<PAGE>


                    EXHIBIT B: LIMITED PARTNERSHIP AGREEMENT

              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
                                     FORM OF
              AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP


                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                             <C>
Preliminary Statement...........................................................................................B-3

Article I---Defined Terms.......................................................................................B-3


Article II---Name; Purpose and Term.............................................................................B-9
    Section   2.1     Name;  Formation..........................................................................B-9
    Section   2.2     Place of Registered Office................................................................B-9
    Section   2.3     Purpose..................................................................................B-10
    Section   2.4     Term.....................................................................................B-10
    Section   2.5     Recording of Certificate.................................................................B-10


Article III---Partners; Capital................................................................................B-10
    Section   3.1     General Partners.........................................................................B-10
    Section   3.2     Limited Partners.........................................................................B-10
    Section   3.3     Partnership Capital......................................................................B-10
    Section   3.4     Liability of Partners....................................................................B-11


Article IV---Allocations, Distributions and Applicable Rules...................................................B-11
    Section   4.1     Allocation of Profit or Loss and Distribution of Net Proceeds from a Sale................B-11
    Section   4.2     Distribution of Net Proceeds of Operational Stage Financing..............................B-12
    Section   4.3     Distribution of Net Cash Flow and Allocation of Profit and Loss from Operation....       B-12
    Section   4.4     Liquidation or Dissolution...............................................................B-12
    Section   4.5     General and Special Rules................................................................B-13


Article V---Rights, Powers and Duties of Partners..............................................................B-15
    Section   5.1     Management and Control of the Partnership; Tax Matters Partner.........................  B-15
    Section   5.2     Authority of General Partners............................................................B-16
    Section   5.3     Authority of Limited Partners............................................................B-17
    Section   5.4     Restrictions on Authority................................................................B-18
    Section   5.5     Authority of Partners and Affiliated Persons to Deal with Partnership................... B-19
    Section   5.6     Duties and Obligations of the General Partners...........................................B-20
    Section   5.7     Compensation of General Partners.........................................................B-20
    Section   5.8     Other Businesses of Partners.............................................................B-20
    Section   5.9     Liability of General Partners to Limited Partners........................................B-20
    Section   5.10    Indemnification                                                                          B-21


Article VI---Transferability of a General Partner's Interest...................................................B-21
    Section   6.1     Removal, Voluntary Retirement or Withdrawal of a General Partner; Transfer of
                      Interests................................................................................B-21
    Section   6.2     Election and Admission of Successor or Additional General Partners...................... B-22
    Section   6.3     Event of Withdrawal of a General Partner.................................................B-22
    Section   6.4     Liability of a Withdrawn General Partner.................................................B-23




                                                                     B-1



<PAGE>






                                                                                                               Page
Article VII---Admission of Additional and Substitute Limited Partners and Transferability of a
              Limited Partner's Interest.....................................................................B-23.
    Section   7.1     Admission of Additional Limited Partners Prior to the Termination Date of the
                      Offering...............................................................................B-23.
    Section   7.2     Admission of Additional Limited Partners After the Termination Date of the
                      Offering...............................................................................B-23.
    Section   7.3     Admission of Substitute Limited Partners...............................................B-23.
    Section   7.4     Retirement or Withdrawal of a Limited Partner..........................................B-24.
    Section   7.5     Transfer or Assignment of a Limited Partner Interest...................................B-24.
    Section   7.6     Bankruptcy, Death, Dissolution or Incompetence of a Limited Partner................... B-25


Article VIII---Dissolution, Liquidation and Termination of the Partnership...................................B-25.
    Section   8.1     Events Causing Dissolution.............................................................B-25.
    Section   8.2     Liquidation............................................................................B-25.


Article IX---Payments to the General Partners and Affiliates.................................................B-26.
    Section   9.1     Reimbursement of Certain Expenses of the General Partners..............................B-26
    Section   9.2     Fees and Deferred Fees.................................................................B-26.


Article X---Books and Records; Bank Accounts; Reports........................................................B-27.
    Section   10.1    Books and Records......................................................................B-27.
    Section   10.2    Bank Accounts..........................................................................B-27.
    Section   10.3    Reports................................................................................B-28.


Article XI---General Provisions..............................................................................B-29.
    Section   11.1    Appointment of Administrative General Partner as Attorney-in-Fact......................B-29
    Section   11.2    Waiver of Partition....................................................................B-29.
    Section   11.3    Notification...........................................................................B-29.
    Section   11.4    Word Meanings..........................................................................B-29.
    Section   11.5     Binding Provisions....................................................................B-30.
    Section   11.6    Applicable Law.........................................................................B-30.
    Section   11.7    Counterparts...........................................................................B-30.
    Section   11.8    Separability of Provisions.............................................................B-30.
    Section   11.9    Paragraph Titles.......................................................................B-30.
    Section   11.10   Entire Agreement.......................................................................B-30.
    Section   11.11   Amendments.............................................................................B-30.


Signatures...................................................................................................B-31.


Schedule A...................................................................................................B-32.

</TABLE>





                                                                     B-2



<PAGE>






              BROWN-FLOURNOY EQUITY INCOME FUND LIMITED PARTNERSHIP
                                     FORM OF
              AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP


                              PRELIMINARY STATEMENT


    The following is the Amended and Restated  Agreement of Limited  Partnership
of  Brown-Flournoy  Equity  Income Fund  Limited  Partnership,  by and among the
General  Partners and Limited  Partners (the  "Agreement").  The parties  hereto
elect to be governed by the provisions of the Delaware  Revised  Uniform Limited
Partnership Act (6 DEL.C. 17-101 et. seq.). The effective date of this Agreement
is as of August , 1986.

    In consideration of the mutual promises made herein, the parties,  intending
to be legally bound, hereby agree as follows:

                                                                  ARTICLE I
                                                                DEFINED TERMS

The defined terms used in this  Agreement  shall,  unless the context  otherwise
requires, have the meanings specified in this Article I.

    "Acquisition  Agreement" means that certain  agreement to be entered into by
the  Partnership  and-Flournoy  Development  Company  pursuant to which Flournoy
Development  Company will (i) provide  services to the Partnership in connection
with the planned  development  of the  Properties,  including  selection  of the
Sites,  negotiation  of  purchase  prices and  terms,  and  execution  of option
agreements;  (ii) in some  instances,  acquire  the  Sites  for the  purpose  of
conveyance  to the  Partnership  and;  (iii)  perform  work  concerning  zoning,
permits,  water and sewer  connections and related matters.  In payment for such
services, Flournoy Development Company will receive an Acquisition Fee.

    With  respect  to  Property  I only,  if the  General  Contractor  commences
construction  prior to the time Class A Limited  Partners are first  admitted to
the Partnership,  the property conveyed to the Partnership under the Acquisition
Agreement applicable to Property I will include (a) all construction theretofore
performed in  connection  with  Property I and (b) all contract  rights owned by
Flournoy Development Company relating to Property I, including,  but not limited
to,  an  assignment  of  Flournoy   Development   Company's   rights  under  the
Construction  Contract  with  the  General  Contractor.  In such  case,  (a) the
purchase  price  payable  by the  Partnership  under the  Acquisition  Agreement
relating  to  Property  I will be  increased  by an  amount  equal  to all  sums
theretofore  paid by  Flournoy  Development  Company  to  Flournoy  Construction
Company under the Construction  Contract for Property I (provided that such sums
must be approved by the Administrative General Partner as set forth in Article V
herein),  and (b) the  Partnership  will thereafter  assume the balance.  of the
Construction  Contract  costs for Property I pursuant to its agreement to assume
all of the remaining,  obligations of Flournoy  Development  Company,  as owner,
under the Construction Contract. As a result, the purchase price of the Property
I site under the Acquisition  Agreement will increase by the amount  reimbursed,
to  Flournoy  Development  Company  by the  Partnership,  and  the  Construction
Contract  price for  Property I  remaining  to be paid by the  Partnership  will
decrease by an equal amount.

    "Acquisition  Fee"  means  the fee  paid to  Flournoy  Development  Company,
pursuant to the Acquisition Agreement,  equal to 4 1/2% of the Gross Proceeds of
the  Offering,  payable 3% at the time Class A Limited  Partners are admitted to
the  Partnership,  and 1  1/2%  deferred  for  later  payment  as set  forth  in
Section.9.2.

     "Act" means the Delaware Revised Uniform Limited  Partnership Act (6 DEL.C.
17-101 et. seq.).






                                                                     B-3



<PAGE>



    "Additional  General  Partner"  means  any  Person  who  is  admitted  as an
Additional  General Partner of the Partnership,  under the provisions of Article
VI, after the date of this Agreement.

    "Additional  Limited  Partner"  means  a  Person  who  is  admitted  to  the
Partnership  pursuant to Section7.1  or 7.2 and who,  after his admission to the
Partnership,  causes the  aggregate  of  Capital  Contributions  of the  Limited
Partners to  increase,  and is reflected as such on the books and records of the
Partnership.

    "Adjusted  Capital  Balance " of a Class A Limited  Partner  means his total
Capital Contribution paid to the Partnership,  less amounts actually distributed
to him from the proceeds of Operational Stage Financing or Sale (other than that
portion, if any, which is payment of an unpaid Preferred Return), as provided in
Article IV herein, at the time of reference thereto.

    "Administrative General Partner" means Brown Equity Income Properties, Inc.,
a Maryland  corporation,  or any Person who is designated  as an  Administrative
General Partner in the Schedule at the time in question.

    "Affiliate " or  "Affiliated  Person"  means,  when used with reference to a
specified Person (i) any Person who, directly or indirectly, through one or more
intermediaries,  controls, or is controlled by, or is under common control with,
the specified Person, (ii) any Person who is an officer, partner, or trustee of,
or serves in a similar  capacity with respect to, the specified  Person,  or any
Person of which the specified Person is an officer,  partner or trustee, or with
respect to which the specified  Person serves in a similar  capacity,  (iii) any
Person who, directly or indirectly, is the beneficial owner of 5% or more of any
class of  equity  securities  of,  or  otherwise  has a  substantial  beneficial
interest in, the specified  Person,  or any Person of which the specified Person
is  directly  or  indirectly  the  owner of 5% or more of any  class  of  equity
securities  or in  which  the  specified  Person  has a  substantial  beneficial
interest, and (iv) any Family Member of the specified Person.

    "Agreement" means this Limited Partnership  Agreement as originally executed
and as  amended  from  time to time,  as the  context  requires.  Words  such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," when used
with reference to this Agreement,  refer to this Agreement as a whole unless the
context otherwise requires.

    "Capital  Account"  means  the  capital  account  to be  maintained  by  the
Partnership for each Partner,  A Partner's  Capital Account is credited with his
Capital   Contributions  and  his  distributive   share  of  Partnership  Profit
(including  tax-exempt  income and gain (or item thereof) and adjustments  under
Section  48(q)(2) of the Code). A Partner's  Capital Account is debited with the
cash  and the  fair  market  value of any  property  distributed  to him (net of
liabilities  assumed by such Partner and  liabilities to which such  distributed
property is subject),  his distributive share of Partnership Loss (and deduction
(or item  thereof)),  and his  distributive  share of  Partnership  expenditures
described in Section 705(a)(2)(B) of the Code (including  adjustments  resulting
from basis adjustments under Section 48 (q) of the Code, losses disallowed under
Sections  267(a)(1)  or 767(b)  of the  Code,  and  Section  709(a)  syndication
expenditures applied to reduce the Capital Accounts of the Partners to whom such
expenditures are allocable at the time such  expenditures are paid or incurred).
A Partner's  Capital Account shall also be adjusted pursuant to Sections 4.4 and
4.5 hereof and as required by Section 704 of the Code. Any question concerning a
Partner's  Capital  Account  shall be resolved by the General  Partners in their
reasonably  exercised  discretion,  applying  principles  consistent  with  this
Agreement and the regulations promulgated under Section 704 of the Code in order
to assure that all allocations  herein will have substantial  economic effect or
will otherwise be respected for income tax purposes.

    "Capital  Contribution"  means the total  amount of cash and the fair market
value of any other assets contributed to the Partnership by the Partners (net of
liabilities  assumed  by the  Partnership  and  liabilities  to  which  any such
contributed assets are subject).  Any reference in this Agreement to the Capital
Contribution of a then-Partner shall include a Capital  Contribution  previously
made by any prior Partner for the Interest of such  then-Partner,  except to the
extent  that all or a portion of the  Interest of any  prior-Partner  shall have
been  terminated  and the portion so terminated  not  transferred to a successor
Partner.

     "Cash Flow Deficit Guaranty  Agreement" means that certain  agreement to be
entered into by the Partnership and John P. Flournoy,  pursuant to which John F.
Flournoy  will  agree to find  any  Partnership  operating  deficits  under  the
following terms and  conditions:  (a) the Cash Flow Deficit  Guaranty  Agreement
will cover





                                                                     B-4



<PAGE>



operating  deficits until a period ending two years after the date of completion
of the last  Property  to be  constructed;  (b) the funding  obligation  will be
limited  to  $500,000,  in the  aggregate;  and  (c)  any  payments  made by the
Development  General Partner under the Cash Flow Deficit Guaranty Agreement will
be  deemed  a  non-interest  bearing  loan  to the  Partnership,  which  will be
reimbursed  from the first  available  net proceeds of  operations,  or from the
proceeds of any Operational Stage Financing or Sale.

    "Class A Limited  Partner"  means any Person who is  designated as a Class A
Limited Partner on the books and records of the Partnership.

    "Class A  Limited  Partner  Percentage"  in  respect  of any Class A Limited
Partner means the percentage obtained by converting to a percentage the fraction
having the Capital Contribution of such Class A Limited Partner as its numerator
and having the Capital Contributions of all Class A Limited Partners at the time
of reference thereto as its denominator.

    "Class B Limited  Partner"  means any Person who is  designated as a Class B
Limited Partner on the books and records of the Partnership.

    "Code "  means  the  Internal  Revenue  Code of  1954,  as  amended  (or any
corresponding provision of succeeding law).

    "Consent of the Class A Limited  Partners" means the prior written  approval
of the Class A Limited  Partners  holding more than fifty  percent  (50%) of the
aggregate Class A Limited  Partner  Percentage in the Partnership at the time of
reference   thereto,   unless  a  different   percentage  of  aggregate  limited
partnership interests is required by law.

    "Contract of Sale" means that  certain  agreement to be entered into by John
F. Flournoy and the Partnership, pursuant to which the Partnership will purchase
from John F.  Flournoy  that  certain  parcel of 3.369 acres of land  located in
Union  City,  Fulton  County,  Georgia,  for the  price of $7,000  per acre,  or
$23,583, which 3.369 acres of land shall be a part of the Property II Site.

    "Controlling  Person" of any General Partner or Affiliate  thereof means any
person who (a) performs  functions for a General Partner or Affiliate similar to
those of (i) a  Chairman  or member of the Board of  Directors,  (ii)  executive
management,  such as a President,  or a Vice-President,  Secretary or Treasurer,
or,(iii)  senior  management;  or (b) holds a 5 % or more equity interest in the
General Partner or Affiliate,  or has the power to direct or cause the direction
of the General  Partner,  or Affiliate,  whether through the ownership of voting
securities, by contract or otherwise.

    "Construction   Contracts"   means  those  fixed  price  contracts  for  the
construction  of the  Properties  to be  entered  into  by the  Partnership  and
Flournoy Construction  Company,  pursuant to which Flournoy Construction Company
shall construct the Properties.

    "Construction  Financing"  means  indebtedness  that may be  incurred by the
Partnership,  under the terms and conditions set forth in Article V, to complete
a Property.

    "Deferred Fees" means that portion of any Selling  Commissions,  Acquisition
Fee, or Organizational and Start-Up Fee that will be deferred for payment by the
Partnership as set forth in Section 9.2.

     "Development General Partner" means John F. Flournoy,  or any Person who is
designated  as a  Development  General  Partner in the  Schedule  at the time of
reference thereto.

    "Entity" means any general partnership,  limited  partnership,  corporation,
joint venture, trust, estate, business trust, cooperative,  association or other
legal form of organization.

    "Family Member" means, with respect to any individual, his spouse, brothers,
sisters, ancestors, and descendants.






                                                                     B-5



<PAGE>






    "Flournoy Development Company" means an Affiliate of the Development General
Partner that will perform certain  services for the Partnership  pursuant to the
Acquisition Agreement, as more fully described in the Prospectus.

    "General  Contractor" means Flournoy  Construction  Company, an Affiliate of
the Development General Partner,  the company that will construct the Properties
pursuant  to the  Construction  Contracts  with the  Partnership,  or any Person
designated by the General Partners as the General Contractor.

    "General  Partner" means any Person  designated as a General  Partner in the
Schedule and any Person who becomes a Successor or Additional General Partner as
provided  herein,  in each such  Person's  capacity as a General  Partner of the
Partnership.

    "Gross  Proceeds of the  Offering"  means the aggregate of the proceeds from
the sale of Units in the  Offering,  which  amount  is equal to the total of all
Capital Contributions received from the Class A Limited Partners.

    "Guaranty  of Timely and  Lien-Free  Completion"  means the  agreement to be
entered into by the Partnership, the Development General Partner and the General
Contractor,  pursuant to which the  Development  General Partner and the General
Contractor will agree to jointly and severally guaranty the timely and lien-free
completion  of each  Property.  Each such  guaranty  will extend to the full net
worth of both guarantors and will be secured by an irrevocable  Letter of Credit
in the amount of 15% of the Construction Contract price of each Property.

    "Interest" means the entire ownership  interest (which may be segmented into
and/or  expressed as a percentage  of various  rights and/or  liabilities)  of a
Partner in the Partnership at any particular  time,  including the right of such
Partner to any and all  benefits  to which a Partner may be entitled as provided
in this Agreement and in the Act,  together with the obligations of such Partner
to comply. with all the terms and provisions of this Agreement and of the Act.

    "Interim  Investments"  means the short-term  investments  made with the Net
Proceeds of the Offering.-until  such Net Proceeds are disbursed for acquisition
and development of the Properties.

    "Letter of Credit" means the instrument or instruments of a commercial bank,
made at the request -of the  Development  General Partner for the benefit of the
Partnership,  to secure  performance  under the Guaranty of Timely and Lien-Free
Completion,  pursuant to which such bank will honor drafts under the  conditions
specified therein,  among which are that the Administrative General Partner may,
acting alone,  draw on such Letter of Credit for the benefit of the  Partnership
upon the occurrence of an event of default by the  Development  General  Partner
and/or the  General  Contractor  under the terms of the  Guaranty  of Timely and
Lien-Free Completion.

    "Limited Partner" means any Person who is designated as a Limited Partner on
the books and records of the  Partnership at the time of reference  thereto,  in
each such Person's capacity as a Limited Partner of the Partnership.

     "Maximum  Offering  Amount"-means  the total amount of $27,000,000 in Gross
Proceeds of the Offering.

    "Minimum  Gain"  means the excess of the  outstanding  principal  balance of
Partnership nonrecourse debt which is secured by Partnership Property (excluding
any portion of such  principal  balance which  would-not be treated as an amount
realized under Section 1001 of the Code and Treas. Reg. 1.1001-2(a)  promulgated
thereunder if such debt were foreclosed  upon),  over the adjusted basis of such
Partnership  Property.  In all  events,  the term  Minimum  Gain  shall have the
meaning  required by any applicable  proposed or final  regulations  promulgated
under  Section  704(b) of the Code,  as from time to time  adopted  or  amended,
including,   until   amended,   withdrawn   or  adopted,   Prop.   Treas.   Reg.
1.704-1(b)(4)(iv).

     "Minimum  Offering Amount" means the amount of $6,455,000 in Gross Proceeds
of the Offering.

    "Net  Cash  Flow"  means  all cash  funds  derived  from  operations  of the
Partnership,  including the yield from the Interim  Investments  and excess cash
reserves deemed  distributable by the General Partners pursuant to Section 3.3.E
hereof,  without reduction for any non-cash charges, but less cash funds used to
pay, or establish  reasonable  reserves for, fees,  commissions,  debt payments,
improvements  and  replacements.   Net  Cash  Flow  shall  not  include  amounts
distributed under Sections 4.1 or 4.2 hereof.


                                                                     B-6



<PAGE>






    "Net Proceeds of the Offering" means the Gross Proceeds of the Offering less
the portion of the Selling Commissions, Acquisition Fee, Organization and Start-
Up Fee and Offering and Promotional Expenses Reimbursement Allowance paid at the
time that Class A Limited Partners are admitted to the Partnership.

    "Net  Proceeds  of  Operational  Stage  Financing  or Sale"  means the gross
proceeds to the  Partnership of any  Operational  Stage  Financing or Sale, less
payment of any unpaid  Deferred  Fees and any amounts  deemed  necessary  by the
General Partners to be allocated to the  establishment of reserves,  the payment
of any debts and liabilities of the  Partnership to creditors,  the repayment to
the Development General Partner of any advances made to the Partnership pursuant
to the Cash Flow Deficit Guaranty  Agreement,  and the payment-of any reasonable
expenses or costs  associated  with the  Operational  Stage  Financing  or Sale,
including but not limited to, fees, points, or real estate brokerage commissions
paid to the General Partners or their Affiliates or any unaffiliated Persons.

    "Notification" -means a writing, containing the information required by this
Agreement to be communicated to any Person,  sent or delivered to such Person in
accordance with the provisions of Section 11.3 of this Agreement.

    "Offering " means the  offering for sale of a minimum of 6,455 and a maximum
of 27,000 Units of Class A Limited Partnership Interests in the Partnership,  as
more fully described in the Prospectus.

    "Offering  and  Promotional  Expenses  Reimbursement  Allowance  " means the
allowance  paid to the  Administrative  General  Partner of a total of 2% of the
Gross  Proceeds of the  Offering,  payable at the time of  admission  of Class A
Limited Partners to the Partnership.
    "Operational  Stage Financing " means any loan obtained by the  Partnership,
secured by one or more of the completed and operating  Properties or any portion
there-of,  including  any  refinancing  of  a  Property  previously  subject  to
Operational  Stage Financing.  The Partnership will not place  Operational Stage
Financing  on a Property in order to make  distributions  to  Partners  if, as a
result, the outstanding  indebtedness of the Partnership would exceed 80% of the
appraised  value of all  Properties  combined.  Depending  on numerous  factors,
including  the  terms  of  then-available   financing  and  prevailing  economic
conditions,  the  General  Partners  may  determine  that less than the  maximum
permitted financing is desirable.

    "Organization and Start- Up Fee" means the fee payable to the Administrative
General  Partner for services to the  Partnership  in preparing the structure of
the   Partnership,   consulting   with  various   professionals   regarding  the
organization of the  Partnership,  and supervising and reviewing the preparation
of all documents,  filings and other instruments related to the Partnership. The
Organization  and  Start-Up  Fee  will  total 4 1/2 % of Gross  Proceeds  of the
Offering,  payable  3% upon the  admission  of Class A Limited  Partners  to the
Partnership  and 1 1/2%  deferred for later  payment as set forth in Section 9.2
herein.

    "Partner" means any General Partner or Limited Partner.

    "Partnership"  means the limited  partnership formed in accordance with this
Agreement by the parties  hereto,  as said limited  partnership may from time to
time be constituted.

    "Partnership Property" means all or any portion of the assets owned or to be
owned by the Partnership, including the Sites, the Properties and all-incidental
personal property.

    "Person " means any individual or Entity.

    "Preferred Return " means a cumulative,  non-compounded  annual return equal
to 7.5 % of  each  Class A  Limited  Partner's  Adjusted  Capital  Balance.  The
Preferred  Return  shall be  determined  on an annual,  basis,  according to the
fiscal year of the  Partnership.  If any portion of a Class A Limited  Partner's
Preferred  Return is not paid from Net Cash Flow,  such unpaid  portion  will be
added  to the  Class A  Limited  Partner's  priority  distribution  from the Net
Proceeds of Operational Stage Financing or Sale.

    "Profit" and "Loss" means taxable income and taxable loss of the Partnership
for federal income tax purposes, determined as of the close of the Partnership's
tax year,  including,  where the context  requires,  related  federal income tax
items  such as  capital  gain or loss,  tax  preferences,  investment  interest,
depreciation cost





                                                                     B-7



<PAGE>






recovery,  depreciation  recapture,  and  cost  recovery  recapture.  Except  as
otherwise  provided  herein,  each  item  of  income,  gain,  loss,   deduction,
preference  or  recapture  entering  into  the  computation  of  Profit  or Loss
hereunder  shall be allocated to each Partner in the same  proportion  as Profit
and Loss are allocated.

    "the  Properties"  means a minimum  of one and a maximum  of four  apartment
projects to be develop, owned and operated by the Partnership,  which Properties
consist  of,  in order of their  planned  development  (which  order,  after the
construction  of Property  I, may be  modified by the General  Partners in their
sole discretion): (a) the Southland Station apartments, containing 160 units, in
Warner Robins, Georgia ("Property I"); (b) the Hidden Lake Phase Two apartments,
containing 160 units, in Union City, Georgia ("Property II"); (c) the Park Place
apartments,  containing 184 units,  in  Spartanburg,  South Carolina  ("Property
III");  and (d) the High Ridge  apartments,  containing  160  units,  in Athens,
Georgia ("Property IV").

     "Property  Manager"  means Flournoy  Properties,  Inc. or any Person who is
designated by the General Partners as Property Manager.

    "Property  Management  Agreement"  means the  agreement or  agreements to be
entered into by the Partnership and the Property  Manager  pursuant to which the
Property  Manager  shall  manage each of the  Properties  for a fee of 5% of the
monthly gross operating revenues of the Properties.

    "Prospectus"   means  the   Partnership's   Prospectus   contained   in  the
Registration  Statement  filed on Form S-11  with the  Securities  and  Exchange
Commission for the  registration  of the Units under the Securities Act of 1933,
in the  final  form in which  ft is  filed  with  the  Securities  and  Exchange
Commission  and as  thereafter  supplemented  pursuant  to Rule  424  under  the
Securities Act of 1933. Any reference  herein to "date of the Prospectus"  shall
be deemed to refer to the date of the  Prospectus in the form filed  pursuant to
Rule 424(b) of the Securities Act of 1933.

    "Purchase  Money  Financing"  means a  purchase  money note or other form of
installment sale obligation received by the Partnership pursuant to a Sale.

    "Sale" means any transaction  entered into by the  Partnership  resulting in
the  receipt of cash or other  consideration  (other than the receipt of Capital
Contributions)  not in the ordinary course of its business,  including,  without
limitation,  sales  or  exchanges  or  other  dispositions  of real or  personal
Partnership property,  condemnations,  recoveries of damage awards and insurance
proceeds (other than business or rental interruption  insurance  proceeds),  but
excepting any borrowing or mortgage financings.

    "Schedule"  means Schedule A annexed hereto as amended from time to time and
as so amended at the time of reference thereto.

    "Selling Agent" means Alex. Brown Realty  Securities,  Inc., an Affiliate of
the Administrative General Partner, which will offer the Units on a best efforts
basis pursuant to a Selling Agent Agreement with the Partnership.

     "Selling Agent Agreement"  means that certain  agreement to be entered into
by the Partnership and Alex.  Brown Realty  Securities,  Inc.  pursuant to which
Alex.  Brown  Realty  Securities,  Inc.  will offer and sell the Units on a best
efforts basis.

    "Selling  Commissions " means the maximum total of 7 % of the Gross Proceeds
of the Offering paid the Selling Agent or reallowed other soliciting dealers for
their efforts in offering the Units. 5% of the maximum selling  Commissions will
be  paid  at the  time  of  admission  of  Class A  Limited  Partners  into  the
Partnership;  the remaining 2% will be deferred for payment from as set forth in
Section  9.2  herein.  The 7% maximum  Selling  Commissions  will be reduced for
volume  purchases,  in which case the reduction will apply to the portion of the
Selling  Commission due at the time of admission of Class A Limited  Partners to
the Partnership.

    "the  Sites"  means a minimum of one and a maximum  of four  tracts of land,
three of which are  located in the State of Georgia  and one of which is located
in the State of South Carolina, upon which the Properties are-to be developed.







                                                                     B-8



<PAGE>






    "Sponsor"   means  any  Person   directly  or  indirectly   instrumental  in
organizing, wholly or in part, the Partnership or who will manage or participate
in the management of the Partnership, and any Affiliate of such Person, but does
not include (a) any Person whose only  relationship  with the Partnership or the
General  Partner  is  that  of  an  independent   property  manager  whose  only
compensation  from the Partnership is in the form of fees for the performance of
property  management  services,  or  (b)  wholly-independent   parties  such  as
attorneys,  accountants  and  broker-dealers  whose only  compensation  from the
Partnership  is for  professional  services  rendered  in  connection  with  the
Offering or the operations of the Partnership.

    "Substitute  Limited  Partner"  means  a  Person  who  is  the  assignee  or
transferee,  in  whole  or in  part,  of a  Limited  Partner's  Interest  in the
Partnership,  who is  admitted  to  the  Partnership  as a  Limited  Partner  in
accordance  with Section 7.3 hereof,  and who is listed as such on the books and
records of the Partnership.

    "Successor  General Partner" means any Person who is admitted as a Successor
General Partner to the Partnership  under the provisions of Article VI after the
date of this Agreement.

    "Tax-Exempt  Partner(s) " means,  depending  upon the context,  either (a) a
Partner  that is a  "tax-exempt  entity"  or that is deemed  to be a  tax-exempt
entity,  or (b) in the  case of a  disqualified  lease by the  Partnership  to a
tax-exempt entity,  the General Partners.  As used herein, the terms "tax-exempt
entity" and  "disqualified  lease" shall have the meanings given them in Section
168(j) of the Code.

    "Tax Matters Partner" means the Administrative General Partner designated in
Section 5.1 as the tax matters partner,  as defined in Section 6231(a)(7) of the
Code.

    "Termination  Date of the  Offering"  means the date upon which the Offering
will terminate, which, if not sooner terminated by the General Partners, will be
one year  from the date of the  Prospectus,  unless  extended  for up to 60 days
thereafter by the General Partners

    "Unit" means a Class A Limited Partner's Interest, which is offered pursuant
to the Offering,  and which upon  admission of a Class A Limited  Partner to the
Partnership, represents a Capital Contribution of $1,000.

    "U.S. Person" means a Person who is (i) an individual who is either a United
States  citizen  or a  resident  of the United  States  for  federal  income tax
purposes,  (ii) a  corporation,  partnership,  or other legal entity  created or
organized in or under the laws of the United States or any political subdivision
thereof,  (iii) a  corporation  that is not created or organized in or under the
laws of the United  States or any  political  subdivision  thereof but which has
made an election under either Section 897(i) or Section 897(k) of the Code to be
treated  as a domestic  corporation  for  certain  purposes  of  federal  income
taxation,  or (iv) an estate or trust  whose  income  from  sources  without the
United States is includable in its gross income for federal  income tax purposes
regardless of its connection  with a trade or business  carried on in the United
States.

    "Working Capital Reserves" means, initially, the portion of the Net Proceeds
of the Offering set aside as working capital  reserves  pursuant to Section 3.3E
and the funds  thereafter set aside by the General  Partners for working capital
reserves.


                                   ARTICLE II
                             NAME; PURPOSE AND TERM


Section 2.1 Name; Formation

    The  Partners   hereby  form  the  limited   partnership   to  be  known  as
"Brown-Flournoy Equity Income Fund Limited Partnership" (the "Partnership"), and
such  name  shall be used at all  times  in  connection  with the  Partnership's
business and affairs;  provided,  however,  that the  Partnership  may use trade
names in its business operations. The Partnership shall be governed by the Act.

Section 2.2 Place of Registered Office

    The  address  of the  registered  office  in the  state of  Delaware  of the
Partnership  is  Corporation  Trust  Center,  1209  Orange  Street,  Wilmington,
Delaware 19801; the name of the registered agent for service of process on


                                                                     B-9



<PAGE>






the  Partnership  in the State of  Delaware at that  address is The  Corporation
Trust Company. The Partnership's principal place of business is 3810 Buena Vista
Road,  Columbus,  Georgia 31907, or such other place(s) as the General  Partners
may  hereafter  determine.  Notification  of any change in the  location  of the
principal office shall be given to the Limited Partners on or before the date of
any such change.

Section 2.3 Purpose

    The purpose of the Partnership is to acquire, own, develop,  encumber,  hold
for investment,  operate as a business,  lease,  sell,  dispose of and otherwise
deal with the Partnership Property,  and to do all things necessary,  convenient
or incidental to the achievement of the foregoing.

Section 2.4 Term

    The  Partnership   shall  continue  until  December  31,  2036,  unless  the
Partnership  is sooner  dissolved  in  accordance  with the  provisions  of this
Agreement.

Section 2.5 Recording of Certificate

    The  General  Partners  shall  take all  necessary  action to  maintain  the
Partnership in good standing as a limited  partnership under the Act, including,
without limitation, the filing of a certificate of limited partnership under the
Act and such  amendments and further  certificates as may be necessary under the
Act and  necessary to qualify the  Partnership  to do business in such states as
the  Partnership  owns property.  The General  Partners shall not be required to
send a copy of the  Partnership's  filed  certificate of limited  partnership to
each Limited Partner.


                                                                 ARTICLE III
                                                              PARTNERS; CAPITAL

Section 3.1 General Partners

    The name,  address and Capital  Contribution  of each General Partner is set
forth on the Schedule.  Upon the dissolution and termination of the Partnership,
each General Partner shall make a Capital  Contribution to the Partnership in an
amount  equal to the lesser of (i) the deficit  balance,  if any, in his Capital
Account or ( ii) his  proportionate  share of the excess of 1.01% of the Capital
Contributions of the Limited Partners over the Capital Contributions  previously
contributed by the General Partners.

Section 3.2 Limited Partners

    The name,  address and Capital  Contribution  of each Limited Partner in his
capacity as such shall be reflected on the books and records of the Partnership.

Section 3.3 Partnership Capital

     A. Each Partner's Capital Contribution shall be paid in cash on or prior to
the date of his admission to the Partnership.

    B. Except to the extent of any interest  income  earned on a Class A Limited
Partner's Capital Contribution while it is held in escrow, pending his admission
to the  Partnership,  and later  distributed  to such  Class A  Limited  Partner
pursuant  to Section  4.5A,  no Partner  shall be paid  interest  on any Capital
Contribution.

     C. Except as otherwise  provided in this  Agreement,  no Partner shall have
the right to withdraw, or receive any return of, his Capital Contribution.

     D. Under circumstances  requiring a return of any Capital Contribution,  no
Partner shall have the right to receive property other than cash.

     E. The Partnership  shall initially set aside Working Capital  Reserves for
normal repairs,  replacements  and  contingencies in an amount equal to at least
3.0% of the Gross Proceeds of the Offering. If in any fiscal quarter,


                                                                    B-10



<PAGE>






the  General  Partners  determine  that  the  Working  Capital  Reserves  of the
Partnership are in excess of the amount deemed sufficient in connection with the
Partnership's operations, and that such Working Capital Reserves may be reduced,
the amount of such  reduction may be distributed to the Partners as a portion of
the Partnership's Net Cash Flow. Upon the Sale or disposition of a Property, any
Working  Capital  Reserves  maintained  for such Property may be  distributed to
Partners or applied as Working Capital Reserves for other Properties.

Section 3.4 Liability of Partners

    A. Except as provided in the Act, a Limited  Partner will not be  personally
liable  for the  debts,  liabilities,  contracts,  or other  obligations  of the
Partnership.  Except as  provided  in the Act,  a Limited  Partner  will have no
liability in excess of the capital  contribution  which such Limited  Partner is
obligated to make to the Partnership,  and his share of the Partnership's assets
and undistributed profits.

    B. No Limited Partner shall be required to lend any funds to the Partnership
or,  after his Capital  Contribution  has been fully  paid,  to make any further
capital contribution to the Partnership, nor shall any Limited Partner be liable
for or, have any obligation to restore, any negative Capital Account.

    C. No Limited  Partner shall have any- personal  liability for the repayment
of the  Capital  Account of any  General  Partner or be required to repay to the
Partnership all or any portion of any negative  amount of the General  Partners'
Capital Accounts.

    D. No General Partner shall have any personal liability for the repayment of
the Capital  Contribution  or the Preferred  Return of any Limited Partner or be
required to repay to the  Partnership  all or any portion of any negative amount
of the Limited Partners' Capital Accounts.

    E. No payments made by the  Development  General Partner under the Cash Flow
Deficit  Guaranty  Agreement  shall  constitute  a Capital  Contribution  of the
Development  General  Partner  or be  credited  to the  Capital  Account  of the
Development  General  Partner.  Such  payments,  if any,  shall be treated as an
interest free loan to the Partnership,  as set forth in the definition contained
in Article I herein.


                                   ARTICLE IV
                 ALLOCATIONS, DISTRIBUTIONS AND APPLICABLE RULES


     Section 4.1 Allocation of Profit or Loss and  Distribution  of Net Proceeds
from a Sale

     A.  Profit  from any Sale (and  Profit  from any deemed  Sale  pursuant  to
Sections 4.4 or 4.5) shall be allocated in the following order of priority

    (1) First, if one or more Partners has a negative Capital  Account,  to such
Partners,  in  proportion to their  negative  Capital  Accounts,  until all such
Capital Accounts have zero balances.

    (2) Second,  if any Class A Limited Partner has an unpaid Preferred  Return,
any Profit not allocated  pursuant to Section 4.1A(l) shall be allocated 100% to
the Class A Limited  Partners,  in  accordance  with  their  respective  Class A
Limited Partner  Percentages,  until the Capital Account of each Class A Limited
Partner is equal to his unpaid Preferred Return.

    (3) Third,  any Profit not  allocated  pursuant  to  Sections 4. 1A(l) or 4.
1A(2) shall be allocated  100% to the Class A Limited  Partners,  in  accordance
with their  respective  Class A Limited Partner  Percentages,  until the Capital
Account  of each  Class A Limited  Partner  is equal to the sum of his  Adjusted
Capital Balance plus his unpaid Preferred Return, if any.

    (4) Fourth,  any  remaining  Profit  shall be  allocated  80% to the Class A
Limited Partners, in accordance- with their Class A Limited Partner Percentages,
14% to John F. Flournoy in his capacity as a Class B Limited Partner, 4 % to the
Realty Associates 1986 Limited Partnership, a Class B Limited Partner, 1% to the
Development General Partner and 1 % to the Administrative General Partner.

     B. Loss from any Sale (and Loss from any deemed  Sale  pursuant to Sections
4.4 and 4.5) shall be allocated in the following order of priority:

                                                                    B-11



<PAGE>





    (1) First, if one or more Partners has a positive Capital  Account,  to such
Partners,  in  proportion to their  positive  Capital  Accounts,  until all such
positive Capital Accounts have zero balances.

    (2) Any  remaining  Loss shall be allocated  as follows:  80% to the Class A
Limited Partners,  in accordance with their Class A Limited Partner Percentages,
14% to John F.  Flournoy  in his  capacity as a Class B Limited  Partner,  4% to
Realty Associates 1986 Limited  Partnership,  a Class B Limited Partner,  1 % to
the Development General Partner and 1 % to the Administrative General Partner.

    C. After the  allocation  of Profit and Loss  pursuant to Sections  4.1A and
4.1B, Net Proceeds,  if any, from a Sale, and any net proceeds upon  dissolution
of  the  Partnership,  shall  be  distributed,   credited  and  applied  by  the
Partnership  to its Partners in proportion to their positive  Capital  Accounts,
until  all such  Capital  Accounts  have  been  reduced  to zero.  The first Net
Proceeds of Sale distributed to the Class A Limited Partners shall be deemed, to
the extent  applicable,  distributions  of any unpaid  Preferred  Return due the
Class A Limited Partners.

Section 4.2 Distribution of Net Proceeds of Operational Stage Financing

    Upon the Operational Stage Financing of any Property or portion thereof, Net
Proceeds of  Operational  Stage  Financing  shall be  distributed,  credited and
applied in the following order of priority:

    (1) First,  if any Class A Limited Partner has an unpaid  Preferred  Return,
100 % to the Class A Limited Partners,  in accordance with their Class A Limited
Partner  Percentages,  until each Class A Limited Partner has received an amount
equal to his unpaid Preferred Return.

    (2) Second,  100% to the Class A Limited Partners,  in accordance with their
Class A Limited  Partner  Percentages,  until each Class A Limited  Partner  has
received an amount equal to his Adjusted Capital Balance.

    (3) Third,  any remaining Net Proceeds shall be distributed 80% to the Class
A Limited Partners,  in accordance with their respective Class A Limited Partner
Percentages,  14% to John  F.  Flournoy  in his  capacity  as a Class B  Limited
Partner,  4% to Realty  Associates 1986 Limited  Partnership,  a Class B Limited
Partner,  1 % to the Development  General Partner and 1 % to the  Administrative
General Partner.

     Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss
from Operations

    A.  Net  Cash  Flow,  if  any,  shall  be  distributed  and  applied  by the
Partnership as follows: 98% to the Class A Limited Partners,  in accordance with
their  respective  Class A Limited Partner  Percentages,  1 % to the Development
General Partner and 1 % to the  Administrative  General  Partner.  To the extent
feasible,  the General Partners will endeavor to distribute any Net Cash Flow on
a quarterly basis.

    B. For each taxable year,  Profit and Loss (other than Profit or Loss from a
Sale) of the Partnership shall be allocated 98% to the Class A Limited Partners,
in accordance with their respective Class A Limited Partner Percentages,  1 % to
the Administrative General Partner and 1 % to the Development General Partner.

Section 4.4 Liquidation or Dissolution

    A. If the Partnership is liquidated or dissolved, the net proceeds from such
liquidation,  as  provided  in  Article  VIII,  shall  be  distributed  first to
creditors,  including  Partners  who  are  creditors,  to the  extent  otherwise
permitted by law (whether by payment or by  establishment  of  reserves),  other
than liabilities for  distributions to Partners,  and any remaining net proceeds
shall be distributed in the order of priority set forth in Section 4.1A,  unless
applicable law shall otherwise require, in which event the order of priority set
forth in Section 4.1A shall be modified to the extent necessary, but only to the
extent necessary, to comply with such applicable law.

    B. If the General  Partners  elect,  pursuant to Section 8.2C, to distribute
any of the Property of the  Partnership  to the Partners in kind,  such Property
shall be applied, based upon its fair market value, in the order of priority set
forth in Section 4.4A, unless applicable law shall otherwise  require,  in which
event the order of priority  set forth in Section  4.4A shall be modified to the
extent  necessary,  but  only to the  extent  necessary,  to  comply  with  such
applicable law. In this regard, all unsold  Partnership  Property shall first be
valued, as





                                                                    B-12



<PAGE>






provided  in  Section  4.5B,  to  determine  the  Profit or Loss that would have
resulted  from a Sale of such  Property,  and,  subject to the special  rules of
Section 4.5,  such Profit or Loss shall be allocated as provided in Section 4.IA
and shall be  properly  credited  or  charged  to the  Capital  Accounts  of the
Partners.

Section 4.5 General and Special Rules

    A.  Except as  otherwise  provided  herein,  the  timing  and  amount of all
distributions shall be determined by the General Partners. No Partner shall have
the right to demand and receive any  distribution  of property  other than cash.
Notwithstanding  any other  provision of this  Agreement,  the General  Partners
shall have authority to make the following distributions to certain of the Class
A Limited  Partners  following such Class A Limited  Partners'  admission to the
Partnership:  First,  if the  Partnership  has  realized  a savings  on  Selling
Commissions  payable by the Partnership with respect to the purchase of Units by
a Class A Limited  Partner,  due to the purchase by such Class A Limited Partner
of 100 or more Units (as more fully set forth in the  Prospectus),  the  General
Partners shall make a distribution  to such Class A Limited Partner equal to the
amount of such savings realized by the Partnership.  Second,  if any interest is
earned on a Class A Limited Partner's Capital  Contribution  while it is held in
escrow,  pending such Class A Limited  Partner's  admission to the  Partnership,
such interest shall be paid by the Partnership to such Class A Limited Partner.

    B.  Subject  to all  of the  special  rules  of  this  Section  4.5,  if any
Partnership  Property is distributed to the Partners in kind,  such  Partnership
Property  first shall be valued on the basis of the fair market value thereof to
determine  the  Profit or Loss that  would  have  resulted  if such  Partnership
Property  had been  sold,  and then such  Profit or Loss shall be  allocated  as
provided  in Section  4.1A,  and shall be  properly  credited  or charged to the
Capital   Accounts   of  the   Partners   in   accordance   with   Treas.   Reg.
1.704-1(b)(2)(iv)(e) or any successor provision thereto. Any Partner entitled to
any interest in such assets shall  receive such  interest as a  tenant-in-common
with all other Partners so entitled.  The fair market value of such assets shall
be determined by an  independent  appraiser who shall be selected by the General
Partners.

    C.  Notwithstanding  any other  provision of this Agreement to the contrary,
the  allocation  of  Loss  or  deduction  (or  item  thereof)   attributable  to
nonrecourse debt that is secured by any Property of the Partnership  shall in no
event be permitted to the Partners having negative  Capital Account  balances to
the extent that the sum of negative  Capital Account  balances of the Partner or
Partners receiving such allocations would exceed the Minimum Gain (determined at
the end of the  Partnership  taxable  year to  which  the  allocations  relate).
Instead,  such Loss (or deduction or item thereof)  shall be allocated  first to
the Partners having positive  Capital  Accounts,  in proportion to such positive
Capital Accounts,  until all such positive Capital Accounts have been reduced to
zero, and any additional  Loss (or deduction or item thereof) shall be allocated
to the Partners in accordance  with the sharing  arrangements  set forth in this
Article IV. The Partner or Partners  having negative  Capital  Account  balances
resulting  in whole or in part from  allocations  of Loss (or  deduction or item
thereof)  attributable  to  nonrecourse  debt that is secured by Property of the
Partnership shall, to the extent possible,  be allocated Profit (income, gain or
item  thereof) in an amount no less than the excess of the sum of such  negative
Capital Account  balances over the Minimum Gain at a time no later than the time
at which the  Minimum  Gain is reduced  below the sum of such  negative  Capital
Account balances.

    D. Notwithstanding any other provision of this Agreement to the contrary, in
the event  that at the end of any  Partnership  taxable  year (i) any  Partner's
Capital  Account is adjusted  for, or (ii) such Partner is  allocated,  or (iii)
there  is  distributed  to such  Partner,  any item  described  in  Treas.  Reg.
1.704-1(b)(2)(ii)(d)(4),  (5)-or (6) in an amount not reasonably expected on the
date of execution of this Agreement and such treatment creates a deficit balance
in such  Partner's  Capital  Account in excess of the  deficit  balance  that is
permitted in accordance with Section 4.5C hereof (the "Excess Deficit Balance"),
then  such  Partner  shall be  allocated  all  items of  income  and gain of the
Partnership  for such  taxable  year (as set  forth  below)  and all  subsequent
taxable  years until such Excess  Deficit  Balance has been  eliminated.  In the
event that such unexpected  adjustments  create an Excess Deficit Balance in the
Capital  Account of more than one Partner in any  Partnership  taxable year, all
items of  income  and gain (as set  forth  below)  of the  Partnership  for such
taxable  year and all  subsequent  taxable  years shall be  allocate  among such
Partners  in  proportion  to their  Excess  Deficit  Balances  until such Excess
Deficit  Balances  have been  eliminated.  Any remaining  Profit or Loss,  after
adjustment has






                                                                    B-13



<PAGE>






been made for allocation of income or gain pursuant to this Sections 4.5D, shall
be allocated in accordance. with Sections 4.1, 4.2 and 4.3 hereof. In allocating
Partnership income or gain to Partners with Excess Deficit Balances, the General
Partners shall first allocate taxable income of the Partnership.  If allocations
of taxable  income are  insufficient  to eliminate the Partners'  Excess Deficit
Balances,  the General Partners shall allocate items of gross income (as defined
in Section 61 of the Code) to Partners having Excess Deficit Balances in amounts
sufficient to eliminate such deficit balances.  This Section 4.5D is intended to
be-a  "qualified  income  offset"  provision  within the meaning of Treas.  Reg.
1.704-1(b)(2)(ii)(d),  and the General Partners shall be authorized to interpret
and apply  this  Section  4.5D so as to  satisfy  the  requirement  of the final
regulations and any successor provision.

    E. If any Partner's  Interest in the  Partnership is reduced  (provided such
reduction does not result in a complete termination of such Partner's Interest),
such Partner's share of the Partnership's  "unrealized  receivables" (within the
meaning  of  Section  751(c)  of the  Code),  shall  not  be  reduced  so  that,
notwithstanding  any other  provision of this  Agreement to the  contrary,  that
portion of the Profit  otherwise  allocable upon a liquidation or dissolution of
the  Partnership  pursuant  to Section  4.1 hereof  which is taxable as ordinary
income  (recaptured)  for  federal  income  tax  purposes  as a  result  of  the
application of Sections 704, 751, 1245 or 1250 of the Code shall,  to the extent
possible without increasing the total gain to the Partnership or to any Partner,
be  allocated  among the  Partners in  proportion  to the  deductions  (or basis
reductions treated as deductions)  giving rise to such recapture.  Any questions
as to the aforesaid  allocation of ordinary  income  (recapture),  to the extent
such  questions  cannot be  resolved  in the manner  specified  above,  shall be
resolved by the General Partners in their reasonably exercised discretion.

    F. All Profit and Loss of the Partnership shall be allocated with respect to
each taxable year of the  Partnership as of the end of, and within  seventy-five
(75) days after the end of,  such  taxable  year,  or as soon  thereafter  as is
practically possible.

    G.  Generally,  all Profit and Loss (other than Profit and Loss from a Sale)
shall be allocated, and Net Cash Flow shall be distributed,  as the case may be,
to the Persons shown on the records of the  Partnership to have been Partners as
of the last day of the taxable year for which such allocation or distribution is
to be made,  subject to the special  rules set forth in this Section  4.5G.  The
Partnership  shall adopt the "interim closing of the books" method of allocating
Partnership Profit and Loss, in accordance with a "semi-monthly convention" with
respect to the admission of Additional  Limited  Partners or Substitute  Limited
Partners on or before the Termination Date of the Offering.  Accordingly,  if on
or before the  Termination  Date of the Offering,  Additional  Limited  Partners
and/or Substitute  Limited Partners are admitted to the Partnership (i) prior to
the sixteenth day of a calendar month,  the Partnership  will close its books as
of the end of the last day of the  month  prior to the month of  admission,  and
such Additional  Limited  Partners and/or  Substitute  Limited Partners shall be
treated as entering the  Partnership on the first day of the month of admission;
or (ii) on or after the sixteenth day of a calendar month,  the Partnership will
close its books as of the end of the  fifteenth  day of the month of  admission,
and such Additional Limited Partners and/or  Substituted  Limited Partners shall
be treated as entering the Partnership on the sixteenth day of such month. After
the Termination Date of the Offering,  a Substitute Limited Partner shall not be
admitted  to the  Partnership  until  the date on which the  assignment  to such
Substitute  Limited Partner of an Interest in the Partnership  becomes effective
as  provided  in Section  7.3B hereof (the  "Effective  Date").  Accordingly,  a
Substitute Limited Partner shall be deemed to be the owner of an Interest in the
Partnership  from and after the Effective  Date,  with such  Substitute  Limited
Partner being entitled to Partnership  distributions  and  allocations of Profit
and Loss only with respect to Partnership operations commencing on the Effective
Date.  Profit and Loss from a Sale shall be  allocated,  and Net  Proceeds of an
Operational Stage Financing or Sale shall be distributed,  among the Persons who
are  recognized  as  Partners on the date of closing of such  Operational  Stage
Financing or Sale. Any  distribution  of Sale proceeds  attributable to deferred
payments  that are  paid in a  taxable  year  after  the  year of Sale  shall be
distributed to the Persons who are recognized as Partners as of the date of such
distribution.

    H.  Notwithstanding  any  other  provision  hereof,  if any  portion  of the
Properties is "tax-exempt use property" within the meaning of Section  168(j)(3)
and (j)(9) of the Code (or any similar  provision of law which may  subsequently
be enacted),  such portion shall be deemed allocated specially to the Tax-Exempt
Partner(s),







                                                                    B-14



<PAGE>






and cost  recovery  deductions  shall be  allocated  proportionately  among  the
Partners  other than the  Tax-Exempt  Partners in such  amounts so that,  to the
maximum extent possible, the cost recovery deductions otherwise allocable to the
Partners other than the Tax-Exempt  Partners shall not be reduced as a result of
such  characterization,  the intent of this  Section  being to provide  that the
Partners  other than the  Tax-Exempt  Partners  shall be  entitled to those cost
recovery  deductions  which  would  have been  available  if no  portion  of the
Property were  "tax-exempt  use  property." If there is more than one Tax-Exempt
Partner,  such  allocations  shall be made in  proportion  to  their  respective
Limited Partner Percentages.

    I. In the event  that any Class A Limited  Partner  fails to  furnish to the
General  Partners  evidence,  in form and substance  satisfactory to the General
Partners,  establishing  that the  General  Partners  have no  obligation  under
Section  1445 of the Code  with  respect  to such  Class A  Limited  Partner  to
withhold and pay over an amount to the  Internal  Revenue  Service,  the General
Partners  may, in their sole  discretion,  withhold with respect to such Class A
Limited  Partner  the amount  they would be  required  to  withhold  pursuant to
Section 1445 of the Code if such Class A Limited Partner were not a U.S. Person,
and any amount so withheld  shall be treated as a  distribution  under  Sections
4.1,  4.2 or 4.3 of this  Agreement,  as the case may be,  and shall  reduce the
amount otherwise distributable to such Class A Limited Partner thereunder.


                                    ARTICLE V
                      RIGHTS, POWERS AND DUTIES OF PARTNERS


Section 5.1 Management and Control of the Partnership; Tax Matters Partner

    A. The General Partners shall have the exclusive right to manage and control
the business of the Partnership.  Except as otherwise provided herein, decisions
to be made by the General  Partners shall be made by the joint  agreement of the
Administrative General Partner and the Development General Partner.

     B. Except as otherwise  provided herein,  the Partnership shall be bound by
the signature of any General Partner.

    C. No Limited  Partner  (except one who may also be a General  Partner,  and
then  only  in his  capacity  as  General  Partner)  shall  have  the  right  to
participate  in the  control of the  business  of the  Partnership,  or have any
authority or right to act for or bind the Partnership.

    D. The  Administrative  General Partner is hereby designated to serve as the
Partnership's  Tax  Matters  Partner  and  shall  have  all  of the  powers  and
responsibilities  of such  position as provided in Sections  6221 et seq. of the
Code. All third party costs and expenses incurred by the Administrative  General
Partner in  performing  its duties as Tax Matters  Partner shall be borne by the
Partnership,  as shall all expenses  incurred by the Partnership  and/or the Tax
Matters Partner in connection  with any tax audit or tax related  administrative
or judicial proceeding. Each Partner shall be responsible for all costs incurred
by such Partner with respect to any tax audit or tax related  administrative  or
judicial proceeding in connection with such Partner's tax returns, and all costs
incurred by any such  Partner who  participates  in any tax audit or tax related
administrative  or  judicial  proceeding  of or against the  Partnership  or any
Partner. Each Partner hereby (i) expressly authorizes the Tax Matters Partner to
enter into any settlement with the Internal  Revenue Service with respect to any
tax  matter,  tax item,  tax issue,  tax audit,  or judicial  proceeding,  which
settlement  shall  be  binding  on  all  Partners;  (ii)  waives  the  right  to
participate  in any  administrative  or  judicial  proceeding  in which  the tax
treatment.  of any  Partnership  item is to be  determined;  and (iii) agrees to
execute such consents, waivers or other documents as the Tax Matters Partner may
determine are necessary to accomplish  the  provisions of this Section 5.1D. The
Tax Matters  Partner shall have no liability to any Partner or the  Partnership,
and shall be indemnified by the  Partnership to the full extent provided by law,
for any act or  omission  performed  or  omitted  by it within  the scope of the
authority  conferred on it by this  Agreement,  except for acts of negligence or
for damages arising from any  misrepresentation or breach of any other agreement
with the  Partnership.  The  liability  and  indemnification  of the Tax Matters
Partner  shall be  determined  in the same  manner as is  provided  in  Sections
5.9,and 5. 10 hereof






                                                                    B-15



<PAGE>






    E. Anything herein to the contrary notwithstanding,  if any of the following
events of default  shall occur at any time during the term hereof,  then,  until
such time as any such events shall have been cured,  all decisions to be made by
the General Partners shall be made solely by the Administrative General Partner,
provided that such event of default shall not have been caused solely by any act
or omission of the Administrative General Partner:

       (i) an event of default shall have occurred under any of the documents or
instruments  evidencing or securing the Construction  Financing and such default
shall not have been cured within any applicable cure period;

       (ii) the Property Manager shall be in material default under any Property
Management  Agreement,  and such  default  shall not have been cured  within any
applicable cure period;

       (iii) the General  Contractor  shall be in material default under (a) the
Construction  Contract  for any  Property  or (b) any  Guaranty  of  Timely  and
Lien-Free  Completion,  and such  default  shall not have been cured  within any
applicable cure period;

       (iv) Flournoy  Development Company shall be in material default under the
Acquisition  Agreement,  and such  default  shall not have been cured within any
applicable cure period;

       (v) the Development  General Partner shall be in default under any of (a)
the Cash Flow Deficit Guaranty  Agreement,  (b) any Guaranty of Timely and Lien-
Free  Completion  or (c) the Contract of Sale,  and such default  shall not have
been cured within any applicable cure period; or

       (vi) the Development General Partner or any of its Affiliates shall be in
material  default  under any other  agreement  between or among the  Development
General Partner and/or any such Affiliate and the Partnership,  and such default
shall not have been cured within any applicable cure period.

Section 5.2 Authority of General Partners

    A.  Except to the  extent  otherwise  provided  herein,  including,  without
limitation,  in Section  5.2C,  5.3A,  5.4A,  5.4B,  5.5A and 5.5B,  the General
Partners for, and in the name of, and on behalf of, the Partnership,  are hereby
authorized:

       (i) to enter  into any kind of  activity  and to  perform  and  carry out
contracts of any kind necessary to, or in connection  with, or incidental to the
accomplishment  of the purposes of the  Partnership,  so long as said activities
and contracts may be lawfully  carried on or performed by a limited  partnership
under applicable laws and regulations;

       (ii) to engage Persons,  including the Sponsors,  to provide  services or
goods to the Partnership,  upon such terms as the General Partners deem fair and
reasonable and in the best interest of the Partnership, provided, however, that,
as to services or goods  provided by a Sponsor,  (a) the  compensation  for-such
services  or goods must be  comparable  and  competitive  with that of any other
Person who provides  comparable services or goods, and, as to services under the
Construction Contracts and with regard to obtaining Operational Stage Financing,
will  not  exceed  90% of  the  competitive  price  that  would  be  charged  by
non-affiliated  persons or entities  rendering  similar  services in the same or
comparable  geographic  locations;  (b) the compensation and other terms of such
contracts  shall be fully  disclosed  to the  Class A  Limited  Partners  in the
reports of the Partnership, (c) the Sponsor must have been previously engaged in
the business of providing such services or goods, independent of the Partnership
and as an ongoing business, and (d) all such transactions shall be embodied in a
contract  that   describes  the  services  or  goods  to  be  provided  and  the
compensation  to be paid,  which  contract may be modified by the Consent of the
Class A Limited Partners,  and which contract shall permit  termination  without
penalty on sixty (60) days notice;

       (iii) to  acquire  by lease or  purchase,  develop,  own,  sell,  convey,
finance,  improve,  assign,  mortgage,  lease or exchange incident to a tax-free
swap  any  real  estate  and any  personal  property  necessary,  convenient  or
incidental to the accomplishment of the purposes of the Partnership;








                                                                    B-16

<PAGE>


       (iv) to  develop,  construct,  maintain,  finance,  improve,  own,  grant
options with respect to, sell, convey, assign, mortgage or lease any Partnership
Property or any other real estate or personal property necessary,  convenient or
incidental to the accomplishment of the purposes of the Partnership;

       (v)  to   execute   any  and  all   agreements,   contracts,   documents,
certifications  and  instruments  necessary or convenient in connection with the
development,   construction,   management,  maintenance  and  operation  of  any
Partnership  Property,  including  without  limitation,  necessary  easements to
public or quasi-public bodies or public utilities;

       (vi) to borrow money and issue  evidences of  indebtedness in furtherance
of any or all of the purposes of the Partnership, and to secure the same by deed
of trust,  mortgage,  security interest,  pledge or other lien or encumbrance on
any Partnership Property or any other assets of the Partnership;


       (vii)  to  repay in  whole  or in  part,  negotiate,  refinance,  recast,
increase,  renew, modify or extend any secured, or other indebtedness  affecting
any Partnership  Property and in connection therewith to execute any extensions,
renewals or modifications  of any evidences of indebtedness  secured by deeds of
trust, mortgages, security interests, pledges or other encumbrances covering any
Partnership Property;

       (viii) to engage a real estate  agent  (including  a Sponsor) to sell any
Partnership  Property or portions  thereof upon such terms and conditions as are
deemed  fair  and  reasonable  by the  General  Partners  and to be in the  best
interest  of the  Partnership,  and  to pay  reasonable  compensation  for  such
services;  provided,  however,  that any real estate  commission  paid shall not
exceed six percent  (6%) of the contract  price for the Sale of any  Partnership
Property,  and, in addition,  if a Sponsor provides substantial services in such
regard,  the Sponsor may receive up to one-half of such real estate  commission,
not to exceed three  percent (3 %), the payment of which real estate  commission
to the Sponsor shall be subordinated to the payment to Class A Limited  Partners
of their  Adjusted  Capital  Balance plus the unpaid  portion,  if any, of their
Preferred Return.

       (ix) to admit  Additional  Class A Limited Partners to the Partnership in
accordance  with the terms  described in the  Prospectus and Article VII of this
Agreement.

     B. Any person dealing with the Partnership or the General Partners may rely
upon a certificate signed by any General Partner, as to:

       (i) the identity of any General Partner or any Limited Partner;

       (ii) the existence or  non-existence of any fact or facts that constitute
conditions precedent tGeneral Partners or in any other manner are germane to the
affairs of the Partnership;

       (iii)  the  Persons  who  are  authorized  to  execute  and  deliver  any
       instrument or document of the Partnorship; (iv) any act or failure to act
       by the Partnership or as to any other matter  whatsoever  iPartnership or
       any Partner.

    C. The  Administrative  General  Partner  shall have the sole  authority and
power, on behalf of the Partnership, subject to Section 5.3, to review, approve,
terminate,  modify, enforce, continue or otherwise deal, in good faith, with the
Property Management  Agreements,  the Cash Flow Deficit Guaranty Agreement,  the
Guaranties  of Timely  and  Lien-Free  Completion,  the  Contract  of Sale,  the
Construction Contracts, the Acquisition Agreement or any other agreements now or
hereafter made between the Partnership  and the  Development  General Partner or
any Affiliate thereof.

Section 5.3 Authority of Limited Partners

    A. By the vote of the Class A Limited  Partners  holding a  majority  of the
Class A Limited Partner Percentages,  the Class A Limited Partners,  without the
consent of the General Partners, may:

       (i) amend the Partnership Agreement;

     (ii) dissolve or terminate the  Partnership  prior to the expiration of its
term;



                                                                    B-17



<PAGE>






       (iii) remove a General Partner and elect a new General Partner;

     (iv) approve or disapprove of the Sale of all or  substantially  all of the
Partnership's Property;

       (v) terminate,  upon 60 days notice, any contract between the Partnership
    and any General Partner or any Affiliate thereof.

    B. Meetings of the Partnership may be called by the General Partners, or by,
Class A Limited  Partners  holding  more than ten  percent  (10%) of the Class A
Limited Partner Percentage, for the purpose of discussing and/or voting upon any
of the matters  upon which Class A Limited  Partners  are entitled to vote under
the terms of this Agreement.  Upon the General Partners' receipt of Notification
stating the purpose of such meeting by such requisite  percentage of the Class A
Limited Partners, the General Partners shall, within ten (10) days after receipt
thereof, provide Notification to the Class A Limited Partners of the time, place
and purpose of such meeting,  which shall be held not less than 15 nor more than
60 days after the receipt of such request by the General Partners.

Section 5.4 Restrictions on Authority

    A. With respect to the  Partnership and  Partnership  Property,  the General
Partners  shall  have  no  authority  to  perform  any act in  violation  of any
applicable  laws or regulations  thereunder,  nor shall the General  Partners as
such, without the Consent of the Class A Limited Partners, have any authority:

     (i) to  voluntarily  dissolve or  terminate  the  Partnership  prior to the
expiration of its term, exceplisted in Section 8.1 hereof;

        (ii) to purchase or acquire  property or undertake  construction  of any
    properties other than the Properties specified,  provided, however, that the
    General  Partners may alter the planned order of  construction of Properties
    II, III and IV if they determine, in their sole discretion, that such change
    is not detrimental to the Partnership;

     (iii) except as permitted in this  Agreement,  to do any act required to be
approved by the Class A Limited Partners under the Act;

        (iv) to reinvest  any Net  Proceeds of  Operational  Stage  Financing or
Sale, except in short-term securities pursuant to Section 10.2B;

        (v) except  with  respect to the  Interim  Investments,  to invest in or
    underwrite  securities  of any  type  or  kind  for  any  purpose,  or  make
    investments  other than in the  Properties  and the  operations  related and
    incidental thereto;

       (vi) to do any act in contravention of this Agreement;

     (vii) to do any act that would make it  impossible to carry on the ordinary
business of the Partnership;

       (viii) to confess a judgment against the Partnership;

     (ix) to offer  Class A Limited  Partner  Interests  in the  Partnership  in
exchange for property;

        (x) to  possess  the  Properties  or any  Partnership  Property  related
    thereto,  or assign  the  Partnership's  rights in same,  for other than the
    exclusive use of the Partnership;

        (xi) to admit  Additional  Class A Limited  Partners to the  Partnership
    after the Termination  Date of the Offering (the General  Partners shall not
    be  required  to seek the  Consent of the Class A Limited  Partners to admit
    Substitute Limited Partners into the Partnership);

     (xii) to operate  in such a manner as to be  classified  as an  "investment
company" under the meaning of the Investment Company Act of 1940;

        (xiii) except as provided herein and in the  Prospectus,  to purchase or
    lease any property from or sell or lease property to the General Partners or
    their Affiliates; or


                                                                    B-18



<PAGE>






        (xiv) to  obtain  financing  other  than  under  the  circumstances  and
    conditions  set forth herein and in the  Prospectus  with respect to (a) any
    Construction  Financing or financing  commitment to complete a Property,  or
    (b) any Operational Stage Financing.

    B. In addition,  the General  Partners  shall have no authority to cause the
Partnership  to incur  Construction  Financing with respect to Property 1, or to
cause the Partnership to incur Construction  Financing for any of Properties II,
III or IV except on the following terms and conditions:

        (i) If the Offering has raised less than 100 % but more than 50 % of the
    Gross  Proceeds  of the  Offering  necessary  to  complete a  Property,  the
    Partnership may obtain a Construction  Financing  commitment for the balance
    of the funds necessary to acquire and complete such Property. As the balance
    of the Net Proceeds of the Offering  necessary to complete such Property are
    subsequently raised from additional  investors,  any Construction  Financing
    actually  drawn  with  respect  to such  Property  will be  retired  by such
    additional  Net Proceeds of the Offering.  If for any Property  insufficient
    additional  funds  are  raised  from  investors  to  completely  retire  the
    Construction  Financing prior to the Termination Date of the Offering,  such
    financing  will remain in place and  constitute a lien against the Property.
    Under no circumstances  will the Partnership  subject more than one Property
    to  Construction  Financing  at any given  time,  nor may the amount of such
    Construction  Financing  exceed  50% of the  Net  Proceeds  of the  Offering
    necessary  for  completion  of  that  Property,  nor  will  the  Partnership
    undertake  construction under such  circumstances  absent a commitment for a
    replacement  loan at the completion of  construction  or unless the original
    construction  financing has a term, including permitted  extensions,  of not
    less than four years.

        (ii) If more gm 50% but less  than  100% of the  Gross  Proceeds  of the
    Offering  necessary to construct any of Properties II, III or IV are raised,
    the General  Partners may, in lieu of obtaining  Construction  Financing for
    such Property, elect to terminate the Offering.

     Section 5.5  Authority  of  Partners  and  Affiliated  Persons to Deal with
Partnership

    A. The  General  Partners  may,  for,  in the name of, and on behalf of, the
Partnership, borrow money from, or enter into agreements,  contracts or the like
(in addition to those set forth herein)  with,  any Sponsor,  in an  independent
capacity,  as distinguished from such capacity (if any) as a Sponsor, as if such
Sponsor  were an  independent  contractor;  provided,  however,  that  any  such
agreement  shall be subject  to the  conditions  set forth in  Section  5.2A(ii)
herein.

     B. Neither the General  Partners nor any  Affiliate  thereof shall have the
authority:

     (i) to cause the Partnership to invest in any program, partnership or other
venture not enumerated herein;

     (ii) to receive any compensation, fee or expense not otherwise permitted to
be paid to it under the terms of this Agreement or the Prospectus;

        (iii) to cause the  Partnership  to acquire  and  develop  any  Property
    without first having obtained an appraisal with respect to the value thereof
    on an  "as-built"  basis,  rendered by an  independent,  appraiser  who is a
    member  of a  nationally  recognized  society  of  appraisers,  in which the
    "as-built" appraised value equals or exceeds the purchase price of the Site,
    plus the Construction Contract price for the Property,  plus any Acquisition
    Fee paid with respect to such Property by the Partnership;

        (iv) to commingle the  Partnership  funds with those of any other person
    or entity,  or to invest any of the Net  Proceeds of the  Offering in junior
    mortgages,  junior deeds of trust or other similar obligations,  except that
    funds of the  Partnership  may be  temporarily  retained  by  agents  of the
    Partnership  pursuant  to  contracts  for the  rendering  of services to the
    Partnership by such agents or held in accounts  established  -and maintained
    for the  purpose  of making  the  Interim  Investments  and/or  computerized
    disbursements;

     (v) to cause the  Partnership  to lend money or other assets to the General
Partners or any Affiliates thereof;

     (vi)  to  grant  to the  General  Partners  or any  Affiliates  thereof  an
exclusive listing for the Sale of Partnership assets,  including the Properties;
or




                                                                    B-19



<PAGE>






        (vii) to receive any rebate or give-up,  or, except as specifically  set
    forth herein, to participate in any reciprocal business  an-arrangement with
    any General Partner or an Affiliate thereof.

Section 5.6 Duties and Obligations of the General Partners

    A . The  General  Partners  shall take all action that may be  necessary  or
appropriate  for the  continuation of the  Partnership's  existence as a limited
partnership  under the Act. The General Partners shall devote to the Partnership
such  time as may be  necessary  for the  proper  performance  of  their  duties
hereunder, but neither the General Partners nor any of their Affiliates shall be
expected  to devote  their  full time to the  performance  of such  duties.  The
General Partners or their Affiliates may act as general or managing partners for
other  partnerships  engaged  in  businesses  similar to that  conducted  by the
Partnership. Nothing herein shall limit the General Partners or their Affiliates
from engaging in any such business activities, or any other activities which may
be competitive  with the  Partnership,  such activities shall not be wrongful or
improper,  and the  General  Partners  or their  Affiliates  shall not incur any
obligation,  fiduciary or  otherwise,  to disclose or offer any interest in such
activities  to any party  hereto and shall not be deemed to have a  conflict  of
interest because of such activities.

    B. The  General  Partners  shall at all times  conduct  their  affairs,  the
affairs of all their  Affiliates  and the affairs of the  Partnership  in such a
manner that no Limited  Partner  (except a Limited Partner who is also a General
Partner)  will have any  personal  liability  for  Partnership  debts  except as
otherwise set forth herein and in the Prospectus.

     C. The  General  Partners  from time to time  shall  prepare  and file such
certificates  (or  amendments  thereto)  and  other  similar  documents  as are.
required by the Act.

    D. The General  Partners  shall  prepare or cause to be prepared,  and shall
file, on or before the due date (or any extension thereof),  any federal,  state
or local  tax  returns  required  to be filed by the  Partnership.  The  General
Partners shall cause the Partnership to pay any taxes payable by the Partnership
to the extent same are not payable by any other party.

    E. The  General  Partners  shall be under a  fiduciary  duty to conduct  the
affairs of the Partnership in the best interests of the  Partnership,  including
the safekeeping and use of all Partnership  funds and assets,  whether or not in
the General Partners' possession or control, and the use thereof for the benefit
of the  Partnership.  The General  Partners shall not enter into any contract or
agreement  relieving  them of their  common  law  fiduciary  duty.  The  General
Partners  shall at all times act in good faith and exercise due diligence in all
activities  relating to the  conduct of the  business  of the  Partnership.  The
General  Partners shall treat the Class A Limited  Partners as a group and shall
not favor the interests of any particular Class A Limited Partner.

Section 5.7 Compensation of General Partners

    Except as  expressly  provided in Article IX herein,  the  General  Partners
shall receive no fees, salaries, reimbursement or other compensation for serving
as General Partners.

Section 5.8 Other Businesses of Partners

    Neither  the   Partnership   nor  any  Partner  shall  have  any  rights  or
obligations,  by virtue of this Agreement,  in or to any independent ventures of
any nature or description,  or the income or profits derived therefrom, in which
a Partner may engage, including,  without limitation, the ownership,  operation,
management,  syndication and development of other real estate projects,  even if
in competition with the Properties.

Section 5.9 Liability of General-Partners to Limited Partners

    The General Partners shall not be liable,  responsible,  or accountable,  in
liabilities, damages or otherwise, to any Limited Partner or the Partnership for
any loss,  judgment,  liability,  expense or amount  paid in  settlement  of any
claims sustained which arise out of any act or omission  performed or omitted by
them  within the scope of the  authority  conferred  on them by this  Agreement,
except for acts of  negligence  or  misconduct  or for damages  arising from any
misrepresentation   or  breach  of  an  agreement  with  the  Partnership.   The
partnership





                                                                    B-20



<PAGE>






shall not incur the cost of that portion of any liability  insurance  which
insures a General  Partner  against any liability as to which a General  Partner
may not be indemnified under Section 5. 10 herein.

Section 5.10 Indemnification

    A. The General  Partners shall be indemnified to the full extent provided by
law for any loss, judgment,  liability,  expense or amount paid in settlement of
any claims sustained by a General Partner which arise out of any act or omission
performed  or  omitted by any or all of them  within the scope of the  authority
conferred on them by this Agreement,  if the General Partners determine, in good
faith,  that such act or omission was in the best  interests of the  Partnership
and that such act or omission did not  constitute  negligence  or  misconduct or
breach of any other agreement with the Partnership,  provided that any indemnity
under this  Section  shall be provided  out of and to the extent of  Partnership
assets only, and no Limited Partner shall have any personal liability on account
thereof.

    B.  Notwithstanding  Section  5.  10A,  the  General  Partners  shall not be
indemnified by the Partnership for any liability, loss or damage incurred by any
or all of them in  connection  with (i) any claim or  settlement  arising  under
federal  or state  securities  laws  unless  (a)  there  has  been a  successful
adjudication on the merits of each count involving  securities laws  violations,
(b) such claims have been  dismissed  with prejudice on the merits by a court of
competent  jurisdiction,  or (c) a court of  competent  jurisdiction  approves a
settlement of the claims,  after being advised as to the current position of the
Securities and Exchange Commission,  the Massachusetts  Securities Division, the
California  Commissioner  of  Corporations,  and  such  other  state  securities
administrators,  as shall be required by such court,  regarding  indemnification
for  violations  of  securities  law;  or (ii)  any  liability  imposed  by law,
including liability for negligence or misconduct.


                                   ARTICLE VI
                 TRANSFERABILITY OF A GENERAL PARTNER'S INTEREST


     Section  6.1  Removal,  Voluntary  Retirement  or  Withdrawal  of a General
Partner; Transfer of Interests

     A. A General Partner may be removed in the manner specified in Section 5.3A
herein.

    B. No General  Partner  may  voluntarily  withdraw or retire from his or its
position as a General Partner of the Partnership  unless another General Partner
(including  any Additional or Successor  General  Partner  admitted  pursuant to
Section  6.2)  remains,  and unless (i)  counsel for the  Partnership  is of the
opinion that such voluntary  retirement or withdrawal from the Partnership  will
not  cause  the  Partnership:  (a) to be  dissolved  under  the  Act;  (b) to be
classified  other than as a partnership for federal income tax purposes;  or (c)
to  terminate  for federal  income tax  purposes;  and (ii) the  approval of the
remaining General  Partner(s) and the Consent of the Class A Limited Partners to
such voluntary retirement or withdrawal is obtained.

    C.  A  General  Partner  who  voluntarily  retires  or  withdraws  from  the
Partnership  in violation of this Section 6.1 shall be and remain  liable to the
Partnership  and the Partners for damages  resulting from the General  Partner's
breach of this Agreement,  and, without limitation of remedies,  the Partnership
may offset  such  damages  against the amounts  otherwise  distributable  to the
retiring or withdrawing General Partner.

    D. No General Partner shall have the right to sell,  exchange,  or otherwise
dispose of all or any portion of its Interest  unless the  proposed  assignee or
transferee  of all or a portion  of the  Interest  of such  General  Partner  is
admitted  as a  Successor  or  Additional  General  Partner  to the  Partnership
pursuant to the  provisions  of Section 6.2 prior to any such sale,  exchange or
other disposition.

    E. The voluntary  retirement or withdrawal of a General Partner shall become
effective  only -upon (i) receipt by the  Partnership of the opinions of counsel
referred to in Section 6. 1B(i); (ii) receipt by the Partnership of the approval
and consent  referred to in Section  6.1B(ii);  and (iii) the  amendment  of the
Partnership's  certificate of limited  partnership to reflect such withdrawal or
retirement and its filing for recordation.






                                                                    B-21



<PAGE>






Section 6.2 Election and Admission of Successor -or Additional General Partners

    A. By the vote of the Class A Limited  Partners  holding a  majority  of the
Class A Limited Partner Percentages,  a Successor General Partner may be elected
to replace a General  Partner  removed in the manner  described  in Section 5.3A
herein; provided,  however, that prior to such action the Partnership shall have
received an opinion of counsel for the Partnership  that such admission will not
cause the Partnership,  to be classified other than as a partnership for federal
income tax purposes,  or cause the  Partnership  to terminate for federal income
tax purposes.

    B.  Except as  otherwise  expressly  provided  herein,  no  Person  shall be
admitted as a Successor or Additional General Partner unless (i) counsel for the
Partnership is of the opinion that the admission of such Successor or Additional
General Partner will not cause the Partnership to be classified  other than as a
partnership  for  federal  income  tax  purposes  or cause  the  Partnership  to
terminate for federal income tax purposes; (ii) the consent of the then existing
General  Partner(s)  is  obtained;  and (iii) the Consent of the Class A Limited
Partners to such admission has been obtained.

    C. The  admission of such  Successor or  Additional  General  Partner  shall
become effective upon (i) receipt by the Partnership of the opinions referred to
in Sections 6.2A or 6.2B(i),  as applicable;  (ii) receipt by the Partnership of
the consents referred to in Section 6.2B(ii) and (iii), if applicable; and (iii)
the amendment of the Partnership's certificate of limited partnership to reflect
the admission of the Successor or Additional  General Partner and its filing for
recordation.

Section 6.3 Event of Withdrawal of a General Partner

    A. In addition to a voluntary  withdrawal of a General  Partner  pursuant to
Section  6.1E,  a General  Partner  shall be deemed to  withdraw  if the General
Partner assigns all of his Interests in the Partnership,  if the General Partner
is removed pursuant to Section 5.3A, and upon the following acts or events:  (i)
if a  natural  person,  upon  his  death or the  entry  by a court of  competent
jurisdiction  that such General  Partner is  incompetent to manage his person or
his property; (ii) if a corporation, the filing of a certificate of dissolution,
or its equivalent,  for the corporation or the revocation of its charter;  (iii)
if a partnership,  the dissolution and commencement of winding up of the General
Partner;  (iv) if a trustee of a trust,  the  termination  of the trust (but not
merely  the  substitution  of  a  new  trustee);  and  (v)  if  an  estate,  the
distribution   by  the  fiduciary  of  the  estate's   entire  interest  in  the
Partnership.  To the maximum extent  permitted by the Act, no other act or event
shall be deemed an event of withdrawal of a General  Partner or serve to convert
a General Partner to a Limited Partner.

    B. In the event of the  withdrawal of a General  Partner who is not then the
sole General  Partner,  the  Partnership  shall be  continued  by the  remaining
General Partner or General Partners,  who shall make and file such amendments to
the Partnership's  certificate of limited partnership as are required by the Act
to  reflect  the fact that the  withdrawn  General  Partner  has  ceased to be a
General  Partner of the  Partnership.  In the event.  of the  withdrawal  of the
Development  General  Partner  pursuant to Section  6.3A(i) above,  then, at the
election of Flournoy Properties, Inc. and with the consent of the Administrative
General Partner and the Consent of the Class A Limited Partners, notwithstanding
any other  provision of this  Agreement,  Flournoy  Properties,  Inc., a Georgia
corporation, shall be admitted to the Partnership as a Successor General Partner
subject to the satisfaction of all of the requirements of Section 6.2C.

    C. In the event of the withdrawal of a sole General  Partner,  the withdrawn
General  Partner,  or its  successors,  representatives,  heirs or assigns shall
promptly give Notification of such withdrawal to all remaining Partners. In such
event,  the  Partnership  shall be  dissolved  unless,  within 90 days after the
withdrawal of the sole General Partner,  all remaining Partners agree in writing
to continue the business of the Partnership-and to the appointment, effective as
of the date of withdrawal of the sole General Partner, of one or more Additional
General Partners.











                                                                    B-22



<PAGE>






Section 6.4 Liability- of a Withdrawn General Partner

    A. Any General  Partner who  withdraws  from the  Partnership  shall be, and
remain,  liable for all obligations  and  liabilities  incurred by it as General
Partner prior to the time such  withdrawal  becomes  effective.  In-addition,  a
General Partner who  voluntarily  withdraws in violation of this Agreement shall
be subject to the liability described in Section 6.l C.

    B. Upon the  withdrawal  of a General  Partner,  such General  Partner shall
immediately  cease to he a General  Partner,  and,  unless a  Successor  General
Partner has  acquired  the  Interest of the  withdrawing  General  Partner,  the
withdrawn  General  Partner's  Interest shall be converted to a limited  partner
Interest  of a new  class.  Such  conversion  shall  not  affect  any  rights or
liabilities of the withdrawn  General Partner,  except that such General Partner
shall no longer participate in the management of the Partnership.

    C. The personal representatives, heirs, successors or assigns of any General
Partner who withdraws from the Partnership shall be, and remain,  liable for all
obligations  and  liabilities  incurred by the General  Partner  prior to, or in
connection with, its withdrawal.


                                   ARTICLE VII
           ADMISSION OF ADDITIONAL AND SUBSTITUTE LIMITED PARTNERS AND
                TRANSFERABILITY OF A -LIMITED PARTNER'S INTEREST


     Section  7.1  Admission  of  Additional   Limited  Partners  Prior  to  the
Termination Date of the Offering

    Prior to the Termination Date of the Offering, the Partnership is authorized
to sell and issue not less than 6,455 nor more than 27,000  Units,  and to admit
as Class A Limited  Partners to the  Partnership the Persons who contribute cash
to  the  capital  of  the  Partnership  for  such  Units  and  meet  such  other
requirements  as are  set  forth  in the  Prospectus.  Such  Additional  Limited
Partners shall be listed in the books and records of the Partnership,  and shall
be recognized by the Partnership  for the purposes of Partnership  distributions
and allocations as set forth in Article IV herein.

     Section 7.2 Admission of Additional  Limited Partners After the Termination
Date of the Offering

    A. After the Termination  Date of the Offering,  a Person may be admitted as
an Additional Limit Partner with the General Partners'  consent,  the Consent of
the  Class A Limited  Partners,  and by  providing  the  Administrative  General
Partner  with a power  of  attorney  acceptable  to the  Administrative  General
Partner.  The  General  Partners  shall  not  consent  to  the  admission  of an
Additional Limited Partner if the General Partners receive an opinion of counsel
to the  Partnership  that  such  admission  would  cause the  Partnership  to be
classified other than as a partnership for federal income tax purposes, or cause
the Partnership to terminate for federal income tax purposes .
    B. The admission of a Person as an Additional  Limited  Partner shall become
effective as of the first day of the fiscal quarter  following  satisfaction  of
the conditions set forth in Section 7.2A. An additional Limited Partner shall be
recognized by the Partnership for the purposes of Partnership  distributions and
allocations as set forth in Article IV herein.

     C. The Partnership  shall be reimbursed by such Additional  Limited Partner
for the expense of his admission to the Partnership.

Section 7.3 Admission of Substitute Limited Partners

    A. A Person may be admitted as a Substitute Limited Partner with the General
Partners' consent-,  and by providing the Administrative  General Partner with a
power of attorney acceptable to the Administrative  General Partner. The General
Partners shall not consent to the admission of a Substitute  Limited  Partner if
the General  Partners receive an opinion of counsel to the Partnership that such
admission would cause the Partnership to be





                                                                    B-23



<PAGE>






classified other than as a partnership for federal income tax purposes, or cause
the Partnership to terminate for federal income tax purposes.

    B. The  admission of a Person as a Substitute  Limited  Partner shall become
effective as of the first day of the fiscal quarter  following  satisfaction  of
the conditions set forth in Section 7.2A. A Substitute  Limited Partner shall be
recognized by the Partnership for the purposes of Partnership  distributions and
allocations as set forth in Article IV herein.

     C. The  Partnership  shall be reimbursed by any Substitute  Limited Partner
for the expense of his admission to the Partnership.

Section 7.4 Retirement or Withdrawal of a Limited Partner

    A. No Limited Partner shall have the right to voluntarily retire or withdraw
from the  Partnership  unless the General  Partners shall have consented to such
voluntary retirement or withdrawal by a Limited Partner.  Upon the retirement or
withdrawal  of  a  Limited  Partner:  (i)  the  Interest  of  such  retiring  or
withdrawing  Limited Partner shall thereafter  belong to the  Partnership;  (ii)
such retiring or  withdrawing  Limited  Partner shall not be entitled to receive
distributions  with respect to any periods after the time of such  retirement of
withdrawal;  and (iii) such retiring or withdrawing Limited Partner shall not be
entitled to receive any amount for the fair value of his Interest as of the date
of his retirement or withdrawal, other than as agreed to by the General Partners
and the withdrawing  Limited Partner.  The General Partners shall not consent to
the  voluntary  retirement  or  withdrawal  of a Limited  Partner if the General
Partners  receive an opinion of counsel to the Partnership  that such retirement
or  withdrawal  would cause the  Partnership  to be  classified  other than as a
partnership  for  federal  income  tax  purposes,  or cause the  Partnership  to
terminate for federal income tax purposes.

    B. At any time after the Termination  Date of the Offering,  the Partnership
may, in response to the request of a Limited  Partner,  repurchase any or all of
the Units of such Limited Partner upon mutually  agreeable terms,  provided that
such.  repurchase  does not  materially  impair the capital or  operation of the
Partnership.  The  determination  to  repurchase  Units will be made in the sole
discretion  of the  General  Partners.  The  determination  of the  value of the
repurchased  Units will be based upon,  among other  factors,  the current  fair
market  value  of  the  Properties  and  the  Partnership's   assets,  less  all
Partnership  debts and  obligations.  The Partnership  will not repurchase Units
prior  to  the  Termination  Date  of the  Offering  and  is  not  obligated  to
-repurchase  Units at any time. Units acquired by the General Partners and their
Affiliates  will  not be  eligible  for  repurchase  by the  Partnership.  Units
purchased by the Partnership  during any fiscal quarter shall be deemed canceled
effective as of the first day of the fiscal quarter following the effective date
of such purchase.

Section 7.5 Transfer or Assignment of a Limited Partner Interest

    A.  Subject  to the  conditions  set forth in this  Section  7.5,  a Limited
Partner shall have the right to transfer,  sell, exchange,  or otherwise dispose
of  his  Interest  with  the  consent  of  the  General  Partners,  delivery  of
appropriate documents or instruments,  all in substance and form satisfactory to
the General Partners,  evidencing such Limited Partner's  intention to transfer,
sell,  exchange or  otherwise  dispose of his  Interest,  and by  providing  the
Administrative  General  Partner  with a power  of  attorney  acceptable  to the
Administrative  General  Partner.  The General Partners shall not consent to any
such  transfer,  sale,  exchange or other  disposition  if the General  Partners
receive  an opinion of counsel  to the  Partnership  that such  transfer,  sale,
exchange or other disposition would cause the Partnership to be classified other
dm as a partnership for federal income tax purposes, or cause the Partnership to
terminate for federal income tax purposes.

    B. Any such transfer,  sale, exchange or other disposition of an Interest by
a Limited  Partner shall also comply with the following  conditions  (i) no such
actions  may be taken  with  respect  to a  fraction  of a Unit;  (ii) a Limited
Partner  must  take such  action  with  respect  to all of his Units if he would
otherwise  retain  less  than five (5) Units (or two (2) Units in the case of an
IRA);  and  (iii)  all such  actions  must be made in  compliance  with  minimum
purchase requirements, and all other requirements of applicable securities laws,
the evidence for which  compliance  shall be submitted by the Limited Partner to
the General Partners.







                                                                    B-24



<PAGE>






    C. The  assignee of a Limited  Partner's  Interest  shall not  automatically
become or  exercise  any rights of a Limited  Partner of the  Partnership.  Such
Person  shall  become  and  exercise  the  rights  of a Limited  Partner  of the
Partnership only if such Person is admitted into the Partnership as a Substitute
Limited Partner in accordance  with Section 7.3. The Partnership  shall be under
no obligation to recognize any such transfer or assignment  unless such transfer
or assignment complies with this Section 7.5.

Section 7.6 Bankruptcy, Death, Dissolution or Incompetence of a Limited Partner

    In the  event  of the  bankruptcy,  dissolution,  death or  adjudication  of
incompetence  (which term shall  include but not be limited to,  insanity)  of a
Limited  Partner,  his successors,  assigns,-personal  representatives  or heirs
shall have all the rights of such Limited Partner for the purpose of settling or
managing his estate or property.  The bankruptcy,  dissolution,  adjudication of
incompetence  (which term shall include,  but not be limited to,  insanity),  or
death of a Limited Partner shall not dissolve the Partnership.


                                  ARTICLE VIII
           DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP



Section 8.1 Events Causing Dissolution

     A. The  Partnership  shall  dissolve and its affairs shall be wound up upon
the first to occur of the following events:

       (i) the expiration of its term;

     (ii) the  withdrawal  of a  General  Partner,  unless  the  Partnership  is
continued pursuant to Sections 6.3B or 6.3C;

        (iii)  the  Sale  of  all  or  substantially  all  Partnership  Property
    (excepting (a) a disposition thereof which, in the opinion of counsel to the
    Partnership,  qualifies,  in whole or in part, under Section 1031 or Section
    1033 of the Code or (b) a Sale in which the  Partnership  receives  Purchase
    Money Financing,  in which case the Partnership  shall dissolve upon receipt
    of the final payment thereunder);

     (iv) the election by the General Partners,  with the Consent of the Class A
Limited Partners, to dissolve the Partnership; or

        (v) Class A Limited  Partners  holding a majority of the Class A Limited
Partner Percentage vote to dissolve the Partnership.

    B. Dissolution of the Partnership shall be effective on the day on which the
event occurs giving rise to the dissolution. A certificate of cancellation shall
be filed under the Act upon the dissolution  and the  commencement of winding up
of the Partnership;  provided, however, that the Partnership shall not terminate
until the assets of the Partnership have been distributed as provided in Section
8.2.

Section 8.2 Liquidation

    A. As soon as  practical  after  the  dissolution  of the  Partnership,  the
General Partners,  or, in the event of the withdrawal of a sole General Partner,
any Limited Partner, shall give Notification to all the Limited Partners of such
fact and shall prepare a plan as to whether and in what manner the assets of the
Partnership  shall  be  liquidated.  With the  Consent  of the  Class A  Limited
Partners,  the assets of the  Partnership,  subject to its liabilities  (and the
establishment  of  reserves,  if  necessary,  for  such  liabilities),  shall be
transferred  to a successor  Entity,  upon such terms and conditions as are then
agreed upon.

    B.  Unless the  Partners  agree to transfer  the assets of the  Partnership,
subject to its liabilities, to a successor Entity pursuant to Section 8.2A, upon
dissolution of the Partnership,  the General Partners (or Limited  Partners,  as
the case may be) shall  liquidate the assets of the  Partnership,  and apply and
distribute the proceeds thereof in



                                                                    B-25



<PAGE>






accordance with Section 4.4. A Partner or an Affiliate of a Partner may purchase
such assets with the Consent of the Class A Limited Partners.

    C.  Notwithstanding the provisions of Section 8.2B, in the event the General
Partners  shall  determine  that an  immediate  sale of all or a portion  of the
Partnership  assets  would  cause  undue  loss  to  the  Partners,  the  General
Partner(s), in order to avoid such loss, may, after having given Notification to
all the  Limited  Partners,  either  defer  liquidation  of, and  withhold  from
distribution for a reasonable time, any assets of the Partnership, or distribute
the  assets in kind to a  liquidating  trust to be held for the  benefit  of the
Partners.


                                   ARTICLE IX
                 PAYMENTS TO THE GENERAL PARTNERS AND AFFILIATES


Section 9.1 Reimbursement of Certain Expenses of the General Partners

    The Partnership  shall reimburse the General Partners on a current basis for
all reasonable expenses incurred on behalf of the Partnership for administrative
services  necessary to the prudent  operation of the Partnership,  provided that
the  reimbursement  shall be at the lower of the  actual  cost  incurred  by the
General Partners or the amount that the Partnership would be required to pay for
comparable   administrative   services  in  the  same  geographic  location.  No
reimbursement shall be permitted for services for which the General Partners are
entitled  to  compensation  by way of separate  fees.  Excluded  from  allowable
reimbursement shall be:

     (i)  rent  or  depreciation,   utilities,   capital   equipment  and  other
administrative items related thereto; and

        (ii) salaries, fringe benefits, travel expenses and other administrative
    items  incurred by or  allocated  to any  Controlling  Person of any General
    Partner or any Affiliate thereof.

Section 9.2 Fees and Deferred Fees

     A. The Partnership shall make the following  payments and pay the following
fees to the General Partners and/or their Affiliates:

       (i) to the Selling Agent, the Selling Commissions.

     (ii) to the  Administrative  General Partner,  the Offering and Promotional
Expenses Reimbursement Allowance.

        (iii) to Flournoy Development Company, the Acquisition Fee, and payments
pursuant to the Acquisition Agreement.

     (iv) to the Administrative  General Partner,  the Organization and Start-Up
Fee.

     (v)  to  the  General   Contractor,   construction  fees  pursuant  to  the
Construction Contracts.

     (vi) to the  Property  Manager,  the fees  under  the  Property  Management
Agreements.

     (vii) to the Development General Partner, payments pursuant to the Contract
of Sale.

        (viii) to the Administrative  General Partner,  the Development  General
    Partner  and/or  their  Affiliates,  a fee for  securing  Operational  Stage
    Financing,  payable at the closing of any such financing,  provided that the
    Development General Partner, the Administrative General Partner and/or their
    Affiliates  actually  render such services.  Any fee paid will be reasonable
    and competitive with the services provided,  and is not expected to exceed a
    total of 1% of the principal  amount of the debt  incurred.  If both General
    Partners render services to secure Operational Stage Financing, the fee will
    be divided between them commensurate with actual services rendered.






                                                                           B-26



<PAGE>






 (ix) to the Development  General Partner,  the  Administrative  General Partner
and/or their  Affiliates,  real estate brokerage  commissions,  payable upon the
Sale of any  Property,  provided  that  the  Development  General  Partner,  the
Administrative  General  Partner and/or their  Affiliates  actually  render real
estate brokerage  services in connection with such Sale. Any commissions paid to
the General  Partners or their Affiliates will be limited to a maximum of 3 % of
the contract price for the Sale of the Property, and will be subordinated to the
payment to Class A Limited  Partners of their Adjusted  Capital Balance plus the
unpaid  portion,  if any,  of their  Preferred  Return.  If more than one of the
General  Partners  or their  Affiliates  is involved  in  rendering  real estate
brokerage  services to the  Partnership,  the commission will be divided between
them commensurate with actual services rendered.

    B. Deferred Fees owed to the General  Partners and their  Affiliates will be
paid from the proceeds of Operational Stage Financing or Sale, in which case the
Deferred Fees will be paid before any  distributions  therefrom  will be made to
Limited Partners.  If such event has not occurred within three years of the date
Class  A  Limited  Partners  are  first  admitted  to  the  Partnership,  or  if
insufficient proceeds are raised therefrom to pay the Deferred Fees, the General
Partners  may cause the  Partnership  to incur  other  indebtedness  to pay such
Deferred Fees, or cause the  Partnership to pay the Deferred Fees from operating
revenues before further distributions are made to Limited Partners.

    C. The total of the fees and Deferred Fees owed to the General  Partners and
their Affiliates, as set forth in subsection A. (i), (ii), (iii) and (iv) above,
shall in no event  exceed  twenty  percent  (20%) of the Gross  Proceeds  of the
Offering.


                                    ARTICLE X
                    BOOKS AND RECORDS; BANK ACCOUNTS; REPORTS


Section 10.1 Books and Records

    A. Unless otherwise  directed by the  Administrative  General  Partner,  the
books and records of the Partnership shall be maintained by the General Partners
at the Partnership's  principal place of business.  In all cases, said books and
records shall be available for examination  and copying by any Limited  Partner,
or his duly authorized  representatives,  for any purpose  reasonably related to
the  Limited  Partner's  interest as a Limited  Partner,  at the expense of such
Limited Partner,  at any and all reasonable times. The Partnership shall keep at
its principal place of business, without limitation, the following records: true
and  full  information  regarding  the  status  of the  business  and  financial
condition of the Partnership;  promptly after becoming available,  a copy of the
Partnership's  federal,  state and local  income tax  returns  for each year;  a
current  list of the  names  and  last  known  business,  residence  or  mailing
addresses of each  Partner;  a copy of this  Agreement  and the  certificate  of
limited partnership and all amendments thereto, together with executed copies of
any powers of attorney  pursuant to which this Agreement and any certificate and
all amendments thereto have been executed;  true and full  information-regarding
the amount of cash and a  description  and  statement of the agreed value of any
other  property or services  contributed  by each Partner and which each Partner
has agreed to  contribute  in the  future,  and the date on which each  became a
Partner,  and other  information  regarding the affairs of the Partnership as is
just and reasonable.

    B. The  Partnership  shall keep its books and records in accordance with the
accounting methods followed for federal income tax purposes, which shall reflect
all  Partnership  transactions  and shall be  appropriate  and  adequate for the
Partnership's business. The Partnership's taxable year shall be a calendar year.

Section 10.2 Bank Accounts

    A.  The  General  Partners  shall  have  fiduciary  responsibility  for  the
safekeeping and use of all kinds. and assets of the Partnership,  whether or not
in their immediate possession or control. The General Partners shall not employ,
or permit any other  Person to employ,  such funds in any manner  except for the
benefit of the Partnership.








                                      B-27



<PAGE>






    B. The bank accounts of the Partnership  shall be maintained in such banking
institutions as the General Partners shall determine,  and withdrawals  shall be
made only in the regular  course of  Partnership  business on the signature of a
General  Partner or such other  signature or signatures as the General  Partners
may determine. All deposits and other funds may be deposited in interest bearing
or non-interest bearing accounts guaranteed by federal authorities,  invested in
short-term United States Government or municipal obligations,  or deposited with
a banking institution selected by the General Partners.

Section 10.3 Reports

    A. No later dm 75 days  after the end of each  calendar  year,  the  General
Partners will furnish each Limited Partner with all tax information  relating to
the Partnership's  performance for the preceding  calendar year that is required
to be set forth in the Limited Partner's federal and state income tax return.

    B. Within 60 days after the end of each of the first three  fiscal  quarters
of each fiscal year of the Partnership,  the General Partner will furnish to the
Limited Partners,  as of the last business day of such quarter, a report setting
forth  information with respect to the progress of the  Partnership's  business,
which report shall include:

        (i) an unaudited balance sheet of the Partnership;

        (ii) an unaudited statement of income for the quarter;

        (iii) an unaudited cash flow statement for the quarter;

     (iv) an unaudited  statement  setting forth in detail the services rendered
to and fees received from the Partnership by any Sponsor; and

     (v)  other  pertinent  information   concerning  the  Partnership  and  its
activities during the quarter.

    C. Within 120 days after the end of each fiscal year,  the General  Partners
will furnish an annual report to each Person who was a Limited Partner as of the
last  business  day of the fiscal  year then  ended.  Such  annual  report  will
include:

    (i) a  balance  sheet  as of  the  end  of the  Partnership's  fiscal  year,
statements of income,  Partners' equity and changes in financial position, which
shall be prepared in accordance with generally  accepted  accounting  principles
and accompanied by an auditor's  report  containing an opinion of an independent
certified public accountant;

        (ii) the breakdown of any Fund costs reimbursed to a Sponsor,

        (iii) a cash flow statement;

     (iv) a report of the activities of the Partnership  during the fiscal year;
and

        (v) a table comparing the Financial  Forecast for Property I provided in
    the  Prospectus,  or any other  forecast  which may be provided by amendment
    thereto, with the actual results for Property I, or any other Property which
    is the subject of such forecast, for the fiscal year.

    The annual report shall also set forth  distributions to the Class A Limited
Partners  for  the  period  covered  thereby  and  shall   separately   identify
distributions from (a) Net Cash Flow during the period, (b) Net Cash Flow during
a  prior  period  which  had  been  held as  reserves,  (c)  Net  Proceeds  from
Operational Stage Financing or Sale, and (d) Working Capital Reserves.

    D. The  General  Partners  will  prepare  and timely  file with  appropriate
federal and state  regulatory  authorities all reports required to be filed with
such entities under then-applicable  laws, rules and regulations.  Such reports.
shall  be  prepared  on the  accounting  or  reporting  basis  required  by such
regulatory  authorities.  Upon request, copies of such reports will be furnished
to any  Limited  Partner  for any  purpose  reasonably  related  to the  Limited
Partner's  interest  as a  Limited  Partner.  In the event  that any  regulatory
authority  promulgates rules or amendments thereto that would permit a reduction
in any of the reporting requirements to which the




                                                                    B-28



<PAGE>






Partnership is subject under this Agreement at the time of the execution hereof,
the  Partnership  may cease to prepare and file any such  reports in  accordance
with such rules or amendments.

    E. The General Partner will maintain,  (i) for a period of at least four (4)
years, a record of the  information  obtained to indicate that a Limited Partner
has met the suitability  standards set forth in the  Prospectus;  and (ii) for a
period  of at least  five  (5)  years,  records  of the  appraisals  made of the
Properties,  which  appraisal  records  shall be available  for  inspection  and
copying by any Limited Partner for any purpose reasonably related to the Limited
Partner's interest as a Limited Partner.


                                                                 ARTICLE XI
                                                             GENERAL PROVISIONS


Section 11.1 Appointment of Administrative General Partner as Attorney-in-Fact

    A. Each Limited Partner hereunder (including Substitute Limited Partners and
Additional  Limited  Partners)  hereby  irrevocably  appoints  and  empowers the
Administrative  General Partner his attorney-in-fact to consent to or ratify any
act listed in  Subsections  5.4A(i)  through (xiv) of this  Agreement  after the
Consent  of the Class A  Limited  Partners  thereto  has been  obtained,  and to
execute,  acknowledge,  swear to and deliver all agreements and  instruments and
file all  documents  requisite  to  carrying  out the  intentions  and  purposes
contemplated in this Agreement, including, without limitation, the execution and
delivery of this Agreement and all amendments hereto, the filing of all business
certificates  and necessary  certificates of limited  partnership and amendments
thereto  from  time to time in  accordance  with  all  applicable  laws  and any
certificates  of  cancellation.  This power of attorney  shall be deemed coupled
with an  interest,  and shall not be affected by the  subsequent  disability  or
incapacity of the principal.

    D. The  appointment by all Limited  Partners of the  Administrative  General
Partner  as  attorney-in-fact  shall be  deemed  to be a power  coupled  with an
interest and shall survive the assignment by any Limited Partner of the whole or
any part of his Interest in the Partnership.

     C. The power of attorney granted by this Section 11. 1 shall be governed by
the laws of the State of Delaware.


Section 11.2 Waiver of Partition

    The  Partners  hereby  waive any right of partition or any right to take any
other  action  which  otherwise  might be  available  to them for the purpose of
severing their relationship with the Partnership or their interest in the assets
held by the Partnership from the interest of the other Partners.

Section 11.3 Notification

    Any Notification,  in order to be effective,  shall be sent by registered or
certified mail, postage prepaid,  if to a Partner, to the address of the Partner
set  forth  in  the  books  and  records  of  the  Partnership,  and  if to  the
Partnership,  to the principal place of business of the Partnership set forth in
Section 2.2 (unless  Notification of a change of the principal office is given),
the date of  registry  thereof or the date of the  certification  thereof  being
deemed the date of receipt of Notification;  provided, however, that any written
communication  sent to a Partner or to the Partnership and actually  received by
such Person shall constitute Notification for all purposes of this Agreement.

Section 11.4 Word Meanings

    In this  Agreement,  the singular shall include the plural and the masculine
gender shall include the feminine and neuter and vice versa,  unless the context
otherwise requires.







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<PAGE>






Section 11.5 Binding Provisions

    The covenants and  agreements  contained  herein shall be binding upon,  and
inure to the  benefit of the heirs,  personal  representatives,  successors  and
assigns of the respective parties hereto.

Section 11.6 Applicable Law

    This Agreement  shall be construed and enforced in accordance  with the laws
of the State of Delaware, without regard to principles of conflict of laws.

Section 11.7 Counterparts

    This Agreement may be executed in any number of counterparts,  each of which
shall be deemed to be an original as against any party whose  signature  appears
thereon, and all of which shall together constitute one and the same instrument.
This  Agreement  shall become binding upon the date hereof.  Each  Additional or
Successor General Partner shall become a signatory hereof by signing such number
of counterparts of this Agreement and such other instrument or instruments,  and
in such manner as the General Partners shall determine, and by so signing, shall
be deemed to have  adopted and to have agreed to be bound by all the  provisions
of this Agreement; provided, however, that no -such counterpart shall be binding
until-it shall have been signed by the Administrative General Partner.


Section 11.8 Separability of Provisions

    Each provision of this Agreement shall be considered  separable,  and if for
any reason any  provision or provisions  hereof are  determined to be invalid or
contrary to any  existing or future law,  such  invalidity  shall not impair the
operation of or affect those portions of this Agreement which are valid.

Section 11.9 Paragraph Titles

    Paragraph titles are for descriptive  purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.

Section 11.10 Entire Agreement

    This Agreement and the exhibits and documents  referred to herein constitute
the entire  understanding and agreement among the parties hereto with respect to
the  subject  matter  hereof,  and  supersede  all  prior  and   contemporaneous
agreements and  understandings,  inducements or conditions,  express or implied,
oral or written, except as herein contained.  This Agreement may not be modified
or amended other than by an agreement in writing.

Section 11.11 Amendments

    A. In addition to the amendments  contemplated  elsewhere in this Agreement,
this  Agreement  may be amended  with the written  consent of all of the General
Partners  then  entitled  to act  thereon and the Consent of the Class A Limited
Partners;  provided,  however,  that any  amendment to change this Section 11.11
must be approved in writing by all Partners.

    B. In addition to the amendments contemplated in Section 11.11A, the General
Partners may also make such  amendments to this Agreement,  in their  reasonably
exercised  discretion,  without the Consent of the Class A Limited Partners,  as
are necessary:

        (i) To admit Additional Limited Partners and Substitute Limited Partners
to the Partnership in accordance with the terms of this Agreement;

        (ii) To -make  ministerial  changes to this Agreement that do not affect
    the  substantive  rights of the Partners,  such as,  without  limitation,  a
    change in the name of the  Partnership,  the name or address of the resident
    agent or address of the Partnership's principal office.



                                                                    B-30



<PAGE>






     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the          day of August, 1986.


                                                              GENERAL PARTNERS


WITNESS:



_______________________________________        ___________________________(SEAL)
                                              John F. Flournoy,
                                              the Development General Partner


ATTEST:                                   BROWN EQUITY INCOME PROPERTIES, INC.,
                                          the Administrative General Partner


_______________________________________    By:                            (SEAL)
                                                  John M. Prugh, President


                                                  CLASS A LIMITED PARTNERS


ATTEST:                                   BROWN EQUITY INCOME PROPERTIES, INC.,
                          Attorney-in-Fact for each of the Class A Limited
                          Partners now and hereafter admitted as Class A Lim-
                          ited Partners of the Partnership pursuant to powers of
                          attorney now and hereafter executed in favor-of, and
                           delivered to, the Administrative General Partner.


_______________________________________     By:                          (SEAL)
                                                  John M. Prugh, President


                                                   CLASS B LIMITED PARTNERS


WITNESS:



_______________________________________                                  (SEAL)
                                John F. Flournoy


WITNESS:                                    REALTY ASSOCIATES 1986 LIMITED
                                               PARTNERSHIP



_______________________________________     By:                          (SEAL)
                                                      Authorized Signatory




                                                                    B-31



<PAGE>






                                                                 SCHEDULE A


                                                                  Capital
                                                                Contribution

   General Partners
       Administrative General Partner
       Brown Equity Income Properties, Inc.                      $   50.00
       225 East Redwood Street, 4th floor
       Baltimore, Maryland 21202

       Development General Partner
       John F. Flournoy                                          $   50.00
       3810 Buena Vista Road                                       $100.00
       Columbus, Georgia 31907

   Class A Limited Partners
       To be admitted.                                            _________
                                                                   $000.00

  Class B Limited Partners
       John F. Flournoy                                           $ 75.00
       3810 Buena Vista Road
       Columbus, Georgia 31907

       Realty Associates 1986
       Limited Partnership                                      $  25.00
       225 East Redwood Street, 4th floor                        $100.00
       Baltimore, Maryland 21202










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