AMENDED AND RESTATED BYLAWS
                                       OF
                             FAC REALTY TRUST, INC.

                                    ARTICLE I

                                  Stockholders


Section 1. MEETINGS OF STOCKHOLDERS.

     (a.) Annual Meeting. The annual meeting of the stockholders of the
Corporation for the election of directors and the receiving of reports shall be
held at such date and time as shall be determined by the Board of Directors.
Upon due notice, there may also be considered and acted upon at an annual
meeting any matter that could properly be considered and acted upon at a special
meeting.

     (b.) Special Meetings.

          (1) Special meetings of the stockholders of the Corporation for any
     purpose may be held on any day when called at any time by the holders of
     shares entitling them to exercise a majority of the voting power of the
     Corporation entitled to vote at such a meeting, the Board of Directors, the
     Chairman of the Board, the President or by a committee of the Board of
     Directors that has been duly designated by the Board of Directors and whose
     powers and authority, as provided in a resolution of the Board of
     Directors, include the power to call such meetings, but special meetings
     may not be called by any other person or persons.

          (2) In order that the Corporation may determine the stockholders
     entitled to request a special meeting, the Board of Directors may fix a
     record date to determine the stockholders entitled to make such a request
     (the "Request Record Date"). The Request Record Date shall not precede the
     date upon which the resolution fixing the Request Record Date is adopted by
     the Board of Directors and shall not be more than 10 days after the date
     upon which the resolution fixing the Request Record Date is adopted by the
     Board of Directors. Any stockholder of record seeking to have stockholders
     request a special meeting shall, by sending written notice to the Secretary
     of the Corporation by certified or registered mail, return receipt
     requested, request the Board of Directors to fix a Request Record Date. The
     Board of Directors shall within 10 days after the date on which a valid
     request to fix a Request Record Date is received, adopt a resolution fixing
     the Request Record Date and shall make a public announcement of such
     Request Record Date, the Request Record Date shall be the 10th day after
     the first date on which a valid written request to set a Request Record
     Date is received by the Secretary. To be valid, such written request shall
     set forth the purpose or purposes for which the special meeting


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     is to be held, shall be signed by one or more stockholders of record (or
     their duly authorized proxies or other representatives), shall bear the
     date of signature of each such stockholder (or proxy or other
     representative) and shall set forth all information relating to such
     stockholder that is required to be disclosed in solicitations of proxies
     for election of directors in an election contest, or is otherwise required,
     in each case pursuant to Regulation 14A under the Securities Exchange Act
     of 1934, as amended (the "Exchange Act"), and Rule 14a-11 thereunder.

          (3) In order for a stockholder or stockholders to request a special
     meeting, a written request or requests for a special meeting by the holders
     of record as of the Request Record Date of at least a majority of the
     issued and outstanding shares of stock that would be entitled to vote at
     such a meeting must be delivered to the Corporation. To be valid, each
     written request by a stockholder for a special meeting shall set forth the
     specific purpose or purposes for which the special meeting is to be held
     (which purpose or purposes shall be limited to the purpose or purposes set
     forth in the written request to set a Request Record Date received by the
     Corporation pursuant to paragraph (2) of this Section 1(b)), shall be
     signed by one or more persons who as of the Request Record Date are
     stockholders of record (or their duly authorized proxies or other
     representatives), shall bear the date of signature of each such stockholder
     (or proxy or other representative) and shall set forth the name and
     address, as they appear in the Corporation's books, of each stockholder
     signing such request and the class and number of shares of the Corporation
     which are owned of record and beneficially by each such stockholder, shall
     be sent to the Secretary by certified or registered mail, return receipt
     requested, and shall be received by the Secretary within 60 days after the
     Request Record Date.

          (4) The Corporation shall not be required to call a special meeting
     upon stockholder request unless, in addition to the documents required by
     paragraph (3) of this Section 1(b), the Secretary receives a written
     agreement signed by each Soliciting Stockholder (as defined below),
     pursuant to which each Soliciting Stockholder, jointly and severally,
     agrees to pay the Corporation's costs of holding the special meeting,
     including the costs of preparing and mailing proxy materials for the
     Corporation's own solicitation, provided that if each of the resolutions
     introduced by any Soliciting Stockholder at such meeting is adopted, and
     each of the individuals nominated by or on behalf of any Soliciting
     Stockholder for election as a director at such meeting is elected, then the
     Soliciting Stockholders shall not be required to pay such costs. For
     purposes of this paragraph (4), the following terms shall have the meanings
     set forth below:

               (i) "Affiliate" of any Person (as defined herein) shall mean any
          Person controlling, controlled by or under common control with such
          first Person.

               (ii) "Participant" shall have the meaning assigned to such term
          in Rule 14a-11 promulgated under the Exchange Act.


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               (iii) "Person" shall mean any individual, firm, corporation,
          partnership, limited liability company, joint venture, association,
          trust, unincorporated organization or other entity.

               (iv) "Proxy" shall have the meaning assigned to such term in Rule
          14a-1 promulgated under the Exchange Act.

               (v) "Solicitation" shall have the meaning assigned to such term
          in Rule 14a-11 promulgated under the Exchange Act.

               (vi) "Soliciting Stockholder" shall mean, with respect to any
          special meeting requested by a stockholder or stockholders, any of the
          following Persons:

                    (a) if the number of stockholders signing the request or
               requests of meeting delivered to the Corporation pursuant to
               paragraph (3) of this Section 1(b) is 10 or fewer, each
               stockholder signing any such request;

                    (b) if the number of stockholders signing the request or
               requests of meeting delivered to the Corporation pursuant to
               paragraph (3) of this Section 1(b) is more than 10, each Person
               who either (I) was a Participant in any Solicitation of such
               request or requests or (II) at the time of the delivery to the
               Corporation of the documents described in paragraph (3) of this
               Section 1(b) had engaged or intended to engage in any
               Solicitation of Proxies for use at such special meeting (other
               than a Solicitation of Proxies on behalf of the Corporation); or

                    (c) any Affiliate of a Soliciting Stockholder, if a majority
               of the directors then in office determine that such Affiliate
               should be required to sign the written notice described in
               paragraph (3) of this Section 1(b) and/or the written agreement
               described in this paragraph (4) in order to prevent the purposes
               of this Section 1(b) from being evaded.

          (5) Except as provided in the following sentence, any special meeting
     shall be held at such hour and day as may be designated by whichever of the
     Board of Directors, Chairman, President or committee shall have called such
     meeting. In the case of any special meeting called by the Chairman or the
     Secretary upon the request of stockholders (a "Request Special Meeting"),
     such meeting shall be held at such hour and day as may by designated by the
     Board of Directors; provided, however, that the date of any Request Special
     Meeting shall be not more than 60 days after the Meeting Record Date (as
     defined in Section 2(c)); and provided further that in the event that the
     directors then in office fail to designate an hour and date for a Request
     Special Meeting within 10 days after the date that valid written requests
     for such meeting by the holders of record as of the Request Record Date of
     at least a majority of the issued and outstanding shares of stock that

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<PAGE>


     would be entitled to vote at such meeting are delivered to the Corporation
     (the "Delivery Date"), then such meeting shall be held at 2:00 p.m. local
     time on the 90th day after the Delivery Date or, if such 90th day is not a
     Business Day (as defined below), on the first preceding Business Day. In
     fixing a meeting date for any special meeting, the Board of Directors,
     Chairman, President or committee may consider such factors as they deem
     relevant within the good faith exercise of their business judgment,
     including, without limitation, the nature of the action proposed to be
     taken, the facts and circumstances surrounding any request of such meeting,
     and any plan of the Board of Directors to call an annual meeting or a
     special meeting for the conduct of related business.

          (6) The Corporation may engage regionally or nationally recognized
     independent inspectors of elections to act as an agent of the Corporation
     for the purpose of promptly performing a ministerial review of the validity
     of any purported written request or requests for a special meeting received
     by the Secretary. For the purpose of permitting the inspectors to perform
     such review, no purported request shall be deemed to have been delivered to
     the Corporation until the earlier of (i) five Business Days following
     receipt by the Secretary of such purported request and (ii) such date as
     the independent inspectors certify to the Corporation that the valid
     requests received by the Secretary represent at least a majority of the
     issued and outstanding shares of stock that would be entitled to vote at
     such meeting. Nothing contained in this paragraph (6) shall in any way be
     construed to suggest or imply that the Board of Directors or any
     stockholder shall not be entitled to contest the validity of any request,
     whether during or after such five- Business Day period, or to take any
     other action (including, without limitation, the commencement, prosecution
     or defense of any litigation with respect thereto, and the seeking of
     injunctive relief in such litigation).

          (7) For purposes of these by-laws, "Business Day" shall mean any day
     other than a Saturday, a Sunday or a day on which banking institutions in
     the State of North Carolina are authorized or obligated by law or executive
     order to close.

     (c.) Place of Meetings. Any meeting of the stockholders may be held at such
place within or without the State of Maryland as may be determined by the Board
of Directors and stated in the notice of said meeting, provided that if the
Board of Directors does not designate a location, such meeting shall be held at
the executive office of the Corporation in Cary, North Carolina.

     (d.) Notice of Meeting and Waiver of Notice.

          (1) Notice. Written notice of the place, date and hour of every
     meeting of the stockholders, whether annual or special, shall be given to
     each stockholder of record entitled to vote at the meeting not less than 10
     nor more than 90 days before the date of the meeting. Every notice of a
     special meeting shall state the purpose or purposes thereof. Such notice
     shall be given in writing to each stockholder entitled thereto by mail,
     addressed to the stockholder at his address as it appears on the records of
     the Corporation.

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     Notice shall be deemed to have been given at the time when it was deposited
     in the mail.

          (2) Record Holder of Shares. The Corporation shall be entitled to
     recognize the exclusive right of a person registered on its books as the
     owner of shares to receive dividends and to vote as such owner, and to hold
     liable for calls and assessments a person registered on its books as the
     owner of shares, and shall not be bound to recognize any equitable or other
     claims to or interests in such share or shares on the part of any other
     person, whether or not the Corporation shall have express or other notice
     thereof, except as otherwise provided by the laws of Maryland.

          (3) Waiver. Whenever any written notice is required to be given under
     the provisions of the Articles of Incorporation, these Bylaws, or by
     statute, a waiver thereof in writing, signed by the person or persons
     entitled to such notice, whether before or after the time stated therein,
     shall be deemed equivalent to the giving of such notice. Neither the
     business to be transacted at nor the purpose of any meeting of the
     stockholders need be specified in any written waiver of notice of such
     meeting. Attendance of a person, either in person or by proxy, at any
     meeting, shall constitute a waiver of notice of such meeting, except where
     a person attends a meeting for the express purpose of objecting to the
     transaction of any business because the meeting was not lawfully called or
     convened.

     (e.) Quorum, Manner of Acting and Adjournment. The holders of record of
shares entitled to cast a majority of the votes entitled to vote at any meeting,
present in person or represented by proxy, shall constitute a quorum for the
transaction of business thereat, except as otherwise provided by statute, by the
Articles of Incorporation, or by these Bylaws. Whether or not a quorum is
present, the holders of shares entitled to cast a majority of the votes present
in person or represented by proxy at the meeting shall have the power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At any such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. When a quorum is present at any meeting, the vote of a
majority of the votes entitled to be cast by the holders of all issued and
outstanding shares present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which, by
express provision of the applicable statute or the Articles of Incorporation or
these Bylaws, a different vote is required, in which case such express provision
shall govern. Except upon those questions governed by the aforesaid express
provisions, the stockholders present in person or by proxy at a meeting at which
a quorum is at any time present or represented shall have the power to continue
to do business until adjournment, notwithstanding a subsequent reduction in the
number of shares present or represented to leave less than would constitute a
quorum.

     (f.) Organization of Meetings.


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          (1) Presiding Officer. Any "executive officer" of the Corporation, as
     that term is defined in section 3(f) of Article III of these Bylaws, may
     call meetings of the stockholders to order and act as chairman thereof.

          (2) Minutes. The Secretary of the Corporation, or, in his absence or
     by his designation, an Assistant Secretary, or, in the absence of both, a
     person appointed by the chairman of the meeting, which person need not be
     an officer of the Corporation, shall act as secretary of the meeting and
     shall make and keep a record of the proceedings thereat.

          (3) Stockholder's List. The officer who has charge of the stock ledger
     of the Corporation shall prepare and make, at least 10 days before every
     meeting of stockholders, a complete list of the stockholders entitled to
     vote at the meeting. The list shall be arranged in alphabetical order
     showing the address of each stockholder and the number of shares registered
     in the name of each stockholder. Such list shall be open to the examination
     of any stockholder for any purpose germane to the meeting, during ordinary
     business hours, for a period of at least 10 days prior to the meeting
     either at a place within the city where the meeting is to be held, which
     place shall be specified in the notice of the meeting, or, if not so
     specified, at the place where the meeting is to be held. The list shall
     also be produced and kept at the time and place of the meeting during the
     whole time thereof, and may be inspected by any stockholder who is present.

          (4) Voting Procedures and Inspectors of Elections.

               (A) The Board of Directors shall, in advance of any meeting of
          stockholders, appoint one or more inspectors to act at the meeting and
          make a written report thereof. The Board of Directors may designate
          one or more persons as alternate inspectors to replace any inspector
          who fails to act at such meeting. If no inspector or alternate is able
          to act at a meeting of stockholders, the chairman of the meeting shall
          appoint one or more inspectors to act at the meeting. Each inspector,
          before entering upon the discharge of his duties, shall take and sign
          an oath faithfully to execute the duties of inspector with strict
          impartiality and according to the best of his ability.

               (B) The inspectors shall (i) determine those stockholders
          entitled to vote at the meeting, (ii) ascertain the number of shares
          outstanding and the voting power of each, (iii) determine the shares
          represented at a meeting and the validity of proxies and ballots, (iv)
          count all votes and ballots, (v) determine and retain for a reasonable
          period a record of the disposition of any challenges made to any
          determination by the inspectors, and (vi) certify their determination
          of the number of shares represented at the meeting and their count of
          all votes and ballots. The inspectors may appoint or retain other
          persons or entities to assist the inspectors in the performance of the
          duties of the inspectors.

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               (C) The date and time of the opening and the closing of the polls
          for each matter upon which the stockholders will vote at a meeting
          shall be announced at the meeting. No ballot, proxies or votes, nor
          any revocations thereof or changes thereto, shall be accepted by the
          inspectors after the closing of the polls unless judicially determined
          otherwise upon application by a stockholder.

               (D) In determining the validity and counting of proxies and
          ballots, the inspectors shall be limited to an examination of the
          proxies, any envelopes submitted with those proxies, ballots and the
          regular books and records of the Corporation, except that the
          inspector may consider other reliable information for the limited
          purpose of reconciling proxies and ballots submitted by or on behalf
          of banks, brokers, their nominees or similar persons which represent
          more votes than the holder of proxy is authorized by the record owner
          to cast or more votes than the stockholder holds of record. If the
          inspectors consider other reliable information for the limited purpose
          permitted herein, the inspectors at the time they make their
          certification pursuant to clause (B) (vi) of this subsection 1(f) (4)
          shall specify the precise information considered by them, including
          the person or persons from whom they obtained the information, when
          the information was obtained, the means by which the information was
          obtained and the basis for the inspectors' belief that such
          information is accurate and reliable.

               (E) The provisions of subsections 1(f)(4)(A) through (D) of this
          Article I shall not apply at any time that the Corporation does not
          have a class of voting stock that is (i) listed on a national
          securities exchange, (ii) authorized for quotation on an interdealer
          quotation system, or (iii) held of record by more than 2,000
          stockholders.

          (5) Order of Business. Unless otherwise determined by the Board of
     Directors prior to the meeting, the chairman of any meeting of stockholders
     shall determine the order of business and shall have the authority in his
     discretion to regulate the conduct of any such meeting, including, without
     limitation, by imposing restrictions on the persons (other than
     stockholders of the Corporation or their duly appointed proxies) who may
     attend any such meeting of stockholders, whether any stockholder or his
     proxy may be excluded from any stockholders' meeting based upon any
     determination by the chairman of the meeting, in his sole discretion, that
     any such person has unduly disrupted or is likely to disrupt the
     proceedings thereat, and the circumstances in which any person may make a
     statement or ask questions at any meeting of stockholders.

     (g.) Voting. Except as otherwise provided by statute or the Articles of
Incorporation, every stockholder entitled to vote shall be entitled to cast the
vote per share to which such share is entitled, in person or by proxy, on each
proposal submitted to the meeting for each share held f record by him on the
record date for the determination of the stockholders entitled to vote at

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the meeting. At any meeting at which a quorum is present, all questions and
business that may come before the meeting shall be determined by a majority of
votes cast, except when a greater proportion is required by law, the Articles of
Incorporation, or these Bylaws.

     (h.) Proxies. A person is entitled to attend a meeting of the stockholders,
to vote thereat, and execute consents, waivers and releases, may be represented
at such meetings or vote thereat, and execute consents, waivers and releases and
exercise any of his rights by proxy or proxies appointed by a legally sufficient
writing assigned by such person, or by hid duly authorized attorney, as provided
by the laws of the State of Maryland.

Section 2. DETERMINATION OF STOCKHOLDERS OF RECORD.

     In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than 60 or less than 10 days before the date of such meeting, or more than
60 days prior to any other action. If no record date is fixed:

          (a.) The record date for determining stockholders entitled to notice
     of or to vote at a meeting of stockholders or entitled to receive payment
     of any dividend or other distribution or allotment of any rights, or
     entitled to exercise any rights in respect of any change, conversion or
     exchange of stock or for the purpose of any other lawful action shall be at
     the close of business on the day next preceding the day on which notice is
     given.

          (b.) The record date for determining stockholders entitled to notice
     of or to vote at a meeting of stockholders shall apply to any adjournment
     of the meeting; provided, however, that the Board of Directors may fix a
     new record date for the adjourned meeting.

     Notwithstanding anything to the contrary in these Bylaws, in the case of
any Request Special Meeting, (i) the record date for such meeting (the "Meeting
Record Date") shall be no later than the 30th day after the Delivery Date and
(ii) if the Board of Directors fails to fix the Meeting Record Date within 30
days after the Delivery Date, then the close of business on such 30th day shall
be the Meeting Record Date.


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                                   ARTICLE II

                                    Directors

Section 1. GENERAL POWERS.

     The business and affairs, power and authority of the Corporation shall be
exercised, conducted and controlled by the Board of Directors, except where the
law, the Articles of Incorporation, or these Bylaws require any power or action
to be authorized or taken by the stockholders. In addition to the powers and
authorities expressly conferred by these Bylaws, the Board of Directors may do
all such lawful things and acts as are not by statute, the Articles of
Incorporation or these Bylaws directed or required to be done by the
stockholders.

Section 2. NUMBER, NOMINATION AND ELECTION OF DIRECTORS.

     (a.) Number. The Board of Directors from time to time shall consist of not
less than the minimum required by the Maryland General Corporation Law nor more
than fifteen members. The Board of Directors may increase or decrease the number
of the members of the Board of Directors within the limitations set forth above.
No reduction in the number of directors shall of itself have the effect of
shortening the term of any incumbent director.

     (b.) Election. The directors shall be elected at the annual meeting of
stockholders, or if not so elected, at a special meeting of stockholders called
for that purpose. At any meeting of stockholders at which directors are to be
elected (an "Election Meeting"), only persons nominated as candidates shall be
eligible for election, and the candidates receiving the greatest number of votes
entitled to be cast shall be elected.

     (c.) Nominations.

          (1) Qualification. Directors of the Corporation need not be
     stockholders or residents of Maryland. No person shall be appointed or
     elected a director of the Corporation unless:

               (A) such person is elected to fill a vacancy in the Board of
          Directors pursuant to Section 3(c) of this Article II; or

               (B) such person is nominated for election as a director of the
          Corporation in accordance with this section.

          (2) Eligibility to Make Nominations. Nominations of candidates for
     election as directors at any Election Meeting may be made by the Board of
     Directors or a committee thereof.


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          (3) Procedure for Nominations. Nominations shall be made not fewer
     than 30 days prior to the date of an Election Meeting. At the request of
     the Secretary or, in his absence, an Assistant Secretary, each proposed
     nominee shall provide the Corporation with such information concerning
     himself as is required under the rules of the Securities and Exchange
     Commission (the "Commission") to be included in the Corporation's proxy
     statement soliciting proxies for the election of such nominee as a
     director.

          (4) Substitution of Nominees. In the event that a person is validly
     designated as a nominee in accordance with these Bylaws and shall
     thereafter become unable or unwilling to stand for election to the Board of
     Directors, the Board of Directors or a committee thereof may designate a
     substitute nominee upon delivery, not fewer than five days prior to the
     date of an Election Meeting, of a written notice to the Secretary setting
     forth such information regarding such substitute nominee as would have been
     required to be delivered to the Secretary pursuant to these Bylaws had such
     substitute nominee been initially proposed as a nominee. Such notice shall
     include a signed consent to serve as a director of the Corporation, if
     elected, of each such substitute nominee.

          (5) Compliance with Procedures. If the chairman of the Election
     Meeting determines that a nomination of any candidate for election as a
     director was not made in accordance with the applicable provisions of these
     Bylaws, he shall so declare to the meeting and such nomination shall be
     void.

     (d.) Chairman of the Board of Directors. The Chairman, if any is elected,
shall, subject to the to the provisions of these Bylaws, preside at all meetings
of the stockholders, of the Board of Directors and of the Executive Committee.

Section 3. TERM OF OFFICE OF DIRECTORS.

     (a.) Term. Each director shall hold office until the annual meeting next
succeeding his election and until his successor is elected and qualified, or
until his earlier resignation, removal from office or death.

     (b.) Resignation. Any director of the Corporation may resign at any time by
giving written notice to the Chairman or to the President or the Secretary of
the Corporation. A resignation from the Board of Directors shall be deemed to
take effect immediately or at such other time as the director may specify.

     (c.) Vacancy. If there shall be any vacancy in the Board of Directors for
any reason, including, but not limited to, death, resignation or as provided by
law, the Articles of Incorporation or these Bylaws (including any increase in
the authorized number of directors), the remaining directors shall constitute
the Board of Directors until such vacancy is filled. The remaining directors may
fill any vacancy in the Board of Directors for the unexpired term.


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Section 4. MEETINGS OF DIRECTORS.

     (a.) Meetings. Meetings of the Board of Directors may be held at any time
upon call by the Chairman or by the President or by any two directors. Unless
otherwise indicated in the notice thereof, any business may be transacted at any
such meeting.

     (b.) Place of Meeting. Any meeting of directors may be held at such place
within or without the State of Maryland as may be designated in the notice of
such meeting.

     (c.) Notice of Meeting and Waiver of Notice. No notice of regular meetings
of the Board of Directors need be given. Special meetings of the Board of
Directors may be called by the Chairman, or by the President on notice to each
director, given either in person or by mail, telephone, telegram, telex or
similar medium of communication; special meetings shall be called on like notice
by the Chairman, the President or the Secretary, on the written request of two
directors. At least 24 hours notice of special meetings shall be given to each
director.

Section 5. QUORUM AND VOTING.

     Except as otherwise provided in the Articles of Incorporation, at any
meeting of directors, not less than one-half (1/2) of the directors then in
office (or, in the event that the directors then in office are an uneven number,
the nearest full number of directors less than one-half (1/2) of such number) is
necessary to constitute a quorum for such meeting, except that any meeting duly
called, whether a quorum is present or otherwise, may, by vote of a majority of
the directors present, be adjourned from time to time. At any meeting at which a
quorum is present, all acts, questions and business which may come before the
meeting shall be determined by a majority of votes cast by the directors present
at such meeting, unless the vote of a greater number is required by statute, the
Articles of Incorporation or these Bylaws.


Section 6. ACTION OF BOARD OF DIRECTORS WITHOUT A MEETING.

     Any action that may be authorized or taken at a meeting of the Board of
Directors may be authorized or taken without a meeting if approved and
authorized by a writing or writings, signed by all of the directors, which are
filed with the minutes of proceedings of the Board of Directors.

Section 7. COMPENSATION.

     The Board of Directors is authorized to fix a reasonable salary for
directors or a reasonable fee for attendance at any meeting of the Board of
Directors, the Executive or Audit Committee, or other committees appointed by
the Board of Directors, or any combination of salary and attendance fee. In
addition, directors may be reimbursed for any expenses incurred by them in
traveling to and from such meetings.


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Section 8. COMMITTEES.

     (a.) Appointment. The Board of Directors, by resolution passed by a
majority of the whole Board of Directors, may, from time to time, appoint one or
more of its members to act as a committee of the Board of Directors. A committee
shall have and exercise the powers of the Board of Directors in the direction of
the management of the business and affairs of the Corporation to the extent
provided in the resolution appointing such committee. Each committee shall have
such name as may be determined by the Board of Directors. A committee shall keep
minutes of its proceedings and shall report its proceedings to the Board of
Directors when required or when requested by a director to do so. Each such
committee and each member thereof shall serve at the pleasure of the Board of
Directors. Vacancies occurring in any such committee may be filled by the Board
of Directors.

     (b.) Executive Committee. In particular, the Board of Directors may create
from its membership an Executive Committee, the members of which shall hold
office during the pleasure of the Board of Directors, and may be removed at any
time, with or without cause, by action thereof. During the intervals between
meetings of the Board of Directors, the Executive Committee shall possess and
may exercise all of the powers and authority of the Board of Directors in the
management and control of the business and affairs of the Corporation to the
extent permitted by law. All action taken by the Executive Committee shall be
reported to the Board of Directors. Each of the Chairman and the President shall
be a member of the Executive Committee, unless such person is not a director or
shall decline in writing.

     (c.) Committee Action. Unless otherwise provided by the Board of Directors,
a majority of the members of any committee appointed by the Board of Directors
pursuant to this section shall constitute a quorum at any meeting thereof, and
the act of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee. Action may also be taken by any such
committee without a meeting by a writing or writings, signed by all of its
members, which is filed with the minutes of proceedings of the committee. Any
such committee shall appoint one of its own number as chairman (provided that
the Chairman or the President, if the Chairman declines or is not a member of
the Executive Committee, shall be the chairman of any Executive Committee), who
shall preside at all meetings and may appoint a Secretary (who need not be a
member of the committee) who shall hold office during the pleasure of such
committee. Meetings of any such committee may be held without notice of the
time, place or purposes thereof and may be held at such times and places within
or without the State of Maryland, as the committee may from time to time
determine, at the call of the chairman of the committee or any two members
thereof. Any such committee may prescribe such other rules as it shall determine
for calling and holding meetings and its method of procedure, subject to any
rules prescribed by the Board of Directors.

Section 9. CONFERENCE TELEPHONE MEETINGS.

     One or more directors may participate in a meeting of the Board, or of a
committee of the

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Board of Directors, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.


                                   ARTICLE III

                                    Officers

Section 1. GENERAL PROVISIONS.

     The Board of Directors at such time as it determines may elect such
executive officers, as defined in Section 3(f) of this Article III, as the Board
of Directors deems necessary. The Board of Directors may assign such additional
titles to one or more of the officers as they shall deem appropriate. Any two or
more executive offices may be held by the same person. Other officers may be
appointed in the manner provided for in these Bylaws. The election or
appointment of an officer for a given term, or a general provision in the
Articles of Incorporation or in these Bylaws with respect to term of office,
shall not be deemed to create any contract rights.

Section 2. TERM OF OFFICE, REMOVAL, AND VACANCIES.

     (a.) Term. Each officer of the Corporation shall hold office during the
pleasure of the Board of Directors and until his successor is elected and
qualified, unless he sooner dies or resigns or is removed.

     (b.) Removal. Subject to the terms of any agreement relating to the
employment or service of any officer of the Corporation, the Board of Directors
by a vote of two-thirds of the members present at a meeting at which a quorum is
present may remove any executive officer at any time, with or without cause, and
the Board of Directors by a vote of a majority of its members present at a
meeting at which a quorum is present may remove any other officer at any time,
with or without cause.

     (c.) Vacancies. Any vacancy in any executive office may be filled by the
Board of Directors.

Section 3. POWERS AND DUTIES.

     (a.) In general. Subject to the specific provisions of these Bylaws, all
officers, as between themselves and the Corporation, shall respectively have
such authority and perform such duties as are customarily incident to their
respective offices, and as may be specified from time to time by the Board of
Directors, regardless of whether such authority and duties are customarily
incident to such office. In the absence of any officer of the Corporation, or
for any other reason the Board of Directors may deem sufficient, the Board of
Directors may delegate from time to

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time the powers or duties of such officer, or any of them, to any other officer
or to any Director.

     (b.) President. The President shall, in the absence of the Chairman or upon
the determination of the Board of Directors, preside at all meetings of the
stockholders. The President shall be the chief executive officer of the
Corporation and shall have general supervision over its property, business and
affairs, and shall perform all the duties usually incident to such office,
subject to the direction of the Board of Directors. He may execute all
authorized deeds, mortgages, bonds, contracts and other obligations in the name
of the Corporation and, subject to the provisions of these Bylaws, shall have
such other powers and duties as may be prescribed by the Board of Directors.

     (c.) Vice Presidents. The Vice Presidents shall have such powers, duties
and titles as may be prescribed by the Board of Directors or as may be delegated
by the President.

     (d.) Secretary. The Secretary shall attend and shall keep the minutes of
all meetings of the stockholders and the Board of Directors (and perform similar
duties for the committees of the Board of Directors when required). He shall
keep such books as may be required by the Board of Directors, shall have charge
of the seal, if any, of the Corporation and shall be permitted, subject to the
provisions of these Bylaws, to give notices of stockholders' and directors'
meetings required by law or by these Bylaws, or otherwise, and have such other
powers and duties as may be prescribed by the Board of Directors.

     (e.) Treasurer. The Treasurer shall receive and have charge of all money,
bills, notes, bonds, stock in other corporations and similar property belonging
to the Corporation, and shall do with the same as shall be ordered by the Board
of Directors. He shall disburse the funds and pledge the credit of the
Corporation as may be directed by the Board of Directors. He shall keep accurate
financial accounts and hold the same open for inspection and examination by the
directors. On the expiration of his term of office, he shall turn over to his
successors, or the Board of Directors, all property, books, papers and money of
the Corporation in his hands, and shall possess such other powers and duties as
may be prescribed by the Board of Directors.

     (f.) Executive Officers. The officers referred to in subparagraphs (b),
(c), (d) and (e) of this section, and such other officers as the Board of
Directors may by resolution identify as such shall be executive officers of the
Corporation and may be referred to as such.

     (g.) Other Officers. The Assistant Vice Presidents, Assistant Secretaries,
Assistant Treasurers, if any, and any other subordinate officers shall be
appointed and removed by the President or the Board of Directors at whose
pleasure each shall serve and shall have such powers and duties as they may
prescribe.


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<PAGE>



Section 4. COMPENSATION.

     The Board of Directors is authorized to determine or to provide the method
of determining the compensation of all officers.

Section 5. BONDS.

     If required by the Board of Directors, any and every officer or agent shall
give the Corporation a bond in a sum and with one or more sureties satisfactory
to the Board of Directors for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.


                                   ARTICLE IV

                         Securities Held by Corporation

Section 1. TRANSFER OF SECURITIES OWNED BY THE CORPORATION.

     All endorsements, assignments, transfers, share powers or other instruments
of transfer of securities standing in the name of the Corporation shall be
executed for and in the name of the Corporation by the President or by any Vice
President, or by the Secretary or Treasurer or by any additional person or
Persons as may be thereunto authorized by the Board of Directors.

Section 2. VOTING SECURITIES HELD BY THE CORPORATION.

     The President, any Vice President, or the Secretary or Treasurer, in person
or by another person thereunto authorized by the Board of Directors, in person
or by proxy or proxies appointed by him, shall have full power and authority on
behalf of the Corporation to vote, act and execute consents, waivers and
releases with respect to any securities issued by other corporations which the
Corporation may own.


                                    ARTICLE V

                               Share Certificates

Section 1. TRANSFER AND REGISTRATION OF CERTIFICATES.

     The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Articles of Incorporation or these
Bylaws, as it deems expedient

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<PAGE>



concerning the issuance, transfer and registration of certificates for shares
and the shares represented thereby.

Section 2. CERTIFICATES FOR SHARES.

     Each holder of shares is entitled to one or more certificates for shares of
the Corporation in such form not inconsistent with law and the Articles of
Incorporation as shall be approved by the Board of Directors. Each such
certificate shall be signed by the President or any Vice President, and by the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer of
the Corporation, which certificate shall certify the number and class of shares
held by such stockholder in the Corporation, but no certificates for shares
shall be executed or delivered until such shares are fully paid. Any or all of
the signatures upon such certificate may be a facsimile, engraved or printed. In
case any officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any share certificate shall have ceased to be
such officer, transfer agent or registrar, before the certificate is issued, it
may be issued with the same effect as if he were such officer, transfer agent or
registrar at the date of its issue.

Section 3. TRANSFER AGENTS, REGISTRARS AND DIVIDEND DISBURSING AGENTS.

     The Board of Directors may from time to time by resolution appoint one or
more incorporated transfer agents and registrars (which may or may not be the
same corporation) for the shares of the Corporation, and the Board of Directors
from time to time by resolutions may appoint a dividend disbursing agent to
disburse any and all dividends authorized by the Board of Directors payable upon
the shares of the Corporation.

Section 4. TRANSFERS.

     Subject to restrictions on the transfer of stock, upon surrender to the
Corporation or the duly appointed transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books. No transfer shall
be made which would be inconsistent with the applicable provisions of the
Uniform Commercial Code.

Section 5. LOST, STOLEN OR DESTROYED CERTIFICATES.

     The Corporation may issue a new certificate for shares in place of any
certificate or certificates heretofore issued by the Corporation alleged to have
been lost, stolen or destroyed upon the making of an affidavit of that fact by
the person claiming the certificate of stock to have been lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors or any duly authorized executive officer may, in its or his
discretion, and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed

                                       16

<PAGE>



certificate or certificates, or his legal representatives, to attest the same in
such manner as it shall require and to indemnify the Corporation, its directors,
officers, employees, agents and representatives, and in connection therewith to
give the Corporation a bond in such sum and containing such terms as the Board
of Directors or such executive officer may direct, against any claim that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost, stolen or destroyed or the issuance of the new
certificate.

Section 6. PROTECTION OF THE CORPORATION.

     The Corporation may treat a fiduciary as having capacity and authority to
exercise all rights of ownership in respect of shares of record in the name of
the decedent holder, person, firm or corporation in conservation, receivership
or bankruptcy, minor, incompetent person, or person under disability, as the
case may be, for whom he is acting, or a fiduciary acting as such, and the
Corporation, its transfer agent and registrar, upon presentation of evidence of
appointment of such fiduciary shall be under no duty to inquire as to the powers
of such fiduciary and shall not be liable to any firm, person or corporation for
loss caused by any act done or omitted to be done by the Corporation or its
transfer agent or registrar in reliance thereon.


                                   ARTICLE VI

   Indemnification of Directors, Officers and Other Authorized Representatives

Section 1. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN THIRD-PARTY
PROCEEDINGS.

     The Corporation shall indemnify any person who was or is an "authorized
representative" of the Corporation (which shall mean for purposes of this
Article a director or officer of the Corporation, or a person serving at the
request of the Corporation as a director, officer, employee, agent or trustee,
of another corporation, partnership, joint venture, trust or other enterprise,
including employee benefit plans) and who was or is a "party" (which shall
include, for purposes of this Article, the giving of testimony or similar
involvement) or is threatened to be made a party to any "third-party proceeding"
(which shall mean for purposes of this Article any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative, other than an action by or in the right of the Corporation) by
reason of the fact that such person was or is an authorized representative of
the Corporation, from and against expenses (which shall include, for purposes of
this Article, attorneys' fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such third-party proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
the Corporation and, with respect to any criminal third-party proceedings (which
could or does lead to a criminal third-party proceeding) had no reasonable cause
to believe such conduct was unlawful. The termination of any third-party
proceeding by judgment, order, settlement,

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<PAGE>



conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the authorized representative did not act in
good faith and in a manner which such person reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal third-party proceeding, had reasonable cause to believe that such
conduct was unlawful.

Section 2. INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES IN CORPORATE
PROCEEDINGS.

     The Corporation shall indemnify any person who was or is an authorized
representative of the Corporation and who was or is a party or is threatened to
be made a party to any "corporate proceeding" (which shall mean, for purposes of
this Article, any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor or investigative
proceeding by the Corporation) by reason of the fact that such person was or is
an authorized representative of the Corporation, against expenses actually and
reasonably incurred by such person in connection with the defense or settlement
of such corporate proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the court in which
such corporate proceeding was pending shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such authorized representative is fairly and reasonably entitled to
indemnity for such expenses that such court shall deem proper.

Section 3. MANDATORY INDEMNIFICATION OF AUTHORIZED REPRESENTATIVES.

     To the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third-party or corporate
proceedings or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.

Section 4. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.

     Any indemnification under Section 1, 2 or 3 of this Article VI (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the authorized
representative is proper in the circumstances because such person has either met
the applicable standard of conduct set forth in Section 1 or 2 or has been
successful on the merits or otherwise as set forth in Section 3 and that the
amount requested has been actually and reasonably incurred. Such determination
shall be made:

          (1) by the Board of Directors by a majority of a quorum consisting of
     directors who were not parties to such third-party or corporate
     proceedings; or

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<PAGE>




          (2) if such a quorum is not obtainable, or, even if obtainable, a
     majority vote of such a quorum so directs, by independent legal counsel in
     a written opinion; or

          (3) by the stockholders.

Section 5. ADVANCING EXPENSES.

     Expenses actually and reasonably incurred in defending a third-party or
corporate proceeding shall be paid on behalf of an authorized representative by
the Corporation in advance of the final disposition of such third-party or
corporate proceeding upon receipt of an undertaking by or on behalf of the
authorized representative to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article VI.

Section 6. EMPLOYEE BENEFIT PLANS.

     For purposes of this Article, the Corporation shall be deemed to have
requested an authorized representative to serve an employee benefit plan where
the performance by such person of duties to the Corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on an authorized
representative with respect to an employee benefit plan pursuant to applicable
law shall be deemed "fines"; and action taken or omitted by such person with
respect to an employee benefit plan in the performance of duties for a purpose
reasonably believed to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose that is not opposed to the best
interests of the Corporation.

Section 7. SCOPE OF ARTICLE.

     The indemnification of and the advancement of expenses to authorized
representatives, provided by, or granted pursuant to, this Article, shall (i)
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in an official capacity and as to action in other capacities, (ii)
continue as to a person who has ceased to be an authorized representative, and
(iii) inure to the benefit of the heirs, personal representatives, executors,
and administrators of such person.

Section 8. RELIANCE ON PROVISIONS.

     Each person who shall act as an authorized representative of the
Corporation shall be deemed to be doing so in reliance upon rights of
indemnification provided by this Article VI.



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<PAGE>



Section 9. INSURANCE.

     The Corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, trustee or
agent of or for the Corporation, or is or was serving at the request or with the
prior approval of the Corporation as a director, officer, employee, trustee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), against any liability asserted
against him and incurred by him in any capacity or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of these Bylaws.


                                   ARTICLE VII

                                     General

Section 1. CONTRACTS, CHECKS, ETC.

     All contracts, agreements, checks, drafts, notes, bonds, bills of exchange
and orders for the payment of money shall be signed or endorsed by the persons
whom the Board of Directors prescribes therefor.

Section 2. FISCAL YEAR.

     The fiscal year of the Corporation shall commence on January 1 of each year
and end on December 31 of the following year, unless otherwise determined by the
Board of Directors.

Section 3. FORM OF NOTICES.

     Whenever notice is required to be given to any director or officer or
stockholder, such notice may be given either in person or by mail, telephone or
telegram, facsimile transmission, telex or similar medium of communication,
except as expressly provided otherwise in these Bylaws. Except as provided in
Article II, Section 4(c), if mailed, the notice will be deemed given when
deposited in the United States mail, postage prepaid, addressed to the
stockholder, officer or director at such address as appears on the books of the
Corporation. If given in person or by telephone, notice will be deemed given
when communicated. If given by telegram, facsimile transmission, telex or
similar medium of communication, notice will be deemed given when properly
dispatched.

Section 4. SEAL.

     The Corporation may, but shall not be required to, have a corporate seal,
which shall have inscribed thereon the name of the Corporation, the year of its
organization and the words

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<PAGE>


"Incorporated Maryland." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise. The Secretary
shall have custody of the corporate seal of the Corporation and shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by the Secretary's signature. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. Whenever the Corporation is permitted
or required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the word
"(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Corporation.

Section 5. CONSISTENCY WITH ARTICLES OF INCORPORATION.

     If any provision of these Bylaws shall be inconsistent with the
Corporation's Articles of Incorporation (and as it may be amended from time to
time), the Articles of Incorporation (as so amended at the time) shall govern.


                                  ARTICLE VIII

                                   Amendments

     Except as otherwise provided in the Articles of Incorporation, these Bylaws
may be altered, amended, or repealed or new bylaws may be adopted by the
affirmative vote of the directors of the Corporation or by the affirmative vote
of the holders of a majority of the shares of the Corporation entitled to vote
in the election of directors, voting as one class at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting.


                                   ARTICLE IX

        Applicability of the Maryland Control Shares Acquisition Statute

     The Maryland Control Shares Acquisition Statute shall not apply to the
voting rights of stock acquired pursuant to the Stock Purchase Agreement by and
between the Corporation and Prometheus Southeast Retail LLC dated as of February
24, 1998, and any amendment thereto.







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