THIRD AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                               REGENCY CENTERS, L.P.

              (formerly known as Regency Retail Partnership, L.P.)



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004.197245.1


                                       vi

                                TABLE OF CONTENTS


                                    Article 1
                                  Defined Terms


                                    Article 2
                             Organizational Matters


Section 2.1       Organization; Application of Act.......................16

Section 2.2       Name...................................................16

Section 2.3       Registered Office and Agent; Principal Office..........17

Section 2.4       Term...................................................17

                                    Article 3
                                     Purpose


Section 3.1       Purpose and Business...................................17

Section 3.2       Powers.................................................17

                                    Article 4
                    Capital Contributions; Issuance Of Units;
                                Capital Accounts


Section 4.1       Capital Contributions of the Partners..................18

Section 4.2       Issuances of Additional Partnership Interests..........19

Section 4.3       No Preemptive Rights...................................21

Section 4.4       Capital Accounts of the Partners.......................21

Section 4.5       Issuance of Series A Preferred Units...................22

                                    Article 5
                                  Distributions


Section 5.1       Requirement and Characterization of Distributions......34

Section 5.2       Amounts Withheld.......................................36

Section 5.3       Withholding............................................36

Section 5.4       Distributions Upon Liquidation.........................38

                                    Article 6
                                   Allocations


Section 6.1       Allocations of Net Income and Net Loss.................38

Section 6.2       Special Allocation Rules...............................42

Section 6.3       Allocations for Tax Purposes...........................45

                                    Article 7
                      Management And Operations Of Business


Section 7.1       Management.............................................46

Section 7.2       Certificate of Limited Partnership.....................51

Section 7.3       Restriction on General Partner's Authority.............52

Section 7.4       Responsibility for Expenses............................52

Section 7.5       Outside Activities of the General Partner..............53

Section 7.6       Contracts with Affiliates..............................53

Section 7.7       Indemnification........................................54

Section 7.8       Liability of the General Partner.......................55

Section 7.9       Other Matters Concerning the General Partner...........56

Section 7.10      Title to Partnership Assets............................57

Section 7.11      Reliance by Third Parties..............................57

                                    Article 8
                   Rights And Obligations Of Limited Partners


Section 8.1       Limitation of Liability................................58

Section 8.2       Management of Business.................................58

Section 8.3       Outside Activities of Limited Partners.................58

Section 8.4       Priority Among Partners................................59

Section 8.5       Rights of Limited Partners Relating
                     to the Partnership........                        ..59

Section 8.6       Redemption of Units....................................60

Section 8.7       Regency's Assumption of Right..........................63

                                    Article 9
                     Books, Records, Accounting And Reports


Section 9.1       Records and Accounting.................................64

Section 9.2       Fiscal Year............................................64

Section 9.3       Reports................................................64



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                                   Article 10
                                   Tax Matters


Section 10.1      Preparation of Tax Returns.............................65

Section 10.2      Tax Elections..........................................65

Section 10.3      Tax Matters Partner....................................65

Section 10.4      Organizational Expenses................................66

                                   Article 11
                            Transfers And Withdrawals


Section 11.1      Transfer...............................................67

Section 11.2      Transfer of General Partner's
                     Partnership Interests.                           ...67

Section 11.3      Limited Partners' Rights to Transfer...................68

Section 11.4      Substituted Limited Partners...........................71

Section 11.5      Assignees..............................................71

Section 11.6      General Provisions.....................................71

                                   Article 12
                              Admission Of Partners


Section 12.1      Admission of Successor General Partner.................72

Section 12.2      Admission of Additional Limited Partners...............73

Section 12.3      Amendment of Agreement and Certificate.................73

Section 12.4      Representations and Warranties of
                     Additional Limited Partners.                      ..73

                                   Article 13
                           Dissolution And Liquidation


Section 13.1      Dissolution............................................74

Section 13.2      Winding Up.............................................75

Section 13.3      Compliance with Timing Requirements of Regulations;
                   Allowance for Contingent orUnforeseen
                   Liabilities or Obligations............................77

Section 13.4      Deficit Capital Account Restoration....................78

Section 13.5      Deemed Distribution and Recontribution.................79

Section 13.6      Rights of Limited Partners.............................79

Section 13.7      Notice of Dissolution..................................80

Section 13.8      Cancellation of Certificate of Limited Partnership.....80

Section 13.9      Reasonable Time for Winding-Up.........................80

                                   Article 14
                  Amendment Of Partnership Agreement; Meetings


Section 14.1      Amendments.............................................80

Section 14.2      Meetings of Limited Partners...........................83

                                   Article 15
                               General Provisions


Section 15.1      Addresses and Notice...................................84

Section 15.2      Titles and Captions....................................85

Section 15.3      Pronouns and Plurals...................................85

Section 15.4      Further Action.........................................85

Section 15.5      Binding Effect.........................................85

Section 15.6      Waiver of Partition....................................85

Section 15.7      Entire Agreement.......................................85

Section 15.8      Remedies Not Exclusive.................................86

Section 15.9      Time...................................................86

Section 15.10        Creditors...........................................86

Section 15.11        Waiver..............................................86

Section 15.12        Execution Counterparts..............................86

Section 15.13        Applicable Law......................................86

Section 15.14        Invalidity of Provisions............................86

                                   Article 16
                                Power Of Attorney


Section 16.1      Power of Attorney......................................86




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                                    SCHEDULES

Schedule 7.8(b)...Regency's PFIC Obligations

Schedule 8.6(a)...Transfer Restrictions in Regency's Articles of Incorporation

Schedule 13.4(a)..Electing Partners with Deficit Capital Account Make-up
 Requirement


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                                    EXHIBITS

Exhibit A.........Partners and Partnership Interests (addresses)

Exhibit B.........Notice of Redemption

Exhibit C.........Security Capital Waiver and Consent Agreement

Exhibit D.........Class Z Branch Partners and Class Z Midland Partners

Exhibit E         Fourth Amended and Restated Agreement of Limited Partnership
                    of Regency Centers, L.P.





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004.197245.1


                                       83

004.197245.1




                 THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
                                   PARTNERSHIP
                                       OF
                              REGENCY CENTERS, L.P.

                  THIS  THIRD   AMENDED  AND   RESTATED   AGREEMENT  OF  LIMITED
PARTNERSHIP  is  dated as of  __________,  1999,  by and  among  Regency  Realty
Corporation, a Florida corporation,  as general partner (the "General Partner"),
and those  additional  persons  who from time to time  agree to be bound by this
Agreement as limited partners (the "Limited Partners"),  and amends and restates
the  Second  Amended  and  Restated  Agreement  of  Limited  Partnership  of the
Partnership  dated as of March 5,  1998 (the  "Second  Amended  Agreement"),  as
amended by Amendment No. 1 dated as of June 25, 1998.

                                   Background

                  Limited  Partners  (the  "Original   Limited   Partners")  who
formerly  were  partners  of Branch  Properties,  L.P.  or its  affiliates  were
admitted to the  Partnership  on March 7, 1997  pursuant to an Amended  Restated
Agreement  of Limited  Partnership  as of that date (as  amended,  the  "Initial
Agreement").

                  In  February  1998,  Regency  Realty  Corporation  ("Regency")
merged with Regency  Atlanta,  Inc.,  which was then the general  partner of the
Partnership,  with  Regency  being  the  surviving  corporation  in the  merger.
Accordingly, Regency became the General Partner of the Partnership. Regency also
caused the merger into the Partnership of its subsidiary, Regency Centers, Inc.,
which  owned at least 35 shopping  center  properties  immediately  prior to the
merger.

                  In  connection  with  the  first  admission  of  Class  2 Unit
holders, the General Partner amended and restated the Initial Agreement on March
5, 1998 (the "Second Amended Agreement") (i) to provide for admitting Additional
Limited  Partners (as defined below) to the Partnership  from time to time, (ii)
to  make  certain  changes  of an  inconsequential  nature  to the  form  of the
provisions  governing the maintenance of Capital  Accounts,  and (iii) to delete
matters of historical interest.

                  In  connection  with the  issuance by the  Partnership  of $80
million Series A Preferred Units (as defined below) to an institutional investor
pursuant to Section 4.2 hereof,  the General  Partner and  Security  Capital (as
defined below)  entered into Amendment No. 1 to the Second Amended  Agreement on
June 25, 1998 (the  "Preferred  Unit  Amendment").  The Preferred Unit Amendment
designated  the rights,  preferences  and  limitations of the Series A Preferred
Units and was  approved  by the holders of a majority  of the  Original  Limited
Partnership Units and the holders of a majority of the Class 2 Units.

                  Pursuant  to  authority  granted  to the  General  Partner  in
Section 14.1(b)(iv),  the General Partner wishes to amend and restate the Second
Amended  Agreement,  as amended,  (i) to reflect the  admission  of the Series A
Preferred  Partners (as defined  below),  (ii) to incorporate the Preferred Unit
Amendment, and (iii) to delete matters of historical interest that are no longer
relevant.

                  The General Partner anticipates that it will contribute all or
substantially all its assets to the Partnership,  subject to applicable consents
of third  parties or in the case of  shopping  centers  securing  $51 million of
securitized mortgage debt due November 5, 2000, upon the repayment of such debt,
so as to cause the Partnership to become an "UPREIT".

                  Pursuant  to Section  14.1(a),  a majority  in interest of the
Original Limited  Partners and a majority in interest of the Additional  Limited
Partners have consented to amending and restating the Second Amended  Agreement,
as amended, (i) to make certain changes to the allocations of Net Income and Net
Loss and  (ii) to  approve  the form of the  Partnership's  Fourth  Amended  and
Restated Agreement of Limited  Partnership  attached hereto (the "Fourth Amended
Agreement") to be effective upon the Partnership becoming an UPREIT and upon the
unanimous consent of the remaining Limited Partners, subject to Section 14.1(g).
Consent to this Third  Amended and  Restated  Agreement  of Limited  Partnership
shall be deemed an irrevocable consent to the form of Fourth Amended Agreement.

                  Pursuant  to  Section  4.2,  a  majority  in  interest  of the
Original Limited  Partners and a majority in interest of the Additional  Limited
Partners  have  consented to (i) the  issuance of  Preferred  Units from time to
time, subject to the conditions set forth in Section 4.2(b)(i).

                  NOW, THEREFORE,  the Second Amended Agreement shall be amended
and  restated as follows  (matters in italics are  agreements  with the Original
Limited Partners only).

Article 1.........
                                  Defined Terms

                  The following  definitions  shall be for all purposes,  unless
otherwise clearly  indicated to the contrary,  applied to the terms used in this
Agreement.

                  "Act" means the Delaware  Revised Uniform Limited  Partnership
Act, as it may be amended from time to time, and any successor to such statute.

                  "Additional  Limited  Partner" means a Person  admitted to the
Partnership as a Limited Partner  pursuant to Section 4.2 hereof (other than (i)
a Preferred  Partner,  (ii) the General  Partner or (iii) any  Affiliate  of the
General Partner other than a Property Affiliate) and who is shown as such on the
books  and  records  of the  Partnership,  including  the  Persons  admitted  in
connection with the Partnership's acquisition of assets from Midland Development
Group, Inc. and certain of its affiliated entities.

                  "Additional Units" means Units issued to an Additional Limited
Partner.  As provided in Section 5.2, the distribution  rights of the Additional
Units  are  subordinate  to the  distribution  rights  of the  Original  Limited
Partnership Units but senior to distribution rights of the Class B Units.

                  "Adjusted   Capital   Account"   means  the  Capital   Account
maintained for each Partner as of the end of each Partnership Year (i) increased
by any  amounts  which such  Partner is  obligated  to restore  pursuant  to any
provision of this Agreement or is deemed to be obligated to restore  pursuant to
the   penultimate   sentences  of   Regulations   Sections   1.704-2(g)(1)   and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations  Sections
1.704-1(b)(2)(ii)(d)(4),  1.704-1(b)(2)(ii)(d)(5),  and 1.704-1(b)(2)(ii)(d)(6).
The foregoing  definition of Adjusted Capital Account is intended to comply with
the  provisions  of  Regulations  Section   1.704-1(b)(2)(ii)(d)  and  shall  be
interpreted consistently therewith.

                  "Adjusted  Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.

                  "Adjusted  Series A  Preferred  Units" of a Partner  means the
number  of Series A  Preferred  Units  owned by the  Partner  multiplied  by the
quotient  obtained by  dividing  $50 by $24.25 (the Value of a Share on June 25,
1998).

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

                  "Agreement" means this Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.

                  "Articles  of  Incorporation"  means the Amended and  Restated
Articles of  Incorporation of Regency,  as filed with the Florida  Department of
State, as further amended or restated from time to time.

                  "Assignee"  means a  Person  to whom  one or more  Partnership
Units have been transferred in a manner permitted under this Agreement,  but who
has not become a Substituted  Limited Partner,  and who has the rights set forth
in Section 11.5.

                  "Available  Cash"  means with  respect to any period for which
such calculation is being made:

(a)      all cash revenues and funds received by the  Partnership  from whatever
         source (excluding the proceeds of any Capital Contribution other than a
         Capital  Contribution  made by the  General  Partner for the purpose of
         funding   distributions  to  Limited  Partners  and  excluding  Capital
         Transaction  Proceeds)  plus the  amount of any  reduction  (including,
         without  limitation,  a reduction resulting because the General Partner
         determines  such  amounts are no longer  necessary)  in reserves of the
         Partnership, which reserves are referred to in clause (b)(iv) below;

(b)      less the sum of the  following  (except  to the  extent  made  with the
         proceeds of any  Capital  Contribution  and except to the extent  taken
         into account in determining Capital Transaction Proceeds), all of which
         shall be paid subject to Section 7.1(h):

     (i) all interest, principal and other debt payments made during such period
by the Partnership,

     (ii) all other cash expenditures  (including capital  expenditures) made by
the Partnership during such period,

(iii)             investments  in any entity  (including  loans made thereto) to
                  the extent that such  investments are not otherwise  described
                  in clauses (b)(i) or (ii), and

(iv)              the amount of any increase in reserves established during such
                  period which the General  Partner  determines  is necessary or
                  appropriate in its sole and absolute discretion.

Notwithstanding  the  foregoing,  Available  Cash  shall  not  include  any cash
received or reductions in reserves,  or take into account any disbursements made
or reserves  established,  after commencement of the dissolution and liquidation
of the Partnership.

                  "Business  Day"  means any day  except a  Saturday,  Sunday or
other day on which commercial banks in New York City, New York are authorized or
required by law to close.

     "Capital  Account"  means  the  Capital  Account  maintained  for a Partner
pursuant to Section 4.4 hereof.

                  "Capital Contribution" means, with respect to any Partner, any
cash,  cash  equivalents  or the value (as set forth by separate  agreement)  of
property  which  such  Partner  contributes  or is deemed to  contribute  to the
Partnership pursuant to Section 4.1, Section 4.2 or Section 4.5 hereof and which
shall be treated as a contribution to the Partnership pursuant to Section 721(a)
of the Code.

                  "Capital   Transaction"  means  a  sale,   exchange  or  other
disposition  (other than in  liquidation of the  Partnership)  or a financing or
refinancing by the Partnership (which shall not include any loan or financing to
the General Partner as permitted by Section  7.1(a)(iii)) of a Partnership asset
or any portion thereof.

                  "Capital Transaction  Proceeds" means the net cash proceeds of
a Capital  Transaction,  after  deducting  all expenses  incurred in  connection
therewith and after  application of any proceeds,  at the sole discretion of the
General  Partner,  toward the  payment of any  indebtedness  of the  Partnership
whether  or not  secured by the  property  that is the  subject of that  Capital
Transaction, the purchase,  improvement or expansion of Partnership property, or
the  establishment  of any reserves deemed  reasonably  necessary by the General
Partner,  including  reserves  for the  purchase,  improvement  or  expansion of
Partnership property.

                  "Cash   Amount"   means  an  amount  of  cash  arrived  at  by
multiplying (i) the number of Partnership Units that are the subject of a Notice
of Redemption times (ii) the Unit Adjustment Factor times (iii) the Value on the
Valuation Date of a Share.

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

                  "Class  B  Units"  means  the  Partnership   Interest  in  the
Partnership  owned by the General Partner or any Affiliate other than a Property
Affiliate but shall exclude any Series A Preferred Units and any other Preferred
Units issued  pursuant to Section  4.2(b)(i).  As provided in Section 5.1(a) and
Section 5.1(b), the distribution  rights of the Class B Units are subordinate to
the distribution rights of the non-Class B Units.

                  "Class 2 Units"  means  the  Partnership  Interests  issued in
connection with the Partnership's acquisition of assets from Midland Development
Group,  Inc.  and  certain of its  affiliated  entities.  Pursuant to this Third
Amended and Restated  Agreement of Limited  Partnership of the Partnership,  all
Class 2 Units have been reclassified as Additional Units.

                  "Class Z Branch  Partners" means the Original Limited Partners
listed on Exhibit D, who have  failed to consent  within 30 days after the Third
Amendment Date to the adoption of this Third Amended Agreement; provided that an
Original Limited Partner who consents to the Third Amended  Agreement after such
30 day period,  which consent may not be revoked,  shall not be deemed a Class Z
Branch  Partner  effective  the  first  day of  January  after the date that the
General Partner receives such consent.

                  "Class  Z  Midland  Partners"  means  the  Additional  Limited
Partners  listed on Exhibit D, who have  failed to consent  within 30 days after
the Third  Amendment  Date to the  adoption  of this  Third  Amended  Agreement;
provided  that an Additional  Limited  Partner who consents to the Third Amended
Agreement after such 30 day period, which consent may not be revoked,  shall not
be deemed a Class Z Midland Partner effective the first day of January after the
date that the General Partner receives such consent.

                  "Code"  means the Internal  Revenue Code of 1986,  as amended.
Any  reference  herein to a specific  section or  sections  of the Code shall be
deemed to include a reference to any corresponding provision of future law.

                  "Common Stock" means the voting Common Stock, $0.01 par value,
of Regency.

                  "Common Units" means the Original Limited  Partnership  Units,
the  Additional  Units and any other  Partnership  Interests in the  Partnership
other than Class B Units hereafter  authorized,  issued or outstanding which are
entitled  to   distributions   and  to  rights  upon  voluntary  or  involuntary
liquidation,  winding-up or dissolution  only out of any assets  remaining after
all Preferred Units have received the amounts to which they are entitled. Common
Units shall rank senior to the Class B Units as to  distributions  made pursuant
to Section 5.1(a) or Section 5.1(b).

                  "Consent"  means,   except  where  this  Agreement   expressly
specifies otherwise, with respect to Limited Partners holding any class of Units
(other than Series A Preferred  Units),  the written consent or affirmative vote
of those Limited  Partners  holding a majority of such Units  outstanding at the
time in question. Except where this Agreement expressly specifies otherwise, the
Consent  of  the  Original   Limited  Partners  means  the  written  consent  or
affirmative  vote of the  Original  Limited  Partners  holding a majority of the
Original Limited Partnership Units outstanding at the time in question.  Consent
of the  Limited  Partners  means the  written  consent of the  Original  Limited
Partners and the  Additional  Limited  Partners  holding a majority of the Units
outstanding at the time in question,  treating such Units as a single class, and
shall  exclude any Partners  holding  Preferred  Units unless this  Agreement is
amended to expressly provide for a particular class or series of Preferred Units
to vote together with the holders of Common Units as a single class. "Consent of
the  Limited  Partners"  shall be  determined  excluding  any Units  held by the
General  Partner or any of its  Affiliates  other than a Property  Affiliate who
shall have no right to vote on any matter for which the  consent of the  Limited
Partners is solicited.

     "Contribution Agreement" means that certain Contribution Agreement and Plan
of  Reorganization,  dated  as  of  February  10,  1997,  by  and  among  Branch
Properties, L.P., Branch Realty Inc. and Regency.

                  "Cumulative Unpaid Accrued Return Account" means, with respect
to any  Original  or  Additional  Limited  Partner,  an amount  equal to (i) the
interest  that  would  accrue at the Prime  Rate plus two  percent  (2%) on such
Partner's Cumulative Unpaid Priority  Distribution Account outstanding from time
to time,  less (ii) the  cumulative  amount of Available Cash and the cumulative
amount of any  Capital  Transaction  Proceeds  distributed  with  respect to the
Limited Partnership Units of such Partner in reduction of such Cumulative Unpaid
Accrued  Return  Account  pursuant  to Section  5.1(a)(ii),  Section  5.1(a)(v),
Section 5.1(b)(i) and Section 5.1(b)(iii).

                  "Cumulative Unpaid Priority  Distribution Account" means, with
respect to any Original or Additional  Limited  Partner,  an amount equal to (i)
the aggregate of all Priority Distribution Amounts for Limited Partnership Units
held by such Partner,  less (ii) the cumulative amount of Available Cash and the
cumulative amount of any Capital Transaction  Proceeds  distributed with respect
to  such  Limited  Partnership  Units  of  such  Partner  in  reduction  of such
Cumulative Unpaid Priority  Distribution  Account pursuant to Section 5.1(a)(i),
Section 5.1(a)(iii),  Section 5.1(a)(iv), Section 5.1(a)(vi), Section 5.1(b)(ii)
and Section 5.1(b)(iv).

                  "Depreciation"  means  for  each  Partnership  Year  or  other
period, an amount equal to the federal income tax depreciation, amortization, or
other cost recovery  deduction  allowable with respect to an asset for such year
or other  period,  except that if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such year
or other period,  Depreciation  shall be an amount which bears the same ratio to
such  beginning  Gross  Asset  Value as the  federal  income  tax  depreciation,
amortization,  or other  cost  recovery  deduction  for such year  bears to such
beginning adjusted tax basis; provided,  however, that if the federal income tax
depreciation,  amortization,  or other cost recovery  deduction for such year is
zero,  Depreciation  shall be determined  with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner,  except
that in the case of a zero basis  property  contributed  by an Original  Limited
Partner,  such property shall be depreciated  for book purposes over a period of
not more than ten years.

                  "Event of  Dissolution"  has the  meaning set forth in Section
13.1.

                  "Excess   Units"  has  the   meaning   set  forth  in  Section
4.5(g)(i)(C).

                  "Exchange  Notice"  has  the  meaning  set  forth  in  Section
4.5(g)(ii)(A).

                  "Exchange   Price"  has  the  meaning  set  forth  in  Section
4.5(g)(i)(A).

                  "First Closing" has the meaning set forth in the  Contribution
Agreement.

                  "Fourth  Amended  Agreement"  means  the  Fourth  Amended  and
Restated Agreement of Limited Partnership attached hereto as Exhibit E.

                  "General  Partner"  means Regency  Realty  Corporation  or its
permitted successors as a general partner of the Partnership.

                  "General  Partnership  Interest" means a Partnership  Interest
held by a General  Partner  that is a general  partnership  interest.  A General
Partnership Interest may be expressed as a number of Class B Units.

                  "Gross  Asset  Value"  means with  respect  to any asset,  the
asset's adjusted basis for federal income tax purposes, except as follows:

(a)      The initial Gross Asset Value of any asset  contributed by a Partner to
         the  Partnership   shall  be  the  fair  market  value   (exclusive  of
         liabilities)  of such asset,  as  determined  by the  General  Partner,
         unless required to be determined in some other manner herein;

     (b) The Gross Asset Values of all  Partnership  assets shall be adjusted to
equal their  respective  fair  market  values  (exclusive  of  liabilities),  as
determined  by  the  General  Partner,  as  of  the  following  times:  (i)  the
acquisition of an additional  interest in the Partnership by any new or existing
Partner in exchange for more than a de minimis  capital  contribution;  (ii) the
distribution by the Partnership to a Partner of more than a de minimis amount of
property as  consideration  for an interest  in the  Partnership;  and (iii) the
liquidation  of the  Partnership  within  the  meaning  of  Regulations  Section
1.704-1(b)(2)(ii)(g);  provided,  however,  that adjustments pursuant to clauses
(i) and  (ii)  above  shall  be  made  only if the  General  Partner  reasonably
determines  that such  adjustments  are necessary or  appropriate to reflect the
relative economic interests of the Partners in the Partnership;

(c)      The Gross  Asset  Value of any  Partnership  asset  distributed  to any
         Partner shall be adjusted to equal the fair market value  (exclusive of
         liabilities) of such asset on the date of distribution as determined by
         the General Partner; and

(d)      The Gross Asset Values of  Partnership  assets  shall be increased  (or
         decreased)  to reflect any  adjustments  to the adjusted  basis of such
         assets pursuant to Code Section 734(b) or Code Section 743(b), but only
         to  the  extent  that  such  adjustments  are  taken  into  account  in
         determining   Capital   Accounts   pursuant  to   Regulations   Section
         1.704-1(b)(2)(iv)(m);  provided, however, that Gross Asset Values shall
         not be  adjusted  pursuant  to this  paragraph  (d) to the  extent  the
         General Partner determines that an adjustment pursuant to paragraph (b)
         above is necessary or appropriate in connection with a transaction that
         would otherwise result in an adjustment pursuant to this paragraph (d).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
paragraphs  (a), (b), or (d) above,  such Gross Asset Value shall  thereafter be
adjusted by the  Depreciation  taken into account with respect to such asset for
purposes of computing profits and losses.

                  "Immediate  Family" means, with respect to any natural Person,
such natural Person's spouse, parents,  descendants,  nephews,  nieces, brothers
and sisters and trusts for the benefit of any of the foregoing.

                  "Incapacity"  or   "Incapacitated"   means,   (i)  as  to  any
individual  Partner,  death,  total  physical  disability or entry by a court of
competent jurisdiction  adjudicating him incompetent to manage his Person or his
estate;  (ii)  as to  any  corporation  which  is a  Partner,  the  filing  of a
certificate  of  dissolution,  or its  equivalent,  for the  corporation  or the
revocation of its charter;  (iii) as to any partnership which is a Partner,  the
dissolution and  commencement of winding up of the  partnership;  (iv) as to any
estate which is a Partner,  the  distribution  by the  fiduciary of the estate's
entire interest in the Partnership;  (v) as to any trustee of a trust which is a
Partner,  the  termination  of the  trust  (but  not the  substitution  of a new
trustee);  or (vi) as to any  Partner,  the  bankruptcy  of  such  Partner.  For
purposes of this  definition,  bankruptcy  of a Partner  shall be deemed to have
occurred when the Partner (a) makes an assignment  for the benefit of creditors,
(b) files a  voluntary  petition  in  bankruptcy,  (c) is adjudged a bankrupt or
insolvent,  or has entered  against him an order of relief in any  bankruptcy or
insolvency  proceeding,  (d) files a petition or answer  seeking for himself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute,  law or regulation,  (e) files an answer or
other  pleading  admitting or failing to contest the material  allegations  of a
petition filed against him in any proceeding of this nature, (f) seeks, consents
to or acquiesces in the appointment of a trustee,  receiver or liquidator of the
Partner or of all or any substantial  part of his properties,  (g) is the debtor
in   any   proceeding   seeking   reorganization,    arrangement,   composition,
readjustment,  liquidation, dissolution or similar relief under any statute, law
or  regulation,  which  has  not  been  dismissed  within  120  days  after  the
commencement  thereof,  or (h) is the subject of a proceeding whereby a trustee,
receiver or liquidator  is appointed  for the Partner or all or any  substantial
part of its  properties  without  the  Partner's  consent or  acquiescence  of a
trustee,  receiver or liquidator,  and such  appointment has not been vacated or
stayed within 90 days after the  appointment or such  appointment is not vacated
within 90 days after the expiration of any such stay.

                  "Indemnitee" means (i) any Person made a party to a proceeding
by reason of his status as (a) the General Partner, (b) a Limited Partner or (c)
a  director  or  officer of the  Partnership  or a Partner,  and (ii) such other
Persons (including  Affiliates of the General Partner or the Partnership) acting
in good faith on behalf of the  Partnership as determined by the General Partner
in its good faith  judgment  other than for any action by such Person  involving
fraud, willful misconduct or gross negligence.

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

                  "Junior   Units"  has  the   meaning   set  forth  in  Section
4.5(c)(iv).

                  "Limited  Partner" means any Person named as a Limited Partner
in Exhibit A attached  hereto,  as such Exhibit may be amended from time to time
in  accordance  with the terms of this  Agreement,  or any  Substituted  Limited
Partner,  Preferred  Partner or  Additional  Limited  Partner,  in such Person's
capacity as a Limited Partner in the Partnership.

                  "Limited Partnership Interest" means a Partnership Interest of
a Limited  Partner in the  Partnership  representing  a  fractional  part of the
Partnership  Interests of all Limited Partners and includes any and all benefits
to which the holder of such a  Partnership  Interest may be entitled as provided
in this  Agreement,  together with all obligations of such Person to comply with
the terms and provisions of this Agreement.  A Limited Partnership  Interest may
be expressed as a number of  Preferred  Units,  Common Units or Class B Units as
provided herein.

                  "Liquidating  Transaction" means any sale or other disposition
of all or  substantially  all of the  assets of the  Partnership  following  the
adoption by the General Partner of a plan of liquidation for the Partnership.

                  "Liquidator" has the meaning set forth in Section 13.2.

                  "Management  Business"  has the  meaning  set forth in Section
7.1(g).

                  "Net Income" and "Net Loss" means for any taxable  period,  an
amount equal to the Partnership's taxable income or loss for such taxable period
determined in accordance  with Section  703(a) of the Code (for this purpose all
items of  income,  gain,  loss or  deduction  required  to be stated  separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:

     (a)    Except   as    otherwise    provided    in    Regulations    Section
1.704-1(b)(2)(iv)(m),  the  computation of all items of income,  gain,  loss and
deduction  shall be made without regard to any election under Section 754 of the
Code which may be made by the  Partnership;  provided,  that the  amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section  734 of the Code as a result of the  distribution  of property by the
Partnership  to a  Partner  (to  the  extent  that  such  adjustments  have  not
previously been reflected in the Partners'  Capital Accounts) shall be reflected
in the  Capital  Accounts  of the  Partners  in the  manner  and  subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m).

(b)      Any income of the  Partnership  that is exempt from federal  income tax
         and not  otherwise  taken into account in  computing  Net Income or Net
         Loss pursuant to this  definition  shall be added to such Net Income or
         Net Loss.

(c)      The computation of all items of income,  gain, loss and deduction shall
         be made  without  regard to the fact that items  described  in Sections
         705(a)(1)(B)  or  705(a)(2)(B)  of the Code are not includable in gross
         income or are neither currently  deductible nor capitalized for federal
         income tax purposes.

(d)      Any income, gain or loss attributable to the taxable disposition of any
         Partnership  property  shall be determined as if the adjusted  basis of
         such  property as of such date of  disposition  were equal in amount to
         the Partnership's Gross Asset Value with respect to such property as of
         such date.

(e)      In lieu of the  depreciation,  amortization,  and other  cost  recovery
         deductions taken into account in computing such taxable income or loss,
         there shall be taken into account Depreciation for such fiscal year.

(f)      In the event the Gross Asset Value of any Partnership asset is adjusted
         pursuant to clause (b) or (c) of the definition thereof,  the amount of
         any such  adjustment  shall be taken into  account as gain or loss from
         the  disposition  of such  asset and  shall be  allocated  pursuant  to
         Section 6.2(g).

(g)      Any items specially allocated under Section 6.2 and Section 6.3 hereof
         shall not be taken into account.

                  Solely for  purposes of  allocating  Net Income or Net Loss in
any Fiscal  Year to the holders of the Series A  Preferred  Units,  items of Net
Income and Net Loss,  as the case may be,  shall not include  Depreciation  with
respect to  properties  (or  groupings  of  properties  selected  by the General
Partner using any method  determined by it to be  reasonable)  that are "ceiling
limited" in respect of the holders of the Series A Preferred Units. For purposes
of the preceding  sentence,  Partnership  property  shall be considered  ceiling
limited  in  respect  of a holder of Series A  Preferred  Units if  Depreciation
attributable to such Partnership  property which would otherwise be allocable to
such Partner, without regard to this paragraph, exceeded depreciation determined
for federal income tax purposes  attributable to such Partnership property which
would otherwise be allocated to such Partner by more than 5%.

                  "Non-U.S.  Person"  means  with  respect  to the  acquisition,
ownership  or transfer  of any  Partnership  Interest  or Shares,  the direct or
indirect  acquisition or ownership  thereof by or a transfer that results in the
direct or indirect  ownership  thereof by any Person who is not (i) a citizen or
resident of the United  States,  (ii) a partnership  or  corporation  created or
organized  in the United  States or under the laws of the  United  States or any
state therein (including the District of Columbia), or (iii) a foreign estate or
trust within the meaning of Section 7701(a)(31) of the Code.

                  "Nonrecourse   Deductions"   has  the  meaning  set  forth  in
Regulations Section 1.704-2(b)(1),  and the amount of Nonrecourse Deductions for
a  Partnership  Year  shall  be  determined  in  accordance  with  the  rules of
Regulations Section 1.704-2(c).

                  "Nonrecourse   Liability"   has  the   meaning  set  forth  in
Regulations Section 1.752-1(a)(2).

                  "Notice  of  Redemption"   means  the  Notice  of  Redemption,
Security  Agreement  and  Investor  Questionnaire  substantially  in the form of
Exhibit  B to this  Agreement,  as it may be  amended  from  time to time by the
General Partner effective upon written notice to the Limited Partners.

                  "Original  Limited  Partner"  means the  Partners who received
Original Limited Partnership Units distributed by Branch Properties, L.P. to its
respective partners pursuant to the Contribution Agreement. The Original Limited
Partners are listed on Exhibit A attached  hereto.  The term  "Original  Limited
Partner"  shall also include any  permitted  transferee  of an Original  Limited
Partner  pursuant to Section 11.3 other than (i) the General Partner or (ii) any
Affiliate of the General Partner other than a Property Affiliate.

                  "Original  Limited  Partnership Unit" means a Partnership Unit
issued to an Original Limited Partner.  The term "Original  Limited  Partnership
Unit" does not  include or refer to any  Preferred  Units,  Additional  Units or
Class B Units.

                  "Parity   Preferred  Units"  means  any  class  or  series  of
Partnership Interests of the Partnership now or hereafter authorized,  issued or
outstanding  expressly  designated by the  Partnership  to rank on a parity with
Series A Preferred Units with respect to  distributions or rights upon voluntary
or involuntary  liquidation,  winding-up or dissolution of the  Partnership,  or
both, as the context may require,  whether or not the dividend  rates,  dividend
payment dates or redemption or liquidation  prices per Unit or conversion rights
or  exchange  rights  shall be  different  from those of the Series A  Preferred
Units.

                  "Partner"  means a General Partner or a Limited  Partner,  and
"Partners" means the General Partner and the Limited Partners.

                  "Partner  Minimum Gain" means an amount,  with respect to each
Partner  Nonrecourse  Debt,  equal to the  Partnership  Minimum  Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).

                  "Partner  Nonrecourse  Debt"  has the  meaning  set  forth  in
Regulations Section 1.704-2(b)(4).

                  "Partner Nonrecourse  Deductions" has the meaning set forth in
Regulations  Section  1.704-2(i)(2),  and  the  amount  of  Partner  Nonrecourse
Deductions  with respect to a Partner  Nonrecourse  Debt for a Partnership  Year
shall be  determined  in  accordance  with  the  rules  of  Regulations  Section
1.704-2(i)(2).

                  "Partnership"  means the limited  partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.

                  "Partnership  Interest"  means an  ownership  interest  in the
Partnership  representing  a  Capital  Contribution  and  includes  any  and all
benefits to which the holder of such a  Partnership  Interest may be entitled as
provided in this  Agreement,  together  with all  obligations  of such Person to
comply with the terms and provisions of this Agreement.  A Partnership  Interest
may be expressed as a number of Preferred Units,  Original  Limited  Partnership
Units, Additional Units or Class B Units.

                  "Partnership  Minimum  Gain"  has the  meaning  set  forth  in
Regulations Section  1.704-2(b)(2),  and the amount of Partnership Minimum Gain,
as well as any net  increase or  decrease in  Partnership  Minimum  Gain,  for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

                  "Partnership Record Date" means the record date established by
the General  Partner for the  distribution of Available Cash pursuant to Section
5.1(a) hereof to Partners  holding Common Units,  which record date shall be the
same as the record date  established by Regency for a dividend to the holders of
Common Stock.

                  "Partnership  Year" means the fiscal year of the  Partnership,
which shall be the calendar year.

                  "Percentage  Interest" means, as to a Partner, its interest in
the  Partnership  as determined by dividing (i) the Adjusted  Series A Preferred
Units,  Common  Units and Class B Units owned by such  Partner by (ii) the total
number of Adjusted Series A Preferred Units, Common Units and Class B Units then
outstanding and as specified in Exhibit A attached  hereto,  as such Exhibit may
be amended from time to time in accordance with the terms of this Agreement.

                  "Person"  means  an  individual  or  a  corporation,   limited
liability company, partnership, trust, unincorporated organization,  association
or other entity.

                  "Pledged  Units" means any Units pledged by a Limited  Partner
to the Partnership or the General Partner, whether pursuant to this Agreement or
by separate agreement.

                  "Preexisting  Partner"  has the  meaning  set forth in Section
14.1(g)(iv) of this Agreement.  Preexisting Partner shall not include any Person
who is not a transferee of a Preexisting  Partner and who first became a Limited
Partner after the Third Amendment Date.

                  "Preferred Partner" means a Partner who holds Preferred Units.
                   -----------------

                  "Preferred Unit Distribution Payment Date" has the meaning set
forth in Section 4.5(c)(i).

                  "Preferred Unit  Partnership  Record Date" has the meaning set
forth in Section 4.5(c)(i).

                  "Preferred  Units" means the Series A Preferred  Units and any
Partnership  Interests  in  the  Partnership  hereafter  authorized,  issued  or
outstanding from time to time pursuant to Section 4.2(b)(i) expressly designated
by the  Partnership  to rank  senior to the Common  Units and Class B Units with
respect to  distributions  or rights upon voluntary or involuntary  liquidation,
winding-up or dissolution of the Partnership, or both.

                  "Property Affiliate" means a Person, other than any Subsidiary
of Regency,  who  contributed  property in  exchange  for a Limited  Partnership
Interest  and who may be deemed  an  Affiliate  of the  General  Partner,  e.g.,
because  such  person is a director of Regency or owns a  significant  number of
Units or shares of Regency stock.

                  "Prime  Rate"  means,  on any  date,  a  fluctuating  rate  of
interest per annum equal to the rate of interest  most recently  established  by
Wachovia  Bank of  Georgia,  N.A.  at its  Atlanta,  Georgia  office (or, at the
General  Partner's  election,  another major lender to the  Partnership,  at the
office with which the  Partnership  deals),  as its prime rate of  interest  for
loans in United States dollars.

                  "Priority  Distribution  Amount"  means  with  respect  to  an
Original   Limited   Partnership  Unit  or  Additional  Unit  outstanding  on  a
Partnership  Record  Date (i) the  cash  dividend  per  share  of  Common  Stock
(including  any  dividend  designated  by Regency as capital  gain  pursuant  to
Section  857(b)(3)(C) of the Code) declared by Regency on the Partnership Record
Date,  multiplied  by  (ii)  the  Unit  Adjustment  Factor  in  effect  on  such
Partnership  Record Date except that on the first  Partnership  Record Date that
occurs with respect to an Additional  Unit, the General Partner may require that
the Priority Distribution Amount be prorated to the extent that the Unit has not
been outstanding  each day since the immediately  preceding  Partnership  Record
Date.

                  "PTP" means a "publicly traded partnership" within the meaning
of Section 7704 of the Code.

                  "Recapture   Income"   means  any  gain   recognized   by  the
Partnership  (computed without regard to any adjustment  required by Section 734
or Section 743 of the Code) upon the disposition of any property or asset of the
Partnership,   which  gain  is  characterized  as  ordinary  income  because  it
represents  the  recapture of deductions  previously  taken with respect to such
property or asset.

                  "Recourse   Liabilities"   has  the   meaning   set  forth  in
Regulations Section 1.752-1(a)(1).

                  "Redeeming Partner" means a Limited Partner who duly exercised
a Redemption Right.

                  "Redemption  Amount"  means the Share Amount or, as determined
by the General Partner in its sole and absolute  discretion,  the Cash Amount or
any combination of the Share Amount and the Cash Amount.

                  "Redemption  Right"  with  respect  to  the  Original  Limited
Partners has the meaning set forth in Section  8.6(a) hereof and with respect to
Additional Limited Partners means any right granted to such Partners by separate
agreement  of the  Partnership  to redeem  such  Partners'  Limited  Partnership
Interests for Common Stock and/or cash.

             "Regency" means Regency Realty Corporation, a Florida corporation.

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

                  "REIT" means a real estate  investment trust under Section 856
of the Code.

                  "Securities Act" means the Securities Act of 1933, as amended.

     "Security  Capital"  means  Security  Capital  U.S.  Realty,  a  Luxembourg
corporation,  Security Capital  Holdings,  S.A., a Luxembourg  corporation,  and
their Affiliates.
                  "Series A Preferred  Partner"  means the Limited  Partners who
received Series A Preferred Units and also include any permitted transferee of a
Series A Preferred  Partner  pursuant to Section 11.3 and the General Partner or
any  Affiliate of Regency upon  exchange or redemption of the Series A Preferred
Units pursuant to Section 4.5.

                  "Series  A  Preferred  Stock"  has the  meaning  set  forth in
Section 4.5(g)(i)(A).

                  "Series A Preferred  Units" means the Partnership  Interest in
the  Partnership   issued  pursuant  to  Section  4.2  and  Section  4.5  hereof
representing  8.125% Series A Cumulative  Redeemable  Preferred  Units. The term
"Series A  Preferred  Unit" does not  include or refer to any  Original  Limited
Partnership Units, Additional Units or Class B Units.

                  "Series A Priority Return" means an amount equal to 8.125% per
annum,  determined  on the basis of a 360 day year of twelve 30 day  months  (or
actual  days  for any  month  which  is  shorter  than a full  monthly  period),
cumulative to the extent not distributed for any given  distribution  period, of
the stated value of $50 per Series A Preferred  Unit,  commencing on the date of
issuance of such Series A Preferred Unit.

                  "Series  A  Redemption  Price"  has the  meaning  set forth in
Section 4.5(e)(i).

                  "Share  Amount"  means  a  number  of  Shares  arrived  at  by
multiplying (i) the number of Partnership Units that are the subject of a Notice
of Redemption times (ii) the Unit Adjustment Factor.

                  "Shares"  means (i) the Common Stock of Regency,  and (ii) any
securities  issuable  with respect to Shares as a result of the  application  of
Section 11.2(b).

                  "Specified  Redemption  Date" means the later of (i) 5:00 p.m.
Eastern time, on the date  specified by the Redeeming  Partner in such Partner's
Notice of Redemption, or (ii) the close of business,  Eastern time, on the first
Business Day after the date in clause (i) if such date is not a Business Day, or
(iii) 5:00 p.m.  Eastern  time,  on the tenth  Business Day after receipt by the
General Partner of a Notice of Redemption.

                  "Subsidiary"   means,   with   respect  to  any  Person,   any
corporation  or other  entity of which a majority of (i) the voting power of the
voting equity  securities  or (ii) the  outstanding  equity  interests is owned,
directly or indirectly, by such Person.

                  "Substituted  Limited  Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.

                  "Third  Amended   Agreement"  means  this  Third  Amended  and
Restated Agreement of Limited Partnership dated as of __________, 1999.

                  "Third  Amendment  Date" means  __________________,  1999, the
effective date of the Third Amended Agreement.

                  "Transaction" has the meaning set forth in Section 11.2(b).

                  "Unit," "Limited Partnership Unit" or "Partnership Unit" means
the  Partnership  Interest  in the  Partnership  to be issued to and held by the
Limited  Partners  pursuant  to Section  4.1,  Section 4.2 or Section  4.5.  The
ownership of Units may be evidenced by such form of  certificate  as the General
Partner  may  determine,  in its  discretion,  and  the  transfer  of the  Units
evidenced by such certificates shall be governed by Article 11.

                  "Unit Adjustment  Factor" means initially 1.0;  provided that,
in order to prevent dilution of the Redemption  Right, in the event that Regency
(i) declares or pays a dividend on its outstanding  Common Stock in Common Stock
or makes a distribution to all holders of its outstanding Common Stock in Common
Stock,  (ii)  subdivides  its  outstanding  Common Stock,  or (iii) combines its
outstanding  Common  Stock into a smaller  number of shares,  except as provided
below,  the Unit  Adjustment  Factor shall be adjusted by  multiplying  the Unit
Adjustment  Factor by a fraction,  the numerator of which shall be the number of
Shares  issued and  outstanding  on the record date  (assuming for such purposes
that such dividend, distribution,  subdivision or combination has occurred as of
such time),  and the  denominator  of which shall be the actual number of Shares
(determined  without the above assumption)  issued and outstanding on the record
date for such dividend, distribution, subdivision or combination. Any adjustment
to the Unit  Adjustment  Factor shall  become  effective  immediately  after the
effective  date of such event  retroactive  to the record date, if any, for such
event.  If the  General  Partner  (i) makes a  distribution  to all  holders  of
outstanding  Units in Units,  (ii)  subdivides the  outstanding  Units, or (iii)
combines the  outstanding  Units into a smaller number of Units at the same time
as a distribution,  subdivision or combination,  as the case may be, occurs with
respect  to the  Common  Stock,  in such  manner as to  prevent  enlargement  or
dilution of the right to redeem one Unit for one share of Common Stock,  then no
adjustment shall be made to the Unit Adjustment  Factor,  and such distribution,
subdivision or combination of Units shall take the place of an adjustment to the
Unit Adjustment Factor so as to preserve the one-Share-for-one  Unit equivalency
for purposes of any Redemption Right.

                  "Valuation  Date"  means the date of  receipt  by the  General
Partner of a Notice of  Redemption  or, if such date is not a Business  Day, the
first Business Day thereafter.

                  "Value"  means,  with  respect to a Share,  the average of the
daily market price of the Common Stock for the ten (10) consecutive trading days
immediately preceding the Valuation Date. The market price for each such trading
day shall be: (i) if the Common  Stock is listed or  admitted  to trading on any
securities  exchange or the Nasdaq National Market,  the closing price,  regular
way, on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the Common Stock is not listed
or admitted to trading on any securities exchange or the Nasdaq National Market,
the last reported sale price on such day or, if no sale takes place on such day,
the average of the  closing  bid and asked  prices on such day, as reported by a
reliable  quotation source  designated by the General  Partner,  or (iii) if the
Common Stock is not listed or admitted to trading on any securities  exchange or
the Nasdaq  National  Market and no such last reported sale price or closing bid
and asked prices are  available,  the average of the  reported  high bid and low
asked prices on such day, as reported by a reliable  quotation source designated
by the General  Partner,  or if there  shall be no bid and asked  prices on such
day, the average of the high bid and low asked  prices,  as so reported,  on the
most recent day (not more than 10 days prior to the date in question)  for which
prices  have  been so  reported;  provided,  that if there  are no bid and asked
prices reported  during the 10 days prior to the date in question,  the Value of
the Common Stock shall be determined by Regency's  board of directors  acting in
good  faith  on the  basis  of  such  quotations  and  other  information  as it
considers, in its reasonable judgment, appropriate.

Article 2.........
                             Organizational Matters

Section 2.1.......Organization; Application of Act.
                  --------------------------------

(a) Organization  and Formation of Partnership.  The Partnership has been formed
as a limited  partnership under the Act. The General Partner is the sole general
partner  and  the  Limited  Partners  are  the  sole  limited  partners  of  the
Partnership.

(b) Application of Act. The Partnership is a limited partnership pursuant to the
provisions  of the Act and upon  the  terms  and  conditions  set  forth in this
Agreement.  Except as expressly provided herein to the contrary,  the rights and
obligations  of the  Partners  and the  administration  and  termination  of the
Partnership  shall be governed  by the Act.  No Partner has any  interest in any
Partnership  property,  and the  Partnership  Interest of each Partner  shall be
personal property for all purposes.

Section 2.2.......Name. The name of the Partnership is Regency Centers, L.P. The
Partnership's  business  may be  conducted  under any other name or names deemed
advisable by the General  Partner,  including the name of the General Partner or
any  Affiliate  thereof.  The words  "Limited  Partnership,"  "L.P.,"  "Ltd." or
similar  words or letters  shall be  included  in the  Partnership's  name where
necessary for the purposes of complying with the laws of any  jurisdiction  that
so requires.  The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall promptly
notify the  Limited  Partners  of such  change;  provided,  that the name of the
Partnership may not be changed to include the name, or any variant  thereof,  of
any Limited Partner without the written consent of that Limited Partner.

Section  2.3.......Registered Office and Agent; Principal Office. The address of
the registered  office of the Partnership in the State of Delaware is located at
1013 Centre Road, City of Wilmington,  County of New Castle, Delaware 19801, and
the registered  agent for service of process on the  Partnership in the State of
Delaware at such registered office is Corporation Service Company. The principal
office of the  Partnership is 121 W. Forsyth  Street,  Suite 200,  Jacksonville,
Florida 32202,  or such other place as the General Partner may from time to time
designate  by notice to the  Limited  Partners.  The  Partnership  may  maintain
offices at such other place or places  within or outside the State of Florida as
the General Partner deems advisable.

Section  2.4.......Term.  The term of the Partnership shall commence on the date
hereof and shall continue until December 31, 2097, unless it is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.

Article 3.........
                                     Purpose

Section  3.1.......Purpose and Business.  The purpose and nature of the business
to be conducted by the  Partnership  is (i) to conduct any business  that may be
lawfully conducted by a limited partnership organized pursuant to the Act and in
connection therewith to sell or otherwise dispose of Partnership assets, (ii) to
enter into any partnership, joint venture or other similar arrangement to engage
in any of the foregoing or the  ownership of interests in any entity  engaged in
any of the  foregoing  and (iii) to do anything  necessary or  incidental to the
foregoing  which,  in each case, is not in breach of this  Agreement;  provided,
however,  that each of the  foregoing  clauses  (i),  (ii),  and (iii)  shall be
limited and  conducted in such a manner as to permit  Regency at all times to be
classified as a REIT,  unless Regency provides notice to the Partnership that it
intends to cease or has ceased to qualify as a REIT.

Section  3.2.......Powers.  The  Partnership is empowered to do any and all acts
and  things  necessary,   appropriate,   proper,  advisable,  incidental  to  or
convenient for the furtherance and  accomplishment  of the purposes and business
described  herein  and  for  the  protection  and  benefit  of the  Partnership;
provided,  however, that the Partnership shall not take, or refrain from taking,
any action which,  in the judgment of the General  Partner,  (i) could adversely
affect the ability of Regency to continue to qualify as a REIT,  unless  Regency
provides  notice to the  Partnership  that it  intends to cease or has ceased to
qualify as a REIT,  (ii) could  subject  Regency to any  additional  taxes under
Section  857 or  Section  4981 of the Code or  (iii)  could  violate  any law or
regulation  of any  governmental  body or agency  having  jurisdiction  over the
General Partner,  Regency or their securities,  unless such action (or inaction)
shall have been specifically consented to by the General Partner in writing.

Article 4.........
                    Capital Contributions; Issuance Of Units;
                                Capital Accounts

Section 4.1.......Capital Contributions of the Partners.

(a)  Initial  Capital   Contributions  of  Original  Limited  Partners.   Branch
Properties,  L.P. has  contributed  property to the  Partnership  which shall be
deemed to have been  contributed by its respective  partners as Original Limited
Partners.  The Original  Limited  Partners  who have not  exercised a Redemption
Right with respect to all their Units are set forth on Exhibit A,  together with
their  respective  Percentage  Interests.  Percentage  Interests of the Original
Limited Partners shall be adjusted in Exhibit A from time to time by the General
Partner  to the  extent  permitted  by  this  Agreement  to  reflect  accurately
redemptions,  Capital Contributions, the issuance of Additional Units or Class B
Units,  or similar events having an effect on a Partner's  Percentage  Interest.
Any  Partnership  Interests held by the General  Partner or any Affiliate  other
than a  Property  Affiliate  (including  Partnership  Interests  acquired  under
Section 4.2, Section 8.6 and Section 8.7) shall be Class B Units, other than the
Series A Preferred Units, the issuance of which has been approved by the Limited
Partners  pursuant to Section 4.2, and any  Preferred  Units issued  pursuant to
Section 4.2(b)(i).

(b) Initial  Capital  Contributions  of  Additional  Limited  Partners.  Midland
Development  Group,  Inc. and certain of its  affiliated  entities and PP Center
Limited have  contributed  property to the Partnership  which shall be deemed to
have been  contributed by their respective  equity owners as Additional  Limited
Partners.  Such Additional  Limited Partners who have not exercised a Redemption
Right with respect to all their Units are set forth on Exhibit A,  together with
their respective Percentage Interests.

(c)  Capital   Contributions  by  General  Partner.   The  General  Partner  has
contributed  cash or other assets to the  Partnership in exchange for the number
of Class B Units set  forth on  Exhibit  A. The  General  Partner  also owns the
number of Class B Units set forth on  Exhibit A which were  acquired  by Regency
upon the  exchange  by  Regency of Shares  pursuant  to the  exercise  by former
Limited Partners of Redemption Rights.

(d) Capital Contributions of Series A Preferred Partners. The Series A Preferred
Partners  have  contributed  cash to the  Partnership  in the  amount of $50 per
Series A  Preferred  Unit.  The  distribution  rights for the Series A Preferred
Units  shall be  senior  to the  distribution  rights  of the  Original  Limited
Partnership  Units,  the Additional  Units and the Class B Units.  The number of
Series A Preferred Units issued to the Series A Preferred  Partners is set forth
on Exhibit A.

(e)  Additional  Capital  Contributions  or  Assessments.  No  Partner  shall be
assessed or be required to contribute  additional funds or other property to the
Partnership,  except  for any  such  amounts  which  a  Limited  Partner  may be
obligated to repay under  Section 5.3 or Section 13.4 and such amounts which the
General  Partner  may be  obligated  to  contribute  as provided  under  Section
7.1(a)(iii).  Any additional funds required by the Partnership, as determined by
the General Partner in its reasonable  business judgment,  may, at the option of
the General  Partner and without an obligation to do so, be  contributed  by the
General  Partner as  additional  Capital  Contributions.  If and as the  General
Partner or any other  Partner  makes  additional  Capital  Contributions  to the
Partnership,  each such Partner shall receive Additional Units, Class B Units or
other  Partnership  Interests,  subject to the  provisions  of  Section  4.2 and
Section 4.5, and such Partner's Capital Account shall be adjusted as provided in
Section 4.4.

(f) Return of Capital  Contributions.  Except as  otherwise  expressly  provided
herein,  the  Capital  Contribution  of each  Partner  will be  returned to that
Partner  only in the manner and to the extent  provided in Article 5 and Article
13 hereof,  and no Partner may withdraw from the  Partnership  or otherwise have
any right to demand or receive  the return of its  Capital  Contribution  to the
Partnership  (as  such),   except  as  specifically   provided   herein.   Under
circumstances  requiring a return of any Capital Contribution,  no Partner shall
have the right to  receive  property  other than  cash,  except as  specifically
provided  herein.  No Partner  shall be  entitled  to  interest  on any  Capital
Contribution or Capital Account  notwithstanding  any  disproportion  therein as
between  the  Partners.  Except as  specifically  provided  herein,  the General
Partner  shall  not be  liable  for the  return of any  portion  of the  Capital
Contribution   of  any  Limited   Partner,   and  the  return  of  such  Capital
Contributions  shall be made solely from Partnership assets. The General Partner
may, but shall not be obligated to, make Capital  Contributions  for the purpose
of enabling the Partnership to make  distributions  of Available Cash to Limited
Partners.

(g)  Liability of Limited  Partners.  No Limited  Partner shall have any further
personal  liability to contribute money to, or in respect of, the liabilities or
the obligations of the Partnership,  nor shall any Limited Partner be personally
liable for any obligations of the Partnership,  except as otherwise  provided in
Section  4.1(e) or in the Act. No Limited  Partner shall be required to make any
contributions  to  the  capital  of  the  Partnership  other  than  its  Capital
Contribution.

Section 4.2.......Issuances of Additional Partnership Interests.

(a)  Limitations.  Separate  agreements  relating to the admission of Additional
Limited  Partners set forth the  provisions,  if any, upon which any  Additional
Units shall be issued to Additional  Limited Partners in the form of earn-out or
as  consideration  for additional  assets to be  contributed by such  Additional
Limited  Partners  to the  Partnership.  The  General  Partner  shall  cause the
earn-out  Additional  Units to be  issued  to the  Additional  Limited  Partners
entitled to receive the same, and shall cause the amendment of this Agreement to
reflect the issuance of any such Additional  Units.  Subject to the restrictions
set  forth  below and in  Section  4.5(f)(ii),  the  General  Partner  is hereby
authorized to cause the Partnership at any time or from time to time to issue to
the  Partners or to other  Persons  such  Partnership  Interests  in one or more
classes,  or one or more  series of any such  classes,  with such  designations,
preferences  and  relative,  participating,  optional or other  special  rights,
powers and duties,  and for such  consideration  as shall be  determined  by the
General  Partner in its sole and absolute  discretion,  subject to Delaware law,
including,  without  limitation,  (i) the  allocations  of items of  Partnership
income,  gain,  loss,  deduction  and  credit  to each  such  class or series of
Partnership  Interests,  (ii)  the  right  of  each  such  class  or  series  of
Partnership  Interests  to share in  Partnership  distributions,  and  (iii) the
rights of each such class or series of Partnership  Interests  upon  dissolution
and liquidation of the  Partnership;  provided,  however,  that so long as there
shall be any Original Limited Partnership Units outstanding, without the Consent
of the Original Limited Partners,  (a) any Partnership Interests issued shall be
subordinate to the Original  Limited  Partnership  Units and will not affect the
priority of distributions with respect to the Original Limited Partnership Units
as set forth in Section  5.1 hereof,  (b) no  Partnership  Interests  other than
Class B Units shall be issued to the  General  Partner or any  Affiliate  of the
General  Partner  other  than a  Property  Affiliate,  and  (c)  no  Partnership
Interests  on a parity  with the  Original  Limited  Partnership  Units shall be
issued to any Person,  and  provided,  further,  that without the Consent of the
Additional  Limited  Partners  holding  Additional  Units,  (a)  no  Partnership
Interests other than Class B Units shall be issued to the General Partner or any
Affiliate of the General Partner other than a Property Affiliate, and (b) except
as provided in Section 6.2(g), no Partnership Interests senior to the Additional
Units shall be issued to any Person.

(b)  Consent  Granted by Limited  Partners  for Certain  Issuances.  Pursuant to
Section  4.2(a),  the  Consent  of Limited  Partners  holding  Original  Limited
Partnership  Units and the Consent of Limited Partners holding  Additional Units
has been obtained for, and no further Consent of the Limited  Partners or of any
class of Limited  Partners  shall be required  for, the  issuance of  additional
Units from time to time as follows:

     (i) Issuance of Preferred Units.  Subject to Section 4.5(f)(ii),  Preferred
Units may be issued to any Limited  Partner if, as a result of such issuance and
the  application  of the  proceeds  therefrom,  the  sum of  (i)  the  aggregate
liquidation  preference of all outstanding  Preferred Units entitled to priority
upon  liquidation  and (ii) the  Partnership's  gross sales price of outstanding
Preferred  Units  entitled to priority  only with  respect to  distributions  of
Available Cash would not exceed twenty percent (20%) of the  Partnership's  book
value before depreciation and amortization as of the end of the calendar quarter
preceding the date of issuance, determined in accordance with generally accepted
accounting  principles.  Nothing in this Section 4.2(b)(i) shall be construed to
prohibit the General  Partner  from (i)  redeeming  Series A Preferred  Units or
other  Preferred  Units  issued  from  time to  time  pursuant  to this  Section
4.2(b)(i) to third  parties who are not  Affiliates  of the General  Partner and
(ii) holding and receiving  distributions on such Redeemed Preferred Units where
such Units are redeemed in exchange for preferred  stock of the General  Partner
having designations,  preferences and other rights substantially  similar to the
designations, preferences and other rights of the Units so redeemed.

(c)  Certain  Issuances  in the  Nature of Stock  Split.  Nothing  herein  shall
prohibit  the  General  Partner  from  issuing  Units pro rata to the holders of
existing  Units in lieu of adjusting  the Unit  Adjustment  Factor in connection
with a stock split,  stock  dividend or similar event with respect to the Common
Stock.

Section  4.3.......No  Preemptive  Rights.  No Person shall have any preemptive,
preferential  or other  similar  right with  respect to (i)  additional  Capital
Contributions  or  loans  to the  Partnership  or (ii)  issuance  or sale of any
Partnership Interests.

Section 4.4.......Capital Accounts of the Partners.

(a) General.  The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations  Section  1.704-1(b)(2)(iv).
Such  Capital  Account  shall be  increased  by (i) the  amount  of all  Capital
Contributions  made  by  such  Partner  to  the  Partnership  pursuant  to  this
Agreement,  (ii) all items of Partnership  income and gain (including income and
gain  exempt from tax)  allocated  to such  Partner  pursuant to Section 6.1 and
Section  6.2 of  this  Agreement,  and  (iii)  the  amount  of  any  Partnership
liabilities  assumed  by such  Partner  or which  are  secured  by any  property
distributed  to such  Partner,  and decreased by (x) the amount of cash or Gross
Asset Value of all actual and deemed  distributions  of cash or property made to
such Partner pursuant to this Agreement,  (y) all items of Partnership deduction
and loss  allocated to such  Partner  pursuant to Section 6.1 and Section 6.2 of
this Agreement, and (z) the amount of any liabilities of such Partner assumed by
the Partnership or which are secured by any property contributed by such Partner
to the Partnership.  Additional Capital Contributions shall be deemed to be made
by reason of the issuance,  and the Additional Limited Partner's Capital Account
shall be  adjusted  by an  amount  equal to the  agreed  value  (as set forth by
separate agreement), of additional Partnership Interests issued to an Additional
Limited Partner pursuant to any earn-out  provisions in the agreement  governing
such  Additional  Limited  Partner's  admission  to the  Partnership.  Any  such
additional Capital  Contributions shall be allocated to the items of contributed
property  contributed by each such  Additional  Limited Partner in proportion to
their  book  values  at the  time  of  issuance  of the  additional  Partnership
Interests.

     (b) Transfers of Partnership Units. A transferee of a Partnership  Interest
shall succeed to a pro rata portion of the Capital Account of the transferor.

(c) Modification by General Partner.  The provisions of this Agreement  relating
to the maintenance of Capital  Accounts are intended to comply with  Regulations
Section 1.704-1(b),  and shall be interpreted and applied in a manner consistent
with such Regulations.  In the event the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts,  or any debits or
credits thereto (including,  without  limitation,  debits or credits relating to
liabilities  which are secured by contributed  or distributed  property or which
are assumed by the Partnership,  the General Partner,  or any Limited Partners),
are computed in order to comply with such  Regulations,  the General Partner may
make such  modification  without  regard to  Article 14 of this  Agreement.  The
General  Partner  also  shall (i) make any  adjustments  that are  necessary  or
appropriate to maintain  equality  between the Capital  Accounts of the Partners
and the amount of Partnership  capital  reflected on the  Partnership's  balance
sheet,  as computed for book purposes,  in accordance with  Regulations  Section
1.704-1(b)(2)(iv)(q),  and (ii) make any appropriate  modifications in the event
unanticipated  events might  otherwise  cause this  Agreement not to comply with
Regulations Section 1.704-1(b).

Section  4.5.......Issuance  of Series A Preferred Units.  Pursuant to authority
granted by Section 4.2 with the Consent of the Original Limited Partners and the
Consent of the  Additional  Limited  Partners,  the General  Partner  caused the
Partnership  to establish a series of  Partnership  Interests  representing  the
Series A Preferred  Units,  with such  designations,  preferences  and relative,
participating,  optional or other special  rights,  powers and duties as are set
forth in this Section  4.5. In the event of a conflict  between this Section 4.5
and any other  provision of this  Agreement as to the Series A Preferred  Units,
the provisions of this Section 4.5 shall control.

(a)  Designation  and Number.  A series of Partnership  Units in the Partnership
designated as the "8.125%  Series A Cumulative  Redeemable  Preferred  Units" is
hereby established. The number of Series A Preferred Units shall be 1,600,000.

(b) Rank. The Series A Preferred  Units will, with respect to  distributions  or
rights upon voluntary or involuntary  liquidation,  winding-up or dissolution of
the  Partnership,  or both,  rank senior to all classes or series of Partnership
Interests now or hereafter  authorized,  issued or  outstanding,  other than any
class or  series  of  equity  securities  of the  Partnership  issued  after the
issuance of the Series A Preferred Units and expressly  designated in accordance
with this  Agreement  as  ranking  on a parity  with or  senior to the  Series A
Preferred  Units as to  distributions  or rights upon  voluntary or  involuntary
liquidation, winding-up or dissolution of the Partnership, or both.

(c)      Distributions.


     (i)  Payment of  Distributions.  Subject to the rights of holders of Parity
Preferred Units and any holders of Partnership  Interests  issued after the date
of issuance  of the Series A  Preferred  Units in  accordance  herewith  ranking
senior to the  Series A  Preferred  Units as to the  payment  of  distributions,
holders of Series A Preferred  Units shall be entitled to receive,  when, as and
if declared by the  Partnership  acting  through  the  General  Partner,  out of
Available Cash and Capital Transaction  Proceeds,  cumulative  preferential cash
distributions  at  the  rate  per  annum  of  8.125%  of  the  original  Capital
Contribution  per  Series  A  Preferred  Unit.  Such   distributions   shall  be
cumulative,  shall accrue from the original date of issuance and will be payable
(A)  quarterly  in arrears,  on or before  March 31, June 30,  September  30 and
December 31 of each year  commencing  on June 30, 1998 and, (B), in the event of
(i) an exchange of Series A Preferred  Units into Series A Preferred  Stock,  or
(ii) a  redemption  of  Series  A  Preferred  Units,  on the  exchange  date  or
redemption  date, as applicable  (each a "Preferred  Unit  Distribution  Payment
Date").  The amount of the distribution  payable for any period will be computed
on the  basis of a 360-day  year of  twelve  30-day  months  and for any  period
shorter than a full quarterly period for which  distributions are computed,  the
amount of the  distribution  payable will be computed on the basis of the actual
number  of  days  elapsed  in  such  a  30-day  month.  If  any  date  on  which
distributions  are to be made on the Series A Preferred  Units is not a Business
Day,  then payment of the  distribution  to be made on such date will be made on
the next  succeeding  day that is a Business  Day (and  without any  interest or
other payment in respect of any such delay) except that, if such Business Day is
in the  next  succeeding  calendar  year,  such  payment  shall  be  made on the
immediately  preceding Business Day, in each case with the same force and effect
as if made on such date.  Distributions  on June 30, 1998 and  thereafter on the
Series A  Preferred  Units will be made to the holders of record of the Series A
Preferred  Units on the  relevant  record  dates to be fixed by the  Partnership
acting  through the General  Partner,  which record dates shall be not less than
ten (10) days and not more than thirty (30)  Business Days prior to the relevant
Preferred Unit Distribution Payment Date (the "Preferred Unit Partnership Record
Date").


     (ii) Limitation on Distributions. No distribution on the Series A Preferred
Units shall be declared or paid or set apart for payment by the  Partnership  at
such  time as the terms  and  provisions  of any  agreement  of the  Partnership
relating  to its  indebtedness  (other  than any  agreement  with the  holder of
Partnership  Interests or an Affiliate  thereof),  prohibits  such  declaration,
payment or setting apart for payment or provide, that such declaration,  payment
or setting  apart for payment  would  constitute  a breach  thereof or a default
thereunder,  or if such declaration,  payment or setting apart for payment shall
be restricted or prohibited by law. Nothing in this Section  4.5(c)(ii) shall be
deemed to modify or in any manner limit the provisions  Section  4.5(c)(iii) and
(iv).

     (iii)  Distributions  Cumulative.  Distributions  on the Series A Preferred
Units will accrue  whether or not the terms and  provisions  of any agreement of
the  Partnership,  including any agreement  relating to its  indebtedness at any
time  prohibit  the  current  payment  of  distributions,  whether  or  not  the
Partnership has earnings,  whether or not there are funds legally  available for
the payment of such of such  distributions and whether or not such distributions
are authorized. Accrued but unpaid distributions on the Series A Preferred Units
will accumulate as of the Preferred Unit Distribution Payment Date on which they
first  become  payable.  Distributions  on  account  of  arrears  for  any  past
distribution  periods may be declared and paid at any time, without reference to
a regular Preferred Unit  Distribution  Payment Date to holders of record of the
Series A  Preferred  Units on the record  date fixed by the  Partnership  acting
through the General  Partner which date shall be not less than ten (10) days and
not more than thirty (30) Business  Days prior to the payment date.  Accumulated
and unpaid distributions will not bear interest.

(iv)     Priority as to Distributions.


     (A)  So  long  as  any  Series  A  Preferred  Units  are  outstanding,   no
distribution  of cash or other property shall be authorized,  declared,  paid or
set apart for payment on or with  respect to any class or series of  Partnership
Interests of the Partnership  ranking junior as to the payment of  distributions
to the Series A Preferred Units  (collectively,  "Junior Units"),  nor shall any
cash or other  property be set aside for or applied to the purchase,  redemption
or other  acquisition for  consideration  of any Series A Preferred  Units,  any
Parity  Preferred  Units with  respect  to  distributions  or any Junior  Units,
unless,  in each case, all  distributions  accumulated on all Series A Preferred
Units and all classes and series of  outstanding  Parity  Preferred  Units as to
payment of distributions have been paid in full. The foregoing sentence will not
prohibit (a) distributions payable solely in Junior Units, (b) the conversion of
Junior  Units or  Parity  Preferred  Units  into  Partnership  Interests  of the
Partnership  ranking junior to the Series A Preferred Units as to distributions,
or (c) the redemption of  Partnership  Interests  corresponding  to any Series A
Preferred Stock,  Parity Preferred Stock with respect to distributions or Junior
Stock (as such terms are defined herein or in the Articles of  Incorporation) to
be  purchased  by the General  Partner  pursuant to Article 5 of the Articles of
Incorporation  to  preserve  the  General  Partner's  status  as a  real  estate
investment trust,  provided that such redemption shall be upon the same terms as
the   corresponding   purchase   pursuant  to  Article  5  of  the  Articles  of
Incorporation.

     (B) So  long  as  distributions  have  not  been  paid  in  full  (or a sum
sufficient  for such full  payment  is not  irrevocably  deposited  in trust for
payment) upon the Series A Preferred  Units,  all  distributions  authorized and
declared  on the  Series  A  Preferred  Units  and  all  classes  or  series  of
outstanding  Parity  Preferred  Units  with  respect to  distributions  shall be
authorized  and  declared  so that the amount of  distributions  authorized  and
declared per Series A Preferred  Unit and such other classes or series of Parity
Preferred  Units  shall in all  cases  bear to each  other the same  ratio  that
accrued  distributions  per Series A  Preferred  Unit and such other  classes or
series of Parity  Preferred  Units (which shall not include any  accumulation in
respect of unpaid  distributions for prior distribution periods if such class or
series of Parity  Preferred  Units do not have cumulative  distribution  rights)
bear to each other.

     (v) No Further  Rights.  Holders of Series A  Preferred  Units shall not be
entitled  to any  distributions,  whether  payable in cash,  other  property  or
otherwise, in excess of the full cumulative distributions described herein.

(d)      Liquidation Preference.

     (i) Payment of Liquidating Distributions.  Subject to the rights of holders
of  Parity  Preferred  Units  with  respect  to  rights  upon any  voluntary  or
involuntary  liquidation,  dissolution  or  winding-up  of the  Partnership  and
subject to Partnership  Interests ranking senior to the Series A Preferred Units
with  respect  to  rights  upon  any  voluntary  or   involuntary   liquidation,
dissolution or winding-up of the Partnership,  the holders of Series A Preferred
Units shall be entitled to receive out of the assets of the Partnership  legally
available for distribution or the proceeds  thereof,  after payment or provision
for debts and other  liabilities of the  Partnership,  but before any payment or
distributions  of the assets  shall be made to holders of any class or series of
Partnership  Interest  that ranks  junior to the Series A Preferred  Units as to
rights upon liquidation, dissolution or winding-up of the Partnership, an amount
equal to the sum of (i) a liquidation preference equal to their positive Capital
Account  balances,  determined  after  taking into  account all Capital  Account
adjustments for the Partnership taxable year during which the liquidation occurs
(other than those made as a result of the liquidating  distribution set forth in
this Section  4.5(d)(i) and (ii) an amount equal to any  accumulated  and unpaid
distributions  thereon,  whether or not declared, to the date of payment. In the
event that,  upon such  voluntary or  involuntary  liquidation,  dissolution  or
winding-up,  there are insufficient assets to permit full payment of liquidating
distributions  to the  holders  of  Series  A  Preferred  Stock  and any  Parity
Preferred Units as to rights upon liquidation,  dissolution or winding-up of the
Partnership, all payments of liquidating distributions on the Series A Preferred
Units and such Parity  Preferred Units shall be made so that the payments on the
Series A Preferred Units and such Parity Preferred Units shall in all cases bear
to each  other  the  same  ratio  that the  respective  rights  of the  Series A
Preferred  Unit and such other Parity  Preferred  Units (which shall not include
any  accumulation  in respect  of unpaid  distributions  for prior  distribution
periods  if such  Parity  Preferred  Units do not have  cumulative  distribution
rights) upon  liquidation,  dissolution or winding-up of the Partnership bear to
each other.

(ii)              Notice.  Written  notice of any such  voluntary or involuntary
                  liquidation,  dissolution  or winding-up  of the  Partnership,
                  stating  the  payment  date or dates  when,  and the  place or
                  places where, the amounts  distributable in such circumstances
                  shall be  payable,  shall be given by (x) fax and (y) by first
                  class mail,  postage  pre-paid,  not less than 30 and not more
                  that 60 days prior to the payment date stated therein, to each
                  record  holder  of  the  Series  A  Preferred   Units  at  the
                  respective  addresses of such holders as the same shall appear
                  on the transfer records of the Partnership.

(iii)             No Further  Rights.  After  payment of the full  amount of the
                  liquidating  distributions  to which  they are  entitled,  the
                  holders  of  Series A  Preferred  Units  will have no right or
                  claim to any of the remaining assets of the Partnership.

(iv)              Consolidation,  Merger  or  Certain  Other  Transactions.  The
                  voluntary sale,  conveyance,  lease, exchange or transfer (for
                  cash, shares of stock,  securities or other  consideration) of
                  all or  substantially  all of the  property  or  assets of the
                  General  Partner to, or the  consolidation  or merger or other
                  business  combination  of the  Partnership  with or into,  any
                  corporation,  trust or other  entity  (or of any  corporation,
                  trust or other entity with or into the Partnership)  shall not
                  be  deemed  to  constitute  a   liquidation,   dissolution  or
                  winding-up of the Partnership.

(e)      Optional Redemption.


     (i) Right of Optional  Redemption.  The Series A Preferred Units may not be
redeemed  prior to the fifth  anniversary of the issuance date. On or after such
date,  the  Partnership  shall have the right to redeem  the Series A  Preferred
Units, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days'  written  notice,  at a redemption  price,  payable in
cash,  equal to the Capital  Account balance of the holder of Series A Preferred
Units (the "Series A Redemption Price");  provided,  however, that no redemption
pursuant to this  Section  4.5(e) will be  permitted  if the Series A Redemption
Price does not equal or exceed the original Capital  Contribution of such holder
plus the cumulative  Series A Priority Return,  whether or not declared,  to the
redemption  date to the extent not previously  distributed or distributed on the
redemption  date  pursuant  to  Section  4.5(c)(i).  If  fewer  than  all of the
outstanding Series A Preferred Units are to be redeemed,  the Series A Preferred
Units to be  redeemed  shall be  selected  pro rata (as  nearly  as  practicable
without creating fractional units).

(ii)     Limitation on Redemption.


     (A) The Series A  Redemption  Price of the Series A Preferred  Units (other
than the portion  thereof  consisting of accumulated  but unpaid  distributions)
will be payable  solely out of the sale proceeds of capital stock of the General
Partner,  which will be contributed by the General Partner to the Partnership as
additional capital contribution, or out of the sale of limited partner interests
in the  Partnership  and from no other  source.  For  purposes of the  preceding
sentence,  "capital stock" means any equity  securities  (including Common Stock
and   Preferred   Stock  (as  such  terms  are   defined  in  the   Articles  of
Incorporation)),  shares,  participation or other ownership  interests  (however
designated)  and any rights  (other  than debt  securities  convertible  into or
exchangeable for equity securities) or options to purchase any of the foregoing.

(B)                        The  Partnership may not redeem fewer than all of the
                           outstanding  Series  A  Preferred  Units  unless  all
                           accumulated and unpaid  distributions  have been paid
                           on all  Series A  Preferred  Units for all  quarterly
                           distribution  periods  terminating on or prior to the
                           date of redemption.

(iii)    Procedures for Redemption.

     (A)  Notice  of  redemption  will be (i)  faxed,  and  (ii)  mailed  by the
Partnership,  by certified mail, postage prepaid, not less than 30 nor more than
60 days prior to the redemption  date,  addressed to the  respective  holders of
record of the Series A Preferred  Units at their  respective  addresses  as they
appear on the records of the  Partnership.  No failure to give or defect in such
notice shall affect the validity of the  proceedings  for the  redemption of any
Series A  Preferred  Units  except  as to the  holder to whom  such  notice  was
defective or not given.  In addition to any  information  required by law,  each
such notice shall state:  (i) the redemption  date, (ii) the Series A Redemption
Price, (iii) the aggregate number of Series A Preferred Units to be redeemed and
if  fewer  than  all of the  outstanding  Series  A  Preferred  Units  are to be
redeemed,  the number of Series A Preferred  Units to be  redeemed  held by such
holder,  which  number  shall equal such  holder's  pro rata share (based on the
percentage of the aggregate  number of outstanding  Series A Preferred Units the
total number of Series A Preferred Units held by such holder  represents) of the
aggregate  number of Series A Preferred Units to be redeemed,  (iv) the place or
places where such Series A Preferred  Units are to be surrendered for payment of
the Series A Redemption Price, (v) that  distributions on the Series A Preferred
Units to be redeemed will cease to accumulate on such  redemption  date and (vi)
that payment of the Series A Redemption Price will be made upon presentation and
surrender of such Series A Preferred Units.

     (B) If the Partnership  gives a notice of redemption in respect of Series A
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Partnership  will deposit  irrevocably in
trust for the  benefit of the Series A  Preferred  Units  being  redeemed  funds
sufficient  to pay the  applicable  Series A  Redemption  Price  and  will  give
irrevocable  instructions and authority to pay such Series A Redemption Price to
the  holders of the Series A  Preferred  Units  upon  surrender  of the Series A
Preferred  Units by such  holders  at the  place  designated  in the  notice  of
redemption.  If the Series A Preferred  Units are evidenced by a certificate and
if fewer than all Series A Preferred  Units  evidenced  by any  certificate  are
being  redeemed,  a new  certificate  shall  be  issued  upon  surrender  of the
certificate  evidencing all Series A Preferred Units,  evidencing the unredeemed
Series A Preferred  Units without cost to the holder  thereof.  On and after the
date of  redemption,  distributions  will  cease to  accumulate  on the Series A
Preferred  Units  or  portions   thereof  called  for  redemption,   unless  the
Partnership defaults in the payment thereof. If any date fixed for redemption of
Series A Preferred  Units is not a Business  Day,  then  payment of the Series A
Redemption  Price payable on such date will be made on the next  succeeding  day
that is a Business Day (and without any interest or other  payment in respect of
any such delay)  except that,  if such  Business Day falls in the next  calendar
year,  such payment will be made on the immediately  preceding  Business Day, in
each case  with the same  force  and  effect  as if made on such date  fixed for
redemption.  If payment of the Series A Redemption Price is improperly  withheld
or  refused  and not paid by the  Partnership,  distributions  on such  Series A
Preferred Units will continue to accumulate from the original redemption date to
the date of payment,  in which case the actual  payment date will be  considered
the date fixed for redemption for purposes of calculating the applicable  Series
A Redemption Price.

(f)      Voting Rights.

(i)               General. Notwithstanding anything to the contrary contained in
                  this Agreement,  Series A Preferred Partners will not have any
                  voting rights or right to consent to any matter  requiring the
                  consent  or  approval  of  the  Limited  Partners,  except  as
                  otherwise  expressly set forth in this Agreement and except as
                  set forth below.

     (ii) Certain Voting Rights.  So long as any Series A Preferred Units remain
outstanding,  the Partnership  shall not,  without the  affirmative  vote of the
holders of at least  two-thirds of the Series A Preferred  Units  outstanding at
the time (A)  authorize or create,  or increase the  authorized or issued amount
of, any class or series of Partnership  Interests  ranking prior to the Series A
Preferred  Units  with  respect  to  payment  of  distributions  or rights  upon
liquidation,  dissolution or winding-up or reclassify any Partnership  Interests
of the Partnership into any such Partnership Interest,  or create,  authorize or
issue any  obligations or security  convertible  into or evidencing the right to
purchase any such Partnership  Interests,  (B) authorize or create,  or increase
the authorized or issued amount of any Parity  Preferred Units or reclassify any
Partnership  Interest of the Partnership into any such  Partnership  Interest or
create,  authorize  or issue any  obligations  or security  convertible  into or
evidencing the right to purchase any such Partnership  Interests but only to the
extent  such  Parity   Preferred  Units  are  issued  to  an  affiliate  of  the
Partnership,  other than (I) Security Capital or (II) the General Partner to the
extent the issuance of such interests was to allow the General  Partner to issue
corresponding  preferred  stock  to  persons  who  are  not  affiliates  of  the
Partnership  or (C)  either  (I)  consolidate,  merge  into or with,  or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (II) amend,  alter or repeal the  provisions of this  Agreement,
whether  by merger,  consolidation  or  otherwise,  that  would  materially  and
adversely affect the powers, special rights,  preferences,  privileges or voting
power of the Series A Preferred Units or the holders thereof; provided, however,
that with  respect to the  occurrence  of a merger,  consolidation  or a sale or
lease of all of the  Partnership's  assets  as an  entirety,  so long as (a) the
Partnership  is the  surviving  entity and the Series A Preferred  Units  remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee  entity  is  a  partnership,   limited  liability  company  or  other
pass-through  entity  organized  under the laws of any state and substitutes the
Series A Preferred Units for other interests in such entity having substantially
the same  terms and  rights as the  Series A  Preferred  Units,  including  with
respect to distributions, voting rights and rights upon liquidation, dissolution
or  winding-up,  then the  occurrence  of any such event  shall not be deemed to
materially and adversely affect such rights,  privileges or voting powers of the
holders of the Series A  Preferred  Units and no vote of the Series A  Preferred
Units shall be required in such case; and provided  further that any increase in
the amount of  Partnership  Interests  or the  creation or issuance of any other
class or series of Partnership Interests, in each case ranking (a) junior to the
Series A  Preferred  Units with  respect to  payment  of  distributions  and the
distribution of assets upon liquidation,  dissolution or winding-up, or (b) on a
parity to the Series A Preferred Units with respect to payment of  distributions
and the  distribution of assets upon  liquidation,  dissolution or winding-up to
the extent  such  Partnership  Interest  are not issued to an  affiliate  of the
Partnership,  other than the General  Partner to the extent the issuance of such
interests  was to allow the  General  Partner to issue  corresponding  preferred
stock to persons who are not affiliates of the Partnership,  shall not be deemed
to  materially  and  adversely  affect such rights,  preferences,  privileges or
voting  powers and no vote of the Series A Preferred  Units shall be required in
such case.

(g)      Exchange Rights.

(i)      Right to Exchange.

     (A) Series A Preferred  Units will be  exchangeable  in whole or in part at
anytime on or after the tenth anniversary of the date of issuance, at the option
of the holders thereof,  for authorized but previously unissued shares of 8.125%
Series A  Cumulative  Redeemable  Preferred  Stock of  Regency  (the  "Series  A
Preferred  Stock") at an exchange rate of one share of Series A Preferred  Stock
for one Series A Preferred  Unit,  subject to adjustment as described below (the
"Exchange  Price"),  provided  that the Series A  Preferred  Units  will  become
exchangeable  at any time,  in whole or in part, at the option of the holders of
Series A Preferred  Units for Series A  Preferred  Stock if (I) at any time full
distributions  shall not have been timely  made on any Series A  Preferred  Unit
with respect to six (6) prior  quarterly  distribution  periods,  whether or not
consecutive,  provided,  however,  that a  distribution  in  respect of Series A
Preferred Units shall be considered  timely made if made within two (2) Business
Days after the  applicable  Preferred Unit  Distribution  Payment Date if at the
time of such late payment  there shall not be any prior  quarterly  distribution
periods in respect of which full distributions were not timely made or (II) upon
receipt by a holder or holders of Series A  Preferred  Units of (a) notice  from
the General  Partner  that the General  Partner or a  Subsidiary  of the General
Partner has taken the position that the  Partnership  is, or upon the occurrence
of a defined  event in the  immediate  future  will be, a PTP and (b) an opinion
rendered by an outside nationally  recognized  independent counsel familiar with
such matters  addressed to a holder or holders of Series A Preferred Units, that
the  Partnership  is or likely is, or upon the  occurrence of a defined event in
the immediate future will be or likely will be, a PTP. In addition, the Series A
Preferred  Units may be exchanged for Series A Preferred  Stock,  in whole or in
part, at the option of any holder prior to the tenth anniversary of the issuance
date and  after  the  third  anniversary  thereof  if such  holder of a Series A
Preferred Units shall deliver to the General Partner either (i) a private ruling
letter  addressed to such holder of Series A Preferred  Units or (ii) an opinion
of independent counsel reasonably acceptable to the General Partner based on the
enactment of  temporary or final  Regulations  or the  publication  of a Revenue
Ruling,  in either case to the effect that an exchange of the Series A Preferred
Units at such  earlier  time would not cause the Series A Preferred  Units to be
considered  "stock and  securities"  within the meaning of Section 351(e) of the
Code for purposes of  determining  whether the holder of such Series A Preferred
Units is an "investment company" under Section 721(b) of the Code if an exchange
is permitted at such earlier date. Furthermore, the Series A Preferred Units may
be exchanged in whole or in part for Series A Preferred  Stock at any time after
the date hereof,  if both (x) the holder thereof  concludes  based on results or
projected results that there exists (in the reasonable  judgement of the holder)
an imminent and substantial  risk that the holder's  interest in the Partnership
does or will represent more than 19.5% of the total profits or capital interests
in  the  Partnership   (determined  in  accordance  with   Regulations   Section
1.731-2(e)(4))  for a taxable year,  and (y) the holder  delivers to the General
Partner an opinion of nationally  recognized  independent  counsel to the effect
that there is an imminent and substantial risk that the holder's interest in the
Partnership  does or will  represent  more than  19.5% of the total  profits  or
capital interests in the Partnership  (determined in accordance with Regulations
Section 1.731-2(e)(4)) for a taxable year.

     (B)  Notwithstanding   anything  to  the  contrary  set  forth  in  Section
4.5(g)(i)(A),  if an Exchange Notice has been delivered to the General  Partner,
then the  General  Partner  may,  at its  option,  elect to  redeem or cause the
Partnership  to redeem all or a portion of the  outstanding  Series A  Preferred
Units for cash in an  amount  equal to the  original  Capital  Contribution  per
Series A Preferred Unit and all accrued and unpaid distributions  thereon to the
date of  redemption.  The General  Partner may exercise its option to redeem the
Series A Preferred  Units for cash  pursuant  to this  Section  4.5(g)(i)(B)  by
giving each holder of record of Series A Preferred  Units notice of its election
to redeem for cash,  within five (5) Business Days after receipt of the Exchange
Notice,  by (i) fax, and (ii) registered  mail,  postage paid, at the address of
each holder as it may appear on the records of the  Partnership  stating (i) the
redemption  date,  which  shall be no later than sixty (60) days  following  the
receipt of the Exchange Notice,  (ii) the redemption  price,  (iii) the place or
places where the Series A Preferred  Units are to be surrendered  for payment of
the redemption  price,  (iv) that  distributions on the Series A Preferred Units
will cease to accrue on such redemption date; (v) that payment of the redemption
price will be made upon  presentation  and  surrender  of the Series A Preferred
Units and (vi) the aggregate  number of Series A Preferred Units to be redeemed,
and if fewer  than all of the  outstanding  Series A  Preferred  Units are to be
redeemed, the number of Series A Units to be redeemed held by such holder, which
number shall equal such holder's  pro-rata share (based on the percentage of the
aggregate  number of  outstanding  Series A Preferred  Units the total number of
Series A Preferred Units held by such holder represents) of the aggregate number
of Series A Preferred Units being redeemed.

     (C) Upon the occurrence of an event giving rise to exchange rights pursuant
to Section 4.5(g)(i)(A),  in the event an exchange of all or a portion of Series
Preferred A Preferred Units pursuant to Section  4.5(g)(i)(A)  would violate the
provisions on ownership limitation of the General Partner set forth in Article 5
of the Articles of Incorporation,  the General Partner shall give written notice
thereof to each  holder of record of Series A Preferred  Units,  within five (5)
Business Days  following  receipt of the Exchange  Notice,  by (i) fax, and (ii)
registered mail,  postage prepaid,  at the address of each such holder set forth
in the  records  of the  Partnership.  In such  event,  each  holder of Series A
Preferred  Units shall be entitled to  exchange,  pursuant to the  provision  of
Section  4.5(g)(ii) a number of Series A Preferred Units which would comply with
the provisions on the ownership  limitation of the General  Partner set forth in
such Article 5 of the Articles of Incorporation and any Series A Preferred Units
not so exchanged (the "Excess  Units") shall be redeemed by the  Partnership for
cash in an amount equal to the original  Capital  Contribution  per Excess Unit,
plus any accrued and unpaid distributions  thereon,  whether or not declared, to
the date of redemption.  The written  notice of the General  Partner shall state
(i) the number of Excess Units held by such holder, (ii) the redemption price of
the Excess  Units,  (iii) the date on which such Excess Units shall be redeemed,
which date shall be no later than sixty (60) days  following  the receipt of the
Exchange  Notice,  (iv) the place or places  where such  Excess  Units are to be
surrendered   for  payment  of  the  Series  A  Redemption   Price,   (iv)  that
distributions  on the Excess Units will cease to accrue on such redemption date,
and (v) that payment of the redemption price will be made upon  presentation and
surrender of such Excess Units.  In the event an exchange would result in Excess
Units,  as a condition  to such  exchange,  each holder of such units  agrees to
provide  representations  and  covenants  reasonably  requested  by the  General
Partner  relating to (i) the widely held nature of the interests in such holder,
sufficient to assure the General Partner that the holder's ownership of stock of
the General  Partner  (without  regard to the limits  described  above) will not
cause  any  individual  to own in  excess  of 9.8% of the  stock of the  General
Partner;  and (ii) to the extent  such  holder  can so  represent  and  covenant
without obtaining information from its owners, the holder's ownership of tenants
of the Partnership and its affiliates.

(D)                        The redemption of Series A Preferred  Units described
                           in Section  4.5(g)(i)(B)  and (C) shall be subject to
                           the provisions of Section  4.5(e)(ii)(A)  and Section
                           4.5(e)(iii)(B);  provided, however, that for purposes
                           hereof  the  term  "Series  A  Redemption  Price"  in
                           Section  4.5(e)(ii)(A)  and  Section   4.5(e)(iii)(B)
                           shall   be  read  to  mean   the   original   Capital
                           Contribution   per  Series  A  Preferred  Unit  being
                           redeemed plus all accrued and unpaid distributions to
                           the redemption date.

(ii)     Procedure for Exchange.


     (A) Any exchange  shall be exercised  pursuant to a notice of exchange (the
"Exchange  Notice")  delivered  to the  General  Partner  by the  holder  who is
exercising  such exchange  right,  by (i) fax and (ii) by certified mail postage
prepaid.  Upon  request of the  General  Partner,  such  holder  delivering  the
Exchange Notice shall provide to the General Partner in writing such information
as the General Partner may reasonably  request to determine  whether any portion
of the  exchange by the  delivering  holder will result in the  violation of the
restrictions  of  Article 5 of the  Articles  of  Incorporation,  including  the
Ownership Limit and the Related Tenant Limit. The exchange of Series A Preferred
Units,  or a specified  portion  thereof,  may be effected after the fifth (5th)
Business Days following  receipt by the General  Partner of the Exchange  Notice
and such requested information by delivering certificates,  if any, representing
such Series A Preferred  Units to be exchanged  together  with,  if  applicable,
written  notice of exchange and a proper  assignment  of such Series A Preferred
Units  to the  office  of the  General  Partner  maintained  for  such  purpose.
Currently,  such office is 121 West  Forsyth  Street,  Suite 200,  Jacksonville,
Florida  32202.  Each exchange will be deemed to have been effected  immediately
prior to the close of  business  on the date on which  such  Series A  Preferred
Units to be exchanged (together with all required documentation) shall have been
surrendered  and  notice  shall have been  received  by the  General  Partner as
aforesaid  and the Exchange  Price shall have been paid.  Any Series A Preferred
Stock issued  pursuant to this Section 4.5(g) shall be delivered as shares which
are duly  authorized,  validly  issued,  fully paid and  nonassessable,  free of
pledge,  lien,  encumbrance  or  restriction  other than those  provided  in the
Articles of Incorporation, the Bylaws of the General Partner, the Securities Act
and relevant state securities or blue sky laws.

     (B) In the event of an exchange  of Series A Preferred  Units for shares of
Series  A  Preferred   Stock,   an  amount  equal  to  the  accrued  and  unpaid
distributions  which are not paid pursuant to Section 4.5(c)(i) hereof,  whether
or not  declared,  to the  date of  exchange  on any  Series A  Preferred  Units
tendered  for  exchange  shall (i) accrue and be payable by the General  Partner
from and after the date of  exchange  on the  shares of the  Series A  Preferred
Stock into which such Series A Preferred Units are exchanged,  and (ii) continue
to accrue on such  Series A Preferred  Units,  which  shall  remain  outstanding
following such exchange, with the General Partner as the holder of such Series A
Preferred Units.  Notwithstanding  anything to the contrary set forth herein, in
no event shall a holder of a Series A Preferred Unit that was validly  exchanged
into Series A Preferred  Stock  pursuant to this section (other than the General
Partner now holding such Series A Preferred Unit), receive a distribution out of
Available Cash or Capital  Transaction  Proceeds of the Partnership with respect
to any Series A Preferred Units so exchanged.

(C)                        Fractional shares of Series A Preferred Stock are not
                           to be issued upon exchange but, in lieu thereof,  the
                           General Partner will pay a cash adjustment based upon
                           the fair market value of the Series A Preferred Stock
                           on the day prior to the exchange  date as  determined
                           in  good  faith  by the  Board  of  Directors  of the
                           General Partner.

(iii)    Adjustment of Exchange Price.

(A)                        The  Exchange  Price is  subject to  adjustment  upon
                           certain   events,    including,   (i)   subdivisions,
                           combinations  and  reclassification  of the  Series A
                           Preferred  Stock,  and  (ii)   distributions  to  all
                           holders of Series A Preferred  Stock of  evidences of
                           indebtedness   of  the  General   Partner  or  assets
                           (including  securities,  but excluding  dividends and
                           distributions  paid in cash out of equity  applicable
                           to Series A Preferred Stock).

     (B) In  case  the  General  Partner  shall  be a party  to any  transaction
(including,  without  limitation,  a  merger,  consolidation,   statutory  share
exchange,  tender offer for all or  substantially  all of the General  Partner's
capital  stock  or sale of all or  substantially  all of the  General  Partner's
assets),  in each case as a result of which the Series A Preferred Stock will be
converted into the right to receive shares of capital stock, other securities or
other  property  (including  cash or any  combination  thereof),  each  Series A
Preferred  Unit will  thereafter  be  exchangeable  into the kind and  amount of
shares of capital stock and other securities and property receivable  (including
cash or any combination  thereof) upon the consummation of such transaction by a
holder of that number of shares of Series A Preferred Stock or fraction  thereof
into which one Series A Preferred  Unit was  exchangeable  immediately  prior to
such  transaction.  The  General  Partner  may not  become  a party  to any such
transaction unless the terms thereof are consistent with the foregoing.

(h) No Conversion  Rights. The holders of the Series A Preferred Units shall not
have any rights to convert  such shares into shares of any other class or series
of stock or into any other securities of, or interest in, the Partnership.

     (i) No  Sinking  Fund.  No  sinking  fund  shall  be  established  for  the
retirement or redemption of Series A Preferred Units.

Article 5
                                  Distributions

Section 5.1       Requirement and Characterization of Distributions.
                  -------------------------------------------------

(a) Subject to Section 5.1(c), the General Partner shall distribute quarterly an
amount equal to 100% of Available Cash generated by the Partnership  during such
quarter to the  Partners who are  Partners on the  Partnership  Record Date with
respect to such quarter as follows:

(i)               First,  one hundred  percent  (100%) to the  Original  Limited
                  Partners,  pro rata  based on the number of  Original  Limited
                  Partnership  Units held by each such Partner on the applicable
                  Partnership  Record  Date,  until each has  received an amount
                  equal to the Priority  Distribution Amount for the quarter for
                  each such Unit;

(ii)              Next,  if  any  Original  Limited  Partners  have  a  positive
                  Cumulative Unpaid Accrued Return Account,  one hundred percent
                  (100%) to such Original  Limited  Partners,  pro rata based on
                  the relative amounts of their Cumulative Unpaid Accrued Return
                  Accounts,  until each such  Cumulative  Unpaid  Accrued Return
                  Account reaches zero;

(iii)             Next,  if  any  Original  Limited  Partners  have  a  positive
                  Cumulative Unpaid Priority  Distribution  Account, one hundred
                  percent  (100%) to such Original  Limited  Partners,  pro rata
                  based  on the  relative  amounts  of their  Cumulative  Unpaid
                  Priority  Distribution  Accounts,  until each such  Cumulative
                  Unpaid Priority Distribution Account reaches zero;

(iv)              Next, one hundred  percent  (100%) to the  Additional  Limited
                  Partners,  pro rata  based on the  relative  amounts  of their
                  Priority  Distribution  Amounts,  until each has  received  an
                  amount  equal  to the  Priority  Distribution  Amount  for the
                  quarter for each Unit held by such Additional  Limited Partner
                  on the applicable Partnership Record Date;

(v)               Next,  if any  Additional  Limited  Partners  have a  positive
                  Cumulative Unpaid Accrued Return Account,  one hundred percent
                  (100%) to such Additional Limited Partners,  pro rata based on
                  the relative amounts of their Cumulative Unpaid Accrued Return
                  Accounts,  until each such  Cumulative  Unpaid  Accrued Return
                  Account reaches zero;

(vi)              Next,  if any  Additional  Limited  Partners  have a  positive
                  Cumulative Unpaid Priority  Distribution  Account, one hundred
                  percent (100%) to such Additional  Limited Partners,  pro rata
                  based  on the  relative  amounts  of their  Cumulative  Unpaid
                  Priority  Distribution  Accounts,  until each such  Cumulative
                  Unpaid Priority Distribution Account reaches zero; and

(vii)             Thereafter,  to the General  Partner and any other  holders of
                  Class B Units, pro rata in accordance with the relative number
                  of Class B Units held by each.

(b) Subject to Section  5.1(c),  the General  Partner shall  distribute  Capital
Transaction  Proceeds received by the Partnership  within 30 days after the date
of such Capital  Transaction,  provided  that the General  Partner has given the
Limited  Partners  20  days'  prior  written  notice  of the  date  for any such
distribution (the "Capital Transaction Record Date"), as follows:

(i)               First,  if any  Original  Limited  Partners  have  a  positive
                  Cumulative Unpaid Accrued Return Account,  one hundred percent
                  (100%) to such Original  Limited  Partners,  pro rata based on
                  the relative amounts of their Cumulative Unpaid Accrued Return
                  Accounts,  until each such  Cumulative  Unpaid  Accrued Return
                  Account reaches zero;

(ii)              Next,  if  any  Original  Limited  Partners  have  a  positive
                  Cumulative Unpaid Priority  Distribution  Account, one hundred
                  percent  (100%) to such Original  Limited  Partners,  pro rata
                  based  on the  relative  amounts  of their  Cumulative  Unpaid
                  Priority  Distribution  Accounts,  until each such  Cumulative
                  Unpaid Priority Distribution Account reaches zero;

(iii)             Next,  if any  Additional  Limited  Partners  have a  positive
                  Cumulative Unpaid Accrued Return Account,  one hundred percent
                  (100%) to such Additional Limited Partners,  pro rata based on
                  the relative amounts of their Cumulative Unpaid Accrued Return
                  Accounts,  until each such  Cumulative  Unpaid  Accrued Return
                  Account reaches zero;

(iv)              Next,  if any  Additional  Limited  Partners  have a  positive
                  Cumulative Unpaid Priority  Distribution  Account, one hundred
                  percent (100%) to such Additional  Limited Partners,  pro rata
                  based  on the  relative  amounts  of their  Cumulative  Unpaid
                  Priority  Distribution  Accounts,  until each such  Cumulative
                  Unpaid Priority Distribution Account reaches zero; and

(v)               Thereafter,  to the General  Partner and any other  holders of
                  Class B Units, pro rata in accordance with the relative number
                  of Class B Units held by each.

(c)  Anything  herein to the  contrary  notwithstanding,  no  Available  Cash or
Capital  Transaction  Proceeds shall be distributed  pursuant to Section 5.1(a),
Section 5.1(b) or any other provision of this Article 5 unless all distributions
accumulated  on all Series A Preferred  Units  pursuant to Section 4.5 have been
paid in full and unless all  distributions  accumulated on any other outstanding
Preferred Units have been paid in full.

Section 5.2 Amounts  Withheld.  All amounts withheld pursuant to the Code or any
provisions  of any state or local tax law and Section 5.3 hereof with respect to
any allocation,  payment or distribution to the General Partner,  or any Limited
Partners  or  Assignees  shall  be  promptly  paid,  solely  out of funds of the
Partnership  (except as otherwise provided in Section 5.3 in connection with the
exercise by a Limited Partner of a Redemption  Right), by the General Partner to
the  appropriate  taxing  authority  and treated as amounts  distributed  to the
General  Partner or such Limited  Partners or Assignees  pursuant to Section 5.1
for all purposes under this Agreement.

Section 5.3 Withholding.  Each Limited Partner hereby authorizes the Partnership
to withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal,  state,  local,  or foreign  taxes that the  General  Partner
determines  that the  Partnership is required to withhold or pay with respect to
any amount  distributable  or allocable to such Limited Partner pursuant to this
Agreement  or with  respect  to the  exercise  by such  Limited  Partner  of the
Redemption  Rights  set  forth  in  Section  8.6 or in any  separate  agreement,
including,  without limitation, any taxes required to be withheld or paid by the
Partnership  pursuant  to Sections  1441,  1442,  1445,  or 1446 of the Code and
Section 48-7-129 of the Official Code of Georgia  Annotated.  Any amount paid on
behalf of or with respect to a Limited  Partner  shall  constitute a loan by the
Partnership to such Limited Partner,  which loan shall be repaid by such Limited
Partner  within 15 days after notice from the General  Partner that such payment
must  be  made  unless  (i)  the  Partnership  withholds  such  payment  from  a
distribution  which would  otherwise be made to the Limited  Partner or (ii) the
General  Partner  determines,  in its sole and  absolute  discretion,  that such
payment may be satisfied out of the  available  funds of the  Partnership  which
would, but for such payment, be distributed to the Limited Partner.  Any amounts
withheld  pursuant  to the  foregoing  clauses  (i) or (ii)  shall be treated as
having been  distributed  to such  Limited  Partner and shall be promptly  paid,
solely  out  of  funds  of  the  Partnership,  by  the  General  Partner  to the
appropriate taxing authority.  Each Limited Partner hereby  unconditionally  and
irrevocably  grants to the  Partnership  a  security  interest  in such  Limited
Partner's Partnership Interest as to secure such Limited Partner's obligation to
pay to the Partnership any amounts  required to be paid pursuant to this Section
5.3  (together   with   attorney's   fees  and  other  costs  in  enforcing  the
Partnership's  rights  against  the  collateral).  In the  event  that a Limited
Partner or Redeeming  Partner  fails to pay any amounts owed to the  Partnership
pursuant to this Section 5.3 when due, the General  Partner may, in its sole and
absolute  discretion,  elect to make the  payment  on behalf of such  defaulting
Partner,  and in such event  shall be deemed to have  loaned such amount to such
defaulting  Partner  and  shall  succeed  to  all  rights  and  remedies  of the
Partnership as against such defaulting Partner  (including,  without limitation,
in the case of a default by other than a Redeeming  Partner the right to receive
distributions from the Partnership). Any amounts payable by a Limited Partner or
a Redeeming  Partner  hereunder  shall bear interest at the Prime Rate, plus two
percentage  points (but not higher than the maximum  lawful  rate) from the date
such  amount is due (i.e.,  15 days after  demand)  until such amount is paid in
full. In the event that the  Partnership  or the General  Partner is required to
withhold tax with  respect to the exercise by a Limited  Partner of a Redemption
Right,   the  Limited  Partner   exercising  the  Redemption  Right  shall  make
arrangements with the Partnership or the General Partner, as the case may be, to
provide  the  funds  to  the  Partnership   necessary  to  effect  the  required
withholding. In the event that, pursuant to applicable laws and regulations, the
General  Partner  may  withhold  a reduced  amount  pending a  determination  by
applicable taxing authorities as to whether any additional  withholding tax must
subsequently  be deposited,  the General Partner shall have the right to require
the Redeeming  Partner to pledge a first priority security interest in a portion
of the Redemption Amount as collateral for the Redeeming Partner's obligation to
provide the funds necessary to effect any subsequent  required holding (together
with  attorney's  fees and other costs in  enforcing  the  Partnership's  rights
against the  collateral),  in an amount in the case of a Share  Amount  equal to
Shares  having a Value on the date of the  pledge  equal to 125% of the  maximum
possible  subsequent  required  withholding  (or  100% of the  maximum  possible
subsequent required  withholding if the Redemption Amount is paid in the form of
the Cash Amount) (the  "Withholding  Collateral").  The General Partner shall be
entitled to retain  possession of the  Withholding  Collateral  until either the
Redeeming  Partner provides funds to the General Partner  sufficient to make any
subsequent  required  withholding  deposit  or the  General  Partner  receives a
determination from the applicable  authorities that no subsequent withholding is
required.  All  dividends,  distributions,  interest  or  other  income  on  the
Withholding  Collateral  while subject to the pledge  hereunder shall be paid to
the Redeeming  Partner  pledging the Withholding  Collateral.  If the applicable
authorities  advise that  subsequent  withholding  is required and the Redeeming
Partner does not deliver the necessary  funds to the General  Partner  within 20
days after  receipt of the  General  Partner's  request  therefor,  the  General
Partner shall be entitled to exercise all rights and remedies of a secured party
under the Uniform  Commercial Code with respect to the  Withholding  Collateral.
Each Limited  Partner and each Redeeming  Partner shall take such actions as the
Partnership or the General  Partner shall request in order to perfect or enforce
the security interest created hereunder.

Section 5.4 Distributions Upon Liquidation.  Notwithstanding  anything contained
in Section 5.1 to the contrary, proceeds from a Liquidating Transaction shall be
distributed to the Partners in accordance with Section 13.2.

Article 6
                                   Allocations

Section 6.1  Allocations of Net Income and Net Loss. For purposes of maintaining
the  Capital  Accounts  and in  determining  the  rights of the  Partners  among
themselves,  the  Partnership's Net Income and Net Loss shall be allocated among
the  Partners  for each  taxable  year (or portion  thereof) as provided  herein
below.

     (a) Net Income. After giving effect to the special allocations set forth in
Section 6.2 below, Net Income shall be allocated as follows:

(i)               First, one hundred percent (100%) to the General Partner in an
                  amount equal to the excess,  if any, of (A) the cumulative Net
                  Losses  allocated to the General  Partner  pursuant to Section
                  6.1(b)(ix)  and the last  sentence  of Section  6.1(b) for all
                  prior  fiscal  years,  over  (B)  the  cumulative  Net  Income
                  allocated  pursuant to this  Section  6.1(a)(i)  for all prior
                  fiscal years;

(ii)              Second,  one hundred  percent (100%) to the Series A Preferred
                  Partners in an amount equal to the excess,  if any, of (A) the
                  cumulative  Net Losses  allocated  to the  Series A  Preferred
                  Partners pursuant to Section 6.1(b)(viii) for all prior fiscal
                  years,  over (B) the cumulative Net Income allocated  pursuant
                  to this Section  6.1(a)(ii),  including any amounts  allocated
                  pursuant to Section  6.2(g)  which were  attributable  to this
                  Section 6.1(a)(ii), for all prior fiscal years;

(iii)             Third,  one hundred  percent  (100%) to the  Original  Limited
                  Partners in an amount equal to the excess,  if any, of (A) the
                  cumulative Net Losses  allocated to such Partners  pursuant to
                  Section  6.1(b)(iv)  for all prior fiscal years,  over (B) the
                  cumulative  Net  Income  allocated  pursuant  to this  Section
                  6.1(a)(iii) for all prior fiscal years,  which amount shall be
                  allocated  among such Partners in the same  proportions and in
                  the reverse order as the Net Losses were allocated pursuant to
                  Section 6.1(b)(iv);

(iv)              Fourth,  one hundred  percent  (100%) to the Original  Limited
                  Partners in an amount equal to the excess,  if any, of (A) the
                  cumulative Net Losses  allocated to such Partners  pursuant to
                  Section  6.1(b)(iii) for all prior fiscal years,  over (B) the
                  cumulative  Net  Income  allocated  pursuant  to this  Section
                  6.1(a)(iv)  for all prior fiscal years,  which amount shall be
                  allocated  among such Partners in the same  proportions and in
                  the reverse order as the Net Losses were allocated pursuant to
                  Section 6.1(b)(iii);

(v)               Fifth,  one hundred  percent  (100%) to the Series A Preferred
                  Partners  until  the  Series A  Preferred  Partners  have been
                  allocated  an amount  equal to the  excess  of the  cumulative
                  Series A Priority  Return  through the last day of the current
                  fiscal year (determined  without  reduction for  distributions
                  made to date in satisfaction  thereof) over the cumulative Net
                  Income allocated to the Series A Preferred  Partners  pursuant
                  to this Section  6.1(a)(v),  including  any amounts  allocated
                  pursuant to Section  6.2(g)  which were  attributable  to this
                  Section 6.1(a)(v), for all prior periods;

     (vi) Sixth,  one hundred  percent (100%) to the Original  Limited  Partners
until the cumulative  allocations of Net Income to each Original Limited Partner
under this Section  6.1(a)(vi)  for the current and all prior fiscal years equal
the cumulative  distributions  paid to the Original  Limited Partner pursuant to
Section 5.1(a)(i) and Section  13.2(a)(iv),  provided,  however,  in the case of
Original Limited Partners other than Class Z Branch Partners,  no allocations of
Net Income shall be made under this Section  6.1(a)(vi) to such Limited Partners
with  respect  to  distributions   made  under  Section  5.1(a)(i)  and  Section
13.2(a)(iv) after the Third Amendment Date;

     (vii) Seventh,  one hundred percent (100%) to the Original Limited Partners
until the cumulative  allocations of Net Income to each Original Limited Partner
under this Section  6.1(a)(vii) for the current and all prior fiscal years equal
the sum of the cumulative  amounts credited to such Partner's  Cumulative Unpaid
Priority  Distribution  Account and Cumulative Unpaid Accrued Return Account for
the  current  and all prior  fiscal  years,  provided,  however,  in the case of
Original Limited Partners other than Class Z Branch Partners,  no allocations of
Net Income shall be made under this Section  6.1(a)(vii) with respect to amounts
credited to such Partners' Cumulative Unpaid Priority  Distribution Accounts and
Cumulative Unpaid Accrued Return Accounts after the Third Amendment Date; and

(viii)            Eighth,  one hundred percent (100%) to the Additional  Limited
                  Partners in an amount equal to the excess,  if any, of (A) the
                  cumulative  Net Losses  allocated  to the  Additional  Limited
                  Partners pursuant to Section  6.1(b)(vii) for all prior fiscal
                  years,  over (B) the cumulative Net Income allocated  pursuant
                  to this Section 6.1(a)(viii) for all prior fiscal years, which
                  amount  shall  be  allocated  among  the  Additional   Limited
                  Partners in the same  proportions  and in the reverse order as
                  the Net Losses were allocated pursuant to Section 6.1(b)(vii);

(ix)              Ninth,  one hundred  percent (100%) to the Additional  Limited
                  Partners in an amount equal to the excess,  if any, of (A) the
                  cumulative  Net Losses  allocated  to the  Additional  Limited
                  Partners  pursuant to Section  6.1(b)(vi) for all prior fiscal
                  years,  over (B) the cumulative Net Income allocated  pursuant
                  to this Section  6.1(a)(ix) for all prior fiscal years,  which
                  amount  shall be  allocated  among such  Partners  in the same
                  proportions  and in the  reverse  order as the Net Losses were
                  allocated pursuant to Section 6.1(b)(vi);

     (x) Tenth,  one hundred percent (100%) to the Additional  Limited  Partners
until  the  cumulative  allocations  of Net  Income to each  Additional  Limited
Partner under this Section  6.1(a)(x) for the current and all prior fiscal years
equal the  cumulative  distributions  paid to the  Additional  Limited  Partners
pursuant to Section 5.1(a)(iv) and Section 13.2(a)(v), provided, however, in the
case of Additional  Limited  Partners  other than Class Z Midland  Partners,  no
allocations  of Net Income  shall be made under this  Section  6.1(a)(x) to such
Limited Partners with respect to distributions made under Section 5.1(a)(iv) and
Section 13.2(a)(v) after the Third Amendment Date;

     (xi) Eleven,  one hundred percent (100%) to the Additional Limited Partners
until  the  cumulative  allocations  of Net  Income to each  Additional  Limited
Partner under this Section 6.1(a)(xi) for the current and all prior fiscal years
equal  the  sum of  (A)  the  cumulative  amounts  credited  to  such  Partner's
Cumulative  Unpaid Priority  Distribution  Account and Cumulative Unpaid Accrued
Return Account for the current and all prior fiscal years and (B) the cumulative
Net Losses  allocated  to the  Additional  Limited  Partner  pursuant to Section
6.1(b)(v)  for  all  prior  fiscal  years,  provided,  however,  in the  case of
Additional  Limited Partners other than Class Z Midland Partners,  no allocation
of Net Income  shall be made  under  this  Section  6.1(a)(xi)  with  respect to
amounts  credited to such  Partners'  Cumulative  Unpaid  Priority  Distribution
Accounts and Cumulative Unpaid Accrued Return Accounts after the Third Amendment
Date; and

(xii)             Thereafter,  to the Original and Additional  Limited  Partners
                  other  than  Class  Z  Branch  Partners  or  Class  Z  Midland
                  Partners,  to the General  Partner and to any other holders of
                  Class B  Units,  pro  rata in  accordance  with  the  relative
                  amounts of  Available  Cash and Capital  Transaction  Proceeds
                  distributed to each of them during the taxable year.

     (b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:

(i)               First,   one  hundred  percent  (100%)  to  the  Original  and
                  Additional Limited Partners other than Class Z Branch Partners
                  or Class Z Midland Partners, to the General Partner and to the
                  Class B Unit holders in an amount equal to the excess, if any,
                  of (A) the cumulative Net Income allocated pursuant to Section
                  6.1(a)(xii)  hereof  for all prior  fiscal  years in excess of
                  distributions  of Available Cash to such Partners for which no
                  corresponding  allocation  of Net  Income had been made (or is
                  required to be made)  under  Sections  6.1(a)(i)-(xi)  hereof,
                  over (B) the cumulative Net Losses allocated  pursuant to this
                  Section 6.1(b)(i) for all prior fiscal years;

(ii)              Second,  to the Original Limited Partners until the cumulative
                  allocations of Net Losses under this Section  6.1(b)(ii) equal
                  the  excess,  if any,  of the  cumulative  allocations  of Net
                  Income  under  Section  6.1(a)(vii)  to such  Partners for all
                  prior fiscal years over the cumulative  distributions  to such
                  Partners  under  Section  5.1(a)(ii)  and  (iii)  and  Section
                  5.1(b)(i)  and (ii) for the current and all prior fiscal years
                  (such  allocation  being made in proportion to such  Partners'
                  respective excess amounts);

(iii)             Third, to the Original Limited Partners with positive Adjusted
                  Capital Account balances  (determined,  solely for purposes of
                  this Section 6.1(b)(iii),  without regard to any obligation of
                  a Partner to restore a negative  Capital Account under Section
                  13.4), in proportion to such balances, until such balances are
                  reduced to zero;

(iv)              Fourth,  to the Original  Limited  Partners in  proportion  to
                  their relative Percentage Interests;  provided,  however, that
                  to the extent that an allocation under this Section 6.1(b)(iv)
                  would cause or increase an Adjusted  Capital  Account  Deficit
                  for such  Partner,  such Net Loss shall be  allocated to those
                  Original  Limited  Partners (in  proportion to their  relative
                  Percentage Interests) for whom such allocation would not cause
                  or increase an Adjusted Capital Account Deficit;

(v)               Fifth, to the Additional Limited Partners until the cumulative
                  allocations of Net Losses under this Section  6.1(b)(v)  equal
                  the  excess,  if any,  of the  cumulative  allocations  of Net
                  Income under Section 6.1(a)(xi) to such Partners for all prior
                  fiscal  years  over  the  cumulative   distributions  to  such
                  Partners   under  Section   5.1(a)(v)  and  (vi)  and  Section
                  5.1(b)(iii)  and (iv) for the  current  and all  prior  fiscal
                  years  (such  allocation  being  made  in  proportion  to such
                  Partners' respective excess amounts);

(vi)              Sixth,  to  the  Additional  Limited  Partners  with  positive
                  Adjusted Capital  Accounts  balances  (determined,  solely for
                  purposes of this  Section  6.1(b)(vi),  without  regard to any
                  obligation of a Partner to restore a negative  Capital Account
                  under Section  13.4),  in proportion to such  balances,  until
                  such balances are reduced to zero;

(vii)             Seventh,  to the Additional  Limited Partners in proportion to
                  their relative Percentage Interests;  provided,  however, that
                  to  the  extent  that  an   allocation   under  this   Section
                  6.1(b)(vii)  would  cause  or  increase  an  Adjusted  Capital
                  Account  Deficit  for such  Partner,  such  Net Loss  shall be
                  allocated to those Additional  Limited Partners (in proportion
                  to  their  relative   Percentage   Interests)  for  whom  such
                  allocation  would not cause or increase  an  Adjusted  Capital
                  Account Deficit;

(viii)            Eighth,  to  the  Series  A  Preferred  Partners  until  their
                  Adjusted  Capital  Account  balance  (determined,  solely  for
                  purposes of this Section  6.1(b)(viii),  without regard to any
                  obligation of a Partner to restore a negative  Capital Account
                  under Section 13.4), has been reduced to zero; and

(ix) Any  remaining  Net Loss shall be allocated to the General  Partner and any
other holders of Class B Units.

Notwithstanding the foregoing,  Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1(b) to the extent that such allocation would
cause such Limited  Partner to have an Adjusted  Capital  Account Deficit at the
end of such taxable year (or increase  any  existing  Adjusted  Capital  Account
Deficit). All Net Losses in excess of the limitations set forth in the preceding
sentence of this Section 6.1(b) shall be allocated to the General Partner.

(c)  Nonrecourse  Liabilities.   The  Partners  agree  that  excess  Nonrecourse
Liabilities of the Partnership  (within the meaning of Section  1.752-3(a)(3) of
the  Regulations)  will be allocated  among the Partners for purposes of Section
752 of the Code in accordance with their respective Percentage Interests.

(d) Gains.  Any gain  allocated to the Partners  upon the sale or other  taxable
disposition of any Partnership asset shall to the extent possible,  after taking
into account other  required  allocations of gain pursuant to Section 6.2 below,
be  characterized  as Recapture  Income in the same  proportions and to the same
extent  as  such  Partners  have  been  allocated  any  deductions  directly  or
indirectly giving rise to the treatment of such gains as Recapture Income.

     Section 6.2 Special Allocation Rules.  Notwithstanding  any other provision
of this  Agreement,  the  following  special  allocations  shall  be made in the
following order:

(a) Minimum Gain Chargeback.  Notwithstanding any other provisions of Article 6,
if there is a net decrease in  Partnership  Minimum Gain during any  Partnership
Year, each Partner shall be specially  allocated items of Partnership income and
gain for such year (and, if necessary,  subsequent  years) in an amount equal to
such  Partner's  share of the net  decrease  in  Partnership  Minimum  Gain,  as
determined under Regulations  Section  1.704-2(g).  Allocations  pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant  thereto.  The items to be so allocated
shall be determined in accordance with Regulations Section  1.704-2(f)(6).  This
Section  6.2(a)  is  intended  to  comply  with  the  minimum  gain   chargeback
requirements in Regulations  Section 1.704-2(f) and for purposes of this Section
6.2(a) only, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other  allocations  pursuant to Section 6.1 of the  Agreement  with
respect  to such  fiscal  year and  without  regard to any  decrease  in Partner
Minimum Gain during such Partnership Year.

(b) Partner  Minimum Gain  Chargeback.  Notwithstanding  any other  provision of
Article 6 (except Section 6.2(a) hereof),  if there is a net decrease in Partner
Minimum Gain  attributable to a Partner  Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner  Minimum Gain  attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary,  subsequent  years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner  Nonrecourse  Debt,  determined in accordance with  Regulations  Section
1.704-2(i)(5).  Allocations  pursuant to the previous  sentence shall be made in
proportion to the  respective  amounts  required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with  Regulations  Section  1.704-2(i)(4).  This  Section  6.2(b) is intended to
comply with the  minimum  gain  chargeback  requirement  in such  Section of the
Regulations and shall be interpreted consistently therewith. Solely for purposes
of this Section 6.2(b), each Partner's Adjusted Capital Account Deficit shall be
determined  prior  to any  other  allocations  pursuant  to  Article  6 of  this
Agreement with respect to such Partnership Year, other than allocations pursuant
to Section 6.2(a) hereof.

(c) Qualified Income Offset. In the event any Partner unexpectedly  receives any
adjustments,  allocations or  distributions  described in  Regulations  Sections
1.704-1(b)(2)(ii)(d)(4),  1.704-1(b)(2)(ii)(d)(5),  or  1.704-1(b)(2)(ii)(d)(6),
and after giving effect to the  allocations  required  under Section  6.2(a) and
Section 6.2(b) hereof,  such Partner has an Adjusted  Capital  Account  Deficit,
items of  Partnership  income  and gain  shall be  specially  allocated  to such
Partner in an amount and manner sufficient to eliminate,  to the extent required
by the  Regulations,  its  Adjusted  Capital  Account  Deficit  created  by such
adjustments, allocations or distributions as quickly as possible.

     (d) Nonrecourse  Deductions.  Nonrecourse Deductions for any taxable period
shall  be  allocated  to  the  Partners  in  accordance  with  their  respective
Percentage Interests.

(e) Partner Nonrecourse  Deductions.  Any Partner Nonrecourse Deductions for any
Partnership  Year shall be  specially  allocated  to the  Partner  who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner  Nonrecourse  Deductions are attributable in accordance with Regulations
Section 1.704-2(i)(2).

(f) Code Section 754  Adjustments.  To the extent an  adjustment to the adjusted
tax basis of any  Partnership  asset pursuant to Section 734(b) or 743(b) of the
Code is required,  pursuant to Regulations Section  1.704-1(b)(2)(iv)(m),  to be
taken  into  account  in  determining  Capital  Accounts,  the  amount  of  such
adjustment to the Capital  Accounts  shall be treated as an item of gain (if the
adjustment  increases  the  basis  of the  asset)  or loss  (if  the  adjustment
decreases  such  basis),  and  such  item of gain or  loss  shall  be  specially
allocated to the Partners in a manner  consistent with the manner in which their
Capital  Accounts  are  required to be adjusted  pursuant to such Section of the
Regulations.

(g) Capital Account Adjustments. Notwithstanding anything herein to the contrary
other than the last sentence of Section  14.1(g),  any gain or loss arising from
an  adjustment  to the Gross Asset Value of any  Partnership  asset  pursuant to
clause (b) or (c) of the definition thereof shall be allocated (i) first, to the
Series A  Preferred  Partners,  but only to the extent that they would have been
allocated such gain pursuant to Section  6.1(a)(ii) or Section 6.1(a)(v) of this
Agreement or such loss pursuant to Section  6.1(b)(viii) of this  Agreement,  as
applicable,  if such gain or loss had been actually  realized;  and (ii) second,
and  subject  to  Section  6.2(h)  hereof,  one  hundred  percent  (100%) of the
remainder of such gain or loss to the General Partner and the Additional Limited
Partners  pro-rata in accordance with the relative number of Units held by each;
provided,  however,  that for this purpose, the General Partner shall be treated
as owning all of the outstanding  Original Limited Partnership Units in addition
to the actual  number of Units which the General  Partner  holds.  An Additional
Limited Partner, at the time of admission to the Partnership, may elect with the
consent of the General Partner to not receive special allocations of any gain or
loss resulting from such adjustments.

(h) Special Adjustments.  Notwithstanding  anything herein to the contrary,  the
following  adjustments  shall be made to the amount of income,  gain, losses and
deductions allocated under Section 6.1 and Section 6.2 of this Agreement and the
amounts distributed to the Partners under Section 13.2(a)(vi):

     (i) In the event that (A) a Liquidating Transaction shall occur and (B) the
Original and Additional  Limited Partners other than the Class Z Branch Partners
and  the  Class  Z  Midland   Partners   would,   after  giving  effect  to  all
contributions,  distributions  and allocations for all periods,  receive amounts
under Section  13.2(a)(vi) of this Agreement which are less than they would have
received had they not consented to the Third Amended Agreement, then the General
Partner  shall  (1) cause to be  distributed  to each of these  Partners  out of
amounts  otherwise  distributable  to the  General  Partner  pursuant to Section
13.2(a)(vi) amounts equal to such shortfall amount and (2) cause to be allocated
to each of  these  Partners  out of  income  (including  gross  income)  or gain
otherwise  allocable to the General Partner an amount of income (including gross
income) or gain equal to such deficit amount;

     (ii) In the event that (A) any gain or loss  arises from an  adjustment  to
the Gross Asset Value of any Partnership  asset pursuant to clause (b) or (c) of
the  definition  thereof  and (B) any such gain or loss  would,  but for Section
6.2(g),  have been  allocated  to the  Original  Limited  Partners  pursuant  to
Sections  6.1 and 6.2 hereof  (other than  Section  6.2(g)) if such gain or loss
were included in the definition of Net Profits and Net Losses, then (1) any gain
or loss which would have been so  allocated  shall be  allocated to the Original
Limited Partners to the fullest extent possible out of gains or losses otherwise
allocable to the General Partner  pursuant to Section  6.2(g),  or to the extent
the gains or losses otherwise  allocable to the General Partner are insufficient
to permit such an allocation,  out of the first items of income,  gain,  loss or
deduction  thereafter allocable to the General Partner and (2) in the event that
a Liquidating Transaction shall occur at a time when gain or loss is required to
be  allocated  to  the  Original  Limited  Partners  pursuant  to  this  Section
6.2(h)(ii),  but  which  allocation  has not  been  made  as of the  time of the
liquidating  distribution,  the General  Partner  shall,  (x) in the case of net
unallocated  gain,  distribute to the Original  Limited  Partners out of amounts
otherwise  distributable to the General Partner amounts equal to the amounts the
Original Limited  Partners would have received under Section  13.2(a)(vi) if the
net  unallocated  gain had been  allocated  thereunder or (y) in the case of net
unallocated  loss,  distribute to the General  Partner out of amounts  otherwise
distributable  to the Original Limited Partners amounts equal to the amounts the
General  Partner  would  have  received  under  Section  13.2(a)(vi)  if the net
unallocated loss had been allocated thereunder; and

     (iii) In the event that (A) a Liquidating  Transaction  shall occur and (B)
an Original  Limited  Partner would,  after giving effect to all  contributions,
distributions  and  allocations  for all periods,  receive amounts under Section
13.2(a)(vi) of this  Agreement  which are less than they would have received had
the  order  of  subsections  6.1(b)(ii),  (iii)  and  (iv) on the one  hand  and
subsections 6.1(b)(v),  (vi) and (vii) on the other hand been reversed effective
as of the date of the Second Amended  Agreement,  then the General Partner shall
(1)  cause  to be  distributed  to  these  Partners  out  of  amounts  otherwise
distributable to the General Partner under Section  13.2(a)(vi) amounts equal to
such  deficit  amount and (2) cause to be  allocated  to these  Partners  out of
income  (including  gross  income) or gain  otherwise  allocable  to the General
Partner  an amount of income  (including  gross  income)  or gain  equal to such
deficit amount.

Section 6.3       Allocations for Tax Purposes.
                  ----------------------------

(a)  General.  Except as  otherwise  provided in this  Section  6.3, for federal
income tax purposes,  each item of income,  gain,  loss and  deduction  shall be
allocated  among the  Partners  in the same  manner as its  correlative  item of
"book" income,  gain, loss or deduction is allocated pursuant to Section 6.1 and
Section 6.2 of this Agreement.

(b)      Other Allocation Rules.
-------------------------------

(i)               For purposes of determining Net Income,  Net Losses,  or other
                  items allocable to any period, Net Income, Net Losses, and any
                  such other items shall be determined on a daily,  monthly,  or
                  other basis,  as determined  by the General  Partner using any
                  permissible  method  under  Section  706 of the  Code  and the
                  Regulations thereunder.

(ii)              In  accordance  with Code Section  704(c) and the  Regulations
                  thereunder,  income,  gain, loss and deduction with respect to
                  any  property  contributed  to the capital of the  Partnership
                  shall,  solely  for  tax  purposes,  be  allocated  among  the
                  Partners so as to take  account of any  variation  between the
                  adjusted basis of such property to the Partnership for federal
                  income tax purposes and its initial Gross Asset Value.

     (iii) To the extent that the fair market value of a property contributed to
the Partnership by Branch Properties,  L.P. differed from its adjusted tax basis
at the time it was  originally  contributed  to  Branch  Properties,  L.P.  (the
"Original Book-Tax Disparity"), the allocation of tax items with respect to such
contributed  property  shall take into account any remaining  Original  Book-Tax
Disparity  at the time such  property is  contributed  to the  Partnership  in a
manner  consistent with the principles of Section 704(c) of the Code,  using the
"traditional  method" under Section  1.704-3(b) of the Regulations,  so that the
Limited Partners who originally  contributed such property to Branch Properties,
L.P.  (or their  successors-in-interest)  bear the tax  burden (or  benefit,  if
applicable) of the remaining Original Book-Tax Disparity.

     (iv) In the  event  the  Gross  Asset  Value  of any  Partnership  asset is
adjusted,  subsequent  allocations of income,  gain,  loss, and deductions  with
respect to such asset shall take account of any  variation  between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations thereunder. Any
elections or other decisions  relating to Code Section 704(c)  allocations shall
be made by the General Partner; provided, however, that the "traditional method"
of making Section 704(c) allocations without curative  allocations  described in
Section  1.704-3(b) of the Regulations  shall be used.  Allocations  pursuant to
Sections  6.3(b)(ii),  (iii) and (iv) hereof are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing,  any Partner's Capital Account or share of Net Income, Net Losses,
other items, or distributions pursuant to any provision of this Agreement.
Article 7
                      Management And Operations Of Business

Section 7.1       Management.
                  ----------

(a) Powers of General Partner.  Except as otherwise  expressly  provided in this
Agreement,   all  management  powers  over  the  business  and  affairs  of  the
Partnership  are  exclusively  vested in the  General  Partner,  and no  Limited
Partner shall have any right to participate in or exercise control or management
power over the business and affairs of the Partnership. Notwithstanding anything
to the contrary in this Agreement, the General Partner may not be removed by the
Limited  Partners  with or  without  cause.  In  addition  to the  powers now or
hereafter  granted a general partner of a limited  partnership  under applicable
law or which are granted to the General  Partner  under any other  provision  of
this  Agreement,  the General  Partner shall have full power and authority to do
all things  deemed  necessary  or desirable by it to conduct the business of the
Partnership,  to  exercise  all powers  set forth in  Section  3.2 hereof and to
effectuate  the  purposes  set forth in Section 3.1 hereof,  including,  without
limitation:

     (i) the  making of any  expenditures,  the  lending or  borrowing  of money
(including,  without  limitation,  borrowing  money to permit the Partnership to
make  distributions  to its Partners in such amounts as will permit  Regency (so
long as  Regency  desires  to  qualify  as a REIT) to avoid the  payment  of any
federal  income tax  (including,  for this  purpose,  any excise tax pursuant to
Section  4981  of  the  Code)  and to  make  distributions  to its  shareholders
sufficient  to permit  Regency to  maintain  REIT  status),  the  assumption  or
guarantee of, or other contracting for, indebtedness and other liabilities,  the
issuance  of  evidences  of  indebtedness  (including  the  securing  of same by
mortgage,  deed of trust  or  other  lien or  encumbrance  on the  Partnership's
assets),  the incurring of any obligations it deems necessary for the conduct of
the activities of the Partnership,  and the repayment (including  prepayment) of
such indebtedness, liabilities and obligations;

(ii)              the making of tax,  regulatory and other filings, or rendering
                  of periodic or other reports to governmental or other agencies
                  having  jurisdiction  over  the  business  or  assets  of  the
                  Partnership;

     (iii)  the  acquisition,   disposition,   conveyance,   mortgage,   pledge,
encumbrance,  hypothecation  or exchange of all or any assets of the Partnership
or the  merger or other  combination  of the  Partnership  with or into  another
entity  (provided that such merger or other  combination  does not result in the
Partnership recognizing taxable gain or loss for federal income tax purposes) on
such terms as the General  Partner  deems proper  (subject to Section 7.6 in the
case of  transactions  between the  Partnership  and the General  Partner or any
Affiliate),  and no approval of the Limited  Partners  shall be required for the
exercise of such powers,  which powers shall include,  without  limitation,  the
power to pledge any or all of the assets of the  Partnership to secure a loan or
other  financing to the General  Partner (the proceeds of which are not required
to be contributed or loaned to the Partnership),  provided, however, that to the
extent that any payment of debt service or closing  costs on any such  mortgage,
pledge,  encumbrance  or  hypothecation  shall result in the  Partnership  being
unable to pay the maximum  amount payable with respect to any  distributions  to
the Limited  Partners  pursuant to Section  5.1,  then  Regency  shall cause the
General Partner to make such additional  Capital  Contributions as are necessary
to enable the  Partnership to pay the maximum amount payable with respect to any
distributions to the Limited Partners pursuant to Section 5.1 (provided that the
General  Partner  shall  have no  obligation  to make  such  additional  Capital
Contributions  in an amount  exceeding  the amount of debt  service  and closing
costs  paid),  and  provided,  further,  that  the  General  Partner  shall  use
reasonable  efforts to effect all dispositions of the Partnership's  assets that
were  contributed by the Limited Partners in accordance with Section 1031 of the
Code  although,  except as provided in Section  7.1(c)  hereof,  it shall not be
required to do so;

     (iv) subject to the  provisions of Section  7.1(h)  hereof,  the use of the
assets of the Partnership (including,  without limitation, cash on hand) for any
purpose  consistent  with the terms of this  Agreement  and on any terms it sees
fit,  including,  without  limitation,  the  financing  of  the  conduct  of the
operations of the General Partner,  the Partnership or any of the  Partnership's
Subsidiaries, the lending of funds to other Persons (including Regency or any of
the  Partnership's  Subsidiaries)  and  the  repayment  of  obligations  of  the
Partnership and its  Subsidiaries and any other Person in which it has an equity
investment  and the making of capital  contributions  to its  Subsidiaries,  the
holding of any real,  personal and mixed property of the Partnership in the name
of the  Partnership  or in the name of a nominee or trustee  (subject to Section
7.10), the creation, by grant or otherwise, of easements or servitudes,  and the
performance of any and all acts necessary or appropriate to the operation of the
Partnership  assets  including,  but not limited to,  applications for rezoning,
objections   to  rezoning,   constructing,   altering,   improving,   repairing,
renovating,  rehabilitating,  razing, demolishing or condemning any improvements
or property of the Partnership;

     (v)  the  negotiation,   execution,   and  performance  of  any  contracts,
conveyances or other  instruments  (including with Affiliates of the Partnership
to the extent provided in Section 7.6) that the General Partner considers useful
or  necessary   to  the  conduct  of  the   Partnership's   operations   or  the
implementation of the General Partner's powers under this Agreement,  including,
without limitation, the execution and delivery of a REIT management agreement on
behalf  of or in the  name  of the  Partnership  providing  for  the  day-to-day
management and operation of the Partnership and including,  without  limitation,
the  execution  and  delivery  of  leases  on  behalf  of or in the  name of the
Partnership  (including  the lease of  Partnership  property for any purpose and
without  limit as to the term  thereof,  whether  or not  such  term  (including
renewal terms) shall extend beyond the date of  termination  of the  Partnership
and  whether or not the portion so leased is to be occupied by the lessee or, in
turn, subleased in whole or in part to others);

(vi)              the opening and closing of bank  accounts,  the  investment of
                  Partnership  funds in securities,  certificates of deposit and
                  other instruments, and the distribution of Partnership cash or
                  other Partnership assets in accordance with this Agreement;

(vii)             the selection and dismissal of employees of the Partnership or
                  the General Partner (including, without limitation,  employees
                  having   titles  such  as   "president,"   "vice   president,"
                  "secretary" and "treasurer"), and the engagement and dismissal
                  of  agents,   outside   attorneys,   accountants,   engineers,
                  appraisers,  consultants,  contractors and other professionals
                  on behalf of the General  Partner or the  Partnership  and the
                  determination  of  their   compensation  and  other  terms  of
                  employment or hiring;

     (viii) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;

(ix)              subject to the  provisions  of Section 4.2 and Section  7.1(h)
                  hereof,  the formation of, or  acquisition  of an interest in,
                  and the  contribution  of property  to any further  limited or
                  general  partnerships,  joint ventures or other  relationships
                  that it deems desirable  (including,  without limitation,  the
                  acquisition of interests in, and the  contribution of property
                  to, its  Subsidiaries  and any other Person in which it has an
                  equity  investment  from  time to time)  (provided  that  such
                  transaction  does not  result in the  Partnership  recognizing
                  taxable gain or loss for federal income tax purposes);

(x)               the   control  of  any  matters   affecting   the  rights  and
                  obligations  of the  Partnership,  including  the  conduct  of
                  litigation   and  the  incurring  of  legal  expense  and  the
                  settlement  of claims and  litigation,  the  submission of any
                  matter to arbitration,  and the  indemnification of any Person
                  against  liabilities and contingencies to the extent permitted
                  by law;

(xi)              subject  to the  provisions  of  Section  7.1(h)  hereof,  the
                  undertaking of any action in connection with the Partnership's
                  direct or indirect investment in its Subsidiaries or any other
                  Person  (including,  without  limitation,  the contribution or
                  loan of funds by the  Partnership  to such Persons)  (provided
                  that  such   action   does  not  result  in  the   Partnership
                  recognizing  taxable  gain  or loss  for  federal  income  tax
                  purposes);

     (xii) the distribution in kind of the Briarcliff  Village property pursuant
to Section 13.2(c);

(xiii)            the  determination of the fair market value of any Partnership
                  property  distributed in kind using such reasonable  method of
                  valuation as it may adopt; and

     (xiv) the execution,  acknowledgment  and delivery of any and all documents
and instruments to effectuate any or all of the foregoing.

(b) No Approval Required for Above Powers.  Subject to any other restriction set
forth in this  Agreement,  each of the Limited  Partners agrees that the General
Partner is  authorized  to execute,  deliver  and  perform  the  above-mentioned
agreements and  transactions  on behalf of the  Partnership  without any further
act,  approval or vote of the Partners,  notwithstanding  any other provision of
this Agreement  (except where Limited Partner Consent,  Original Limited Partner
Consent or the consent of the Series A Preferred  Partners or of any other class
or series of Partnership Interests is expressly required herein), the Act or any
applicable  law, rule or regulation.  The execution,  delivery or performance by
the General Partner or the Partnership of any agreement  authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons  under this  Agreement or of any duty stated or implied by law
or equity.

(c) Approval of Sale of Briarcliff  Village.  Except pursuant to the dissolution
and  liquidation of the  Partnership in accordance  with Article 13 hereof,  the
property  commonly  known  as  Briarcliff   Village  (the  "Briarcliff   Village
Property")  shall not be sold by the  Partnership  or the General  Partner on or
before  December 19, 2005 (other than in a transaction in which the  Partnership
recognizes  no taxable  gain or loss for federal  income  purposes)  without the
approval of a  Majority-in-Interest  of the  Original  Briarcliff  Partners  (as
defined  below)  who  continue,  as of  such  time,  to  hold  Original  Limited
Partnership  Units  attributable to the  contribution of the Briarcliff  Village
Property to Branch  Properties,  L.P. and Branch  Properties,  L.P.'s subsequent
contribution  of  the  Briarcliff  Village  Property  to  the  Partnership  (the
"Original Briarcliff Partners").  Such approval right of the Original Briarcliff
Partners is personal to the Original  Briarcliff  Partners  and shall  terminate
upon  the  death  of an  Original  Briarcliff  Partner  or a  sale,  assignment,
conveyance, or other transfer by an Original Briarcliff Partner, with respect to
that Partner's Original Limited  Partnership Units, and shall not be exercisable
by any successor,  transferee or assignee of an Original  Briarcliff Partner. In
the event of a like-kind  exchange  involving the Briarcliff Village Property by
the  Partnership,  then such  approval  right for the  benefit  of the  Original
Briarcliff  Partners  will  continue  to be  enforceable  after  such  like-kind
exchange,  but shall relate to the property  (whether  real,  personal or mixed,
tangible or intangible)  acquired by the Partnership in such like-kind exchange.
Nothing  herein shall be deemed to require that the  Partnership  or the General
Partner take any action to avoid or prevent an involuntary disposition of all or
part of said Briarcliff  Village pursuant to a condemnation  proceeding or other
taking.  For  purposes  of  this  Section  7.1(c),  Majority-In-Interest  of the
Original  Briarcliff  Partners shall mean the Original  Briarcliff  Partners who
hold,  in the  aggregate,  more  than  fifty  percent  (50%)  of the  Percentage
Interests then allocable to and held by all of the Original  Briarcliff Partners
with respect to the Original Limited  Partnership Units received by the Original
Briarcliff  Partners as a result of the  contribution of the Briarcliff  Village
Property to Branch  Properties,  L.P. and Branch  Properties,  L.P.'s subsequent
contribution  of  the  Briarcliff  Village  Property  to  the  Partnership.  The
Partnership  shall not engage in any  merger,  consolidation  or other  business
combination  with or into another Person unless the Partnership has entered into
an agreement with such Person in which such Person  expressly agrees to be bound
by the provisions of this Section 7.1(c).

(d) Insurance.  At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain  casualty,  liability and other
insurance on the properties of the Partnership  and liability  insurance for the
Indemnitees hereunder.

(e)  Working  Capital and Other  Reserves.  At all times from and after the date
hereof,  the General Partner may cause the Partnership to establish and maintain
working capital reserves in such amounts as the General Partner, in its sole and
absolute discretion,  deems appropriate and reasonable from time to time subject
to the provisions of Section 7.1(h) hereof.

(f) No Obligation to Consider Tax  Consequences to Limited  Partners.  Except as
provided  in Section  7.1(c) and  Section  13.2(c)  with  respect to  Briarcliff
Village,  except as provided in Section  7.1(g) with  respect to the sale of the
Management  Business,  and except for the obligation of the General  Partner set
forth  in  Section   7.1(a)(iii)  to  use  reasonable   efforts  to  effect  all
dispositions of the  Partnership's  assets that were  contributed by the Limited
Partners in  accordance  with Section 1031 of the Code,  (i) in  exercising  its
authority under this  Agreement,  the General Partner may, but shall be under no
obligation  to,  take into  account the tax  consequences  to any Partner of any
action taken by it, and (ii) the General Partner and the  Partnership  shall not
have liability to a Limited  Partner under any  circumstances  as a result of an
income tax liability  incurred by such Limited  Partner as a result of an action
(or  inaction)  by the  General  Partner  pursuant to its  authority  under this
Agreement.

(g) Approval of Sale of Management Business.  Notwithstanding anything contained
herein to the contrary,  the Third Party Management  Business (as defined in the
Contribution   Agreement)   contributed  by  Branch  Properties,   L.P.  to  the
Partnership  as  part  of its  initial  Capital  Contribution  (the  "Management
Business")  shall not be sold by the  Partnership  on or before the tenth (10th)
anniversary  of the First  Closing  (other  than in a  transaction  in which the
Partnership recognizes no taxable gain or loss for federal income tax purposes);
provided,  however,  that the  Partnership  shall be permitted to undertake  the
following  transactions:  (i)  contribution  of  the  Management  Business  to a
corporation  (the "New Management  Company") in which the Partnership  owns five
percent (5%) of the issued and  outstanding  voting common stock and 100% of the
issued  and  outstanding  non-voting  preferred  stock and in which The  Regency
Group, Inc., a Florida corporation, owns ninety-five percent (95%) of the issued
and  outstanding  voting  common stock and in which no other shares of stock are
issued and outstanding  following the  contribution;  (ii) a distribution by the
Partnership  of part or all of the stock of the New  Management  Company  to the
General Partner on or after the fifth (5th) anniversary of the First Closing; or
(iii) a sale of part or all of the  stock of the New  Management  Company  if no
Original  Limited  Partners  hold Units which they  received on the date of this
Agreement or any  Additional  Units  received by them  subsequent to the date of
this Agreement,  or with the unanimous  written consent of the Original  Limited
Partners then holding such Units).

(h) Distributions.  Notwithstanding  anything contained in this Agreement to the
contrary, the General Partner,  acting as a fiduciary,  shall use its reasonable
best  efforts  and act in good faith to  operate  the  Partnership's  assets and
manage the Partnership's business, including its indebtedness,  so as to produce
sufficient  Available  Cash  and  Capital  Transaction  Proceeds  to fund to the
Limited  Partners the Priority  Distribution  Amount on a current  basis and any
balance in the Cumulative  Unpaid Accrued Return Accounts and Cumulative  Unpaid
Priority  Distribution  Accounts of the Limited Partners pursuant to Section 5.1
hereof.

Nothing in Section  7.1(h)  shall  require  the  General  Partner to  contribute
additional capital to the Partnership.

Section 7.2 Certificate of Limited  Partnership.  To the extent that such action
is  determined  by  the  General  Partner  to be  reasonable  and  necessary  or
appropriate,  the General Partner shall file  amendments to and  restatements of
the  Certificate  and do all the things to maintain the Partnership as a limited
partnership  (or a  partnership  in which  the  limited  partners  have  limited
liability)  under the laws of the State of Delaware and each other  jurisdiction
in which the  Partnership  may elect to do business or own property.  Subject to
the  terms of  Section  8.5(a)(iv)  hereof,  the  General  Partner  shall not be
required,  before or after filing,  to deliver or mail a copy of the Certificate
or any amendment  thereto to any Limited Partner.  The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as  may  be  reasonable  and  necessary  or   appropriate   for  the  formation,
continuation,  qualification  and  operation  of a  limited  partnership  (or  a
partnership in which the Limited  Partners have limited  liability) in the State
of Delaware and any other  jurisdiction in which the Partnership may elect to do
business or own property.

     Section 7.3 Restriction on General Partner's Authority. Without the consent
of all the Limited Partners, the General Partner may not:

     (a) Take any action that would make it  impossible to carry on the ordinary
business of the Partnership, except as otherwise provided in this Agreement;

(b)      Possess Partnership property for other than a Partnership purpose;

     (c)  Admit a Person as a  Partner,  except as  otherwise  provided  in this
Agreement; or

     (d) Perform any act that would subject a Limited  Partner to liability as a
general partner.

Section 7.4       Responsibility for Expenses.
                  ---------------------------

(a) No  Compensation.  Except as provided in this  Section 7.4 and  elsewhere in
this  Agreement  (including  the provisions of Article 5 and Article 6 regarding
distributions,  payments,  and  allocations  to which it may be  entitled),  the
General  Partner shall not be compensated for its services as general partner of
the Partnership.

(b) Responsibility for Ownership and Operation  Expenses.  The Partnership shall
be  responsible  for and shall pay all  expenses  relating to the  Partnership's
ownership  of its  assets,  and the  operation  of, or for the  benefit  of, the
Partnership,  and the General Partner shall be reimbursed on a monthly basis, or
such other basis as the General  Partner may  determine in its sole and absolute
discretion,  for all expenses it incurs relating to the Partnership's  ownership
of its assets and the  operation  of, or for the  benefit  of, the  Partnership;
provided,  that the  amount of any such  reimbursement  shall be  reduced by any
interest  earned by the General  Partner with respect to bank  accounts or other
instruments  held by it as permitted in Section 7.10 and not  contributed to the
Partnership.  Such  reimbursements  shall be in addition to any reimbursement to
the  General   Partner   pursuant  to  Section   10.3(c)  and  as  a  result  of
indemnification  pursuant to Section 7.7. The General Partner shall determine in
good faith the amount of expenses  incurred by it relating to the  operation of,
or that inure to the  benefit  of, the  Partnership.  In the event that  certain
expenses  are  incurred  for the benefit of the  Partnership  and other  Persons
(including  the  General  Partner),  such  expenses  will  be  allocated  to the
Partnership and such other Persons in such a manner as the General Partner deems
fair and reasonable, subject to the provisions of Section 7.1(h) hereof.

     (c) Responsibility for  Organizational  Expenses.  The Partnership shall be
responsible for and shall pay all expenses incurred relating to the organization
of the Partnership.

(d)  Partnership  Interest  Issuance  Expenses.  The  General  Partner  shall be
reimbursed  for all expenses it incurs  relating to any  issuance of  additional
Partnership  Interests  pursuant to Section  4.2 or Section  4.5 hereof,  all of
which shall be expenses of the Partnership.

Section 7.5 Outside Activities of the General Partner. Nothing contained in this
Agreement  shall  prevent or  prohibit  the  General  Partner  or any  employee,
officer,  director,  agent, shareholder or Affiliate of the General Partner from
entering into,  engaging in or conducting any other activity or performing for a
fee any service  including  (without  limiting the  generality of the foregoing)
engaging in any  business  dealing  with real  property of any type or location,
including,  without  limitation,  property of a type similar to those properties
owned by the  Partnership,  its  Subsidiaries  or any other  Person in which the
Partnership has an equity investment;  acting as a director, officer or employee
of any  corporation,  as a trustee  of any  trust,  as a general  partner of any
partnership,  or as an administrative  official of any other business entity; or
receiving  compensation  for services to, or  participating  in profits  derived
from,  the  investments  of any such  corporation,  trust,  partnership or other
entity,  regardless  of whether such  activities  are  competitive,  directly or
indirectly,  with the  Partnership.  Nothing  herein  shall  require the General
Partner or any employee,  agent,  shareholder or Affiliate  thereof to offer any
interest in such activities or any particular  opportunity to the Partnership or
any Partner, and neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership  relationship  established hereby in
or to such other activities or to the income or proceeds derived therefrom.  The
pursuit  of such  activities,  even if  competitive  with  the  business  of the
Partnership (including, without limitation, causing tenants to transfer from one
of the Partnership's properties to other properties in which the General Partner
has  an  interest,   directly  or  indirectly,   without   compensation  to  the
Partnership,  or taking other actions for the benefit of the General  Partner or
Affiliates  of the General  Partner that are  detrimental  to the  Partnership),
shall not be deemed wrongful or improper.

Section 7.6       Contracts with Affiliates.
                  -------------------------

(a)  General.  The  General  Partner  or any of its  Affiliates  may enter  into
transactions  or agreements with the  Partnership,  including  transactions  and
agreements  (i) to sell,  transfer or convey any  property  to, or purchase  any
property  from,  the  Partnership,  directly  or  indirectly,  or  (ii)  for the
provision of services to the  Partnership,  provided that such  transactions  or
agreements,   including   transactions  and  agreements  with  Security  Capital
Investment Research,  Inc. or any of its Affiliates,  are on terms that are fair
and reasonable and no less favorable to the  Partnership  than would be obtained
from an unaffiliated third party in connection therewith.  In entering into such
transactions with Affiliates the General Partner shall not allocate expenses and
similar   items   disproportionately   between  the  General   Partner  and  the
Partnership.

(b) Employee  Benefit Plans. The General Partner may propose and adopt on behalf
of the  Partnership  employee  benefit plans funded by the  Partnership  for the
benefit of employees of the General Partner,  the  Partnership,  Subsidiaries of
the  Partnership  or any  Affiliate  of any  of  them  in  respect  of  services
performed,  directly  or  indirectly,  for the benefit of the  Partnership,  the
General  Partner,  or any  of the  Partnership's  Subsidiaries,  subject  to the
provisions of Section 7.1(h) hereof.

(c) Conflict Avoidance  Agreements.  The General Partner is expressly authorized
to enter into,  in the name and on behalf of the  Partnership,  a right of first
opportunity  arrangement  and other conflict  avoidance  agreements with various
Affiliates  of the  Partnership  and the General  Partner,  on such terms as the
General  Partner  believes are  advisable,  subject to the provisions of Section
7.6(a) and Section 7.1(h) hereof.

Section 7.7       Indemnification.
                  ---------------

(a) General.  The Partnership shall indemnify an Indemnitee from and against any
and all  losses,  claims,  damages,  liabilities,  joint  or  several,  expenses
(including legal fees and expenses),  judgments,  fines, settlements,  and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal,  administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established  that: (i) the act or omission of the Indemnitee was material to the
matter  giving rise to the  proceeding  and  constituted  willful  misconduct or
fraud;  (ii) the Indemnitee  actually  received an improper  personal benefit in
money,  property or services;  or (iii) in the case of any criminal  proceeding,
the  Indemnitee  had  reasonable  cause to believe  that the act or omission was
unlawful.  The  termination of any  proceeding by judgment,  order or settlement
does not create a  presumption  that the  Indemnitee  did not meet the requisite
standard of conduct set forth in this Section  7.7(a).  The  termination  of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of  probation  prior  to  judgment,  creates  a  rebuttable
presumption  that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7(a). Any  indemnification  pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership.

(b) Advancement of Expenses.  Reasonable  expenses incurred by an Indemnitee who
is,  or is  threatened  to be  made,  a  party  to a  proceeding  may be paid or
reimbursed  by the  Partnership  in  advance  of the  final  disposition  of the
proceeding upon receipt by the  Partnership of (i) a written  affirmation by the
Indemnitee  of the  Indemnitee's  good faith belief that the standard of conduct
necessary for  indemnification  by the Partnership as authorized in this Section
7.7  has  been  met  and  (ii) a  written  undertaking  by or on  behalf  of the
Indemnitee to repay the amount if it shall  ultimately  be  determined  that the
standard of conduct has not been met.

(c) No Limitation of Rights.  The  indemnification  provided by this Section 7.7
shall be in addition  to any other  rights to which an  Indemnitee  or any other
Person  may be  entitled  under  any  agreement,  pursuant  to any  vote  of the
Partners,  as a  matter  of  law  or  otherwise,  and  shall  continue  as to an
Indemnitee who has ceased to serve in such capacity.

(d) Insurance. The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees  and such other Persons as the General Partner shall  determine,
against  any  liability  that may be asserted  against or  expenses  that may be
incurred  by such  Person  in  connection  with  the  Partnership's  activities,
regardless  of whether the  Partnership  would have the power to indemnify  such
Person against such liability under the provisions of this Agreement.

     (e) No  Personal  Liability  for  Partners.  In no event may an  Indemnitee
subject  any  Partner to  personal  liability  by reason of the  indemnification
provisions set forth in this Agreement.

(f) Interested  Transactions.  An Indemnitee shall not be denied indemnification
in whole or in part  under  this  Section  7.7  because  the  Indemnitee  had an
interest in the transaction with respect to which the indemnification applies if
the transaction was otherwise permitted by the terms of this Agreement.

(g)  Benefit.  The  provisions  of this  Section  7.7 are for the benefit of the
Indemnitees,  their heirs, successors,  assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

Section 7.8       Liability of the General Partner.
                  --------------------------------

(a)  General.  Notwithstanding  anything  to the  contrary  set  forth  in  this
Agreement,  the General Partner shall not be liable for monetary  damages to the
Partnership,  any Partners or any Assignees for losses  sustained or liabilities
incurred  as a result of errors in  judgment  or of any act or  omission  if the
General Partner acted in good faith.

(b) No  Obligation  to  Consider  Interests  of Limited  Partners.  The  Limited
Partners  expressly  acknowledge that the General Partner is acting on behalf of
the Partnership,  the General Partner and Regency's  shareholders  collectively,
that except as provided in Section 7.1(e) with respect to the  establishment and
maintenance of working  capital  reserves,  except as provided in Section 7.1(f)
with  respect to tax  consequences,  except as provided  in Section  7.1(h) with
respect to the  generation  of funds for  distributions  and except as expressly
provided  otherwise  in  Section  7.1(a)(iv),  Section  7.1(a)(ix)  and  Section
7.1(a)(xi)  with  respect  to the powers of the  General  Partner,  the  General
Partner is under no obligation to consider the separate interests of the Limited
Partners  (including,  without  limitation,  the  tax  consequences  to  Limited
Partners or Assignees except as expressly  provided  otherwise in Section 7.1(f)
and Section  7.1(h)) in deciding  whether to cause the  Partnership  to take (or
decline to take) any actions  which the General  Partner has  undertaken in good
faith on behalf of the  Partnership,  and that the General  Partner shall not be
liable for  monetary  damages for losses  sustained,  liabilities  incurred,  or
benefits  not derived by Limited  Partners in  connection  with such  decisions,
provided that the General Partner has acted in good faith and in accordance with
the  provisions of this  Agreement.  For purposes  hereof,  a Person acting in a
manner which furthers  compliance by Regency with the REIT  requirements  of the
Code, shall be deemed to satisfy the standards of conduct hereunder. The Limited
Partners  further  expressly  acknowledge that Regency is obligated to cause the
Partnership  to take (or  decline  to take)  certain  actions in order to assist
Security  Capital and its  Affiliates  in avoiding  classification  as a passive
foreign  investment company within the meaning of Section 1296 of the Code. Such
obligation is set forth on Schedule 7.8(b).

(c) Acts of Agents. Subject to its obligations and duties as General Partner set
forth in Section  7.1(a)  hereof,  the General  Partner may  exercise any of the
powers  granted to it by this  Agreement  and perform any of the duties  imposed
upon it  hereunder  either  directly or by or through  its  agents.  The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.

(d) Effect of Amendment.  Any amendment,  modification or repeal of this Section
7.8 or any provision  hereof shall be prospective  only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited  Partners under this Section 7.8 as in effect  immediately  prior to
such  amendment,  modification  or repeal with respect to claims arising from or
relating to matters  occurring,  in whole or in part,  prior to such  amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9       Other Matters Concerning the General Partner.
                  --------------------------------------------

(a) Reliance on Documents.  The General  Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument,  opinion, report, notice, request,  consent, order, bond, debenture,
or other paper or document  believed by it to be genuine and to have been signed
or presented by the proper party or parties.

(b) Reliance on Consultants  and Advisers.  The General Partner may consult with
legal  counsel,  accountants,  appraisers,  management  consultants,  investment
bankers and other  consultants and advisers selected by it, and any act taken or
omitted to be taken in reliance upon and in accordance  with the opinion of such
Persons as to matters  which such  General  Partner  reasonably  believes  to be
within such Person's  professional  or expert  competence  shall be conclusively
presumed to have been done or omitted in good faith and in accordance  with such
opinion.

(c) Action Through  Officers and Attorneys.  The General  Partner shall have the
right, in respect of any of its powers or obligations hereunder,  to act through
any  of  its  duly  authorized   officers  and  a  duly  appointed  attorney  or
attorneys-in-fact.  Each such  attorney  shall,  to the extent  provided  by the
General  Partner in the power of attorney,  have full power and  authority to do
and perform all and every act and duty which is permitted or required to be done
by the General Partner hereunder.

(d) Actions to Maintain  REIT Status or Avoid  Taxation of the General  Partner.
Notwithstanding any other provisions of this Agreement or the Act, any action of
the General  Partner on behalf of the Partnership or any decision of the General
Partner to refrain from acting on behalf of the  Partnership,  undertaken in the
good faith  belief that such action or omission is  necessary  or  advisable  in
order (i) to protect  the ability of Regency to continue to qualify as a REIT or
(ii) to avoid  Regency  incurring any taxes under Section 857 or Section 4981 of
the Code, is expressly authorized under this Agreement and is deemed approved by
all of the Limited Partners.

(e) Sales of Assets. In the event that Regency or any of its Affiliates in which
it owns,  directly or indirectly,  an interest  disposes of properties or assets
(other than those properties or assets owned by the Partnership) in transactions
or exchanges which Regency  reasonably  believes create capital gains to Regency
and a resulting distribution or dividend to Regency's shareholders,  the General
Partner shall provide the Original  Limited Partners with at least 20 days prior
written notice of the record date for any distribution of the proceeds  thereof,
together with  relevant  information  concerning  such  dividend,  including the
amount, to enable the Original Limited Partners to exercise the Redemption Right
prior to said record date.

Section 7.10 Title to Partnership Assets.  Title to Partnership assets,  whether
real,  personal or mixed and whether tangible or intangible,  shall be deemed to
be owned by the  Partnership  as an  entity,  and no  Partner,  individually  or
collectively,  shall have any ownership  interest in such Partnership  assets or
any portion thereof.  Title to any or all of the Partnership  assets may be held
in the name of the Partnership,  the General Partner or one or more nominees, as
the General Partner may determine,  including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal  title is held in the name of the General  Partner or any nominee or
Affiliate of the General  Partner  shall be held by the General  Partner for the
use and benefit of the  Partnership  in accordance  with the  provisions of this
Agreement;  provided,  however,  that the  General  Partner  shall  use its best
efforts to cause  beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably  practicable.  All Partnership assets shall be
recorded  as  the  property  of  the  Partnership  in  its  books  and  records,
irrespective  of the name in which  legal  title to such  Partnership  assets is
held.

Section 7.11 Reliance by Third Parties. Notwithstanding anything to the contrary
in this Agreement,  any Person dealing with the Partnership shall be entitled to
assume that the General  Partner has full power and authority to encumber,  sell
or otherwise use in any manner any and all assets of the Partnership (including,
without  limitation,  in  connection  with any pledge of  Partnership  assets to
secure a loan or other  financing to the General  Partner as provided by Section
7.1(a)(iii)) and to enter into any contracts on behalf of the  Partnership,  and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's  sole party in  interest,  both  legally  and  beneficially.  Each
Limited  Partner  hereby waives any and all defenses or other remedies which may
be available  against such Person to contest,  negate or disaffirm any action of
the General Partner in connection  with any such dealing.  In no event shall any
Person dealing with the General Partner or its  representatives  be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General  Partner or
its  representatives.  Each and every certificate,  document or other instrument
executed  on  behalf  of  the   Partnership  by  the  General   Partner  or  its
representatives  shall be  conclusive  evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect,  (ii) the Person  executing and delivering  such  certificate,
document or  instrument  was duly  authorized  and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in accordance  with the terms and provisions of this
Agreement and is binding upon the Partnership.

Article 8
                   Rights And Obligations Of Limited Partners

Section  8.1  Limitation  of  Liability.  The  Limited  Partners  shall  have no
liability  under this  Agreement  except as  expressly  provided  in Section 5.3
hereof, or under the Act.

Section 8.2 Management of Business.  No Limited  Partner or Assignee (other than
the General Partner, any of its Affiliates or any officer,  director,  employee,
partner,  agent or trustee of the General  Partner,  the  Partnership  or any of
their  Affiliates,  in their capacity as such) shall take part in the operation,
management  or control  (within  the  meaning  of the Act) of the  Partnership's
business,  transact any business in the Partnership's  name or have the power to
sign documents for or otherwise  bind the  Partnership.  The  transaction of any
such  business by the General  Partner,  any of its  Affiliates  or any officer,
director,  employee,  partner,  agent or trustee  of the  General  Partner,  the
Partnership or any of their  Affiliates,  in their  capacity as such,  shall not
affect,  impair or eliminate  the  limitations  on the  liability of the Limited
Partners or Assignees under this Agreement.

Section 8.3 Outside  Activities of Limited  Partners.  Subject to any agreements
entered into by a Limited  Partner or its Affiliates  with the General  Partner,
the  Partnership  or a Subsidiary or an Affiliate of any of them,  the following
rights shall govern  outside  activities  of Limited  Partners:  (i) any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate, partner,
beneficiary or shareholder of any such Limited  Partner shall be entitled to and
may have  business  interests  and engage in business  activities in addition to
those relating to the Partnership,  including  business interests and activities
in  direct  competition  with the  Partnership,  the  General  Partner  or their
Affiliates;  (ii) neither the Partnership nor any Partners shall have any rights
by virtue of this Agreement in any business ventures of any Partner or Assignee;
(iii) none of the  Partners nor any other Person shall have any rights by virtue
of this  Agreement or the  partnership  relationship  established  hereby in any
business ventures of any other Person,  and such Person shall have no obligation
pursuant to this  Agreement to offer any interest in any such business  ventures
to the  Partnership,  any  Partner  or any  such  other  Person,  even  if  such
opportunity  is of a character  which,  if  presented  to the  Partnership,  any
Partner or such other Person,  could be taken by such Person; (iv) the fact that
a Partner may encounter  opportunities to purchase,  otherwise  acquire,  lease,
sell or otherwise dispose of real or personal property and may take advantage of
such opportunities  himself or introduce such opportunities to entities in which
it has or has not any  interest,  shall not subject such Partner to liability to
the Partnership or any of the other Partners on account of the lost opportunity;
and (v) except as otherwise  specifically provided herein,  nothing contained in
this  Agreement  shall be deemed to  prohibit  a Partner or any  Affiliate  of a
Partner  from  dealing,   or  otherwise  engaging  in  business,   with  Persons
transacting business with the Partnership or from providing services relating to
the purchase, sale, rental, management or operation of real or personal property
(including real estate brokerage services) and receiving  compensation therefor,
from any Persons who have  transacted  business  with the  Partnership  or other
third parties.

Section 8.4 Priority Among  Partners.  Except to the extent  provided by Section
4.2,  Section 4.5,  Section  5.1(a),  Section 5.1(b),  Section  5.1(c),  Section
6.1(a),  Section 6.1(b),  Section 6.2 or Section 6.3 hereof (with respect to the
respective  priority  of the  Series A and any  other  Preferred  Units  and the
Original Limited Partnership Units and the subordination of the Class B Units to
the  Original  Limited  Partners  Units  and  Additional  Units),  or  except as
otherwise expressly provided in this Agreement,  no Partner (Limited or General)
or Assignee  shall have priority over any other Partner  (Limited or General) or
Assignee  either as to the return of  Capital  Contributions  or as to  profits,
losses or distributions.

Section 8.5       Rights of Limited Partners Relating to the Partnership.
                  ------------------------------------------------------

(a) Copies of Business  Records.  In addition to other  rights  provided by this
Agreement or by the Act, and except as limited by Section  8.5(c)  hereof,  each
Limited  Partner  shall be provided  the  following  without  demand,  except as
otherwise provided below, at the Partnership's expense:

(i)               promptly after becoming  available,  a copy of the most recent
                  annual,  quarterly  and current  reports and proxy  statements
                  filed with the Securities  and Exchange  Commission by Regency
                  pursuant to the Securities Exchange Act of 1934, if any;

     (ii)  promptly  after  becoming  available,  a copy  of  the  Partnership's
federal, state and local income tax returns for each Partnership Year;

(iii)             upon written  demand and for a purpose  reasonably  related to
                  such Limited  Partner's  interest as a Limited  Partner in the
                  Partnership,  a  current  list  of the  name  and  last  known
                  business, residence or mailing address of each Partner;

(iv)              a copy  of  this  Agreement  and  (upon  written  demand)  the
                  Certificate and all amendments hereto or (upon written demand)
                  to the  Certificate,  together  with  executed  copies  of all
                  powers of  attorney  pursuant  to which  this  Agreement,  the
                  Certificate  and all  amendments  hereto and thereto have been
                  executed; and

(v)               upon written demand,  true and full information  regarding the
                  amount of cash and a  description  and  statement 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.

(b) Notification of Changes in Unit Adjustment Factor. The General Partner shall
notify  each  Limited  Partner  (other  than  any  Partner  who  does not have a
Redemption  Right) in writing of any change made to the Unit  Adjustment  Factor
within 10 Business Days of the date such change becomes effective.

(c)  Confidential  Information.  Notwithstanding  any  other  provision  of this
Section  8.5,  the  General  Partner  may keep  confidential  from  the  Limited
Partners,  for such  period of time as the  General  Partner  determines  in its
discretion to be reasonable, any information (i) relating to the General Partner
or any of its  Affiliates  or the  conduct of their  business  that the  General
Partner  believes,  in  its  good  faith  judgment,   the  disclosure  of  which
information   would  adversely   affect  a  material   financing,   acquisition,
disposition of assets or securities or other comparable transaction to which the
General  Partner  or any of its  Affiliates  is a party,  (ii) that the  General
Partner  believes  to be in the  nature  of  trade  secrets  of  Regency  or its
Affiliates or (iii) that the Partnership,  Regency or any of their Affiliates is
required  by law or by  agreements  with  unaffiliated  third  parties  to  keep
confidential.  Nothing contained in this Section 8.5(c) shall permit the General
Partner to keep confidential from the Limited Partners any information  relating
to the Partnership or its business.

Section 8.6 Redemption of Units.  The Redemption  Rights of the Original Limited
Partners are set forth in this Section 8.6.  Any  Redemption  Rights  granted to
Additional  Limited  Partners shall be set forth in amendments to this Agreement
or in separate redemption agreements.

(a)  Exercise.  Subject to the  provisions  of this  Section  8.6,  the Original
Limited  Partners shall have the right (the  "Redemption  Right") to require the
Partnership to redeem any Unit held by such Original Limited Partner in exchange
for the  Redemption  Amount to be paid by the  Partnership.  A Redemption  Right
shall be exercised  pursuant to a Notice of Redemption  delivered to the General
Partner by the Original  Limited Partner who is exercising the Redemption  Right
(the  "Redeeming  Partner"),  which shall be irrevocable  except as set forth in
this Section  8.6(a).  The  redemption  shall occur on the Specified  Redemption
Date; provided,  however, a Specified Redemption Date shall not occur until such
later  date as may be  specified  pursuant  to any  agreement  with an  Original
Limited Partner. An Original Limited Partner may exercise a Redemption Right any
time  and any  number  of  times.  A  Redeeming  Partner  may not  exercise  the
Redemption  Right for less than 1,000 Units or, if such Redeeming  Partner holds
less than 1,000 Units, all of the Units held by such Redeeming  Partner.  If (i)
an Original  Limited  Partner  acquires  any Units after the First  Closing from
another  Original Limited Partner or holds or acquires any Shares otherwise than
pursuant to the exercise of a Redemption  Right  hereunder and (ii) the issuance
of a Share Amount  pursuant to the exercise of a Redemption  Right would violate
the  provisions of Section 5.2 of the Articles of  Incorporation  as a result of
the  ownership of such  additional  Units or Shares so acquired by such Original
Limited  Partner  (the  number  of  Shares  in  excess  of the  number of Shares
permitted  pursuant  to said  Section  5.2 is herein  referred to as the "Excess
Shares") and (iii) such  Original  Limited  Partner does not revoke or amend the
exercise of such Redemption  Right to comply with the provisions of said Section
5.2 of the Articles of  Incorporation  within five days after receipt of written
notice  from the  General  Partner  that the  redemption  would be in  violation
thereof,  then the Partnership shall pay to such Redeeming  Partner,  in lieu of
the Share  Amount or the Cash  Amount  attributable  to the Excess  Shares,  the
amount which would be payable to such Redeeming  Partner pursuant to Section 5.3
of the Articles of  Incorporation if such Excess Shares were issued in violation
of Section  5.2 of the  Articles of  Incorporation  and  Regency  exercised  the
remedies  pursuant to said  Section 5.3 of the  Articles of  Incorporation.  The
relevant  provisions of the Articles of Incorporation as presently in effect are
attached  hereto as Schedule  8.6(a).  This  Section  8.6(a)  shall in no way or
manner be construed as limiting the application of the Articles of Incorporation
or constitute any form of waiver or exemption thereunder.

(b)  Payment.  The  General  Partner  shall  have the right to elect to fund the
Redemption  Amount through the issuance of (i) the Share Amount or (ii) the Cash
Amount The Redeeming  Partner  shall have no right,  with respect to any Unit so
redeemed,  to  receive  any  distributions  paid by the  Partnership  after  the
Specified Redemption Date.

(c) Exceptions for Payment.  Notwithstanding  anything contained in this Section
8.6 to the contrary,  the following  provisions  shall apply with respect to the
payment of a Redemption Amount:

     (i) If the funding of the Share  Amount with  respect to the  exercise of a
Redemption Right would cause the issuance of the Shares in connection  therewith
to violate Article 5.14 of the Articles of  Incorporation  of Regency,  then the
Redeeming  Partner  shall not have the right to receive  the Share  Amount  with
respect to the issuance of any Shares  resulting  in such a  violation,  and the
balance of any  Redemption  Amount  relating to the exercise of such  Redemption
Right  shall be paid by a Cash  Amount.  A Non-U.S.  Person who (i) has signed a
Waiver and Consent  Agreement  in the form of Exhibit C attached  hereto for the
benefit of Regency  and  Security  Capital  (the  "Security  Capital  Waiver and
Consent")  and (ii) is  exercising a Redemption  Right (and will receive a Share
Amount) in compliance with the Security Capital Waiver and Consent,  will not be
in violation of the provisions of Article 5.14 of the Articles of  Incorporation
if (x) the aggregate number of Shares to be issued on such Specified  Redemption
Date to all Redeeming Partners who are Non-U.S. Persons is equal to or less than
(y) the  aggregate  number of Shares to be issued on such  Specified  Redemption
Date to all Redeeming Partners who are other than Non-U.S.  Persons (the maximum
number of  Shares  which may be issued  to  Redeeming  Partners  on a  Specified
Redemption  Date who are  Non-U.S.  Persons  in order to satisfy  the  foregoing
requirement is herein referred to as the "Matching Share Amount").  If more than
one Redeeming Partner who is a Non-U.S.  Person exercises a Redemption Right for
the same Specified  Redemption Date and if the aggregate Share Amount payable to
all such Redeeming  Partners would cause the issuance of Shares to such Non-U.S.
Persons to exceed the Matching Share Amount on such Specified  Redemption  Date,
then the Matching Share Amount shall be allocated among such Redeeming  Partners
who are Non-U.S.  Persons pro rata in proportion to the respective Share Amounts
otherwise  payable to such Redeeming  Partners,  and any balance of a Redemption
Amount payable to any such Redeeming  Partner on such Specified  Redemption Date
shall be paid by a Cash Amount.

(ii)              If the  issuance  of Shares for a Share  Amount to a Redeeming
                  Partner  would  be in  violation  of the  Securities  Act  and
                  applicable state  securities laws then such Redeeming  Partner
                  shall not have the right to receive the Share Amount,  and the
                  Redemption Amount shall be paid by the Cash Amount;  provided,
                  however,  the  issuance of Shares for a Share Amount shall not
                  violate the registration requirements of the Securities Act as
                  in effect on the date  hereof if such  Shares are issued to an
                  "accredited investor" as defined in the Securities Act.

(d)      [Intentionally Omitted.]

(e) Conditions.  As a condition to exercising a Redemption Right, each Redeeming
Partner  shall  execute a Notice of Redemption in the form attached as Exhibit B
and, if a Non-U.S.  Person,  the Security Capital Waiver and Consent in the form
attached  as Exhibit C; and  execute  such other  documents  and take such other
actions as the  General  Partner  may  reasonably  require,  including a Foreign
Investment  and Real  Property Tax Act  ("FIRPTA") or similar state and/or local
affidavit (or make appropriate arrangements for deposit with the General Partner
for payment to the Internal  Revenue Service or any state or local  governmental
authority  of the amount  required  for the  General  Partner to comply with the
withholding provisions of such federal, state and local laws, and if applicable,
providing a withholding  certificate evidencing the Redeeming Partner's right to
a reduced rate of FIRPTA  withholding).  As a further  condition to exercising a
Redemption Right, the Units to be redeemed shall be delivered to the Partnership
or Regency, as the case may be, free and clear of all liens, security interests,
deeds  of  trust,  pledges  and  other  encumbrances  of any  nature  whatsoever
(collectively the "Liens"),  subject to the provisions of Section 5.3 hereof. In
the event any Lien exists on the Specified  Redemption  Date with respect to the
Units to be redeemed,  neither the  Partnership  nor Regency (if Regency assumes
the  Redemption  Right  pursuant to Section  8.7) shall have any  obligation  to
redeem such Units,  unless,  in connection  therewith,  the General  Partner has
elected  to pay a  portion  of the  Redemption  Amount  in cash and such cash is
sufficient  to discharge  such Lien,  subject to the  provisions  of Section 5.3
hereof.  Each Redeeming Partner hereby expressly  authorizes the General Partner
to apply such portion of such cash as may be necessary to discharge such Lien in
full.

(f)      [Intentionally Omitted.]

(g)  Regency  Agreement.  Regency  agrees (i) to perform  Regency's  obligations
described in this Section 8.6, (ii) to cause the General  Partner to perform the
General Partner's  obligations  described in this Section 8.6 and (iii) to cause
the  General  Partner  to cause the  Partnership  to perform  the  Partnership's
obligations described in this Section 8.6.

(h) Additional  Rights. In case Regency shall issue rights,  options or warrants
to all holders of its Shares  entitling them to subscribe for or purchase Shares
or other  securities  convertible into Shares at a price per share less than the
current per share  market  price as of the day before the "ex date" with respect
to the  issuance or  distribution  requiring  such  computation,  each  Original
Limited  Partner  holding  Redemption  Rights  shall be entitled to receive such
number of such rights, options or warrants, as the case may be, as he would have
been entitled to receive had he exercised  all of his then  existing  Redemption
Rights  immediately  prior to the record date for such issuance by Regency.  The
term "ex date" shall mean the first date on which Shares trade regularly without
the right to receive such issuance or distribution.  In case the Shares shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization,  reclassification, or otherwise (other
than subdivision or combination of Shares or a stock dividend  described in this
definition),  then and in each such event the Original  Limited Partners holding
Redemption  Rights shall have the right  thereafter to exercise their Redemption
Rights for the kind and amount of shares and other  securities and property that
would have been received  upon such  reorganization,  reclassification  or other
change by holders of the number of Shares with respect to which such  Redemption
Rights  could  have been  exercised  immediately  prior to such  reorganization,
reclassification or change.

(i)  Distributions.  A Redeeming  Partner  exercising a Redemption  Right with a
Specified  Redemption  Date  after a  Partnership  Record  Date and prior to the
payment of the  distribution  of  Available  Cash  relating to such  Partnership
Record Date shall retain the right to receive such  distribution with respect to
such Units redeemed on such Specified Redemption Date.

Section 8.7 Regency's  Assumption of Right.  Notwithstanding  the  provisions of
Section 8.6, Regency may, in its sole and absolute  discretion,  assume directly
and  satisfy a  Redemption  Right by paying to the  Redeeming  Partner the Share
Amount on the Specified  Redemption  Date,  whereupon  Regency shall acquire the
Units offered for  redemption by the Redeeming  Partner and shall be treated for
all purposes of this  Agreement  as the owner of such Units,  which shall become
Class B Units.  In the event  Regency  shall  exercise  its right to satisfy the
Redemption  Right  in the  manner  described  in  the  preceding  sentence,  the
Partnership  shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming  Partner's  exercise of the Redemption Right, and
each of the Redeeming Partner, the Partnership,  the General Partner and Regency
shall treat the transaction  between Regency and the Redeeming Partner as a sale
of the  Redeeming  Partner's  Units to Regency for federal  income tax purposes.
Regency agrees that if the General  Partner elects to pay the Redemption  Amount
through the payment of the Share  Amount,  Regency  shall  guarantee the General
Partner's payment thereof.

Article 9
                     Books, Records, Accounting And Reports

Section 9.1 Records and  Accounting.  The General Partner shall keep or cause to
be kept at the principal office of the Partnership appropriate books and records
with respect to the Partnership's business,  including,  without limitation, all
books and records  necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 8.5 or
Section 9.3 hereof. Any records maintained by or on behalf of the Partnership in
the  regular  course  of its  business  may be kept  on,  or be in the  form of,
magnetic  tape,  photographs,  micrographics  or any other  information  storage
device;  provided,  that the records so maintained are convertible  into clearly
legible  written  form  within a  reasonable  period  of time.  The books of the
Partnership  shall be maintained  for financial  purposes on an accrual basis in
accordance with generally accepted  accounting  principles and for tax reporting
purposes on the accrual basis.

     Section 9.2 Fiscal Year.  The fiscal year of the  Partnership  shall be the
calendar year.


Section 9.3       Reports.
                  -------

(a) Annual Reports. As soon as practicable,  but in no event later than the date
when mailed to Regency's  shareholders,  the General  Partner  shall cause to be
mailed to each  Limited  Partner  as of the close of the  Partnership  Year,  an
annual report containing financial statements of the Partnership,  or of Regency
if such statements are prepared solely on a consolidated  basis with Regency for
such  Partnership  Year,   presented  in  accordance  with  generally   accepted
accounting principles,  such statements to be audited by a nationally recognized
firm of independent public accountants selected by the General Partner.

(b) Quarterly  Reports.  As soon as practicable,  but in no event later than the
date when mailed to Regency's  shareholders,  the General Partner shall cause to
be mailed to each  Limited  Partner as of the last day of the  calendar  quarter
(except  the last  calendar  quarter of each year) who has asked to be placed on
the  mailing  list  for  the  same,  a  report  containing  unaudited  financial
statements of the  Partnership,  or of Regency if such  statements  are prepared
solely on a consolidated  basis with Regency,  and such other information as may
be  required  by  applicable  law  or  regulation,  or as  the  General  Partner
determines to be appropriate.

(c) Other.  During the  pendency  of the  Redemption  Rights,  Limited  Partners
holding   Redemption   Rights  shall  receive  in  a  timely  manner  all  other
communications transmitted from time to time by Regency to its shareholders.

Article 10
                                   Tax Matters

Section 10.1  Preparation of Tax Returns.  The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership  income,  gains,
deductions,  losses and other items required of the  Partnership for federal and
state  income tax  purposes  and shall use all  reasonable  efforts to  furnish,
within 90 days of the close of each taxable year, the tax information reasonably
required  by  Limited  Partners  for  federal  and state  income  tax  reporting
purposes.

Section 10.2 Tax Elections.  Except as otherwise  provided  herein,  the General
Partner shall, in its sole and absolute  discretion,  determine  whether to make
any available election pursuant to the Code; provided, however, that the General
Partner shall make the election under Section 754 of the Code in accordance with
applicable Regulations  thereunder.  The General Partner shall have the right to
seek to revoke any such election  (including,  without limitation,  the election
under Section 754 of the Code) upon the General  Partner's  determination in its
sole and absolute  discretion  that such  revocation is in the best interests of
the Partners.

Section 10.3      Tax Matters Partner.
                  -------------------

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

(b)      Powers.  The tax matters partner is authorized, but not required:

     (i) to  enter  into  any  settlement  with  the  IRS  with  respect  to any
administrative  or judicial  proceedings for the adjustment of Partnership items
required  to be taken into  account by a Partner for income tax  purposes  (such
administrative  proceedings being referred to as a "tax audit" and such judicial
proceedings  being  referred to as  "judicial  review"),  and in the  settlement
agreement the tax matters  partner may expressly state that such agreement shall
bind all  Partners,  except that such  settlement  agreement  shall not bind any
Partner  (1)  who  (within  the  time  prescribed   pursuant  to  the  Code  and
Regulations)  files a  statement  with the IRS  providing  that the tax  matters
partner  shall not have the  authority to enter into a  settlement  agreement on
behalf of such  Partner or (2) who is a "notice  partner" (as defined in Section
6231 of the  Code) or a member  of a  "notice  group"  (as  defined  in  Section
6223(b)(2) of the Code), and, to the extent provided by law, the General Partner
shall cause each Limited Partner to be designated a notice partner;

(ii)              in  the  event  that  a  notice  of  a  final   administrative
                  adjustment at the Partnership level of any item required to be
                  taken into  account by a Partner  for tax  purposes  (a "final
                  adjustment")  is mailed or otherwise  given to the tax matters
                  partner,  to seek  judicial  review of such final  adjustment,
                  including the filing of a petition for  readjustment  with the
                  Tax Court or the United States Claims Court,  or the filing of
                  a complaint  for refund with the District  Court of the United
                  States for the district in which the  Partnership's  principal
                  place of business is located;

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

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

(v)               to enter into an  agreement  with the IRS to extend the period
                  for  assessing  any tax  which  is  attributable  to any  item
                  required  to be  taken  into  account  by a  Partner  for  tax
                  purposes, or an item affected by such item; and

(vi)              to take any other  action on  behalf  of the  Partners  of the
                  Partnership  in  connection  with any tax  audit  or  judicial
                  review proceeding to the extent permitted by applicable law or
                  regulations.

                           The  taking of any action  and the  incurring  of any
         expense  by the  tax  matters  partner  in  connection  with  any  such
         proceeding,  except to the extent  required  by law, is a matter in the
         sole  and  absolute  discretion  of the tax  matters  partner,  and the
         provisions relating to indemnification of the General Partner set forth
         in Section 7.7 of this Agreement  shall be fully  applicable to the tax
         matters partner in its capacity as such.

(c) Reimbursement. The tax matters partner shall receive no compensation for its
services. All third-party costs and expenses incurred by the tax matters partner
in performing its duties as such (including  legal and accounting fees) shall be
borne by the  Partnership.  Nothing  herein  shall be  construed to restrict the
Partnership  from engaging an  accounting  firm and a law firm to assist the tax
matters partner in discharging his duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.

Section 10.4  Organizational  Expenses.  The  Partnership  shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a 60
month period as provided in Section 709 of the Code.

Article 11
                            Transfers And Withdrawals

Section 11.1      Transfer.
                  --------

(a) Definition.  The term  "transfer," when used in this Article 11 with respect
to a Partnership  Unit,  shall be deemed to refer to a transaction  by which the
General Partner purports to assign its General  Partnership  Interest to another
Person or by which a Limited Partner purports to assign its Limited  Partnership
Interest to another  Person,  and  includes a sale,  assignment,  gift,  pledge,
encumbrance,  hypothecation,  mortgage, exchange or any other disposition by law
or otherwise.  The term "transfer" when used in this Article 11 does not include
any redemption of Partnership Units by a Limited Partner.

(b) Requirements.  No Partnership Interest shall be transferred,  in whole or in
part,  except in  accordance  with the terms  and  conditions  set forth in this
Article 11. Any transfer or  purported  transfer of a  Partnership  Interest not
made in accordance with this Article 11 shall be null and void.

Section 11.2      Transfer of General Partner's Partnership Interests.
                  ---------------------------------------------------

(a) General  Partnership  Interest.  The General Partner may not transfer any of
its General Partnership Interest (other than any transfer to an Affiliate of the
General  Partner)  or  withdraw as General  Partner  (other  than  pursuant to a
permitted  transfer),  other than in connection with a transaction  described in
Section  11.2(b).  Any transfer or purported  transfer of the General  Partner's
Partnership Interest not made in accordance with this Section 11.2 shall be null
and void.  Notwithstanding  any  permitted  transfer of its General  Partnership
Interest or withdrawal as General  Partner  hereunder  (other than in connection
with a transaction  described in Section 11.2(b)),  Regency shall remain subject
to Section  7.1(a)(iii),  Section  7.9(e),  Section  8.6 and Section 8.7 of this
Agreement unless such transferee General Partner provides  substantially similar
rights to the Limited  Partners and Consent of the Limited Partners is obtained.
Nothing  contained in this Section  11.2(a) shall entitle the General Partner to
withdraw  as  General  Partner  unless  a  successor  General  Partner  has been
appointed  and  approved by obtaining  (i) the Consent of the  Original  Limited
Partners and (ii) the Consent of the Additional  Limited  Partners.  Any General
Partner  other than Regency  admitted to the  Partnership  by reason of being an
Affiliate  of  Regency  shall be a  subsidiary  of  Regency so long as it is the
General  Partner,  unless (i) the Consent of the Original  Limited  Partners and
(ii) the Consent of the Additional Limited Partners is obtained.

(b) Transfer in Connection With Reclassification,  Recapitalization, or Business
Combination  Involving  General  Partner.  Subject to the  provisions of Section
4.5(f),  neither the General  Partner  nor Regency  shall  engage in any merger,
consolidation or other business  combination or transaction with or into another
Person  or  sale  of  all  or   substantially   all  of  its   assets,   or  any
reclassification,  or  recapitalization  (other than a change in par value, or a
change in the number of shares of Common Stock  resulting  from a subdivision or
combination  as  described  in  the  definition  of  Unit   Adjustment   Factor)
("Transaction"),  unless as a result of the  Transaction  such other  Person (i)
agrees that each Limited Partner who holds a Redemption  Right shall  thereafter
remain entitled to exchange each  Partnership Unit owned by such Limited Partner
(after  application  of the  Unit  Adjustment  Factor)  for an  amount  of cash,
securities,  or other property equal to the greatest amount of cash,  securities
or other  property paid to a holder of one Share in  consideration  of one Share
which a Limited  Partner  holding a Redemption  Right would have received at any
time  during  the  period  from and after the date on which the  Transaction  is
consummated,  as if the  Limited  Partner had  exercised  its  Redemption  Right
immediately  prior to the  Transaction  and received the Share Amount,  and (ii)
agrees to assume the  General  Partner's  obligations  pursuant  to Section  8.6
hereof,  provided,  that if, in  connection  with the  Transaction,  a purchase,
tender or exchange  offer shall have been made to and accepted by the holders of
more than 50 percent of the outstanding  shares of Common Stock,  the holders of
such Partnership Units shall receive the greatest amount of cash, securities, or
other property  which a Limited  Partner  holding a Redemption  Right would have
received had it exercised the Redemption  Right and received the Share Amount in
redemption of its Partnership  Units immediately prior to the expiration of such
purchase,  tender or exchange offer. Prior to consummating any such Transaction,
Regency shall cause appropriate amendments to be made to this Agreement pursuant
to Section 14.1(b) (including the definitions of Shares,  Unit Adjustment Factor
and Value) to carry out the intent of the parties that the rights of the Limited
Partners  holding  Redemption  Rights  hereunder  shall not be prejudiced as the
result  of any such  Transaction.  Notwithstanding  anything  contained  in this
Section  11.2(b) to the  contrary,  the  General  Partner  shall not engage in a
Transaction  that causes the Original Limited Partners to recognize gain or loss
for federal income tax purposes.

(c) Limited Partnership  Interests.  The General Partner may transfer all or any
portion of its Limited  Partnership  Interests  represented by Class B Units, or
any of the rights  associated with such Limited  Partnership  Interests,  to any
party  without the consent of the  Partnership  or any  Partner  (regardless  of
whether such transfer triggers a termination of the Partnership for tax purposes
under Section 708 of the Code).

(d)  Admission  of  Additional  General  Partner.  Except as provided in Section
11.2(a) and Section  11.2(b),  the General  Partner may not admit an  additional
general  partner  other than an  Affiliate  of the General  Partner  pursuant to
Section 11.2(a).

Section 11.3      Limited Partners' Rights to Transfer.
                  ------------------------------------

(a) General. No transfer of a Limited Partnership  Interest by a Limited Partner
is permitted without the prior written consent of the General Partner,  which it
may  withhold  in its sole and  absolute  discretion;  provided,  that a Limited
Partner may transfer  Units without the consent of the General  Partner:  (i) to
members of the  Limited  Partner's  Immediate  Family or one or more  trusts for
their benefit pursuant to applicable laws of descent and  distribution,  gift or
otherwise; (ii) among its Affiliates; (iii) to a lender, provided that the Units
are not  Pledged  Units,  where  such  Units are  pledged  to secure a bona fide
obligation of the Limited Partner and any transfer in accordance with the rights
of such lender under the instruments  evidencing such obligation  (provided that
the General Partner  receives 10 days prior written notice of any transfer under
this clause (a)); (iv) if the Limited  Partner is a trust, to the  beneficiaries
of the Limited Partner or to another trust (1) that is either established by the
same  grantor  as the  Limited  Partner  or (2) whose  beneficiaries  consist of
members of the  Immediate  Family of the grantor of the  Limited  Partner or (3)
whose beneficiaries  consist of beneficiaries of the transferor trust or members
of their  Immediate  Family;  (v) if the  Limited  Partner is an entity,  to the
direct or  indirect  equity  holders of the Limited  Partner;  and (vi) to other
Limited  Partners.  In order to effect any transfer under this Section 11.3, the
Limited  Partner must deliver to the General Partner a duly executed copy of the
instrument  making such transfer and such  instrument  must evidence the written
acceptance by the assignee of all of the terms and conditions of this Agreement,
including, where applicable, the security interest described in Section 5.3, and
represent that such  assignment was made in accordance  with all applicable laws
and regulations.

(b)  Incapacitated  Limited  Partners.  If  a  Limited  Partner  is  subject  to
Incapacity,  the  executor,   administrator,   trustee,   committee,   guardian,
conservator  or receiver of such  Limited  Partner's  estate  shall have all the
rights of a Limited  Partner,  but not more rights  than those  enjoyed by other
Limited  Partners  for the purpose of  settling or managing  the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership.  The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.

(c) No Transfers Violating Securities Laws. The General Partner may prohibit any
transfer  by a Limited  Partner of his  Partnership  Units if, in the opinion of
legal  counsel to the  Partnership,  such  transfer  would  require  filing of a
registration  statement  under  the  Securities  Act of 1933 or would  otherwise
violate any federal or state  securities  laws or regulations  applicable to the
Partnership or the Partnership Units.

(d) Transfers Resulting in Corporation Status. Regardless of whether the General
Partner is  required  to provide  or has  provided  its  consent  under  Section
11.3(a),  no  transfer  by a Limited  Partner of his  Partnership  Units (or any
economic  or other  interest,  right or  attribute  therein)  may be made to any
Person if legal counsel for the  Partnership  renders an opinion  letter that it
creates  a  substantial  risk  that  the  Partnership  would  be  treated  as an
association taxable as a corporation.

(e) Transfers Causing Termination.  Regardless of whether the General Partner is
required  to provide or has  provided  its consent  under  Section  11.3(a),  no
transfer of any  Partnership  Interests  other than the  exercise of  Redemption
Rights shall be effective if such transfer  would, in the opinion of counsel for
the Partnership, result in the termination of the Partnership for federal income
tax  purposes,  in which event such transfer  shall be made  effective as of the
first fiscal quarter in which such  termination  would not occur, if the Partner
making such transfer continues to desire to effect the transfer.

(f) Transfer to Certain Lenders.  Notwithstanding  anything  contained herein to
the contrary,  no transfer of any  Partnership  Units may be made to a lender to
the  Partnership  or any Person who is related  (within  the  meaning of Section
1.752-4(b)  of the  Regulations)  to any  lender to the  Partnership  whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
which  consent may be given or  withheld by the General  Partner in its sole and
absolute  discretion,  provided,  that as a condition to such consent the lender
will be  required  to enter into an  arrangement  with the  Partnership  and the
General  Partner to redeem for the Redemption  Amount any  Partnership  Units in
which a security  interest is held,  simultaneously  with the time at which such
lender  would be deemed to be a  partner  in the  Partnership  for  purposes  of
allocating liabilities to such lender under Section 752 of the Code.

(g) Transfers by Limited Partners Requiring 1934 Act Registration. Regardless of
whether the General  Partner is required to provide or has  provided its consent
under Section  11.3(a),  no transfer by a Limited  Partner of his or its Limited
Partnership  Interest  (or any  economic or other  interest,  right or attribute
therein)  may be made to any  Person  if (i) such  transfer  would  require  the
Partnership to register its equity securities under the Securities  Exchange Act
of 1934 and (ii)  the  Partnership  does  not  then  have  any  class of  equity
securities so registered.

(h)  Transfers  by  Series  A  Preferred  Partners.  In  addition  to the  other
restrictions  on transfer  set forth in this Article 11, which apply to Series A
Preferred Units, no transfer of the Series A Preferred Units may be made without
the consent of the General  Partner,  which  consent may be given or withheld in
its sole and absolute  discretion,  if such  transfer  would result in more than
four  partners  holding  all  outstanding  Series A Preferred  Units  within the
meaning of Regulation Section 1.7704-1(h)(3).

(i)  Transfers  Violating  PTP  Obligations.  Regardless  of whether the General
Partner is  required  to provide  or has  provided  its  consent  under  Section
11.3(a),  at any time on or before  December 31, 2004,  unless the provisions of
this Section 11.3(i) are waived in writing by the General  Partner,  no transfer
(or purported transfer) by a Limited Partner of his or its Partnership Units (or
any  economic  or other  interest,  right or  attribute  therein)  other  than a
transfer to the General  Partner or any of its  Subsidiaries  may be made to any
Person,  and any such transfer (or purported  transfer) shall be void ab initio,
and no Person  shall  otherwise  become a Partner  if (a) legal  counsel  to the
Partnership  renders an opinion letter that such transfer  creates a substantial
risk that the  Partnership  would be  treated  as a PTP  within  the  meaning of
Section 7704 of the Code or (b) such  transfer  would cause the  Partnership  to
have  more  than  100  Partners   within  the  meaning  of  Regulation   Section
1.7704-1(h)(3) immediately after such transfer ("Prohibited PTP Transfer"). If a
Limited  Partner  presents any Units to the General  Partner for  transfer,  the
General  Partner shall advise the Limited Partner within ten Business Days after
receiving the transfer  request if the  purported  transfer  would  constitute a
Prohibited  Transfer.  Notwithstanding the foregoing,  a transfer of Partnership
Units which occurs by operation of law or as a result of a bona fide foreclosure
of  a  lender's  security  interest  and  which  would  otherwise  constitute  a
Prohibited PTP Transfer  shall result in the mandatory  redemption of such Units
for the  Share  Amount  simultaneously  with the time at  which  the  respective
transferee  would  otherwise be deemed a Partner in the Partnership but for this
sentence;  provided,  however,  if the issuance of the Share Amount  pursuant to
this  sentence  would  violate the  provisions of Section 5.2 of the Articles of
Incorporation,  then the  Partnership  shall pay the Cash  Amount in lieu of the
Share Amount in satisfaction of such mandatory redemption. (For purposes of this
Section  11.3,  "Valuation  Date" shall mean the date the  Partnership  receives
notice of the Prohibited PTP Transfer.)

Section 11.4      Substituted Limited Partners.
                  ----------------------------

(a) Consent of General  Partner  Required.  The Limited  Partner  shall have the
right to substitute a transferee as a Limited Partner in his place,  but only if
such  transferee  is a permitted  transferee  under Section 11.3, in which event
such substitution  shall occur if the Limited Partner so provides.  With respect
to any other  transfers,  the General Partner shall have the right to consent to
the admission of a transferee of the interest of a Limited  Partner  pursuant to
this Section 11.4 as a Substituted  Limited Partner,  which consent may be given
or withheld  by the General  Partner in its sole and  absolute  discretion.  The
General  Partner's  failure  or  refusal  to  permit  a  transferee  of any such
interests to become a  Substituted  Limited  Partner  shall not give rise to any
cause of action against the Partnership or any Partner.

(b) Rights and Duties of Substituted Limited Partners. A transferee who has been
admitted as a Substituted  Limited  Partner in  accordance  with this Article 11
shall have all the rights and powers and be subject to all the  restrictions and
liabilities of a Limited Partner under this Agreement.

(c) Amendment of Exhibit A. Upon the admission of a Substituted Limited Partner,
the General Partner shall amend Exhibit A to reflect the name,  address,  number
of  Partnership  Units,  and  Percentage  Interest of such  Substituted  Limited
Partner and to eliminate or adjust, if necessary, the name, address and interest
of the predecessor of such Substituted Limited Partner.

Section 11.5 Assignees. If a transferee is not admitted as a Substituted Limited
Partner in accordance with Section 11.4(a),  such transferee shall be considered
an Assignee for purposes of this Agreement. An Assignee shall be entitled to all
the  rights of an  assignee  of a limited  partnership  interest  under the Act,
including  (if  applicable)  the right to redeem Units under  Section 8.6 or any
separate redemption  agreement,  and the right to receive distributions from the
Partnership  and the share of Net Income,  Net Losses,  gain, loss and Recapture
Income  attributable to the Partnership  Units assigned to such transferee,  but
shall not be deemed to be a holder of  Partnership  Units for any other  purpose
under this Agreement,  and shall not be entitled to vote such Partnership  Units
in any matter  presented to the Limited  Partners  for a vote (such  Partnership
Units being deemed to have been voted on such matter in the same  proportion  as
all Partnership  Units of the same class held by Limited Partners are voted). In
the event any such transferee  desires to make a further  assignment of any such
Partnership  Units,  such  transferee  shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.

Section 11.6      General Provisions.
                  ------------------

(a)  Withdrawal  of Limited  Partner.  No Limited  Partner may withdraw from the
Partnership  other  than as a  result  of a  permitted  transfer  of all of such
Limited  Partner's  Partnership  Units in  accordance  with this  Article  11 or
pursuant to the redemption of all of his Partnership Units.

(b)  Termination  of Status as Limited  Partner.  Any Limited  Partner who shall
transfer all of his Partnership Units in a transfer  permitted  pursuant to this
Article 11 or pursuant to the redemption of all of his  Partnership  Units shall
cease to be a Limited Partner.

(c) Timing of Transfers.  Transfers pursuant to this Article 11 may only be made
on the first day of a fiscal  quarter,  unless  the  General  Partner  otherwise
agrees, or unless resulting by operation of law.

(d) Allocation When Transfer Occurs. If any Partnership  Interest is transferred
during any quarterly segment of the Partnership's fiscal year in compliance with
the  provisions  of this  Article 11 or redeemed  pursuant to Section  8.6,  Net
Income,  Net Losses,  each item thereof and all other items attributable to such
interest  for such  fiscal  year  shall be divided  and  allocated  between  the
transferor  Partner  and the  transferee  Partner by taking into  account  their
varying  interests  during the fiscal year in accordance  with Section 706(d) of
the Code,  using the interim  closing of the books method (other than Net Income
or Net Loss attributable to a Capital  Transaction,  which shall be allocated as
of the Capital  Transaction  Record  Date).  Solely for  purposes of making such
allocations,  each of such items for the calendar month in which the transfer or
redemption  occurs  shall be  allocated  to the  Person  who is a Partner  as of
midnight on the last day of said month. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such transfer
or redemption shall be made to the transferor Partner,  and all distributions of
Available Cash thereafter shall be made to the transferee Partner.

(e) Continued  Obligations  Following  Redemption by Certain  Additional Limited
Partners.  Anything  herein to the contrary  notwithstanding,  if an  Additional
Limited Partner is an Electing Partner (as defined in Section 13.4), and if such
Additional  Limited  Partner  exercises a Redemption  Right with respect to such
Additional  Limited  Partner's  entire  Limited  Partnership  Interest,  and the
General  Partner  determines  in good  faith  that such  Redeeming  Partner  has
exercised a Redemption Right in order to avoid such Additional Limited Partner's
deficit  Capital  Account  restoration  obligations in Section 13.4, the General
Partner may require, upon delivery of written notice to the Redeeming Partner no
later than thirty (30) days after the applicable Specified Redemption Date, that
the  Redeeming  Partner  remain  liable to restore  his  "Hypothetical  Negative
Capital Account Balance" if the Partnership  adopts a plan of liquidation within
three  hundred  sixty  five  (365)  days  following  such  applicable  Specified
Redemption  Date. A Redeeming  Partner's  Hypothetical  Negative Capital Account
Balance is the hypothetical  amount such Redeeming Partner would have had to pay
to the Partnership  pursuant to his obligations  under Section 13.4 hereof if he
had remained as an  Additional  Limited  Partner  until the  liquidation  of the
Partnership.

Article 12
                              Admission Of Partners

Section 12.1 Admission of Successor  General Partner.  A successor to all of the
General Partner's General  Partnership  Interest pursuant to Section 11.2 hereof
who is proposed  and  permitted  to be admitted as a successor  General  Partner
shall be admitted to the Partnership as the General Partner, effective upon such
transfer.  Any  such  transferee  shall  assume  all  of the  General  Partner's
obligations  under  this  Agreement  and  shall  carry  on the  business  of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor  General  Partner  executing and delivering to the  Partnership an
acceptance of all of the terms and  conditions of this  Agreement and such other
documents or instruments as may be required to effect the admission.

Section 12.2      Admission of Additional Limited Partners.
                  ----------------------------------------

(a) General.  A Person who makes a Capital  Contribution  to the  Partnership in
accordance  with  Section  4.2  of  this  Agreement  shall  be  admitted  to the
Partnership  as an  Additional  Limited  Partner upon  furnishing to the General
Partner (i) evidence of acceptance in form  satisfactory  to the General Partner
of all of the  terms  and  conditions  of  this  Agreement,  including,  without
limitation,  the power of  attorney  granted  in Article 16 hereof and (ii) such
other  documents  or  instruments  as may be required  in the sole and  absolute
discretion of the General Partner in order to effect such Person's  admission as
an Additional Limited Partner.

(b)  Consent  of  General  Partner  Required.  Notwithstanding  anything  to the
contrary in this  Section  12.2,  no Person  shall be admitted as an  additional
Limited  Partner without the consent of the General Partner (other than a Person
to whom a Limited Partner may transfer Units pursuant to Section 11.3(a) without
the consent of the General  Partner),  which consent may be given or withheld in
the General Partner's sole and absolute discretion.  The admission of any Person
as an additional  Limited Partner shall become  effective on the date upon which
the name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.

Section 12.3  Amendment of Agreement and  Certificate.  For the admission to the
Partnership  of  any  Partner,   the  General  Partner  shall,  subject  to  the
requirements of Section 4.2, take all steps necessary and appropriate  under the
Act to amend the records of the  Partnership  and, if  necessary,  to prepare as
soon as  practical an amendment  of this  Agreement  (including  an amendment of
Exhibit A) and, if required by law,  shall  prepare and file an amendment to the
Certificate  and may for this  purpose  exercise  the power of attorney  granted
pursuant to Article 16 hereof.

Section 12.4  Representations and Warranties of Additional Limited Partners.  As
inducement  for their  admission to the  Partnership,  each  Additional  Limited
Partner hereby  represents  and warrants that such Limited  Partner (a) has such
knowledge and experience in financial and business matters that it is capable of
evaluating  the merits and risks of an  investment in the  Partnership;  (b) has
been given the opportunity to examine all documents and to ask questions of, and
to receive answers from, the General Partner and its representatives  concerning
the terms and conditions of the  acquisition by it of Units in the  Partnership,
and to obtain any additional  information which it deems necessary to verify the
accuracy of the information with respect thereto; and (c) understands that there
will be no public  market for the Units.  Such  Additional  Limited  Partner has
received and carefully  reviewed  copies of the reports filed by Regency for its
two most recent fiscal years and the interim period to date under the Securities
Exchange Act of 1934 and such additional  information  concerning  Regency,  the
Partnership and the transactions  contemplated by this Agreement,  to the extent
that Regency  could  acquire such  information  without  unreasonable  effort or
expense,  as such  Additional  Limited  Partner deems  necessary for purposes of
making an investment in the Partnership.  The Units in the Partnership  acquired
by such  Additional  Limited  Partner are being acquired by such Limited Partner
for its own  account  for  investment  and not with a view to, or for  resale in
connection  with, the public  distribution or other  disposition  thereof.  Such
Additional  Limited  Partner agrees as a condition to the issuance of such Units
in its name that any transfer, sale, assignment,  hypothecation,  offer or other
disposition  of such Units may not be  effected  except in  accordance  with the
terms of this  Agreement  and  pursuant to an effective  registration  statement
under the Securities Act and the rules and regulations  promulgated  thereunder,
or  an  exemption  therefrom,  and  in  compliance  with  all  other  applicable
securities and "blue sky" laws.  Each Additional  Limited  Partner  acknowledges
that the  Partnership  is not  required to  register  any of the Units under the
Securities Act or any other applicable  securities or "blue sky" laws. Each such
Additional Limited Partner represents and warrants that it has relied on its own
advisors for advice in connection with structuring the transactions contemplated
by this Agreement and is not relying on the General Partner or its  accountants,
attorneys or other advisors with regard to such matters.

Article 13
                           Dissolution And Liquidation

Section  13.1  Dissolution.  The  Partnership  shall  not  be  dissolved  by the
admission of Substituted  Limited Partners or Additional  Limited Partners or by
the admission of a successor  General  Partner in  accordance  with the terms of
this  Agreement.  Upon the  withdrawal  of the General  Partner,  any  successor
General Partner shall continue the business of the Partnership.  Notwithstanding
anything  contained  herein to the  contrary,  except as provided  below in this
Section 13.1,  the General  Partner and the  Partnership  shall not dissolve the
Partnership,  adopt a plan of  liquidation  for the  Partnership  or sell all or
substantially all of the assets of the Partnership in a Liquidating  Transaction
or otherwise  without the (i) Consent of the Original  Limited Partners and (ii)
the Consent of the Additional Limited Partners.  The Partnership shall dissolve,
and its  affairs  shall  be  wound  up,  upon  the  first to occur of any of the
following (each an "Event of Dissolution"):

     (a)  Expiration of Term-- the expiration of its term as provided in Section
2.4 hereof;

(b)  Withdrawal  of  General  Partner  -- an  event  of  withdrawal  of the last
remaining  General  Partner,  as  defined  in the Act  (other  than an  event of
bankruptcy),  unless,  within 90 days after the  withdrawal,  all the  remaining
Limited  Partners  agree in writing to continue the business of the  Partnership
and to the appointment,  effective as of the date of withdrawal, of a substitute
General Partner;

     (c) Judicial Dissolution Decree-- entry of a decree of judicial dissolution
of the Partnership pursuant to the provisions of the Act; or

(d) Bankruptcy or Insolvency of General  Partner -- the last  remaining  General
Partner shall be  Incapacitated  by reason of its bankruptcy  unless,  within 90
days after the withdrawal,  all the remaining  Limited Partners agree in writing
to continue the business of the Partnership and to the appointment, effective as
of the date of withdrawal, of a substitute General Partner.

Section 13.2      Winding Up.
                  ----------

(a) General.  The General  Partner shall provide  written  notice to the Limited
Partners of the occurrence of an Event of  Dissolution,  giving them at least 20
days in which to exercise any Redemption  Right prior to the distribution of any
proceeds  from the  liquidation  of the  Partnership  pursuant  to this  Section
13.2(a).  Upon the occurrence of an Event of Dissolution,  the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent  with, or not necessary to
or appropriate  for, the winding up of the  Partnership's  business and affairs.
The General Partner (or, in the event there is no remaining General Partner, any
Person  elected  by  a  majority  in  interest  of  the  Limited  Partners  (the
"Liquidator"))   shall  be  responsible   for  overseeing  the  winding  up  and
dissolution of the Partnership and shall take full account of the  Partnership's
liabilities  and  property  and the  Partnership  property  (subject  to Section
13.2(b) and Section  13.2(c))  shall be  liquidated as promptly as is consistent
with  obtaining  the fair value  thereof,  and the proceeds  therefrom  shall be
applied and distributed in the following order:

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

     (ii) Second, to the payment and discharge of all of the Partnership's debts
and  liabilities  to the Partners,  pro rata in accordance  with amounts owed to
each such Partner;

     (iii)  Third,  to the Series A Preferred  Partners in  accordance  with the
provisions of Section 4.5(d);

(iv)              Fourth,  to the Original Limited  Partners,  pro rata based on
                  the number of Original Limited  Partnership Units held by such
                  Partners, until each such Partner has received an amount equal
                  to  the  aggregate  Priority  Distribution  Amounts  for  each
                  Partnership  Record Date (if any) occurring  subsequent to the
                  Event of Dissolution;

(v)               Fifth,  one hundred  percent (100%) to the Additional  Limited
                  Partners,  pro rata  based on the number of  Additional  Units
                  held by such Partners, until each such Partner has received an
                  amount equal to the aggregate  Priority  Distribution  Amounts
                  for each Partnership Record Date (if any) occurring subsequent
                  to the Event of Dissolution; and

(vi)              The  balance,  if any,  to the  General  Partner  and  Limited
                  Partners in  accordance  with their  Capital  Accounts,  after
                  giving  effect  to  all  contributions,   distributions,   and
                  allocations for all periods.

The  General  Partner  shall not  receive any  additional  compensation  for any
services performed pursuant to this Article 13.

(b) Deferred  Liquidation.  Notwithstanding  the  provisions of Section  13.2(a)
hereof which require  liquidation of the assets of the Partnership,  but subject
to the order of priorities  set forth  therein,  and further  subject to Section
13.2(c)  hereof and any  separate  agreement of the  Partnership  or the General
Partner with respect to the distribution in kind to Additional  Limited Partners
of assets  contributed by such Additional  Limited Partners (or assets exchanged
for such  assets),  if  prior  to or upon  dissolution  of the  Partnership  the
Liquidator determines that an immediate sale of part or all of the Partnership's
assets  would be  impractical  or would  cause undue loss to the  Partners,  the
Liquidator may, in its sole and absolute discretion, defer for a reasonable time
the liquidation of any assets except those  necessary to satisfy  liabilities of
the Partnership  (including to those Partners as creditors) and/or distribute to
the Partners,  in lieu of cash, as tenants in common and in accordance  with the
provisions of Section  13.2(a) and Section  13.2(c) hereof and any such separate
agreement,  undivided  interests in such  Partnership  assets as the  Liquidator
deems not suitable for liquidation. Any such distributions in kind shall be made
only if, in the good faith judgment of the  Liquidator,  such  distributions  in
kind are in the best  interest  of the  Partners,  and shall be  subject to such
conditions  relating to the disposition and management of such properties as the
Liquidator  deems  reasonable and equitable and to any agreements  governing the
operation of such  properties at such time. The Liquidator  shall  determine the
fair market  value of any  property  distributed  in kind using such  reasonable
method of valuation as it may adopt.

(c)      Distribution of Briarcliff Village.
-------------------------------------------

     (i) In the event that the  Partnership is dissolved in accordance with this
Article 13, the Briarcliff  Village Property (as defined in Section 7.1(c)) will
be  distributed  in-kind to the  Original  Briarcliff  Partners  (as  defined in
Section  7.1(c))  who  continue,  as of  such  time,  to hold  Original  Limited
Partnership  Units  attributable to the  contribution of the Briarcliff  Village
Property to Branch  Properties,  L.P. and Branch  Properties,  L.P.'s subsequent
contribution of the Briarcliff  Village Property to the  Partnership,  with such
Partners to take title to the  Briarcliff  Village  Property in any manner which
they are able to agree among themselves.  In the event that such Partners are to
receive the Briarcliff  Village Property pursuant to this Section 13.2(c),  then
the  Briarcliff  Village  Property  shall have the net value  agreed upon by the
General Partner and the Partners receiving an interest in the Briarcliff Village
Property,  or, if they cannot agree, then the Briarcliff  Village Property shall
be valued in accordance with Section 13.2(d).

     (ii)  If the  net  value  of the  Briarcliff  Village  Property  determined
pursuant  to  Section  13.2(c)(i)  exceeds  the  amount  to which  the  Partners
receiving the Briarcliff  Village Property are entitled pursuant to this Article
13, then such  partners may  contribute  to the capital of the  Partnership  the
amount of cash equal to such  excess,  pro rata in  proportion  to the  relative
number of Units of each such Partners  attributable  to the  contribution of the
Briarcliff  Village Property to Branch  Properties,  L.P. and Branch Properties,
L.P.'s  subsequent  contribution  of  the  Briarcliff  Village  Property  to the
Partnership. If such a contribution is not made in full, then Section 13.2(c)(i)
shall not apply and the  Liquidator  shall be  entitled  to sell the  Briarcliff
Village Property in connection with the dissolution of the Partnership.

(d)  Appraisal.  In the event  that the  Briarcliff  Village  Property  is to be
distributed  to  the  Original   Briarcliff   Partners  in  liquidation  of  the
Partnership pursuant to the provisions of this Section 13.1(d),  then the amount
of such distribution shall be determined as follows if the net value thereof has
not been agreed on pursuant to Section 13.2(c)(i):

(i)               Within  twenty  (20)  days  after the  determination  that the
                  Partnership  shall distribute the Briarcliff  Village Property
                  to the Original Briarcliff Partners, the General Partner and a
                  Majority-In-Interest  of the Original  Briarcliff Partners (as
                  defined in Section  7.1(c)) shall each select an  independent,
                  regionally  or  nationally  recognized  appraiser or appraisal
                  group which is  experienced  in valuing  separate  real estate
                  property ("Appraiser"), and the two Appraisers selected by the
                  parties shall  jointly  select a third  Appraiser.  Each party
                  shall  pay the cost of their  respective  Appraiser  and shall
                  split the cost of the third Appraiser.

(ii)              Within sixty (60) days of  selection  of the third  Appraiser,
                  each of the three  Appraisers  shall  determine the gross fair
                  market value of the Briarcliff Village Property as of the date
                  of the election to liquidate the Partnership, calculated based
                  on the net fair market value of Briarcliff Village (net of the
                  loans   encumbering    Briarcliff   Village),    taking   into
                  consideration  the  terms  and  relative  value  of the  loans
                  encumbering  Briarcliff  Village,  the  fact  that  Briarcliff
                  Village is not being sold and the loans are not being repaid.

(iii)             Upon  receipt of the three  appraisals  determining  the gross
                  fair market value of the Briarcliff Village Property,  the two
                  closest gross fair market values shall be averaged,  with such
                  average to constitute the distribution value of the Briarcliff
                  Village Property.

Section 13.3 Compliance with Timing  Requirements of Regulations;  Allowance for
Contingent or Unforeseen Liabilities or Obligations. Notwithstanding anything to
the contrary in this  Agreement,  in the event the  Partnership is  "liquidated"
within the meaning of Regulations  Section  1.704-1(b)(2)(ii)(g),  distributions
shall be made  pursuant to this  Article 13 to the  General  Partner and Limited
Partners who have  positive  Capital  Accounts in  compliance  with  Regulations
Section  1.704-1(b)(2)(ii)(b)(2)  (including any timing  requirements  therein).
Except as provided in Section 13.4, if any Limited Partner has a deficit balance
in his Capital Account (after giving effect to all contributions,  distributions
and  allocations  for all taxable  years,  including  the year during which such
liquidation  occurs),  such  Partner  shall  have  no  obligation  to  make  any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit  shall not be considered a debt owed to the  Partnership  or to any
other Person for any purpose whatsoever.  In the sole and absolute discretion of
the  General  Partner,  a pro  rata  portion  of the  distributions  that  would
otherwise be made to the General Partner and Limited  Partners  pursuant to this
Article 13 may be: (i)  distributed to a liquidating  trust  established for the
benefit  of the  General  Partner  and  Limited  Partners  for the  purposes  of
liquidating Partnership assets, collecting amounts owed to the Partnership,  and
paying  any   contingent  or  unforeseen   liabilities  or  obligations  of  the
Partnership or of the General  Partner  arising out of or in connection with the
Partnership  (the assets of any such trust shall be  distributed  to the General
Partner and Limited Partners from time to time, in the reasonable  discretion of
the General Partner,  in the same proportions as the amount  distributed to such
trust by the Partnership  would  otherwise have been  distributed to the General
Partner and Limited Partners  pursuant to this  Agreement);  or (ii) withheld to
provide  a  reasonable  reserve  for  Partnership   liabilities  (contingent  or
otherwise) and to reflect the unrealized portion of any installment  obligations
owed  to  the  Partnership;  provided,  that  such  withheld  amounts  shall  be
distributed to the General Partner and Limited Partners as soon as practicable.

Section 13.4      Deficit Capital Account Restoration.
                  -----------------------------------

(a)  Subject  to Section  13.4(b),  if an  Original  Limited  Partner  listed on
Schedule  13.4(a)  (who  constituted  an  "Electing  Partner"  of Branch  and is
referred to  hereinafter as an "Electing  Partner") and any  Additional  Limited
Partner who elects to be added to such Schedule (also an "Electing Partner"), on
the date of the  "liquidation"  of his  respective  interest in the  Partnership
(within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g)), has a negative
balance in his Capital  Account,  then such Electing Partner shall contribute in
cash to the capital of the  Partnership the lesser of (i) the maximum amount (if
any such maximum amount is stated) listed beside such Electing Partner's name on
Schedule  13.4(a) or (ii) the amount required to increase his Capital Account as
of such date to zero.  Any such  contribution  required  of a Partner  hereunder
shall be made on or before  the later of (i) the end of the  Partnership  fiscal
year in which the interest of such Partner is  liquidated  or (ii) the ninetieth
(90th) day following the date of such liquidation. Notwithstanding any provision
hereof to the contrary,  all amounts so  contributed by a partner to the capital
of the Partnership  shall,  upon the  liquidation of the Partnership  under this
Article 13, be first paid to any then  creditors of the  Partnership,  including
Partners  that are  Partnership  creditors  (in the order  provided  in  Section
13.2(a)),  and any remaining  amount shall be  distributed to the other Partners
then having positive balances in their respective Capital Accounts in proportion
to such positive balances.

(b) After the death of an Electing  Partner,  the executor of the estate of such
an Electing  Partner  may elect to reduce (or  eliminate)  the  deficit  Capital
Account  restoration  obligation of such an Electing Partner pursuant to Section
13.4(a). Such election may be made by such executor by delivering to the General
Partner  within two hundred  seventy (270) days of the death of such an Electing
Partner a written  notice  setting  forth the  maximum  deficit  balance  in his
Capital Account that such executor agrees to restore under Section  13.4(a),  if
any. If such executor does not make a timely  election  pursuant to this Section
13.4(b)  (whether or not the balance in his Capital  Account is negative at such
time), then such Electing  partner's estate (and the  beneficiaries  thereof who
receive  distribution of Partnership  Units therefrom) shall be deemed to have a
deficit  Capital  Account  restoration  obligation as set forth  pursuant to the
terms of Section 13.4(a).

(c) If the General Partner,  on the date of "liquidation" of its interest in the
Partnership,   within  the  meaning  of  Section   1.704-1(b)(2)(ii)(g)  of  the
Regulations,  has a negative  balance in its Capital  Account,  then the General
Partner shall  contribute in cash to the capital of the  Partnership  the amount
needed to restore its Capital  Account  balance to zero.  Any such  contribution
required to be made by the General  Partner shall be made by the General Partner
on or  before  the  later of (i) the end of the  Partnership  Year in which  the
General Partner's interest is liquidated,  or (ii) the ninetieth (90th) calendar
day following  the date of such  liquidation.  Notwithstanding  any provision of
this Agreement to the contrary, all amounts so contributed to the capital of the
Partnership  in  accordance  with this  Section  13.4  shall be  distributed  in
accordance  with  Section  13.2(a).   Regency  unconditionally   guarantees  the
obligation of the General  Partner under this Section 13.4(c) for the benefit of
the Partnership and the other Partners.

Section 13.5 Deemed Distribution and  Recontribution.  Notwithstanding any other
provision  of this Article 13 (but  subject to Section  13.3),  in the event the
Partnership   is   liquidated   within  the  meaning  of   Regulations   Section
1.704-1(b)(2)(ii)(g) but no Event of Dissolution has occurred, the Partnership's
property shall not be liquidated,  the  Partnership's  liabilities  shall not be
paid or  discharged,  and the  Partnership's  affairs  shall  not be  wound  up.
Instead,  the  Partnership  shall be deemed to have  distributed the Property in
kind to the General  Partner and Limited  Partners,  who shall be deemed to have
assumed and taken such property subject to all Partnership  liabilities,  all in
accordance with their respective Capital Accounts.  Immediately thereafter,  the
General Partner and Limited Partners shall be deemed to have  recontributed  the
Partnership  property in kind to the Partnership,  which shall be deemed to have
assumed and taken such property subject to all such liabilities.

Section 13.6 Rights of Limited Partners. Except as specifically provided in this
Agreement,  including Section 7.1(a)(iii),  Section 8.6, Section 8.7 and Section
13.4,  each Limited  Partner shall look solely to the assets of the  Partnership
for the return of his Capital  Contribution  and shall have no right or power to
demand or  receive  property  other  than cash from the  Partnership.  Except as
specifically  provided in this Agreement,  including Section 4.5 with respect to
the Series A Preferred  Units,  no Limited  Partner shall have priority over any
other  Limited   Partner  as  to  the  return  of  his  Capital   Contributions,
distributions, or allocations.

Section 13.7 Notice of  Dissolution.  In the event an Event of Dissolution or an
event occurs that would,  but for the  provisions of Section  13.1,  result in a
dissolution  of the  Partnership,  the  General  Partner  shall,  within 30 days
thereafter,  provide  written  notice thereof to each of the Partners and to all
other  parties  with  whom  the  Partnership  regularly  conducts  business  (as
determined in the sole and absolute discretion of the General Partner) and shall
publish  notice  thereof in a newspaper of general  circulation in each place in
which the Partnership regularly conducts business (as determined in the sole and
absolute discretion of the General Partner).

Section  13.8  Cancellation  of  Certificate  of Limited  Partnership.  Upon the
completion of the  liquidation  of the  Partnership  as provided in Section 13.2
hereof,  the  Partnership  shall  be  terminated  and  the  Certificate  and all
qualifications   of  the  Partnership  as  a  foreign  limited   partnership  in
jurisdictions  other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.

Section 13.9 Reasonable Time for Winding-Up.  A reasonable time shall be allowed
for the orderly  winding-up of the business and affairs of the  Partnership  and
the  liquidation  of its assets  pursuant to Section  13.2  hereof,  in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions
of this Agreement  shall remain in effect between the Partners during the period
of liquidation.

Article 14
                  Amendment Of Partnership Agreement; Meetings

Section 14.1      Amendments.
                  ----------

(a) General.  Amendments  to this  Agreement may be proposed only by the General
Partner,  who shall  submit any  proposed  amendment  (other  than an  amendment
pursuant to Section 14.1(b)) to the Limited Partners.  The General Partner shall
seek the written vote of the  applicable  Partners on the proposed  amendment or
shall call a meeting to vote thereon and to transact any other  business that it
may deem  appropriate.  Except as  provided  in Section  4.5(f)(ii)  and Section
14.1(b), Section 14.1(c), Section 14.1(d), Section 14.1(e) or Section 14.1(f) or
except as may be expressly provided to the contrary elsewhere herein, a proposed
amendment  shall be adopted and be  effective  as an  amendment  hereto if it is
approved by the General  Partner and it receives (i) the Consent of the Original
Limited Partners and (ii) the Consent of the Additional Limited Partners.

(b) General  Partner's  Power to Amend.  Notwithstanding  Section  14.1(a),  the
General  Partner  shall  have the power,  without  the  consent  of the  Limited
Partners,  to amend this Agreement as may be required to facilitate or implement
any of the following purposes:

     (i) to add to the obligations of the General Partner or surrender any right
or power granted to the General  Partner or any Affiliate of the General Partner
for the benefit of the Limited Partners;

(ii)     to add to or change the name of the Partnership;

     (iii) to reflect the admission, substitution, termination, or withdrawal of
Partners in accordance with this Agreement;

     (iv) to set forth the rights, powers, duties and preferences of the holders
of any additional Partnership Interests issued pursuant to Section 4.2;

(v)               to reflect a change that is of an  inconsequential  nature and
                  does not adversely affect the Limited Partners in any material
                  respect,  or to cure any ambiguity,  correct or supplement any
                  provision in this Agreement not inconsistent  with law or with
                  other  provisions,  or make  other  changes  with  respect  to
                  matters   arising  under  this  Agreement  that  will  not  be
                  inconsistent   with  law  or  with  the   provisions  of  this
                  Agreement; and

(vi)              to  satisfy  any  requirements,   conditions,   or  guidelines
                  contained  in  any  order,   directive,   opinion,  ruling  or
                  regulation  of a  federal  or state  agency  or  contained  in
                  federal or state.

The General  Partner will provide 10 days' prior  written  notice to the Limited
Partners when any action under this Section 14.1(b) is taken.

(c) Consent of Adversely  Affected  Partner  Required.  Notwithstanding  Section
14.1(a) hereof and subject to Section  4.5(f)(ii)  hereof,  this Agreement shall
not be amended  without  the  consent  of each  Partner  (other  than a Series A
Preferred  Partner)  adversely  affected if such  amendment  would (i) convert a
Limited Partner's interest in the Partnership into a general partner's interest,
(ii) modify the limited  liability of a Limited  Partner,  (iii) alter rights of
the Partner to receive distributions pursuant to Article 5 or Article 13, or the
allocations  specified in Article 6 (except as permitted pursuant to Section 4.2
or  Section  4.4(c)  hereof),  (iv)  alter or  modify  the  Redemption  Right or
Redemption Amount as set forth in Section 8.6 and related definitions hereof, or
(v) amend  Section  4.2(a)  (issuances  of  additional  Partnership  Interests),
Section 7.1(a)(iii)  (Section 1031 exchanges),  Section 7.1(h)  (distributions),
Section 7.3  (restrictions on General Partner's  authority),  or (vi) amend this
Section 14.1(c).

(d) When  Consent of Limited  Partnership  Interests  Required.  Notwithstanding
Section  14.1(a) hereof and subject to Section  4.5(f)(ii),  the General Partner
shall not amend Section 4.2  (issuances of  additional  Partnership  Interests),
Section  7.1(h)  (distributions),  Section 7.6  (contracts  with  Affiliates) or
Section 11.2 (transfer of General  Partnership  Interest) without the Consent of
the  Limited  Partners  and the  General  Partner  shall not amend this  Section
14.1(d) without the unanimous consent of the Limited Partners (other than Series
A  Preferred  Partners  and any  other  Preferred  Partners  unless  such  other
Preferred  Partners  are  expressly  granted  voting  rights  under this Section
14.1(d).

(e)      When Consent of Other Limited Partners Required.
--------------------------------------------------------

(i)               Matters  Relating  to  Briarcliff.   Notwithstanding   Section
                  14.1(a) hereof,  Section 7.1(c) (sale of Briarcliff  Village),
                  Section 13.2(c)  (distribution of Briarcliff Village) and this
                  Section  14.1(e)(i)  may be amended only with the Consent of a
                  Majority in Interest of the Original  Briarcliff  Partners (as
                  defined in Section 7.1(c).

(ii)              Matters Relating to Other Classes of Partners. Notwithstanding
                  Section 14.1(a) hereof,  except as provided in Section 14.1(c)
                  and Section  4.5(f)(ii),  any amendment  that would  adversely
                  affect  only  a  class  of  Limited  Partners,  including  the
                  Original Limited Partners,  may be amended with the Consent of
                  such class of Limited Partners.

(f) Security Capital Consent. So long as the Stockholders  Agreement referred to
in  Schedule  7.8(b)  remains in effect,  this  Agreement  shall not be amended,
modified or supplemented, in any such case, without the prior written consent of
Security  Capital.  Any amendment,  modification  or supplement  adopted without
Security Capital's consent shall be void.

(g) UPREIT  Amendment.  On the first day of the month immediately after the date
that the  General  Partner  Meets  the  UPREIT  Test (as  defined  below),  this
Agreement shall be automatically  amended and restated in the form of the Fourth
Amended  Agreement  attached  hereto  as  Exhibit  E,  and such  Fourth  Amended
Agreement  shall govern the Partnership  from such date. In its discretion,  the
General  Partner may defer the effective date of the Fourth  Amendment until the
first day of the calendar  quarter  immediately  after the General Partner meets
the UPREIT Test. "Meets the UPREIT Test" means that:

     (i) from the most recent date that any  distribution has been paid pursuant
to  Article  5 until the date on which the test is being  applied,  one  hundred
percent  (100%)  of  the  revenues  of  the  General  Partner,  determined  on a
consolidated basis in accordance with generally accepted accounting  principles,
are attributable to revenues of the Partnership and its Subsidiaries,  including
revenues  attributable  to the  Partnership  pursuant  to one  or  more  nominee
agreements between the Partnership and Regency and its Subsidiaries in which the
economic  benefit  and  detriment  of assets  governed  by such  agreements  are
attributed to the Partnership even though record title to such assets is held by
Regency  and/or  its  Subsidiaries  which  are  not  also  Subsidiaries  of  the
Partnership but excluding any revenues attributable to outside activities of the
General Partner permitted by Section 7.5 of the Fourth Amended Agreement;

(ii)              the  General  Partner  holds  (x) the  number of Class B Units
                  equal to the total  number of  Shares  of  Common  Stock  then
                  outstanding  and (y) the number of  additional  Units equal to
                  the  number  and having  designations,  preferences  and other
                  rights substantially similar to the designations,  preferences
                  and other  rights of other  classes  of equity of the  General
                  Partner  then  outstanding,  whether  consisting  of preferred
                  stock or special  common  stock,  and the  General  Partner is
                  hereby  authorized  to  issue  or  redeem  such  Units  as are
                  necessary to effectuate the foregoing;

(iii)             on the date on which the test is being  applied,  no  Original
                  Limited  Partner or Additional  Limited Partner has a positive
                  Cumulative   Unpaid  Accrued  Return  Account  or  a  positive
                  Cumulative Unpaid Priority Distribution Account; and

     (iv) Persons (or their  transferees)  who are Limited Partners on the Third
Amendment Date (the  "Preexisting  Partners," which term includes any transferee
of a  Preexisting  Partner)  have  unanimously  consented to the Fourth  Amended
Agreement attached hereto as Exhibit E; provided,  however,  that this unanimous
consent requirement may be reduced, in the General Partner's discretion,  to the
consent of Preexisting  Partners holding not less than eighty-five  (85%) of the
outstanding Units held by the Preexisting Partners (excluding any Units acquired
as  transferee  from a Limited  Partner  who is not a  Preexisting  Partner).  A
non-consenting  Preexisting Partner may consent in writing at any time after the
Third  Amendment  Date to the  provisions  of such Fourth  Amended  Agreement by
delivering written notice of such consent to the General Partner in such form as
the General Partner may require.  Once a consent is delivered hereunder,  it may
not be  revoked.  Any  Limited  Partner  that  consented  to this Third  Amended
Agreement  shall be deemed to have  irrevocably  consented to the Fourth Amended
Agreement,  such consent  shall be included for the purpose of  determining  the
percentage of  Preexisting  Partners who have  consented  thereto and no further
consent of such  Limited  Partner  or of any  Partner  who is not a  Preexisting
Partner is required for the effectiveness of the Fourth Amended Agreement.

Contemporaneously  with the  adoption of the Fourth  Amended  Agreement  and the
General Partner's most recent  contribution of asset(s) to the Partnership,  the
Gross Asset  Values of all  Partnership  assets shall be adjusted to equal their
fair market  values  (exclusive  of  liabilities),  as determined by the General
Partner,  and,  notwithstanding  anything  else  herein  to  the  contrary,  any
resulting  unrealized  gain or loss  shall be  allocated  first to the  Series A
Preferred  Partners  to  the  extent  required  by  Section  6.2(g)  hereof  and
thereafter in a manner which will cause the remaining  Partners' Capital Account
balances to be in  proportion  with the number of Units which each  Partner will
own immediately following the time that the Fourth Amended Agreement is adopted.

Section 14.2      Meetings of Limited Partners.
                  ----------------------------

(a) General.  Meetings of the Limited Partners may be called only by the General
Partner.  Such meeting shall be held at the principal office of the Partnership,
or at such other place as may be  designated by the General  Partner.  Notice of
any such  meeting  shall be given to all Limited  Partners not less than fifteen
days nor more than  sixty  days  prior to the date of such  meeting.  The notice
shall state the purpose or purposes of the meeting. Limited Partners may vote in
person or by proxy at such  meeting.  Whenever  the vote or  consent  of Limited
Partners is permitted or required under this Agreement, such vote or consent may
be given at a meeting of Limited Partners or may be given in accordance with the
procedure  prescribed  in Section  14.1 hereof.  Except as  otherwise  expressly
provided in this Agreement, including without limitation Section 4.5(f)(ii), the
Consent of the  Original  Limited  Partners  and the  Consent of the  Additional
Limited Partners shall be required.

(b) Actions Without a Meeting. Any action required or permitted to be taken at a
meeting  of the  Limited  Partners  may be taken  without a meeting if a written
consent  setting  forth the  action so taken is signed by the  Limited  Partners
holding  the number and type of Units that would be  sufficient  to approve  the
action  if taken at a  meeting.  Such  consent  may be in one  instrument  or in
several instruments,  and shall have the same force and effect as a vote of such
Limited  Partners  at a meeting.  Such  consent  shall be filed with the General
Partner. An action so taken shall be deemed to have been taken at a meeting held
on the effective date so certified.

(c) Proxy.  Each Limited  Partner may authorize any Person or Persons to act for
him by  proxy  on all  matters  in  which  a  Limited  Partner  is  entitled  to
participate, including waiving notice of any meeting, or voting or participating
at a  meeting.  Every  proxy  must  be  signed  by the  Limited  Partner  or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless  otherwise  provided in the proxy.  Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.

(d) Conduct of Meeting.  Each meeting of Limited  Partners shall be conducted by
the  General  Partner or such other  Person as the  General  Partner may appoint
pursuant to such rules for the conduct of the meeting as the General  Partner or
such other Person deems appropriate.

Article 15
                               General Provisions

Section 15.1 Addresses and Notice.  All notices and demands under this Agreement
shall be in writing, and may be either delivered personally (which shall include
deliveries  by  courier)  by U.S.  mail  or a  nationally  recognized  overnight
courier,  by  telefax,  telex or  other  wire  transmission  (with  request  for
assurance of receipt in a manner  appropriate with respect to  communications of
that  type;  provided,  that a  confirmation  copy  is  concurrently  sent  by a
nationally recognized express courier for overnight delivery) or mailed, postage
prepaid, by certified or registered mail, return receipt requested,  directed to
the  parties  at their  respective  addresses  set forth on  Exhibit A  attached
hereto, as it may be amended from time to time, and, if to the Partnership, such
notices and  demands  sent in the  aforesaid  manner  must be  delivered  at its
principal  place of business  set forth  above.  Notices  and  demands  shall be
effective  upon receipt.  Any party hereto may designate a different  address to
which notices and demands shall  thereafter be directed by written  notice given
in the same manner and directed to the Partnership at its office hereinabove set
forth.

Section 15.2 Titles and Captions.  All article or section  titles or captions in
this Agreement are for  convenience  only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise,  references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.

Section 15.3 Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the  corresponding  masculine,  feminine or
neuter forms,  and the singular form of nouns,  pronouns and verbs shall include
the plural and vice versa.

Section  15.4  Further  Action.  The  parties  shall  execute  and  deliver  all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.5 Binding  Effect.  This Agreement shall be binding upon and inure to
the benefit of the parties  hereto and their heirs,  executors,  administrators,
successors,  legal representatives and permitted assigns.  Section 14.1(f) shall
inure to the benefit of Security Capital.

Section 15.6 Waiver of Partition. The Partners hereby agree that the Partnership
properties are not and will not be suitable for partition.  Accordingly, each of
the Partners hereby  irrevocably  waives any and all rights (if any) that it may
have to maintain any action for partition of any of the Partnership properties.

Section 15.7 Entire Agreement. This Agreement supersedes any prior agreements or
understandings  among the parties with respect to the matters  contained  herein
and it may not be  modified  or  amended in any manner  other than  pursuant  to
Article 14. Matters  (including but not limited to Redemption  Rights) affecting
Additional  Limited  Partners who are admitted to the  Partnership  from time to
time may be set forth from time to time in separate  agreements,  provided  that
such agreements  would not require the consent of any other Limited  Partners if
included  as part of  this  Agreement,  and in the  event  of any  inconsistency
between this Agreement and any such separate agreement permitted hereunder,  the
provisions of the separate agreement shall control.

Section 15.8 Remedies Not Exclusive.  Any remedies herein contained for breaches
of  obligations  hereunder  shall not be deemed  to be  exclusive  and shall not
impair the right of any party to exercise any other right or remedy, whether for
damages, injunction or otherwise.

Section 15.9      Time.  Time is of the essence of this Agreement.
                  ----

     Section 15.10 Creditors.  None of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.

Section  15.11  Waiver.  No  failure  by any  party to  insist  upon the  strict
performance of any covenant,  duty,  agreement or condition of this Agreement or
to  exercise  any  right  or  remedy  consequent  upon a  breach  thereof  shall
constitute waiver of any such breach or any other covenant,  duty,  agreement or
condition.

Section  15.12  Execution  Counterparts.  This  Agreement  may  be  executed  in
counterparts,  all of which together shall  constitute one agreement  binding on
all  the  parties  hereto,   notwithstanding  that  all  such  parties  are  not
signatories to the original or the same counterpart.

Section 15.13  Applicable  Law. This Agreement  shall be construed in accordance
with and governed by the laws and  judicial  decisions of the State of Delaware,
without regard to the principles of conflicts of law.

Section 15.14 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and  enforceability  of the remaining  provisions  contained herein shall not be
affected thereby.

Article 16
                                Power Of Attorney

Section 16.1      Power of Attorney.
                  -----------------

(a) Scope.  Each  Limited  Partner  and each  Assignee  hereby  constitutes  and
appoints  the General  Partner,  any  Liquidator,  and  authorized  officers and
attorneys-in-fact  of each, and each of those acting  singly,  in each case with
full power of substitution and resubstitution,  as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead to:

     (i)  execute,  swear  to,  acknowledge,  deliver,  file and  record  in the
appropriate public offices (1) all certificates, documents and other instruments
(including,  without  limitation,  this  Agreement and the  Certificate  and all
amendments or  restatements  thereof) that the General Partner or the Liquidator
deems  appropriate  or necessary to form,  qualify or continue the  existence or
qualification  of the Partnership as a limited  partnership (or a partnership in
which the limited partners have limited  liability) in the State of Delaware and
in all other  jurisdictions in which the Partnership may conduct business or own
property;  (2) all  instruments  that the General  Partner deems  appropriate or
necessary to reflect any amendment,  change, modification or restatement of this
Agreement  in  accordance  with  its  terms;   (3)  all  conveyances  and  other
instruments or documents that the General Partner deems appropriate or necessary
to reflect the dissolution  and  liquidation of the Partnership  pursuant to the
terms  of this  Agreement,  including,  without  limitation,  a  certificate  of
cancellation;  (4)  all  instruments  or  documents  and  all  certificates  and
acknowledgments  relating to any mortgage,  pledge, or other form of encumbrance
in  connection  with any loan or  other  financing  to the  General  Partner  as
provided by Section 7.1(a)(iii);  (5) all instruments relating to the admission,
withdrawal,  removal or substitution of any Partner pursuant to, or other events
described  in,  Article  11,  Article  12 or  Article  13 hereof or the  Capital
Contribution  of  any  Partner;  (6)  all  certificates,   documents  and  other
instruments  relating  to the  determination  of  the  rights,  preferences  and
privileges  of  Partnership   Interests;   and  (7)  all  financing  statements,
continuation  statements and similar  documents  which the General Partner deems
appropriate  to perfect  and to continue  perfection  of the  security  interest
referred to in Section 5.3; and

(ii)              execute, swear to, acknowledge and file all ballots, consents,
                  approvals,   waivers,   certificates  and  other   instruments
                  appropriate or necessary,  to evidence,  confirm or ratify any
                  vote,  consent,  approval,  agreement or other action which is
                  made or given by the Partners  hereunder or is consistent with
                  the terms of this Agreement or  appropriate  or necessary,  to
                  effectuate the terms or intent of this Agreement.

Nothing  contained  herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.

(b) Additional Power of Attorney of Limited  Partners.  Each Additional  Limited
Partner  hereby grants to the General  Partner and any Liquidator and authorizes
officers and attorneys-in-fact of such Persons, and each of those acting singly,
in each case with full power of substitution and resubstitution, as its true and
lawful agent and  attorney-in-fact,  with full power and  authority in its name,
place and stead to execute and file in such  Additional  Limited  Partner's name
any financing statements,  continuation  statements and similar documents and to
perform all other acts which the General  Partner deems  appropriate  to perfect
and to continue  perfection of the security  interest in any Pledged Units owned
by such Additional Limited Partner.

(c)  Irrevocability.  The foregoing  power of attorney is hereby  declared to be
irrevocable  and a power coupled with an interest,  in  recognition  of the fact
that each of the Partners will be relying upon the power of the General  Partner
and any  Liquidator to act as  contemplated  by this  Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer  of all  or  any  portion  of  such  Limited  Partner's  or  Assignee's
Partnership  Units and shall  extend to such  Limited  Partner's  or  Assignee's
heirs,  successors,  assigns and  personal  representatives.  Each such  Limited
Partner or Assignee hereby agrees to be bound by any representation  made by the
General  Partner,  acting in good faith pursuant to such power of attorney;  and
each such Limited  Partner or Assignee  hereby waives any and all defenses which
may be  available  to  contest,  negate or  disaffirm  the action of the General
Partner, taken in good faith under such power of attorney.  Each Limited Partner
or Assignee shall execute and deliver to the General  Partner or the Liquidator,
within 15 days after receipt of the General  Partner's  request  therefor,  such
further  designations,  powers of attorney and other  instruments as the General
Partner or the  Liquidator,  as the case may be, deems  necessary to  effectuate
this Agreement and the purposes of the Partnership.





<PAGE>


004.197245.1


     Signature  Pages to  Regency  Centers,  L.P.  Third  Amended  and  Restated
Agreement of Limited Partnership

                                       85

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

                      GENERAL PARTNER:

                      REGENCY REALTY CORPORATION


                      By:____________________________________
                      Name:    Bruce M. Johnson
                      Title:   Managing Director


                      SECURITY CAPITAL U.S. REALTY,
                      a Luxembourg corporation


                      By:____________________________________
                      Name:    ______________________________
                      Title:   ______________________________


                      SECURITY CAPITAL HOLDINGS, S.A.,
                      a Luxembourg corporation


                      By:____________________________________
                      Name:    ______________________________
                      Title:   ______________________________


                      ARDEN SQUARE HOLDINGS SARL


                      By:____________________________________
                      Name:    ______________________________
                      Title:   ______________________________





<PAGE>


                      BLOSSOM VALLEY HOLDINGS SARL


                      By:____________________________________
                      Name:    ______________________________
                      Title:   ______________________________


                      COOPER STREET PLAZA HOLDINGS SARL


                      By:____________________________________
                      Name:    ______________________________
                      Title:   ______________________________


                         DALLAS HOLDINGS SARL


                         By:____________________________________
                         Name:    ______________________________
                         Title:   ______________________________


                         EL CAMINO HOLDINGS SARL


                         By:____________________________________
                         Name:    ______________________________
                         Title:   ______________________________


                         FRIARS MISSION HOLDINGS SARL


                         By:____________________________________
                         Name:    ______________________________
                         Title:   ______________________________



<PAGE>


004.197245.1


                                       19

004.197245.1


Series B Amendment to Partnership Agreement

                              Regency Centers, L.P.
                    Amendment No. 1 to Third Amended and Restated Agreement of
                Limited Partnership (the "Partnership Agreement")
              Relating to 8.75% Series B Cumulative Redeemable Preferred Units

                  Section  1.  Definitions.   Capitalized  terms  used  and  not
otherwise  defined  herein  shall  have  the  meaning  assigned  thereto  in the
Partnership  Agreement.  For  purposes  of this  Amendment,  the term  "Series B
Limited  Partner" means a Limited Partner holding Series B Preferred  Units. The
term  "Parity  Preferred  Units"  shall be used to refer to  Series A  Preferred
Units,  Series B Preferred Units (as hereafter  defined) and any class or series
of Partnership Interests of the Partnership now or hereafter authorized,  issued
or outstanding  expressly designated by the Partnership to rank on a parity with
Series  A  Preferred   Units  or  Series  B  Preferred  Units  with  respect  to
distributions or rights upon voluntary or involuntary liquidation, winding-up or
dissolution of the Partnership,  or both, as the context may require, whether or
not the dividend  rates,  dividend  payment dates or  redemption or  liquidation
prices per unit or conversion  rights or exchange rights shall be different from
those of the Series A Preferred Units. The term "Series B Priority Return" shall
mean,  an amount equal to 8.75% per annum,  determined on the basis of a 360 day
year of twelve 30 day months (or actual days for any month which is shorter than
a full monthly  period),  cumulative to the extent not distributed for any given
distribution  period,  of the stated value of $100 per Series B Preferred  Unit,
commencing  on the  date of  issuance  of such  Series  B  Preferred  Unit.  The
Partnership  Agreement  shall be amended to add such  definitions,  and shall be
further amended to add the following  definition:  "Priority  Returns" means the
Series A Priority  Return and the  Series B  Priority  Return or similar  amount
payable  with  respect to any other  Parity  Preferred  Units.  The term "Junior
Stock" means any class or series of capital stock of the General Partner ranking
junior  as  to  the  payment  of  distributions  or  rights  upon  voluntary  or
involuntary liquidation, winding up or dissolution of the General Partner to the
Series  B  Preferred  Stock.  The  term  "PTP"  shall  mean a  "publicly  traded
partnership"  within  the  meaning  of  Section  7704 of the Code (as  hereafter
defined).  The final  Paragraph in the definition of "Net Income" and "Net Loss"
in the Partnership Agreement shall be restated in its entirety as follows:

                  "Solely for purposes of  allocating  Net Income or Net Loss in
                  any Fiscal Year to the holders of the Parity  Preferred Units,
                  items of Net  Income and Net Loss,  as the case may be,  shall
                  not  include  Depreciation  with  respect  to  properties  (or
                  groupings of properties  selected by the General Partner using
                  any  method  determined  by  it  to be  reasonable)  that  are
                  "ceiling  limited"  in  respect  of the  holders of the Parity
                  Preferred  Units.  For  purposes  of the  preceding  sentence,
                  Partnership  property shall be considered  ceiling  limited in
                  respect of a holder of Parity  Preferred Units if Depreciation
                  attributable   to  such   Partnership   property  which  would
                  otherwise be allocable to such Partner, without regard to this
                  paragraph, exceeded depreciation determined for federal income
                  tax purposes  attributable to such Partnership  property which
                  would otherwise be allocated to such Partner by more than 5%."

                  Section 2.  Designation  and Number.  A series of  Partnership
Units in the Partnership designated as the "8.75% Series B Cumulative Redeemable
Preferred  Units" (the "Series B Preferred  Units") is hereby  established.  The
number of Series B Preferred Units shall be 850,000.

                  Section 3.        Rank.
                                    ----

(a) The Series B Preferred Units will, with respect to  distributions  or rights
upon  voluntary or  involuntary  liquidation,  winding-up or  dissolution of the
Partnership,  or both,  rank  senior to all  classes  or  series of  Partnership
Interests  now or hereafter  authorized,  issued or  outstanding  other than any
class or  series  of  equity  securities  of the  Partnership  issued  after the
issuance of the Series B Preferred Units and expressly  designated in accordance
with  the  Partnership  Agreement  as  ranking  on a parity  with  the  Series B
Preferred  Units as to  distributions  or rights upon  voluntary or  involuntary
liquidation, winding-up or dissolution of the Partnership, or both. The Series B
Preferred Units are expressly  designated as ranking on a parity with the Series
A Preferred Units.

(b) The last sentence of Section 4.1(a) of the  Partnership  Agreement  shall be
amended to read in full as follows (new language is underscored):

                  Any  Partnership  Interests held by the General Partner or any
                  Affiliate   other   than  a  Property   Affiliate   (including
                  Partnership  Interests  acquired  under  Sections 4.2, 8.6 and
                  8.7)  shall be  Class B Units,  other  than  Parity  Preferred
                  Units,  the issuance of which has been approved by the Limited
                  Partners  pursuant to Section  4.2,  and any  Preferred  Units
                  issued pursuant to Section 4.2(b)(i).

                  Section 4.        Distributions.
                                    -------------

(a)  Payment  of  Distributions.  Subject  to the  rights of  holders  of Parity
Preferred  Units,  holders of Series B  Preferred  Units  shall be  entitled  to
receive,  when, as and if declared by the Partnership acting through the General
Partner,  out of Available  Cash and Capital  Transaction  Proceeds,  cumulative
preferential  cash  distributions at the rate per annum of 8.75% of the original
Capital Contribution per Series B Preferred Unit (the "Original Coupon Rate"; as
it may be adjusted from time to time, the "Coupon Rate").  If (i) on or prior to
January 31, 2000, the Partnership or the General Partner consummates a merger or
consolidation  (the "Merger") with another entity (the "Merger  Partner") having
an equity market capitalization in excess of $1 billion, and (ii) after the date
of  consummation  of the  Merger  and on or  before  the  later of the 180th day
following the first public  announcement of the proposed Merger and the 90th day
following  the  consummation  of the Merger (the  "Adjustment  Period"),  either
Moody's  or  Standard  & Poor's  (each a "Rating  Agency")  changes  (a  "Rating
Change") its unconditional,  published rating of the General Partner's preferred
stock (such  Agency's "GP Rating"),  then,  from and after the date of each such
Rating  Change by either such Rating Agency during the  Adjustment  Period,  the
Coupon Rate shall be adjusted to equal an amount  determined by  decreasing  (if
the product  described below is a positive number) or increasing (if the product
described below is a negative number) the Original Coupon Rate by the product of
(A) the positive  number of grade levels of such Rating  Agency by which its new
GP Rating exceeds,  or the negative number of grade levels of such Rating Agency
by which its new GP Rating is less than,  its GP Rating as of September 3, 1999,
multiplied by (B) 12.5 basis points. In the case of each such Rating Change, the
designation of the Series B Preferred  Units will change  accordingly to reflect
such new Coupon Rate.  Promptly after the  expiration of the Adjustment  Period,
the  parties  hereto  shall  execute,  acknowledge  and  deliver  or cause to be
executed,  acknowledged  and delivered all  instruments  and documents as may be
reasonably  necessary  or  desirable  to  memorialize  the revised  Coupon Rate,
including making a corresponding  change to the Series B Priority  Return.  Such
distributions  shall be  cumulative,  shall  accrue  from the  original  date of
issuance  and will be payable (A)  quarterly  in arrears,  on or before March 1,
June 1,  September 1 and December 1 of each year  commencing on December 1, 1999
and (B) in the event of (i) an exchange of Series B Preferred  Units into Series
B Preferred  Stock,  or (ii) a redemption  of Series B Preferred  Units,  on the
exchange date or redemption date, as applicable (each a "Series B Preferred Unit
Distribution  Payment  Date").  The amount of the  distribution  payable for any
period will be computed on the basis of a 360-day year of twelve  30-day  months
and for any period shorter than a full quarterly period for which  distributions
are computed,  the amounts of the distribution payable will be computed based on
the ratio of the actual number of days elapsed in period to ninety (90) days. If
any date on which  distributions  are to be made on the Series B Preferred Units
is not a Business Day (as defined  herein),  then payment of the distribution to
be made on such date will be made on the next  succeeding day that is a Business
Day (and  without any  interest  or other  payment in respect of any such delay)
except that, if such Business Day is in the next succeeding  calendar year, such
payment shall be made on the  immediately  preceding  Business Day, in each case
with the  same  force  and  effect  as if made on such  date.  Distributions  on
December 31, 1999 and thereafter on the Series B Preferred Units will be made to
the holders of record of the Series B  Preferred  Units on the  relevant  record
dates to be fixed by the Partnership  acting through the General Partner,  which
record  dates shall be not less than ten (10) days and not more than thirty (30)
Business Days prior to the relevant  Preferred  Unit  Distribution  Payment Date
(the "Series B Preferred Unit Partnership Record Date").

                  The term  "Business  Day"  shall  mean each day,  other than a
Saturday or a Sunday,  which is not a day on which banking  institutions  in New
York, New York are authorized or required by law,  regulation or executive order
to close.

(b) Distributions Cumulative. Distributions on the Series B Preferred Units will
accrue  whether  or  not  the  terms  and  provisions  of any  agreement  of the
Partnership,  including any agreement relating to its indebtedness,  at any time
prohibit the current  payment of  distributions,  whether or not the Partnership
has earnings,  whether or not there are funds legally  available for the payment
of such  distributions  and whether or not such  distributions  are  authorized.
Accrued but unpaid distributions on the Series B Preferred Units will accumulate
as of the Series B Preferred Unit Distribution  Payment Date on which they first
become payable.  Distributions  on account of arrears for any past  distribution
periods may be declared  and paid at any time,  without  reference  to a regular
Series B Preferred Unit  Distribution  Payment Date to holders of records of the
Series B  Preferred  Units on the record  date fixed by the  Partnership  acting
through the General  Partner which date shall be not less than ten (10) days and
not more than thirty (30) Business  Days prior to the payment date.  Accumulated
and unpaid distributions will not bear interest.

(c)      Priority as to Distributions.
-------------------------------------

(i) So long as any Series B Preferred Units are outstanding,  no distribution of
cash or other  property  shall be  authorized,  declared,  paid or set apart for
payment on or with  respect to any class or series of  Partnership  Interests of
the  Partnership  ranking  junior as to the payment of  distributions  to Parity
Preferred  Units  (collectively,  "Junior  Units"),  nor shall any cash or other
property  be set aside  for or  applied  to the  purchase,  redemption  or other
acquisition  for  consideration  of any  Series B  Preferred  Units,  any Parity
Preferred Units with respect to  distributions or any Junior Units,  unless,  in
each case, all distributions accumulated on all Series B Preferred Units and all
classes  and  series of  outstanding  Parity  Preferred  Units as to  payment of
distributions  have been paid in full. The foregoing  sentence will not prohibit
(a)  distributions  payable solely in Junior Units, (b) the conversion of Junior
Units or Parity  Preferred Units into  Partnership  Interests of the Partnership
ranking junior to the Series B Preferred Units as to  distributions,  or (c) the
redemption  of  Partnership  Interests  corresponding  to any Series B Preferred
Stock,  Parity  Preferred Stock with respect to distributions or Junior Stock to
be  purchased  by the General  Partner  pursuant to Article 5 of the Articles of
Incorporation  of the General  Partner (the  "Charter")  to preserve the General
Partner's  status  as  a  real  estate  investment  trust,  provided  that  such
redemption shall be upon the same terms as the  corresponding  purchase pursuant
to Article 5 of the Charter.

(ii) So long as  distributions  have not been paid in full (or a sum  sufficient
for such full payment is not  irrevocably  deposited in trust for payment)  upon
the Series B Preferred Units, all  distributions  authorized and declared on the
Series B  Preferred  Units  and all  classes  or series  of  outstanding  Parity
Preferred Units with respect to  distributions  shall be authorized and declared
so that the  amount  of  distributions  authorized  and  declared  per  Series B
Preferred Unit and such other classes or series of Parity  Preferred Units shall
in all cases bear to each other the same ratio that  accrued  distributions  per
Series B  Preferred  Unit and such other  classes or series of Parity  Preferred
Units  (which  shall  not  include  any   accumulation   in  respect  of  unpaid
distributions for prior distribution periods if such classes or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.

     (d) No Further  Rights.  Holders of Series B  Preferred  Units shall not be
entitled  to any  distributions,  whether  payable in cash,  other  property  or
otherwise, in excess of the full cumulative distributions described herein.

     (e) Section 5.1(c) of the Partnership Agreement shall be amended to read in
full as follows (new language is underscored):

                  "Anything herein to the contrary  notwithstanding,  subject to
                  Section  4(c)(i)  of  Amendment  No. 1 to this  Agreement,  no
                  Available  Cash  or  Capital  Transaction  Proceeds  shall  be
                  distributed pursuant to Section 5.1(a),  Section 5.1(b) or any
                  other  provisions  of this Article 5 unless all  distributions
                  accumulated  on all  Series  A  Preferred  Units  pursuant  to
                  Section   4.5  have   been  paid  in  full  and   unless   all
                  distributions  accumulated on any other outstanding  Preferred
                  units have been paid in full."

                  Section 5.        Allocations.
                                    -----------

(a)  Section  6.1(a) and 6.1(b) of the  Agreement  are  hereby  deleted  and the
following  inserted  as new  Sections  6.1(a)  and 6.1(b) in lieu  thereof  (new
language is underscored):

                  Section  6.1  Allocations  of Net  Income  and Net  Loss.  For
         purposes of maintaining  the Capital  Accounts and in  determining  the
         rights of the Partners among  themselves,  the Partnership's Net Income
         and Net Loss shall be  allocated  among the  Partners  for each taxable
         year (or portion thereof) as provided herein below.

                                    (a) Net Income.  After giving  effect to the
                  special allocations set forth in Section 6.2 below, Net Income
                  shall be  allocated  as  follows  (and for this  purpose,  the
                  holders  of Class A Units  shall be  treated  as if they  were
                  Original Limited Partners):

                                            (i)  First,   one  hundred   percent
                           (100%) to the General  Partner in an amount  equal to
                           the excess,  if any, of (A) the cumulative Net Losses
                           allocated to the General Partner  pursuant to Section
                           6.1(b)(ix)  and the last  sentence of Section  6.1(b)
                           for all prior fiscal years,  over (B) the  cumulative
                           Net  Income   allocated   pursuant  to  this  Section
                           6.1(a)(i) for all prior fiscal years;

                                            (ii)  Second,  one  hundred  percent
                           (100%) to the holders of Parity Preferred Units in an
                           amount  equal  to the  excess,  if  any,  of (A)  the
                           cumulative  Net Losses  allocated  to the  holders of
                           Parity    Preferred   Units   pursuant   to   Section
                           6.1(b)(viii) for all prior fiscal years, over (B) the
                           cumulative  Net  Income  allocated  pursuant  to this
                           Section  6.1(a)(ii),  including any amounts allocated
                           pursuant to Section 6.2(g) which were attributable to
                           this Section 6.1(a)(ii), for all prior fiscal years;

                                            (iii)  Third,  one  hundred  percent
                           (100%) to the Original  Limited Partners in an amount
                           equal to the excess,  if any,  of (A) the  cumulative
                           Net Losses  allocated  to such  Partners  pursuant to
                           Section  6.1(b)(iv) for all prior fiscal years,  over
                           (B) the cumulative Net Income  allocated  pursuant to
                           this Section  6.1(a)(iii) for all prior fiscal years,
                           which amount shall be allocated  among such  Partners
                           in the same  proportions  and in the reverse order as
                           the Net Losses  were  allocated  pursuant  to Section
                           6.1(b)(iv);

                                            (iv)  Fourth,  one  hundred  percent
                           (100%) to the Original  Limited Partners in an amount
                           equal to the excess,  if any,  of (A) the  cumulative
                           Net Losses  allocated  to such  Partners  pursuant to
                           Section  6.1(b)(iii) for all prior fiscal years, over
                           (B) the cumulative Net Income  allocated  pursuant to
                           this Section  6.1(a)(iv)  for all prior fiscal years,
                           which amount shall be allocated  among such  Partners
                           in the same  proportions  and in the reverse order as
                           the Net Losses  were  allocated  pursuant  to Section
                           6.1(b)(iii);

                                            (v)  Fifth,   one  hundred   percent
                           (100%) to the holders of Parity Preferred Units until
                           the  holders  of  Parity  Preferred  Units  have been
                           allocated  an  amount  equal to the  excess  of their
                           respective  cumulative  Priority  Returns through the
                           last  day  of the  current  fiscal  year  (determined
                           without reduction for  distributions  made to date in
                           satisfaction  thereof) over the cumulative Net Income
                           allocated  to the holders of Parity  Preferred  Units
                           pursuant to this  Section  6.1(a)(v),  including  any
                           amounts  allocated  pursuant to Section  6.2(g) which
                           were attributable to this Section 6.1(a)(v),  for all
                           prior periods;

                                            (vi)  Sixth,   one  hundred  percent
                           (100%) to the  Original  Limited  Partners  until the
                           cumulative allocations of Net Income to each Original
                           Limited Partner under this Section 6.1(a)(vi) for the
                           current  and  all  prior   fiscal   years  equal  the
                           cumulative distributions paid to the Original Limited
                           Partner  pursuant  to Section  5.1(a)(i)  and Section
                           13.2(a)(iv)  ,  provided,  however,  in the  case  of
                           Original  Limited  Partners other than Class Z Branch
                           Partners,  no allocations of Net Income shall be made
                           under  this  Section   6.1(a)(vi)   to  such  Limited
                           Partners  with  respect to  distributions  made under
                           Section  5.1(a)(i) and Section  13.2(a)(iv) after the
                           Third Amendment Date;.

                                            (vii) Seventh,  one hundred  percent
                           (100%) to the  Original  Limited  Partners  until the
                           cumulative allocations of Net Income to each Original
                           Limited  Partner under this Section  6.1(a)(vii)  for
                           the current and all prior  fiscal years equal the sum
                           of the cumulative  amounts credited to such Partner's
                           Cumulative Unpaid Priority  Distribution  Account and
                           Cumulative  Unpaid  Accrued  Return  Account  for the
                           current  and  all  prior  fiscal   years,   provided,
                           however,  in the case of  Original  Limited  Partners
                           other than Class Z Branch Partners, no allocations of
                           Net  Income   shall  be  made   under  this   Section
                           6.1(a)(vii)  with respect to amounts credited to such
                           Partners'  Cumulative  Unpaid  Priority  Distribution
                           Accounts  and   Cumulative   Unpaid   Accrued  Return
                           Accounts after the Third Amendment Date;

                                            (viii) Eighth,  one hundred  percent
                           (100%)  to  the  Additional  Limited  Partners  in an
                           amount  equal  to the  excess,  if  any,  of (A)  the
                           cumulative  Net Losses  allocated  to the  Additional
                           Limited Partners pursuant to Section  6.1(b)(vii) for
                           all prior fiscal years,  over (B) the  cumulative Net
                           Income    allocated    pursuant   to   this   Section
                           6.1(a)(viii) for all prior fiscal years, which amount
                           shall  be  allocated  among  the  Additional  Limited
                           Partners in the same  proportions  and in the reverse
                           order as the Net Losses  were  allocated  pursuant to
                           Section 6.1(b)(vii);

                                            (ix)  Ninth,   one  hundred  percent
                           (100%)  to  the  Additional  Limited  Partners  in an
                           amount  equal  to the  excess,  if  any  of  (A)  the
                           cumulative  Net Losses  allocated  to the  Additional
                           Limited Partners  pursuant to Section  6.1(b)(vi) for
                           all prior fiscal years,  over (B) the  cumulative Net
                           Income allocated  pursuant to this Section 6.1(a)(ix)
                           for all prior  fiscal  years,  which  amount shall be
                           allocated among such Partners in the same proportions
                           and in the  reverse  order  as the  Net  Losses  were
                           allocated pursuant to Section 6.1(b)(vi);

                                            (x)  Tenth,   one  hundred   percent
                           (100%) to the Additional  Limited  Partners until the
                           cumulative   allocations   of  Net   Income  to  each
                           Additional   Limited   Partner   under  this  Section
                           6.1(a)(x)  for the current and all prior fiscal years
                           equal  the  cumulative   distributions  paid  to  the
                           Additional   Limited  Partners  pursuant  to  Section
                           5.1(a)(iv) and Section 13.2(a)(v), provided, however,
                           in the case of Additional Limited Partners other than
                           Class  Z  Midland  Partners,  no  allocations  of Net
                           Income shall be made under this Section  6.1(a)(x) to
                           such Limited  Partners with respect to  distributions
                           made under Section  5.1(a)(iv) and Section 13.2(a)(v)
                           after the Third Amendment Date;

                                            (xi) Eleventh,  one hundred  percent
                           (100%) to the Additional  Limited  Partners until the
                           cumulative   allocations   of  Net   Income  to  each
                           Additional   Limited   Partner   under  this  Section
                           6.1(a)(xi) for the current and all prior fiscal years
                           equal the sum of (A) the cumulative  amounts credited
                           to  such   Partner's   Cumulative   Unpaid   Priority
                           Distribution  Account and  Cumulative  Unpaid Accrued
                           Return  Account for the current and all prior  fiscal
                           years and (B) the cumulative Net Losses  allocated to
                           the Additional  Limited  Partner  pursuant to Section
                           6.1(b)(v)  for  all  prior  fiscal  years,  provided,
                           however,  in the case of Additional  Limited Partners
                           other than Class Z Midland Partners, no allocation of
                           Net  Income   shall  be  made   under  this   Section
                           6.1(a)(xi)  with respect to amounts  credited to such
                           Partners'  Cumulative  Unpaid  Priority  Distribution
                           Accounts  and   Cumulative   Unpaid   Accrued  Return
                           Accounts after the Third Amendment Date; and

                                            (xii)  Thereafter,  to the  Original
                           and  Additional  Limited  Partners other than Class Z
                           Branch Partners or Class Z Midland  Partners,  to the
                           General  Partner and to any other  holders of Class B
                           Units,  pro  rata in  accordance  with  the  relative
                           amounts of  Available  Cash and  Capital  Transaction
                           Proceeds  distributed  to  each of  them  during  the
                           taxable year.

     (b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:

                                            (i)  First,   one  hundred   percent
                           (100%)  to  the  Original  and   Additional   Limited
                           Partners other than Class Z Branch  Partners or Class
                           Z Midland  Partners,  to the General  Partner and the
                           Class  B  Unit  holders  in an  amount  equal  to the
                           excess,  if any,  of (A) the  cumulative  Net  Income
                           allocated pursuant to Section  6.1(a)(xii) hereof for
                           all prior fiscal years in excess of  distributions of
                           Available   Cash  to  such   Partners  for  which  no
                           corresponding  allocation of Net Income had been made
                           (or  is   required   to  be  made)   under   Sections
                           6.1(a)(i)-(xi)  hereof,  over (B) the  cumulative Net
                           Losses allocated  pursuant to this Section  6.1(b)(i)
                           for all prior fiscal years;

                                            (ii) Second, to the Original Limited
                           Partners  until  the  cumulative  allocations  of Net
                           Losses  under  this  Section   6.1(b)(ii)  equal  the
                           excess, if any, of the cumulative  allocations of Net
                           Income under Section 6.1(a)(vii) to such Partners for
                           all   prior   fiscal   years   over  the   cumulative
                           distributions   to  such   Partners   under   Section
                           5.1(a)(ii)  and (iii) and Section  5.1(b)(i) and (ii)
                           for the  current  and all prior  fiscal  years  (such
                           allocation being made in proportion to such Partners'
                           respective excess amounts);

                                            (iii) Third, to the Original Limited
                           Partners  with  positive   Adjusted  Capital  Account
                           balances  (determined,  solely for  purposes  of this
                           Section 6.1(b)(iii), without regard to any obligation
                           of a Partner to restore a  negative  Capital  Account
                           under Section 13.4),  in proportion to such balances,
                           until such balances are reduced to zero;

                                            (iv) Fourth, to the Original Limited
                           Partners in proportion to their  relative  Percentage
                           Interests; provided, however, that to the extent that
                           an  allocation  under this Section  6.1(b)(iv)  would
                           cause or increase an Adjusted Capital Account Deficit
                           for such Partner, such Net Loss shall be allocated to
                           those  Original  Limited  Partners (in  proportion to
                           their  relative  Percentage  Interests) for whom such
                           allocation  would not cause or  increase  an Adjusted
                           Capital Account Deficit;

                                            (v) Fifth, to the Additional Limited
                           Partners  until  the  cumulative  allocations  of Net
                           Losses under this Section 6.1(b)(v) equal the excess,
                           if any, of the  cumulative  allocations of Net Income
                           under  Section  6.1(a)(xi)  to such  Partners for all
                           prior fiscal years over the cumulative  distributions
                           to such Partners under Section 5.1(a)(v) and (vi) and
                           Section  5.1(b)(iii) and (iv) for the current and all
                           prior  fiscal  years (such  allocation  being made in
                           proportion  to  such  Partners'   respective   excess
                           amounts);

                                            (vi)   Sixth,   to  the   Additional
                           Limited  Partners  with  positive   Adjusted  Capital
                           Accounts balances (determined, solely for purposes of
                           this  Section  6.1(b)(vi),   without  regard  to  any
                           obligation of a Partner to restore a negative Capital
                           Account  under Section  13.4),  in proportion to such
                           balances, until such balances are reduced to zero;

                                            (vii)  Seventh,  to  the  Additional
                           Limited  Partners  in  proportion  to their  relative
                           Percentage Interests;  provided, however, that to the
                           extent  that  an   allocation   under  this   Section
                           6.1(b)(vii)  would  cause  or  increase  an  Adjusted
                           Capital  Account  Deficit for such Partner,  such Net
                           Loss shall be allocated to those  Additional  Limited
                           Partners (in proportion to their relative  Percentage
                           Interests) for whom such  allocation  would not cause
                           or increase an Adjusted Capital Account Deficit;

                                            (viii)  Eighth,  to the  holders  of
                           Parity   Preferred   Units  until  their   respective
                           Adjusted Capital Account Balance (determined,  solely
                           for  purposes of this Section  6.1(b)(viii),  without
                           regard to any  obligation  of a Partner  to restore a
                           negative  Capital  Account under Section  13.4),  has
                           been reduced to zero; and

                                            (ix) Any remaining Net Loss shall be
                           allocated  to  the  General  Partner  and  any  other
                           holders of Class B Units.

         Notwithstanding the foregoing, Net Losses shall not be allocated to any
         Limited Partner pursuant to this Section  6.1(b)(ix) to the extent that
         such  allocation  would cause such Limited  Partner to have an Adjusted
         Capital  Account  Deficit at the end of such  taxable year (or increase
         any  existing  Adjusted  Capital  Account  Deficit).  All Net Losses in
         excess of the limitations  set forth in the preceding  sentence of this
         Section 6.1(b) shall be allocated to the General Partner.

     (b) Section  6.2(g) of the  Agreement is hereby  deleted and the  following
inserted as new Section 6.2(g) in lieu thereof (new language is underscored):

                                    (g)     Capital     Account     Adjustments.
                  Notwithstanding anything herein to the contrary other than the
                  last  sentence of Section  14.1(g),  any gain or loss  arising
                  from an adjustment to the Gross Asset Value of any Partnership
                  asset pursuant to clause (b) or (c) of the definition  thereof
                  shall be  allocated  (i) first,  to the  holders of the Parity
                  Preferred  Units,  but only to the extent that they would have
                  been  allocated  such gain  pursuant to Section  6.1(a)(ii) or
                  Section  6.1(a)(v) of this  Agreement or such loss pursuant to
                  Section 6.1(b)(viii) of this Agreement, as applicable, if such
                  gain or loss had been actually realized;  and (ii) second, and
                  subject to section 6.2(h) hereof,  one hundred  percent (100%)
                  of the  remainder of such gain or loss to the General  Partner
                  and the  Additional  Limited  Partners  (other than holders of
                  Parity  Preferred  Units)  pro  rata in  accordance  with  the
                  relative number of Units held by each; provided, however, that
                  for this  purpose,  the  General  Partner  shall be treated as
                  owning  all of the  outstanding  Class A Units  and all of the
                  outstanding  Original Limited Partnership Units in addition to
                  the actual number of Units which the General Partner holds. An
                  Additional  Limited  Partner  (except  for  holders  of Parity
                  Preferred Units), at the time of admission to the Partnership,
                  may elect  with the  consent  of the  General  Partner  to not
                  receive special allocations of any gain or loss resulting from
                  such adjustments.

                  Section 6.        Liquidation Preference.
                                    ----------------------

(a) Payment of  Liquidating  Distributions.  Subject to the rights of holders of
Parity  Preferred Units with respect to rights upon any voluntary or involuntary
liquidation,  dissolution or winding-up of the Partnership the holders of Series
B  Preferred  Units  shall be  entitled  to  receive  out of the  assets  of the
Partnership  legally available for distribution or the proceeds  thereof,  after
payment or provision for debts and other  liabilities  of the  Partnership,  but
before any payment or  distributions  of the assets  shall be made to holders of
any class or series of  Partnership  Interest  that ranks junior to the Series B
Preferred Units as to rights upon liquidation,  dissolution or winding-up of the
Partnership, an amount equal to the sum of (i) a liquidation preference equal to
their positive  Capital Account  balances,  determined after taking into account
all Capital Account  adjustments  for the Partnership  taxable year during which
the  liquidation  occurs  (other than those made as a result of the  liquidating
distribution  set forth in this Section  6(a)),  and (ii) an amount equal to any
accumulated and unpaid distributions  thereon,  whether or not declared,  to the
date  of  payment.  In the  event  that,  upon  such  voluntary  or  involuntary
liquidation,  dissolution or winding-up, there are insufficient assets to permit
full payment of liquidating  distributions  to the holders of Series B Preferred
Stock and any Parity Preferred Units as to rights upon liquidation,  dissolution
or winding-up of the Partnership,  all payments of liquidating  distributions on
the Series B Preferred Units and such Parity  Preferred Units shall in all cases
bear to each  other the same ratio  that the  respective  rights of the Series B
Preferred  Unit and such other Parity  Preferred  Units (which shall not include
any  accumulation  in respect  of unpaid  distributions  for prior  distribution
periods  if such  Parity  Preferred  Units do not have  cumulative  distribution
rights) upon  liquidation,  dissolution or winding-up of the Partnership bear to
each other.

(b) Notice.  Written notice of any such  voluntary or  involuntary  liquidation,
dissolution or winding-up of the Partnership,  stating the payment date or dates
when,  and  the  place  or  places  where,  the  amounts  distributable  in such
circumstances  shall  be  payable,  shall  be given by (i) fax and (ii) by first
class mail,  postage pre-paid,  not less than 30 and not more than 60 days prior
to the  payment  date  stated  therein,  to each  record  holder of the Series B
Preferred  Units at the  respective  addresses of such holders as the same shall
appear on the transfer records of the Partnership.

     (c) No Further Rights.  After payment of the full amount of the liquidating
distributions  to which they are  entitled,  the  holders of Series B  Preferred
Units  will  have no  right  or  claim  to any of the  remaining  assets  of the
Partnership.

(d)  Consolidation,  Merger or Certain Other  Transactions.  The voluntary sale,
conveyance,  lease, exchange or transfer (for cash, shares of stock,  securities
or other consideration) of all or substantially all of the property or assets of
the  General  Partner  to, or the  consolidation  or  merger  or other  business
combination of the  Partnership  with or into, any  corporation,  trust or other
entity  (or of  any  corporation,  trust  or  other  entity  with  or  into  the
Partnership)  shall not be deemed to constitute a  liquidation,  dissolution  or
winding-up of the Partnership.

                  Section 7.        Optional Redemption.
                                    -------------------

(a)  Right of  Optional  Redemption.  The  Series B  Preferred  Units may not be
redeemed  prior to the fifth  anniversary of the issuance date. On or after such
date,  the  Partnership  shall have the right to redeem  the Series B  Preferred
Units, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days'  written  notice,  at a redemption  price,  payable in
cash,  equal to the Capital  Account balance of the holder of Series B Preferred
Units (the "Redemption Price");  provided,  however, that no redemption pursuant
to this Section 7 will be permitted  if the  Redemption  Price does not equal or
exceed the  original  Capital  Contribution  of such holder plus the  cumulative
Series B Priority Return, whether or not declared, to the redemption date to the
extent not previously distributed or distributed on the redemption date pursuant
to Section 4(a). If fewer than all of the  outstanding  Series B Preferred Units
are to be  redeemed,  the  Series  B  Preferred  Units to be  redeemed  shall be
selected pro rata (as nearly as practicable without creating fractional units).

(b)      Limitation on Redemption.
---------------------------------

(i) The Redemption Price of the Series B Preferred Units (other than the portion
thereof  consisting of  accumulated  but unpaid  distributions)  will be payable
solely out of the sale proceeds of capital stock of the General  Partner,  which
will be  contributed  by the General  Partner to the  Partnership  as additional
capital  contribution,  or out of the sale of limited  partner  interests in the
Partnership  and from no other source.  For purposes of the preceding  sentence,
"capital  stock"  means  any  equity  securities  (including  Common  Stock  and
Preferred   Stock  (as  such  terms  are  defined  in  the  Charter)),   shares,
participation or other ownership  interests (however  designated) and any rights
(other  than  debt  securities  convertible  into  or  exchangeable  for  equity
securities) or options to purchase any of the foregoing.

(ii) The Partnership  may not redeem fewer than all of the outstanding  Series B
Preferred Units unless all accumulated and unpaid  distributions  have been paid
on  all  Series  B  Preferred  Units  for  all  quarterly  distribution  periods
terminating on or prior to the date of redemption.

(c)      Procedures for Redemption.
----------------------------------

(i) Notice of redemption will be (i) faxed,  and (ii) mailed by the Partnership,
by certified mail, postage prepaid, not less than 30 nor more than 60 days prior
to the redemption  date,  addressed to the  respective  holders of record of the
Series B Preferred  Units at their  respective  addresses  as they appear on the
records of the  Partnership.  No failure to give or defect in such notice  shall
affect  the  validity  of the  proceedings  for the  redemption  of any Series B
Preferred Units except as to the holder to whom such notice was defective or not
given.  In addition to any  information  required by law, each such notice shall
state: (i) the redemption date, (ii) the Redemption  Price,  (iii) the aggregate
number of Series B Preferred  Units to be redeemed  and if fewer than all of the
outstanding Series B Preferred Units are to be redeemed,  the number of Series B
Preferred  Units to be redeemed  held by such  holder,  which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding  Series B  Preferred  Units the total  number of Series B  Preferred
Units  held by such  holder  represents)  of the  aggregate  number  of Series B
Preferred  Units to be  redeemed,  (iv) the place or places  where such Series B
Preferred Units are to be surrendered for payment of the Redemption  Price,  (v)
that  distributions on the Series B Preferred Units to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the Redemption Price
will be made upon presentation and surrender of such Series B Preferred Units.

(ii) If the  Partnership  gives a notice of  redemption  in  respect of Series B
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Partnership  will deposit  irrevocably in
trust for the  benefit of the Series B  Preferred  Units  being  redeemed  funds
sufficient  to pay the  applicable  Redemption  Price and will give  irrevocable
instructions  and authority to pay such  Redemption  Price to the holders of the
Series B Preferred  Units upon surrender of the Series B Preferred Units by such
holders at the place  designated  in the notice of  redemption.  If the Series B
Preferred  Units are evidenced by a  certificate  and if fewer than all Series B
Preferred Units evidenced any certificate are being redeemed,  a new certificate
shall be issued  upon  surrender  of the  certificate  evidencing  all  Series B
Preferred Units, evidencing the unredeemed Series B Preferred Units without cost
to the holder thereof.  On and after the date of redemption,  distributions will
cease to accumulate on the Series B Preferred  Units or portions  thereof called
for redemption,  unless the Partnership  defaults in the payment thereof. If any
date fixed for  redemption  of Series B Preferred  Units is not a Business  Day,
then payment of the  Redemption  Price  payable on such date will be made on the
next  succeeding  day that is a Business  Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the  immediately  preceding
Business  Day,  in each case with the same  force and  effect as if made on such
date fixed for  redemption.  If payment of the  Redemption  Price is  improperly
withheld  or  refused  and not paid by the  Partnership,  distributions  on such
Series  B  Preferred  Units  will  continue  to  accumulate  from  the  original
redemption  date to the date of payment,  in which case the actual  payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.

                  Section 8.        Voting Rights.
                                    -------------

(a)  General.  Holders of the Series B Preferred  Units will not have any voting
rights or right to consent to any matter  requiring  the  consent or approval of
the Limited Partners, except as otherwise expressly set forth in the Partnership
Agreement and except as set forth below.

(b)  Certain  Voting  Rights.  So long as any Series B  Preferred  Units  remain
outstanding,  the Partnership  shall not,  without the  affirmative  vote of the
holders of at least  two-thirds of the Series B Preferred  Units  outstanding at
the time (i)  authorize or create,  or increase the  authorized or issued amount
of, any class or series of Partnership  Interests  ranking prior to the Series B
Preferred  Units  with  respect  to  payment  of  distributions  or rights  upon
liquidation,  dissolution or winding-up or reclassify any Partnership  Interests
of the Partnership into such Partnership Interest, or create, authorize or issue
any obligations or security convertible into or evidencing the right to purchase
any such  Partnership  Interest,  (ii)  authorize  or create,  or  increase  the
authorized or issued  amount of any Parity  Preferred  Units or  reclassify  any
Partnership  interest of the Partnership into any such  Partnership  Interest or
create,  authorize  or issue any  obligations  or security  convertible  into or
evidencing the right to purchase any such Partnership  Interests but only to the
extent  such  Parity   Preferred  Units  are  issued  to  an  affiliate  of  the
Partnership,  other than (A) Security  Capital  U.S.  Realty,  Security  Capital
Holdings, S.A. or their affiliates purchasing preferred stock of the same series
on the same terms as non-affiliates or (B) the General Partner to the extent the
issuance  of  such  interests  was  to  allow  the  General   Partner  to  issue
corresponding  preferred  stock  to  persons  who  are  not  affiliates  of  the
Partnership in the same transaction or (iii) either (A) consolidate,  merge into
or with, or convey,  transfer or lease its assets  substantially  as an entirety
to, any corporation or other entity or (B) amend, alter or repeal the provisions
of the Partnership  Agreement,  whether by merger,  consolidation  or otherwise,
that  would  materially  and  adversely  affect  the  powers,   special  rights,
preferences,  privileges or voting power of the Series B Preferred  Units or the
holders  thereof;  provided,  however,  that with respect to the occurrence of a
merger,  consolidation or a sale or lease of all of the Partnership's  assets as
an entirety,  so long as (a) the  Partnership  is the  surviving  entity and the
Series B Preferred Units remain outstanding with the terms thereof unchanged, or
(b) the  resulting,  surviving or transferee  entity is a  partnership,  limited
liability company or other  pass-through  entity organized under the laws of any
state and  substitutes  the Series B Preferred Units for other interests in such
entity having  substantially the same terms and rights as the Series B Preferred
Units,  including with respect to  distributions,  voting rights and rights upon
liquidation,  dissolution or  winding-up,  then the occurrence of any such event
shall not be deemed to materially and adversely  affect such rights,  privileges
or voting  powers of the holders of the Series B Preferred  Units and no vote of
the Series B  Preferred  Units  shall be  required  in such case;  and  provided
further than any increase in the amount of Partnership Interests or the creation
or issuance of any other class or series of Partnership Interests,  in each case
ranking  (a) junior to the Series B Preferred  Units with  respect to payment of
distributions  and the distribution of assets upon  liquidation,  dissolution or
winding-up,  or (b) on a parity to the Series B Preferred  Units with respect to
payment  of  distributions  and the  distribution  of assets  upon  liquidation,
dissolution  or  winding-up  to the extent such  Partnership  Interests  are not
issued to an affiliate of the Partnership,  other than (A) Security Capital U.S.
Realty,   Security  Capital  Holdings,   S.A.  or  their  affiliates  purchasing
Partnership interests of the same series on the same terms as non-affiliates, or
(B) the  General  Partner to the extent the  issuance of such  interests  was to
allow the General Partner to issue corresponding  preferred stock to persons who
are not  affiliates of the  Partnership,  shall not be deemed to materially  and
adversely  affect such rights,  preferences,  privileges or voting powers and no
vote of the Series B Preferred Units shall be required in such case.

                  In addition to the  foregoing,  the  Partnership  will not (x)
enter into any contract,  mortgage,  loan or other  agreement  that prohibits or
restricts,  or has the effect of  prohibiting or  restricting,  the ability of a
Preferred  Partner to exercise  its rights set forth herein to effect in full an
exchange or redemption  pursuant to Section 10, except with the written  consent
of  the  holders  of at  least  two-thirds  of  the  Series  B  Preferred  Units
outstanding at the time; or (y) amend,  alter, or repeal or waive Section 7.5 of
the Fourth  Amended  Agreement (to the extent in effect) or, until  December 31,
2000, Section 11.3(i) of the Partnership Agreement if such amendment, alteration
or waiver adversely  affects the holders of Series B Preferred Units without the
affirmative  vote  of at  least  two-thirds  of the  Series  B  Preferred  Units
outstanding at the time.

                  Notwithstanding anything to the contrary in this Section 8, in
no event shall the  General  Partner or any of its  affiliates  have any voting,
consent or approval rights in respect of any Series B Preferred Units it or they
may hold, and any percentage or portion of outstanding  Series B Preferred Units
that may be  required  hereunder  for any vote,  consent or  approval of holders
thereof shall be determined as if all Series B Preferred  Units then held by the
General Partner or any of its affiliates were not outstanding.

                  Section 9.        Transfer Restrictions.
                                    ---------------------

(a) The Series B  Preferred  Units  shall not be subject  to the  provisions  of
Article 11 of the Partnership  Agreement other than Sections  11.1(a),  11.3(b),
11.3(c), 11.3(d), 11.3(e), 11.3(f), 11.3(g), 11.3(i) and 11.6.

(b) No transfer of the Series B Preferred  Units may be made without the consent
of the General  Partner,  which consent may be given or withheld in its sole and
absolute  discretion,  if such transfer  would result in more than four partners
holding all outstanding  Series B Preferred Units within the meaning of Treasury
Regulation  Section  1.7704-1(h)(1)(ii)  (without regard to Treasury  Regulation
Section  1.7704-1(h)(3)(ii));  provided,  however,  that the  General  Partner's
consent may not be  unreasonably  withheld if (a) such transfer would not result
in more than four (4) partners holding all outstanding  Series B Preferred Units
within the  meaning of such  Treasury  Regulation  Sections  or (b) the  General
Partner  is relying  on a  provision  other  than  Treasury  Regulation  Section
1.7704-1(h)  to avoid  classification  of  Operating  Partnership  as a PTP.  In
addition, no transfer may be made to any person if such transfer would cause the
exchange  of the Series B  Preferred  Units for  Series B  Preferred  Stock,  as
provided  herein,  to be required to be registered  under the Securities Act, or
any state  securities  laws.  Notwithstanding  anything in this Agreement to the
contrary,  the Series B  Preferred  Units shall be freely  transferable  to LLC,
which shall upon such transfer be admitted as a Limited Partner hereunder.

                  Section 10.       Exchange Rights.
                                    ---------------

(a)      Right to Exchange.
--------------------------

(i) Series B Preferred Units will be exchangeable in whole or in part at anytime
on or after the tenth anniversary of the date of issuance,  at the option of the
holders thereof, for authorized but previously unissued shares of 8.75% Series B
Cumulative  Redeemable  Preferred  Stock of the General  Partner  (the "Series B
Preferred  Stock") at an exchange rate of one share of Series B Preferred  Stock
for one Series B Preferred Unit , subject to adjustment as described  below (the
"Exchange  Price"),  provided  that the Series B  Preferred  Units  will  become
exchangeable  at any time,  in whole or in part, at the option of the holders of
Series B Preferred  Units for Series B  Preferred  Stock if (y) at any time full
distributions  shall not have been timely  made on any Series B  Preferred  Unit
with respect to six (6) prior  quarterly  distribution  periods,  whether or not
consecutive,  provided,  however,  that a  distribution  in  respect of Series B
Preferred Units shall be considered  timely made if made within two (2) Business
Days after the  applicable  Preferred Unit  Distribution  Payment Date if at the
time of such late payment  there shall not be any prior  quarterly  distribution
periods in respect of which full  distributions were not timely made or (z) upon
receipt by a holder or holders of Series B  Preferred  Units of (A) notice  from
the General  Partner  that the General  Partner or a  subsidiary  of the General
Partner has become aware of facts that will or likely will cause the Partnership
to become a PTP and (B) an opinion rendered by an outside nationally  recognized
independent  counsel familiar with such matters addressed to a holder or holders
of Series B Preferred  Units,  that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition,  the Series B Preferred  Units may be exchanged for Series B
Preferred  Stock,  in whole or in part, at the option of any holder prior to the
tenth anniversary of the issuance date and after the third  anniversary  thereof
if such  holder of a Series B  Preferred  Units  shall  deliver  to the  General
Partner either (i) a private letter ruling  addressed to such holder of Series B
Preferred Units or (ii) an opinion of independent counsel reasonably  acceptable
to the General  Partner  based on the  enactment of temporary or final  Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series B Preferred  Units at such earlier time would not
cause the Series B  Preferred  Units to be  considered  "stock  and  securities"
within the meaning of Section  351(e) of the Internal  Revenue Code of 1986,  as
amended  (the  "Code") for  purposes of  determining  whether the holder of such
Series B Preferred Units is an "investment  company" under Section 721(b) of the
Code if an exchange is permitted at such earlier date. Furthermore, the Series B
Preferred  Units may be  exchanged  in whole or in part for  Series B  Preferred
Stock at any  time  after  the  date  hereof,  if both  (1) the  holder  thereof
concludes  based on  results or  projected  results  that  there  exists (in the
reasonable  judgment of the holder) an imminent  and  substantial  risk that the
holder's  interest in the Partnership  does or will represent more than 19.5% of
the total  profits  or  capital  interests  in the  Partnership  (determined  in
accordance with Treasury Regulations Section  1.731-2(e)(4)) for a taxable year,
and (2) the holder  delivers  to the  General  Partner an opinion of  nationally
recognized  independent  counsel to the effect  that  there is an  imminent  and
substantial  risk that the  holder's  interest in the  Partnership  does or will
represent  more than  19.5% of the total  profits or  capital  interests  in the
Partnership   (determined  in  accordance  with  Treasury   Regulations  Section
1.731-2(e)(4)) for a taxable year.

(ii) Notwithstanding  anything to the contrary set forth in Section 10(a)(i), if
an  Exchange  Notice (as  defined  herein)  has been  delivered  to the  General
Partner,  then the General Partner may, at its option,  elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series B preferred
Units for cash in an  amount  equal to the  original  Capital  Contribution  per
Series B Preferred Unit and all accrued and unpaid distributions  thereon to the
date of  redemption.  The General  Partner may exercise its option to redeem the
Series B Preferred  Units for cash pursuant to this Section  10(a)(ii) by giving
each  holder of record of Series B  Preferred  Units  notice of its  election to
redeem for cash,  within five (5)  Business  Days after  receipt of the Exchange
Notice,  by (i) fax, and (ii) registered  mail,  postage paid, at the address of
each holder as it may appear on the records of the  Partnership  stating (i) the
redemption  date,  which  shall be no later than sixty (60) days  following  the
receipt of the Exchange Notice,  (ii) the redemption  price,  (iii) the place or
places where the Series B Preferred  Units are to be surrendered  for payment of
the redemption  price,  (iv) that  distribution  on the Series B Preferred Units
will cease to accrue on such redemption date; (v) that payment of the redemption
price will be made upon  presentation  and  surrender  of the Series B Preferred
Units and (vi) the aggregate  number of Series B Preferred Units to be redeemed,
and if fewer  than all of the  outstanding  Series B  Preferred  Units are to be
redeemed,  the number of Series B Preferred  Units to be  redeemed  held by such
holder,  which number  shall equal such  holder's  pro-rata  share (based on the
percentage of the aggregate  number of outstanding  Series B Preferred Units the
total number of Series B Preferred Units held by such holder  represents) of the
aggregate number of Series B Preferred Units being redeemed.

(iii) Upon the occurrence of an event giving rise to exchange rights pursuant to
Section  10(a)(i),  in the event an  exchange  of all or a  portion  of Series B
Preferred  Units  pursuant to Section  10(a)(i)  would violate the provisions on
ownership  limitation  of the  General  Partner  set  forth in  Article 5 of the
Charter, the General Partner shall give written notice thereof to each holder of
record of Series B Preferred  Units,  within five (5)  Business  Days  following
receipt of the Exchange Notice,  by (i) fax, and (ii) registered  mail,  postage
prepaid,  at the  address of each such  holder  set forth in the  records of the
Partnership.  In such event,  each  holder of Series B Preferred  Units shall be
entitled to exchange,  pursuant to the  provision  of Section  10(b) a number of
Series B Preferred Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in such Article 5 of the Charter and
any Series B Preferred  Units not so  exchanged  (the "Excess  Units")  shall be
redeemed by the Partnership for cash in an amount equal to the original  Capital
Contribution per Excess Unit, plus any accrued and unpaid distributions thereon,
whether or not declared,  to the date of  redemption.  The written notice of the
General  Partner shall state (i) the number of Excess Units held by such holder,
(ii) the  redemption  price of the  Excess  Units,  (iii) the date on which such
Excess  Units  shall be  redeemed,  which date shall be no later than sixty (60)
days  following  the receipt of the  Exchange  Notice,  (iv) the place or places
where such Excess  Units are to be  surrendered  for  payment of the  Redemption
Price,  (v) that  distributions on the Excess Units will cease to accrue on such
redemption date, and (vi) that payment of the redemption price will be made upon
presentation  and surrender of such Excess Units. In the event an exchange would
result in Excess  Units,  as a condition to such  exchange,  each holder of such
units agrees to provide  representations and covenants  reasonably  requested by
the General  Partner  relating to (i) the widely held nature of the interests in
such  holder,  sufficient  to  assure  the  General  Partner  that the  holder's
ownership  of  stock  of the  General  Partner  (without  regard  to the  limits
described  above) will not cause any  individual to own in excess of 9.8% of the
stock of the General Partner, to the extent such holder can reasonably make such
representation; and (ii) to the extent such holder can so represent and covenant
without obtaining information from its owners, the holder's ownership of tenants
of the Partnership and its affiliates.

                  To the extent the General Partner would not be able to pay the
cash set  forth  above in  exchange  for the  Excess  Units,  and to the  extent
consistent  with the Charter,  the General  Partner agrees that it will grant to
the  holders  of the  Series B  Preferred  Units  exceptions  to the  Beneficial
Ownership  Limit and  Constructive  Ownership  Limit  set forth in the  Series B
Articles Supplementary sufficient to allow such holders to exchange all of their
Series B Preferred  Units for Series B Preferred  Stock,  provided  such holders
furnish to the General Partner representations acceptable to the General Partner
in its sole and absolute  discretion  which assure the General Partner that such
exceptions  will not jeopardize  the General  Partner's tax status as a REIT for
purposes of federal and applicable state law.

                  Notwithstanding   any  provision  of  this  Agreement  to  the
contrary, no Series B Limited Partner shall be entitled to effect an exchange of
Series B  Preferred  Units  for  Series B  Preferred  Stock to the  extent  that
ownership  or right to acquire  such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by the General Partner,  may cause
the Partner or any other Person,  to violate the  restrictions  on ownership and
transfer of Series B Preferred Stock set forth in the Charter. To the extent any
such  attempted  exchange for Series B Preferred  Stock would be in violation of
the  previous  sentence,  it shall be void ab initio  and such  Series B Limited
Partner  shall not  acquire  any  rights or  economic  interest  in the Series B
Preferred Stock otherwise issuable upon such exchange.

(iv) The redemption of Series B Preferred Units  described in Section  10(a)(ii)
and (iii)  shall be subject to the  provisions  of Section  7(b)(i)  and Section
7(c)(ii);  provided,  however,  that for  purposes  hereof the term  "Redemption
Price" in  Sections  7(b)(i)  and  7(c)(ii)  shall be read to mean the  original
Capital Contribution per Series B Preferred Unit being redeemed plus all accrued
and unpaid distributions to the redemption date.

(b)      Procedure for Exchange.
-------------------------------

(i) Any  exchange  shall be  exercised  pursuant  to a notice of  exchange  (the
"Exchange  Notice")  delivered  to the  General  Partner  by the  holder  who is
exercising  such exchange  right,  by (i) fax and (ii) by certified mail postage
prepaid.  Upon  request of the  General  Partner,  such  holder  delivering  the
Exchange Notice shall provide to the General Partner in writing such information
as the General Partner may reasonably  request to determine  whether any portion
of the  exchange by the  delivering  holder will result in the  violation of the
restrictions of Article 5 of the Charter,  including the Ownership Limit and the
Related Tenant Limit.  The exchange of Series B Preferred  Units, or a specified
portion  thereof,  may be effected after the fifth (5th) Business Days following
receipt  by the  General  Partner  of the  Exchange  Notice  and such  requested
information  by  delivering  certificates,  if any,  representing  such Series B
Preferred Units to be exchanged together with, if applicable,  written notice of
exchange and a proper  assignment of such Series B Preferred Units to the office
of the General Partner  maintained for such purpose.  Currently,  such office is
121 West Forsyth Street, Suite 200,  Jacksonville,  Florida 32202. Each exchange
will be deemed to have been effected  immediately prior to the close of business
on the date on which such Series B  Preferred  Units to be  exchanged  (together
with all required  documentation)  shall have been  surrendered and notice shall
have been received by the General  Partner as aforesaid  and the Exchange  Price
shall have been paid.  Any Series B  Preferred  Stock  issued  pursuant  to this
Section  10 shall be  delivered  as shares  which are duly  authorized,  validly
issued,  fully paid and  nonassessable,  free of pledge,  lien,  encumbrance  or
restriction other than those provided in the Charter,  the Bylaws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.

(ii) In the event of an  exchange  of  Series B  Preferred  Units for  shares of
Series  B  Preferred   Stock,   an  amount  equal  to  the  accrued  and  unpaid
distributions which are not paid pursuant to Section 4(a) hereof, whether or not
declared,  to the date of exchange on any Series B Preferred  Units tendered for
exchange  shall (i) accrue and be payable by the General  Partner from and after
the date of exchange  on the shares of the Series B  Preferred  Stock into which
such Series B Preferred Units are exchanged, and (ii) continue to accrue on such
Series  B  Preferred  Units,  which  shall  remain  outstanding  following  such
exchange,  with the  General  Partner as the holder of such  Series B  Preferred
Units.  Notwithstanding  anything to the contrary set forth herein,  in no event
shall a holder of a Series B  Preferred  Unit that was  validly  exchanged  into
Series B  Preferred  Stock  pursuant  to this  section  (other  than the General
Partner now holding such Series B Preferred Unit), receive a distribution out of
Available Cash or Capital  Transaction  Proceeds of the Partnership with respect
to any Series B Preferred Units so exchanged.

(iii)  Fractional  shares of Series B Preferred  Stock are not to be issued upon
exchange but, in lieu thereof,  the General  Partner will pay a cash  adjustment
based  upon the fair  market  value of the Series B  Preferred  Stock on the day
prior to the exchange date as determined in good faith by the Board of Directors
of the General Partner.

(c) Adjustment of Series B Exchange  Price. In case the General Partner shall be
a  party  to  any  transaction   (including,   without  limitation,   a  merger,
consolidation,  statutory share exchange,  tender offer for all or substantially
all of the General  Partner's  capital stock or sale of all or substantially all
of the General Partner's assets), in each case as a result of which the Series B
Preferred  Stock will be converted  into the right to receive  shares of capital
stock,  other  securities or other property  (including  cash or any combination
thereof),  each Series B Preferred Unit will thereafter be exchangeable into the
kind and amount of shares of capital  stock and other  securities  and  property
receivable  (including cash or any combination thereof) upon the consummation of
such  transaction  by a holder of that  number of  Series B  Preferred  Stock or
fraction  thereof  into  which  one  Series B  Preferred  Unit was  exchangeable
immediately  prior to such  transaction.  The  General  Partner may not become a
party to any such  transaction,  whether or not any Series B Preferred Stock are
then  outstanding:  (i) which does not  preserve  the  existence of the Series B
Preferred Stock with their current rights,  preferences and privileges,  or (ii)
if the terms thereof are inconsistent with the foregoing.  In addition,  so long
as a Preferred  Partner or any of its permitted  successors or assigns holds any
Series B  Preferred  Units as the case may be, the  General  Partner  shall not,
without the affirmative vote of the holders of at least two-thirds of the Series
B Preferred  Units  (voting  together as a class with any  outstanding  Series B
Preferred Stock)  outstanding at the time: (a) designate or create,  or increase
the authorized or issued amount of, any class or series of shares ranking senior
to the Series B Preferred Stock with respect to the payment of  distributions or
rights upon liquidation,  dissolution or winding-up or reclassify any authorized
shares of the General  Partner  into any such  shares,  or create,  authorize or
issue any obligations or securities  convertible into or evidencing the right to
purchase any such shares; (b) designate or create, or increase the authorized or
issued amount of, any Parity Preferred Stock or reclassify any authorized shares
of the General Partner into any such shares,  or create,  authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such shares,  but only to the extent that such Parity Preferred Stock are issued
to an Affiliate  of the General  Partner  other than (A)  Security  Capital U.S.
Realty,  Security  Capital  Holdings,  S.A. or their affiliates if issued on the
same terms in the transaction as to  non-affiliates,  or (B) the General Partner
to the extent the issuance of such interests was to allow the General Partner to
issue  corresponding  preferred stock in the same transaction to persons who are
not affiliates of the Partnership;  (c) amend, alter or repeal the provisions of
the Charter or bylaws of the General Partner,  whether by merger,  consolidation
or otherwise,  that would  materially and adversely  affect the powers,  special
rights, preferences,  privileges or voting power of the Series B Preferred Stock
or the holders thereof;  provided,  however,  that any increase in the amount of
authorized  Preferred  Stock or the  creation or issuance of any other series or
class of Preferred Stock, or any increase in the amount of authorized  shares of
each class or  series,  in each case  ranking  either (1) junior to the Series B
Preferred  Stock  with  respect  to  the  payment  of   distributions   and  the
distribution of assets upon liquidation,  dissolution or winding-up, or (2) on a
parity  with the  Series B  Preferred  Stock  with  respect  to the  payment  of
distributions  and the distribution of assets upon  liquidation,  dissolution or
winding-up to the extent such Preferred  Stock are not issued to an Affiliate of
the Company,  other than the General  Partner to the extent the issuance of such
interests  was to allow the  General  Partner to issue  corresponding  preferred
stock to persons who are not affiliates of the Partnership,  shall not be deemed
to  materially  and  adversely  affect such rights,  preferences,  privileges or
voting powers.

     Section  11. No  Conversion  Rights.  The holders of the Series B Preferred
Units shall not have any rights to convert such Partnership Units into any other
class of Partnership Interests or any interest in the Partnership.

     Section 12. No Sinking Fund. No sinking fund shall be  established  for the
retirement or redemption of the Series B Preferred Units.

                  Section 13.       Miscellaneous.
                                    -------------

(a) The terms "Original  Limited  Partnership  Units," "Class B Units," "Class 2
Units,"  "Class  Z Branch  Partners,"  "Class Z  Midland  Partners"  "Additional
Units,"  "Additional  Limited  Partners,"  "Common  Units" and "General  Partner
Units" and  "Percentage  Interest"  in the  Partnership  Agreement  shall not be
deemed to include the Series B Preferred Units.  The terms "Limited  Partnership
Interest"  and  "Partnership  Interest"  shall be deemed to include the Series B
Preferred Units.

(b)  Exhibit A to the  Partnership  Agreement  is hereby  amended to include the
Series B Preferred Units as Limited Partnership Interests.

     (c)  Section  7.1(h) of the  Partnership  Agreement  is hereby  amended  to
include the Series B Priority Return Amount.

(d) Nothing contained in Section 8.4 or the last sentence of Section 13.6 of the
Partnership  Agreement  shall be deemed to limit the issuance of, and provisions
applicable to, the Series B Preferred Units.

(e)  Notwithstanding  anything to the  contrary  contained in Section 8.6 of the
Partnership Agreement, in no event shall the rights of the holders of the Series
B Preferred  Units set forth in Section 10 of this  Agreement be  subordinate to
the Redemption Rights set forth in Section 8.6 of the Partnership Agreement.

(f) Notwithstanding any other provisions of this Amendment, this Amendment shall
not be amended,  and no action may be taken by the General Partner,  without the
Consent of each  Partner  adversely  affected if such  amendment or action would
alter the  redemption  or  exchange  rights as set  forth in  Sections  7 and 10
hereof, respectively or amend this Section 14(f).

(g) Upon  effectiveness  of the Fourth  Amended  Agreement,  the Fourth  Amended
Agreement  shall be  amended,  to the extent  applicable,  to  incorporate  this
Amendment and be consistent herewith.

(h) At such time,  and in the event  that,  the  Company  authorizes  sufficient
additional  shares of preferred  stock, the holders of a majority in interest of
the Series B Preferred  Units and Series B Preferred  Stock in the aggregate may
request in writing to the Company that the stated value of the Series B Priority
Return may be reduced to $25, with all reference  herein to "$100" to thereafter
be deemed references to "$25," and with appropriate proportionate adjustments to
be made herein,  mutatis mutandis,  in distributions,  liquidation  preferences,
shares  issuable upon  exchange,  and otherwise as necessary and  appropriate to
preserve  the  economic  value of  Series B  Preferred  Units  and the  Series B
Preferred  Stock,  and the Company shall take all reasonable steps necessary and
appropriate to give effect to such request.



<PAGE>


004.197245.1


Series B Amendment to Partnership Agreement

004.197245.1


Series B Amendment to Partnership Agreement

                                                     GENERAL PARTNER

            Regency Realty Corporation


      By:___________________________
                 Bruce M. Johnson
  Its  Managing Director and Executive
                  Vice President

         CONTRIBUTOR
            TIMES MIRROR COMPANY


            By:___________________________
                     Name:
                     Title:

            SECURITY CAPITAL U.S. REALTY


            By:_________________________________
            Name:______________________________
            Title:_______________________________


            SECURITY CAPITAL HOLDINGS S.A.


            By:_________________________________
            Name:______________________________
            Title:_______________________________



            ARDEN SQUARE HOLDINGS SARL


            By:_________________________________
            Name:______________________________
            Title:_______________________________




<PAGE>


                      BLOSSOM VALLEY HOLDINGS SARL


                      By:_________________________________
                      Name:______________________________
                      Title:_______________________________


                      COOPER STREET PLAZA HOLDINGS SARL


                      By:_________________________________
                      Name:______________________________
                      Title:_______________________________


                      DALLAS HOLDINGS SARL


                      By:_________________________________
                      Name:______________________________
                      Title:_______________________________

                      EL CAMINO HOLDINGS SARL


                      By:_________________________________
                      Name:______________________________
                      Title:_______________________________


                      FRIARS MISSION HOLDINGS SARL


                      By:_________________________________
                      Name:______________________________
                      Title:_______________________________





<PAGE>


Series C Amendment to Partnership Agreement              18

004.197245.1


004.197245.1


Series C Amendment to Partnership Agreement

                      Regency Centers, L.P.
           Amendment No. 2 to Third Amended and Restated Agreement of
                Limited Partnership (the "Partnership Agreement")
           Relating to 9.0% Series C Cumulative Redeemable Preferred Units

                  Section  1.  Definitions.   Capitalized  terms  used  and  not
otherwise  defined  herein  shall  have  the  meaning  assigned  thereto  in the
Partnership Agreement. For purposes of this Amendment the term "Series C Limited
Partner" shall mean a Limited Partner holding Series C Preferred Units. The term
"Parity  Preferred  Units"  shall be used to refer to Series A Preferred  Units,
Series B Preferred  Units,  Series C Preferred Units (as hereafter  defined) and
any class or series of Partnership Interests of the Partnership now or hereafter
authorized,  issued or outstanding  expressly  designated by the  Partnership to
rank on a parity with Series A Preferred  Units or Series B Preferred Units with
respect to  distributions  or rights upon voluntary or involuntary  liquidation,
winding-up  or  dissolution  of the  Partnership,  or both,  as the  context may
require, whether or not the dividend rates, dividend payment dates or redemption
or liquidation  prices per unit or conversion rights or exchange rights shall be
different  from  those of the  Series A  Preferred  Units.  The term  "Series  C
Priority  Return" shall mean,  an amount equal to 9.0% per annum,  determined on
the basis of a 360 day year of  twelve 30 day  months  (or  actual  days for any
month which is shorter than a full monthly period), cumulative to the extent not
distributed for any given  distribution  period,  of the stated value of $100.00
per Series C Preferred Unit, commencing on the date of issuance of such Series C
Preferred  Unit.  The  Partnership  Agreement  shall  be  amended  to  add  such
definitions,  and shall be  further  amended  to add the  following  definition:
"Priority  Returns"  means the Series A Priority  Return,  the Series B Priority
Return and the Series C Priority  Return or similar  amount payable with respect
to any other Parity  Preferred Units. The term "Junior Stock" means any class or
series of capital stock of the General  Partner ranking junior as to the payment
of distributions or rights upon voluntary or involuntary liquidation, winding up
or dissolution of the General  Partner to the Series C Preferred  Stock or other
Parity  Preferred  Shares.   The  term  "PTP"  shall  mean  a  "publicly  traded
partnership"  within  the  meaning  of  Section  7704 of the Code (as  hereafter
defined).  The final  Paragraph in the definition of "Net Income" and "Net Loss"
in the  Partnership  Agreement shall be restated in its entirety as follows (new
language is underscored):

                  "Solely for purposes of  allocating  Net Income or Net Loss in
                  any Fiscal Year to the holders of the Parity  Preferred Units,
                  items of Net  Income and Net Loss,  as the case may be,  shall
                  not  include  Depreciation  with  respect  to  properties  (or
                  groupings of properties  selected by the General Partner using
                  any  method  determined  by  it  to be  reasonable)  that  are
                  "ceiling  limited"  in  respect  of the  holders of the Parity
                  Preferred  Units.  For  purposes  of the  preceding  sentence,
                  Partnership  property shall be considered  ceiling  limited in
                  respect of a holder of Parity  Preferred Units if Depreciation
                  attributable   to  such   Partnership   property  which  would
                  otherwise be allocable to such Partner, without regard to this
                  paragraph, exceeded depreciation determined for federal income
                  tax purposes  attributable to such Partnership  property which
                  would otherwise be allocated to such Partner by more than 5%."

                  Section 2.  Designation  and Number.  A series of  Partnership
Units in the Partnership  designated as the "9.0% Series C Cumulative Redeemable
Preferred  Units" (the "Series C Preferred  Units") is hereby  established.  The
number of Series C Preferred Units shall be 750,000.

                  Section 3.        Rank.
                                    ----

(a) The Series C Preferred Units will, with respect to  distributions  or rights
upon  voluntary or  involuntary  liquidation,  winding-up or  dissolution of the
Partnership,  or both,  rank  senior to all  classes  or  series of  Partnership
Interests  now or hereafter  authorized,  issued or  outstanding  other than any
class or  series  of  equity  securities  of the  Partnership  issued  after the
issuance of the Series C Preferred Units and expressly  designated in accordance
with  the  Partnership  Agreement  as  ranking  on a parity  with  the  Series C
Preferred  Units as to  distributions  or rights upon  voluntary or  involuntary
liquidation, winding-up or dissolution of the Partnership, or both. The Series C
Preferred Units are expressly  designated as ranking on a parity with the Series
A Preferred Units and the Series B Preferred Units.

(b) The last sentence of Section 4.1(a) of the  Partnership  Agreement  shall be
amended to read in full as follows (new language is underscored):

                  Any  Partnership  Interests held by the General Partner or any
                  Affiliate   other   than  a  Property   Affiliate   (including
                  Partnership  Interests  acquired  under  Sections 4.2, 8.6 and
                  8.7)  shall be  Class B Units,  other  than  Parity  Preferred
                  Units,  the issuance of which has been approved by the Limited
                  Partners  pursuant to Section  4.2,  and any  Preferred  Units
                  issued pursuant to Section 4.2(b)(i).

                  Section 4.        Distributions.
                                    -------------

(a)  Payment  of  Distributions.  Subject  to the  rights of  holders  of Parity
Preferred  Units,  holders of Series C  Preferred  Units  shall be  entitled  to
receive,  out of Available  Cash and Capital  Transaction  Proceeds,  cumulative
preferential  cash  distributions  at the rate per annum of 9.0% of the original
Capital  Contribution per Series C Preferred Unit. Such  distributions  shall be
cumulative,  shall accrue from the original date of issuance and will be payable
in cash when, as and if declared by the  Partnership  acting through the General
Partner,  (A) quarterly in arrears, on or before March 31, June 30, September 30
and December 31 of each year  commencing  on  September  30, 1999 and (B) in the
event of (i) an  exchange  of Series C  Preferred  Units into Series C Preferred
Stock, or (ii) a redemption of Series C Preferred Units, on the exchange date or
redemption  date, as applicable  (each a "Series C Preferred  Unit  Distribution
Payment Date").  The amount of the  distribution  payable for any period will be
computed  on the basis of a 360-day  year of twelve  30-day  months  and for any
period  shorter  than  a full  quarterly  period  for  which  distributions  are
computed,  the amounts of the distribution payable will be computed based on the
ratio of the actual  number of days  elapsed in the  quarterly  period to ninety
(90)  days.  If any date on which  distributions  are to be made on the Series C
Preferred Units is not a Business Day (as defined  herein),  then payment of the
distribution  to be made on such  date will be made on the next  succeeding  day
that is a Business Day (and without any interest or other  payment in respect of
any such delay)  except that,  if such  Business  Day is in the next  succeeding
calendar year, such payment shall be made on the immediately  preceding Business
Day,  in each case  with the same  force  and  effect  as if made on such  date.
Distributions  on the Series C  Preferred  Units will be made to the  holders of
record of the Series C Preferred  Units on the relevant record dates to be fixed
by the Partnership acting through the General Partner,  which record dates shall
be not less than ten (10) days and not more than thirty (30) Business Days prior
to the  relevant  Preferred  Unit  Distribution  Payment  Date  (the  "Series  C
Preferred Unit Partnership Record Date").

                  The term  "Business  Day"  shall  mean each day,  other than a
Saturday or a Sunday,  which is not a day on which banking  institutions  in New
York, New York are authorized or required by law,  regulation or executive order
to close.

(b) Distributions Cumulative. Distributions on the Series C Preferred Units will
accrue  whether  or  not  the  terms  and  provisions  of any  agreement  of the
Partnership,  including any agreement  relating to its  indebtedness at any time
prohibit the current  payment of  distributions,  whether or not the Partnership
has earnings,  whether or not there are funds legally  available for the payment
of such  distributions  and whether or not such  distributions are authorized or
declared.  Accrued but unpaid distributions on the Series C Preferred Units will
accumulate as of the Series C Preferred Unit Distribution  Payment Date on which
they first  become  payable.  Distributions  on account of arrears  for any past
distribution  periods may be declared and paid at any time, without reference to
a regular Series C Preferred Unit Distribution Payment Date to holders of record
of the  Series C  Preferred  Units on the record  date fixed by the  Partnership
acting  through the General  Partner  which date shall be not less than ten (10)
days and not more than thirty  (30)  Business  Days prior to the  payment  date.
Accumulated and unpaid distributions will not bear interest.

(c)      Priority as to Distributions.
-------------------------------------

(i) So long as any Series C Preferred Units are outstanding,  no distribution of
cash or other  property  shall be  authorized,  declared,  paid or set apart for
payment on or with  respect to any class or series of  Partnership  Interests of
the  Partnership  ranking  junior as to the payment of  distributions  to Parity
Preferred  Units  (collectively,  "Junior  Units"),  nor shall any cash or other
property  be set aside  for or  applied  to the  purchase,  redemption  or other
acquisition  for  consideration  of any  Series C  Preferred  Units,  any Parity
Preferred Units with respect to  distributions or any Junior Units,  unless,  in
each case, all distributions accumulated on all Series C Preferred Units and all
classes  and  series of  outstanding  Parity  Preferred  Units as to  payment of
distributions  have been paid in full. The foregoing  sentence will not prohibit
(a)  distributions  payable solely in Junior Units, (b) the conversion of Junior
Units or Parity  Preferred Units into  Partnership  Interests of the Partnership
ranking junior to the Series C Preferred Units as to  distributions,  or (c) the
redemption  of  Partnership  Interests  corresponding  to any Series C Preferred
Stock,  Parity  Preferred Stock with respect to distributions or Junior Stock to
be  purchased  by the General  Partner  pursuant to Article 5 of the Articles of
Incorporation  of the General  Partner (the  "Charter")  to preserve the General
Partner's  status  as  a  real  estate  investment  trust,  provided  that  such
redemption shall be upon the same terms as the  corresponding  purchase pursuant
to Article 5 of the Charter.

(ii) So long as  distributions  have not been paid in full (or a sum  sufficient
for such full payment is not  irrevocably  deposited in trust for payment)  upon
the Series C Preferred Units, all  distributions  authorized and declared on the
Series C  Preferred  Units  and all  classes  or series  of  outstanding  Parity
Preferred Units with respect to  distributions  shall be authorized and declared
so that the  amount  of  distributions  authorized  and  declared  per  Series C
Preferred Unit and such other classes or series of Parity  Preferred Units shall
in all cases bear to each other the same ratio that  accrued  distributions  per
Series C  Preferred  Unit and such other  classes or series of Parity  Preferred
Units  (which  shall  not  include  any   accumulation   in  respect  of  unpaid
distributions for prior distribution periods if such classes or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.

     (d) No Further  Rights.  Holders of Series C  Preferred  Units shall not be
entitled  to any  distributions,  whether  payable in cash,  other  property  or
otherwise, in excess of the full cumulative distributions described herein.

     (e) Section 5.1(c) of the Partnership Agreement shall be amended to read in
full as follows (new language is underscored):

                  "Anything herein to the contrary  notwithstanding,  subject to
                  Section  4(d)(i)  of  Amendment  No. 2 to this  Agreement,  no
                  Available  Cash  or  Capital  Transaction  Proceeds  shall  be
                  distributed pursuant to Section 5.1(a),  Section 5.1(b) or any
                  other  provisions  of this Article 5 unless all  distributions
                  accumulated  on all  Series  A  Preferred  Units  pursuant  to
                  Section   4.5  have   been  paid  in  full  and   unless   all
                  distributions  accumulated on any other outstanding  Preferred
                  Units have been paid in full."

                  Section 2.        Allocations.
                                    -----------

(a)  Section  6.1(a) and 6.1(b) of the  Agreement  are  hereby  deleted  and the
following  inserted  as new  Sections  6.1(a)  and 6.1(b) in lieu  thereof  (new
language is underscored):

                           Section 6.1  Allocations  of Net Income and Net Loss.
         For purposes of maintaining the Capital Accounts and in determining the
         rights of the Partners among  themselves,  the Partnership's Net Income
         and Net Loss shall be  allocated  among the  Partners  for each taxable
         year (or portion thereof) as provided herein below.

                           (a) Net Income.  After  giving  effect to the special
                  allocations  set forth in Section 6.2 below,  Net Income shall
                  be allocated as follows (and for this purpose,  the holders of
                  Class A Units  shall  be  treated  as if  they  were  Original
                  Limited Partners):

                                    (i) First, one hundred percent (100%) to the
                           General Partner in an amount equal to the excess,  if
                           any, of (A) the  cumulative  Net Losses  allocated to
                           the General  Partner  pursuant to Section  6.1(b)(ix)
                           and the last sentence of Section 6.1(b) for all prior
                           fiscal  years,  over (B) the  cumulative  Net  Income
                           allocated  pursuant to this Section 6.1(a)(i) for all
                           prior fiscal years;

                                    (ii) Second,  one hundred  percent (100%) to
                           the  holders of Parity  Preferred  Units in an amount
                           equal to the excess,  if any,  of (A) the  cumulative
                           Net  Losses   allocated  to  the  holders  of  Parity
                           Preferred Units pursuant to Section  6.1(b)(viii) for
                           all prior fiscal years,  over (B) the  cumulative Net
                           Income allocated pursuant to this Section 6.1(a)(ii),
                           including any amounts  allocated  pursuant to Section
                           6.2(g)  which  were   attributable  to  this  Section
                           6.1(a)(ii), for all prior fiscal years;

                                    (iii) Third,  one hundred  percent (100%) to
                           the Original  Limited  Partners in an amount equal to
                           the excess,  if any, of (A) the cumulative Net Losses
                           allocated  to  such  Partners   pursuant  to  Section
                           6.1(b)(iv)  for all prior fiscal years,  over (B) the
                           cumulative  Net  Income  allocated  pursuant  to this
                           Section 6.1(a)(iii) for all prior fiscal years, which
                           amount shall be allocated  among such Partners in the
                           same  proportions and in the reverse order as the Net
                           Losses were allocated pursuant to Section 6.1(b)(iv);

                                    (iv) Fourth,  one hundred  percent (100%) to
                           the Original  Limited  Partners in an amount equal to
                           the excess,  if any, of (A) the cumulative Net Losses
                           allocated  to  such  Partners   pursuant  to  Section
                           6.1(b)(iii) for all prior fiscal years,  over (B) the
                           cumulative  Net  Income  allocated  pursuant  to this
                           Section  6.1(a)(iv) for all prior fiscal years, which
                           amount shall be allocated  among such Partners in the
                           same  proportions and in the reverse order as the Net
                           Losses   were    allocated    pursuant   to   Section
                           6.1(b)(iii);

                                    (v) Fifth, one hundred percent (100%) to the
                           holders of Parity  Preferred  Units until the holders
                           of Parity  Preferred  Units  have been  allocated  an
                           amount  equal  to  the  excess  of  their  respective
                           cumulative  Priority  Returns through the last day of
                           the current fiscal year (determined without reduction
                           for  distributions   made  to  date  in  satisfaction
                           thereof) over the cumulative Net Income  allocated to
                           the  holders of Parity  Preferred  Units  pursuant to
                           this  Section   6.1(a)(v),   including   any  amounts
                           allocated  pursuant  to  Section  6.2(g)  which  were
                           attributable to this Section 6.1(a)(v), for all prior
                           periods;

                                    (vi) Sixth,  one hundred  percent  (100%) to
                           the Original  Limited  Partners  until the cumulative
                           allocations  of Net Income to each  Original  Limited
                           Partner under this Section 6.1(a)(vi) for the current
                           and all  prior  fiscal  years  equal  the  cumulative
                           distributions  paid to the Original  Limited  Partner
                           pursuant to Section 5.1(a)(i) and Section 13.2(a)(iv)
                           , provided,  however, in the case of Original Limited
                           Partners  other  than  Class Z  Branch  Partners,  no
                           allocations  of Net  Income  shall be made under this
                           Section  6.1(a)(vi)  to such  Limited  Partners  with
                           respect to distributions made under Section 5.1(a)(i)
                           and  Section  13.2(a)(iv)  after the Third  Amendment
                           Date;.

                                    (vii) Seventh, one hundred percent (100%) to
                           the Original  Limited  Partners  until the cumulative
                           allocations  of Net Income to each  Original  Limited
                           Partner  under  this  Section   6.1(a)(vii)  for  the
                           current and all prior  fiscal  years equal the sum of
                           the  cumulative  amounts  credited to such  Partner's
                           Cumulative Unpaid Priority  Distribution  Account and
                           Cumulative  Unpaid  Accrued  Return  Account  for the
                           current  and  all  prior  fiscal   years,   provided,
                           however,  in the case of  Original  Limited  Partners
                           other than Class Z Branch Partners, no allocations of
                           Net  Income   shall  be  made   under  this   Section
                           6.1(a)(vii)  with respect to amounts credited to such
                           Partners'  Cumulative  Unpaid  Priority  Distribution
                           Accounts  and   Cumulative   Unpaid   Accrued  Return
                           Accounts after the Third Amendment Date;

                                    (viii) Eighth, one hundred percent (100%) to
                           the Additional Limited Partners in an amount equal to
                           the excess,  if any, of (A) the cumulative Net Losses
                           allocated to the Additional Limited Partners pursuant
                           to Section  6.1(b)(vii)  for all prior fiscal  years,
                           over (B) the cumulative Net Income allocated pursuant
                           to this  Section  6.1(a)(viii)  for all prior  fiscal
                           years,  which  amount  shall be  allocated  among the
                           Additional  Limited  Partners in the same proportions
                           and in the  reverse  order  as the  Net  Losses  were
                           allocated pursuant to Section 6.1(b)(vii);

                                    (ix) Ninth,  one hundred  percent  (100%) to
                           the Additional Limited Partners in an amount equal to
                           the excess,  if any of (A) the  cumulative Net Losses
                           allocated to the Additional Limited Partners pursuant
                           to Section  6.1(b)(vi)  for all prior  fiscal  years,
                           over (B) the cumulative Net Income allocated pursuant
                           to  this  Section  6.1(a)(ix)  for all  prior  fiscal
                           years,  which amount  shall be  allocated  among such
                           Partners in the same  proportions  and in the reverse
                           order as the Net Losses  were  allocated  pursuant to
                           Section 6.1(b)(vi);

                                    (x) Tenth, one hundred percent (100%) to the
                           Additional  Limited  Partners  until  the  cumulative
                           allocations of Net Income to each Additional  Limited
                           Partner under this Section  6.1(a)(x) for the current
                           and all  prior  fiscal  years  equal  the  cumulative
                           distributions paid to the Additional Limited Partners
                           pursuant   to   Section    5.1(a)(iv)   and   Section
                           13.2(a)(v),   provided,   however,  in  the  case  of
                           Additional   Limited  Partners  other  than  Class  Z
                           Midland Partners,  no allocations of Net Income shall
                           be made under this Section  6.1(a)(x) to such Limited
                           Partners  with  respect to  distributions  made under
                           Section  5.1(a)(iv) and Section  13.2(a)(v) after the
                           Third Amendment Date;

                                    (xi) Eleventh, one hundred percent (100%) to
                           the Additional  Limited Partners until the cumulative
                           allocations of Net Income to each Additional  Limited
                           Partner under this Section 6.1(a)(xi) for the current
                           and all prior  fiscal  years equal the sum of (A) the
                           cumulative   amounts   credited  to  such   Partner's
                           Cumulative Unpaid Priority  Distribution  Account and
                           Cumulative  Unpaid  Accrued  Return  Account  for the
                           current  and  all  prior  fiscal  years  and  (B) the
                           cumulative  Net Losses  allocated  to the  Additional
                           Limited Partner pursuant to Section 6.1(b)(v) for all
                           prior fiscal years, provided, however, in the case of
                           Additional   Limited  Partners  other  than  Class  Z
                           Midland  Partners,  no allocation of Net Income shall
                           be made under this Section 6.1(a)(xi) with respect to
                           amounts credited to such Partners'  Cumulative Unpaid
                           Priority  Distribution Accounts and Cumulative Unpaid
                           Accrued  Return  Accounts  after the Third  Amendment
                           Date; and

                                    (xii)   Thereafter,   to  the  Original  and
                           Additional Limited Partners other than Class Z Branch
                           Partners or Class Z Midland Partners,  to the General
                           Partner  and to any other  holders  of Class B Units,
                           pro rata in accordance  with the relative  amounts of
                           Available  Cash  and  Capital  Transaction   Proceeds
                           distributed to each of them during the taxable year.

     (b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:

                                    (i) First, one hundred percent (100%) to the
                           Original and Additional  Limited  Partners other than
                           Class Z Branch Partners or Class Z Midland  Partners,
                           to the General  Partner and the Class B Unit  holders
                           in an amount equal to the excess,  if any, of (A) the
                           cumulative Net Income  allocated  pursuant to Section
                           6.1(a)(xii)  hereof  for all  prior  fiscal  years in
                           excess of  distributions  of  Available  Cash to such
                           Partners for which no corresponding allocation of Net
                           Income  had  been  made (or is  required  to be made)
                           under Sections  6.1(a)(i)-(xi)  hereof,  over (B) the
                           cumulative  Net  Losses  allocated  pursuant  to this
                           Section 6.1(b)(i) for all prior fiscal years;

                                    (ii)  Second,   to  the   Original   Limited
                           Partners  until  the  cumulative  allocations  of Net
                           Losses  under  this  Section   6.1(b)(ii)  equal  the
                           excess, if any, of the cumulative  allocations of Net
                           Income under Section 6.1(a)(vii) to such Partners for
                           all   prior   fiscal   years   over  the   cumulative
                           distributions   to  such   Partners   under   Section
                           5.1(a)(ii)  and (iii) and Section  5.1(b)(i) and (ii)
                           for the  current  and all prior  fiscal  years  (such
                           allocation being made in proportion to such Partners'
                           respective excess amounts);

                                    (iii)  Third,   to  the   Original   Limited
                           Partners  with  positive   Adjusted  Capital  Account
                           balances  (determined,  solely for  purposes  of this
                           Section 6.1(b)(iii), without regard to any obligation
                           of a Partner to restore a  negative  Capital  Account
                           under Section 13.4),  in proportion to such balances,
                           until such balances are reduced to zero;

                                    (iv)  Fourth,   to  the   Original   Limited
                           Partners in proportion to their  relative  Percentage
                           Interests; provided, however, that to the extent that
                           an  allocation  under this Section  6.1(b)(iv)  would
                           cause or increase an Adjusted Capital Account Deficit
                           for such Partner, such Net Loss shall be allocated to
                           those  Original  Limited  Partners (in  proportion to
                           their  relative  Percentage  Interests) for whom such
                           allocation  would not cause or  increase  an Adjusted
                           Capital Account Deficit;

                                    (v)  Fifth,   to  the   Additional   Limited
                           Partners  until  the  cumulative  allocations  of Net
                           Losses under this Section 6.1(b)(v) equal the excess,
                           if any, of the  cumulative  allocations of Net Income
                           under  Section  6.1(a)(xi)  to such  Partners for all
                           prior fiscal years over the cumulative  distributions
                           to such Partners under Section 5.1(a)(v) and (vi) and
                           Section  5.1(b)(iii) and (iv) for the current and all
                           prior  fiscal  years (such  allocation  being made in
                           proportion  to  such  Partners'   respective   excess
                           amounts);

                                    (vi)  Sixth,   to  the  Additional   Limited
                           Partners  with  positive  Adjusted  Capital  Accounts
                           balances  (determined,  solely for  purposes  of this
                           Section 6.1(b)(vi),  without regard to any obligation
                           of a Partner to restore a  negative  Capital  Account
                           under Section 13.4),  in proportion to such balances,
                           until such balances are reduced to zero;

                                    (vii)  Seventh,  to the  Additional  Limited
                           Partners in proportion to their  relative  Percentage
                           Interests; provided, however, that to the extent that
                           an allocation  under this Section  6.1(b)(vii)  would
                           cause or increase an Adjusted Capital Account Deficit
                           for such Partner, such Net Loss shall be allocated to
                           those  Additional  Limited Partners (in proportion to
                           their  relative  Percentage  Interests) for whom such
                           allocation  would not cause or  increase  an Adjusted
                           Capital Account Deficit;

                                    (viii)  Eighth,  to the  holders  of  Parity
                           Preferred  Units  until  their  respective   Adjusted
                           Capital  Account  Balance  (determined,   solely  for
                           purposes of this Section 6.1(b)(viii), without regard
                           to any  obligation of a Partner to restore a negative
                           Capital Account under Section 13.4), has been reduced
                           to zero; and

                                    (ix)  Any   remaining   Net  Loss  shall  be
                           allocated  to  the  General  Partner  and  any  other
                           holders of Class B Units.

                  Notwithstanding  the  foregoing,   Net  Losses  shall  not  be
allocated  to any Limited  Partner  pursuant to this Section  6.1(b)(ix)  to the
extent that such allocation would cause such Limited Partner to have an Adjusted
Capital  Account  Deficit  at the end of such  taxable  year  (or  increase  any
existing  Adjusted  Capital  Account  Deficit).  All Net Losses in excess of the
limitations set forth in the preceding  sentence of this Section 6.1(b) shall be
allocated to the General Partner.

     (b) Section  6.2(g) of the  Agreement is hereby  deleted and the  following
inserted as new Section 6.2(g) in lieu thereof (new language is underscored):

                           (g)  Capital  Account  Adjustments.   Notwithstanding
                  anything  herein to the contrary  other than the last sentence
                  of  Section  14.1(g),   any  gain  or  loss  arising  from  an
                  adjustment to the Gross Asset Value of any  Partnership  asset
                  pursuant to clause (b) or (c) of the definition  thereof shall
                  be allocated (i) first, to the holders of the Parity Preferred
                  Units,  but only to the  extent  that  they  would  have  been
                  allocated such gain pursuant to Section  6.1(a)(ii) or Section
                  6.1(a)(v) of this  Agreement or such loss  pursuant to Section
                  6.1(b)(viii) of this Agreement, as applicable, if such gain or
                  loss had been actually realized;  and (ii) second, and subject
                  to Section  6.2(h) hereof,  one hundred  percent (100%) of the
                  remainder of such gain or loss to the General  Partner and the
                  Additional  Limited  Partners  (other  than  holders of Parity
                  Preferred  Units)  pro rata in  accordance  with the  relative
                  number of Units held by each; provided, however, that for this
                  purpose, the General Partner shall be treated as owning all of
                  the  outstanding  Class  A Units  and  all of the  outstanding
                  Original Limited  Partnership  Units in addition to the actual
                  number of Units which the General Partner holds. An Additional
                  Limited  Partner  (except  for  holders  of  Parity  Preferred
                  Units), at the time of admission to the Partnership, may elect
                  with the consent of the General Partner to not receive special
                  allocations   of  any  gain  or  loss   resulting   from  such
                  adjustments.

                  Section 3.        Liquidation Preference.
                                    ----------------------

(a) Payment of  Liquidating  Distributions.  Subject to the rights of holders of
Parity  Preferred Units with respect to rights upon any voluntary or involuntary
liquidation,  dissolution  or  winding-up  of the  Partnership  and  subject  to
Partnership  Interests  ranking  senior to the  Series C  Preferred  Units  with
respect to rights upon any voluntary or involuntary liquidation,  dissolution or
winding up of the Partnership,  the holders of Series C Preferred Units shall be
entitled to receive out of the assets of the Partnership  legally  available for
distribution or the proceeds  thereof,  after payment or provision for debts and
other liabilities of the Partnership, but before any payment or distributions of
the  assets  shall be made to  holders  of any class or  series  of  Partnership
Interest  that ranks  junior to the Series C  Preferred  Units as to rights upon
liquidation,  dissolution or winding-up of the Partnership, an amount equal to a
liquidation  preference  equal  to  their  positive  Capital  Account  balances,
determined  after taking into account all Capital  Account  adjustments  for the
Partnership  taxable year during which the  liquidation  occurs,  including  the
allocation  of Net  Income  or Net Loss  (and  any  specially  allocated  items)
computed  after  adjusting  the Gross Asset Values of the  Partnership's  assets
immediately  prior to any such liquidation if failure to make such adjustment to
the Gross  Asset  Values  would  have an  adverse  economic  impact the Series C
Preferred  Units  (other  than  those  made  as  a  result  of  the  liquidating
distribution  set forth in this  Section  6(a)).  In the event  that,  upon such
voluntary or  involuntary  liquidation,  dissolution  or  winding-up,  there are
insufficient  assets to permit full payment of liquidating  distributions to the
holders of Series C Preferred Units and any Parity  Preferred Units as to rights
upon liquidation,  dissolution or winding-up of the Partnership, all payments of
liquidating  distributions  on the  Series C  Preferred  Units  and such  Parity
Preferred  Units  shall in all cases  bear to each other the same ratio that the
respective rights of the Series C Preferred Unit and such other Parity Preferred
Units  (which  shall  not  include  any   accumulation   in  respect  of  unpaid
distributions for prior  distribution  periods if such Parity Preferred Units do
not have  cumulative  distribution  rights)  upon  liquidation,  dissolution  or
winding-up of the Partnership bear to each other.

(b) Notice.  Written notice of any such  voluntary or  involuntary  liquidation,
dissolution or winding-up of the Partnership,  stating the payment date or dates
when,  and  the  place  or  places  where,  the  amounts  distributable  in such
circumstances  shall  be  payable,  shall  be given by (i) fax and (ii) by first
class mail,  postage pre-paid,  not less than 30 and not more than 60 days prior
to the  payment  date  stated  therein,  to each  record  holder of the Series C
Preferred  Units at the  respective  addresses of such holders as the same shall
appear on the transfer records of the Partnership.

     (c) No Further Rights.  After payment of the full amount of the liquidating
distributions  to which they are  entitled,  the  holders of Series C  Preferred
Units  will  have no  right  or  claim  to any of the  remaining  assets  of the
Partnership.

(d)  Consolidation,  Merger or Certain Other  Transactions.  The voluntary sale,
conveyance,  lease, exchange or transfer (for cash, shares of stock,  securities
or other consideration) of all or substantially all of the property or assets of
the  General  Partner  to, or the  consolidation  or  merger  or other  business
combination of the  Partnership  with or into, any  corporation,  trust or other
entity  (or of  any  corporation,  trust  or  other  entity  with  or  into  the
Partnership)  shall not be deemed to constitute a  liquidation,  dissolution  or
winding-up of the Partnership.

                  Section 4.        Optional Redemption.
                                    -------------------

(a)  Right of  Optional  Redemption.  The  Series C  Preferred  Units may not be
redeemed  prior to the fifth  anniversary of the issuance date. On or after such
date,  the  Partnership  shall have the right to redeem  the Series C  Preferred
Units, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days'  written  notice,  at a redemption  price,  payable in
cash,  equal to the Capital  Account balance of the holder of Series C Preferred
Units (the "Redemption Price");  provided,  however, that no redemption pursuant
to this Section 7 will be permitted if such  Redemption  Price does not equal or
exceed the  original  Capital  Contribution  of such holder plus the  cumulative
Series C Priority Return, whether or not declared, to the redemption date to the
extent not previously distributed or distributed on the redemption date pursuant
to Section 4(a). If fewer than all of the  outstanding  Series C Preferred Units
are to be  redeemed,  the  Series  C  Preferred  Units to be  redeemed  shall be
selected pro rata (as nearly as practicable without creating fractional units).

(b)      Limitation on Redemption.
---------------------------------

(i) The Redemption Price of the Series C Preferred Units (other than the portion
thereof  consisting of  accumulated  but unpaid  distributions)  will be payable
solely out of the sale proceeds of capital stock of the General  Partner,  which
will be contributed by the General  Partner to the  Partnership as an additional
capital  contribution,  or out of the sale of limited  partner  interests in the
Partnership  and from no other source.  For purposes of the preceding  sentence,
"capital  stock"  means  any  equity  securities  (including  Common  Stock  and
Preferred   Stock  (as  such  terms  are  defined  in  the  Charter)),   shares,
participation or other ownership  interests (however  designated) and any rights
(other  than  debt  securities  convertible  into  or  exchangeable  for  equity
securities) or options to purchase any of the foregoing.

(ii) The Partnership  may not redeem fewer than all of the outstanding  Series C
Preferred Units unless all accumulated and unpaid  distributions  have been paid
on  all  Series  C  Preferred  Units  for  all  quarterly  distribution  periods
terminating on or prior to the date of redemption.

(c)      Procedures for Redemption.
----------------------------------

(i) Notice of redemption will be (i) faxed,  and (ii) mailed by the Partnership,
by certified mail, postage prepaid, not less than 30 nor more than 60 days prior
to the redemption  date,  addressed to the  respective  holders of record of the
Series C Preferred  Units at their  respective  addresses  as they appear on the
records of the  Partnership.  No failure to give or defect in such notice  shall
affect  the  validity  of the  proceedings  for the  redemption  of any Series C
Preferred Units except as to the holder to whom such notice was defective or not
given.  In addition to any  information  required by law, each such notice shall
state: (i) the redemption date, (ii) the Redemption  Price,  (iii) the aggregate
number of Series C Preferred  Units to be redeemed  and if fewer than all of the
outstanding Series C Preferred Units are to be redeemed,  the number of Series C
Preferred  Units to be redeemed  held by such  holder,  which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding  Series C  Preferred  Units the total  number of Series C  Preferred
Units  held by such  holder  represents)  of the  aggregate  number  of Series C
Preferred  Units to be  redeemed,  (iv) the place or places  where such Series C
Preferred Units are to be surrendered for payment of the Redemption  Price,  (v)
that  distributions on the Series C Preferred Units to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the Redemption Price
will be made upon presentation and surrender of such Series C Preferred Units.

(ii) If the  Partnership  gives a notice of  redemption  in  respect of Series C
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Partnership  will deposit  irrevocably in
trust for the  benefit of the Series C  Preferred  Units  being  redeemed  funds
sufficient  to pay the  applicable  Redemption  Price and will give  irrevocable
instructions  and authority to pay such  Redemption  Price to the holders of the
Series C Preferred  Units upon surrender of the Series C Preferred Units by such
holders at the place  designated  in the notice of  redemption.  If the Series C
Preferred  Units are evidenced by a  certificate  and if fewer than all Series C
Preferred  Units  evidenced  by  any  certificate  are  being  redeemed,  a  new
certificate  shall be issued upon  surrender of the  certificate  evidencing all
Series C Preferred  Units,  evidencing the unredeemed  Series C Preferred  Units
without  cost to the  holder  thereof.  On and  after  the  date of  redemption,
distributions  will  cease to  accumulate  on the  Series C  Preferred  Units or
portions thereof called for redemption,  unless the Partnership  defaults in the
payment thereof. If any date fixed for redemption of Series C Preferred Units is
not a Business  Day, then payment of the  Redemption  Price payable on such date
will be made on the next  succeeding day that is a Business Day (and without any
interest or other  payment in respect of any such delay)  except  that,  if such
Business Day falls in the next calendar  year,  such payment will be made on the
immediately  preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series C Preferred  Units will continue to accumulate  from the original
redemption  date to the date of payment,  in which case the actual  payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.

                  Section 5.        Voting Rights.
                                    -------------

(a)  General.  Holders of the Series C Preferred  Units will not have any voting
rights or right to consent to any matter  requiring  the  consent or approval of
the Limited Partners, except as otherwise expressly set forth in the Partnership
Agreement and except as set forth below.

(b)  Certain  Voting  Rights.  So long as any Series C  Preferred  Units  remain
outstanding,  the Partnership  shall not,  without the  affirmative  vote of the
holders of at least  two-thirds of the Series C Preferred  Units  outstanding at
the time (i)  authorize or create,  or increase the  authorized or issued amount
of, any class or series of Partnership  Interests  ranking prior to the Series C
Preferred  Units  with  respect  to  payment  of  distributions  or rights  upon
liquidation,  dissolution or winding-up or reclassify any Partnership  Interests
of the Partnership into such Partnership Interest, or create, authorize or issue
any obligations or security convertible into or evidencing the right to purchase
any such  Partnership  Interest,  (ii)  authorize  or create,  or  increase  the
authorized or issued  amount of any Parity  Preferred  Units or  reclassify  any
Partnership  Interest of the Partnership into any such  Partnership  Interest or
create,  authorize  or issue any  obligations  or security  convertible  into or
evidencing the right to purchase any such Partnership  Interests but only to the
extent  such  Parity   Preferred  Units  are  issued  to  an  affiliate  of  the
Partnership,  other than (A) Security  Capital  U.S.  Realty,  Security  Capital
Holdings,  S.A. or their affiliates or (B) the General Partner to the extent the
issuance  of  such  interests  was  to  allow  the  General   Partner  to  issue
corresponding  preferred  stock  to  persons  who  are  not  affiliates  of  the
Partnership  or (iii)  either (A)  consolidate,  merge into or with,  or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend,  alter or repeal the  provisions  of the  Partnership
Agreement  (including  without  limitation this Amendment No. 2 to Third Amended
and Restated Agreement of Limited Partnership), whether by merger, consolidation
or  otherwise,  in each case in a manner  that would  materially  and  adversely
affect the powers,  special rights,  preferences,  privileges or voting power of
the Series C Preferred Units or the holders  thereof;  provided,  however,  that
with respect to the occurrence of a merger  consolidation  or a sale or lease of
all of the Partnership's  assets as an entirety,  so long as (a) the Partnership
is the surviving entity and the Series C Preferred Units remain outstanding with
the terms  thereof  unchanged,  or (b) the  resulting,  surviving or  transferee
entity is a partnership,  limited liability company or other pass-through entity
organized  under the laws of any state and  substitutes  the Series C  Preferred
Units for other interests in such entity having substantially the same terms and
rights as the Series C Preferred Units, including with respect to distributions,
redemptions,  transfers, voting rights and rights upon liquidation,  dissolution
or  winding-up,  then the  occurrence  of any such event  shall not be deemed to
materially and adversely affect such rights,  privileges or voting powers of the
holders of the Series C  Preferred  Units and no vote of the Series C  Preferred
Units shall be required in such case; and provided  further than any increase in
the amount of  Partnership  Interests  or the  creation or issuance of any other
class or series of Partnership Interests, in each case ranking (a) junior to the
Series C  Preferred  Units with  respect to  payment  of  distributions  and the
distribution of assets upon liquidation,  dissolution or winding-up, or (b) on a
parity to the Series C Preferred Units with respect to payment of  distributions
and the  distribution of assets upon  liquidation,  dissolution or winding-up to
the extent such  Partnership  Interests  are not issued to an  affiliate  of the
Partnership,  other than (A) Security  Capital  U.S.  Realty,  Security  Capital
Holdings,  S.A. or their affiliates or (B) the General Partner to the extent the
issuance  of  such  interests  was  to  allow  the  General   Partner  to  issue
corresponding  preferred  stock  to  persons  who  are  not  affiliates  of  the
Partnership, shall not be deemed to materially and adversely affect such rights,
preferences,  privileges  or voting powers and no vote of the Series C Preferred
Units shall be required in such case.

                  Section 6.        Transfer Restrictions.
                                    ---------------------

     (a) The Series C  Preferred  Units  shall be subject to the  provisions  of
Article 11 of the Partnership Agreement.

(b) No transfer of the Series C Preferred  Units may be made without the consent
of the General  Partner,  which consent may be given or withheld in its sole and
absolute  discretion,  if such transfer  would result in more than four partners
holding all outstanding  Series C Preferred Units within the meaning of Treasury
Regulation  Section  1.7704-1(h)(1)(ii)  (without regard to Treasury  Regulation
Section  1.7704-1(h)(3)(ii));  provided,  however,  that the  General  Partner's
consent may not be  unreasonably  withheld if (a) such transfer would not result
in more than four (4) partners holding all outstanding  Series C Preferred Units
within the  meaning of such  Treasury  Regulation  Sections  or (b) the  General
Partner  is relying  on a  provision  other  than  Treasury  Regulation  Section
1.7704-1(h)  to avoid  classification  of  Operating  Partnership  as a PTP.  In
addition, no transfer may be made to any person if such transfer would cause the
exchange  of the Series C  Preferred  Units for Series C  Preferred  Shares,  as
provided  herein,  to be required to be registered  under the Securities Act, or
any state securities laws.

                  Section 7.        Exchange Rights.
                                    ---------------

(a)      Right to Exchange.
--------------------------

(i) Series C Preferred Units will be exchangeable in whole or in part at anytime
on or after the tenth anniversary of the date of issuance,  at the option of the
holders thereof,  for authorized but previously unissued shares of 9.0% Series C
Cumulative  Redeemable  Preferred  Stock of the General  Partner  (the "Series C
Preferred  Stock") at an exchange rate of one share of Series C Preferred  Stock
for one Series C Preferred  Unit,  subject to adjustment as described below (the
"Exchange  Price"),  provided  that the Series C  Preferred  Units  will  become
exchangeable  at any time,  in whole or in part, at the option of the holders of
Series C Preferred  Units for Series C  Preferred  Stock if (y) at any time full
distributions  shall not have been timely  made on any Series C  Preferred  Unit
with respect to six (6) prior  quarterly  distribution  periods,  whether or not
consecutive,  provided,  however,  that a  distribution  in  respect of Series C
Preferred Units shall be considered  timely made if made within two (2) Business
Days after the  applicable  Preferred Unit  Distribution  Payment Date if at the
time of such late payment  there shall not be any prior  quarterly  distribution
periods in respect of which full  distributions were not timely made or (z) upon
receipt by a holder or holders of Series C  Preferred  Units of (A) notice  from
the General  Partner  that the General  Partner or a  subsidiary  of the General
Partner has become aware of facts that will or likely will cause the Partnership
to become a PTP and (B) an opinion rendered by an outside nationally  recognized
independent  counsel familiar with such matters addressed to a holder or holders
of Series C Preferred  Units,  that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition,  the Series C Preferred  Units may be exchanged for Series C
Preferred  Stock,  in whole or in part, at the option of any holder prior to the
tenth anniversary of the issuance date and after the third  anniversary  thereof
if such  holder of a Series C  Preferred  Units  shall  deliver  to the  General
Partner either (i) a private ruling letter  addressed to such holder of Series C
Preferred Units or (ii) an opinion of independent counsel reasonably  acceptable
to the General  Partner  based on the  enactment of temporary or final  Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series C Preferred  Units at such earlier time would not
cause the Series C  Preferred  Units to be  considered  "stock  and  securities"
within the meaning of Section  351(e) of the Internal  Revenue Code of 1986,  as
amended  (the  "Code") for  purposes of  determining  whether the holder of such
Series C Preferred Units is an "investment  company" under Section 721(b) of the
Code if an exchange is permitted at such earlier date. Furthermore, the Series C
Preferred  Units may be  exchanged  in whole or in part for  Series C  Preferred
Shares  at any time  after  the date  hereof,  if both  (1) the  holder  thereof
concludes  based on  results or  projected  results  that  there  exists (in the
reasonable judgment of the holder) a material risk that the holder's interest in
the  Partnership  does or will represent more than 19.5% of the total profits or
capital  interests in the  Partnership  (determined in accordance  with Treasury
Regulations  Section  1.731-2(e)(4))  for a  taxable  year,  and (2) the  holder
delivers to the General Partner an opinion of nationally recognized  independent
counsel to the effect that there is a material  risk that the holder's  interest
in the  Partnership  does or will represent more than 19.5% of the total profits
or capital interests in the Partnership  (determined in accordance with Treasury
Regulations  Section  1.731(e)(4))  for a taxable  year.  In addition,  Series C
Preferred Units, if the holder thereof so determines,  may be exchanged in whole
or in part for Series C Preferred  Stock at any time after the date  hereof,  if
(1) the holder  concludes (in the  reasonable  judgment of the holder) that less
than 90% of the gross  income of the  Partnership  for any taxable  year will or
likely will constitute "qualifying income" within the meaning of Section 7704(d)
of the Code and (2) the holder  delivers  to the  General  Partner an opinion of
nationally  recognized  independent  counsel to the effect that less than 90% of
the gross  income of the  Partnership  for a  taxable  year will or likely  will
constitute  "qualifying  income"  within the  meaning of Section  7704(d) of the
Code.

(ii) Notwithstanding  anything to the contrary set forth in Section 10(a)(i), if
an  Exchange  Notice (as  defined  herein)  has been  delivered  to the  General
Partner,  then the General Partner may, at its option,  elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series C Preferred
Units for cash in an  amount  equal to the  holder's  positive  Capital  Account
balance as apportioned  with respect to such redeemed  Units,  determined  after
adjusting  the  holder's   Capital  Account  for  its  allocable  share  of  the
Partnership's  Net Income or Net Loss (and specially  allocated items) up to the
redemption  date  computed  after  adjusting  the  Gross  Asset  Values  of  the
Partnership's  assets  immediately  prior to such  redemption if failure to make
such adjustment to Gross Asset Values would have an adverse  economic impact the
Series C Preferred  Units. The General Partner may exercise its option to redeem
the Series C Preferred  Units for cash  pursuant to this  Section  10(a)(ii)  by
giving each holder of record of Series C Preferred  Units notice of its election
to redeem for cash,  within five (5) Business Days after receipt of the Exchange
Notice,  by (i) fax, and (ii) registered  mail,  postage paid, at the address of
each holder as it may appear on the records of the  Partnership  stating (i) the
redemption  date,  which  shall be no later than sixty (60) days  following  the
receipt of the Exchange Notice,  (ii) the redemption  price,  (iii) the place or
places where the Series C Preferred  Units are to be surrendered  for payment of
the redemption  price,  (iv) that  distribution  on the Series C Preferred Units
will cease to accrue on such redemption date; (v) that payment of the redemption
price will be made upon  presentation  and  surrender  of the Series C Preferred
Units and (vi) the aggregate  number of Series C Preferred Units to be redeemed,
and if fewer  than all of the  outstanding  Series C  Preferred  Units are to be
redeemed,  the number of Series C Preferred  Units to be  redeemed  held by such
holder,  which number  shall equal such  holder's  pro-rata  share (based on the
percentage of the aggregate  number of outstanding  Series C Preferred Units the
total number of Series C Preferred Units held by such holder  represents) of the
aggregate number of Series C Preferred Units being redeemed.

(iii) Upon the occurrence of an event giving rise to exchange rights pursuant to
Section  10(a)(i),  in the event an  exchange  of all or a  portion  of Series C
Preferred  Units  pursuant  to Section  10(a)(i)  would  violate  the  ownership
limitation  provisions  of the  General  Partner  set forth in  Article 5 of the
Charter, the General Partner shall give written notice thereof to each holder of
record of Series C Preferred  Units,  within five (5)  Business  Days  following
receipt of the Exchange Notice,  by (i) fax, and (ii) registered  mail,  postage
prepaid,  at the  address of each such  holder  set forth in the  records of the
Partnership.  In such event,  each  holder of Series C Preferred  Units shall be
entitled to exchange,  pursuant to the  provisions  of Section 10(b) a number of
Series C  Preferred  Units  which would  comply  with the  ownership  limitation
provisions of the General Partner set forth in such Article 5 of the Charter and
any Series C Preferred  Units not so  exchanged  (the "Excess  Units")  shall be
redeemed by the Partnership for cash in an amount equal to the original  Capital
Contribution per Excess Unit, plus any accrued and unpaid distributions thereon,
whether or not declared,  to the date of  redemption.  The written notice of the
General  Partner shall state (i) the number of Excess Units held by such holder,
(ii) the  redemption  price of the  Excess  Units,  (iii) the date on which such
Excess  Units  shall be  redeemed,  which date shall be no later than sixty (60)
days  following  the receipt of the  Exchange  Notice,  (iv) the place or places
where such Excess  Units are to be  surrendered  for  payment of the  Redemption
Price,  (v) that  distributions on the Excess Units will cease to accrue on such
redemption date, and (vi) that payment of the redemption price will be made upon
presentation  and surrender of such Excess Units. In the event an exchange would
result in Excess  Units,  as a condition to such  exchange,  each holder of such
units agrees to provide  representations and covenants  reasonably  requested by
the General  Partner  relating to (i) the widely held nature of the interests in
such  holder,  sufficient  to  assure  the  General  Partner  that the  holder's
ownership  of  stock  of the  General  Partner  (without  regard  to the  limits
described  above) will not cause any  individual to own in excess of 9.8% of the
stock of the General Partner, to the extent such holder can reasonably make such
representation; and (ii) to the extent such holder can so represent and covenant
without obtaining information from its owners, the holder's ownership of tenants
of the Partnership and its affiliates.

                  Notwithstanding   any  provision  of  this  Agreement  to  the
contrary, no Series C Limited Partner shall be entitled to effect an exchange of
Series C  Preferred  Units  for  Series C  Preferred  Stock to the  extent  that
ownership  or right to acquire  such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by the General Partner,  may cause
the Partner or any other Person,  to violate the  restrictions  on ownership and
transfer of Series C Preferred Stock set forth in the Charter. To the extent any
such  attempted  exchange for Series C Preferred  Stock would be in violation of
the  previous  sentence,  it shall be void ab initio  and such  Series C Limited
Partner  shall not  acquire  any  rights or  economic  interest  in the Series C
Preferred Stock otherwise issuable upon such exchange.

(iv) The redemption of Series C Preferred Units  described in Section  10(a)(ii)
and (iii)  shall be subject to the  provisions  of Section  7(b)(i)  and Section
7(c)(ii);  provided,  however,  that for  purposes  hereof the term  "Redemption
Price" in  Sections  7(b)(i)  and  7(c)(ii)  shall be read to mean the  original
Capital Contribution per Series C Preferred Unit being redeemed plus all accrued
and unpaid distributions to the redemption date.

(b)      Procedure for Exchange.
-------------------------------

(i) Any  exchange  shall be  exercised  pursuant  to a notice of  exchange  (the
"Exchange  Notice")  delivered  to the  General  Partner  by the  holder  who is
exercising  such exchange  right,  by (i) fax and (ii) by certified mail postage
prepaid.  Upon  request of the  General  Partner,  such  holder  delivering  the
Exchange Notice shall provide to the General Partner in writing such information
as the General Partner may reasonably  request to determine  whether any portion
of the  exchange by the  delivering  holder will result in the  violation of the
restrictions of Article 5 of the Charter,  including the Ownership Limit and the
Related Tenant Limit.  The exchange of Series C Preferred  Units, or a specified
portion  thereof,  may be effected  after the fifth (5th) Business Day following
receipt  by the  General  Partner  of the  Exchange  Notice  and such  requested
information  by  delivering  certificates,  if any,  representing  such Series C
Preferred Units to be exchanged together with, if applicable,  written notice of
exchange and a proper  assignment of such Series C Preferred Units to the office
of the General Partner  maintained for such purpose.  Currently,  such office is
121 West Forsyth Street, Suite 200,  Jacksonville,  Florida 32202. Each exchange
will be deemed to have been effected  immediately prior to the close of business
on the date on which such Series C  Preferred  Units to be  exchanged  (together
with all required  documentation)  shall have been  surrendered and notice shall
have been received by the General  Partner as aforesaid  and the Exchange  Price
shall have been paid.  Any Series C  Preferred  Shares  issued  pursuant to this
Section  10 shall be  delivered  as shares  which are duly  authorized,  validly
issued,  fully paid and  nonassessable,  free of pledge,  lien,  encumbrance  or
restriction other than those provided in the Charter,  the Bylaws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.

(ii) In the event of an  exchange  of  Series C  Preferred  Units for  shares of
Series  C  Preferred   Stock,   an  amount  equal  to  the  accrued  and  unpaid
distributions which are not paid pursuant to Section 4(a) hereof, whether or not
declared,  to the date of exchange on any Series C Preferred  Units tendered for
exchange  shall (i) accrue and be payable by the General  Partner from and after
the date of exchange  on the shares of the Series C  Preferred  Stock into which
such Series C Preferred Units are exchanged, and (ii) continue to accrue on such
Series  C  Preferred  Units,  which  shall  remain  outstanding  following  such
exchange,  with the  General  Partner as the holder of such  Series C  Preferred
Units.  Notwithstanding  anything to the contrary set forth herein,  in no event
shall a holder of a Series C  Preferred  Unit that was  validly  exchanged  into
Series C  Preferred  Stock  pursuant  to this  section  (other  than the General
Partner now holding such Series C Preferred Unit), receive a distribution out of
Available Cash or Capital  Transaction  Proceeds of the Partnership with respect
to any Series C Preferred Units so exchanged.

(iii)  Fractional  shares of Series C Preferred  Stock are not to be issued upon
exchange but, in lieu thereof,  the General  Partner will pay a cash  adjustment
based  upon the fair  market  value of the Series C  Preferred  Stock on the day
prior to the exchange date as determined in good faith by the Board of Directors
of the General Partner.

(c) Adjustment of Series C Exchange  Price. In case the General Partner shall be
a  party  to  any  transaction   (including,   without  limitation,   a  merger,
consolidation,  statutory share exchange,  tender offer for all or substantially
all of the General  Partner's  capital stock or sale of all or substantially all
of the General Partner's assets), in each case as a result of which the Series C
Preferred  Stock will be converted  into the right to receive  shares of capital
stock,  other  securities or other property  (including  cash or any combination
thereof),  each Series C Preferred Unit will thereafter be exchangeable into the
kind and amount of shares of capital  stock and other  securities  and  property
receivable  (including cash or any combination thereof) upon the consummation of
such  transaction  by a holder of that  number of  Series C  Preferred  Stock or
fraction  thereof  into  which  one  Series C  Preferred  Unit was  exchangeable
immediately  prior to such  transaction.  The  General  Partner may not become a
party to any such  transaction  unless the terms thereof are consistent with the
foregoing.

                  Section 8. No Conversion  Rights.  The holders of the Series C
Preferred Units shall not have any rights to convert such Partnership Units into
any  other  class  of  Partnership  Interests  or  any  other  interest  in  the
Partnership.

     Section 9. No Sinking  Fund. No sinking fund shall be  established  for the
retirement or redemption of the Series C Preferred Units.

                  Section 10.       Miscellaneous.
                                    -------------

(a) The terms "Original  Limited  Partnership  Units," "Class B Units," "Class 2
Units,"  "Class Z Branch  Partners,"  "Class Z  Midland  Partners,"  "Additional
Limited  Partners,"  "Common  Units,"  "General  Partner Units" and  "Percentage
Interest" in the Partnership Agreement shall not be deemed to include the Series
C Preferred  Units.  The terms "Limited  Partnership  Interest" and "Partnership
Interest" shall be deemed to include the Series C Preferred Units.

(b)  Exhibit A to the  Partnership  Agreement  is hereby  amended to include the
Series C Preferred Units as Limited Partnership Interests.

     (c)  Section  7.1(h) of the  Partnership  Agreement  is hereby  amended  to
include the Series C Priority Return Amount.

(d) Nothing contained in Section 8.4 or the last sentence of Section 13.6 of the
Partnership  Agreement  shall be deemed to limit the issuance of, and provisions
applicable to, the Series C Preferred Units.

(e)  Notwithstanding  anything to the  contrary  contained in Section 8.6 of the
Partnership Agreement, in no event shall the rights of the holders of the Series
C Preferred  Units set forth in Section 10 of this  Agreement be  subordinate to
the Redemption Rights set forth in Section 8.6 of the Partnership Agreement.

(f) All references to Section 4.5(f) and Section  4.5(f)(ii)  shall be deemed to
include a reference to Section 8 and Section 8(b) hereof, respectively.

(g) Simultaneously with the effectiveness of the Fourth Amended Agreement,  this
Amendment No. 2 to the Partnership  Agreement shall be deemed Amendment No. 2 to
the Fourth Amended Agreement, mutatis mutandis, and the Series C Preferred Units
shall continue to be outstanding upon the terms and conditions set forth herein.

     (h) This  Amendment  may be  executed in one or more  counterparts,  all of
which shall constitute one and the same agreement.





<PAGE>




004.197245.1


Series C Amendment to Partnership Agreement

004.197245.1




Series C Amendment to Partnership Agreement

                  GENERAL PARTNER

                  Regency Realty Corporation

                  By:___________________________
                           Bruce M. Johnson
                           Its  Managing Director and Executive
                                Vice President

                  CONTRIBUTOR

                  GOLDMAN SACHS 1999 EXCHANGE PLACE FUND, L.P.

                  By: Goldman Sachs  Management  Partners,  L.P., as its general
                       partner

                  By: Goldman Sachs Management, Inc., as its general partner

                  By: ___________________________
                           Name: Elizabeth C. Groves
                           Title:   Vice President

                  SECURITY CAPITAL U.S. REALTY

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________

                  SECURITY CAPITAL HOLDINGS S.A.

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________

                  ARDEN SQUARE HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________




                  BLOSSOM VALLEY HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________


                  COOPER STREET PLAZA HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________


                  DALLAS HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________


                  EL CAMINO HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________


                  FRIARS MISSION HOLDINGS SARL

                  By:_________________________________
                  Name:______________________________
                  Title:_______________________________





<PAGE>


                                        2



004.197245.1


NYDOCS03/486233 5

004.197245.1


Series C Amendment to Partnership Agreement

                              Regency Centers, L.P.
                Amendment No. 3 to Third Amended and Restated Agreement of
                               Limited Partnership
           Relating to 9.125% Series D Cumulative Redeemable Preferred Units


                  This Amendment No. 3 (this  "Amendment")  to the Third Amended
and Restated Agreement of Limited Partnership, dated as of September 1, 1999 (as
amended  through  the date  hereof,  the  "Partnership  Agreement"),  of Regency
Centers, L.P., a Delaware limited partnership (the "Partnership"), is made as of
the 29th day of September,  1999 by Regency Realty Corporation,  Inc., a Florida
corporation,  as general  partner (the "General  Partner"),  and the undersigned
Limited Partners that are being admitted to the Partnership on the date hereof.

                                               W I T N E S S E T H:
                                               - - - - - - - - - -

                  WHEREAS,  the General Partner and the Limited  Partners desire
to amend the  Partnership  Agreement to create a class of Preferred Units and to
set forth the rights, powers, duties and preferences of such Preferred Units.

                  NOW THEREFORE,  pursuant to the authority contained in Section
4.2(b) of the  Partnership  Agreement,  the General  Partner  hereby  amends the
Partnership Agreement as follows:

     A.  Defined  Terms.  Capitalized  terms  used  in  this  Amendment  and not
otherwise  defined  herein  shall  have  the  meaning  assigned  thereto  in the
Partnership Agreement.

     B. Amendments.  Effective as of the date hereof, the Partnership  Agreement
is hereby amended as follows:

                  Section 1.        Amendments to Article 1 - Defined Terms.
                                    ---------------------------------------

                  (a)      New Definitions

     The  following  terms  are  hereby  added to  Article  1 in  their  correct
alphabetical order"

                  "Series D Excess  Units" has the  meaning set forth in Section
4.8(g)(i)(C).

                  "Series  D  Exchange  Notice"  has the  meaning  set  forth in
Section 4.8(g)(ii)(A).

                  "Series D Exchange Price" has the meaning set forth in Section
4.8(g)(i)(A).

                  "Series D Preferred  Partner"  means the Limited  Partners who
received Series D Preferred Units and also include any permitted transferee of a
Series D Preferred  Partner  pursuant to Section 11.3 and the General Partner or
any  Affiliate of Regency upon  exchange or redemption of the Series D Preferred
Units pursuant to Section 4.8.



<PAGE>


                                       21





NYDOCS03/486233 5

                  "Series  D  Preferred  Stock"  has the  meaning  set  forth in
Section 4.8(g)(i)(A).

                  "Series D Preferred  Units" means the Partnership  Interest in
the  Partnership   issued  pursuant  to  Section  4.2  and  Section  4.8  hereof
representing  9.125% Series D Cumulative  Redeemable  Preferred  Units. The term
"Series D  Preferred  Unit" does not  include or refer to any  Original  Limited
Partnership Units, Additional Units or Class B Units.

                  "Series D Preferred  Unit  Distribution  Payment Date" has the
meaning set forth in Section 4.8(c)(i).

                  "Series D  Preferred  Unit  Partnership  Record  Date" has the
meaning set forth in Section 4.8(c)(i).

                  "Series D Priority Return" means an amount equal to 9.125% per
annum,  determined  on the basis of a 360 day year of twelve 30 day  months  (or
actual  days  for any  month  which  is  shorter  than a full  monthly  period),
cumulative to the extent not distributed for any given  distribution  period, of
the stated value of $100 per Series D Preferred Unit,  commencing on the date of
issuance of such Series D Preferred Unit.

                  "Series  D  Redemption  Price"  has the  meaning  set forth in
Section 4.8(e)(i).

                  (b)      Amendment to Existing Definitions

                  (i)  All   references  in  Article  I  and  elsewhere  in  the
Partnership Agreement to: "Excess Units",  "Exchange Notice",  "Exchange Price",
"Preferred Unit Distribution  Payment Date",  "Preferred Unit Partnership Record
Date" and  "Priority  Return"  shall be deemed  references  to  "Series A Excess
Units",  "Series A  Exchange  Notice",  "Series  A  Exchange  Price",  "Series A
Preferred Unit Distribution  Payment Date", "Series A Preferred Unit Partnership
Record Date" and "Series A Priority Return" respectively.

                  (ii) The definition of "Percentage Interest" is hereby amended
by deleting the words "Adjusted  Series A Preferred  Units" each time such words
appear in said definition.

                  (iii) The definition of "Adjusted Series A Preferred Units" is
hereby deleted.

     Section  2.  Section  4.1 - Capital  Contributions  of  Series A  Preferred
Partners and Series D Preferred Partners.


     Section  4.1(d) of the  Partnership  Agreement  is hereby  deleted  and the
following inserted in lieu thereof:



<PAGE>


                  "(d) (i) The Series A Preferred Partners have contributed cash
to the  Partnership  in the  amount  of $50 per  Series A  Preferred  Unit.  The
distribution  rights for the  Series A  Preferred  Units  shall be senior to the
distribution  rights of the Original Limited  Partnership  Units, the Additional
Units,  the Common Units, the Class 2 Units and the Class B Units. The number of
Series A Preferred Units issued to the Series A Preferred  Partners is set forth
on Exhibit A. (ii) The Series D Preferred  Partners have contributed cash to the
Partnership in the amount of $100 per Series D Preferred Unit. The  distribution
rights  for the Series D  Preferred  Units  shall be senior to the  distribution
rights of the Original Limited  Partnership Units, the Additional Units,  Common
Units,  the  Class 2 Units  and the  Class B  Units . The  number  of  Series  D
Preferred  Units  issued  to the  Series D  Preferred  Partners  is set forth on
Exhibit A."

     Section 3. Section 4.2 - Issuance of Additional Partnership Interests.


                  (a) Section  4.2(a) is hereby  amended by inserting  the words
"and  Section  4.8(f)(ii)"  after the  reference to "Section 4.5 (f)(ii)" in the
third sentence thereof.

                  (b) Section 4.2(b)(i) is hereby amended by inserting the words
"and  Section  4.8(f)(ii)"  after the  reference to "Section 4.5 (f)(ii)" in the
first line thereof.

                  Section 4.        Section 4.5

                  (a) Section  4.5(c)(i) is hereby  amended by (i) inserting the
parenthetical "(such quarterly periods to be the quarterly periods ending on the
dates specified in this  sentence)"  after the first reference to "quarterly" in
clause (A) in the second sentence thereof; and (ii) deleting the words "computed
on the basis of the actual number of days elapsed in such a 30-day month" in the
third sentence thereof and inserting  "computed on the basis of the ratio of the
actual  number of days  elapsed in such  quarterly  period to ninety  (90) days"
therefor.

     (b) Section  4.5(c)(iv)(A) is hereby amended by deleting it in its entirety
and inserting the following in lieu thereof:





<PAGE>


                           "(A) So long as any  Series  A  Preferred  Units  are
                  outstanding,  no  distribution of cash or other property shall
                  be authorized,  declared,  paid or set apart for payment on or
                  with  respect  to any class or  series  of Junior  Units as to
                  distributions,  nor  shall any cash or other  property  be set
                  aside for or  applied  to the  purchase,  redemption  or other
                  acquisition for consideration of any Series A Preferred Units,
                  any Parity  Preferred Units as to  distributions or any Junior
                  Units, unless, in each case, all distributions  accumulated on
                  all Series A  Preferred  Units and all  classes  and series of
                  outstanding  Parity Preferred Units as to  distributions  have
                  been paid in full.  The  foregoing  sentence will not prohibit
                  (a)  distributions  payable  solely in Junior  Units,  (b) the
                  conversion  of Junior  Units or Parity  Preferred  Units  into
                  Junior Units,  or (c) the redemption of Partnership  Interests
                  corresponding  to  any  Series  A  Preferred   Stock,   Parity
                  Preferred Stock or Junior Stock to be purchased by the General
                  Partner pursuant to Article 5 of the Articles of Incorporation
                  to  preserve  the  General  Partner's  status as a real estate
                  investment trust,  provided that such redemption shall be upon
                  the  same  terms as the  corresponding  purchase  pursuant  to
                  Article 5 of the Articles of Incorporation."

                  (c) Section  4.5(d)(i)  is hereby  amended by (A) deleting the
words "and (ii) an amount  equal to any  accumulated  and  unpaid  distributions
thereon,  whether or not  declared,  to the date of payment" from the end of the
first  sentence and  deleting the  reference to "(i)" after the words "an amount
equal to the sum of" in that sentence and (B)  inserting  the words  "(including
all accumulated and unpaid  distributions,  whether or not declared, to the date
of payment  to the  extent  not  previously  credited  to such  Capital  Account
balances)" after the words "Capital  Account  balances" in the former clause (i)
thereof.

                  (d) Section  4.5(f)(ii)  is hereby  amended by  inserting  the
words "if issued upon arm's length terms in the good faith  determination of the
board of directors of the General Partner" after the words "Security Capital" in
clause (B)(I) thereof.

     (e) The last  sentence of Section  4.5(g)(i)(A)  is hereby  deleted and the
following inserted in lieu thereof:

         "Furthermore,  the Series A Preferred  Units may be  exchanged in whole
         but not in part by any holder thereof which is a real estate investment
         trust  within the meaning of  Sections  856 through 859 of the Code for
         Series A  Preferred  Stock  (but only if the  exchange  in whole may be
         accomplished  consistently  with the  ownership  limitations  set forth
         under Article 5 of the Articles of  Incorporation  (taking into account
         exceptions  thereto))  if at any  time (i) the  Partnership  reasonably
         determines  that the assets and income of the Partnership for a taxable
         year  after  1999 would not  satisfy  the  income  and assets  tests of
         Section 856 of the Code for such taxable year if the Partnership were a
         real estate investment trust within the meaning of the Code or (ii) any
         such  holder  of  Series  A  Preferred   Units  shall  deliver  to  the
         Partnership and the General  Partner an opinion of independent  counsel
         reasonably  acceptable to the General Partner to the effect that, based
         on the assets and income of the  Partnership  for a taxable  year after
         1999, the Partnership  would not satisfy the income and assets tests of
         Section 856 of the Code for such taxable year if the Partnership were a
         real estate  investment  trust  within the meaning of the Code and that
         such failure would create a meaningful risk that a holder of the Series
         A Preferred Units would fail to maintain qualification as a real estate
         investment trust.

     (f) The following Section 4.5(g)(iii)(C) is hereby added to the Partnership
Agreement:


<PAGE>


         (C) So long as a Preferred  Partner or any of its permitted  successors
         or assigns  holds any Series A Preferred  Units as the case may be, the
         General Partner shall not,  without the affirmative vote of the holders
         of at least  two-thirds of the Series A Preferred Units  (excluding any
         Series A Preferred Units surrendered to the General Partner in exchange
         for Series A  Preferred  Stock) and Series A  Preferred  Stock  (voting
         together  as a class  based on the  number of shares  into  which  such
         Series A Preferred Units are then convertible) outstanding at the time:
         (a)  designate or create,  or increase the  authorized or issued amount
         of,  any  class or  series of  shares  ranking  senior to the  Series A
         Preferred Stock with respect to the payment of  distributions or rights
         upon   liquidation,   dissolution   or  winding-up  or  reclassify  any
         authorized  shares of the  General  Partner  into any such  shares,  or
         create,  authorize or issue any  obligations or securities  convertible
         into or evidencing the right to purchase any such shares; (b) designate
         or create,  or increase the  authorized or issued amount of, any Parity
         Preferred  Stock or  reclassify  any  authorized  shares of the General
         Partner  into  any such  shares,  or  create,  authorize  or issue  any
         obligations  or security  convertible  into or evidencing  the right to
         purchase  any such  shares,  but only to the  extent  that such  Parity
         Preferred Stock are issued to an Affiliate of the General Partner other
         than (A) Security Capital U.S. Realty,  Security Capital Holdings, S.A.
         or their  affiliates (if issued on arm's length terms in the good faith
         determination of the board of directors of the General Partner), or (B)
         the General Partner to the extent the issuance of such interests was to
         allow the General Partner to issue corresponding preferred stock in the
         same  transaction to persons who are not affiliates of the Partnership;
         (c) amend,  alter or repeal the  provisions of the Charter or bylaws of
         the General  Partner,  whether by merger,  consolidation  or otherwise,
         that would materially and adversely affect the powers,  special rights,
         preferences, privileges or voting power of the Series A Preferred Stock
         or the holders  thereof;  provided,  however,  that any increase in the
         amount of authorized Preferred Stock or the creation or issuance of any
         other series or class of Preferred Stock, or any increase in the amount
         of  authorized  shares of each  class or series,  in each case  ranking
         either (1) junior to the Series A Preferred  Stock with  respect to the
         payment  of   distributions   or  the   distribution   of  assets  upon
         liquidation,  dissolution  or  winding-up,  or (2) on a parity with the
         Series A Preferred  Stock with respect to the payment of  distributions
         or  the  distribution  of  assets  upon  liquidation,   dissolution  or
         winding-up  to the  extent  such  Preferred  Stock are not issued to an
         Affiliate  of the General  Partner  (other than  Security  Capital U.S.
         Realty,  Security Capital Holdings,  S.A. or their affiliates if issued
         on arm's length terms in the good faith  determination  of the board of
         directors of the General Partner), or (B) General Partner to the extent
         the  issuance of such  interests  was to allow the  General  Partner to
         issue  corresponding  preferred stock to persons who are not affiliates
         of the  Partnership,  shall not be deemed to  materially  and adversely
         affect such rights, preferences, privileges or voting powers."

                  Section 5.        Section 4.8 - Series D Preferred Units

                  The  Partnership  Agreement is hereby amended by inserting the
following as a new Section 4.8:

                  "Section 4.8      Issuance of Series D Preferred Units.

                  (a) Designation and Number.  A series of Partnership  Units in
the  Partnership  designated  as the  "9.125%"  Series D  Cumulative  Redeemable
Preferred  Units (the  "Series D Preferred  Units") is hereby  established.  The
number of Series D Preferred Units shall be 500,000.



<PAGE>




NYDOCS03/486233 6


                  (b)      Rank.

                  The  Series  D   Preferred   Units  will,   with   respect  to
distributions and rights upon voluntary or involuntary  liquidation,  winding-up
or  dissolution  of the  Partnership,  rank  senior to all  classes or series of
Partnership Interests now or hereafter authorized, issued or outstanding,  other
than the  Series A  Preferred  Units,  Series B  Preferred  Units  and  Series C
Preferred Units and any class or series of equity  securities of the Partnership
issued  after  the  issuance  of the  Series D  Preferred  Units  and  expressly
designated in accordance with the  Partnership  Agreement as ranking on a parity
with or senior to the Series D  Preferred  Units as to  distributions  or rights
upon  voluntary or  involuntary  liquidation,  winding-up or  dissolution of the
Partnership. The Series D Preferred Units are expressly designated as ranking on
a parity with the Series A Preferred Units, the Series B Preferred Units and the
Series C Preferred Units as to both  distributions  and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership.

                  (c)      Distributions.


<PAGE>


                  (i) Payment of Distributions. Subject to the rights of holders
of Parity Preferred Units and any holders of Partnership  Interests issued after
the date hereof in accordance  herewith ranking senior to the Series D Preferred
Units as to the payment of  distributions,  holders of Series D Preferred  Units
shall be entitled to receive, when, as and if declared by the Partnership acting
through the  General  Partner,  out of  Available  Cash and Capital  Transaction
Proceeds,  cumulative  preferential cash  distributions at the rate per annum of
9.125% of the original  Capital  Contribution  per Series D Preferred Unit. Such
distributions  shall be  cumulative,  shall  accrue  from the  original  date of
issuance and will be payable (A)  quarterly  (such  quarterly  periods to be the
quarterly periods ending on the dates set forth in this sentence) in arrears, on
or  before  March  31,  June 30,  September  30 and  December  31 of each  year,
commencing  on  December  31,  1999 (with the first such  payment to include the
amount accrued from the period commencing September 29, 1999 and ending December
31, 1999) and,  (B) in the event of (i) an exchange of Series D Preferred  Units
into Series D Preferred Stock, or (ii) a redemption of Series D Preferred Units,
on the  exchange  date or  redemption  date,  as  applicable  (each a  "Series D
Preferred  Unit  Distribution  Payment  Date").  The amount of the  distribution
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and for any period shorter than a full quarterly  period for which
distributions  are  computed,  the amount of the  distribution  payable  will be
computed on the basis of the ratio of the actual  number of days elapsed in such
period to ninety (90) days. If any date on which distributions are to be made on
the Series D Preferred  Units is not a Business  Day (as defined  herein),  then
payment  of the  distribution  to be made on such  date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay)  except that,  if such Business Day is in the next
succeeding  calendar  year,  such  payment  shall  be  made  on the  immediately
preceding  Business  Day, in each case with the same force and effect as if made
on such date.  Distributions on December 31, 1999 and thereafter will be made to
the holders of record of the Series D  Preferred  Units on the  relevant  record
dates to be fixed by the Partnership  acting through the General Partner,  which
record  dates shall be not less than ten (10) days and not more than thirty (30)
Business Days prior to the relevant  Preferred  Unit  Distribution  Payment Date
(the "Series D Preferred Unit Partnership Record Date").

                  (ii)  Limitation  on  Distributions.  No  distribution  on the
Series D  Preferred  Units shall be declared or paid or set apart for payment by
the Partnership at such time as the terms and provisions of any agreement of the
Partnership  relating to its  indebtedness  (other than any  agreement  with the
holder  of  Partnership  Interests  or an  Affiliate  thereof),  prohibits  such
declaration,  payment  or  setting  apart  for  payment  or  provide,  that such
declaration,  payment or setting  apart for payment  would  constitute  a breach
thereof  or a default  thereunder,  or if such  declaration,  payment or setting
apart for payment shall be  restricted  or  prohibited  by law.  Nothing in this
Section 4(c)(ii) shall be deemed to modify or in any manner limit the provisions
of Sections 4.8(c)(iii) or 4.8(c)(iv).

                  (iii) Distributions Cumulative.  Distributions on the Series D
Preferred  Units  will  accrue  whether or not the terms and  provisions  of any
agreement  of  the  Partnership,   including  any  agreement   relating  to  its
indebtedness, at any time prohibit the current payment of distributions, whether
or not the  Partnership  has  earnings,  whether or not there are funds  legally
available for the payment of such of such  distributions and whether or not such
distributions are authorized.  Accrued but unpaid  distributions on the Series D
Preferred Units will  accumulate as of the Series D Preferred Unit  Distribution
Payment Date on which they first  become  payable.  Distributions  on account of
arrears for any past distribution  periods may be declared and paid at any time,
without reference to a regular Series D Preferred Unit Distribution Payment Date
to holders of record of the Series D Preferred Units on the record date fixed by
the Partnership  acting through the General Partner which date shall be not less
than ten (10) days and not more than  thirty  (30)  Business  Days  prior to the
payment date. Accumulated and unpaid distributions will not bear interest.

                  (iv)     Priority as to Distributions.

                           (A) So long  as any  Series  D  Preferred  Units  are
                  outstanding,  no  distribution of cash or other property shall
                  be authorized,  declared,  paid or set apart for payment on or
                  with  respect  to any class or series  of  Junior  Units  with
                  respect to distributions, nor shall any cash or other property
                  be set aside for or applied  to the  purchase,  redemption  or
                  other  acquisition for consideration of any Series D Preferred
                  Units,   any   Parity   Preferred   Units   with   respect  to
                  distributions or any Junior Units,  unless,  in each case, all
                  distributions  accumulated on all Series D Preferred Units and
                  all classes and series of outstanding  Parity  Preferred Units
                  as to the  payment  of  distributions  have been paid in full.
                  Without limiting Section  4.8(f)(ii),  the foregoing  sentence
                  will not prohibit (a)  distributions  payable solely in Junior
                  Units,  (b) the conversion of Junior Units or Parity Preferred
                  Units into Junior Units,  or (c) the redemption of Partnership
                  Interests  corresponding  to any  Series  D  Preferred  Stock,
                  Parity  Preferred Stock or Junior Stock to be purchased by the
                  General  Partner  pursuant  to  Article 5 of the  Articles  of
                  Incorporation  to preserve the General  Partner's  status as a
                  real estate  investment  trust,  provided that such redemption
                  shall  be upon the same  terms as the  corresponding  purchase
                  pursuant to Article 5 of the Articles of Incorporation.



<PAGE>


                           (B) So long as  distributions  have not been  paid in
                  full  (or a sum  sufficient  for  such  full  payment  is  not
                  irrevocably  deposited in trust for payment) upon the Series D
                  Preferred Units, all distributions  authorized and declared on
                  the  Series D  Preferred  Units and all  classes  or series of
                  outstanding  Parity Preferred Units as to distributions  shall
                  be authorized and declared so that the amount of distributions
                  authorized  and declared per Series D Preferred  Unit and such
                  other classes or series of Parity Preferred Units shall in all
                  cases  bear  to  each  other  the  same  ratio  that   accrued
                  distributions  per  Series D  Preferred  Unit  and such  other
                  classes or series of Parity  Preferred  Units (which shall not
                  include any  accumulation  in respect of unpaid  distributions
                  for  prior  distribution  periods  if such  class or series of
                  Parity  Preferred  Units do not have  cumulative  distribution
                  rights) bear to each other.

     (v) No Further  Rights.  Holders of Series D  Preferred  Units shall not be
entitled  to any  distributions,  whether  payable in cash,  other  property  or
otherwise, in excess of the full cumulative distributions described herein.

                  (d)      Liquidation Preference.

                  (i)  Payment  of  Liquidating  Distributions.  Subject  to the
rights of holders of Parity  Preferred  Units  with  respect to rights  upon any
voluntary  or  involuntary   liquidation,   dissolution  or  winding-up  of  the
Partnership and subject to Partnership  Interests ranking senior to the Series D
Preferred  Units  with  respect  to rights  upon any  voluntary  or  involuntary
liquidation, dissolution or winding-up of the Partnership, the holders of Series
D  Preferred  Units  shall be  entitled  to  receive  out of the  assets  of the
Partnership  legally available for distribution or the proceeds  thereof,  after
payment or provision for debts and other  liabilities  of the  Partnership,  but
before any payment or  distributions  of the assets  shall be made to holders of
any class or series of  Partnership  Interest  that ranks junior to the Series D
Preferred Units as to rights upon liquidation,  dissolution or winding-up of the
Partnership,  an amount equal to the sum of a  liquidation  preference  equal to
their positive  Capital Account balances  (including,  without  limitation,  any
accumulated and unpaid  distributions,  whether or not declared,  to the date of
payment to the extent not previously credited to such Capital Account balances),
determined  after taking into account all Capital  Account  adjustments  for the
Partnership  taxable year during which the liquidation  occurs (other than those
made as a result of the liquidating  distribution  set forth in this 4.8(d)(i)).
In the event that, upon such voluntary or involuntary  liquidation,  dissolution
or  winding-up,  there  are  insufficient  assets  to  permit  full  payment  of
liquidating  distributions  to the holders of Series D  Preferred  Stock and any
Parity Preferred Units as to rights upon liquidation,  dissolution or winding-up
of the  Partnership,  all payments of liquidating  distributions on the Series D
Preferred  Units  and  such  Parity  Preferred  Units  shall be made so that the
payments on the Series D Preferred  Units and such Parity  Preferred Units shall
in all cases bear to each other the same ratio that the respective rights of the
Series D Preferred Unit and such other Parity  Preferred  Units (which shall not
include  any  accumulation  in  respect  of  unpaid   distributions   for  prior
distribution  periods  if such  Parity  Preferred  Units do not have  cumulative
distribution  rights)  upon  liquidation,   dissolution  or  winding-up  of  the
Partnership bear to each other.





<PAGE>


                  (ii)  Notice.   Written   notice  of  any  such  voluntary  or
involuntary liquidation,  dissolution or winding-up of the Partnership,  stating
the  payment  date or dates  when,  and the place or places  where,  the amounts
distributable in such circumstances shall be payable,  shall be given by (i) fax
and (ii) by first class mail,  postage  pre-paid,  not less than 30 and not more
that 60 days prior to the payment date stated therein,  to each record holder of
the Series D Preferred Units at the respective  addresses of such holders as the
same shall appear on the transfer records of the Partnership.

                  (iii) No Further  Rights.  After payment of the full amount of
the liquidating  distributions to which they are entitled, the holders of Series
D Preferred Units will have no right or claim to any of the remaining  assets of
the Partnership.

                  (iv) Consolidation,  Merger or Certain Other Transactions. The
voluntary sale,  conveyance,  lease,  exchange or transfer (for cash,  shares of
stock,  securities or other  consideration)  of all or substantially  all of the
property or assets of the General Partner to, or the  consolidation or merger or
other business  combination of the  Partnership  with or into, any  corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.

                  (e)      Optional Redemption.

                  (i) Right of Optional Redemption. The Series D Preferred Units
may not be redeemed  prior to the fifth  anniversary of the issuance date. On or
after such  date,  the  Partnership  shall have the right to redeem the Series D
Preferred Units, in whole or in part, at any time or from time to time, upon not
less than 30 nor more  than 60 days'  written  notice,  at a  redemption  price,
payable in cash,  equal to the Capital Account balance of the holder of Series D
Preferred Units (the "Series D Redemption Price");  provided,  however,  that no
redemption  pursuant to this Section 4.8(e)(i) will be permitted if the Series D
Redemption Price does not equal or exceed the original  Capital  Contribution of
such  holder  plus the  cumulative  Series D  Priority  Return,  whether  or not
declared,  to the redemption  date to the extent not  previously  distributed or
distributed on the redemption date pursuant to Section 4.8(c)(i).  If fewer than
all of the outstanding Series D Preferred Units are to be redeemed, the Series D
Preferred  Units to be  redeemed  shall be  selected  pro  rata  (as  nearly  as
practicable without creating fractional units).

                  (ii)     Limitation on Redemption.





<PAGE>


                           (A) The Series D  Redemption  Price  (other  than the
                  portion   thereof   consisting  of   accumulated   but  unpaid
                  distributions) will be payable solely out of the sale proceeds
                  of  capital  stock  of the  General  Partner,  which  will  be
                  contributed  by the  General  Partner  to the  Partnership  as
                  additional capital contribution, or out of the sale of limited
                  partner interests in the Partnership and from no other source.
                  For purposes of the preceding sentence,  "capital stock" means
                  any equity  securities  (including  Common Stock and Preferred
                  Stock  (as  such  terms  are   defined  in  the   Articles  of
                  Incorporation)),  shares,  participation  or  other  ownership
                  interests (however designated) and any rights (other than debt
                  securities   convertible   into  or  exchangeable  for  equity
                  securities) or options to purchase any of the foregoing.

                           (B) The  Partnership may not redeem fewer than all of
                  the   outstanding   Series  D  Preferred   Units   unless  all
                  accumulated  and  unpaid  distributions  have been paid on all
                  Series  D  Preferred  Units  for  all  quarterly  distribution
                  periods terminating on or prior to the date of redemption.

                  (iii)    Procedures for Redemption.

                           (A) Notice of redemption will be (i) faxed,  and (ii)
                  mailed by the Partnership, by certified mail, postage prepaid,
                  not less than 30 nor more than 60 days prior to the redemption
                  date,  addressed  to the  respective  holders of record of the
                  Series D Preferred Units at their respective addresses as they
                  appear on the records of the  Partnership.  No failure to give
                  or defect in such  notice  shall  affect the  validity  of the
                  proceedings for the redemption of any Series D Preferred Units
                  except as to the holder to whom such notice was  defective  or
                  not given.  In  addition to any  information  required by law,
                  each such notice shall state:  (i) the redemption  date,  (ii)
                  the Series D Redemption  Price,  (iii) the aggregate number of
                  Series D Preferred  Units to be redeemed and if fewer than all
                  of  the  outstanding  Series  D  Preferred  Units  are  to  be
                  redeemed,  the  number  of  Series  D  Preferred  Units  to be
                  redeemed  held by such  holder,  which number shall equal such
                  holder's  pro  rata  share  (based  on the  percentage  of the
                  aggregate  number of outstanding  Series D Preferred Units the
                  total  number of Series D Preferred  Units held by such holder
                  represents)  of the  aggregate  number of  Series D  Preferred
                  Units to be  redeemed,  (iv) the  place or places  where  such
                  Series D Preferred  Units are to be surrendered for payment of
                  the Series D Redemption  Price, (v) that  distributions on the
                  Series  D  Preferred  Units  to  be  redeemed  will  cease  to
                  accumulate  on such  redemption  date and (vi) that payment of
                  the Series D Redemption  Price will be made upon  presentation
                  and surrender of such Series D Preferred Units.





<PAGE>


                           (B) If the  Partnership  gives a notice of redemption
                  in respect of Series D Preferred  Units (which  notice will be
                  irrevocable)  then, by 12:00 noon,  New York City time, on the
                  redemption date, the Partnership  will deposit  irrevocably in
                  trust for the  benefit of the Series D  Preferred  Units being
                  redeemed  funds  sufficient  to pay the  applicable  Series  D
                  Redemption  Price and will give  irrevocable  instructions and
                  authority to pay such Series D Redemption Price to the holders
                  of the Series D Preferred Units upon surrender of the Series D
                  Preferred Units by such holders at the place designated in the
                  notice of  redemption.  If the  Series D  Preferred  Units are
                  evidenced  by a  certificate  and if fewer  than all  Series D
                  Preferred   Units  evidenced  by  any  certificate  are  being
                  redeemed,  a new certificate shall be issued upon surrender of
                  the  certificate  evidencing  all  Series D  Preferred  Units,
                  evidencing  the  unredeemed  Series D Preferred  Units without
                  cost  to  the  holder  thereof.  On  and  after  the  date  of
                  redemption,  distributions  will  cease to  accumulate  on the
                  Series  D  Preferred  Units or  portions  thereof  called  for
                  redemption,  unless the  Partnership  defaults  in the payment
                  thereof.  If  any  date  fixed  for  redemption  of  Series  D
                  Preferred  Units is not a Business  Day,  then  payment of the
                  Series D Redemption Price payable on such date will be made on
                  the next  succeeding  day that is a Business  Day (and without
                  any  interest  or other  payment in respect of any such delay)
                  except that,  if such  Business Day falls in the next calendar
                  year, such payment will be made on the  immediately  preceding
                  Business  Day,  in each case with the same force and effect as
                  if made on such date fixed for  redemption.  If payment of the
                  Series D Redemption  Price is  improperly  withheld or refused
                  and not paid by the Partnership,  distributions on such Series
                  D  Preferred  Units  will  continue  to  accumulate  from  the
                  original redemption date to the date of payment, in which case
                  the actual  payment date will be considered the date fixed for
                  redemption for purposes of calculating the applicable Series D
                  Redemption Price.

                  (f)      Voting Rights.

                  (i) General.  Holders of the Series D Preferred Units will not
have any voting  rights or right to consent to any matter  requiring the consent
or approval of the Limited Partners,  except as otherwise expressly set forth in
the Partnership Agreement and except as set forth below.





<PAGE>


                  (ii) Certain Voting Rights.  So long as any Series D Preferred
Units remain  outstanding,  the Partnership  shall not,  without the affirmative
vote of the  holders  of at least  two-thirds  of the Series D  Preferred  Units
outstanding  at the time (i) authorize or create,  or increase the authorized or
issued amount of, any class or series of Partnership  Interests ranking prior to
the Series D Preferred Units with respect to payment of  distributions or rights
upon  liquidation,  dissolution or winding-up or create,  authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such Partnership Interests, (ii) authorize or create, or increase the authorized
or issued amount of any Parity  Preferred  Units or reclassify  any  Partnership
Interest  of the  Partnership  into any such  Partnership  Interest  or  create,
authorize or issue any  obligations or security  convertible  into or evidencing
the right to purchase any such Partnership Interests but only to the extent such
Parity Preferred Units are issued to an affiliate of the Partnership, other than
(A) Security  Capital U.S.  Realty,  Security  Capital  Holdings,  S.A. or their
affiliates (if issued upon arm's length terms in the good faith determination of
the board of directors of the General Partner) or (B) the General Partner to the
extent the issuance of such interests was to allow the General  Partner to issue
corresponding  preferred  stock  to  persons  who  are  not  affiliates  of  the
Partnership  or (iii)  either (A)  consolidate,  merge into or with,  or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend,  alter or repeal the  provisions  of the  Partnership
Agreement,  whether by merger, consolidation or otherwise, that would materially
and adversely  affect the powers,  special  rights,  preferences,  privileges or
voting power of the Series D Preferred Units or the holders  thereof;  provided,
however,  that with respect to the  occurrence of a merger,  consolidation  or a
sale or lease of all of the Partnership's assets as an entirety,  so long as (a)
the Partnership is the surviving  entity and the Series D Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee  entity  is  a  partnership,   limited  liability  company  or  other
pass-through  entity  organized  under the laws of any state and substitutes the
Series D Preferred Units for other interests in such entity having substantially
the same  terms and  rights as the  Series D  Preferred  Units,  including  with
respect to distributions, voting rights and rights upon liquidation, dissolution
or  winding-up,  then the  occurrence  of any such event  shall not be deemed to
materially and adversely affect such rights,  privileges or voting powers of the
holders of the Series D  Preferred  Units and no vote of the Series D  Preferred
Units shall be required in such case; and provided  further that any increase in
the amount of  Partnership  Interests  or the  creation or issuance of any other
class or series of Partnership Interests, in each case ranking (a) junior to the
Series D  Preferred  Units  with  respect to  payment  of  distributions  or the
distribution of assets upon liquidation,  dissolution or winding-up, or (b) on a
parity to the Series D Preferred Units with respect to payment of  distributions
or the distribution of assets upon liquidation, dissolution or winding-up to the
extent  such  Partnership  Interest  are  not  issued  to an  affiliate  of  the
Partnership,  other than the General  Partner to the extent the issuance of such
interests  was to allow the  General  Partner to issue  corresponding  preferred
stock to persons who are not affiliates of the Partnership,  shall not be deemed
to  materially  and  adversely  affect such rights,  preferences,  privileges or
voting  powers and no vote of the Series D Preferred  Units shall be required in
such case.

                  (g)      Exchange Rights.

                  (i)      Right to Exchange.
                           -----------------





<PAGE>


                           (A) Series D Preferred  Units will be exchangeable in
                  whole or in part at anytime on or after the tenth  anniversary
                  of the date of issuance, at the option of the holders thereof,
                  for authorized but previously unissued shares of 9.125% Series
                  D Cumulative Redeemable Preferred Stock of the General Partner
                  (the  "Series D Preferred  Stock") at an exchange  rate of one
                  share of Series D  Preferred  Stock for one Series D Preferred
                  Unit,  subject to adjustment as described below (the "Series D
                  Exchange  Price"),  provided that the Series D Preferred Units
                  will become  exchangeable at any time, in whole or in part, at
                  the  option of the  holders  of Series D  Preferred  Units for
                  Series D Preferred Stock if (y) at any time full distributions
                  shall not have been made on the applicable  Series D Preferred
                  Unit Distribution  Payment Date on any Series D Preferred Unit
                  with respect to six (6) prior quarterly  distribution periods,
                  whether  or  not  consecutive,   provided,   however,  that  a
                  distribution  in respect of Series D Preferred  Units shall be
                  considered  timely made if made within two (2)  Business  Days
                  after the  applicable  Series D  Preferred  Unit  Distribution
                  Payment Date if at the time of such late  payment  there shall
                  not be any prior quarterly  distribution periods in respect of
                  which full  distributions were made more than two (2) Business
                  Days after the applicable Series D Preferred Unit Distribution
                  Payment  Date or (z) upon  receipt  by a holder or  holders of
                  Series D  Preferred  Units  of (A)  notice  from  the  General
                  Partner  that  the  General  Partner  or a  Subsidiary  of the
                  General  Partner has taken the position  that the  Partnership
                  is, or upon the occurrence of a defined event in the immediate
                  future  will  be,  a PTP and  (B) an  opinion  rendered  by an
                  outside  nationally  recognized  independent  counsel familiar
                  with such matters addressed to a holder or holders of Series D
                  Preferred Units, that the Partnership is or likely is, or upon
                  the occurrence of a defined event in the immediate future will
                  be or  likely  will  be,  a PTP.  In  addition,  the  Series D
                  Preferred Units may be exchanged for Series D Preferred Stock,
                  in whole or in part,  at the option of any holder prior to the
                  tenth  anniversary  of the  issuance  date and after the third
                  anniversary  thereof  if such  holder of a Series D  Preferred
                  Units  shall  deliver  to the  General  Partner  either  (i) a
                  private  ruling  letter  addressed  to such holder of Series D
                  Preferred  Units or (ii) an  opinion  of  independent  counsel
                  reasonably  acceptable  to the  General  Partner  based on the
                  enactment of temporary or final  Treasury  Regulations  or the
                  publication of a Revenue Ruling,  in either case to the effect
                  that an  exchange  of the  Series  D  Preferred  Units at such
                  earlier  time would not cause the Series D Preferred  Units to
                  be  considered  "stock and  securities"  within the meaning of
                  section 351(e) of the Code for purposes of determining whether
                  the holder of such Series D Preferred  Units is an "investment
                  company"  under  section  721(b) of the Code if an exchange is
                  permitted  at such  earlier  date.  Furthermore,  the Series D
                  Preferred  Units may be  exchanged in whole but not in part by
                  any holder  thereof  which is a real estate  investment  trust
                  within the meaning of Sections 856 through 859 of the Code for
                  Series D  Preferred  Stock (but only if the  exchange in whole
                  may  be   accomplished   consistently   with   the   ownership
                  limitations  set  forth  under  Article 5 of the  Articles  of
                  Incorporation  (taking into account exceptions  thereto) if at
                  any time (i) the  Partnership  reasonably  determines that the
                  assets and income of the  Partnership for a taxable year after
                  1999 would not satisfy the income and assets  tests of Section
                  856 of the Code for such taxable year if the Partnership  were
                  a real estate  investment trust within the meaning of the Code
                  or (ii) any such  holder of  Series D  Preferred  Units  shall
                  deliver to the  Partnership and the General Partner an opinion
                  of independent  counsel  reasonably  acceptable to the General
                  Partner to the effect that,  based on the assets and income of
                  the Partnership for a taxable year after 1999, the Partnership
                  would not satisfy  the income and assets  tests of Section 856
                  of the Code for such  taxable year if the  Partnership  were a
                  real estate  investment  trust  within the meaning of the Code
                  and that such failure  would  create a meaningful  risk that a
                  holder of the Series D Preferred  Units would fail to maintain
                  qualification as a real estate investment trust.





<PAGE>


                           (B)  Notwithstanding  anything  to the  contrary  set
                  forth in Section 4.8(G)(i)(A),  if an Series D Exchange Notice
                  (as defined herein) has been delivered to the General Partner,
                  then the General  Partner may, at its option,  elect to redeem
                  or cause the  Partnership  to redeem  all or a portion  of the
                  outstanding  Series D  Preferred  Units  for cash in an amount
                  equal  to the  original  Capital  Contribution  per  Series  D
                  Preferred  Unit  and  all  accrued  and  unpaid  distributions
                  thereon to the date of  redemption.  The  General  Partner may
                  exercise its option to redeem the Series D Preferred Units for
                  cash  pursuant  to this  Section  4.8(g)(i)(B)  by giving each
                  holder of record of  Series D  Preferred  Units  notice of its
                  election  to redeem for cash,  within five (5)  Business  Days
                  after receipt of the Series D Exchange Notice, by (i) fax, and
                  (ii)  registered  mail,  postage  paid, at the address of each
                  holder as it may  appear  on the  records  of the  Partnership
                  stating (i) the redemption  date, which shall be no later than
                  sixty (60) days following the receipt of the Series D Exchange
                  Notice,  (ii) the redemption price,  (iii) the place or places
                  where the Series D Preferred  Units are to be surrendered  for
                  payment of the redemption  price,  (iv) that  distributions on
                  the  Series D  Preferred  Units  will  cease to accrue on such
                  redemption date; (v) that payment of the redemption price will
                  be made  upon  presentation  and  surrender  of the  Series  D
                  Preferred  Units  and (vi) the  aggregate  number  of Series D
                  Preferred  Units to be redeemed,  and if fewer than all of the
                  outstanding  Series D Preferred Units are to be redeemed,  the
                  number of Series D Preferred Units to be redeemed held by such
                  holder,  which number shall equal such holder's pro-rata share
                  (based  on  the   percentage  of  the   aggregate   number  of
                  outstanding  Series D  Preferred  Units  the  total  number of
                  Series D Preferred  Units held by such holder  represents)  of
                  the  aggregate  number  of  Series  D  Preferred  Units  being
                  redeemed.

                           (C) Upon the  occurrence  of an event  giving rise to
                  exchange rights pursuant to Section 4.8(g)(i)(A), in the event
                  an exchange  of all or a portion of Series D  Preferred  Units
                  pursuant to Section  4.8(g)(i)(A) would violate the provisions
                  on ownership  limitation  of the General  Partner set forth in
                  Article  5 of  the  Articles  of  Incorporation,  the  General
                  Partner  shall give written  notice  thereof to each holder of
                  record of Series D Preferred  Units,  within five (5) Business
                  Days following receipt of the Series D Exchange Notice, by (i)
                  fax, and (ii) registered mail, postage prepaid, at the address
                  of  each  such   holder  set  forth  in  the  records  of  the
                  Partnership.  In such event, each holder of Series D Preferred
                  Units shall be entitled to exchange, pursuant to the provision
                  of Section  4.8(g)(ii)  a number of Series D  Preferred  Units
                  which  would  comply  with  the  provisions  on the  ownership
                  limitation of the General  Partner set forth in such Article 5
                  of the  Articles of  Incorporation  and any Series D Preferred
                  Units not so exchanged  (the "Series D Excess Units") shall be
                  redeemed by the Partnership for cash in an amount equal to the
                  original  Capital  Contribution per Series D Excess Unit, plus
                  any accrued and unpaid distributions  thereon,  whether or not
                  declared, to the date of redemption. The written notice of the
                  General  Partner shall state (i) the number of Series D Excess
                  Units held by such holder,  (ii) the  redemption  price of the
                  Series D Excess  Units,  (iii) the date on which such Series D
                  Excess Units shall be  redeemed,  which date shall be no later
                  than sixty  (60) days  following  the  receipt of the Series D
                  Exchange Notice,  (iv) the place or places where such Series D
                  Excess Units are to be surrendered for payment of the Series D
                  Redemption  Price,  (iv) that  distributions  on the  Series D
                  Excess Units will cease to accrue on such redemption date, and
                  (v) that  payment  of the  redemption  price will be made upon
                  presentation  and surrender of such Series D Excess Units.  In
                  the event an exchange  would result in Series D Excess  Units,
                  as a  condition  to such  exchange,  each holder of such units
                  agrees to provide  representations  and  covenants  reasonably
                  requested  by the General  Partner  relating to (i) the widely
                  held nature of the  interests  in such holder,  sufficient  to
                  assure the General  Partner  that the  holder's  ownership  of
                  stock of the  General  Partner  (without  regard to the limits
                  described  above)  will not  cause  any  individual  to own in
                  excess of 9.8% of the stock of the General  Partner;  and (ii)
                  to the  extent  such  holder  can so  represent  and  covenant
                  without  obtaining  information from its owners,  the holder's
                  ownership of tenants of the Partnership and its affiliates.





<PAGE>


                           (D)  The  redemption  of  Series  D  Preferred  Units
                  described in Section  4.8(g)(i)(B) and (C) shall be subject to
                  the   provisions   of  Section   4.8(e)(ii)(A)   and   Section
                  4.8(e)(iii)(B);  provided,  however,  that for purposes hereof
                  the term  "Redemption  Price" in  Sections  4.8(e)(ii)(A)  and
                  4.8(e)(iii)(B)  shall  be read to mean  the  original  Capital
                  Contribution  per Series D Preferred  Unit being redeemed plus
                  all accrued and unpaid distributions to the redemption date.

                  (ii)     Procedure for Exchange.
                           ----------------------

                           (A) Any  exchange  shall be  exercised  pursuant to a
                  notice of exchange (the "Series D Exchange Notice")  delivered
                  to the General  Partner by the holder who is  exercising  such
                  exchange  right, by (i) fax and (ii) by certified mail postage
                  prepaid.  Upon  request of the  General  Partner,  such holder
                  delivering  the Series D Exchange  Notice shall provide to the
                  General  Partner in writing  such  information  as the General
                  Partner  may  reasonably  request  to  determine  whether  any
                  portion of the exchange by the  delivering  holder will result
                  in the  violation  of the  restrictions  of  Article  5 of the
                  Articles of  Incorporation,  including the Ownership Limit and
                  the Related  Tenant Limit.  The exchange of Series D Preferred
                  Units, or a specified  portion thereof,  may be effected after
                  the fifth (5th) Business Days following receipt by the General
                  Partner  of the Series D  Exchange  Notice and such  requested
                  information by delivering  certificates,  if any, representing
                  such Series D Preferred  Units to be exchanged  together with,
                  if  applicable,  written  notice  of  exchange  and  a  proper
                  assignment  of such Series D Preferred  Units to the office of
                  the General  Partner  maintained for such purpose.  Currently,
                  such   office  is  121  West   Forsyth   Street,   Suite  200,
                  Jacksonville,  Florida 32202.  Each exchange will be deemed to
                  have been effected  immediately prior to the close of business
                  on the  date on which  such  Series  D  Preferred  Units to be
                  exchanged  (together  with all required  documentation)  shall
                  have been  surrendered  and notice shall have been received by
                  the  General  Partner as  aforesaid  and the Series D Exchange
                  Price  shall have been  paid.  Any  Series D  Preferred  Stock
                  issued  pursuant to this Section  4.8(g) shall be delivered as
                  shares which are duly authorized,  validly issued,  fully paid
                  and  nonassessable,  free  of  pledge,  lien,  encumbrance  or
                  restriction  other  than those  provided  in the  Articles  of
                  Incorporation,   the  Bylaws  of  the  General  Partner,   the
                  Securities Act and relevant state securities or blue sky laws.





<PAGE>


                           (B) In the event of an exchange of Series D Preferred
                  Units for shares of Series D Preferred  Stock, an amount equal
                  to the  accrued  and unpaid  distributions  which are not paid
                  pursuant to Section 4(a) hereof,  whether or not declared,  to
                  the date of exchange on any Series D Preferred  Units tendered
                  for  exchange  shall (i) accrue and be payable by the  General
                  Partner  from and after the date of  exchange on the shares of
                  the  Series  D  Preferred  Stock  into  which  such  Series  D
                  Preferred Units are exchanged,  and (ii) continue to accrue on
                  such Series D Preferred Units,  which shall remain outstanding
                  following  such  exchange,  with the  General  Partner  as the
                  holder  of such  Series  D  Preferred  Units.  Notwithstanding
                  anything to the contrary set forth herein, in no event shall a
                  holder of a Series D Preferred Unit that was validly exchanged
                  into Series D Preferred  Stock pursuant to this section (other
                  than the General  Partner now holding  such Series D Preferred
                  Unit), receive a distribution out of Available Cash or Capital
                  Transaction  Proceeds of the  Partnership  with respect to any
                  Series D Preferred Units so exchanged.

                           (C) Fractional shares of Series D Preferred Stock are
                  not to be issued  upon  exchange  but,  in lieu  thereof,  the
                  General Partner will pay a cash adjustment based upon the fair
                  market value of the Series D Preferred  Stock on the day prior
                  to the exchange  date as determined in good faith by the Board
                  of Directors of the General Partner.

                  (iii)    Adjustment of Exchange Price.

                           (A)  The  Series  D  Exchange  Price  is  subject  to
                  adjustment upon certain events,  including,  (i) subdivisions,
                  combinations  and  reclassification  of the Series D Preferred
                  Stock,  and (ii)  distributions  to all  holders  of  Series D
                  Preferred  Stock of evidences of  indebtedness  of the General
                  Partner  or  assets  (including   securities,   but  excluding
                  dividends  and  distributions  paid  in  cash  out  of  equity
                  applicable to Series D Preferred Stock).

                           (B) In case the General  Partner  shall be a party to
                  any  transaction  (including,  without  limitation,  a merger,
                  consolidation,  statutory share exchange, tender offer for all
                  or substantially all of the General Partner's capital stock or
                  sale  of all or  substantially  all of the  General  Partner's
                  assets),  in each  case as a  result  of  which  the  Series D
                  Preferred  Stock will be  converted  into the right to receive
                  shares of capital  stock,  other  securities or other property
                  (including  cash or any  combination  thereof),  each Series D
                  Preferred Unit will thereafter be  exchangeable  into the kind
                  and amount of shares of capital stock and other securities and
                  property   receivable   (including  cash  or  any  combination
                  thereof) upon the consummation of such transaction by a holder
                  of that  number  of  shares  of  Series D  Preferred  Stock or
                  fraction  thereof  into which one Series D Preferred  Unit was
                  exchangeable  immediately  prior  to  such  transaction.   The
                  General Partner may not become a party to any such transaction
                  unless the terms thereof are consistent with the foregoing.





<PAGE>


NYDOCS03/486233 6


                           (C) So  long  as a  Preferred  Partner  or any of its
                  permitted  successors  or assigns holds any Series D Preferred
                  Units as the case  may be,  the  General  Partner  shall  not,
                  without  the  affirmative  vote  of the  holders  of at  least
                  two-thirds  of the Series D  Preferred  Units  (excluding  any
                  Series D Preferred Units surrendered to the General Partner in
                  exchange for Series D Preferred  Stock) and Series D Preferred
                  Stock  (voting  together  as a class on the basis of number of
                  shares into which Series D Preferred  Units are  exchangeable)
                  outstanding at the time: (a) designate or create,  or increase
                  the  authorized  or issued  amount  of, any class or series of
                  shares  ranking  senior to the Series D  Preferred  Stock with
                  respect  to  the  payment  of  distributions  or  rights  upon
                  liquidation,  dissolution  or  winding-up  or  reclassify  any
                  authorized shares of the General Partner into any such shares,
                  or create,  authorize or issue any  obligations  or securities
                  convertible  into or evidencing the right to purchase any such
                  shares; (b) designate or create, or increase the authorized or
                  issued amount of, any Parity Preferred Stock or reclassify any
                  authorized shares of the General Partner into any such shares,
                  or create,  authorize  or issue any  obligations  or  security
                  convertible  into or evidencing the right to purchase any such
                  shares,  but only to the  extent  that such  Parity  Preferred
                  Stock are issued to an Affiliate of the General  Partner other
                  than  (A)  Security  Capital  U.S.  Realty,  Security  Capital
                  Holdings,  S.A. or their affiliates (if issued on arm's length
                  terms  in  the  good  faith  determination  of  the  board  of
                  directors of the General Partner),  or (B) the General Partner
                  to the extent the issuance of such  interests was to allow the
                  General Partner to issue corresponding  preferred stock in the
                  same  transaction  to persons  who are not  affiliates  of the
                  Partnership;  (c) amend, alter or repeal the provisions of the
                  Charter or bylaws of the General  Partner,  whether by merger,
                  consolidation   or  otherwise,   that  would   materially  and
                  adversely  affect the  powers,  special  rights,  preferences,
                  privileges or voting power of the Series D Preferred  Stock or
                  the holders thereof;  provided,  however, that any increase in
                  the amount of  authorized  Preferred  Stock or the creation or
                  issuance of any other series or class of Preferred  Stock,  or
                  any increase in the amount of authorized  shares of each class
                  or  series,  in each case  ranking  either  (1)  junior to the
                  Series D  Preferred  Stock  with  respect  to the  payment  of
                  distributions or the distribution of assets upon  liquidation,
                  dissolution or winding-up,  or (2) on a parity with the Series
                  D Preferred Stock with respect to the payment of distributions
                  or the distribution of assets upon liquidation, dissolution or
                  winding-up to the extent such  Preferred  Stock are not issued
                  to an Affiliate of the General  Partner  (other than  Security
                  Capital U.S. Realty,  Security Capital Holdings, S.A. or their
                  affiliates  if issued on arm's  length terms in the good faith
                  determination  of  the  board  of  directors  of  the  General
                  Partner), or (B) General Partner to the extent the issuance of
                  such  interests  was to allow  the  General  Partner  to issue
                  corresponding   preferred   stock  to  persons   who  are  not
                  affiliates  of  the  Partnership,   shall  not  be  deemed  to
                  materially  and  adversely  affect such  rights,  preferences,
                  privileges or voting powers.

                  (h)  No  Conversion  Rights.  The  holders  of  the  Series  D
Preferred  Units shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other  securities of, or interest
in, the Partnership.

     (i) No  Sinking  Fund.  No  sinking  fund  shall  be  established  for  the
retirement or redemption of Series D Preferred Units."

           Section 6.        Article 7 - Management and Operating of Business.
                              ------------------------------------------------

     Section  7.1(h) is hereby amended by inserting the words "Series A Priority
Return,  Series D Priority Return and" before the words  "Priority  Distribution
Amount" therein.



<PAGE>


      Section 7.        Article 8 - Rights and Obligations of Limited Partners.
                        ------------------------------------------------------

     Section 8.4 is hereby  amended by (i)  inserting the words  "Section  4.8,"
after the words "Section  4.5," therein and (ii) inserting the words  "Preferred
Units" after the words "Series A" therein.

                  Section 8.        Article 11 - Transfers and Withdrawals.

                  (a) Section  11.2(b) is hereby  amended by inserting the words
"and Section 4.8(f)" after the words "4.5(f)" in the first sentence thereof.

                  (b) The Series A  Preferred  Partners  and Series D  Preferred
Partners may, subject to Sections 11.3(b)-(j), assign their Units to any Person,
and any such assignee shall be admitted as a Substituted Limited Partner.

     (c) Section 11.3(h) is hereby amended by adding the following at the end of
the section:

                  ";  provided,  however,  that the  General  Partner  shall not
                  unreasonably   withhold   its  consent  to  a  waiver  of  the
                  limitations   set  forth  in  this  Section   11.3(h)  if  the
                  Partnership is (1) relying on a provision  other than Treasury
                  Regulation  Section  1.7704-1(h)  to avoid  classification  of
                  Partnership as a PTP or (2) a PTP."

                  (d)      The following is inserted as a new Section 11.3(j):

                  "(j) Transfers by Series D Preferred Partners.  In addition to
                  the other  restrictions  on transfer set forth in this Article
                  11,  which apply to Series D Preferred  Units,  no transfer of
                  the Series D Preferred  Units may be made  without the consent
                  of the General Partner, which consent may be given or withheld
                  in its sole and absolute  discretion,  if such transfer  would
                  result in more  than four  partners  holding  all  outstanding
                  Series D  Preferred  Units  within the  meaning of  Regulation
                  Section 1.7704-1(h)(3) "; provided,  however, that the General
                  Partner  shall not  unreasonably  withhold  its  consent  to a
                  waiver of the limitations set forth in this Section 11.3(j) if
                  the  Partnership  is (1)  relying  on a  provision  other than
                  Treasury    Regulation    Section    1.7704-1(h)    to   avoid
                  classification of Partnership as a PTP or (2) a PTP."

                  Section 9.        Article 12 - Admission of Partners.





<PAGE>


                  Section  12.2(a) and 12.4 are hereby  amended by deleting  all
references  therein to  "Additional  Limited  Partners"  and inserting the words
"additional Limited Partners" therefor.





<PAGE>


                  Section 10.       Article 13 - Dissolution and Liquidation.

                  (a) The first  reference to "Additional  Limited  Partners" in
the first paragraph of Section 13.1 is hereby deleted and the words  "additional
Limited Partners" are hereby inserted in lieu thereof.

     (b) Clause  (iii) of Section  13.2(a) is hereby  deleted and the  following
inserted in lieu thereof:

                  "(iii)  Third,  one  hundred  percent  (100%) to the  Series A
                  Preferred  Partners  in  accordance  with  the  provisions  of
                  Section  4.5(d)  and to the  Series D  Preferred  Partners  in
                  accordance with the provisions of Section 4.8(d)."

                  (c) The words "and  Section  4.8 with  respect to the Series D
Preferred Units" is hereby inserted after the words "Section 4.5 with respect to
the Series A Preferred Units" in Section 13.6.

   Section 11.       Article 14 - Amendment of Partnership Agreement; Meetings.
                      ---------------------------------------------------------

                  (a) Sections  14.1(a),  14.1(c) and 14.1(d) are hereby amended
by inserting the words "and  4.8(f)(ii)"  after each  reference to  "4.5(f)(ii)"
therein.

                  (b) Section  14.1(c) is hereby  amended by replacing the words
"Series A Preferred Partner" with the words "holder of Parity Preferred Units."

                  (c) The last paragraph of Section 14.1(g) is hereby amended by
replacing the words  "Series A Preferred  Partners"  with the words  "holders of
Parity Preferred Units."

                  Section 12.       Miscellaneous.

                  (a)  Notwithstanding  anything to the  contrary  contained  in
Section 8.6 of the  Partnership  Agreement,  in no event shall the rights of the
holders of the Series D Preferred Units set forth in Section 5 of this Amendment
be  subordinate  to the  Redemption  Rights  set  forth  in  Section  8.6 of the
Partnership Agreement.

                  (b) The  Partnership  and the General  Partner  represent  and
warrant  that the  issuance  of the Series D  Preferred  Units  pursuant to this
Amendment is permitted pursuant to Section 4.2(b)(i).





<PAGE>


                  (c) The  Partnership  and General  Partner (i)  represent  and
warrant that,  except as disclosed on Schedule 1 attached hereto,  no Redemption
Rights contemplated in Section 8.6 require the Partnership or General Partner to
pay cash in lieu of the Share  Amount in exchange  for Units  (other than at the
election of the Partnership or General  Partner) and (ii) covenant and agree not
to grant,  without the consent of the Series A Preferred  Partners  and Series D
Preferred  Partners,  any Redemption Rights requiring the Partnership or General
Partner to pay cash in lieu of the Share  Amount in  exchange  for Units  (other
than  at  the  election  of the  Partnership  or  General  Partner)  except  (i)
redemption  rights assumed by Partnership or General  Partner in connection with
the acquisition of an existing operating  partnership and (ii) redemption rights
as to less  than 5% of the  Common  Units  arising  from a  tender  offer by the
Partnership intended to reduce the number of partners of the Partnership, unless
(i) the cash used to  effectuate  any such cash  redemption  is raised  from the
issuance of Common Stock of the General  Partner issued for such purpose or (ii)
the  Partnership  shall allow the  holders of the Series A  Preferred  Units and
Series D Preferred Units to redeem their Units for the Series A Redemption Price
and Series D Redemption  Price,  respectively,  immediately prior to the time of
such other redemption.

 Section 13.       Fourth Amended and Restated Agreement of Limited Partnership.
                 ------------------------------------------------------------

                  The form of Fourth  Amended and Restated  Agreement of Limited
Partnership  (the  "Restated  Form")  attached to the  Partnership  Agreement is
hereby amended to conform to the amendments set forth in this Amendment,  all of
which shall be deemed incorporated in said Fourth Amended and Restated Agreement
of Limited Partnership (the "Restated Agreement") upon the effectiveness thereof
(with such  conforming  changes as may be necessary to give  substantive  effect
thereto). Additionally, the Restated Agreement Form and, upon its effectiveness,
the Restated Agreement are hereby amended as follows:

     (a) Section  4.2(b)(i)(A) is hereby amended by inserting the words "subject
to Sections 4.5(f)(ii) and 4.8(f)(ii)," at the beginning of clause (ii);

     (b) Section  4.2(b)(i)(B)  is hereby  amended by  inserting  the words "and
Sections 4.5(f)(ii) and 4.8(f)(ii) after the reference to "Section  14.1(g)(ii)"
in clause (ii);

                  (c) Section  13.4(c) is hereby  amended by inserting the words
"subject  to the  priorities  set  forth  in  Section  13.2(a)"  after  the word
"balances" at the end of the next to last sentence thereof; and

     (d) Section 14.1(g) is hereby amended by inserting the following at the end
thereof:

                  "Nothing  contained in Section 14(g) shall be deemed to modify
                  or affect the rights, preferences and priorities of the Series
                  A Preferred  Partners  and Series D  Preferred  Partners as to
                  distributions and allocations."





<PAGE>


     Section  14.  Reaffirmation.  Except  as  modified  herein,  all  terms and
conditions of the  Partnership  Agreement shall remain in full force and effect,
which terms and conditions the General Partner hereby ratifies and affirms.




<PAGE>






NYDOCS03/486233 5

Signature Page to Partnership Agreement Amendment





                  IN WITNESS WHEREOF, this Amendment has been executed as of the
date first above written.

                                                     GENERAL PARTNER

                                                    Regency Realty Corporation



                                                     By:
                                      Name:
                                     Title:




                                                 BELAIR REAL ESTATE CORPORATION



                                                     By:
                                      Name:
                                     Title:


                                                    BELCREST REALTY CORPORATION

                                                     By:
                                      Name:
                                     Title: