<PAGE>

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                  CORNERSTONE NC OPERATING LIMITED PARTNERSHIP
                  --------------------------------------------

                         a Virginia limited partnership

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

            THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
            UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
            OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
           TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
         REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
            AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN
           FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE
          EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION
          MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
                 APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

                         dated as of September 30, 2001

================================================================================
================================================================================

                                       i
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                                TABLE OF CONTENTS
                                -----------------
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                           <C>
ARTICLE 1 - DEFINED TERMS

ARTICLE 2 - ORGANIZATIONAL MATTERS

Section 2.1 Organization.........................................................................................16
Section 2.2 Name.................................................................................................16
Section 2.3 Registered Office and Agent; Principal Office........................................................16
Section 2.4 Power of Attorney....................................................................................16
Section 2.5 Term.................................................................................................17

ARTICLE 3 - PURPOSE

Section 3.1 Purpose and Business.................................................................................17
Section 3.2 Powers...............................................................................................18
Section 3.3 Partnership Only For Purposes Specified..............................................................18
Section 3.4 Representations and Warranties by the Limited Partners...............................................18

ARTICLE 4 - CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Initial Partners; Sale of Property......................................20
Section 4.2 Additional Funding and Capital Contributions.........................................................21
Section 4.3 Loans by Third Parties...............................................................................22
Section 4.4 No Interest; No Return...............................................................................22

ARTICLE 5 - DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions....................................................22
Section 5.2 Distributions In Kind................................................................................23
Section 5.3 Amounts Withheld.....................................................................................23
Section 5.4 Distributions upon Liquidation.......................................................................23
Section 5.5 Restricted Distributions.............................................................................23

ARTICLE 6 - ALLOCATIONS

Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss..........................................23
Section 6.2 General Allocations..................................................................................24
Section 6.3 Additional Allocation Provisions.....................................................................24
Section 6.4 Tax Allocations......................................................................................26
Section 6.5 Other Provisions.....................................................................................27

ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1 Management...........................................................................................27
Section 7.2 Certificate of Limited Partnership...................................................................29
Section 7.3 Restrictions on General Partner's Authority..........................................................30
Section 7.4 Refinancing, Sales...................................................................................31
Section 7.5 [Reserved]...........................................................................................32
Section 7.6 Other Business of the General Partner................................................................32
Section 7.7 Indemnification......................................................................................32
Section 7.8 Liability of the General Partner.....................................................................34
Section 7.9 Other Matters Concerning the General Partner.........................................................35
Section 7.10 Title to Partnership Assets.........................................................................36
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                                      ii


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<S>                                                                                                            <C>
ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability..............................................................................36
Section 8.2 Management of Business...............................................................................36
Section 8.3 Outside Activities of A Limited Partner..............................................................36
Section 8.4 Return of Capital....................................................................................37
Section 8.5 Rights of Limited Partners Relating To the Partnership...............................................37
Section 8.6 Redemption Rights of Qualifying Parties..............................................................38
Section 8.7 Partnership Right To Call Limited Partner Interests..................................................40
Section 8.8 Other Redemptions....................................................................................41
Section 8.9 Exchange Rights of Holders of Non-Preferred Partnership Units........................................41

ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting...............................................................................42
Section 9.2 Fiscal Year..........................................................................................42
Section 9.3 Reports..............................................................................................42

ARTICLE 10 - TAX MATTERS

Section 10.1 Preparation of Tax Returns..........................................................................43
Section 10.2 Tax Elections.......................................................................................43
Section 10.3 Tax Matters Partner.................................................................................43
Section 10.4 Withholding.........................................................................................44

ARTICLE 11 - TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer............................................................................................45
Section 11.2 Transfer of General Partner's Partnership Interest..................................................45
Section 11.3 Limited Partners' Rights to Transfer................................................................46
Section 11.4 Additional Or Substituted Limited Partners..........................................................47
Section 11.5 Assignees...........................................................................................48
Section 11.6 General Provisions..................................................................................48
Section 11.7 Incremental Costs...................................................................................50

ARTICLE 12 - ADMISSION OF PARTNERS

Section 12.1 Admission of Successor General Partner..............................................................50
Section 12.2 Admission of Additional Limited Partners and Substituted
Limited Partner..................................................................................................51
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.......................................51
Section 12.4 Limit on Number of Partners.........................................................................52

ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1 Dissolution.........................................................................................52
Section 13.2 Winding Up..........................................................................................52
Section 13.3 Deemed Contribution and Distribution................................................................54
Section 13.4 Rights of Limited Partners..........................................................................54
Section 13.5 Notice of Dissolution...............................................................................55
Section 13.6 Cancellation of Certificate of Limited Partnership..................................................55
Section 13.7 Reasonable Time for Winding-Up......................................................................55

ARTICLE 14 - PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS;
MEETINGS

Section 14.1 Procedures for Actions and Consents of Partners.....................................................55
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                                      iii

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<S>                                                                                                             <C>
Section 14.2 Amendments..........................................................................................55
Section 14.3 Meetings of the Partners............................................................................56

ARTICLE 15 - GENERAL PROVISIONS

Section 15.1 Addresses and Notice................................................................................57
Section 15.2 Further Action......................................................................................57
Section 15.3 Binding Effect......................................................................................57
Section 15.4 Waiver..............................................................................................57
Section 15.5 Counterparts........................................................................................58
Section 15.6 Applicable Law......................................................................................58
Section 15.7 Entire Agreement....................................................................................58
Section 15.8 Invalidity of Provisions............................................................................58
Section 15.9 Limitation to Preserve REIT Status..................................................................58
Section 15.10 No Partition.......................................................................................59
Section 15.11 No Third-Party Rights Created Hereby...............................................................59
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                                      iv
<PAGE>

                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                  CORNERSTONE NC OPERATING LIMITED PARTNERSHIP

     THIS AGREEMENT OF LIMITED PARTNERSHIP OF CORNERSTONE NC OPERATING LIMITED
PARTNERSHIP, dated as of September 30, 2001 (the "Effective Date"), is entered
into by and between Cornerstone Realty Income Trust, Inc., a Virginia
corporation, as the "General Partner", and State Street, LLC, a North Carolina
limited liability company and State Street I, LLC, a North Carolina limited
liability company, as the "Original Limited Partners".

                                   RECITALS
                                   --------

        WHEREAS, on September 30, 2001, the General Partner, entered into
Membership Interest Contribution Agreements (the "Contribution Agreements") with
the Original Limited Partners pursuant to which the Original Limited Partners
agreed to contribute to a partnership to be formed all of the membership
interests in seven lower-tiered limited liability companies holding real
property in North Carolina (the "Contributed Property").

        WHEREAS, the General Partner wishes to assign its rights and obligations
under the Contribution Agreements to the Partnership.

         NOW THEREFORE, in consideration of the foregoing recitals and covenants
between the parties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                   AGREEMENT
                                   ---------

                                   ARTICLE 1
                                 DEFINED TERMS
                                 -------------

     As used in this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, (i) the terms defined in this Article include
the plural as well as the singular; (ii) all accounting terms not otherwise
defined herein have the meanings ascribed to them in accordance with GAAP;
(iii)all references in this Agreement to designated "Articles," "Sections" and
other subdivisions are to the designated Articles, Sections and other
subdivisions of this Agreement; (iv) the words "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; (v) "including" shall mean
"including, without limitation," "including, without limiting the generality of
the foregoing," and other phrases of similar import; and (v) the following terms
shall have the meanings ascribed to them set forth below.

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

     "Actions" has the meaning set forth in Section 7.7 hereof.

     "Additional Funds" has the meaning set forth in Section 4.2.A hereof.

                                       1

<PAGE>

     "Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 4.2.D or 11.4 hereof and who is shown as
such on the books and records of the Partnership.

     "Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:

          (a) decrease such deficit by any amounts that such Partner is
     obligated to restore pursuant to this Agreement or by operation of law upon
     liquidation of such Partner's Partnership Interest or is deemed to be
     obligated to restore pursuant to the penultimate sentence of each of
     Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

          (b) increase such deficit by the items described in Regulations
     Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

     "Adjustment Factor" means 1.0; provided, however, that in the event that:

          (a) the General Partner (i) declares or pays a dividend on its
     outstanding REIT Shares in REIT Shares or makes a distribution to all
     holders of its outstanding REIT Shares in REIT Shares, (ii) splits or
     subdivides its outstanding REIT Shares or (iii) effects a reverse stock
     split or otherwise combines its outstanding REIT Shares into a smaller
     number of REIT Shares, the Adjustment Factor shall be adjusted by
     multiplying the Adjustment Factor previously in effect by a fraction, (1)
     the numerator of which shall be the number of REIT Shares issued and
     outstanding on the record date for such dividend, distribution, split,
     subdivision, reverse split or combination (assuming for such purposes that
     such dividend, distribution, split, subdivision, reverse split or
     combination has occurred as of such time) and (2) the denominator of which
     shall be the actual number of REIT Shares (determined without the above
     assumption) issued and outstanding on the record date for such dividend,
     distribution, split, subdivision, reverse split or combination;

          (b) in the event that the General Partner distributes any rights,
     options or warrants to all holders of its REIT Shares to subscribe for or
     to purchase or to otherwise acquire REIT Shares (or other securities or
     rights convertible into, exchangeable for or exercisable for REIT Shares)at
     a price per share less than the Value of a REIT Share on the record date
     for such distribution (each a "Distributed Right"), then the Adjustment
     Factor shall be adjusted by multiplying the Adjustment Factor previously in
     effect by a fraction, (i) the numerator of which shall be the number of
     REIT Shares issued and outstanding on the record date plus the maximum
     number of REIT Shares purchasable under such Distributed Rights and (ii)
     the denominator of which shall be the number of REIT Shares issued and
     outstanding on the record date plus a fraction, (1) the numerator of which
     is the maximum number of REIT Shares purchasable under such Distributed
     Rights times the minimum purchase price per REIT Share under such
     Distributed Rights and (2) the

                                       2

<PAGE>

     denominator of which is the Value of a REIT Share as of the record date;
     provided, however, that, if any such Distributed Rights expire or become no
     longer exercisable, then the Adjustment Factor shall be adjusted, effective
     retroactive to the date of distribution of the Distributed Rights, to
     reflect a reduced maximum number of REIT Shares or any change in the
     minimum purchase price for the purposes of the above fractions;

          (c) in the event that the General Partner shall, by dividend or
     otherwise, distribute to all holders of its REIT Shares evidences of its
     indebtedness or assets (including securities, but excluding any cash
     dividend or any dividend or distribution referred to in subsection (a)
     above), which evidences of indebtedness or assets relate to assets not
     received by the General Partner pursuant to a pro rata distribution by the
     Partnership, then the Adjustment Factor shall be adjusted to equal the
     amount determined by multiplying the Adjustment Factor in effect
     immediately prior to the close of business on the date fixed for
     determination of shareholders entitled to receive such distribution by a
     fraction, (i) the numerator shall be such Value of a REIT Share on the date
     fixed for such determination and (ii) the denominator shall be the Value of
     a REIT Share on the dated fixed for such determination less the then Fair
     Market Value (as reasonably determined by the General Partner) of the
     portion of the evidences of indebtedness or assets so distributed
     applicable to one REIT Share.

Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event. For illustrative purposes, examples of adjustments to the
Adjustment Factor are set forth on Exhibit B attached hereto.

     "Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "Control" when used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "Controlling" and "Controlled" have meanings correlative to the foregoing.

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

     "Applicable Percentage" has the meaning set forth in Section 8.6.B hereof.

     "Appraisal" means, with respect to real property or any interest therein
(other than the Real Property), the written opinion of an independent third
party experienced in the valuation of similar assets, selected by the General
Partner in good faith. Such opinion may be in the form of an opinion by such
independent third party that the Fair Market Value for such asset as set by the
General Partner is fair, from a financial point of view, to the Partners and/or
the Partnership.

         "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 an Additional Limited Partner or a Substituted Limited Partner, and who
has the rights set forth in Section 11.5 hereof.

                                       3

<PAGE>

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

          (a) the sum, without duplication, of:

               (1) the Partnership's Net Income or Net Loss (as the case may be)
          for such period;

               (2) all payments of interest on account of Partner Loans;

               (3) Depreciation and all other noncash charges to the extent
          deducted in determining Net Income or Net Loss for such period;

               (4) any reserves or increases in reserves (including Working
          Capital Reserves) of the Partnership;

               (5) the excess, if any, of the net cash proceeds from the sale,
          exchange, disposition, financing or refinancing of Partnership
          property for such period over the Net Income (or Net Loss, as the case
          may be) attributable to and recognized as a result of such sale,
          exchange, disposition, financing or refinancing during such period
          (excluding Terminating Capital Transactions); and

               (6) all other cash received (including amounts previously accrued
          as Net Income and amounts of deferred income) or any net amounts
          borrowed by the Partnership for such period that was not included in
          determining Net Income or Net Loss for such period;

     (b) Less the sum, without duplication, of:

               (1) all principal debt payments made during such period by the
          Partnership other than payments on account of Partner Loans in which
          anyone other than the Holders of Preferred Partnership Units has
          participated; and

               (2) any amount included in determining Net Income or Net Loss for
          such period that was not received by the Partnership during such
          period.

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 dissolution and the commencement of the
liquidation and winding up of the Partnership.

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

     "Capital Account" means, with respect to any Partner, the Capital Account
maintained by the Partnership for such Partner on the Partnership's books and
records in accordance with the following provisions:

                                       4

<PAGE>

          (a) To each Partner's Capital Account, there shall be added such
     Partner's Capital Contributions, such Partner's distributive share of Net
     Income and any items in the nature of income or gain that are specially
     allocated pursuant to Section 6.3 hereof, and the principal amount of any
     Partnership liabilities assumed by such Partner or that are secured by any
     property distributed to such Partner.

          (b) From each Partner's Capital Account, there shall be subtracted the
     amount of cash and the Gross Asset Value of any property distributed to
     such Partner pursuant to any provision of this Agreement, such Partner's
     distributive share of Net Loss and any items in the nature of expenses or
     losses that are specially allocated pursuant to Section 6.3 hereof and the
     principal amount of any liabilities of such Partner assumed by the
     Partnership or that are secured by any property contributed by such Partner
     to the Partnership.

          (c) In the event any interest in the Partnership is Transferred in
     accordance with the terms of this Agreement, the transferee shall succeed
     to the Capital Account of the transferor to the extent that it relates to
     the Transferred interest.

          (d) In determining the principal amount of any liability for purposes
     of subsections (a) and (b) hereof, there shall be taken into account Code
     Section 752(c) and any other applicable provisions of the Code and
     Regulations.

          (e) The provisions of this Agreement relating to the maintenance of
     Capital Accounts are intended to comply with Regulations Sections
     1.704-1(b)and 1.704-2, and shall be interpreted and applied in a manner
     consistent with such Regulations. If the General Partner shall determine
     that it is prudent to modify the manner in which the Capital Accounts are
     maintained in order to comply with such Regulations, the General Partner
     may make such modification provided that such modification will not have a
     material effect on the amounts distributable to any Partner without the
     Consent of the Limited Partners. 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 that unanticipated
     events might otherwise cause this Agreement not to comply with Regulations
     Section 1.704-1(b) or Section 1.704-2.

     "Capital Contribution" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any Contributed Property that such
Partner contributes to the Partnership pursuant to Section 4.1 or Section 4.2.D
hereof.

     "Cash Amount" means an amount of cash equal to the product of (i) the Value
of a REIT Share and (ii) the REIT Shares Amount determined as of the applicable
Valuation Date attributable to the Tendered Units.

     "Certificate" means the Certificate of Limited Partnership of the
Partnership filed in the office of the State Corporation Commission of the
Commonwealth of Virginia, as amended from time to time in accordance with the
terms hereof and the Act.

                                       5

<PAGE>

     "Charter" means the Articles of Incorporation of the General Partner filed
with the Virginia State Corporation Commission, as amended, supplemented or
restated from time to time.

     "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time or any successor statute thereto, as interpreted by the
applicable Regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.

     "Consent" means the consent to, approval of, or vote on a proposed action
by a Limited Partner given in accordance with Article 14 hereof, which Consent
shall be obtained prior to the taking of any action for which it is required by
this Agreement and, except as otherwise provided in this Agreement, may be given
or withheld by the relevant Limited Partners, in their reasonable discretion.

     "Contributed Property" has the meaning set forth in the Recitals of this
Agreement, together with any other asset, in such form as may be permitted by
the Act, but excluding cash, contributed or deemed contributed to the
Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Code Section 708).

     "Cut-Off Date" means with respect to Tendered Units covered by a Notice of
Redemption received by the General Partner the later of (i) the last Business
Day of the Calendar month in which a Notice of Redemption is received and (ii)
the first Business Day which is at least fifteen (15) days after the date that
the Notice of Redemption is received.

     "Debt" means, as to any Person as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with generally accepted accounting principles, should be
capitalized.

     "Depreciation" means, for each Fiscal Year or other applicable 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
period, Depreciation shall be in an amount that 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 or other period 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 or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.

                                       6

<PAGE>

     "Distributed Right" has the meaning set forth in the definition of
"Adjustment Factor."

     "Effective Date" has the meaning set forth in the preamble to this
Agreement.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.

     "Fair Market Value" shall mean, as of the time of determination, (i) with
respect to the Contributed Property or any interest therein, the value of the
Contributed Property or such interest determined by agreement of the General
Partner and the Original Limited Partners and (ii) with respect to other
material real property interests, the value of such property determined by
agreement of the General Partner or the Liquidator, as applicable, and the
Original Limited Partners or, if no such agreement has been reached, the value
determined by Appraisal.

     "Family Members" means, as to a Person that is an individual, (i) such
Person's spouse; (ii) such Person's ancestors; (iii) such Person's descendants
(whether by blood or by adoption); (iv) such Person's brothers and sisters; (v)
Inter Vivos or testamentary trusts of which only such Person and/or his spouse,
ancestors, descendants (whether by blood or by adoption), brothers and/or
sisters are beneficiaries; and (vi) any partnership or limited liability company
all of whose partners or members consist of such Person and/or his spouse,
ancestors, descendants (whether by blood or by adoption), brothers and/or
sisters and/or Inter Vivos or testamentary trusts of which only such Person
and/or his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and/or sisters are beneficiaries.

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

     "Funding Notice" has the meaning set forth in Section 4.2.B hereof.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounts and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the United States accounting profession, which are applicable to the
circumstances on the date of determination.

     "General Partner" means Cornerstone Realty Income Trust, Inc., a Virginia
corporation, and its successors and assigns, as the general partner of the
Partnership in its capacity as general partner of the Partnership.

                                       7

<PAGE>

     "General Partner Interest" means the Partnership Interest held by the
General Partner, which Partnership Interest is an interest as a general partner
under the Act. A General Partner Interest may be expressed as a number of
Partnership 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
     Limited Partner to the Partnership shall be set forth on the Partner
     Schedule with respect to such Limited Partner.

          (b) The Gross Asset Values of all Partnership assets immediately prior
     to the occurrence of any event described in clause (1), clause (2), clause
     (3), clause (4) or clause (5) hereof shall be adjusted to equal their
     respective gross Fair Market Values as of the following times:

               (1) the acquisition of an additional interest in the Partnership
     (other than in connection with the execution of this Agreement but
     including contributions or deemed contributions by a Partner pursuant to
     Section 4.2 hereof) by a new or existing Partner in exchange for more than
     a de minimis Capital Contribution, if the General Partner reasonably
     determines that such adjustment is necessary or appropriate to reflect the
     relative economic interests of the Partners in the Partnership;

               (2) 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, if the General Partner reasonably determines that such
     adjustment is necessary or appropriate to effect the relative economic
     interests of the Partners in the Partnership;

               (3) the liquidation of the Partnership within the meaning of
     Regulations Section 1.704-1(b)(2)(ii)(g);

               (4) upon the admission of a successor General Partner pursuant to
     Section 12.1 hereof; and

               (5) at such other times as the General Partner shall reasonably
     determine necessary or advisable in order to comply with Regulations
     Sections 1.704-1(b) and 1.704-2.

          (c) The Gross Asset Value of any Partnership asset distributed to a
     Partner shall be the Fair Market Value of such asset on the date of
     distribution.

          (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 subsection (d) to the extent that the General Partner reasonably
     determines that an adjustment pursuant to subsection (b) above is necessary
     or appropriate in connection with a

                                       8

<PAGE>

     transaction that would otherwise result in an adjustment pursuant to this
     subsection (d).

          (e) If the Gross Asset Value of a Partnership asset has been
     determined or adjusted pursuant to subsection (a), subsection (b) or
     subsection (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 Net Income and Net Losses.

     "Gross Income" means, for each Fiscal Year of the Partnership, an amount
equal to the sum of all items of income and gain taken into account in
determining Net Income or Net Loss.

     "Holder" means either (i) a Partner or (ii) an Assignee owning a
Partnership Unit that is treated as a member of the Partnership for federal
income tax purposes.

     "Incapacity" or "Incapacitated" means, (i) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her person
or his or her estate; (ii) as to any Partner that is a corporation or limited
liability company, the filing of a certificate of dissolution, or its
equivalent, for the corporation or limited liability company or the revocation
of its charter; (iii) as to any Partner that is a partnership, the dissolution
and commencement of winding up of the partnership; (iv) as to any Partner that
is an estate, the distribution by the fiduciary of the estate's entire interest
in the Partnership; (v) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief of or against such Partner under any bankruptcy, insolvency or other
similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors; (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's assets; (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof; (g) the appointment without the Partner's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety
(90) days of such appointment; or (h) an appointment referred to in clause (g)
above is not vacated within ninety (90) days after the expiration of any such
stay.

     "Indemnitee" means (i) any Person made a party to a proceeding by reason of
its status as (A) the General Partner or a Limited Partner or (B) a director of
the General Partner or a Limited Partner, or an officer or employee of the
Partnership or the General Partner or a Limited Partner; and (ii) such other
Persons (including Affiliates of the General Partner, a Limited Partner or the
Partnership) as the General Partner may designate from

                                       9

<PAGE>

time to time (whether before or after the event giving rise to potential
liability), in its reasonable discretion.

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

     "Limited Partner" means the Original Limited Partners or any Additional
Limited Partner or Substituted Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership. In no event shall the General Partner become
or be construed to be a Limited Partner hereunder, even if the General Partner
acquires Partnership Units previously held by a Limited Partner, whether
pursuant to Section 8.6 hereof or otherwise.

     "Limited Partner 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 Partner Interest may be expressed as
a number of Partnership Units.

     "Liquidating Event" has the meaning set forth in Section 13.1 hereof.

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

     "Loan To Value Ratio" shall mean the ratio of the principal amount of Debt
secured by a mortgage or deed of trust to the Fair Market Value of the property
securing such Debt, in each instance as of the time of determination.

     "Majority in Interest of the Limited Partners" means those Limited Partners
holding in the aggregate more than fifty percent (50%) of the aggregate
Partnership Units of all Limited Partners.

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

          (a) 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 of "Net Income" or "Net Loss" shall be
     added to (or subtracted from, as the case may be) such taxable income (or
     loss);

          (b) Any expenditure of the Partnership described in Code Section
     705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant
     to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
     account in computing Net Income (or Net Loss) pursuant to this definition
     of "Net Income" or "Net Loss," shall be subtracted from (or added to, as
     the case may be) such taxable income (or loss);

          (c) In the event that the Gross Asset Value of any Partnership asset
     is adjusted pursuant to subsection (b) or subsection (c) of the definition
     of "Gross Asset Value," the amount of such adjustment shall

                                      10

<PAGE>

     be taken into account as gain or loss from the disposition of such asset
     for purposes of computing Net Income or Net Loss;

          (d) Gain or loss resulting from any disposition of property with
     respect to which gain or loss is recognized for federal income tax purposes
     shall be computed by reference to the Gross Asset Value of the property
     disposed of, notwithstanding that the adjusted tax basis of such property
     differs from its Gross Asset Value;

          (e) In lieu of the depreciation, amortization and other cost recovery
     deductions that would otherwise be taken into account in computing such
     taxable income or loss, there shall be taken into account Depreciation for
     such Fiscal Year;

          (f) To the extent that an adjustment to the adjusted tax basis of any
     Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
     required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be
     taken into account in determining Capital Accounts as a result of a
     distribution other than in liquidation of a Partner's interest in the
     Partnership, the amount of such adjustment shall be treated as an item of
     gain (if the adjustment increases the basis of the asset) or loss (if the
     adjustment decreases the basis of the asset) from the disposition of the
     asset and shall be taken into account for purposes of computing Net Income
     or Net Loss; and

          (g) Notwithstanding any other provision of this definition of "Net
     Income" or "Net Loss," any item that is specially allocated pursuant to
     Section 6.3.B hereof shall not be taken into account in computing Net
     Income or Net Loss. The amounts of the items of Partnership income, gain,
     loss or deduction available to be specially allocated pursuant to Section
     6.3 hereof shall be determined by applying rules analogous to those set
     forth in this definition of "Net Income" or "Net Loss."

     "Non-Preferred Partnership Units" means Partnership Units issued to the
Original Limited Partners as of the Effective Date, whether subsequently held by
an Original Limited Partner, any other Limited Partner or an Assignee.

     "Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal 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 substantially in the
form of Exhibit C attached to this Agreement.

     "Original Limited Partners" has the meaning set forth in the first
paragraph hereof, any Assignee or other transferee, including any Additional
Limited Partner or Substituted Limited Partner succeeding to all or any part of
the Partnership Interest of an Original Limited Partner.

     "Ownership Limit" means the applicable restriction on ownership of shares
of the General Partner currently imposed under the Charter; e.g., no

                                      11

<PAGE>

ownership of more than nine and 8/10ths percent (9.9%) of the REIT Shares issued
and outstanding.

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

     "Partner Loan" has the meaning set forth in Section 4.2.C hereof.

     "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 Fiscal Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).

     "Partner Schedule" means a schedule, substantially in the form attached
hereto as Exhibit A and executed by the General Partner and a Limited Partner
(including the Original Limited Partners and any Additional Limited Partner or
Substituted Limited Partner), that shall set forth, with respect to a Limited
Partner to which Partnership Units are issued pursuant to this Agreement; (i)
the Gross Asset Values, as determined by the General Partner and agreed to by
the contributing Limited Partner, for any Contributed Property contributed by
such contributing Limited Partner; and (ii) the initial Partnership Units issued
to such Limited Partner.

     "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 by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership 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 Fiscal 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, which record date shall be the same as the record date established by
the General Partner for a distribution to its shareholders.

     "Partnership Unit" means a fractional share of the Partnership Interests of
all Partners issued pursuant to Section 4.1 or Section 4.2 hereof; provided,
however, that the General Partner Interest and the Limited Partner Interests
shall have the differences in rights and privileges as specified in

                                      12

<PAGE>

this Agreement. The ownership of Partnership Units may (but need not, in the
sole and absolute discretion of the General Partner, except in the case of the
Original Limited Partners) be evidenced by a certificate for Partnership Units
issued by the General Partner.

     "Permitted Transfer" has the meaning set forth in Section 11.3.A hereof.

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

     "Preferred Partnership Units" means Partnership Units issued to the
Original Limited Partners as of the Effective Date, whether subsequently held by
an Original Limited Partner, any other Limited Partner, an Assignee or the
General Partner (following the acquisition of Tendered Units pursuant to Section
8.6 hereof).

     "Preferred Return Per Unit" means with respect to Preferred Partnership
Units, a return equal to the annualized cash dividends paid on account of a REIT
Share for any applicable period. The Preferred Return Per Unit shall not
constitute a "Guaranteed Payment" under Code Section 707(c).

     "Prime Rate" means the interest rate which First Union National Bank, a
national banking association, announces from time to time as its prime lending
rate; provided, however, that if such Bank (or any successor bank) no longer
announces a prime lending rate, the interest rate announced from time to time by
another bank designated by the General Partner which is one of the twenty (20)
largest national banks, measured by total assets.

     "Qualified Transferee" means an "Accredited Investor" as defined in Rule
501 promulgated under the Securities Act.

     "Qualifying Party" means (i) an Original Limited Partner; (ii) an
Additional Limited Partner or a Substituted Limited Partner; or (iii) a Family
Member or an Assignee who is also a Qualified Transferee; provided, however,
that with respect to each such Family Member or Assignee (other than such an
Assignee in a Permitted Transfer pursuant to a pledge of Partnership Units),
until such time as the Original Limited Partner from whom such Family Member or
Assignee derived its Partnership Units is deceased or Incapacitated, such Family
Member or Assignee shall effect a Redemption and any other rights pursuant to
Section 8.6 hereof solely through, by power of attorney or other method approved
by the General Partner or the Original Limited Partner from whom such Family
Member or Assignee derived its Partnership Units.

     "Redemption" has the meaning set forth in Section 8.6.A hereof.

     "Redemption Date" means the date, which is sixty (60) days following the
Cut-Off Date (or if such date is not a Business Day, then the next following
Business Day).

     "Regulations" means the applicable income tax regulations under the Code,
whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

                                      13

<PAGE>

     "Regulatory Allocations" has the meaning set forth in Section 6.3.B(h)
hereof.

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

     "REIT Partner" means a Partner or Assignee that is, or has made an election
to qualify as, a REIT.

     "REIT Payment" has the meaning set forth in Section 15.9 hereof.

     "REIT Requirements" has the meaning set forth in Section 5.1. hereof.

     "REIT Share" means a share of the General Partner's common stock, par value
$0.01 per share or, with respect to any successor General Partner by way of any
merger in which such successor is the survivor, a share of the successor General
Partner's common stock; provided, however, if the successor General Partner has
more than one class of stock or other publicly traded security, REIT Share shall
mean a share of that class of common stock or other publicly traded security
that was acquired by the shareholders of the General Partner as merger
consideration in connection with such merger.

     "REIT Shares Amount" means a number of REIT Shares equal to the product of
(i) the number of Tendered Units and (ii) the Adjustment Factor; provided,
however, that if the General Partner issues to all holders of REIT Shares as of
a certain record date rights, options, warrants or convertible or exchangeable
securities entitling the General Partner's shareholders to subscribe for or
purchase REIT Shares, or any other securities or property (collectively, the
"Rights"), with the record date for such Rights issuance falling within the
period starting on the date of the Notice of Redemption and ending on the day
immediately preceding the Redemption Date, which Rights will not be distributed
before the relevant Redemption Date, then the REIT Shares Amount shall also
include such Rights that a holder of that number of REIT Shares would be
entitled to receive, expressed, where relevant hereunder, in a number of REIT
Shares determined by the General Partner in good faith.

     "Related Party" means, with respect to any Person, any other Person whose
ownership of shares of the General Partner's capital stock would be attributed
to the first such Person under either Code Section 544 (as modified by Code
Section 856(h)(1)(B)) or Code Section 318 (as modified by Code Section
856(d)(5)).

     "Related Person" means with respect to a Partner or a Holder, a Person
bearing a relationship to such Partner or Holder, or a Person to whom such
Partner or Holder bears a relationship, specified in Regulations Section
1.752-4(b).

     "Rights" has the meaning set forth in the definition of "REIT Shares
Amount."

     "SEC" means the Securities and Exchange Commission.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

                                      14

<PAGE>

     "Substituted Limited Partner" means an Assignee who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof. The term
"Substituted Limited Partner" shall not include any Additional Limited Partner.

     "Tax Items" has the meaning set forth in Section 6.4.A hereof.

     "Tendered Units" has the meaning set forth in Section 8.6.A hereof.

     "Tendering Party" has the meaning set forth in Section 8.6.A hereof.

     "Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.

     "Transfer," when used with respect to a Partnership Unit or all or any
portion of a Partnership Interest, means any sale, assignment, bequest,
conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when the term is used in Article 11 hereof, Transfer does not
include (a) any Redemption of Partnership Units by the Partnership, or
acquisition of Tendered Units from the Limited Partners by the General Partner,
pursuant to Section 8.6 hereof or (b) any redemption of Partnership Units
pursuant to Section 8.7 or Section 8.8 hereof. The terms "Transferred" and
"Transferring" have correlative meanings.

     "Valuation Date" means (a) in the case of a tender of Partnership Units for
Redemption, the date of receipt by the General Partner of a Notice of Redemption
or, if such date is not a Business Day, the immediately preceding Business Day
or (b) in any other case, the date specified in this Agreement.

     "Value" means, on any Valuation Date with respect to a REIT Share, the
average of the daily market prices for twenty (20) consecutive trading days
immediately preceding the Valuation Date. The market price for any such trading
day shall be:

          (a) if the REIT Shares are listed or admitted to trading on any
     securities exchange or The Nasdaq Stock Market's National Market System,
     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,
     in either case as reported in the principal consolidated transaction
     reporting system;

          (b) if the REIT Shares are not listed or admitted to trading on any
     securities exchange or The Nasdaq Stock Market's National Market System,
     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

          (c) if the REIT Shares are not listed or admitted to trading on any
     securities exchange or The Nasdaq Stock Market's National Market System and
     no such last reported sale price or closing bid and asked prices are
     available, the average of the reported high bid and low

                                      15

<PAGE>

     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 five (5) days prior to the
     date in question) for which prices have been so reported; provided,
     however, that if there are no bid and asked prices reported during the five
     (5) days prior to the date in question, the Value of the REIT Shares shall
     be determined by Appraisal. In the event that the REIT Shares Amount
     includes Rights that a holder of REIT Shares would be entitled to receive,
     then the Value of such Rights shall be determined by Appraisal.

                                    ARTICLE 2
                             ORGANIZATIONAL MATTERS
                             ----------------------

     Section 2.1 Organization

     The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and subject to the 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. The Partnership Interest of each
Partner shall be personal property for all purposes.

     Section 2.2 Name

     The name of the Partnership is Cornerstone NC Operating Limited
Partnership. The Partnership's business may be conducted under any other name or
names selected by the General Partner, including the name of the General Partner
or any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Partners of such change in the next regular communication to the Partners.

     Section 2.3 Registered Office And Agent; Principal Office

     The address of the registered office of the Partnership in the Commonwealth
of Virginia is located at One James Center, 901 East Cary Street, Richmond,
Virginia 23219, and the registered agent for service of process on the
Partnership in the Commonwealth of Virginia at such registered office is James
W. C. Canup, who is a resident of Virginia and a member of the Virginia State
Bar. The principal registered office of the Partnership is located at 306 East
Main Street, Richmond, Virginia 23219 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 Commonwealth of Virginia as the General Partner deems advisable.

     Section 2.4 Power Of Attorney

     A. Each Limited Partner and each Assignee hereby irrevocably constitutes
and appoints the General Partner, any Liquidator and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in

                                      16

<PAGE>

each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead to
execute, swear to, seal, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including this Agreement and the Certificate and all amendments, supplements 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 to the extent provided by
applicable law) in the Commonwealth of Virginia and in all other jurisdictions
in which the Partnership may conduct business or own property; (b) all
conveyances and other instruments or documents that are appropriate or necessary
to reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including a certificate of cancellation; (c) all
conveyances and other instruments or documents that are appropriate or necessary
to reflect the distribution or exchange of assets of the Partnership pursuant to
the terms of this Agreement; (d) 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; and (f) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges relating to Partnership Interests. 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. The foregoing power of attorney is hereby declared to be irrevocable and
a special power coupled with an interest, in recognition of the fact that each
of the Limited Partners and Assignees will be relying upon the power of the
General Partner 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 or Partnership Interest and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidator, within fifteen (15) days after receipt of the General
Partner's or the Liquidator's request therefor, such other instruments as the
General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.

     Section 2.5 Term

     The term of the Partnership shall commence on the Effective Date and shall
continue until December 31, 2100 unless the Partnership is dissolved sooner
pursuant to the provisions of Article 13 hereof or as otherwise provided by law.

                                    ARTICLE 3
                                     PURPOSE
                                     -------

     Section 3.1 Purpose And Business

     The purpose and nature of the Partnership is to conduct the business of
ownership, construction, development and operation of the real property owned by
the limited liability companies the membership interests in which

                                      17

<PAGE>

constitute the Contributed Property (the "Real Property") and anything necessary
or incidental to the foregoing; provided, however, that such business may be
limited to and conducted in such a manner as to permit the General Partner, in
its sole and absolute discretion, at all times to be classified as a REIT.

     Section 3.2 Powers

     A. The Partnership shall be 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.

     B. Notwithstanding any other provision in this Agreement, the General
Partner may cause the Partnership not to take, or to refrain from taking, any
action that, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of the General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner to any
additional taxes under Code Section 857 or Code Section 4981 or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner, its securities or the Partnership, unless
such action (or inaction) under clause (i), clause (ii) or clause (iii) above
shall have been specifically consented to by the General Partner in writing.

     Section 3.3 Partnership Only For Purposes Specified

     The Partnership shall be a limited partnership only for the purposes
specified in Section 3.1 hereof, and this Agreement shall not be deemed to
create a company, venture or partnership between or among the Partners with
respect to any activities whatsoever other than the activities within the
purposes of the Partnership as specified in Section 3.1 hereof. Except as
otherwise provided in this Agreement, no Partner shall have any authority to act
for, bind, commit or assume any obligation or responsibility on behalf of the
Partnership, its properties or any other Partner. No Partner, in its capacity as
a Partner under this Agreement, shall be responsible or liable for any
indebtedness or obligation of another Partner, nor shall the Partnership be
responsible or liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of this Agreement by
such Partner, except as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of this Agreement
and the Act.

     Section 3.4 Representations And Warranties By The Limited Partners

     A. Each Limited Partner that is an individual (including each Additional
Limited Partner or Substituted Limited Partner as a condition to becoming an
Additional Limited Partner or a Substituted Limited Partner) represents and
warrants to the Partnership, the General Partner and each other Limited Partner
that (i) the consummation of the transactions contemplated by this Agreement to
be performed by such Limited Partner will not result in a breach or violation
of, or a default under, any material agreement by which such Limited Partner or
any of such Limited Partner's property is bound, or any statute, regulation,
order or other law to which such Limited Partner is subject; (ii) such Limited
Partner is neither a "Foreign Person" within the meaning of Code Section 1445(f)
nor a "Foreign Partner" within the meaning of Code Section 1446(e); (iii) to the
best of its

                                      18

<PAGE>

knowledge, after reasonable inquiry, such Limited Partner does not own, directly
or indirectly or by attribution under Code Section 318 (as modified by Code
Section 856(d)(5)), (A) stock of any corporation that is a tenant of either (I)
the General Partner, (II) the Partnership or (III) any partnership, venture or
limited liability company of which the General Partner or the Partnership is a
member; or (B) an interest in the assets or net profits of any tenant of either
(I) the General Partner; (II) the Partnership; or (III) any partnership, venture
or limited liability company of which the General Partner or the Partnership is
a member; (iv) such Limited Partner does not own, directly or indirectly or by
attribution under Code Section 544 (as modified by Code Section 856(h)) stock of
the General Partner other than by reason of the Redemption right; and (v) this
Agreement is binding upon and enforceable against such Limited Partner in
accordance with its terms.

     B. Each Limited Partner that is not an individual (including each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner)
represents and warrants to the Partnership, the General Partner and each other
Limited Partner that (i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including
that of its general partner(s), committee(s), trustee(s), beneficiaries,
directors and/or shareholder(s), as the case may be, as required; (ii) the
consummation of such transactions shall not result in a breach or violation of,
or a default under, its partnership or operating agreement, trust agreement,
charter or bylaws, as the case may be, any material agreement by which such
Limited Partner or any of such Limited Partner's properties or any of its
partners, members, beneficiaries, trustees or shareholders, as the case may be,
is or are bound, or any statute, regulation, order or other law to which such
Limited Partner or any of its partners, members, trustees, beneficiaries or
shareholders, as the case may be, is or are subject; (iii) such Limited Partner
is neither a "Foreign Person" within the meaning of Code Section 1445(f) nor a
"Foreign Partner" within the meaning of Code Section 1446(e); (iv) to the best
of its knowledge, after reasonable inquiry, such Limited Partner does not own,
directly or indirectly or by attribution under Code Section 318 (as modified by
Code Section 856(d)(5)), (A) stock of any corporation that is a tenant of either
(I) the General Partner; (II) the Partnership; or (III) any partnership, venture
or limited liability company of which the General Partner or the Partnership is
a member; or (B) an interest in the assets or net profits of any tenant of
either (I) the General Partner; (II) the Partnership; or (III) any partnership,
venture or limited liability company of which the General Partner or the
Partnership is a member; (v) such Limited Partner does not own, directly or
indirectly or by attribution under Code Section 544 (as modified by Code Section
856(h)) stock of the General Partner other than by reason of the Redemption
right; and (vi) this Agreement is binding upon, and enforceable against, such
Limited Partner in accordance with its terms.

     C. Each Limited Partner (including each Substituted Limited Partner as a
condition to becoming a Substituted Limited Partner) represents, warrants and
agrees that it has acquired and continues to hold its interest in the
Partnership for its own account for investment only and not for the purpose of,
or with a view toward, the resale or distribution of all or any part thereof,
nor with a view toward selling or otherwise distributing such interest or any
part thereof at any particular time or under any predetermined circumstances.
Each Limited Partner further represents and

                                      19

<PAGE>

warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.

     D. The representations and warranties contained in Sections 3.4.A, 3.4.B
and 3.4.C hereof shall survive the execution and delivery of this Agreement by
each Limited Partner (and, in the case of an Additional Limited Partner or a
Substituted Limited Partner, the admission of such Additional Limited Partner or
Substituted Limited Partner as a Limited Partner in the Partnership) and the
dissolution, liquidation and termination of the Partnership. The General Partner
may, in its sole and absolute discretion on behalf of the Partnership and its
Partners, grant waivers and exceptions to the representations and warranties
contained in Sections 3.4.A, 3.4.B and 3.4.C hereof, but any such waiver or
exception must be in writing, must refer to this Section 3.4.D and must describe
with particularity the representation or warranty as to which such waiver or
exception shall apply.

     E. Each Limited Partner (including each Substituted Limited Partner as a
condition to becoming a Substituted Limited Partner) hereby represents that it
has consulted and been advised by its legal counsel and tax advisor in
connection with, and acknowledges that no representations have been made by any
Partner or any employee or representative or Affiliate of any Partner with
respect to, the potential profit, tax consequences of any sort (including the
tax consequences resulting from making a Capital Contribution, being admitted to
the Partnership or being allocated Tax Items), cash flows, funds from operations
or yield, if any, in respect of the Partnership, and that projections and any
other information, including financial and descriptive information and
documentation, that may have been in any manner submitted to such Limited
Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

                                    ARTICLE 4
                              CAPITAL CONTRIBUTIONS
                              ---------------------

     Section 4.1 Capital Contributions Of The Initial Partners; Sale of Property

     A. At the time of the execution of this Agreement, the Original Limited
Partners and the General Partner shall have made and shall make, respectively,
their respective Capital Contributions shown on Exhibit A attached hereto. The
Original Limited Partners and the General Partner shall initially own
Partnership Units in the respective amounts set forth on such Exhibit A. Except
as provided by law, in Section 4.2.C, Section 4.2.D or Section 10.4 hereof, or
as may be necessary to effect a Redemption, the Partners shall have no
obligation or right to make any additional Capital Contributions or loans to the
Partnership.

     B. The General Partner and the Original Limited Partners agree to treat the
conveyance of the Contributed Property as a Capital Contribution pursuant to
Section 4.1.A as a transfer described in Section 721 of the Code. Unless the
Original Limited Partners otherwise consent, the Partnership shall file all
federal and state income tax returns, and shall reflect the Contributed Property
on its books, in a manner consistent with this treatment.

                                      20

<PAGE>

     Section 4.2 Additional Funding And Capital Contributions

     A. General. The General Partner may, in good faith, at any time and from
time to time, determine that the Partnership requires additional funds
("Additional Funds") in order to meet its Debts and obligations and fulfill the
purposes set forth in Section 3.1 hereof. Additional Funds may be raised by the
Partnership, at the election of the General Partner, in any manner provided in,
and in accordance with, the terms of this Section 4.2 or Section 4.3 hereof.

     B. Notice of Additional Funds Requirement. The General Partner shall give
written notice (the "Funding Notice") to the Limited Partners of the need for
Additional Funds and the anticipated source(s) thereof.

     C. Partner Loans. The General Partner may lend Additional Funds to the
Partnership (a "Partner Loan") on terms and conditions no less favorable to the
Partnership than would be available to the Partnership from any third party;
provided, however, that in no event shall the aggregate outstanding principal
balance of all Partner Loans made by the General Partner exceed Five Million
Dollars ($5,000,000) the ("Loan Limit"); and provided further, that each Limited
Partner may elect, by delivering written notice to the General Partner within
thirty (30) days of the delivery of the Funding Notice, to participate in the
Partner Loan in the same proportionate share as such Limited Partner's Units
bears to the aggregate Units of all Holders, including the General Partner,
participating in such Loan, or such other share as the General Partner and such
Holders shall agree. In the event the General Partner has not elected to lend
Additional Funds to the Partnership, the General Partner has failed to make the
additional Capital Contribution required by Section 4.2(D) hereof, and a Limited
Partner has made a good faith determination that the lack of Additional Funds
could cause the Partnership to default in its obligations to third parties,
including any holder of any Debt secured by a mortgage or deed of trust on the
Real Property, such Limited Partner may elect, by delivering written notice to
the General Partner and all other Limited Partners, to lend Additional Funds to
the Partnership as a Partner Loan on terms and conditions no less favorable to
the Partnership than would be available to the Partnership from any third party.
In such event, within thirty (30) days of the delivery of the foregoing notice,
each other Limited Partner may elect, by delivering written notice to the
notifying Limited Partner to participate in the Partner Loan in the same
proportionate share as such Limited Partner's Units bears to the aggregate Units
of all Holders participating in such Loan, or such other share as the notifying
Limited Partner and such Holders shall agree.

     D. Additional General Partner Contributions; Additional Limited Partners.
In the event the General Partner has failed to make a Partner Loan in the full
amount of the Additional Funds or in the event the General Partner has reached
the Loan Limit(and the Original Limited Partners have elected not to make
Partner Loans in an amount equal to the unfunded Additional Funds), the General
Partner shall make additional cash Capital Contributions in an amount equal to
such unfunded Additional Funds. Whether or not a Funding Notice is given to the
Limited Partners, the General Partner on behalf of the Partnership may raise all
or any portion of the Additional Funds by making additional Capital
Contributions and/or accepting additional Capital Contributions from any other
Partners and/or third parties and either (i) in the case of Partners (including
the General Partner),increasing such Partner's Partnership Units; or (ii) in the
case of a third party, admitting

                                      21

<PAGE>

such third party as an Additional Limited Partner; provided, however, that the
General Partner shall have secured the consent required under Section 12.2(A).
Subject to the terms of this Section 4.2 and to the definition of "Gross Asset
Value," the General Partner shall determine in good faith the amount, terms and
conditions of such additional Capital Contributions; provided, however, that (i)
in no event shall any such Contribution entitle the maker thereof to a
distribution or return prior to, the distribution and return to which the
Holders of Preferred Partnership Units are entitled hereunder; and (ii) in the
case of an additional Capital Contribution by the General Partner, the
Partnership shall issue to the General Partner the number of Partnership Units
derived by dividing (a) the amount of the additional Capital Contribution (net
of any liabilities assumed or taken subject to by the Partnership) by (b) the
Value determined as of the date of such Capital Contribution.

     Section 4.3 Loans By Third Parties

     The Partnership may incur or assume Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements, for any purpose, upon
such terms as the General Partner determines appropriate; subject, however, to
the limitations of Sections 7.3 and 7.4 hereof, the Partner Schedule attached
hereto as Exhibit A, and the proviso of Section 7.9(D) hereof.

     Section 4.4 No Interest; No Return

     No Partner shall be entitled to interest on its Capital Contribution or on
such Partner's Capital Account. Except as provided herein or by law, no Partner
shall have any right to demand or receive the return of its Capital Contribution
from the Partnership.

                                    ARTICLE 5
                                  DISTRIBUTIONS
                                  -------------

     Section 5.1 Requirement And Characterization Of Distributions

     The General Partner shall cause the Partnership to distribute quarterly all
(or with respect to amounts to be distributed pursuant to clause (2) below, such
portion as the General Partner may in its sole and absolute discretion
determine) of the Available Cash generated by the Partnership with respect to
such quarter as follows:

          (1) First, to each Holder of Preferred Partnership Units on the
     Partnership Record Date, pari passu, an amount equal to the sum of (i) the
     product of (a) the Preferred Return Per Unit for such quarter and (b) the
     number of Preferred Partnership Units held by such Holder as of the
     Partnership Record Date; and (ii) any accrued but unpaid amounts previously
     distributable to such Holder (or its predecessor) under clause (i), above,
     plus interest thereon at the Prime Rate in effect on the scheduled date of
     such distribution under such clause (i) for the period commencing with such
     scheduled date and ending on the date of its distribution hereunder;
     provided, however, that the amount distributable pursuant to clause (i) to
     any Additional Limited Partner holding Preferred Partnership Units admitted
     to the Partnership in the quarter immediately preceding and ending with
     such Partnership Record Date shall be prorated based on the number of days
     that such Additional

                                      22

<PAGE>

     Limited Partner was a Holder of such Preferred Partnership Units during
     such quarter; and

          (2) Second, 0.001% to the Limited Partners and Assignees in accordance
     with their respective Partnership Units and the balance to the General
     Partner.

The General Partner in its sole and absolute discretion may distribute to the
Holders Available Cash in accordance with foregoing priorities on a more
frequent basis and provide for an appropriate record date.

     Section 5.2 Distributions In Kind

     No right is given to any Holder to demand or receive property other than
cash as provided in this Agreement. With the Consent of a Majority in Interest
of the Limited Partners, the General Partner may make a distribution in kind of
Partnership assets to the Holders and, in such event, subject to Section 8.8
hereof, such assets shall be distributed in such a fashion as to ensure that the
same are distributed and allocated in accordance with Articles 5, 6 and 10
hereof. In the event of a Terminating Capital Transaction, at the request of any
Original Limited Partner, the General Partner will use its best efforts to make
a distribution in kind of Partnership assets in accordance with the preceding
sentence.

     Section 5.3 Amounts Withheld

     All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.4 hereof with respect to any allocation, payment or
distribution to any Holder shall be treated as amounts paid or distributed to
such Holder pursuant to Section 5.1 hereof for all purposes under this
Agreement.

     Section 5.4 Distributions Upon Liquidation

     Notwithstanding the other provisions of this Article 5, net proceeds from a
Terminating Capital Transaction, and any other cash received or reductions in
reserves made after commencement of the liquidation of the Partnership, shall be
distributed to the Holders in accordance with Section 13.2 hereof.

     Section 5.5 Restricted Distributions

     Notwithstanding any provision to the contrary contained in this Agreement,
neither the Partnership nor the General Partner, on behalf of the Partnership,
shall make a distribution to any Holder on account of its Partnership Interest
or interest in Partnership Units if such distribution would violate Section
50-73.100 of the Act or other applicable law.

                                    ARTICLE 6
                                   ALLOCATIONS
                                   -----------

     Section 6.1 Timing And Amount Of Allocations Of Net Income And Net Loss

     Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Fiscal Year of the Partnership as of the end of
each such year. Except as otherwise provided in this Article 6, and

                                      23

<PAGE>

subject to Section 11.6.C hereof, an allocation to a Holder of a share of Net
Income or Net Loss shall be treated as an allocation of the same share of each
item of income, gain, loss or deduction that is taken into account in computing
Net Income or Net Loss.

     Section 6.2 General Allocations

     Except as otherwise provided in this Article 6 and subject to Section
11.6.C hereof, Net Income and Net Loss, net of the Gross Income allocated
pursuant to Section 6.3.A, shall be allocated as follows:

          (1) 99.999% to the General Partner; and

          (2) 0.001% to the Limited Partners and Assignees (including the
     General Partner following the acquisition of Tendered Units pursuant to
     Section 8.6 hereof) in accordance with their respective Partnership Units
     at the end of each Fiscal Year.

     Section 6.3 Additional Allocation Provisions

     Notwithstanding the foregoing provisions of this Article 6:

     A. Special Allocations. Gross income shall be allocated to each Holder of
Partnership Units for any Fiscal Year (and, if necessary, subsequent Fiscal
Years) to the extent that such Holder receives a distribution of the Preferred
Return Per Unit pursuant to Section 5.1.1 of this Agreement.

     B. Regulatory Allocations.

          (a) Minimum Gain Chargeback. Except as otherwise provided in
              -----------------------
     Regulations Section 1.704-2(f), notwithstanding the provisions of Section
     6.2 hereof, or any other provision of this Article 6, if there is a net
     decrease in Partnership Minimum Gain during any Fiscal Year, each Holder
     shall be specially allocated items of Partnership income and gain for such
     year (and, if necessary, subsequent years) in an amount equal to such
     Holder'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 Holder pursuant thereto. The items to be
     allocated shall be determined in accordance with Regulations Sections
     1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.B(a) is intended to
     qualify as a "Minimum Gain Chargeback" within the meaning of Regulations
     Section 1.704-2(f) and shall be interpreted consistently therewith.

          (b) Partner Minimum Gain Chargeback. Except as otherwise provided in
              -------------------------------
     Regulations Section 1.704-2(i)(4) or in Section 6.3.B(a) hereof, if there
     is a net decrease in Partner Minimum Gain attributable to a Partner
     Nonrecourse Debt during any Fiscal Year, each Holder 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 Holder'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)(4). Allocations pursuant to the previous sentence shall be made
     in proportion to the

                                      24

<PAGE>

     respective amounts required to be allocated to each General Partner,
     Limited Partner and other Holder pursuant thereto. The items to be so
     allocated shall be determined in accordance with Regulations Sections
     1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.B(b) is intended to
     qualify as a "Chargeback Of Partner Nonrecourse Debt Minimum Gain" within
     the meaning of Regulations Section 1.704-2(i) and shall be interpreted
     consistently therewith.

          (c) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any
              ---------------------------------------------------------
     Nonrecourse Deductions for any Fiscal Year shall be specially allocated to
     the Holders of Partnership Units in accordance with their share of Net Loss
     under Section 6.2. Any Partner Nonrecourse Deductions for any Fiscal Year
     shall be specially allocated to the Holder(s) 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).

          (d) Qualified Income Offset. If any Holder unexpectedly receives an
              -----------------------
     adjustment, allocation or distribution described in Regulations Section
     1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain
     shall be allocated, in accordance with Regulations Section
     1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to
     eliminate, to the extent required by such Regulations, the Adjusted Capital
     Account Deficit of such Holder as quickly as possible, provided that an
     allocation pursuant to this Section 6.3.B(d) shall be made if and only to
     the extent that such Holder would have an Adjusted Capital Account Deficit
     after all other allocations provided in this Article 6 have been
     tentatively made as if this Section 6.3.B(d) were not in the Agreement. It
     is intended that this Section 6.3.B(d) qualify and be construed as a
     "Qualified Income Offset" within the meaning of Regulations Section
     1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

          (e) Gross Income Allocation. In the event that any Holder has a
              -----------------------
     deficit Capital Account at the end of any Fiscal Year that is in excess of
     the sum of (i) the amount (if any) that such Holder is obligated to restore
     to the Partnership upon complete liquidation of such Holder's Partnership
     Interest and (ii) the amount that such Holder 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), each such Holder shall be specially
     allocated items of Partnership income and gain in the amount of such excess
     eliminate such deficit as quickly as possible, provided that an allocation
     pursuant to this Section 6.3.B(e) shall be made if and only to the extent
     that such Holder would have a deficit Capital Account in excess of such sum
     after all other allocations provided in this Article 6 have been
     tentatively made as if this Section 6.3.B(e) and Section 6.3.B(d) hereof
     were not in the Agreement.

          (f) Limitation on Allocation of Net Loss. To the extent that any
              ------------------------------------
     allocation of Net Loss would cause or increase an Adjusted Capital Account
     Deficit as to any Holder of Partnership Units, such allocation of Net Loss
     shall be reallocated among the other Holders of Partnership Units in
     accordance with their respective Partnership Units, subject to the
     limitations of this Section 6.3.B(f).

                                      25

<PAGE>

          (g) Section 754 Adjustment. To the extent that an adjustment to the
              ----------------------
     adjusted tax basis of any Partnership asset pursuant to Code Section 734(b)
     or Code Section 743(b) is required, pursuant to Regulations Section
     1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to
     be taken into account in determining Capital Accounts as the result of a
     distribution to a Holder of Partnership Units in complete liquidation of
     its interest in the Partnership, 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 gain or loss shall be specially allocated to the Holders
     in accordance with their Partnership Units in the event that Regulations
     Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
     distribution was made in the event that Regulations Section
     1.704-1(b)(2)(iv)(m)(4) applies.

          (h) Curative Allocations. The allocations set forth in Sections
              --------------------
     6.3.B(a), (b), (c), (d), (e), (f) and (g) hereof (the "Regulatory
     Allocations") are intended to comply with certain regulatory requirements,
     including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
     Notwithstanding the provisions of Section 6.1 hereof, the Regulatory
     Allocations shall be taken into account in allocating other items of
     income, gain, loss and deduction among the Holders so that, to the extent
     possible without violating the requirements giving rise to the Regulatory
     Allocations, the net amount of such allocations of other items and the
     Regulatory Allocations to each Holder shall be equal to the net amount that
     would have been allocated to each such Holder if the Regulatory Allocations
     had not occurred.

     C. Allocation of Excess Nonrecourse Liabilities. For purposes of
        --------------------------------------------
determining a Holder's proportional share of the "Excess Nonrecourse
Liabilities" of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), each Holder's interest in Partnership profits for a Fiscal Year
shall be as follows: one hundred percent (100%) to the Limited Partners and
Assignees (including the General Partner following the acquisition of Tendered
Units pursuant to Section 8.6 hereof) in accordance with their respective
Partnership Units at the end of such Fiscal Year.

     Section 6.4 Tax Allocations

     A. In General. Except as otherwise provided in this Section 6.4, for income
tax purposes under the Code and the Regulations each Partnership item of income,
gain, loss and deduction (collectively, "Tax Items") shall be allocated among
the Holders in the same manner as its correlative item of "Book" income, gain,
loss or deduction is allocated pursuant to Sections 6.2 and 6.3 hereof.

     B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A hereof, Tax Items with respect to the Contributed Property or
other property that is contributed to the Partnership with a Gross Asset Value
that varies from its basis in the hands of the contributing Partner immediately
preceding the date of contribution shall be allocated among the Holders for
income tax purposes pursuant to Regulations promulgated under Code Section
704(c) so as to take into account such variation. The Partnership shall account
for such variation under the method set forth in the Partner Schedule attached
hereto as Exhibit A. In the event that the Gross Asset Value of any Partnership
asset is adjusted pursuant to

                                      26

<PAGE>

subsection (b) of the definition of "Gross Asset Value" (provided in Article 1
hereof), subsequent allocations of Tax Items with respect to such asset shall
take account of the variation, if any, between the adjusted basis of such asset
and its Gross Asset Value in the same manner as under Code Section 704(c) and
the applicable Regulations.

     Section 6.5 Other Provisions

     A. Other Allocations Upon Change in Law. In the event that the Code or any
Regulations require allocations of items of income, gain, loss, deduction or
credit different from those set forth in this Article 6, the General Partner is
hereby authorized to make new allocations in reliance on the Code and such
Regulations, such new allocations shall be effected pursuant to the fiduciary
duty of the General Partner to the Partnership and the other Partners; provided,
however, that in no event shall any such new allocations adversely affect the
net after-tax economic return to which the Limited Partners would otherwise be
entitled under this Agreement in the absence of such new allocations.

     B. Consistent Tax Reporting. The Partners acknowledge and are aware of the
income tax consequences of the allocations made by this Article 6 and hereby
agree to be bound by the provisions of this Article 6 in reporting their shares
of Net Income, Net Losses and other items of income, gain, loss, deduction and
credit for federal, state and local income tax purposes.

                                    ARTICLE 7
                      MANAGEMENT AND OPERATIONS OF BUSINESS
                      -------------------------------------

     Section 7.1 Management

     A. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership are and shall be
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Partners with or without cause, except with the consent of the General
Partner. In addition to the powers now or hereafter granted a general partner of
a limited partnership under applicable law or that are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to the other provisions hereof, including Sections 7.3 and 7.4 hereof,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:

          (1) the making of any expenditures, the lending or borrowing of money
     (including making prepayments on loans and borrowing money to permit the
     Partnership to make distributions to its Partners in such amounts as will
     permit the General Partner (so long as the General Partner qualifies as a
     REIT) to avoid the payment of any federal income tax (including, for this
     purpose, any excise tax pursuant to Code Section 4981) and to make
     distributions to its shareholders sufficient to permit the General Partner
     to maintain REIT status or otherwise to satisfy the REIT Requirements), 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

                                      27

<PAGE>

     mortgage, deed of trust or other lien or encumbrance on the Partnership's
     assets) and the incurring of any obligations that it deems necessary for
     the conduct of the activities of the Partnership;

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

          (3) the acquisition, sale, transfer, exchange or other disposition of
     any assets of the Partnership;

          (4) the mortgage, pledge, encumbrance or hypothecation of any assets
     of the Partnership (including the Real Property), the use of the assets of
     the Partnership (including cash on hand) for any purpose consistent with
     the terms of this Agreement and on any terms that it sees fit, including
     the financing of the operations and activities of the Partnership, and the
     repayment of obligations of the Partnership;

          (5) the management, operation, leasing, landscaping, repair,
     alteration, demolition, replacement or improvement of any property,
     including the Real Property, or other asset of the Partnership;

          (6) the negotiation, execution and performance of any contracts,
     Leases, conveyances or other instruments that the General Partner considers
     useful or necessary to the conduct of the Partnership's operations or the
     implementation of the General Partner's powers under this Agreement,
     including contracting with property managers (including as to the Real
     Property or other property, contracting with the contributing or any other
     Limited Partner or its Affiliates for property management services),
     contractors, developers, consultants, accountants, legal counsel, other
     professional advisors and other agents and the payment of their expenses
     and compensation out of the Partnership's assets; provided, however, that
     in no event shall the General Partner enter into any such contract or lease
     for any consideration in excess of the amount an independent third party
     would charge and expect to receive as reimbursable expenses or compensation
     for comparable goods or services;

          (7) the establishment and maintenance of working capital and other
     reserves in such amounts as the General Partner, in its sole and absolute
     discretion, deems appropriate from time to time;

          (8) the distribution of Partnership cash or other Partnership assets
     in accordance with this Agreement, the holding, management, investment and
     reinvestment of cash and other assets of the Partnership and the collection
     and receipt of revenues, rents and income of the Partnership;

          (9) the selection and dismissal of agents, outside attorneys,
     accountants, consultants and contractors of the Partnership or the General
     Partner and the determination of their compensation and other terms of
     employment or hiring;

          (10) the maintenance of such insurance for the benefit of the

                                      28

<PAGE>

     Partnership and the Partners as it deems necessary or appropriate,
     including casualty insurance on the Real Property to the same extent as
     maintained on the General Partner's properties held outside the
     Partnership;

          (11) the control of any matters affecting the rights and obligations
     of the Partnership, including the settlement, compromise, submission to
     arbitration or any other form of dispute resolution, or abandonment, of any
     claim, cause of action, liability, debt or damages, due or owing to or from
     the Partnership, the commencement or defense of suits, legal proceedings,
     administrative proceedings, arbitrations or other forms of dispute
     resolution, and the representation of the Partnership in all suits or legal
     proceedings, administrative proceedings, arbitrations or other forms of
     dispute resolution, the incurring of legal expense, and the indemnification
     of any Person against liabilities and contingencies to the extent permitted
     by law;

          (12) the enforcement of any rights against any Partner pursuant to
     representations, warranties, covenants and indemnities relating to such
     Partner's contribution of property or assets to the Partnership;

          (13) the exercise, directly or indirectly, through any
     attorney-in-fact acting under a general or limited power of attorney, of
     any right, including the right to vote, appurtenant to any asset or
     investment held by the Partnership;

          (14) the making, execution and delivery of any and all deeds, leases,
     notes, mortgages, deeds of trust, security agreements, conveyances,
     contracts, guarantees, warranties, indemnities, waivers, releases or legal
     instruments or agreements in writing necessary or appropriate in the
     judgment of the General Partner for the accomplishment of any of the powers
     of the General Partner enumerated in this Agreement; and

          (15) the issuance of additional Partnership Units in connection with
     Capital Contributions by Additional Limited Partners and additional Capital
     Contributions by Partners pursuant to Article 4 hereof.

     B. Each of the Limited Partners agrees that, notwithstanding any other
provision of this Agreement, the Act or any applicable law, rule or regulation,
except as provided in Section 7.3 hereof, 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.

     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 Commonwealth of
Virginia and the State of North Carolina and any other state or the District of
Columbia or any other jurisdiction in which the Partnership may elect to do
business or own property. Subject to the terms of Section 8.5.A(4) hereof, the
General Partner shall not be required, before

                                      29

<PAGE>

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 to the extent provided by applicable
law) in the Commonwealth of Virginia and the State of North Carolina and any
other state or the District of Columbia or any other jurisdiction in which the
Partnership may elect to do business or own property.

     Section 7.3    Restrictions On General Partner's Authority

     A. The General Partner may not take any action in contravention of this
Agreement. Specifically, the General Partner may not:

          (1) take any action that would make it impossible to carry on the
     ordinary business of the Partnership, except as provided in Article 13
     hereof;

          (2) possess Partnership property, or assign any rights in specific
     Partnership property, for other than a Partnership purpose;

          (3) admit a Person as a Partner, except as otherwise provided in this
     Agreement;

          (4) perform any act that would subject a Limited Partner to liability
     as a general partner; or

          (5) take or fail to take any action that prohibits or restricts, or
     has the effect of prohibiting or restricting, the ability of (i) the
     General Partner or the Partnership from satisfying its obligations under
     Section 5.1 or Section 8.6 hereof in full or (ii) a Limited Partner from
     exercising its rights under Section 8.6 hereof to effect a Redemption in
     full, except, in either case, with the Consent of such Limited Partner
     affected by the prohibition or restriction.

     B. The General Partner shall not, without the prior Consent of the Limited
Partners, undertake, on behalf of the Partnership, any of the following actions
or enter into any transaction that would have the effect of any such action:

          (1) except as provided in Section 7.3.D hereof, amend, modify or
     terminate this Agreement other than to reflect the admission, substitution,
     termination or withdrawal of Partners pursuant to Article 11 or Article 12
     hereof;

          (2) make a general assignment for the benefit of creditors or appoint
     or acquiesce in the appointment of a custodian, receiver or trustee for all
     or any part of the assets of the Partnership;

          (3) institute any proceeding for bankruptcy on behalf of the
     Partnership; or

          (4) subject to the rights of Transfer provided in Section 11.2

                                      30

<PAGE>

     hereof, approve or acquiesce to the Transfer of the Partnership Interest of
     the General Partner, or admit into the Partnership any additional or
     successor General Partners.

     C. Notwithstanding Section 7.3.B hereof, 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:

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

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

          (3) to reflect a change that is of an inconsequential nature and does
     not adversely affect the Limited Partners in any material respect;

          (4) 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 law; and

          (5) to reflect such changes as are reasonably necessary for the
     General Partner to maintain its status as a REIT or to satisfy the REIT
     Requirements.

The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.

     D. Notwithstanding any other provision hereof, this Agreement shall not be
amended, and no action may be taken by the General Partner, without the Consent
of each Limited Partner adversely affected, if such amendment or action would
(i) convert a Limited Partner Interest in the Partnership into a General Partner
Interest (except as a result of the General Partner acquiring such Partnership
Interest); (ii) modify the limited liability of a Limited Partner; (iii) alter
the rights of the Holders of Preferred Partnership Units to receive
distributions pursuant to Article 5 or Section 13.2.A hereof, including amending
or modifying any related definitions, or the allocations specified in Article 6
hereof; (iv) alter or modify the Redemption rights, Cash Amount or REIT Shares
Amount, or amend or modify any related definitions; or (v) amend this Section
7.3 or Section 7.4. Further, no amendment may alter the restrictions on the
General Partners authority set forth elsewhere in this Section 7.3 or Section
7.4 without the Consent specified therein. Any such amendment or action
consented to by any Limited Partner shall be effective as to that Limited
Partner, notwithstanding the absence of such Consent by any other Limited
Partner.

     Section 7.4 Refinancing, Sales

     The General Partner hereby represents and warrants to, and covenants with,
the Original Limited Partners that it will not breach or otherwise violate any
of its promises, agreements, undertaking or covenants set forth in the Partner
Schedule attached hereto as Exhibit A concerning, among other things, the
financing or refinancing of any Partnership Debt and the sale,

                                      31

<PAGE>

exchange, or other disposition of any Real Property, except as expressly
permitted under Section 7.9(D) hereof.

     Section 7.5 [Reserved]

     Section 7.6 Other Business of the General Partner

     The General Partner may engage independently or with others in other
business ventures of every nature and description, including the ownership of
other properties and the making or management of other investments. Nothing in
this Agreement shall be deemed to prohibit the General Partner or any Affiliate
of the General Partner from dealing, or otherwise engaging in business with,
Persons transacting business with the Partnership, or from providing services
related to the purchase, sale, financing, management, development or operation
of real or personal property and receiving compensation therefor, and may have
business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities that
are in direct or indirect competition with the Partnership or that may conflict
with or detract from the activities of the Partnership. 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 ventures or
activities or to the income or proceeds derived therefrom, and the pursuit of
such ventures, even if competitive with the business of the Partnership, shall
not be deemed wrongful or improper and neither the General Partner or any
Affiliate of the General Partner shall have any obligation pursuant to this
Agreement to offer any interest in any such venture or activity to the
Partnership, any Limited Partner or any such Person, even if such opportunity is
of a character that, if presented to the Partnership, any Limited Partner or
such other Person, could be taken by such Person.

     Section 7.7 Indemnification

     A. To the fullest extent permitted by applicable law, the Partnership shall
indemnify each Indemnitee from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including attorney's fees and other
legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement ("Actions") in which such Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise;
provided, however, that the Partnership shall not indemnify an Indemnitee (i)
for willful misconduct, gross negligence or a knowing violation of the law; (ii)
for any transaction for which such Indemnitee received an improper personal
benefit in violation or breach of any provision of this Agreement; or (iii) for
liabilities incurred in violation of the terms of this Agreement; and provided
further, however, that the General Partner shall make every effort not to cause
the Partnership to sell any of its property to fund any such indemnity. The
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to
a loan guaranty or otherwise, for any indebtedness of the Partnership (including
any indebtedness which the Partnership has assumed or taken subject to), and the
General Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent with the
provisions of this Section 7.7 in favor of any Indemnitee having or potentially
having liability for any such indebtedness. It is the intention of this Section
7.7.A that the Partnership indemnify each Indemnitee to the

                                      32

<PAGE>

fullest extent permitted by law. 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. Any
indemnification pursuant to this Section 7.7 shall be made first out of
Available Cash of the Partnership generated in the ordinary course of
Partnership operations, and neither the General Partner nor any Limited Partner
shall have any obligation to contribute to the capital of the Partnership or
otherwise provide funds to enable the Partnership to fund its obligations under
this Section 7.7.

     B. To the fullest extent permitted by applicable law, each Partner shall
indemnify each other Indemnitee from and against any and all Actions in which
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise attributable to such Partner's willful misconduct, gross negligence,
knowing violation of the law or transaction for which such Partner received an
improper personal benefit in violation or breach of any provision of this
Agreement.

     C.   To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by the indemnifying
party as incurred by the Indemnitee in advance of the final disposition of the
Action upon receipt by the indemnifying party 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 indemnifying party under 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 such
standard of conduct has not been met.

     D. 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 and shall inure to the benefit of the heirs, successors, assigns
and administrators of the Indemnitee unless otherwise provided in a written
agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.

     E. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any 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.

     F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

     G. 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.

     H. 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. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof

                                      33

<PAGE>

shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

     I. It is the intent of the Partners that any amounts paid by the
Partnership to a Partner pursuant to this Section 7.7 shall be treated as
"Guaranteed Payments" within the meaning of Code Section 707(c).

     Section 7.8 Liability Of The General Partner

     A. Notwithstanding anything to the contrary set forth in this Agreement,
neither the General Partner nor any of its directors or officers shall be liable
or accountable in damages or otherwise to the Partnership, any Partners or any
Assignees for losses sustained, liabilities incurred or benefits not derived as
a result of errors in judgment or mistakes of fact or law or of any act or
omission if the General Partner or such director or officer acted in good faith
unless any such error, mistake, act or omission constitutes gross negligence,
fraud, willful misconduct, a knowing violation of law or a breach of this
Agreement.

     B. The Limited Partners expressly acknowledge that the General Partner is
acting for the benefit of the Partnership, the Limited Partners and the General
Partner's shareholders collectively and that the General Partner is under no
obligation to give priority to the separate interests of the Limited Partners or
the General Partner's shareholders in deciding whether to cause the Partnership
to take (or decline to take) any actions; provided, however, that the General
Partner shall at all times, in good faith, attempt to minimize any adverse tax
consequences to the Original Limited Partners as a result of such action or
inaction; and provided further, however, that no such action or inaction may
breach or otherwise violate any of the promises, agreements, undertakings or
covenants of the General Partner set forth in the Partner Schedule attached
hereto as Exhibit A.

     C. 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 employees or agents (subject to the supervision
and control of the General Partner).

     D. 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, and its officers' and directors',
liability to the Partnership or 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.

     E. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (a) active and deliberate dishonesty; or (b) actual receipt
of an improper benefit or profit in money, property or services. This Agreement
is executed by the officers of the General Partner solely as officers of the
same and not in their own individual capacities.

                                      34

<PAGE>

     F. To the extent that, at law or in equity, the General Partner has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or the Limited Partners, the General Partner shall not be liable to the
Partnership or to any other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of the General Partner otherwise
existing at law or in equity, are agreed by the Partners to replace such other
duties and liabilities of such General Partner.

     G. Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner acknowledges that the obligation of the Partnership to
redeem Tendered Units in accordance with Section 8.6.A hereof, and the
obligation of the General Partner to cause the Partnership to deliver the Cash
Amount for Tendered Units in accordance with Section 8.6.B hereof if the General
Partner has failed to exchange REIT Shares for Tendered Units in accordance with
the provisions thereof, are affirmative obligations of the General Partner on
behalf of the Partnership or on its own behalf, and no Tendering Party shall be
obligated to seek or exhaust its remedies against the Partnership prior to
seeking the Cash Amount directly from the General Partner.

     Section 7.9 Other Matters Concerning The General Partner

     A. Except as otherwise provided to the contrary herein, the General Partner
shall at all times act in its fiduciary capacity as a general partner of a
limited partnership.

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

     C. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters that the 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.

     D. 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 the General Partner to continue
to qualify as a REIT, (ii) for the General Partner otherwise to satisfy the REIT
Requirements or (iii) to avoid the General Partner incurring any taxes under
Code Section 857 or Code Section 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners. The General
Partner will attempt to minimize the recognition of any taxable income or gain
by the Original Limited Partners resulting from such action or omission.

                                      35

<PAGE>

     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 with other Partners or
Persons, shall have any ownership interest in such Partnership assets or any
portion thereof.

                                    ARTICLE 8
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
                   ------------------------------------------

     Section 8.1 Limitation Of Liability

     Except for the capital contributed by the Original Limited Partners
pursuant to Section 4.1 hereof, the Original Limited Partners shall have no
further obligation to fund any amounts to the Partnership. The Limited Partners
shall have no liability under this Agreement except as expressly provided in
this Agreement 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, member, 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 operations, 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, member,
employee, partner, agent, representative, 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 A Limited Partner

     A Limited Partner may engage independently or with others in other business
ventures of every nature and description, including the ownership of other
properties and the making or management of other investments. Nothing in this
Agreement shall be deemed to prohibit a Limited Partner or any Affiliate of a
Limited Partner from dealing, or otherwise engaging in business with, Persons
transacting business with the Partnership, or from providing services related to
the purchase, sale, financing, management, development or operation of real or
personal property and receiving compensation therefor, and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct or
indirect competition with the Partnership or that may conflict with or detract
from the activities of the Partnership. 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 ventures or activities or to the income
or proceeds derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper and neither a Limited Partner or any Affiliate of a Limited Partner
shall have any obligation pursuant to this Agreement to offer any interest in
any such venture or activity to the Partnership, the General

                                      36


<PAGE>

Partner, any other Limited Partner or any such Person, even if such opportunity
is of a character that, if presented to the Partnership, the General Partner,
any other Limited Partner or such other Person, could be taken by such Person.

     Section 8.4 Return Of Capital

     Except pursuant to the rights of Redemption set forth in Section 8.6
hereof, no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein.
Except to the extent provided in  Sections 5.1 and 13.2 hereof or otherwise
expressly provided in this Agreement, no Limited Partner or Assignee shall have
priority over any other Limited Partner or Assignee either as to the return of
Capital Contributions or as to profits, losses or distributions.

     Section 8.5 Rights Of Limited Partners Relating To The Partnership

     A. 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 have
the right, upon written demand and at such Limited Partner's own expense:

          (1) to obtain a copy of (i) the most recent annual and quarterly
     reports filed with the SEC by the General Partner pursuant to the Exchange
     Act and (ii) each report or other written communication sent to the
     shareholders of the General Partner;

          (2)  to obtain a copy of the Partnership's federal, state and local
     income tax returns for each Fiscal Year;

          (3)  to obtain a current list of the name and last known business,
     residence or mailing address of each Partner;

          (4) to obtain a copy of this Agreement and the Certificate and all
     amendments thereto, together with executed copies of all powers of attorney
     pursuant to which this Agreement, the Certificate and all amendments
     thereto have been executed; and

          (5) to obtain 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 that each Partner has agreed to contribute
     in the future, and the date on which each became a Partner.

     B. On written request, the Partnership shall notify any Limited Partner
that is a Qualifying Party of the then current Adjustment Factor or any change
made to the Adjustment Factor or to the REIT Shares Amount applicable to such
Limited Partner.

     C. 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 sole and absolute discretion to be
reasonable, any information that the Partnership or the General Partner is
required by law or by agreements with unaffiliated third parties to keep
confidential.

                                      37

<PAGE>

     Section 8.6 Redemption Rights Of Qualifying Parties

     A. At any time following the first anniversary of the Effective Date, a
Qualifying Party, but no other Limited Partner or Assignee (the "Tendering
Party"), shall have the right (subject to the terms and conditions set forth
herein) to require the Partnership to redeem all or a portion of the Preferred
Partnership Units held by such Tendering Party (such Preferred Partnership Units
being hereafter called "Tendered Units") in exchange (a "Redemption") for the
Cash Amount, which Cash Amount shall be due and payable on the Cut-Off Date,
unless the General Partner makes an election pursuant to Section 8.6.B hereof.
Any Redemption shall be exercised pursuant to a Notice of Redemption delivered
to the General Partner by the Qualifying Party when exercising the Redemption
right. In the event of a Redemption, the Cash Amount shall be delivered in
exchange for the Tendered Units by a certified check payable to the Tendering
Party or otherwise in immediately available funds. In the event the payment of
such Cash Amount by the Partnership would impair of otherwise adversely affect
the amount of Available Cash required to satisfy, on a current basis, the
distribution priority to the Holders of Preferred Partnership Units, the General
Partner shall make a cash Capital Contribution to the Partnership in the amount
of such Cash Amount.

     B. Notwithstanding the provisions of Section 8.6.A hereof, on or before the
close of business on the Cut-Off Date, the General Partner may, in its sole and
absolute discretion but subject to the Ownership Limit, acquire some or all
(such percentage being referred to as the "Applicable Percentage") of the
Tendered Units from the Tendering Party in exchange for REIT Shares instead of
the Cash Amount. If the General Partner so elects, on the Redemption Date the
Tendering Party shall sell such number of the Tendered Units to the General
Partner in exchange for a number of REIT Shares equal to the product of the REIT
Shares Amount and the Applicable Percentage; provided, however, that in lieu of
any fractional REIT Share resulting from such calculation, the General Partner
may tender the Cash Amount attributable to such fractional REIT Share. The
Tendering Party shall submit (i) such information, certification or affidavit as
the General Partner may reasonably require in connection with the application of
the Ownership Limit and other restrictions and limitations of the Charter to any
such acquisition and (ii) such written representations, investment letters
(except in the case of the Original Partner), legal opinions or other
instruments necessary, in the General Partner's good faith opinion, to effect
compliance with the Securities Act. The REIT Shares shall be delivered by the
General Partner as duly authorized, validly issued, fully paid and
nonassessable, fully registered and, in the case of the Original Limited
Partner, freely saleable REIT Shares free of any pledge, lien, encumbrance or
restriction, other than the Ownership Limit and, if applicable, the Rights shall
be delivered free of any pledge, lien, encumbrance or restriction other than the
Ownership Limit and the Securities Act and relevant state securities or "Blue
Sky" laws. In the event that either (i) the General Partner has not or cannot
deliver the REIT Shares and, if applicable, the Rights, subject in each instance
only to the foregoing restrictions, on or before the Redemption Date; or (ii)
the Tendering Party is unable to satisfy the requirements of clauses (i) or
(ii), above, the General Partner shall cause the Partnership to deliver to the
Tendering Party, in lieu thereof, the Cash Amount in accordance with the
provisions of Section 8.6.A hereof. The General Partner shall be entitled to
suspend the use of any registration statement under the Securities Act covering
the REIT Shares for a reasonable period of time, but not to exceed 90 days
aggregate (a "Delay Period"), if any executive officer of the General Partner
determines that in such executive officer's reasonable good faith

                                      38

<PAGE>

judgment the registration and distribution of the REIT Shares covered by such
registration statement would materially interfere with any pending material
financing, acquisition or corporate reorganization or other material corporate
development involving the General Partner or any of its subsidiaries or would
require premature disclosure thereof and promptly gives the Qualifying Party
written notice of such determination, containing a general statement of the
reasons for such deferral and an approximation of the period of the anticipated
delay (provided that nothing herein shall require the General Partner to
disclose any terms of any such transaction or the identity of any party
thereto); provided, however the aggregate number of days included in all Delay
Periods shall not exceed 180 days. Immediately upon receipt of a written notice
of suspension, each Qualifying Party shall cease all disposition efforts with
respect to REIT Shares held by such Qualifying Party.

     C. Notwithstanding the provisions of Section 8.6.B hereof, the General
Partner shall not, under any circumstances, elect to acquire Tendered Units in
exchange for the REIT Shares Amount if such exchange would be prohibited under
the Charter.

     D. Notwithstanding anything herein to the contrary, with respect to any
Redemption or acquisition of Tendered Units pursuant to Section 8.6.B hereof:

          (1) All Partnership Units acquired by the General Partner pursuant to
     Section 8.6.B hereof shall automatically, and without further action
     required, be converted into and deemed to be General Partner Interests
     comprised of the same number of Partnership Units.

          (2) No Tendering Party, where the Redemption would consist of less
     than all the Partnership Units held by Partners other than the General
     Partner, shall be entitled to elect or effect a Redemption to the extent
     that the aggregate Partnership Units of the Limited Partners would be
     reduced, as a result of the Redemption (or the acquisition of the Tendered
     Units by the General Partner pursuant to Section 8.6.B hereof), to less
     than one percent (1%) of all Partnership Units outstanding immediately
     prior to delivery of the Notice of Redemption.

          (3) Subject to the Ownership Limit, no Tendering Party may effect a
     Redemption of less than twenty-five percent of its Partnership Units or, if
     such Tendering Party holds (as a Limited Partner or, economically, as an
     Assignee) less than five hundred (500) Partnership Units, all of the
     Partnership Units held by such Tendering Party.

          (4) The consummation of such Redemption (or an acquisition of Tendered
     Units by the General Partner pursuant to Section 8.6.B hereof, as the case
     may be) shall be subject to the expiration or termination of the applicable
     waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements
     Act of 1976, as amended.

          (5) The Tendering Party shall continue to own (subject, in the case of
     an Assignee, to the provisions of Section 11.5 hereof) all Partnership
     Units subject to any Redemption, and be treated as a Limited Partner or an
     Assignee, as applicable, with respect such Partnership Units for all
     purposes of this Agreement, until such Partnership Units are either paid
     for by the Partnership pursuant to Section 8.6.A hereof or transferred to
     the General Partner and paid

                                      39

<PAGE>

     for, by the issuance of the REIT Shares, pursuant to Section 8.6.B hereof
     on the Redemption Date. Until a Redemption Date and an acquisition of the
     Tendered Units by the General Partner pursuant to Section 8.6.B hereof, the
     Tendering Party shall have no rights as a shareholder of the General
     Partner with respect to the REIT Shares issuable in connection with such
     acquisition.

For purposes of determining compliance with the restrictions set forth in this
Section 8.6.D, all Partnership Units beneficially owned by a Related Party of a
Tendering Party shall be considered to be owned or held by such Tendering Party.

     E. In connection with an exercise of Redemption rights pursuant to this
Section 8.6, the Tendering Party shall submit the following to the General
Partner, in addition to the Notice of Redemption:

          (1) A written affidavit, dated the same date as, and accompanying, the
     Notice of Redemption, (a) disclosing the actual and constructive ownership,
     as determined for purposes of Code Sections 856(a)(6), 856(h), 856(d)(2)(B)
     and 856(d)(5), of REIT Shares by (i) such Tendering Party and (ii) any
     Related Party and (b) representing that, after giving effect to the
     Redemption or an acquisition of the Tendered Units by the General Partner
     pursuant to Section 8.6.B hereof, neither the Tendering Party nor any
     Related Party will own REIT Shares in excess of the Ownership Limit;

          (2) A written representation that neither the Tendering Party nor any
     Related Party has any intention to acquire any additional REIT Shares prior
     to the closing of the Redemption or an acquisition of the Tendered Units by
     the General Partner pursuant to Section 8.6.B hereof on the Redemption
     Date; and

          (3) An undertaking to certify, at and as a condition to the closing of
     (i) the Redemption or (ii) the acquisition of the Tendered Units by the
     General Partner pursuant to Section 8.6.B hereof on the Redemption Date,
     that either (a) the actual and constructive ownership of REIT Shares by the
     Tendering Party and any Related Party remain unchanged from that disclosed
     in the affidavit required by Section 8.6.E(1); or (b) after giving effect
     to the Redemption or an acquisition of the Tendered Units by the General
     Partner pursuant to Section 8.6.B hereof, neither the Tendering Party nor
     any Related Party shall own REIT Shares in violation of the Ownership
     Limit.

     F. Notwithstanding any other provision of this Agreement, a Limited Partner
or Assignee shall not be entitled to effect an exchange for REIT Shares to the
extent the ownership or right to acquire REIT Shares pursuant to such exchange
by such Partner or Assignee would cause such Partner or any other Person to
violate the Ownership Limit. To the extent any attempted exchange would be in
violation of this Section 8.6.F, it shall be null and void ab initio and such
Limited Partner or Assignee shall not require any rights or economic interests
in REIT Shares otherwise issuable upon such exchange.

     Section 8.7 Partnership Right To Call Limited Partner Interests

     Notwithstanding any other provision of this Agreement, on and after the

                                      40

<PAGE>

date on which the aggregate Partnership Units of the Limited Partners are less
than ten thousand (10,000), the Partnership shall have the right, but not the
obligation, from time to time and at any time to redeem any and all outstanding
Limited Partner Interests by treating any Limited Partner as a Tendering Party
who has delivered a Notice of Redemption pursuant to Section 8.6 hereof for the
amount of Partnership Units to be specified by the General Partner, in its sole
and absolute discretion, by notice to such Limited Partner that the Partnership
has elected to exercise its rights under this Section 8.7. Such notice given by
the General Partner to a Limited Partner pursuant to this Section 8.7 shall be
treated as if it were a Notice of Redemption delivered to the General Partner by
such Limited Partner. For purposes of this Section 8.7, (a) any Limited Partner
(whether or not otherwise a Qualifying Party) may, in the General Partner's sole
and absolute discretion, be treated as a Qualifying Party that is a Tendering
Party; and (b) the provisions of Sections 8.6.D(2) through 8.6.D(4) hereof shall
not apply.

     Section 8.8 Other Redemptions

     Nothing in this Agreement shall preclude the redemption of a Limited
Partner Interest or Partnership Units by the Partnership upon such terms and
conditions as may be negotiated between the Limited Partner or Assignee holding
such Limited Partner Interest or Partnership Units, on the one hand, and the
General Partner, on the other hand, in their sole and absolute discretion;
provided, however, in no event may any such redemption impair or otherwise
affect (i) the amount of Available Cash required to satisfy, on a current basis,
the distribution priority to the Holders of Preferred Partnership Units; or (ii)
the rights of the Tendering Parties to effect a Redemption or the ability of the
Partnership to perform its obligations under Section 8.6.A. Such a redemption
may include the payment of cash by the Partnership to the Limited Partner or
Assignee, in a lump sum or in installments, or the distribution in kind of
Partnership assets to such Limited Partner or Assignee (which assets may be
encumbered), including assets to be designated by the Limited Partner or
Assignee and acquired (with or without debt financing) by the Partnership. In
effecting any such redemption by negotiated agreement, none of the Partnership,
the General Partner, the Limited Partner and the Assignee, as the case may be,
shall have any duty to offer the same or similar terms for redemption of any
other Limited Partner Interest or Partnership Units.

     Section 8.9 Exchange Rights of Holders of Non-Preferred Partnership Units

     At the times specified in Exhibit D the Partnership shall exchange the
Non-Preferred Partnership Units specified in Exhibit D held by a Qualifying
Party (the "Non-Preferred Tendering Party") in exchange for Preferred
Partnership Units (the "Exchange"). The Non-Preferred Tendering Party shall
continue to own (subject, in the case of an Assignee, to the provisions of
section 11.5 hereof) all Preferred Partnership Units received in the Exchange
and be treated as a Limited Partner or an Assignee, as applicable, with respect
to such Partnership Units for all purposes of this Agreement. Until the
Exchange, the Non-Preferred Tendering Party shall have no rights as a Preferred
Partnership Unit Holder and no rights to distributions under Article 5 hereof or
allocations under Article 6 hereof.

                                      41

<PAGE>

                                    ARTICLE 9
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS
                     --------------------------------------

     Section 9.1 Records And Accounting

     A. The General Partner shall keep or cause to be kept at the principal
office of the Partnership separate books and records for the Partnership as
required to be maintained by the Act or otherwise necessary or appropriate with
respect to the Partnership's business, including 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.A 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, punch cards,
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.

     B. Each Limited Partner, but no Assignee, shall have the right, at its sole
cost and expense following reasonable advance notice to the General Partner and
during normal business hours of the General Partner, to inspect and copy, or to
cause an independent certified public accountant to inspect and copy, the books
and records of the Partnership at the principal place of business of the General
Partner.

     C. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with GAAP, or on such
other basis as the General Partner determines to be necessary or appropriate.

     Section 9.2 Fiscal Year

     The Fiscal Year of the Partnership shall be the calendar year.

     Section 9.3 Reports

     A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Fiscal Year, the General Partner shall cause
to be mailed to each Limited Partner of record as of the close of the Fiscal
Year an annual report containing financial statements of the Partnership for
such Fiscal Year, presented in accordance with GAAP. Such statements of the
Partnership need not be audited but, if not audited, shall be accompanied by a
letter or certificate from the accountants for the Partnership certifying that
the same were or will be used in connection with the audited financial
statements of the General Partner for the period covered thereby.

     B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner of record as of the last day of the calendar quarter a report
containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law or regulation or as the General
Partner determines to be appropriate.

                                      42

<PAGE>

                                   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 with respect to Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes. The
Limited Partners shall promptly provide the General Partner with such
information relating to the Contributed Property, including tax basis and other
relevant information, as may be reasonably requested by the General Partner from
time to time.

     Section 10.2 Tax Elections

     Except as otherwise provided herein, the General Partner shall, in its sole
and absolute discretion, determine whether to make or revoke any available
election pursuant to the Code. Notwithstanding the preceding sentence, the
General Partner shall elect to use, on behalf of the Partnership, (i) if
requested by a Limited Partner or Assignee within thirty (30) days of the end of
a taxable year, the optional adjustment to basis of property of the Partnership
as provided by and in accordance with Code Section 754 and (ii) the "Recurring
Item" method of accounting provided under Code Section 461(h) with respect to
property taxes imposed on the Partnership's Properties.

     Section 10.3 Tax Matters Partner

     A. The General Partner shall be the "Tax Matters Partner" of the
Partnership for federal income tax purposes. The tax matters partner shall
receive no compensation for its services. All third-party costs and expenses
incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership in
addition to any reimbursement pursuant to Section 7.5 hereof. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
to assist the tax matters partner in discharging its duties hereunder.

     B. The tax matters partner is authorized, but not required:

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

                                      43

<PAGE>

          (2) in the event that a notice of a final administrative adjustment at
     the Partnership level of any item required to be taken into account by a
     Partner for tax purposes (a "Final Adjustment") is mailed to the tax
     matters partner, to seek judicial review of such final adjustment,
     including the filing of a petition for readjustment with the United States
     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;

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

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

          (5) to enter into an agreement with the IRS to extend the period for
     assessing any tax that is attributable to any item required to be taken
     into account by a Partner for tax purposes, or an item affected by such
     item, each Original Limited Partner affected by such extension must consent
     to such extension, which consent will not unreasonably be withheld; and

          (6) to take any other action on behalf of the Partners 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 within the discretion of the tax matters partner and the
provisions relating to indemnification of the General Partner set forth in
Section 7.7 hereof shall be fully applicable to the tax matters partner in its
capacity as such. The General Partner will inform the Original Limited Partners
of any actions to be taken (and seek to obtain the input of the Original Limited
Partners) or taken by it pursuant to this Section 10.3

     Section 10.4 Withholding

     Each Limited Partner hereby authorizes the Partnership to withhold from or
pay on behalf of or with respect to such Limited Partner any amount of federal,
state, local or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including any taxes required to be withheld or paid by the Partnership pursuant
to Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446.
Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution that would otherwise be made to the
Limited Partner or (ii) the General Partner reasonably determines that such
payment may be satisfied out of the Available Funds of the Partnership that
would, but for such payment, be distributed to the Limited Partner. Each Limited
Partner hereby

                                      44

<PAGE>

unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.4. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.4 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the Prime
Rate plus four (4) percentage points (but not higher than the maximum lawful
rate) from the date such amount is due (I.E., fifteen (15) days after demand)
until such amount is paid in full. Each Limited Partner shall take such actions
as the Partnership or the General Partner shall request in order to perfect or
enforce the security interest created hereunder.

                                   ARTICLE 11
                            TRANSFERS AND WITHDRAWALS
                            -------------------------

     Section 11.1 Transfer

     A. No part of the interest of a Partner shall be subject to the claims of
any creditor and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.

     B. 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 ab initio.

     Section 11.2 Transfer Of General Partner's Partnership Interest

     A. The General Partner may not Transfer any of its General Partner Interest
or withdraw from the Partnership except as provided in Section 11.2.B hereof.

     B. The General Partner shall not withdraw from the Partnership and shall
not Transfer all or any portion of its interest in the Partnership other than to
an Affiliate of the General Partner without the Consent of the Limited Partners,
which Consent may be given or withheld in the sole and absolute discretion of
the Limited Partners; provided, however, that no such Consent shall be required
in the event of a Transfer or constructive Transfer to a successor to all or
substantially all of the assets of the General Partner or to a successor by
operation of law or otherwise in connection with the merger or consolidation of
the General Partner. Upon any Transfer or constructive Transfer of such a
Partnership Interest pursuant to the Consent of the Limited Partners or
otherwise in accordance with the provisions of this Section 11.2.B, the
transferee shall become a successor General Partner for all purposes herein, and
shall be vested with the powers and rights of the transferor General Partner,
and shall be liable for all obligations and responsible for all duties of the
General Partner (except that upon a Transfer to an Affiliate of the General
Partner, the General Partner shall remain liable for all obligations and
responsible for all duties of the General Partner), once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of

                                      45

<PAGE>

such transferee to be bound by all the terms and provisions of this Agreement
with respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such Transferred Partnership
Interest, and such Transfer shall, except for a Transfer to an Affiliate of the
General Partner, relieve the transferor General Partner of its obligations under
this Agreement without the Consent of the Limited Partners. In the event that
the General Partner withdraws from the Partnership, in violation of this
Agreement or otherwise, or otherwise dissolves or terminates, or upon the
bankruptcy of the General Partner, a Majority In Interest of the Limited
Partners may elect to continue the Partnership business by selecting a successor
General Partner in accordance with the Act.

     Section 11.3 Limited Partners' Rights To Transfer

     A. General. No Limited Partner other than the Original Limited Partners
shall Transfer all or any portion of its Partnership Interest to any transferee
without the consent of the General Partner, which consent may be withheld in the
sole and absolute discretion of the General Partner; provided, however, that a
Limited Partner other than the Original Limited Partners may (i) at any time,
without the consent of the General Partner, Transfer all or part of its
Partnership Interest to a Qualified Transferee who is also (A) a Family Member
of such Limited Partner; (B) a trust, whether or not revocable, of which such
Limited Partner or such Limited Partner's Family Members are the sole
beneficiaries; (C) an organization described in Code Section 501(c)(3); or (D)
an Affiliate; or (ii) pledge all or any portion of its Partnership Interest to a
lending institution that is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
Transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension of credit.
The Original Limited Partners may transfer all or any portion of their
Partnership Interest without the consent of the General Partner or any other
Limited Partner. Any Transfer permitted by this proviso is hereinafter referred
to as a "Permitted Transfer". It is a condition to any Transfer otherwise
permitted hereunder (whether or not such Transfer is a Permitted Transfer) that
the transferee assume by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest. Notwithstanding the foregoing, any
transferee of any Transferred Partnership Interest shall be subject to any and
all ownership limitations (including the Ownership Limit) contained in the
Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including the Ownership Limit. Any transferee, whether or not
admitted as an Additional Limited Partner or a Substituted Limited Partner,
shall take subject to the obligations of the transferor hereunder. Unless
admitted as an Additional Limited Partner or a Substituted Limited Partner, no
transferee, whether by a voluntary Transfer, by operation of law or otherwise,
shall have any rights hereunder other than the rights of an Assignee as provided
in Section 11.5 hereof.

     B. Incapacity. 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

                                      46

<PAGE>

as the Incapacitated Limited Partner possessed to Transfer all or any part of
its interest in the Partnership. The Incapacity of a Limited Partner, in and of
itself, shall not dissolve or terminate the Partnership.

     C. Opinion of Counsel. In connection with any Transfer of a Limited Partner
Interest, the General Partner shall have the right to receive an opinion of
counsel satisfactory to it to the effect that the proposed Transfer may be
effected without registration under the Securities Act and will not otherwise
violate any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Interests Transferred. If, in the opinion of such
counsel, such Transfer would require the filing of a registration statement
under the Securities Act or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units, the General Partner may prohibit any Transfer otherwise permitted under
this Section 11.3 by a Limited Partner of Partnership Interests.

     D. Adverse Tax Consequences. No Transfer by a Limited Partner of its
Partnership Interests (including any Redemption, any other acquisition of
Partnership Units by the General Partner or any acquisition of Partnership Units
by the Partnership) may be made to any person if (i) in the opinion of legal
counsel for the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation; or (ii) such Transfer is effectuated
through an "Established Securities Market" or a "Secondary Market (or the
substantial equivalent thereof)" within the meaning of Code Section 7704.

     Section 11.4 Additional Or Substituted Limited Partners

     A. No Limited Partner other than the Original Limited Partners shall have
the right to substitute a transferee (including any transferee pursuant to
Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place. A
transferee of the entire interest of a Limited Partner other than the Original
Limited Partners may be admitted as a Substituted Limited Partner and a
transferee of a portion of the interest of a Limited Partner may be admitted as
an Additional Limited Partner only with the consent of the General Partner,
which consent may be given or withheld by the General Partner in its sole and
absolute discretion. The failure or refusal by the General Partner to otherwise
permit a transferee of any such interests to become an Additional Limited
Partner or a Substituted Limited Partner shall not give rise to any cause of
action against the Partnership or the General Partner. Subject to the foregoing,
an Assignee shall not be admitted as an Additional Limited Partner or a
Substituted Limited Partner until and unless it furnishes to the General Partner
(i) evidence of acceptance, in form and substance satisfactory to the General
Partner, of all the terms, conditions and applicable obligations of this
Agreement, including the power of attorney granted in Section 2.4 hereof; (ii) a
Partner Schedule executed by such Assignee; and (iii) such other documents and
instruments as may be reasonably required or advisable to effect such Assignee's
admission as a Substituted Limited Partner or an Additional Limited Partner, as
the case may be.

     B. A transferee who has been admitted as an Additional Limited Partner or 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.

                                      47

<PAGE>

     C. Upon the admission of an Additional Limited Partner or a Substituted
Limited Partner, the General Partner shall amend the Partner Schedule(s) to
eliminate, if necessary, the name and address of the predecessor of a
Substituted Limited Partner. In addition, the Additional Limited Partner or
Substituted Limited Partner and the General Partner shall execute a Partner
Schedule with respect to such Additional Limited Partner or Substituted Limited
Partner, which Partner Schedule shall supersede, to the extent necessary, the
Partner Schedule for the predecessor of the Additional Limited Partner or
Substituted Limited Partner.

     Section 11.5 Assignees

     If the General Partner does not consent to the admission of any Permitted
Transferee under Section 11.3 hereof or Section 11.4 hereof as an Additional
Limited Partner or a Substituted Limited Partner, 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 the right to receive distributions from the Partnership
and the share of Gross Income, Net Income, Net Loss and other items of income,
gain, loss, deduction and credit of the Partnership attributable to the
Partnership Units assigned to such transferee and the rights to Transfer the
Partnership Units provided in this Article 11, but shall not be deemed to be a
Holder of Partnership Units for any other purpose under this Agreement (other
than as expressly provided in Section 8.6 hereof with respect to a Qualifying
Party that becomes a Tendering Party), and shall not be entitled to effect a
Consent or vote with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (which such right shall remain with the
transferor Limited Partner). In the event that 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. No Limited Partner may withdraw from the Partnership other than as a
result of a Transfer permitted pursuant to this Article 11 where such transferee
was admitted as a Substituted Limited Partner, or pursuant to a Redemption (or
acquisition by the General Partner) of all of its Partnership Units under
Section 8.6 hereof.

     B. Any Limited Partner who shall Transfer all of its Partnership Units in a
Transfer (i) permitted pursuant to this Article 11 where such transferee was
admitted as a Substituted Limited Partner; (ii) pursuant to the exercise of its
rights to effect a Redemption of all of its Partnership Units under Section 8.6
hereof; or (iii) to the General Partner, whether or not pursuant to Section
8.6.B hereof, shall cease to be a Limited Partner.

     C. If any Partnership Unit is Transferred in compliance with the provisions
of this Article 11, or is redeemed by the Partnership or acquired by the General
Partner pursuant to Section 8.6 hereof, on any day other than the first day of a
Fiscal Year, then Gross Income, Net Income, Net Loss, each item thereof and all
other items of income, gain, loss, deduction and credit attributable to such
Partnership Unit for such Fiscal Year shall be allocated to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer or assignment other than a Redemption, to the transferee Partner
(including the General Partner in the case of an

                                      48

<PAGE>

acquisition of Partnership Units pursuant to Section 8.6.B hereof) or Assignee,
by taking into account their varying interests during the Fiscal Year in
accordance with Code Section 706(d), using the "Daily Proration" or "Interim
Closing of the Books" method or another permissible method selected by the
General Partner and approved by the transferor Partner and the transferee
Partner, which approval will not unreasonably be withheld. Solely for purposes
of making such allocations, the General Partner, in its sole and absolute
discretion, may determine that each of such items for the calendar month in
which a Transfer occurs shall be allocated to the transferee Partner or Assignee
and none of such items for the calendar month in which a Transfer or a
Redemption occurs shall be allocated to the transferor Partner or the Tendering
Party, as the case may be, if such Transfer occurs on or before the fifteenth
(15th) day of the month; otherwise such items for such calendar month shall be
allocated to the transferor. All distributions of Available Cash attributable to
such Partnership Unit with respect to which the Partnership Record Date is
before the date of such Transfer, assignment or Redemption shall be made to the
transferor Partner or the Tendering Party, as the case may be, and, in the case
of a Transfer other than a Redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner or Assignee.

     D. In addition to any other restrictions on Transfer herein contained, in
no event may any Transfer or assignment of a Partnership Interest by any Partner
(exclusive of any acquisition of Partnership Units by the General Partner or any
other acquisition of Partnership Units by the Partnership) be made:

          (1)  to any person or entity who lacks the legal right, power or
     capacity to own a Partnership Interest;

          (2) in violation of applicable law;

          (3) of any component portion of a Partnership Interest, such as the
     Capital Account, or rights to distributions, separate and apart from all
     other components of a Partnership Interest;

          (4) in the event that such Transfer could, in the good faith opinion
     of the General Partner, cause the General Partner to cease to comply with
     the REIT Requirements;

          (5) if such Transfer could, in the opinion of counsel to the
     Partnership or the General Partner, cause a termination of the Partnership,
     in either case for federal or state income tax purposes (except as a result
     of the Redemption (or acquisition by the General Partner) of Partnership
     Units held by the Original Limited Partners);

          (6) if such Transfer could, in the opinion of legal counsel to the
     Partnership, cause the Partnership either (i) to cease to be classified as
     a partnership or (ii) to be classified as a publicly traded partnership, in
     either case for federal income tax purposes (except as a result of the
     Redemption (or acquisition by the General Partner) of Partnership Units
     held by the Original Limited Partners);

          (7) if such Transfer could, in the opinion of legal counsel to the
     Partnership, cause the Partnership to become, with respect to any employee
     benefit plan subject to Title I of ERISA, a "Party-In-

                                      49

<PAGE>

     Interest" (as defined in ERISA Section 3(14)) or a "Disqualified Person"
     (as defined in Code Section 4975(c));

          (8) if such Transfer could, in the opinion of legal counsel to the
     Partnership, cause any portion of the assets of the Partnership to
     constitute assets of any employee benefit plan pursuant to Department of
     Labor Regulations Section 2510.2-101;

          (9) if such Transfer requires the registration of such Partnership
     Interest pursuant to any applicable federal or state securities laws;

          (10) if such Transfer could cause the Partnership to have more than
     one hundred (100) Partners (including as Partners for such purpose those
     Persons indirectly owning an interest in the Partnership through another
     partnership, a limited liability company, subchapter S corporation or a
     grantor trust, if substantially all the value of such Person's interest in
     any such entity is attributable to such entity's interest (direct or
     indirect) in the Partnership);

          (11) if such Transfer causes the Partnership (as opposed to the
     General Partner) to become a reporting company under the Exchange Act; or

          (12) if such Transfer subjects the Partnership to regulation under the
     Investment Company Act of 1940, the Investment Advisors Act of 1940 or
     ERISA, each as amended.

     Section 11.7 Incremental Costs

     The General Partner shall be entitled to be reimbursed for its reasonable
incremental administrative costs incurred in connection with making payments to,
preparing reports and statements for, effecting Redemptions with respect to and
otherwise servicing all transferees of Preferred Partnership Units, whether
directly or indirectly and, whether or not such transferee is an Additional
Limited Partner, a Substituted Limited Partner or an Assignee, over and above
the amount of such costs incurred in connection with providing such services to
the General Partner and an aggregate of ten (10) additional Holders or
transferees of Preferred Partnership Units. Such costs may include a reasonable
allocation of the General Partner's internal costs and expenses, including a pro
rata portion of the salaries or wages, benefits and overhead of its employees
engaged in servicing the Holders and transferees. The General Partner may effect
such reimbursement by deducting the reimbursable amount from the distributions
otherwise payable to the Holders of the Preferred Partnership Units pursuant to
Section 5.1(1) hereof.

                                   ARTICLE 12
                              ADMISSION OF PARTNERS
                              ---------------------

     Section 12.1 Admission Of Successor General Partner

     A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective immediately prior to such Transfer. Any such successor 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

                                      50

<PAGE>

delivering to the Partnership an acceptance of all of the terms, conditions and
applicable obligations 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 And Substituted
                  Limited Partner

     A. After the admission to the Partnership of the Original Limited Partner
on the date hereof, a Person (other than an existing Partner) who is admitted to
the Partnership as an Additional Limited Partner or a Substitute Limited Partner
shall furnish to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all of the terms, conditions
and applicable of this Agreement, including the power of attorney granted in
Section 2.4 hereof; (ii) a Partner Schedule executed by such Person; and (iii)
such other documents or instruments as may be reasonably required with respect
to Designated Parties, or may be required in the sole and absolute discretion of
the General Partner with respect to other Persons, in order to effect such
Party's or other Person's admission as an Additional Limited Partner or a
Substitute Limited Partner. Additional Limited Partners may be admitted to the
Partnership upon prior written consent of a Majority in Interest of the Original
Limited Partners and such written consent will not unreasonably be withheld.

     B. If any Additional Limited Partner or Substituted Limited Partner is
admitted to the Partnership on any day other than the first day of a Fiscal
Year, then Gross Income, Net Income, Net Loss, each item thereof and all other
items of income, gain, loss, deduction and credit allocable among Partners and
Assignees for such Fiscal Year shall be allocated among such Additional Limited
Partner or Substituted Limited Partner and all other Partners and Assignees by
taking into account their varying interests during the Fiscal Year in accordance
with Code Section 706(d), using the "Interim Closing Of The Books" method or
another permissible method selected by the General Partner and approved by a
Majority in Interest of the Limited Partners, which approval shall not be
unreasonably withheld. Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner or Substituted Limited Partner occurs shall be allocated among
all the Partners and Assignees, including such Additional Limited Partner or
Substituted Limited Partner, in accordance with the principles described in
Section 11.6.C hereof. All distributions of Available Cash with respect to which
the Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees other than the Additional Limited Partner or
Substituted Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner or Substituted Limited Partner.

     Section 12.3 Amendment Of Agreement And Certificate Of Limited Partnership

     For the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Act to amend the
records of the Partnership and, if necessary, to prepare as soon as practical an
amendment of this Agreement (including an amendment to the Partner Schedule(s)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

                                      51

<PAGE>

     Section 12.4 Limit On Number Of Partners

     No Person shall be admitted to the Partnership as a Substituted Limited
Partner or an Additional Limited Partner if the effect of such admission would
be to cause the Partnership to have more than one hundred (100) Partners
including as Partners for such purpose those Persons indirectly owning an
interest in the Partnership through another partnership, a limited liability
company, a subchapter S corporation or a grantor trust, if substantially all the
value of such Person's interest in any such entity is attributable to such
entity's interest (direct or indirect) in the Partnership, or otherwise cause
the Partnership to become a reporting company under the Exchange Act.

                                   ARTICLE 13
                    DISSOLUTION, LIQUIDATION AND TERMINATION
                    ----------------------------------------

     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 without dissolution. However, the
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a "Liquidating Event"):

          (1) the expiration of its term as provided in Section 2.5 hereof;

          (2) an event of withdrawal, as defined in the Act (including
     bankruptcy), of the sole General Partner unless, within ninety (90) days
     after the withdrawal, a "Majority in Interest" (as such phrase is used in
     Section 17-801(3) of the Act) of the remaining Partners and the Original
     Limited Partners agree in writing, in its sole and absolute discretion, to
     continue the business of the Partnership and to the appointment, effective
     as of the date of withdrawal, of a successor General Partner;

          (3) entry of a decree of judicial dissolution of the Partnership
     pursuant to the provisions of the Act;

          (4) the occurrence of a Terminating Capital Transaction; or

          (5) the Redemption (or acquisition by the General Partner) of all
     Partnership Units other than Partnership Units held by the General Partner.

     Section 13.2 Winding Up

     A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of effecting any Redemptions or the acquisition
by the General Partner of Tendered Units and winding up its affairs in an
orderly manner, liquidating its assets and satisfying the claims of its
creditors and Partners. After the occurrence of a Liquidating Event, no Partner
shall take any action that is inconsistent with, or not necessary to or
appropriate for, such purposes. The General Partner (or, in the event that there
is no remaining General Partner or the General Partner has dissolved, become
bankrupt within the meaning of the Act or ceased to

                                      52

<PAGE>

operate, any Person elected by a Majority in Interest of the Limited Partners
(the General Partner or such other Person being referred to herein as the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property, and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:

          (1) First, to the satisfaction of all of the Partnership's debts and
     liabilities to creditors other than the Partners and their Assignees
     (whether by payment or the making of reasonable provision for payment
     thereof);

          (2) Second, to the satisfaction of all of the Partnership's debts and
     liabilities to the General Partner other than Partner Loans (whether by
     payment or the making of reasonable provision for payment thereof),
     including amounts due as reimbursements under Section 7.5 hereof;

          (3) Third, to the payment of the accrued but unpaid amounts payable to
     the Holders of Preferred Partnership Units, PARI PASSU in accordance with
     their ownership of such Units, pursuant to Section 5.1(1) hereof;

          (4) Fourth, to the satisfaction of all of the Partnership's debts and
     liabilities to the other Partners and any Assignees, including the
     repayment of Partner Loans, pari passu in accordance with their ownership
     of such Loans (whether by payment or the making of reasonable provision for
     payment thereof); and

          (5) The balance, if any, to the General Partner, the Limited Partners
     and any Assignees in accordance with and in proportion to their positive
     Capital Account balances, after giving effect to all contributions,
     distributions and allocations for all periods.

                                      53

<PAGE>

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

     B. Notwithstanding the provisions of Section 13.2.A hereof that require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership
(including to those Partners as creditors) and/or distribute to the Partners, in
lieu of cash, as tenants in common and in accordance with the provisions of
Section 13.2.A hereof, undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any such distributions in kind
shall be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time.

     C. In the event that 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 Partners and Assignees that have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) to the
extent of, and in proportion to, their respective positive Capital Account
balances. If any Partner has a deficit balance in its 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 or the
Liquidator, a pro rata portion of the distributions that would otherwise be made
to the Partners pursuant to this Article 13 may be withheld or escrowed to
provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment obligations
owed to the Partnership, provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited Partners in the manner and
order of priority set forth in Section 13.2.A hereof as soon as practicable.

     Section 13.3 Deemed Contribution and Distribution

     Notwithstanding any other provision of this Article 13, in the event that
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event 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.

     Section 13.4 Rights Of Limited Partners

     Except as provided in Section 8.6 hereof, (i) each Partner shall look
solely to the assets of the Partnership for the return of its Capital
Contribution and (ii) no Partner shall have the right or power to demand or
receive property other than cash from the Partnership. Except as provided in

                                      54

<PAGE>

Sections 5.1 and 13.2.A hereof, no Partner shall have priority over any other
Partner as to the return of its Capital Contributions, distributions or
allocations.

     Section 13.5 Notice Of Dissolution

     In the event that a Liquidating Event occurs or an event occurs that would,
but for an election or objection by one or more Partners pursuant to Section
13.1 hereof, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners and, in the General Partner's sole and absolute discretion
or as required by the Act, to all other parties with whom the Partnership
regularly conducts business, and the General Partner may, or, if required by the
Act, shall, publish notice thereof in a newspaper of general circulation in each
place in which the Partnership regularly conduct business.

     Section 13.6 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, a certificate of
cancellation shall be filed with the Commonwealth of Virginia, all
qualifications of the Partnership as a foreign limited partnership or
association in jurisdictions other than the Commonwealth of Virginia shall be
cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.

     Section 13.7 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
                      PROCEDURES FOR ACTIONS AND CONSENTS
                       OF PARTNERS; AMENDMENTS; MEETINGS
                       ---------------------------------

     Section 14.1 Procedures For Actions And Consents Of Partners

     The actions requiring Consent of the Limited Partners pursuant to this
Agreement, including Sections 7.3 or 7.4 hereof, or otherwise pursuant to
applicable law, are subject to the procedures set forth in this Article 14.

     Section 14.2 Amendments

     Amendments to this Agreement may be proposed by the General Partner or by a
Majority in Interest of the Limited Partners. Following any such proposal by the
General Partner, the General Partner shall submit the proposed amendment to the
Limited Partners. The General Partner may seek the written consent of the
Limited Partners on any other proposed amendment or call a meeting to vote
thereon and to transact any other business that the General Partner may deem
appropriate. For purposes of obtaining a written Consent, the General Partner
may require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute a
Consent that is consistent with the

                                      55

<PAGE>

General Partner's recommendation with respect to the proposal; provided,
however, that an action shall become effective at such time as requisite
Consents are received even if prior to such specified time.

     Section 14.3 Meetings Of The Partners

     A. Meetings of the Partners may be called by the General Partner and shall
be called upon the receipt by the General Partner of a written request by a
Majority in Interest of the Limited Partners. The call shall state the nature of
the business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. 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
Partners or may be given in accordance with the procedure prescribed in Section
14.3.B hereof.

     B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by Partners holding a majority of the Partnership
Units (or such other percentage as is expressly required by this Agreement for
the action in question). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of Partners
holding a majority of the Partnership Units (or such other percentage as is
expressly required by this Agreement). 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. 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 its attorney-in-fact. No
proxy shall be valid after the expiration of eleven (11) months from the date
thereof unless otherwise provided in the proxy (or there is receipt of a proxy
authorizing a later date). Every proxy shall be revocable at the pleasure of the
Limited Partner executing it, such revocation to be effective upon the
Partnership's receipt of written notice of such revocation from the Limited
Partner executing such proxy.

     D. Each meeting of 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. Meetings of Partners may be conducted in the same manner as
meetings of the General Partner's shareholders and may be held at the same time
as, and as part of, the meetings of the General Partner's shareholders.

                                      56

<PAGE>

                                  ARTICLE 15
                              GENERAL PROVISIONS
                              ------------------

     Section 15.1 Addresses And Notice

     Any notice, demand, request or report required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in writing and shall
be deemed given or made (i) when delivered in person, (ii) three (3) Business
Days following deposit in the United States mail if sent by certified mail,
return receipt requested or (iii) the next Business Day if sent by a
nationally-recognized commercial courier service (A) in the case of a Partner,
to such Partner at the address set forth below or, if not set forth below, on
the Partner Schedule with respect to such Partner) or such other address of
which the Partner shall notify the General Partner in writing; and (B) in the
case of an Assignee, to the address of which such Assignee shall notify the
General Partner in writing:

                  Cornerstone Realty Income Trust, Inc.
                  306 East Main Street
                  Richmond, VA 23219
                  Attention:  S. J. Olander, Jr.

                  State Street, LLC
                  C/o State Street Companies
                  211 State Street, P. O. Box 29265
                  Greensboro, North Carolina
                  Attention:  Jeffery W. Kentner

     Section 15.2 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 15.3 Binding Effect

     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

     Section 15.4 Waiver

     A. 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.

     B. The restrictions, conditions and other limitations on the rights and
benefits of the Limited Partners contained in this Agreement, and the
representations, duties, covenants and other requirements of performance or
notice by the Limited Partners, are for the benefit of the Partnership and may
be waived or relinquished by the General Partner, in its sole and absolute
discretion, on behalf of the Partnership in one or more instances from time to
time and at any time; provided, however, that any such waiver or relinquishment
may not made if it would have the effect of (i) creating liability for any other
Limited Partner; (ii) causing the Partnership to cease to qualify as a limited
partnership; (iii) reducing the amount of cash

                                      57

<PAGE>

otherwise distributable to the Limited Partners; (iv) resulting in the
classification of the Partnership as an association or publicly traded
partnership taxable as a corporation; or (v) violating the Securities Act, the
Exchange Act or any state "Blue Sly" or other securities laws; provided,
further, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Charter shall be made and shall be effective only as
provided in the Charter.

     Section 15.5 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.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto or upon execution of a Partner Schedule.

     Section 15.6 Applicable Law

     This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Virginia, without regard to the
principles of conflicts of law. In the event of a conflict between any provision
of this Agreement and any non-mandatory provision of the Act, the provisions of
this Agreement shall control and take precedence.

     Section 15.7 Entire Agreement

     This Agreement contains all of the understandings and agreements between
and among the Partners with respect to the subject matter of this Agreement and
the rights, interests and obligations of the Partners with respect to the
Partnership.

     Section 15.8 Invalidity Of Provisions

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

     Section 15.9 Limitation To Preserve REIT Status

     Notwithstanding anything else in this Agreement, to the extent that the
amount paid, credited, distributed or reimbursed by the Partnership to, for or
with respect to any REIT Partner or its officers, directors, employees or
agents, whether as a reimbursement, fee, expense or indemnity (a "REIT
Payment"), would constitute gross income to the REIT Partner for purposes of
Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any
other provision of this Agreement, the amount of such REIT Payments, as selected
by the General Partner in its discretion from among items of potential
distribution, reimbursement, fees, expenses and indemnities, shall be reduced
for any Fiscal Year so that the REIT Payments, as so reduced, to, for or with
respect to such REIT Partner shall not exceed the lesser of:

          (1) an amount equal to the excess, if any, of (i) four and nine-
     tenths percent (4.9%) of the REIT Partner's total gross income (but
     excluding the amount of any REIT Payments) for the Fiscal Year that is
     described in subsections (A) through (H) of Code Section 856(c)(2) over
     (ii) the amount of gross income (within the meaning of Code

                                      58
<PAGE>

     Section 856(c)(2)) derived by the REIT Partner from sources other than
     those described in subsections (A) through (H) of Code Section 856(c)(2)
     (but not including the amount of any REIT Payments); or

          (2) an amount equal to the excess, if any, of (i) twenty-four percent
     (24%) of the REIT Partner's total gross income (but excluding the amount of
     any REIT Payments) for the Fiscal Year that is described in subsections (A)
     through (I) of Code Section 856(c)(3) over (ii) the amount of gross income
     (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner
     from sources other than those described in subsections (A) through (I) of
     Code Section 856(c)(3) (but not including the amount of any REIT Payments);

provided, however, that REIT Payments in excess of the amounts set forth in
clauses (a) and (b) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
REIT. To the extent that REIT Payments may not be made in a Fiscal Year as a
consequence of the limitations set forth in this Section 15.9, such REIT
Payments shall carry over and shall be treated as arising in the following
Fiscal Year. The purpose of the limitations contained in this Section 15.9 is to
prevent any REIT Partner from failing to qualify as a REIT under the Code by
reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 15.9 shall be interpreted and applied to
effectuate such purpose.

     Section 15.10 No Partition

     No Partner nor any successor-in-interest to a Partner shall have the right
while this Agreement remains in effect to have any property of the Partnership
partitioned, or to file a complaint or institute to any proceeding at law or in
equity to have such property of the Partnership partitioned, and each Partner,
on behalf of itself and its successors and assigns hereby waives any such right.
It is the intention of the Partners that the rights of the parties hereto and
their successors-in-interest to Partnership property, as among themselves, shall
be governed by the terms of this Agreement, and that the rights of the Partners
and their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.

     Section 15.11 No Third-Party Rights Created Hereby

     The provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, inter se; and no other person, firm or entity (i.e.,
a party who is not a signatory hereto or a permitted successor to such signatory
hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this Agreement.
No creditor or other third party having dealings with the Partnership shall have
the right to enforce the right or obligation of any Partner to make Capital
Contributions or loans to the Partnership or to pursue any other right or remedy
hereunder or at law or in equity. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may any such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or any of
the Partners.

                                      59

<PAGE>

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

                                        GENERAL PARTNER:

                                        CORNERSTONE REALTY INCOME TRUST, INC.
                                        a Virginia corporation

                                        By
                                          -------------------------------------

                                        ORIGINAL LIMITED PARTNER:

                                        STATE STREET, LLC
                                        a North Carolina limited liability
                                          company

                                        By: State Street Companies, Inc., its
                                              Manager

                                        By
                                          -------------------------------------

                                        ORIGINAL LIMITED PARTNER:

                                        STATE STREET I, LLC
                                        a North Carolina limited liability
                                          company

                                        By: State Street Companies, Inc., its
                                              Manager

                                        By
                                          -------------------------------------

                                      60

<PAGE>

                                   EXHIBIT A
                                   ---------

     THIS PARTNER SCHEDULE is executed by Cornerstone Realty Income Trust, Inc.,
a Virginia corporation (the "General Partner"), and the party named below (the
"New Partner") in respect of Cornerstone NC Operating Limited Partnership, a
Virginia limited partnership (the "Partnership").

1.   NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF NEW PARTNER

         State Street, LLC.                          State Street I, LLC
         211 East Boulevard                          211 East Boulevard
         Charlotte, NC 28203                         Charlotte, NC 28203
         TIN:  56-1935887                            TIN:  56-2171025

2.   CAPITAL CONTRIBUTIONS

         Assumption of debt: General Partners                   $     93,623,474

     PLUS expenditures actually incurred by the General Partner in connection
with the transactions contemplated under the Purchase Contracts that would
ordinarily be capitalized in accordance with GAAP; provided, however, in no
event shall the aggregate amount of the foregoing expenditures result in the
issuance of Partnership Units to the General Partner in excess of the aggregate
number of Partnership Units issued to the Original Limited Partners.

     Contributed Property: Original Limited Partners           $      32,196,526

3.   PARTNERSHIP UNITS

     General Partner:                  9,362,347 Partnership Units

     Original Limited Partners:        1,262,680 Preferred Partnership Units
                                       1,431,590 Non-Preferred Partnership Units

         allocated among the Original Limited Partners as follows:

         State Street, LLC.              968,747 Preferred Partnership Units
                                         838,398 Non-Preferred Partnership Units

         State Street I, LLC             293,933 Preferred Partnership Units
                                         593,192 Non-Preferred Partnership Units

4.1  ADMISSION OF SUBSTITUTED PARTNER (IF APPLICABLE)

     The Partner is admitted to the Partnership as an Additional Limited Partner
or a Substituted Limited Partner. The General Partner hereby consents to such
admission. The Partner acknowledges receipt of a copy of, and agrees to be bound
by, the Agreement of Limited Partnership, as amended, for the Partnership. The
Partner specifically confirms (a) the representations and warranties contained
in Section 3.4 of such Agreement of Limited Partnership, as amended, for the
Partnership and (b) the grant of the power of attorney set forth in Section 2.4
of such Agreement.

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<PAGE>

4.2  ADDITIONAL COVENANTS OF THE GENERAL PARTNER

     The General Partner hereby represents, warranty covenants and agrees that:

     A. The General Partner shall cause the Partnership to elect the
"traditional method," as set forth in Regulations Section 1.704-3(b), with
respect to the "built-in gain" (as defined in Regulations Section
1.704-3(a)(3)(ii)) on the Real Property and any "Replacement Property" (as
defined below). For purposes of determining as of the Effective Date the
built-in gain on each component of the Real Property, the Fair Market Value of
each component of the Real Property shall be established by agreement between
the General Partner and the Original Limited Partners.

     B. During the period beginning on the Effective Date and ending on the
second (2nd) anniversary of the Effective Date (the "Lockout Period"), neither
the Partnership or the General Partner nor any Affiliate of the Partnership or
the General Partner shall voluntarily transfer (or permit the voluntary transfer
of) all or any portion of, or any direct or indirect interest in, the Real
Property, any Replacement Property or any partnership (or membership) interest
in any entity that owns all or a portion of the Real Property or any Replacement
Property in a transaction that would result in the recognition of any taxable
income or gain by any Original Limited Partner for Federal income tax purposes.
The General Partner and the Original Limited Partners agree that, during the
Lockout Period, the Partnership may transfer all or any portion of the Real
Property in a transaction qualifying for nonrecognition of gain under Code
Section 1031 (or any successor statute) (an "Exchange"), provided that (a) the
Exchange does not result in the recognition of any taxable income or gain by any
Original Limited Partner for Federal income tax purposes and (b) the real
property acquired in the Exchange (the "Replacement Property") shall remain
subject to the provisions of this Section 4 as if the Replacement Property were
all or a portion of the Real Property. The General Partner and the Original
Limited Partners acknowledge and agree that an involuntary transfer of all or a
portion of the Real Property or any Replacement Property could occur by way of
condemnation, casualty or foreclosure. In the event of an involuntary transfer
of all or a portion of the Real Property or any Replacement Property by way of
(i) a condemnation or casualty, the General Partner shall, on behalf of the
Partnership, use its reasonable good faith efforts to minimize or avoid the
recognition of any taxable income or gain by any Original Limited Partner for
Federal income tax purposes from the condemnation or casualty through the use of
Code Section 1033 (or any successor statute) or (ii) foreclosure, the General
Partner shall, on behalf of the Partnership, use its reasonable good faith
efforts to minimize or avoid the recognition of any taxable income or gain by
any Original Limited Partner for Federal income tax purposes from the
foreclosure through the use of Code Section 1031 (or any successor statute).
After the Lockout Period, the General Partner shall, on behalf of the
Partnership, use reasonable good faith efforts to structure any refinancing of
indebtedness or disposition of all or any portion of the Real Property or any
Replacement Property so as to minimize the recognition of any taxable income or
gain by any Original Limited Partner for federal income tax purposes.

     C. Subject to the terms and provisions of Section 4.2(D) hereof:

        (a) During the Lockout Period, the Partnership shall maintain
outstanding, without prepayment or other reduction, nonrecourse indebtedness

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<PAGE>

(within the meaning of Regulations Section 1.752-1(a)(2)) secured by the Real
Property (or any Replacement Property) in an aggregate amount equal to the
aggregate outstanding principal balance of all indebtedness secured by the Real
Property immediately prior to the Effective Date (the "Existing Debt"); and

          (b) Neither the General Partner nor the Partnership shall (i) cause or
permit any Person to directly or indirectly guarantee, or otherwise become
liable for the payment of, all or a portion of the Existing Debt or any
"Replacement Debt" (as defined below), (ii) otherwise take or permit any action
that would result in all or a portion of the Existing Debt or any Replacement
Debt to fail to be treated as nonrecourse indebtedness (within the meaning of
Regulations Section 1.752-1(a)(2)), or (iii) amend or otherwise alter the
provisions of Section 6.3.C of the Agreement in a manner that results in a
smaller share of the "Excess Nonrecourse Liabilities" of the Partnership (within
the meaning of Regulations Section 1.752-3(a)(3)) being allocable to the
Original Limited Partners.

     D. The terms and provisions of Section 4.2(C) hereof shall not apply to the
extent of:

          (a) Scheduled principal payments (but not any prepayments and any
principal payments due as a result of any acceleration or default of the
Existing Debt or any Replacement Debt (except in the event of a condemnation,
casualty or foreclosure, in which case the provisions of Section 4.2(D)(c)
hereof shall apply)) made in accordance with the requirements of the Existing
Debt or any Replacement Debt;

          (b) Payments of principal made in connection with the refinancing of
the Existing Debt or any Replacement Debt, provided that (i) such refinancing
conforms with the terms of Section 4.2(E) hereof and (ii) after giving effect to
such refinancing, the Partnership would be in compliance with the terms of
Section 4.2(C) hereof (after taking into account principal payments permitted
under clause (a) above); and

          (c) Any payment of principal made (or deemed to be made) in connection
with the condemnation, casualty or foreclosure of all or a portion of the Real
Property or any Replacement Property.

     E. During the Lockout Period, the Partnership may refinance the Existing
Debt or any Replacement Debt with new debt (the "Replacement Debt") only if the
new debt (a) is secured by the Real Property or any Replacement Property, (b)
has a principal amortization schedule which equals or is longer than the current
amortization schedule of the Existing Debt or Replacement Debt (not including
any bullet or balloon payments at maturity) that is being refinanced, and (c) is
(i) nonrecourse indebtedness within the meaning of Regulations Section
1.752-1(a)(2) and (ii) qualified nonrecourse financing within the meaning of
Code Section 465(b)(6)(B). In addition to the foregoing, a Replacement Debt
shall have a principal amount that equals or exceeds the outstanding principal
balance of the Existing Debt or the Replacement Debt that is being refinanced;
provided, however, that any Replacement Debt with a principal amount greater
than the outstanding principal balance of the Existing Debt or the Replacement
Debt that is being refinanced shall not result in the Real Property or any
Replacement Property having a Loan To Value Ratio immediately after such
refinancing that exceeds ninety percent (90%).

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<PAGE>

     F. In the event that the Partnership or the General Partner removes the
Existing Debt or disposes of all or a portion of the Real Property during the
Lockout Period (the "Action"), the General Partner shall advance up to the
lesser of (a) $1,000,000 (in the aggregate) or (b) the Built in Tax Amount as a
loan to the Original Limited Partners on an interest-free basis with such loan
commencing on April 1 of the year subsequent to the Action and such loan
maturing on April 15, 2004. For purposes of this section, the "Built in Tax
Amount" shall mean, for each Original Limited Partner (treating such Original
Limited Partner as if it were taxable as an individual) the Code Section 704(c)
built in gain realized by the Original Limited Partner calculated at the highest
applicable marginal tax rates then in effect for federal and state income tax
purposes.

     G. For purposes of this Section 4, the term "Original Limited Partner"
shall include (a) the ultimate owners, at whatever level, that are taxpayers or
taxpaying entities for Federal income tax purposes, of any Original Limited
Partner, or its constituent partners or members at whatever level, as the case
may be, as determined by looking-through each Original Limited Partner, or
constituent partner or member at whatever level, as the case may be, that is a
partnership, limited liability company or other pass-through entity for Federal
income tax purposes and (b) any transferee controlled by such Person who
acquired an ownership interest in Partnership Units in a transaction in which
the transferee's basis is determined, in whole or in part, by reference to the
basis of the transferor.

                                      64

<PAGE>

                                    EXHIBIT B
                                    ---------
                      EXAMPLES REGARDING ADJUSTMENT FACTOR
                      ------------------------------------

     For purposes of the following examples, it is assumed that (a) the
Adjustment Factor in effect on June 30, 2001 is 1.0 and (b) on July 1, 2001 (the
"Partnership Record Date" for purposes of these examples), prior to the events
described in the examples, there are 100 REIT Shares issued and outstanding.

EXAMPLE 1

     On the Partnership Record Date, the General Partner declares a dividend on
its outstanding REIT Shares in REIT Shares. The amount of the dividend is one
REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i)
of the definition of "Adjustment Factor," the Adjustment Factor shall be
adjusted on the Partnership Record Date, effective immediately after the stock
dividend is declared, as follows:

                        1.0 X (200 DIVIDED BY 100) = 2.0

Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0.

EXAMPLE 2

     On the Partnership Record Date, the General Partner distributes options to
purchase REIT Shares to all holders of its REIT Shares. The amount of the
distribution is one option to acquire one REIT Share in respect of each REIT
Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the
Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the
definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on
the Partnership Record Date, effective immediately after the options are
distributed, as follows:

1.0 X ((100 + 100) DIVIDED BY (100 + (100 * $4.00) DIVIDED BY $5.00)) = 1.1111

Accordingly, the Adjustment Factor after the options are distributed is 1.1111.
If the options expire or become no longer exercisable, then the retroactive
adjustment specified in Paragraph (ii) of the definition of "Adjustment Factor"
shall apply.

EXAMPLE 3

     On the Partnership Record Date, the General Partner distributes assets to
all holders of its REIT Shares. The amount of the distribution is one asset with
a Fair Market Value of $1.00 in respect of each REIT Share owned. It is also
assumed that the assets do not relate to assets received by the General Partner
pursuant to a pro rata distribution by the Partnership. The Value of a REIT
Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph
(iii) of the definition of "Adjustment Factor," the Adjustment Factor shall be
adjusted on the Partnership Record Date, effective immediately after the assets
are distributed, as follows:

                 1.0 X ($5.00 DIVIDED BY ($5.00 - $1.00)) = 1.25

Accordingly, the Adjustment Factor after the assets are distributed is 1.25.

                                      65

<PAGE>

                                      EXHIBIT C
                                      ---------
                                 NOTICE OF REDEMPTION
                                 --------------------

To:  Cornerstone Realty Income Trust, Inc.
     306 East Main Street
     Richmond, VA 23219


     The undersigned Limited Partner or Assignee[, acting on behalf of
_______________ as Assignee] hereby irrevocably tenders for Redemption
__________ Partnership Units of [the undersigned and/or _______________ as
Assignee] in Cornerstone NC Operating Limited Partnership in accordance with the
terms of the Agreement of Limited Partnership of Cornerstone NC Operating
Limited Partnership, dated as of ___________,__________ , as amended (the
"Agreement"), and the Redemption rights referred to therein. The undersigned:

          (a) undertakes (i) to surrender such Partnership Units and any
     certificate therefor at the closing of the Redemption and (ii) to furnish
     to the General Partner, prior to the Redemption Date, the documentation,
     instruments and information required under Section 8.6 of the Agreement;

          (b) directs that the certified check representing the Cash Amount
     deliverable upon the closing of such Redemption be delivered to the address
     specified below;

          (c) represents, warrants, certifies and agrees that:

               (1) the undersigned Limited Partner or the Assignee is a
     Qualifying Party,

               (2) the undersigned Limited Partner or the Assignee has, and at
     the closing of the Redemption will have, good, marketable and unencumbered
     title to such Partnership Units, free and clear of the rights or interests
     of any other person or entity,

               (3) the undersigned Limited Partner or the Assignee has, and at
     the closing of the Redemption will have, the full right, power and
     authority to tender and surrender such Partnership Units as provided
     herein, and

               (4) the undersigned Limited Partner or the Assignee has obtained
     the consent or approval of all persons and entities, if any, having the
     right to consent to or approve such tender and surrender; and

          (d) acknowledges that he or such Assignee will continue to own such
     Partnership Units until and unless either (1) such Partnership Units are
     acquired by the General Partner pursuant to Section 8.6.B of the Agreement
     or (2) such Redemption transaction closes.

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<PAGE>

     All capitalized terms used herein and not otherwise defined shall have the
same meaning ascribed to them respectively in the Agreement.

Dated:
       ------------------------

                         Name of Limited Partner [or Assignee]:


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


                         ----------------------------------------------------
                         (Signature of Limited Partner [or Assignee]:


                         ----------------------------------------------------
                         (Street Address)


                         ----------------------------------------------------
                         (City)                        (State)   (Zip Code)

Issue Check Payable to:
                                  -------------------------------------------

Please insert social security or
identifying number:
                                  -------------------------------------------

                                      67

<PAGE>

                                   EXHIBIT D
                                   ---------

<TABLE>
<CAPTION>
Original Limited Partner            Number of Non-Preferred Units to be Exchanged       Date
------------------------            ---------------------------------------------       ----
<S>                                                      <C>                           <C>
State Street I, LLC                                      593,192                        the earlier of (i) Lease
                                                                                        Up* or (ii) March 31, 2002

State Street, LLC                                        116,481                        Final Completion** of
                                                                                        St. Andrews Place II

State Street, LLC                                        285,289                        the earlier of (i) Lease
                                                                                        Up* or (ii) six months
                                                                                        after Final Completion**
                                                                                        of St. Andrews Place II

State Street, LLC                                        116,913                        Final Completion** of
                                                                                        Trinity Commons II

State Street, LLC                                        319,715                        the earlier of (i) Lease
                                                                                        Up* or (ii) nine months
                                                                                        after Final Completion**
                                                                                        of Trinity Commons II
</TABLE>

* For purposes of this Exhibit D, Lease Up shall mean lease up of the applicable
apartment units to a 95% level and income stabilization for a period of 120
days.

** For purposes of this Exhibit D, Final Completion shall have the same meaning
as defined in Schedule 6.12 of the Membership Interest Contribution Agreement
among Cornerstone Realty Income Trust, Inc, Cornerstone NC Operating Limited
Partnership and State Street LLC dated as of September 30, 2001 with respect to
St. Andrews Place II, LLC and Trinity Commons II, LLC, as the case may be.

                                      68