<PAGE>
 
                                                                     EXHIBIT 4.1



                                    FORM OF
                          SECOND AMENDED AND RESTATED
                       AGREEMENT OF LIMITED PARTNERSHIP

                                      OF

                  PROPERTY CAPITAL TRUST LIMITED PARTNERSHIP
      (formerly known as Framingham York Associates Limited Partnership)



THE PARTNERSHIP INTERESTS OF THE LIMITED PARTNERS ISSUED PURSUANT TO THIS
LIMITED PARTNERSHIP AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR UNDER THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THEY ARE REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND ANY OTHER APPLICABLE SECURITIES OR "BLUE
SKY" LAWS, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
PARTNERSHIP INTERESTS ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN
THIS AGREEMENT.

                                                         _________________, 1999
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
ARTICLE 1 - DEFINED TERMS ..................................................   2
 
ARTICLE 2 - ORGANIZATIONAL MATTERS .........................................  11
    Section 2.1   Formation ................................................  11
    Section 2.2   Name .....................................................  12
    Section 2.3   Principal Office .........................................  12
    Section 2.4   Power of Attorney ........................................  12
    Section 2.5   Term .....................................................  13
 
ARTICLE 3 - PURPOSE ........................................................  13
    Section 3.1   Purpose and Business .....................................  13
    Section 3.2   Powers ...................................................  14
 
ARTICLE 4 - CAPITAL CONTRIBUTIONS ..........................................  14
    Section 4.1   Capital Contributions of the Partners ....................  14
    Section 4.2   Issuances of Additional Partnership Interests ............  15
    Section 4.3   Contribution of Proceeds of Issuance of REIT Shares ......  16
 
ARTICLE 5 - DISTRIBUTIONS ..................................................  16
    Section 5.1   Requirement and Characterization of Distributions ........  16
    Section 5.2   Amounts Withheld .........................................  17
    Section 5.3   Distributions Upon Liquidation ...........................  17
    Section 5.4   Revisions to Reflect Issuance of Additional Partnership 
                  Interests ................................................  17
                  
ARTICLE 6 - ALLOCATIONS ....................................................  18
    Section 6.1   Allocations For Capital Account Purposes .................  18
 
ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS ..........................  19
    Section 7.1   Management ...............................................  19
    Section 7.2   Certificate of Limited Partnership .......................  22
    Section 7.3   Restrictions on General Partner Authority ................  23
    Section 7.4   Reimbursement of the General Partner and the Company; 
                  DRIP's and Repurchase Programs ...........................  23
    Section 7.5   Outside Activities of the General Partner ................  24
    Section 7.6   Contracts with Affiliates ................................  24
    Section 7.7   Indemnification ..........................................  25
    Section 7.8   Liability of the General Partner .........................  26
    Section 7.9   Other Matters Concerning the General Partner .............  27
    Section 7.10  Title to Partnership Assets ..............................  27
    Section 7.11  Reliance by Third Parties ................................  28
 
ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS .....................  28
    Section 8.1   Limitation of Liability ..................................  28
    Section 8.2   Management of Business ...................................  28
    Section 8.3   Outside Activities of Limited Partners ...................  29
</TABLE> 

                                      (i)
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                            Page
                                                                            ----
<S>                                                                         <C>
    Section 8.4   Return of Capital ........................................  29
    Section 8.5   Rights of Limited Partners Relating to the Partnership ...  29
    Section 8.6   Common Unit Redemption Right .............................  30
    Section 8.7   Series A Preferred Units Redemption Right ................  31
    Section 8.8   Series B Preferred Units Redemption Right ................  31
 
ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS .........................  31
    Section 9.1   Records and Accounting ...................................  31
    Section 9.2   Fiscal Year ..............................................  32
    Section 9.3   Reports ..................................................  32
 
ARTICLE 10 - TAX MATTERS ...................................................  32
    Section 10.1  Preparation of Tax Returns ...............................  32
    Section 10.2  Tax Elections ............................................  32
    Section 10.3  Tax Matters Partner ......................................  33
    Section 10.4  Organizational Expenses ..................................  34
    Section 10.5  Withholding ..............................................  34
 
ARTICLE 11 - TRANSFERS AND WITHDRAWALS .....................................  35
    Section 11.1  Transfer .................................................  35
    Section 11.2  Limited Partners' Rights to Transfer .....................  35
    Section 11.3  Substituted Limited Partners .............................  36
    Section 11.4  Assignees ................................................  36
    Section 11.5  General Provisions .......................................  37
 
ARTICLE 12 - ADMISSION OF PARTNERS .........................................  37
    Section 12.1  Admission of Successor General Partner ...................  37
    Section 12.2  Admission of Additional Limited Partners .................  38
    Section 12.3  Amendment of Agreement and Certificate of Limited 
                  Partnership ..............................................  38
                             
ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION ......................  38
    Section 13.1  Dissolution ..............................................  38
    Section 13.2  Winding Up ...............................................  39
    Section 13.3  Compliance with Timing Requirements of Regulations .......  41
    Section 13.4  Deemed Termination .......................................  41
    Section 13.5  Rights of Limited Partners ...............................  41
    Section 13.6  Notice of Dissolution ....................................  41
    Section 13.7  Termination of Partnership and Cancellation of Certificate
                  of Limited Partnership ...................................  41
    Section 13.8  Reasonable Time for Winding-Up ...........................  42
    Section 13.9  Waiver of Partition ......................................  42
 
ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS ..................  42
    Section 14.1  Amendments ...............................................  42
    Section 14.2  Meetings of the Partners .................................  43
 
ARTICLE 15 - GENERAL PROVISIONS ............................................  45
</TABLE> 

                                     (ii)
<PAGE>
 
<TABLE> 
<S>                                                                          <C>
    Section 15.1  Restrictive Covenants .................................... 45 
    Section 15.2  Addresses and Notice ..................................... 45 
    Section 15.3  Titles and Captions ...................................... 45 
    Section 15.4  Pronouns and Plurals ..................................... 45 
    Section 15.5  Further Action ........................................... 45 
    Section 15.6  Binding Effect ........................................... 45 
    Section 15.7  Creditors ................................................ 46 
    Section 15.8  Waiver ................................................... 46 
    Section 15.9  Counterparts ............................................. 46 
    Section 15.10 Applicable Law ........................................... 46 
    Section 15.11 Invalidity of Provisions ................................. 46 
    Section 15.12 Entire Agreement ......................................... 46
</TABLE> 
 
EXHIBITS
 
Exhibit A-1    -    Partners Contributions and Partnership Interests
Exhibit A-2    -    Partners Capital Accounts
Exhibit B      -    Capital Account Maintenance
Exhibit C      -    Special Allocation Rules
Exhibit D      -    Notice of Redemption
Exhibit E      -    Recourse Debt Level Schedule
Exhibit F      -    Series A Preferred Units Redemption Right
Exhibit G      -    Series B Preferred Units Redemption Right

                                     (iii)
<PAGE>
 
                                    FORM OF
                          SECOND AMENDED AND RESTATED
                       AGREEMENT OF LIMITED PARTNERSHIP
                                      OF
                  PROPERTY CAPITAL TRUST LIMITED PARTNERSHIP


     THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
PROPERTY CAPITAL TRUST LIMITED PARTNERSHIP (this "Agreement"), dated as of
__________, 1999, is entered into by and among Property Capital Trust, Inc., a
Maryland corporation (the "Company"), and the Persons (as defined below) whose
names are set forth on Exhibit A-1 attached hereto (as it may be amended from
                       -----------                                           
time to time).

     WHEREAS, this Partnership, originally known as Framingham York Laboratories
Associates Limited Partnership (which name was subsequently changed to
Framingham York Associates Limited Partnership), was formed on September 27,
1984 pursuant to the Uniform Limited Partnership Act of Massachusetts, as
amended (the "Act");

     WHEREAS, an Amended and Restated Agreement of Limited Partnership of the
Partnership, dated as of December 21, 1984, was entered into among Bruce A. Beal
and Robert L. Beal, each an individual, as general partners, and certain of
those Persons whose names are set forth on Exhibit A-1, as limited partners (the
                                           -----------                          
"Original Agreement");

     WHEREAS, the Partnership entered into a Contribution and Merger Agreement,
dated as of October __, 1998, with Property Capital Trust Limited Partnership, a
Massachusetts limited partnership ("PCT LP"), pursuant to which PCT LP would be
merged with and into the Partnership, with the Partnership as the surviving
limited partnership (the "PCT LP Merger");

     WHEREAS, the PCT LP Merger became effective on the date hereof;

     WHEREAS, in connection with the PCT LP Merger and in exchange for the
interest of each partner of the Partnership and PCT LP, as set forth in Exhibit
                                                                        -------
A-1 attached hereto, additional Persons have been admitted into the Partnership
---                                                                            
as limited partners and general partner;

     WHEREAS, the Partners have agreed that the fair market value of the assets
of the surviving limited partnership at the time of the contribution thereof is
equal to $3,000,000 (after the deduction of the liabilities to which such assets
are subject);

     WHEREAS, the Partners have agreed that their Capital Account (as
hereinafter defined) balances shall be restated as set forth on Exhibit A-2;
                                                                ----------- 
attached hereto;

     WHEREAS, the Partnership changed its name to Property Capital Trust Limited
Partnership; and

     WHEREAS, the Partners of the Partnership desire to amend and restate the
Original Agreement on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, the Partners hereby amend and restate this Agreement as set
forth in full below pursuant to the authority granted to the Partners under
Section 9.11 of the Original Agreement and adopt this Second Amended and
Restated Agreement in full substitution of the Original Agreement.
<PAGE>
 
                                   ARTICLE 1
                                 DEFINED TERMS

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

     "Act" has the meaning set forth in the recitals hereof.
      ---                                                   

     "Additional Limited Partner" means a Person admitted to the Partnership as
      --------------------------                                               
a Limited Partner pursuant to Sections 4.2 and 12.2 hereof and who is shown as
such on the books and records of the Partnership.

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

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

     "Adjusted Property" means any property, the Carrying Value of which has
      -----------------                                                     
been adjusted pursuant to Exhibit B hereof.  Once an Adjusted Property is deemed
                          ---------                                             
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
                                                       ---------        

     "Affiliate" means, with respect to any Person, any Person directly or
      ---------                                                           
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, "control," when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.  No officer, director or stockholder of
the General Partner shall be considered an Affiliate of the General Partner
solely as a result of serving in such capacity or being a stockholder of the
General Partner.

     "Agreed Value" means (i) in the case of any Contributed Property as of the
      ------------                                                             
time of its contribution to the Partnership, the 704(c) Value of such property,
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder.  The aggregate Agreed Value of the Contributed Property contributed
or deemed contributed by each Partner as of the date hereof is as set forth in
Exhibit A-1.
----------- 

                                       2
<PAGE>
 
     "Agreement" means this First Amended and Restated Agreement of Limited
      ---------                                                            
Partnership, as it may be amended, supplemented or restated from time to time.

     "Articles of Incorporation" means the Articles of Incorporation or other
      -------------------------                                              
organizational document governing the General Partner, as amended or restated
from time to time.

     "Assignee" means a Person to whom one or more Partnership Units have been
      --------                                                                
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.4
hereof.

     "Available Cash" means, with respect to any period for which such
      --------------                                                  
calculation is being made, (i) the sum of:

          (a) the Partnership's Net Income or Net Loss (as the case may be) for
     such period (without regard to adjustments resulting from allocations
     described in Sections 1.A through 1.E of Exhibit C);
                                              ---------  

          (b) Depreciation and all other noncash charges deducted in determining
     Net Income or Net Loss for such period;

          (c) the amount of any reduction in the reserves of the Partnership
     referred to in clause (ii)(f) below (including, without limitation,
     reductions resulting because the General Partner determines such amounts
     are no longer necessary);

          (d) the excess of proceeds from the sale, exchange, disposition, or
     refinancing of Partnership property for such period over the gain
     recognized from such sale, exchange, disposition, or refinancing during
     such period (excluding Terminating Capital Transactions); and

          (e) all other cash received by the Partnership for such period that
     was not included in determining Net Income or Net Loss for such period;

     (ii) less the sum of:

          (a) all principal debt payments made by the Partnership during such
     period;

          (b) capital expenditures made by the Partnership during such period;

          (c) investments made by the Partnership during such period in any
     entity (including loans made thereto) to the extent that such investments
     are not otherwise described in clause (ii)(a) or (ii)(b);

          (d) all other expenditures and payments not deducted in determining
     Net Income or Net Loss for such period;

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

                                       3
<PAGE>
 
          (f) the amount of any increase in reserves during such period which
     the General Partner determines to be necessary or appropriate in its sole
     and absolute discretion; and

          (g) the amount of any working capital accounts and other cash or
     similar balances which the General Partner determines to be necessary or
     appropriate, in its sole and absolute discretion.

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

     "Book-Tax Disparities" means, with respect to any item of Contributed
      --------------------                                                
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date.  A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
   ---------                                                               
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.

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

     "Capital Account" means the Capital Account maintained for a Partner
      ---------------                                                    
pursuant to Exhibit B hereof.
            ---------        

     "Capital Contribution" means, with respect to any Partner, any cash, cash
      --------------------                                                    
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.

     "Carrying Value" means (i) with respect to a Contributed Property or
      --------------                                                     
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts
following the contribution of or adjustment with respect to such Property; and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereof, and to reflect changes, additions or other
                ---------                                                   
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.

     "Cash Amount" means an amount of cash per Partnership Unit equal to the
      -----------                                                           
Value on the Valuation Date of the REIT Shares Amount.
 
     "Certificate of Designations" means an amendment to this Agreement that
      ---------------------------                                           
sets forth the designations, rights, powers, duties and preferences of holders
of any Partnership Interests issued pursuant to Section 4.2.A, which amendment
is in the form of a certificate signed by the General Partner and appended to
this Agreement.  A Certificate of Designations is not the exclusive manner in
which such an amendment may be effected.  The General Partner may adopt a
Certificate of Designations without the consent of the Limited Partners to the
extent permitted pursuant to Section 14.1.B hereof.

                                       4
<PAGE>
 
     "Certificate of Limited Partnership" means the Certificate of Limited
      ----------------------------------                                  
Partnership relating to the Partnership filed in the office of the Massachusetts
Secretary of State, as amended from time to time in accordance with the terms
hereof and the Act.

     "Code" means the Internal Revenue Code of 1986, as amended and in effect
      ----                                                                   
from time to time, 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.

     "Common Units" means the Partnership Units issued to the Partners, which
      ------------                                                           
Partnership Units have the rights, preferences and privileges designated herein.
The number of Common Units issued to such Partners is set forth on Exhibit A-1
                                                                   -----------
attached hereto.

     "Company" means Property Capital Trust, Inc., a Maryland corporation.
      -------                                                             

     "Consent" means the consent or approval of a proposed action by a Partner
      -------                                                                 
given in accordance with Section 14.2 hereof.

     "Contributed Property" means each property or other asset, in such form as
      --------------------                                                     
may be permitted by the Act (but excluding cash), contributed or deemed
contributed to the Partnership (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code).  Once the Carrying Value of a Contributed Property is adjusted
pursuant to Exhibit B hereof, such property shall no longer constitute a
            ---------                                                   
Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
                                     ---------                               
Adjusted Property for such purposes.

     "Conversion Factor" means 1.0, provided that in the event that the Company
      -----------------             -------- ----                              
(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) subdivides its outstanding REIT Shares; or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time), and 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,
subdivision or combination.  Any adjustment to the Conversion Factor shall
become effective immediately after the Effective Date of such event retroactive
to the record date, if any, for such event (provided, however, if a Notice of
                                            --------  -------                
Redemption is given prior to such a record date and the Specified Redemption
Date is after such a record date, then the adjustment to the Conversion Factor
shall, with respect to such redeeming Partner, be retroactive to the date of
such Notice of Redemption).  It is intended that adjustments to the Conversion
Factor are to be made in order to avoid unintended dilution or anti-dilution as
a result of transactions in which REIT Shares are issued, redeemed or exchanged
without a corresponding issuance, redemption or exchange of Partnership Units.
If, prior to a Specified Redemption Date, Rights (other than Rights issued
pursuant to an employee benefit plan or other compensation arrangement) were
issued and have expired, and such Rights were issued with an exercise price
that, together with the purchase price for such Rights, was below fair market
value in relation to the security or other property to be acquired upon the
exercise of such Rights, and such Rights were issued to all holders of
outstanding REIT shares or the General Partner cannot in good faith represent
that the issuance of such Rights benefitted the Limited Partners, then the
Conversion Factor applicable upon a Notice of Redemption shall be equitably
adjusted in a manner 

                                       5
<PAGE>
 
consistent with antidilution provisions in warrants and other instruments in the
case of such a below market issuance or exercise price. A similar equitable
adjustment to protect the value of Partnership Units shall be made in all events
if any Rights issued under a "Shareholder Rights Plan" became exercisable and
expired prior to a Specified Redemption Date.

     "Depreciation" means, for each taxable year, an amount equal to the federal
      ------------                                                              
income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
                                                          --------  ------- 
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.

     "Effective Date" means [___________, 1999].
      --------------                            

     "General Partner" means the Company, in its capacity as the general partner
      ---------------                                                           
of the Partnership, or its successors as general partner of the Partnership.

     "General Partner Interest" means a Partnership Interest held by the General
      ------------------------                                                  
Partner, in its capacity as general partner.  A General Partner Interest may be
expressed as a number of Partnership Units.

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

     "Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
      ----------      -------------                                          
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his or her Person or estate; (ii) as to
any corporation which is a Partner, the filing of a certificate of dissolution,
or its equivalent, for the corporation or the revocation of its charter; (iii)
as to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner.  For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation, reorganization
or other relief 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 properties; (f) any 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 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 

                                       6
<PAGE>
 
appointment referred to in clause (g) which has been stayed 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
      ----------                                                                
(A) his status as the General Partner, or as a director, trustee, officer,
employee or shareholder (with respect to the affairs of such entity) of the
Partnership, the General Partner or a predecessor entity of the General Partner,
or (B) his or its liabilities, pursuant to a loan guarantee or otherwise, for
any indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken assets subject to); (ii) each
present and former trustee, officer, employee or shareholder (in connection with
the affairs of Property Capital Trust, a Massachusetts business trust (the
"Trust")) of the Trust in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative (A)
arising out of or pertaining to the transactions contemplated by the Agreement
and Plan of Merger, dated as of June 18, 1998, as amended, between the Trust and
the Company (the "Trust Merger Agreement") or (B) otherwise with respect to any
acts or omissions occurring at or prior to the Effective Time (as defined in the
Trust Merger Agreement) for a period of six years after the Effective Date; and
(iii) such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.

     "Limited Partner" means any Person (including the Company) named as a
      ---------------                                                     
Limited Partner in Exhibit A-1 attached hereto, as such Exhibit may be amended
                   -----------                                                
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner of the Partnership.

     "Limited Partner Interest" means a Partnership Interest of a Limited
      ------------------------                                           
Partner in the Partnership representing a fractional part of the Partnership
Interests of all 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.

     "Limited Partner Recourse Debt Percentage" means with respect to certain of
      ----------------------------------------                                  
the Limited Partners the percentage listed with respect to such Limited Partner
on the recourse debt level schedule attached hereto as Exhibit E.

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

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

     "Minimum Rental Income" has the meaning set forth in Section 5.1.B hereof.
      ---------------------                                                    

     "Modified Adjusted Capital Account Balance" means, with respect to any
      -----------------------------------------                            
Partner, the Capital Account maintained for each Partner as of the end of each
Partnership taxable year (i) increased by any amounts which such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) decreased by the
items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).

     "Net Income" means, for any taxable period, the excess, if any, of the
      ----------                                                           
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable 

                                       7
<PAGE>
 
period. The items included in the calculation of Net Income shall be determined
in accordance with federal income tax accounting principles, subject to the
specific adjustments provided for in Exhibit B.
                                     --------- 

     "Net Loss" means, for any taxable period, the excess, if any, of the
      --------                                                           
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
                --------- 

     "Nonrecourse Built-in Gain" means, with respect to any Contributed
      -------------------------                                        
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
                                                              ---------        
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.

     "New Securities" has the meaning set forth in Section 4.2.B hereof.
      --------------                                                    

     "Nonrecourse Deductions" has the meaning set forth in Regulations Section
      ----------------------                                                  
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership
taxable 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 D to this Agreement.
        ---------                   

     "Original Agreement" has the meaning set forth in the recitals hereof.
      ------------------                                                   

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

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

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

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

     "Partnership" means the limited partnership formed under the Act and
      -----------                                                        
pursuant to this Agreement, as it may be amended and/or restated, 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 

                                       8
<PAGE>
 
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 a Partnership Minimum Gain, for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).

     "Partnership Record Date" means the record date established by the General
      -----------------------                                                  
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof,
which record date shall be the same as the record date established by the
Company for a distribution to its shareholders of some of all of its portion of
such distribution.

     "Partnership Unit" or "Unit" means a fractional, undivided share of the
      ----------------      ----                                            
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3 (and includes any series or class of Preferred Units). The number of
Partnership Units outstanding and the Percentage Interest in the Partnership
represented by such Units are set forth in Exhibit A attached hereto, as such
                                           ---------                         
Exhibit may be amended from time to time. The ownership of Partnership Units
shall be evidenced by such form of certificate for units as the General Partner
adopts from time to time unless the General Partner determines that the
Partnership Units shall be uncertificated securities.

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

     "Percentage Interest" means, as to a Partner, its percentage interest in
      -------------------                                                    
the Partnership as determined by dividing the Partnership Units (other than the
Series A Preferred Units and Series B Preferred Units) owned by such Partner by
the total number of Partnership Units (other than the Series A Preferred Units
and Series B Preferred Units) then outstanding and as specified in Exhibit A-1
                                                                   -----------
attached hereto, as such Exhibit may be amended from time to time.

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

     "PCT LP" has the meaning set forth in the recitals hereof.
      ------                                                   

     "PCT LP Merger" has the meaning set forth in the recitals hereof.
      -------------                                                   

     "Preferred Unit" means a Partnership Unit which is designated as a
      --------------                                                   
"Preferred Unit" (or as a particular class or series of Preferred Units) and
which has the rights, preferences and other privileges designated herein (or in
the Certificate of Designations for such class of Preferred Units) in respect of
a Preferred Unitholder.  The allocation of Preferred Units, if any, among the
Partners shall be set forth on Exhibit A-1, as may be amended from time to time.
                               -----------                                      

     "Preferred Unitholder" means a Limited Partner that holds Preferred Units
      --------------------                                                    
(of any class or series).

     "Recapture Income" means any gain recognized by the Partnership upon the
      ----------------                                                       
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

                                       9
<PAGE>
 
     "Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
      -----------------                                                  

     "Redemption Right" shall have the meaning set forth in Section 8.6 hereof.
      ----------------                                                         

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

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

     "REIT Share" shall mean a share of common stock, par value $.01 per share,
      ----------                                                               
of the Company.

     "REIT Shares Amount" shall mean a number of REIT Shares equal to the
      ------------------                                                 
product of the number of Partnership Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor in effect on the date of receipt by
the General Partner of a Notice of Redemption, provided that in the event the
                                               -------- ----                 
Company issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares, or any other securities or property (collectively,
"Rights"), and the Rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include the Rights that were issuable to
a holder of the REIT Shares Amount of REIT Shares on the applicable record date
relating to the issuance of such Rights.

     "Residual Gain" or "Residual Loss" means any item of gain or loss, as the
      -------------      -------------                                        
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
                                            ---------                      
Disparities.

     "Rights" shall have the meaning set forth in the definition of "REIT Shares
      ------                                                                    
Amount."

     "704(c) Value" of any Contributed Property means the fair market value of
      ------------                                                            
such property or other consideration at the time of contribution, as determined
by the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the 704(c) Value of any property deemed
       --------  -------                                              
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Exhibit B hereof.  Subject to Exhibit B hereof,
                              ---------                     ---------        
the General Partner shall, in its sole and absolute discretion, use such method
as it deems reasonable and appropriate to allocate the aggregate of the 704(c)
Values of Contributed Properties in a single or integrated transaction among the
separate properties on a basis proportional to their respective fair market
values.

     "Series A Preferred Units" means the Partnership Units issued to certain of
      ------------------------                                                  
the Limited Partners on the Effective Date, which Partnership Units have the
rights, preferences and privileges designated herein. The number of Series A
Preferred Units issued to such Limited Partners is set forth on Exhibit A-1
                                                                -----------
attached hereto.

     "Series B Preferred Units" means the Partnership Units issued to certain of
      ------------------------                                                  
the Limited Partners on the Effective Date,, which Partnership Units have the
rights, preferences and privileges designated herein. The number of Series B
Preferred Units issued to such Limited Partners is set forth on Exhibit A-1
                                                                -----------
attached hereto.

                                       10
<PAGE>
 
     "Specified Redemption Date" means the tenth (10th) Business Day after
      -------------------------                   ----                    
receipt by the Company of a Notice of Redemption; provided that no Specified
                                                  -------- ----             
Redemption Date shall occur before that date that is twelve (12) months after
the Effective Date, provided further that if the Company combines its
                    -------- -------                                 
outstanding REIT Shares, no Specified Redemption Date shall occur after the
record date of such combination of REIT Shares and prior to the effective date
of such combination.

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

     "Substituted Limited Partner" means a Person who is admitted as a Limited
      ---------------------------                                             
Partner to the Partnership pursuant to Section 11.3 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.

     "Unrealized Gain" attributable to any item of Partnership property means,
      ---------------                                                         
as of any date of determination, the excess, if any, of (i) the fair market
value of such property (as determined under Exhibit B hereof) as of such date;
                                            ---------                         
over (ii) the Carrying Value of such property (prior to any adjustment to be
made pursuant to Exhibit B hereof) as of such date.
                 ---------                         

     "Unrealized Loss" attributable to any item of Partnership property means,
      ---------------                                                         
as of any date of determination, the excess, if any, of (i) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Exhibit B
                                                                 ---------
hereof) as of such date; over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
                 ---------                         

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

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

                                       11
<PAGE>
 
Rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate, provided that the Value of any rights issued
                                  -------- ----
pursuant to a "Shareholder Rights Plan" shall be deemed to have no value unless
a "triggering event" shall have occurred (i.e., if the Rights issued pursuant
                                          ----
thereto are no longer "attached" to the REIT Shares and are able to trade
independently).


                                   ARTICLE 2
                            ORGANIZATIONAL MATTERS

      Section 2.1   Formation
                    ---------

      The Partnership is a limited partnership organized pursuant to the
provisions of the Act. The Partners hereby agree to continue the Partnership
upon the terms and conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act.  The Partnership Interest of each Partner shall be personal property for
all purposes.

      Section 2.2   Name
                    ----

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

      Section 2.3   Principal Office
                    ----------------

      The principal office of the Partnership shall be 177 Milk Street, Boston,
Massachusetts 02109, 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
Massachusetts as the General Partner deems advisable.

      Section 2.4   Power of Attorney
                    -----------------

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

           (1)  execute, swear to, acknowledge, deliver, file and record in the
                appropriate public offices (a) all certificates, documents and
                other instruments (including, without limitation, this Agreement
                and the Certificate of Limited Partnership and all amendments or
                restatements thereof) that the General Partner or the Liquidator
                deems appropriate or necessary to form, qualify or continue the
                existence or

                                       12
<PAGE>
 
                qualification of the Partnership as a limited partnership (or a
                partnership in which the Limited Partners have limited
                liability) in the Commonwealth of Massachusetts and in all other
                jurisdictions in which the Partnership may or plans to conduct
                business or own property; (b) all instruments that the General
                Partner deems appropriate or necessary to reflect any amendment,
                change, modification or restatement of this Agreement in
                accordance with its terms; (c) all conveyances and other
                instruments or documents that the General Partner or the
                Liquidator deems appropriate or necessary to reflect the
                dissolution and liquidation of the Partnership pursuant to the
                terms of this Agreement, including, without limitation, a
                certificate of cancellation; (d) all instruments relating to the
                admission, withdrawal, removal or substitution of any Partner
                pursuant to, or other events described in, Article 11, 12 or 13
                hereof or the Capital Contribution of any Partner; and (e) all
                certificates, documents and other instruments relating to the
                determination of the rights, preferences and privileges of
                Partnership Interests; and

          (2)   execute, swear to, seal, acknowledge and file all ballots,
                consents, approvals, waivers, certificates and other instruments
                appropriate or necessary, in the sole and absolute discretion of
                the General Partner or any Liquidator, to make, evidence, give,
                confirm or ratify any vote, consent, approval, agreement or
                other action which is made or given by the Partners hereunder or
                is consistent with the terms of this Agreement or appropriate or
                necessary, in the sole discretion of the General Partner or any
                Liquidator, to effectuate the terms or intent of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator 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 power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives.  Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney.  Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.

                                       13
<PAGE>
 
      Section 2.5   Term
                    ----

      The term of the Partnership commenced on September 27, 1984, the date on
which the Certificate of Limited Partnership was filed in the office of the
Secretary of State of the Commonwealth of Massachusetts, and shall continue
until December 31, 2099, unless the Partnership is dissolved sooner pursuant to
the provisions of Article 13 or as otherwise provided by law.


                                   ARTICLE 3
                                    PURPOSE

      Section 3.1   Purpose and Business
                    --------------------

      The purpose and nature of the business to be conducted by the Partnership
is (i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that such business
                                           --------  -------                    
shall be limited to and conducted in such a manner as to permit the Company at
all times to be classified as a REIT, unless the Company ceases to qualify as a
REIT for reasons other than the conduct of the business of the Partnership; (ii)
to enter into any partnership, joint venture, limited liability company or other
similar arrangement to engage in any of the foregoing or to own interests in any
entity engaged, directly or indirectly, in any of the foregoing; and (iii) to do
anything necessary or incidental to the foregoing.  In connection with the
foregoing, and without limiting the Company's right, in its sole discretion, to
cease qualifying as a REIT, the Partners acknowledge the Company's current
status as a REIT inures to the benefit of all of the Partners and not solely the
General Partner.  The General Partner shall also be empowered to do any and all
acts and things necessary or prudent to ensure that the Partnership will not be
classified as a "publicly traded partnership" for purposes of Section 7704 of
the Code, including but not limited to imposing restrictions on transfers and
restrictions on redemptions.

      Section 3.2   Powers
                    ------

      The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation, full
power and authority, directly or through its ownership interest in other
entities, to enter into, perform and carry out contracts of any kind, borrow
money and issue evidences of indebtedness whether or not secured by mortgage,
deed of trust, pledge or other lien, acquire, own, manage, improve and develop
real property, and lease, sell, transfer and dispose of real property; provided,
                                                                       -------- 
however, that the Partnership shall not take, or refrain from taking, any action
--------                                                                        
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of the Company to continue to
qualify as a REIT; (ii) could subject the Company to any additional taxes under
Section 857 or Section 4981 of the Code; or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.

                                       14
<PAGE>
 
                                   ARTICLE 4
                             CAPITAL CONTRIBUTIONS

      Section 4.1   Capital Contributions of the Partners
                    -------------------------------------

     A.   Initial Capital Contributions.  The Company, as General Partner and as
          -----------------------------                                         
a Limited Partner, and the other Persons listed on Exhibit A-1 made Capital
                                                   -----------             
Contributions to the Partnership as set forth therein and their initial Capital
Account balances are as set forth in Exhibit A-2.  The General Partner completed
                                     -----------                                
Exhibit A-1 to reflect the Capital Contributions made by each Partner, the
-----------                                                               
Partnership Units assigned to each Partner and the Percentage Interest in the
Partnership represented by such Partnership Units.

     B.   General Partnership Interest.  A number of Partnership Units held by
          ----------------------------                                        
the Company equal to one percent (1%) of all outstanding Partnership Units shall
be deemed to be the General Partner Partnership Units and shall be the General
Partnership Interest.  All other Partnership Units held by the Company shall be
deemed to be Limited Partnership Interests and shall be held by the General
Partner in its capacity as a Limited Partner in the Partnership.

     C.   Capital Contributions By Merger.  To the extent the Partnership
          -------------------------------                                
acquires any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests in the
Person merging into the Partnership shall become Partners and shall be deemed to
have made Capital Contributions as provided in the applicable merger agreement
and as set forth in Exhibit A-1, as amended to reflect such deemed Capital
                    -----------                                           
Contributions.

     D.   No Obligation to Make Additional Capital Contributions.  Each Partner
          ------------------------------------------------------               
shall own the number of Partnership Units set forth for such Partner in Exhibit
                                                                        -------
A-1 and shall have a Percentage Interest in the Partnership as set forth in
---                                                                        
Exhibit A-1, which Percentage Interest shall be adjusted in Exhibit A-1 from
-----------                                                 -----------     
time to time by the General Partner to the extent necessary to reflect
accurately redemptions, additional Capital Contributions, the issuance of
additional Partnership Units (pursuant to any merger or otherwise), or similar
events having an effect on any Partner's Percentage Interest.  The number of
Partnership Units held by the General Partner, in its capacity as general
partner, (equal to one percent (1%) of all outstanding Partnership Units from
time to time) shall be deemed to be the General Partner Interest.  Except as
provided in Sections 4.2, 10.5 or elsewhere in this Agreement, the Partners
shall have no obligation to make any additional Capital Contributions or loans
to the Partnership.

      Section 4.2   Issuances of Additional Partnership Interests
                    ---------------------------------------------

     A.   The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner and its
Affiliates) or other Persons (including, without limitation, in connection with
the contribution of property to the Partnership) additional Partnership Units or
other Partnership Interests in one or more classes, or one or more series of any
of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to the Limited Partner Interests issued on the
Effective Date, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Massachusetts law, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests; (ii)
the right of each such class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such class or series of

                                       15
<PAGE>
 
Partnership Interests upon dissolution and liquidation of the Partnership;
provided that no such additional Partnership Units or other Partnership
-------- ----                                                          
Interests shall be issued to the General Partner, unless either (a)(1) the
additional Partnership Interests are issued in connection with the grant, award
or issuance of REIT Shares or other equity interests by the Company, which REIT
shares or other equity interests have designations, preferences and other rights
such that the economic interests attributable to such REIT shares or other
equity interests are substantially similar to the designations, preferences and
other rights of the additional Partnership Interests issued to the General
Partner in accordance with this Section 4.2A, and (2) the Company shall make a
Capital Contribution to the Partnership in an amount equal to the proceeds
raised in connection with such issuance, or (b) the additional Partnership
Interests are issued to all Partners in proportion to their respective
Percentage Interests.  In addition, the Company may acquire Partnership Units
from other Partners pursuant to this Agreement.  In the event that the
Partnership issues Partnership Interests pursuant to this Section 4.2A, the
General Partner shall make such revisions to this Agreement (without any
requirement of receiving approval of the Limited Partners) including but not
limited to the revisions described in Section 5.4, Section 6.1 and Section 8.6
hereof, as it deems necessary to reflect the issuance of such additional
Partnership Interests and the special rights, powers and duties associated
therewith.  Unless specifically set forth otherwise by the General Partner, any
Partnership Interest issued after the Effective Date shall have the same rights,
powers and duties as the Partnership Interests issued on the Effective Date.

     B.   From and after the date hereof, the Company shall not issue any
additional REIT Shares (other than REIT Shares issued pursuant to Section 8.6
hereof), or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares (collectively "New
Securities") other than to all holders of REIT Shares unless (i) the General
Partner shall cause the Partnership to issue to the Company, Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
of the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially similar to those of the New
Securities; and (ii) the Company contributes to the Partnership the proceeds
from the issuance of such New Securities and from the exercise of rights
contained in such New Securities.  Without limiting the foregoing, the Company
is expressly authorized to issue New Securities for no tangible value or for
less than fair market value, and the General Partner is expressly authorized to
cause the Partnership to issue to the Company corresponding Partnership
Interests, so long as (x) the General Partner concludes in good faith that such
issuance is in the interests of the Company and the Partnership (for example,
and not by way of limitation, the issuance of REIT Shares and corresponding
Units pursuant to an employee stock purchase plan providing for employee grants
or purchases of REIT Shares or employee stock options that have an exercise
price that is less than the fair market value of the REIT Shares, either at the
time of issuance or at the time of exercise); and (y) the Company contributes
all proceeds, if any, from such issuance and exercise to the Partnership.

      Section 4.3   Contribution of Proceeds of Issuance of REIT Shares
                    ---------------------------------------------------

     In connection with the issuance of New Securities pursuant to Section 4.2
hereof, the General Partner shall contribute to the Partnership any proceeds (or
a portion thereof) raised in connection with such issuance; provided that if the
                                                            -------- ----       
proceeds actually received by the General Partner are less than the gross
proceeds of such issuance as a result of any underwriter's discount or other
expenses paid or incurred in connection with such issuance, then the General
Partner shall be deemed to have made a Capital Contribution to the Partnership
in the amount equal to the sum of the net proceeds of such issuance plus the
amount of such underwriter's discount and other expenses paid by the General
Partner (which discount and expense shall be treated as an expense for the
benefit of the Partnership for purposes of Section 7.4 hereof).

                                       16
<PAGE>
 
In the case of employee acquisitions of New Securities at a discount from fair
market value or for no value in connection with a grant of New Securities, the
amount of such discount representing compensation to the employee, as determined
by the General Partner, shall be treated as an expense of the issuance of such
New Securities.


                                   ARTICLE 5
                                 DISTRIBUTIONS

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

     A.   The General Partner shall distribute at least quarterly an amount
equal to 100% of Available Cash generated by the Partnership during such quarter
or shorter period to the holders of Partnership Units who are Partners on the
Partnership Record Date with respect to such quarter or shorter period

          (i)   first, to the holders of Series A Preferred Units (in proportion
     to the number of Series A Preferred Units owned by each such holder) an
     amount that in the aggregate equals $36,636 for such quarter or shorter
     period;

          (ii)  second, to the holders of the Series B Preferred Units (in
     proportion to the number of Series B Preferred Units owned by each such
     holder) an amount that in the aggregate equals $35,864 for such quarter or
     shorter period; and

          (iii) third, to the holders of Common Units in accordance with their
     respective Percentage Interests on such Partnership Record Date;

          provided, that in no event may a Partner receive a distribution of
          --------  ----                                                    
     Available Cash with respect to a Partnership Unit if such Partner is
     entitled to receive a distribution out of such Available Cash with respect
     to a REIT Share for which such Partnership Unit has been redeemed or
     exchanged, and further provided that no distributions shall be made
                    ------- --------                                    
     pursuant to clause (iii) above unless all cumulative distributions with
     respect to the Series A Preferred Units and the Series B Preferred Units
     for all past distribution periods and the then current distribution period
     have been or contemporaneously are (x) paid in full or (y) declared and a
     sum sufficient for the full payment thereof is set apart for such payment.
     The General Partner shall take such reasonable efforts, as determined by it
     in its sole and absolute discretion and consistent with the Company's
     qualification as a REIT, to distribute Available Cash to (a) the Limited
     Partners so as to preclude any such distribution or portion thereof from
     being treated as part of a sale of property to the Partnership by a Limited
     Partner under Section 707 of the Code or the Regulations thereunder;
     provided that the General Partner and the Partnership shall not have
     -------- ----                                                       
     liability to a Limited Partner under any circumstances as a result of any
     distribution to a Limited Partner being so treated and (b) satisfy the
     requirements for qualifying as a REIT under the Code.

     B.   Notwithstanding anything to the contrary contained herein, the holders
of Series A Preferred Units and the holders of Series B Preferred Units shall
only be entitled to the distributions set forth in Section 5.1A(i) and Section
5.1A(ii) above, respectively, for so long as the rental income from the property
located at 51 New York Avenue, Framingham, Massachusetts is equal to or exceeds
$89,250 (the

                                       17
<PAGE>
 
"Minimum Rental Income") during any quarter or shorter period. In the event that
such property does not generate the Minimum Rental Income in any quarter or
shorter period, then the distributions required to be made pursuant to Section
5.1A(i) and Section 5.1A(ii) above to the holders of Series A Preferred Units
and the holders of Series B Preferred Units, respectively, shall be decreased in
proportion to the amount by which the amount of rental income actually received
during such quarter or shorter period is less than the Minimum Rental Income.

     Section 5.2    Amounts Withheld
                    ----------------

     All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.5 hereof with respect to any allocation, payment or
distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 hereof for all
purposes under this Agreement.

     Section 5.3    Distributions Upon Liquidation
                    ------------------------------

     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 Partners in accordance with Section 13.2
hereof.

     Section 5.4    Revisions to Reflect Issuance of Additional Partnership
                    -------------------------------------------------------
Interests
---------

     In the event that the Partnership issues additional Partnership Interests
to the General Partner or any Additional Limited Partner pursuant to Article 4
hereof, the General Partner shall make such revisions to this Article 5 as it
deems necessary to reflect the issuance of such additional Partnership Interests
and any special rights, duties or powers with respect thereto.

                                       18
<PAGE>
 
                                   ARTICLE 6
                                  ALLOCATIONS

     Section 6.1    Allocations For Capital Account Purposes
                    ----------------------------------------

     For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B attached hereto)
                                                      ---------                 
shall be allocated among the Partners in each taxable year (or portion thereof)
as provided below.

     A.   Subject to (iii) below, and after reduction for the allocations
described therein, Net Income shall be allocated

          (i)    first, to the Partners in the same ratio and reverse order as
     Net Loss was allocated to such Partners pursuant to Section 6.1B(ii) and
     (iii) hereof for all fiscal years until the aggregate amount of Net Losses
     previously allocated to the Partners pursuant to such provisions of Section
     6.1B hereof equal the aggregate amount of Net Income allocated to such
     Partners pursuant to this clause (i) of Section 6.1A; and

          (ii)   thereafter, Net Income shall be allocated to the Partners in
     accordance with their respective Percentage Interests.

          (iii)  Notwithstanding anything to the contrary in 6.1A(i) and (ii)
     above, items of gross income shall be allocated

                 (a) first to the holders of Series A Preferred Units, pro rata,
     in proportion to the number of Series A Preferred Units owned by each,
     until the aggregate amount of income allocated pursuant to this clause (a)
     for all fiscal periods equals the aggregate amount distributed to the
     holders of Series A Preferred Units pursuant to clause (i) of Section 5.1A
     hereof for all fiscal periods, and

                 (b) second, to the holders of Series B Preferred Units, pro
     rata, in proportion to the number of Series B Preferred Units owned by
     each, until the aggregate amount of income allocated pursuant to this
     clause (b) for all fiscal periods equals the aggregate amount distributed
     to the holders of Series B Preferred Units pursuant to clause (ii) of
     Section 5.1A hereof for all fiscal periods.

     B.   After giving effect to the special allocations set forth in Section 1
of Exhibit C attached hereto, Net Losses shall be allocated
   ---------                                               

          (i)    first, to the Partners in the same ratio and reverse order as
     Net Income was allocated to such Partners pursuant to Section 6.1A(ii)
     hereof for all fiscal years until the aggregate amount of Net Income
     previously allocated to such Partners pursuant to Section 6.1A(ii) hereof
     equals the aggregate amount of Net Loss allocated to such Partners pursuant
     to this Section 6.1B(i) hereof;

          (ii)   second, to the Partners, pro rata, in proportion to their
     Adjusted Capital Account 

                                       19
<PAGE>
 
     balance until their Adjusted Capital Account balance has been reduced to
     zero, provided however, for purposes of this Section 6.1B(ii) hereof each
     Partner's Adjusted Capital Account balance shall not include the portion of
     such Capital Account attributable to the Series A Preferred Units or the
     Series B Preferred Units;

          (iii)  third, to the holders of the Series B Preferred Units, pro
     rata, in proportion to their portion of their Capital Account balance
     attributable to the Series B Preferred Units, until the aggregate amount of
     Net Loss allocated to such holders pursuant to this Section 6.1B(iii)
     hereof has reduced such portion of their Capital Account balance to zero;

          (iv)   fourth, to the holders of the Series A Preferred Units, pro
     rata, in proportion to their portion of their Capital Account balance
     attributable to the Series A Preferred Units, until the aggregate amount of
     Net Losses allocated to such holders pursuant to this Section 6.1B(iv)
     hereof has reduced such portion of their Capital Account balance to zero;

          (v)    fifth, to the Partners in accordance with their respective
     Percentage Interests; provided that Net Losses shall not be allocated to
     any Limited Partner to the extent such allocation would cause such Limited
     Partner to have an Adjusted Capital Account Deficit; and

          (vi)   thereafter, all Net Losses in excess of the limitations set
     forth in this Section 6.1B hereof shall be allocated to the General
     Partner.

     C.   For purposes of Regulations Section 1.752-3(a), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of the sum of (i) the
amount of Partnership Minimum Gain and (ii) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with their
respective interests in Partnership profits, as determined by the General
Partner in its reasonable discretion after taking into account all relevant
facts and circumstances.

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

                                   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 Limited Partners with or without cause.  In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do 

                                       20
<PAGE>
 
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, without limitation, making prepayments on loans and
               borrowing money to permit the Partnership to make distributions
               to its Partners in such amounts as will permit the Company (so
               long as the Company qualifies as a REIT) to avoid the payment of
               any federal income tax (including, for this purpose, any excise
               tax pursuant to Section 4981 of the Code) and to make
               distributions to its shareholders in amounts sufficient to permit
               the Company to maintain REIT status), the assumption or guarantee
               of, or other contracting for, indebtedness and other liabilities,
               the issuance of evidence of indebtedness (including the securing
               of the same by deed, mortgage, deed of trust or other lien or
               encumbrance on the Partnership's assets) and the incurring of any
               obligations 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, the registration of any class of securities of the
               Partnership under the Securities Exchange Act of 1934, as
               amended, and the listing of any debt securities of the
               Partnership on any exchange;

          (3)  the acquisition, disposition, mortgage, pledge, encumbrance,
               hypothecation or exchange of any assets of the Partnership
               (including the exercise or grant of any conversion, option,
               privilege, or subscription right or other right available in
               connection with any assets at any time held by the Partnership)
               or the merger or other combination of the Partnership with or
               into another entity (all of the foregoing subject to any prior
               approval only to the extent required by Section 7.3 hereof);

          (4)  the use of the assets of the Partnership (including, without
               limitation, cash on hand) for any purpose consistent with the
               terms of this Agreement and on any terms it sees fit, including,
               without limitation, the financing of the conduct of the
               operations of the Company, the Partnership or any of the
               Partnership's Subsidiaries, the lending of funds to other Persons
               (including, without limitation, the Subsidiaries of the
               Partnership and/or the Company) and the repayment of obligations
               of the Partnership and its Subsidiaries and any other Person in
               which it has an equity investment, and the making of capital
               contributions to its Subsidiaries;

          (5)  the management, operation, leasing, landscaping, repair,
               alteration, demolition or improvement of any real property or
               improvements owned by the Partnership or any Subsidiary of the
               Partnership;

          (6)  the negotiation, execution, and performance of any contracts,
               conveyances or other instruments that the General Partner
               considers useful or necessary to the conduct of

                                       21
<PAGE>
 
               the Partnership's operations or the implementation of the General
               Partner's powers under this Agreement, including contracting with
               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;

          (7)  the distribution of Partnership cash or other Partnership assets
               in accordance with this Agreement;

          (8)  holding, managing, investing and reinvesting cash and other
               assets of the Partnership;

          (9)  the collection and receipt of revenues and income of the
               Partnership;

          (10) the establishment of one or more divisions of the Partnership,
               the selection and dismissal of employees of the Partnership
               (including, without limitation, employees having titles such as
               "president," "vice president," "secretary" and "treasurer" of the
               Partnership), and agents, outside attorneys, accountants,
               consultants and contractors of the Partnership, and the
               determination of their compensation and other terms of employment
               or hiring;

          (11) the maintenance of such insurance for the benefit of the
               Partnership, the Partner and directors and officers thereof as it
               deems necessary or appropriate;

          (12) the formation of, or acquisition of an interest in, and the
               contribution of property to, any further limited or general
               partnerships, joint ventures or other relationships that it deems
               desirable (including, without limitation, the acquisition of
               interests in, and the contributions of property to, its
               Subsidiaries and any other Person in which it has an equity
               investment from time to time);

          (13) 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, arbitration 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;

          (14) the undertaking of any action in connection with the
               Partnership's direct or indirect investment in its Subsidiaries
               or any other Person (including, without limitation, the
               contribution or loan of funds by the Partnership to such
               Persons);

          (15) the determination of the fair market value of any Partnership
               property distributed in kind using such reasonable method of
               valuation as the General Partner may adopt;

                                       22
<PAGE>
 
          (16) 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;

          (17) the exercise of any of the powers of the General Partner
               enumerated in this Agreement on behalf of or in connection with
               any Subsidiary of the Partnership or any other Person in which
               the Partnership has a direct or indirect interest, or jointly
               with any such Subsidiary or other Person;

          (18) the exercise of any of the powers of the General Partner
               enumerated in this Agreement on behalf of any Person in which the
               Partnership does not have an interest pursuant to contractual or
               other arrangements with such Person;

          (19) 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

          (20) the issuance of additional Partnership Units, as appropriate, 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 the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3 hereof, the Act or any applicable law, rule
or regulation, to the fullest extent permitted under the Act or other applicable
law, rule or regulation.  The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.

     C.   At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.

     D.   In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner of any action taken by it.  The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances, as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner taken
pursuant to its authority under this Agreement and in accordance with the terms
of Section 7.3 hereof.  The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, the Company and the
Company's stockholders collectively.

                                       23
<PAGE>
 
     Section 7.2    Certificate of Limited Partnership
                    ----------------------------------

     The General Partner has previously filed the Certificate of Limited
Partnership with the Secretary of State of the Commonwealth of Massachusetts as
required by the Act.  The General Partner shall use all reasonable efforts to
cause to be filed such other certificates or documents as may be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the Commonwealth of Massachusetts and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property.  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 of Limited
Partnership and do all of 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 Massachusetts and each other
state, or the District of Columbia, in which the Partnership may elect to do
business or own property.  Subject to the terms of Section 8.5A(4) hereof, the
General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership or any amendment thereto
to any Limited Partner.

     Section 7.3    Restrictions on General Partner Authority.  The General
                    -----------------------------------------              
Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement without the written Consent of Limited Partners
holding a majority of the Percentage Interests of the Limited Partners
(including Limited Partner Interests held by the Company), or such other
percentage of the Limited Partners as may be specifically provided for under a
provision of this Agreement.

      Section 7.4   Reimbursement of the General Partner and the Company; DRIP's
                    ------------------------------------------------------------
     and Repurchase Programs
     -----------------------

     A.   Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

     B.   The General Partner shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
expenses that it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, (i) expenses
relating to the ownership of interests in and operation of the Partnership, (ii)
compensation, if any, of the Company's officers and employees including, without
limitation, payments under the General Partner's Stock Incentive Plans that
provides for stock units, or other phantom stock, pursuant to which employees of
the General Partner will receive payments based upon dividends on or the value
of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses
of being a public company, including costs of filings with the Securities and
Exchange Commission, reports and other distributions to its stockholders);
provided that the amount of any such reimbursement shall be reduced by any
-------- ----                                                             
interest earned by the General Partner with respect to bank accounts or other
instruments or accounts held by it on behalf of the Partnership.  The Partners
acknowledge that all such expenses of the General Partner are deemed to be for
the benefit of the Partnership.  Such reimbursement shall be in addition to any
reimbursement made as a result of indemnification pursuant to Section 7.7
hereof.

     C.   As set forth in Section 4.3 hereof, the Company shall be treated as
having made a Capital Contribution in the amount of all expenses that it incurs
relating to the Company's  offering of New 

                                       24
<PAGE>
 
Securities.

     D.   In the event that the Company shall elect to purchase from its
shareholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
Company, any employee stock purchase plan adopted by the Company, or any similar
obligation or arrangement undertaken by the Company in the future or for the
purpose of retiring such REIT Shares, the purchase price paid by the Company for
such REIT Shares and any other expenses incurred by the Company in connection
with such purchase shall be considered expenses of the Partnership and shall be
advanced to the Company or reimbursed to the Company, subject to the condition
that: (i) if such REIT Shares subsequently are sold by the Company, the Company
shall pay to the Partnership any proceeds received by the Company for such REIT
Shares (which sales proceeds shall include the amount of dividends reinvested
under any dividend reinvestment or similar program provided that a transfer of
REIT Shares for Units pursuant to Section 8.6 hereof would not be considered a
sale for such purposes); and (ii) if such REIT Shares are not retransferred by
the Company within thirty (30) days after the purchase thereof, or the Company
otherwise determines not to retransfer such REIT Shares, the Company, as General
Partner, shall cause the Partnership to redeem a number of Partnership Units
held by the Company, as a Limited Partner, equal to the product obtained by
dividing the number of such REIT Shares by the Conversion Factor (in which case
such advancement or reimbursement of expenses shall be treated as having been
made as a distribution in redemption of such number of Partnership Units held by
the Company).


     Section 7.5   Outside Activities of the General Partner
                   -----------------------------------------

     The General Partner shall not directly or indirectly enter into or conduct
any business other than in connection with the ownership, acquisition and
disposition of Partnership Interests and the management of the business of the
Partnership, and such activities as are incidental thereto.  The General Partner
and any Affiliates of the General Partner may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.

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

     A.   The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner.  The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.

     B.   Except as provided in Section 7.5 hereof, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law as
the General Partner, in its sole and absolute discretion, believes are
advisable.

     C.   Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.

     D.   The General Partner, in its sole and absolute discretion and without
the approval of the

                                       25
<PAGE>
 
Limited Partners, may propose and adopt, on behalf of the Partnership, employee
benefit plans, stock option plans, and similar plans funded by the Partnership
for the benefit of employees of the General Partner, the Partnership,
Subsidiaries of the Partnership or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of the Partnership,
the General Partner, or any Subsidiaries of the Partnership.

     E.   The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of the Partnership
and the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.

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

     A.   To the fullest extent permitted by Massachusetts law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorneys 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 or the Company as set forth in
this Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful.  Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a
guaranty by a limited partner of nonrecourse indebtedness of the Partnership or
as otherwise provided in any such loan guaranty) or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
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.  The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, creates
a rebuttable presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.7A.  Any indemnification pursuant to this Section
7.7 shall be made only out of the assets of the Partnership, 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.   It is the intention of the Partners that the General Partner will
incur no liability to the Partnership or any Limited Partner for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner carried out its duties in good faith.  In
addition, the General Partner shall not be responsible for any misconduct or
negligence on the part of its agents, provided the General Partner appointed
such agents in good faith. Nothing herein shall be construed as prohibiting the
General Partners from consulting with legal counsel, accountants, appraiser,
management consultants, investment bankers and other consultants and advisors,
and any action that the General Partner takes or omits to take in reliance upon
the opinions of such persons, as to matters that it reasonably believes 

                                       26
<PAGE>
 
to be within their professional or expert competence, shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.

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

     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 unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.

     E.   The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

     F.   For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

     G.   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.

     H.   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.

     I.   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
shall be prospective only and shall not in any way affect 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.

                                       27
<PAGE>
 
     Section 7.8   Liability of the General Partner
                   --------------------------------

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

     B.   The Limited Partners expressly acknowledge that, as stated in Section
7.1D, the General Partner is acting on behalf of the Partnership and the
shareholders of the Company collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners in
deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith.

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

     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 and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

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

     A.   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.

     B.   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 which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.

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

                                       28
<PAGE>
 
     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 Company to continue to
qualify as a REIT; or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.

     Section 7.10  Title to Partnership Assets
                   ---------------------------

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

     Section 7.11  Reliance by Third Parties
                   -------------------------

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

                                       29
<PAGE>
 
                                   ARTICLE 8
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

     Section 8.1   Limitation of Liability
                   -----------------------

     The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.

     Section 8.2   Management of Business
                   ----------------------

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

     Section 8.3   Outside Activities of Limited Partners
                   --------------------------------------

     Subject to any agreements entered into pursuant to Section 7.6E hereof and
any other agreements entered into by a Limited Partner or its Affiliates with
the Partnership or any of its Subsidiaries, any Limited Partner (other than the
Company) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.  None of the Limited Partners (other than the Company) nor any other
Person shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.

     Section 8.4   Return of Capital
                   -----------------

     Except pursuant to the right of redemption set forth in Section 8.6,
Section 8.7 and Section 8.8 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 by Exhibit C
                                                                  ---------
hereof or as 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 the other rights provided by this Agreement or by the
Act, and except as 

                                       30
<PAGE>
 
limited by Section 8.5C hereof, each Limited Partner shall have the right, for a
purpose reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand and at such Limited Partner's own expense (including such copying
and administrative charges as the General Partner may establish from time to
time):

          (1)  to obtain a copy of the most recent annual and quarterly reports
               filed with the Securities and Exchange Commission by the Company
               pursuant to the Securities Exchange Act of 1934, as amended;

          (2)  to obtain a copy of the Partnership's federal, state and local
               income tax returns for each Partnership 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 of Limited
               Partnership and all amendments thereto, together with executed
               copies of all powers of attorney pursuant to which this
               Agreement, the Certificate of Limited Partnership 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 which each Partner has agreed to
               contribute in the future, and the date on which each became a
               Partner.

     B.   The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor and the REIT Shares Amount per Partnership
Unit and, with reasonable detail, how the same was determined.

     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 (i) the General Partner reasonably believes to
be in the nature of trade secrets or other information, the disclosure of which
the General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.

     Section 8.6   Common Unit Redemption Right
                   ----------------------------

     A.   Subject to Sections 8.6B and 8.6C hereof, on or after that date which
is twelve (12) months after the Effective Date, each Limited Partner (other than
the Company) shall have the right (the "Redemption Right") to require the
                                        ----------------                 
Partnership to redeem on a Specified Redemption Date all or a portion of the
Common Units held by such Limited Partner at a redemption price per Common Unit
equal to and in the form of the Cash Amount to be paid by the Partnership.  The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the Company) by the Limited Partner who is
exercising the Redemption Right (the "Redeeming Partner"); provided, however,
                                                           --------  ------- 
that the Partnership shall not be obligated to satisfy such Redemption Right if
the Company elects to 

                                       31
<PAGE>
 
purchase the Common Units subject to the Notice of Redemption pursuant to
Section 8.6B hereof. A Limited Partner may not exercise the Redemption Right for
less than one thousand five hundred (1,500) Common Units or, if such Limited
Partner holds less than one thousand five hundred (1,500) Common Units, all of
the Partnership Units held by such Partner. The Redeeming Partner shall have no
right, with respect to any Common Units so redeemed, to receive any
distributions paid on or after the Specified Redemption Date. The Assignee of
any Limited Partner may exercise the rights of such Limited Partner pursuant to
this Section 8.6, and such Limited Partner shall be deemed to have assigned such
rights to such Assignee and shall be bound by the exercise of such rights by
such Assignee. In connection with any exercise of such rights by an Assignee on
behalf of a Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.

     B.   Notwithstanding the provisions of Section 8.6A hereof, upon an
election by a Limited Partner to exercise the Redemption Right, the Company may,
in its sole and absolute discretion (subject to the limitations on ownership and
transfer of REIT Shares set forth in the Articles of Incorporation of the
Company), elect to assume directly and satisfy a Redemption Right by paying to
the Redeeming Partner either the Cash Amount or the REIT Shares Amount, as the
Company determines in its sole and absolute discretion, whereupon the Company
shall acquire the Common Units offered for redemption by the Redeeming Partner
and shall be treated for all purposes of this Agreement as the owner of such
Common Units.  If the Company shall elect to exercise its right to purchase
Common Units under this Section 8.6B with respect to a Notice of Redemption, it
shall so notify the Redeeming Partner within five (5) Business Days after the
receipt by it of such Notice of Redemption.  Unless the Company shall exercise
its right to purchase Common Units from the Redeeming Partner pursuant to this
Section 8.6B, the Company shall not have any obligation to the Redeeming Partner
or the Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right.  In the event the Company shall exercise its right to purchase
Common Units with respect to the exercise of a Redemption Right in the manner
described in the first sentence of this Section 8.6B, the Partnership shall have
no obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of such Redemption Right, and each of the Redeeming
Partner, the Partnership, and the Company shall treat the transaction between
the Company and the Redeeming Partner, for federal income tax purposes, as a
sale of the Redeeming Partner's Common Units to the Company.  Each Redeeming
Partner agrees to execute such documents as the Company may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Redemption
Right.

     C.   Notwithstanding the provisions of Section 8.6A and Section 8.6B
hereof, a Partner shall not be entitled to exercise the Redemption Right
pursuant to Section 8.6A hereof if the delivery of REIT Shares to such Partner
on the Specified Redemption Date by the Company pursuant to Section 8.6B hereof
(regardless of whether or not the Company would in fact exercise its rights
under Section 8.6B hereof) would be prohibited under the Articles of
Incorporation of the Company.

     D.   In the event that the Partnership issues additional Partnership
Interests pursuant to Section 4.2A hereof, the General Partner shall make such
revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.

     Section 8.7   Series A Preferred Units Redemption Right
                   -----------------------------------------

     The Partnership shall have the right to redeem any issued Series A
Preferred Units pursuant to the redemption terms set forth on Exhibit F attached
                                                              ---------         
hereto.

                                       32
<PAGE>
 
     Section 8.8    Series B Preferred Units Redemption Right
                    -----------------------------------------

     The Partnership shall have the right to redeem any issued Series B
Preferred Units pursuant to the redemption terms set forth on Exhibit G attached
                                                              ---------         
hereto.


                                   ARTICLE 9
                    BOOKS, RECORDS, ACCOUNTING AND REPORTS

     Section 9.1    Records and Accounting
                    ----------------------

     The General Partner shall keep or cause to be kept at the principal office
of the Partnership those records and documents required to be maintained by the
Act and other books and records deemed by the General Partner to be appropriate
with respect to the Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 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. The books of
the Partnership shall be maintained, for financial and tax reporting purposes,
on an accrual basis in accordance with generally accepted accounting principles,
or 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 Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the Company if such statements are prepared solely on a consolidated basis with
the Company, for such Partnership Year, presented in accordance with generally
accepted accounting principles, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the General
Partner.

     B.   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 as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the Company, if such
statements are prepared solely on a consolidated basis with the Company, and
such other information as may be required by applicable law or regulation, or as
the General Partner determines to be appropriate.

                                       33
<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 of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within 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.

      Section 10.2  Tax Elections
                    -------------

      Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. Notwithstanding the above, in making any such tax election
the General Partner shall take into account the tax consequences to the Limited
Partners resulting from any such election. The General Partner shall make such
tax elections on behalf of the Partnership as the Limited Partners holding a
majority of the Percentage Interests of the Limited Partners (excluding Limited
Partner Interests held by the Company) request, provided that the General
Partner believes that such election is not adverse to the interests of the
General Partner, including its interest in preserving its qualification as a
REIT under the Code. The General Partner intends that Section 704(c) allocations
with respect to contributed property shall be made by the election of the so-
called "traditional method" with curative allocations limited solely to
allocations of gain on sale of such contributed property to the extent
allocations of depreciation deductions with respect to such contributed property
to non-contributing Partners have been limited by the so-called "ceiling rule",
as described in Regulations Section 1.704-3(c)(3)(iii)(B). The General Partner
shall have the right to seek to revoke any tax election it makes (including,
without limitation, the election under Section 754 of the Code) upon the General
Partner's determination, in its sole and absolute discretion, that such
revocation is in the best interests of the Partners.

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

      A.   The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes.  Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
                                                                   -------- 
however, that such information is provided to the Partnership by the Limited
-------                                                                     
Partners and the Assignees.

      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

                                       34
<PAGE>
 
              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 Section
              6231(a)(8) of the Code) or a member of a "notice group" (as
              defined in Section 6223(b)(2) of the Code);

          (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 Tax Court or the filing of a complaint for
              refund with the United States Claims Court or 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
              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 which is attributable to any item required to be
              taken account of by a Partner for tax purposes, or an item
              affected by such item; and

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

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

      C.   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.  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, so long as the
compensation paid by the Partnership for such services is reasonable.

      Section 10.4  Organizational Expenses
                    -----------------------

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

                                       35
<PAGE>
 
     Section 10.5   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, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code.  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 which would otherwise be made to the Limited
Partner; or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner.  Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner.  Each
Limited Partner hereby 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 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
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.  Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan.  Any amounts payable by a Limited Partner hereunder
shall bear interest at the lesser of (A) the base rate on corporate loans at
large United States money center commercial banks, as published from time to
time in The Wall Street Journal, plus four (4) percentage points, or (B) the
        -----------------------                                             
maximum lawful rate of interest on such obligation, such interest to accrue 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.   The term "transfer," when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge (except for a pledge in which the pledgee agrees not to
foreclose with respect to such Partnership Unit until after the first
anniversary of the initial public offering of the Company), encumbrance,
hypothecation, mortgage, exchange or any other disposition by operation of law
or otherwise.  The term "transfer" when used in this 

                                       36
<PAGE>
 
Article 11 does not include any redemption of Partnership Interests by the
Partnership from a Limited Partner or any acquisition of Partnership Units from
a Limited Partner by the Company pursuant to Section 8.6 hereof. No part of the
interest of a Limited Partner shall be subject to the claims of any creditor,
any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement or consented to by the General
Partner.

      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.

      Section 11.2  Limited Partners' Rights to Transfer
                    ------------------------------------

      A.   Subject to the provisions of Sections 11.2.C, 11.2.D, 11.2.E, and
11.3 hereof, a Limited Partner (other than the Company) may, after the
expiration of one year from the Effective Date transfer, with or without the
consent of the General Partner, all or any portion of its Partnership Interest,
or any of such Limited Partner's economic rights as a Limited Partner.

      B.   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 of the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership.  The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.

      C.   The General Partner may prohibit any transfer by a Limited Partner of
its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units.

      D.   No transfer by a Limited Partner of its Partnership Units 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; (ii) it is made within one year of the Effective Date; (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" with the meaning of
Section 7704 of the Code; (iv) such transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); (v) such transfer would, in
the opinion of legal counsel for 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; or (vi) such
transfer would subject the Partnership to be regulated under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended.

      E.   No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section 1.752-
4(b) of the Regulations) to any lender to the Partnership whose loan constitutes
a Nonrecourse Liability, without the consent of the General Partner, in its sole
and absolute discretion; provided that as a condition to such consent the lender
                         -------- ----                                          
will be required to 

                                       37
<PAGE>
 
enter into an arrangement with the Partnership and the General Partner to redeem
for the Cash Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.

      Section 11.3  Substituted Limited Partners
                    ----------------------------

      A.   No Limited Partner shall have the right to substitute a transferee as
a Limited Partner in his place.  The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this Section 11.3 as a substituted limited partner (the
"Substituted Limited Partner"), which consent may be given or withheld by the
General Partner in its sole and absolute discretion.  The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.

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

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

      Section 11.4  Assignees
                    ---------

      If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.3 hereof, such transferee shall be
considered an Assignee for purposes of this Agreement.  An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
but except as otherwise provided in Section 8.6A hereof shall not be deemed to
be a holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted on such matter in the same proportion as all other Partnership Units
held by Limited Partners are voted).  In the event any such transferee desires
to make a further assignment of any such Partnership Units, such transferee
shall be subject to all of 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 11.5  General Provisions
                    ------------------

      A.   No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption 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 permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such 

                                       38
<PAGE>
 
Partnership Units as Substitute Limited Partners. Similarly, any Limited Partner
who shall transfer all of its Partnership Units pursuant to a redemption of all
of its Partnership Units under Section 8.6 hereof shall cease to be a Limited
Partner.

     C.   Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.

     D.   If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section 8.6
hereof on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the Partnership Year in accordance with Section 706(d)
of the Code, using the interim closing of the books method.  Solely for purposes
of making such allocations, each of such items for the calendar month in which
the transfer or assignment occurs shall be allocated to the transferee Partner,
and none of such items for the calendar month in which a redemption occurs shall
be allocated to the Redeeming Partner; provided, however, that the General
                                       --------  -------                  
Partner may adopt such other conventions relating to allocations in connection
with transfers, assignments or redemptions as it determines are necessary or
appropriate.  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 Redeeming Partner, as the case may be, and in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.


                                  ARTICLE 12
                             ADMISSION OF PARTNERS

     Section 12.1   Admission of Successor General Partner
                    --------------------------------------

     A successor to all of the General Partner Interest who is proposed to be
admitted as a successor General Partner shall be admitted to the Partnership as
the General Partner, effective upon such transfer. Any such transferee shall
carry on the business of the Partnership without dissolution.  In each case, the
admission shall be subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms and conditions
of this Agreement and such other documents or instruments as may be required to
effect the admission.  In the case of such admission on any day other than the
first day of a Partnership Year, all items attributable to the General Partner
Interest for such Partnership Year shall be allocated between the transferring
General Partner and such successor as provided in Section 11.5D hereof.

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

     A.   After the admission to the Partnership of the initial Limited Partners
on the date hereof, a Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof and (ii) such 

                                       39
<PAGE>
 
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.

     B.   Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion.  The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.

     C.   If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using any convention permitted by law and selected by the
General Partner.  Solely for purposes of making such allocations, each such item
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all of the Partners and Assignees, including
such Additional Limited Partner; provided, however, that the General Partner may
                                 --------  -------                              
adopt such other conventions relating to allocations to Additional Limited
Partners as it determines are necessary or appropriate.  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, and all distributions of Available Cash
thereafter shall be made to all of the Partners and Assignees, including such
Additional 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 of Exhibit A) and, if
                                                       ---------         
required by law, shall prepare and file an amendment to the Certificate of
Limited Partnership and may for this purpose exercise the power of attorney
granted pursuant to Section 2.4 hereof.


                                  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.  Subject to Section 15.1 hereof, the
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following ("Liquidating Events"):

     A.   the expiration of its term as provided in Section 2.5 hereof;

                                       40
<PAGE>
 
     B.   an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after such
event of withdrawal a majority in interest of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;

     C.   from and after the date of this Agreement through December 31, 2099,
an election to dissolve the Partnership made by the General Partner with the
Consent of Partners holding fifty percent (50%) of the Percentage Interests of
the Limited Partners (including Limited Partner Interests held by the Company);

     D.   on or after January 1, 2100, an election to dissolve the Partnership
made by the General Partner, in its sole and absolute discretion;

     E.   entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;

     F.   the sale of all or substantially all of the assets and properties of
the Partnership; or

     G.   a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.

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

     A.   Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the 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
common stock in the Company) shall be applied and distributed in the following
order:

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

          (2) Second, to the payment and discharge of all of the Partnership's
              debts and liabilities to the General Partner;

                                       41
<PAGE>
 
          (3) Third, to the payment and discharge of all of the Partnership's
              debts and liabilities to the other Partners; and

          (4) The balance to the Partners in accordance with their positive
              Capital Account balances, after giving effect to all
              contributions, distributions, and allocations for all periods.

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

     B.   Notwithstanding the provisions of Section 13.2A hereof which 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, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2A 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.  The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.

     C.   In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:

          (1) distributed to a trust established for the benefit of the General
              Partner and Limited Partners for the purposes of liquidating
              Partnership assets, collecting amounts owed to the Partnership,
              and paying any contingent or unforeseen liabilities or obligations
              of the Partnership or the General Partner arising out of or in
              connection with the Partnership. The assets of any such trust
              shall be distributed to the General Partner and Limited Partners
              from time to time, in the reasonable discretion of the Liquidator,
              in the same proportions as the amount distributed to such trust by
              the Partnership would otherwise have been distributed to the
              General Partner and Limited Partners pursuant to this Agreement;
              or

          (2) 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 13.2A as soon as
              practicable.

                                       42
<PAGE>
 
     Section 13.3  Compliance with Timing Requirements of Regulations
                   --------------------------------------------------

     In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).

     If at such time as the Partnership (or the General Partner's interest
therein is "liquidated" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g), the General Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all Fiscal Years or portions thereof, including the year during which such
liquidation occurs, the General Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to zero in
compliance with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3)).
                                                               -      

     Section 13.4  Deemed Termination
                   ------------------

     Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered "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.
Instead, for federal income tax purposes and for purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
                     ---------                                                
(i) contributed the Partnership property in kind to a new partnership (the "New
Partnership"), which shall be deemed to have assumed and taken such property
subject to all Partnership liabilities in exchange for all of the interests in
such New Partnership, and (ii) distributed such interests to the Partners
pursuant to the provisions of this Agreement in liquidation of the Partnership,
subsequent to which the New Partnership shall be referred to as the Partnership
for all purposes of this Agreement.

     Section 13.5  Rights of Limited Partners
                   --------------------------

     Except as otherwise provided in this Agreement, each Limited Partner shall
look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership.  Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.

     Section 13.6  Notice of Dissolution
                   ---------------------

     In the event a Liquidating Event occurs or an event occurs that would, but
for the provisions of 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.

     Section 13.7 Termination of Partnership and Cancellation of Certificate
                  ----------------------------------------------------------
     of Limited Partnership
     ----------------------

     Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications 

                                       43
<PAGE>
 
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.

     Section 13.8  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.

     Section 13.9  Waiver of Partition
                   -------------------

     Each Partner hereby waives any right to partition of the Partnership
property.


                                  ARTICLE 14
                 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

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

     A.   Amendments to this Agreement may be proposed by the General Partner or
by any Limited Partners (other than the Company) holding at least forty percent
(40%) or more of the Common Units. Following such proposal, the General Partner
shall submit any proposed amendment to the Limited Partners.  The General
Partner shall seek the written vote of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that it
may deem appropriate.  For purposes of obtaining a written vote, 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 vote which is consistent with the General Partner's recommendation
with respect to the proposal.  Except as provided in Section 13.1.C, 14.1.B,
14.1.C or 14.1.D hereof, a proposed amendment shall be adopted and be effective
as an amendment hereto if it is approved by the General Partner and it receives
the Consent of Partners holding a majority of the Percentage Interests of the
Limited Partners (including Limited Partner Percentage Interests held by the
Company); provided, that, an action shall become effective at such time as the
          --------  ----                                                      
requisite consents are received even if prior to such specified time.

     B.   Notwithstanding Section 14.1A 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 or any Affiliate of
              the General Partner for the benefit of the Limited Partners;

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

                                       44
<PAGE>
 
          (3) to set forth and reflect in the Agreement the designations,
              rights, powers, duties, and preferences of the holders of any
              additional Partnership Interests issued pursuant to Section 4.2A
              hereof;

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

          (5) 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.

The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1B is taken.

     C.   Notwithstanding Section 14.1A and 14.1B hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner's interest in the Partnership into
a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of the
Partner (other than as a result of the issuance of Partnership Interests) to
receive distributions pursuant to Article 5 or Article 13 or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.2 and Section
14.1B(3) hereof); (iv) alter or modify the Redemption Right and REIT Shares
Amount as set forth in Section 8.6 hereof, and the related definitions, in a
manner adverse to such Partner; (v) cause the termination of the Partnership
prior to the time set forth in Sections 2.5 or 13.1 hereof; or (vi) amend this
Section 14.1C. Further, no amendment may alter the restrictions on the General
Partner's authority set forth in Section 7.3B hereof without the Consent
specified in that section.  In addition, Section 8.7 may only be amended as
provided therein.

     D.   Notwithstanding Section 14.1A or Section 14.1B hereof, the General
Partner shall not (except in connection with amendments made to reflect the
issuance of additional Partnership Interests and the relative rights, powers and
duties incident thereto) amend Sections 4.2A, 7.5, 7.6 or 14.2 hereof without
the Consent of Limited Partners holding a majority of the Percentage Interests
of the Limited Partners, excluding Limited Partner Interests held by the General
Partner or its Affiliates.

     Section 14.2  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
Limited Partners (other than the Company) holding forty percent (40%) or more of
the Common Units.  The request 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 the Partners is permitted or required under this Agreement,
such vote or Consent may be given at a meeting of the Partners or may be given
in accordance with the procedure prescribed in Section 14.1A hereof.  Except as
otherwise expressly provided in this Agreement, 

                                       45
<PAGE>
 
the Consent of holders of a majority of the Percentage Interests held by Limited
Partners (including Limited Partnership Percentage Interests held by the
Company) shall control.

     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 a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (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 his
attorney-in-fact.  No proxy shall be valid after the expiration of twelve (12)
months from the date thereof unless otherwise provided in the proxy.  Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
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 the 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.  Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the shareholders of the Company and may be held at
the same time, and as part of, meetings of the shareholders of the Company.

     E.   The Series A Preferred Units do not have any voting rights with
respect to the Partnership, except that any action which would materially alter
the economic rights or preferences of the Series A Preferred Units shall only be
taken if at least a majority of the interests of the holders of Series A
Preferred Units approve such action.

     F.   The Series B Preferred Units do not have any voting rights with
respect to the Partnership, except that any action which would materially alter
the economic rights or preferences of the Series B Preferred Units shall only be
taken if at least a majority of the interests of the holders of Series B
Preferred Units approve such action.

                                       46
<PAGE>
 
                                  ARTICLE 15
                              GENERAL PROVISIONS

     Section 15.1  Restrictive Covenants
                   ---------------------

     A.   For a period of two (2) years from the Effective Date, (i) so long as
the single real estate property located at 51 New York Avenue, Framingham,
Massachusetts, which is currently owned by the Partnership, is the only real
estate property owned by Partnership, the aggregate amount of borrowed money
indebtedness of the General Partner and the Partnership on a consolidated basis
shall not exceed $1,000,000 and (ii) if the Partnership proposes to acquire
additional properties, the aggregate fair market value of all properties of the
General Partner and the Partnership on a consolidated basis (net of all
indebtedness of the General Partner and the Partnership on a consolidated basis
for money borrowed) after giving effect to such acquisitions must equal or
exceed $3,000,000.

     B.   For a period of two (2) years from the Effective Date, the Partnership
shall either (i) continue to own the real estate property located at 51 New York
Avenue, Framingham, Massachusetts or (ii) if such property is disposed of, own
additional or substitute assets having an aggregate fair market value (net of
all indebtedness of the General Partner and the Partnership on a consolidated
basis for money borrowed and after giving effect to such disposition) at least
equal to $3,000,000.

     C.   For a period of two (2) years from the Effective Date, the Partnership
shall not be liquidated or dissolved.

     Section 15.2  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 when delivered in person or when sent by first class
United States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A or such other address of which
                                     ---------                               
the Partner shall notify the General Partner in writing.

     Section 15.3  Titles and Captions
                   -------------------

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

     Section 15.4  Pronouns and Plurals
                   --------------------

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

                                       47
<PAGE>
 
     Section 15.5  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 15.6  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 15.7  Creditors
                   ---------

     Other than as expressly set forth herein with respect to the Indemnities,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.

     Section 15.8  Waiver
                   ------

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

     Section 15.9  Counterparts
                   ------------

     This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all of 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.

     Section 15.10 Applicable Law
                   --------------

     This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts, without regard to the
principles of conflicts of law.

     Section 15.11 Invalidity of Provisions
                   ------------------------

     If any provision of this Agreement shall to any extent be held void or
unenforceable (as to duration, scope, activity, subject or otherwise) by a court
of competent jurisdiction, such provision shall be deemed to be modified so as
to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable.  In such event, the
remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or
unenforceable) shall not be affected thereby.  Each other provision of this
Agreement, unless specifically conditioned upon the voided aspect of such
provision, shall remain valid and enforceable to the fullest extent permitted by
law; any other provisions of this Agreement that are specifically conditioned on
the voided aspect of such invalid provision shall also be deemed to be modified
so as to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable to the fullest extent
permitted by law.

                                       48
<PAGE>
 
     Section 15.12 Entire Agreement
                   ----------------

     This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Original
Agreement, any other prior written or oral understandings or agreements among
them with respect thereto.

                 [Remainder of Page Intentionally Left Blank]

                                       49
<PAGE>
 
  IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

                              GENERAL PARTNER:

                              PROPERTY CAPITAL TRUST, INC.


                              By:  ____________________________________
                                   Name:
                                   Title:

                                       50
<PAGE>
 
                        LIMITED PARTNER SIGNATURE PAGE

     The undersigned, desiring to become one of the within named Limited
Partners of Property Capital Trust Limited Partnership, hereby becomes a party
to the First Amended and Restated Agreement of Limited Partnership of Property
Capital Trust Limited Partnership by and among Property Capital Trust, Inc. and
such Limited Partners, dated as of August __, 1998.  The undersigned agrees that
this signature page may be attached to any counterpart of said Agreement of
Limited Partnership.

          Signature Line for Limited Partner:

                                        PROPERTY CAPITAL TRUST, INC.


                                        By: _______________________________
                                            Name:
                                            Title:
 


          Address of Limited Partner:   177 Milk Street
                                        Boston, MA  02109
 

                                       51
<PAGE>
 
                        LIMITED PARTNER SIGNATURE PAGE

     The undersigned, desiring to become one of the within named Limited
Partners of Property Capital Trust Limited Partnership, hereby becomes a party
to the First Amended and Restated Agreement of Limited Partnership of Property
Capital Trust Limited Partnership by and among Property Capital Trust, Inc. and
such Limited Partners, dated as of August __, 1998.  The undersigned agrees that
this signature page may be attached to any counterpart of said Agreement of
Limited Partnership.

          Signature Line for Limited Partner:



 
                                        ___________________________________


          Address of Limited Partner:
 

                                       52
<PAGE>
                                  Exhibit A-1
                                  -----------

               Partners Contributions and Partnership Interests

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                         AGREED
                          CASH          VALUE OF                              SERIES A      SERIES B
NAME AND ADDRESS OF    PARTNERSHIP    CONTRIBUTED       TOTAL       COMMON   PREFERRED     PREFERRED     PERCENTAGE
 PARTNER               CONTRIBUTION     PROPERTY     CONTRIBUTION    UNITS     UNITS         UNITS       INTEREST
---------------------------------------------------------------------------------------------------------------------- 
<S>                    <C>            <C>            <C>            <C>      <C>           <C>           <C> 
        TOTAL           _________      __________    __________     _______  __________   ____________    100.0000%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     A-1-1
<PAGE>
 
                                  Exhibit A-2
                                  -----------


                           Partners Capital Accounts

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                               COMMON      NUMBER OF                    NUMBER OF        SERIES B   
                 NUMBER OF      UNITS      SERIES A       SERIES A      SERIES B        PREFERRED   
                  COMMON       CAPITAL     PREFERRED  PREFERRED UNITS   PREFERRED     UNITS CAPITAL 
   NAME            UNITS       ACCOUNT       UNITS    CAPITAL ACCOUNT     UNITS          ACCOUNT     
-----------------------------------------------------------------------------------------------------
<S>              <C>        <C>            <C>        <C>               <C>        <C>
        TOTAL    ________   $1,499,977.00  ________      $2,787,653.00  ________          $212,347.00
-----------------------------------------------------------------------------------------------------
</TABLE>

                                     A-2-1
<PAGE>
 
                                   Exhibit B
                                   ---------

                          Capital Account Maintenance


1.  Capital Accounts of the Partners
    --------------------------------

     A.   The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement; and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1.A of
the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
                  ---------                                                   
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement; and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1.B of the Agreement and Exhibit C hereof.
                                                               ---------        

     B.   For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:

          (1) Except as otherwise provided in Regulations Section 1.704-
              1(b)(2)(iv)(m), the computation of all items of income, gain, loss
              and deduction shall be made without regard to any election under
              Section 754 of the Code which may be made by the Partnership,
              provided that the amounts of any adjustments to the adjusted bases
              of the assets of the Partnership made pursuant to Section 734 of
              the Code as a result of the distribution of property by the
              Partnership to a Partner (to the extent that such adjustments have
              not previously been reflected in the Partners' Capital Accounts)
              shall be reflected in the Capital Accounts of the Partners in the
              manner and subject to the limitations prescribed in Regulations
              Section 1.704(b)(2)(iv)(m)(4).

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

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

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

                                      B-1
<PAGE>
 
          (5) In the event the Carrying Value of any Partnership Asset is
              adjusted pursuant to Section 1.D hereof, the amount of any such
              adjustment shall be taken into account as gain or loss from the
              disposition of such asset.

     C.   A transferee (including an Assignee) of a Partnership Unit shall
succeed to a pro rata portion of the Capital Account of the transferor.

     D.   (1)  Consistent with the provisions of Regulations Section 1.704-
               1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying
               Value of all Partnership assets shall be adjusted upward or
               downward to reflect any Unrealized Gain or Unrealized Loss
               attributable to such Partnership property, as of the times of the
               adjustments provided in Section 1.D(2) hereof, as if such
               Unrealized Gain or Unrealized Loss had been recognized on an
               actual sale of each such property and allocated pursuant to
               Section 6.1 of the Agreement.

          (2)  Such adjustments shall be made as of the following times: (a)
               immediately prior to the acquisition of an additional interest in
               the Partnership by any new or existing Partner in exchange for
               more than a de minimis Capital Contribution; (b) immediately
               prior to the distribution by the Partnership to a Partner of more
               than a de minimis amount of property as consideration for an
               interest in the Partnership; and (c) immediately prior to the
               liquidation of the Partnership within the meaning of Regulations
               Section 1.704-1(b)(2)(ii)(g), provided, however, that
                                             --------  -------      
               adjustments pursuant to clauses (a) and (b) above shall be made
               only if the General Partner determines that such adjustments are
               necessary or appropriate to reflect the relative economic
               interests of the Partners in the Partnership.

          (3)  In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
               Carrying Value of Partnership assets distributed in kind shall be
               adjusted upward or downward to reflect any Unrealized Gain or
               Unrealized Loss attributable to such Partnership property, as of
               the time any such asset is distributed.

          (4)  In determining Unrealized Gain or Unrealized Loss for purposes of
               this Exhibit B, the aggregate cash amount and fair market value
                    --------- 
               of all Partnership assets (including cash or cash equivalents)
               shall be determined by the General Partner using such reasonable
               method of valuation as it may adopt, or in the case of a
               liquidating distribution pursuant to Article 13 of the Agreement,
               shall be determined and allocated by the Liquidator using such
               reasonable methods of valuation as it may adopt. The General
               Partner, or the Liquidator, as the case may be, shall allocate
               such aggregate value among the assets of the Partnership (in such
               manner as it determines in its sole and absolute discretion to
               arrive at a fair market value for individual properties).

     E.   The provisions of this Agreement (including this Exhibit B and other
                                                           ---------          
Exhibits to this Agreement) relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations.  In the event the
General Partner shall determine that it is prudent to modify (i) the manner in
which the Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed; or (ii) the manner in
which items are allocated 

                                      B-2
<PAGE>
 
among the Partners for federal income tax purposes in order to comply with such
Regulations or to comply with Section 704(c) of the Code, the General Partner
may make such modification without regard to Article 14 of the Agreement,
provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 13 of the Agreement upon the
dissolution of the Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q); and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b). In addition, the
General Partner may adopt and employ such methods and procedures for (i) the
maintenance of book and tax capital accounts; (ii) the determination and
allocation of adjustments under Sections 704(c), 734 and 743 of the Code; (iii)
the determination of Net Income, Net Loss, taxable income and loss and items
thereof under this Agreement and pursuant to the Code; (iv) the adoption of
reasonable conventions and methods for the valuation of assets and the
determination of tax basis; (v) the allocation of asset value and tax basis; and
(vi) conventions for the determination of cost recovery, depreciation and
amortization deductions, as it determines in its sole discretion are necessary
or appropriate to execute the provisions of this Agreement, to comply with
federal and state tax laws, and are in the best interest of the Partners.

2.   No Interest
     -----------

     No interest shall be paid by the Partnership on Capital Contributions or on
balances in Partners' Capital Accounts.

3.   No Withdrawal
     -------------

     No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.

                                      B-3
<PAGE>
 
                                   Exhibit C
                                   ---------

                           Special Allocation Rules


1.   Special Allocation Rules
     ------------------------

     Notwithstanding any other provision of the Agreement or this Exhibit C, the
                                                                  ---------     
following special allocations shall be made in the following order:

     A.   Minimum Gain Chargeback.  Notwithstanding the provisions of Section
          -----------------------                                            
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
                                                     ---------               
net decrease in Partnership Minimum Gain during any Partnership taxable year,
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto.  The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6).  This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and shall be interpreted consistently
therewith.  Solely for purposes of this Section 1.A, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of Partner Minimum Gain during such Partnership taxable
year.

     B.   Partner Minimum Gain Chargeback.  Notwithstanding any other provision
          -------------------------------                                      
of Section 6.1 of this Agreement or any other provisions of this Exhibit C
                                                                 ---------
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5).  Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.  The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4).  This Section 1.B is intended
to comply with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith. Solely for purposes
of the Section 1.B, each Partner's Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to Section 6.1 of the
Agreement or this Exhibit with respect to such Partnership taxable year, other
than allocations pursuant to Section 1.A hereof.

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

                                      C-1
<PAGE>
 
     D.   Nonrecourse Deductions.  Nonrecourse Deductions for any Partnership
          ----------------------                                             
taxable year shall be allocated to the Partners in accordance with their
respective Percentage Interests.  If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio for such Partnership taxable year which would satisfy
such requirements.

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

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

     G.   Curative Allocations.  The allocations set forth in Section 1.A
          --------------------                                           
through 1.F of this Exhibit C  (the "Regulatory Allocations") are intended to
                    ---------                                                
comply with certain requirements of the Regulations under Section 704(b) of the
Code.  The Regulatory Allocations may not be consistent with the manner in which
the Partners intend to divide Partnership distributions.  Accordingly, the
General Partner is hereby authorized to divide other allocations of income,
gain, deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners.  In general, the Partners anticipate that, if
necessary, this will be accomplished by specially allocating other items of
income, gain, loss and deduction among the Partners so that the net amount of
the Regulatory Allocations and such special allocations to each person is zero.
However, the General Partner will have discretion to accomplish this result in
any reasonable manner; provided, however, that no allocation pursuant to this
                       --------  -------                                     
Section 1.G shall cause the Partnership to fail to comply with the requirements
of Regulations Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).

2.   Allocations for Tax Purposes
     ----------------------------

     A.   Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit C, provided however, gain on the sale of property
                  ---------  -------- -------                              
contributed as of the Effective Date with respect to which the General Partner
elects, the "traditional method with curative allocations" described in Treasury
Regulation Section 1.704-3(c)(3)(iii)(B) shall first be allocated to solely to
the Partners who contributed such Property, pro rata, in proportion to their
Percentage Interests, to the extent allocations to non-contributing Partners of
depreciation deductions with respect to such Contributed Property have been
limited by the so-called "ceiling rule."

     B.   In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:

                                      C-2
<PAGE>
 
          (1)  (a)  In the case of a Contributed Property, such items
                    attributable thereto shall be allocated among the Partners,
                    consistent with the principles of Section 704(c) of the Code
                    and the Regulations thereunder, to take into account the
                    variation between the 704(c) Value of such property and its
                    adjusted basis at the time of contribution; and

               (b)  any item of Residual Gain or Residual Loss attributable to a
                    Contributed Property shall be allocated among the Partners
                    in the same manner as its correlative item of "book" gain or
                    loss is allocated pursuant to Section 6.1 of the Agreement
                    and Section 1 of this Exhibit C.
                                          --------- 

          (2)  (a)  In the case of an Adjusted Property, such items shall

                    (1) first, be allocated among the Partners in a manner
                    consistent with the principles of Section 704(c) of the Code
                    and the Regulations thereunder to take into account the
                    Unrealized Gain or Unrealized Loss attributable to such
                    property and the allocations thereof pursuant to Exhibit B;
                                                                     ---------
                    and
                    
                    (2) second, in the event such property was originally a
                    Contributed Property, be allocated among the Partners in a
                    manner consistent with Section 2.B(1) of this Exhibit C; and
                                                                  ---------     

               (b)  any item of Residual Gain or Residual Loss attributable to
                    an Adjusted Property shall be allocated among the Partners
                    in the same manner its correlative item of "book" gain or
                    loss is allocated pursuant to Section 6.1 of the Agreement
                    and Section 1 of this Exhibit C.
                                          --------- 

          (3)  all other items of income, gain, loss and deduction shall be
               allocated among the Partners the same manner as their correlative
               item of "book" gain or loss is allocated pursuant to Section 6.1
               of the Agreement and Section 1 of the Exhibit C.
                                                     --------- 

     C.   To the extent that the Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit the Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.

3.   No Withdrawal
     -------------

     No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.

                                      C-3
<PAGE>
 
                                   Exhibit D
                                   ---------

                             Notice of Redemption


     The undersigned Limited Partner hereby irrevocably (i) redeems __________
Common Units in Property Capital Trust Limited Partnership in accordance with
the terms of the Second Amended and Restated Agreement of Limited Partnership of
Property Capital Trust and the Redemption Right referred to therein; (ii)
surrenders such Common Units and all right, title and interest therein; and
(iii) directs that the Cash Amount or REIT Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be delivered
to the address specified below, and if REIT Shares are to be delivered, such
REIT Shares be registered or placed in the name(s) and at the address(es)
specified below.  The undersigned hereby, represents, warrants, and certifies
that the undersigned (a) has marketable and unencumbered title to such Common
Units, free and clear of the rights or interests of any other person or entity;
(b) has the full right, power, and authority to redeem and surrender such Common
Units as provided herein; and (c) has obtained the consent or approval of all
person or entities, if any, having the right to consent or approve such
redemption and surrender.

Dated:_________________________


Name of Limited Partner:____________________________________
                                   Please Print

                                    ____________________________________
                                    (Signature of Limited Partner)

                                    ____________________________________
                                    (Street Address)

                                    ____________________________________
                                    (City)       (State)     (ZipCode)

                                    Signature Guaranteed by:

                                    ____________________________________

If REIT Shares are to be issued, issue to:

Name:_________________________________


Please insert social security or identifying number:__________________

                                      D-1
<PAGE>
 
                                   Exhibit E
                                   ---------

                         Recourse Debt Level Schedule


                                   Recourse Debt   Recourse Debt
Name of Limited Partner             Percentage         Amount
-----------------------          ---------------  ---------------

[_____________________]               [____]%          [____]%



                                Total           $[_________]

                                      E-1
<PAGE>
 
                                   Exhibit F
                                   ---------

                   Series A Preferred Units Redemption Right

     1.   Redemption Right.  At any time after the issuance of the Series A
          ----------------                                                 
Preferred Units, the Partnership, at its option and upon not less than 15 nor
more than 60 days' written notice, may redeem the Series A Preferred Units, in
whole or in part, at any time or from time to time, for cash at a redemption
price of $4.4812 per Series A Preferred Unit, plus all accrued and unpaid
distributions thereon to the date fixed for redemption required to be made
pursuant to Section 5.1A(i) of this Agreement (except as provided in Paragraph 3
below), without interest.

     2.   Limitations on Redemption.  Unless full cumulative distributions on
          -------------------------                                          
all Series A Preferred Units required to be made pursuant to Section 5.1A(i) of
this Agreement shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past distribution periods and the then current distribution period, no
Series A Preferred Units shall be redeemed unless all Series A Preferred Units
are simultaneously redeemed.  If less than all of the outstanding Series A
Preferred Units is to be redeemed, the Series A Preferred Units to be redeemed
shall be selected pro rata (as nearly as may be practicable without creating
fractional Series A Preferred Units).

     3.   Payment of Distributions in Connection with Redemption.  Immediately
          ------------------------------------------------------              
prior to any redemption of Series A Preferred Units, the Partnership shall pay,
in cash, any accumulated and unpaid distributions required to be made pursuant
to Section 5.1(a)(i) of this Agreement through the redemption date, unless a
redemption date falls after the Partnership Record Date and prior to the
corresponding distribution payment date, in which case each holder of Series A
Preferred Units at the close of business on such Partnership Record Date shall
be entitled to the distribution payable on such Units on the corresponding
distribution payment date notwithstanding the redemption of such Units before
such distribution payment date.  Except as provided above, the Partnership will
make no payment or allowance for unpaid distributions, whether or not in
arrears, on Series A Preferred Units which are redeemed.

     4.   Procedures for Redemption.
          ------------------------- 

          (a) Notice of redemption will be mailed by the Partnership, postage
prepaid, not less than 15 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series A Preferred Units at
their respective addresses as they appear on Exhibit A-1 attached to this
                                             -----------                 
Agreement.  No failure to give such notice or any defect thereto or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any units of Series A Preferred Units except as to the holder to whom notice
was defective or not given.

          (b) The notice of redemption shall state:  (i) the redemption date;
(ii) the redemption price; (iii) the number of Series A Preferred Units to be
redeemed; and (iv) that distributions on the units to be redeemed will cease to
accrue on such redemption date.

          (c) If notice of redemption of any Series A Preferred Units has been
given and if the funds necessary for such redemption have been set aside by the
Partnership in trust for the benefit of the holders of any Series B Preferred
Units so called for redemption, then from and after the redemption date
distributions will cease to accrue on such Series A Preferred Units, such Series
A Preferred Units shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to receive the
redemption price.  On the redemption date the Series A Preferred Units shall be
redeemed by 

                                      F-1
<PAGE>
 
the Partnership at the redemption price plus any accrued and unpaid
distributions payable upon such redemption.

          (d) The deposit of funds with a bank or trust corporation for the
purpose of redeeming Series A Preferred Units shall be irrevocable except that:

              (i) the Partnership shall be entitled to receive from such bank or
trust corporation the interest or other earnings, if any, earned on any money so
deposited in trust, and the holders of the Series A Preferred Units redeemed
shall have no claim to such interest or other earnings; and

              (ii) any balance of monies so deposited by the Trust and unclaimed
by the holders of the Series B Preferred Units entitled thereto at the
expiration of two years from the applicable redemption date shall be repaid,
together with any interest or other earnings thereon, to the Partnership, and
after any such repayment, the holders of the Series A Preferred Units entitled
to the funds so repaid to the Partnership shall look only to the Partnership for
payment without interest or other earnings.

     5.   Status of Redeemed Units. Any Series A Preferred Units that shall at
          ------------------------                                            
any time have been redeemed shall, after such redemption, have the status of
authorized but unissued Preferred Units, without designation as to series until
such Units are thereafter designated as part of a particular series by the
General Partner.

                                      F-2
<PAGE>
 
                                   Exhibit G
                                   ---------

                   Series B Preferred Units Redemption Right

     1.   Redemption Right.  At any time after the issuance of the Series B
          ----------------                                                 
Preferred Units, the Partnership, at its option and upon not less than 15 nor
more than 60 days' written notice, may redeem the Series B Preferred Units, in
whole or in part, at any time or from time to time, for cash at a redemption
price of $.63125 per Series B Preferred Unit, plus all accrued and unpaid
distributions thereon to the date fixed for redemption required to be made
pursuant to Section 5.1A(ii) of this Agreement (except as provided in Paragraph
3 below), without interest.

     2.   Limitations on Redemption.  Unless full cumulative distributions on
          -------------------------                                          
all Series A Preferred Units required to be made pursuant to Section 5.1A(i) of
this Agreement and full cumulative distributions on all Series B Preferred Units
required to be made pursaunt to Section 5.1A(ii) of this Agreement shall have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for all past distribution periods
and the then current distribution period, no Series B Preferred Units shall be
redeemed unless all Series B Preferred Units are simultaneously redeemed.
Notwithstanding anything to the contrary contained herein, no Series B Preferred
Units may be redeemed unless all Series A Preferred Units have first been
redeemed.  If less than all of the outstanding Series B Preferred Units is to be
redeemed, the Series B Preferred Units to be redeemed shall be selected pro rata
(as nearly as may be practicable without creating fractional Series B Preferred
Units.

     3.   Payment of Distributions in Connection with Redemption.  Immediately
          ------------------------------------------------------              
prior to any redemption of Series B Preferred Units, the Partnership shall pay,
in cash, any accumulated and unpaid distributions through the redemption date,
unless a redemption date falls after the Partnership Record Date and prior to
the corresponding distribution payment date, in which case each holder of Series
B Preferred Units at the close of business on such Partnership Record Date shall
be entitled to the distribution payable on such Units on the corresponding
distribution payment date notwithstanding the redemption of such Units before
such distribution payment date.  Except as provided above, the Partnership will
make no payment or allowance for unpaid distributions, whether or not in
arrears, on Series B Preferred Units which are redeemed.

     4.   Procedures for Redemption.
          ------------------------- 

          (a) Notice of redemption will be mailed by the Partnership, postage
prepaid, not less than 15 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series B Preferred Units at
their respective addresses as they appear on Exhibit A-1 attached to this
                                             -----------                 
Agreement.  No failure to give such notice or any defect thereto or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any units of Series B Preferred Units except as to the holder to whom notice
was defective or not given.

          (b) The notice of redemption shall state:  (i) the redemption date;
(ii) the redemption price; (iii) the number of Series B Preferred Units to be
redeemed; and (iv) that distributions on the units to be redeemed will cease to
accrue on such redemption date.

          (c) If notice of redemption of any Series B Preferred Units has been
given and if the funds necessary for such redemption have been set aside by the
Partnership in trust for the benefit of the holders of any Series B Preferred
Units so called for redemption, then from and after the redemption date
distributions will cease to accrue on such Series B Preferred Units, such Series
B Preferred Units shall no 

                                      G-1
<PAGE>
 
longer be deemed outstanding and all rights of the holders of such shares will
terminate, except the right to receive the redemption price. On the redemption
date the Series B Preferred Units shall be redeemed by the Partnership at the
redemption price plus any accrued and unpaid distributions payable upon such
redemption.

          (d) The deposit of funds with a bank or trust corporation for the
purpose of redeeming Series B Preferred Units shall be irrevocable except that:

              (i) the Partnership shall be entitled to receive from such bank or
trust corporation the interest or other earnings, if any, earned on any money so
deposited in trust, and the holders of the Series B Preferred Units redeemed
shall have no claim to such interest or other earnings; and

              (ii) any balance of monies so deposited by the Trust and unclaimed
by the holders of the Series B Preferred Units entitled thereto at the
expiration of two years from the applicable redemption date shall be repaid,
together with any interest or other earnings thereon, to the Partnership, and
after any such repayment, the holders of the Series B Preferred Units entitled
to the funds so repaid to the Partnership shall look only to the Partnership for
payment without interest or other earnings.

     5.   Status of Redeemed Units. Any Series B Preferred Units that shall at
          ------------------------                                            
any time have been redeemed shall, after such redemption, have the status of
authorized but unissued Preferred Units, without designation as to series until
such Units are thereafter designated as part of a particular series by the
General Partner.

                                      G-2
<PAGE>
 
                                                                     EXHIBIT 5.1


                   [Goodwin, Procter & Hoar  LLP Letterhead]



                               November 20, 1998


Maryland Property Capital Trust, Inc.
177 Milk Street
Boston, MA 02109


     Re:  Legality of Securities to be Registered
          under Registration Statement on Form S-4
          ----------------------------------------

Ladies and Gentlemen:

     This opinion is furnished in connection with the registration on Form S-4
(the "Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), of 159,737 shares of common stock, par value
$.01 per share, of Maryland Property Capital Trust, Inc., a Maryland corporation
(the "Corporation"), which will be issued to the shareholders of Property
Capital Trust (the "Trust") in connection with the Merger (as defined below).

     We have acted as counsel to the Corporation in connection with the
preparation and filing with the Securities and Exchange Commission of the
Registration Statement and the proposed merger (the "Merger") of the Trust into
the Corporation pursuant to the Agreement and Plan of Merger, by and between the
Corporation and the Trust, dated as of June 18, 1998, as amended (the "Merger
Agreement").

     In connection with rendering this opinion, we have (i) assumed that, prior
to the consummation of the Merger, the number of authorized shares of the common
stock of the Corporation will be increased from 100 to 10,000,000 and (ii)
examined the Articles of Amendment and Restatement of the Corporation, as
expected to be filed with the Secretary of State of the State of Maryland, the
Bylaws of the Corporation, such records of the corporate proceedings of the
Corporation as we deemed material, the Registration Statement and the exhibits
thereto, and such other certificates, receipts, records and documents as we
considered necessary for the purposes of this opinion.  In our examination, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as certified,
photostatic or facsimile copies, the authenticity of the originals of such
copies and the authenticity of telephonic confirmations of public officials and
others.  As to facts material to our opinion, we have relied upon certificates
or telephonic confirmations of public officials and certificates, documents,
statements and other information of the Corporation or representatives or
officers thereof.

     We are attorneys admitted to practice in The Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdictions other than the
laws of the United States of America and the Maryland General Corporation Law as
in effect on the date hereof.

     Based upon the foregoing, we are of the opinion that under the Maryland
General Corporation Law, pursuant to which the Corporation is incorporated, the
shares to be issued to the shareholders of the Trust in 
<PAGE>

Maryland Property Capital Trust, Inc.
November 20, 1998 
Page 2

connection with the Merger, when issued in accordance with the terms described
in the Merger Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.

     We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us with respect to this opinion
under the heading "Legal Matters" in the Prospectus which is a part of such
Registration Statement.


                                Very truly yours,

                                /s/ Goodwin, Procter & Hoar  LLP

                                GOODWIN, PROCTER & HOAR  LLP