<PAGE>
 
                               TENTH AMENDMENT TO
                           FIRST AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                    CHARLES E. SMITH RESIDENTIAL REALTY L.P.

       THIS TENTH AMENDMENT TO FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF CHARLES E. SMITH RESIDENTIAL REALTY L.P. (this "TENTH
AMENDMENT"), dated as of October 3, 1997, is entered into by Charles E. Smith
Residential Realty, Inc., a Maryland corporation, as general partner (the
"GENERAL PARTNER") of Charles E. Smith Residential Realty L.P. (the
"PARTNERSHIP"), for itself and on behalf of the limited partners of the
Partnership.

       WHEREAS, Section 4.2.B of the First Amended and Restated Agreement of
Limited Partnership of the Partnership (as heretofore amended, the "PARTNERSHIP
AGREEMENT") provides that the General Partner shall not issue additional
convertible securities containing the right to subscribe for or purchase shares
of Common Stock of the General Partner ("REIT SHARES" and collectively, the "NEW
SECURITIES"), other than to all holders of REIT Shares, unless the General
Partner causes the Partnership to issue to the General Partner Partnership
Interests having designations, preferences and other rights, all such that the
economic interests are substantially the same as those of the New Securities;

       WHEREAS, the General Partner has entered into a Purchase Agreement dated
as of September 17, 1997, pursuant to which the General Partner has agreed to
issue shares of Common Stock and a newly created series of capital stock,
designated Series B Cumulative Convertible Redeemable Preferred Stock (the
"SERIES B PREFERRED STOCK");

       WHEREAS, pursuant to the authority granted to the General Partner
pursuant to Section 4.2 of the Partnership Agreement, the General Partner
desires to amend the Partnership Agreement (i) to establish a new class of
Units, to be entitled Series B Cumulative Convertible Redeemable Preferred Units
(the "SERIES B PREFERRED UNITS"), and to set forth the designations, rights,
powers, preferences and duties of such Series B Preferred Units, which are
substantially the same as those of the Series B Preferred Stock, and (ii) to
make certain other changes to the Partnership Agreement;

       NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the General Partner hereby amends the Partnership Agreement, as
follows:

       1. Section 4.2 of the Partnership Agreement is hereby amended by adding
after Section 4.2.D the following section:

            E. Series B Preferred Units.  Under the authority granted to
               ------------------------                                 
       it by Section 4.2.A hereof, the General Partner hereby establishes an
       additional class of Partnership Units entitled "Series B Cumulative
       Convertible Redeemable Preferred Units" (the "SERIES B PREFERRED UNITS").
       Series B Preferred Units shall have the designations, preferences,
       rights, powers and duties as set forth in Exhibit G hereto.
                                                 ---------        

                                      E-1
<PAGE>
 
       2. Exhibits to Partnership Agreement.
          --------------------------------- 

          A. The General Partner shall maintain the information set forth in
Exhibit A to the Partnership Agreement, as such information shall change from
time to time, in such form as the General Partner deems appropriate for the
conduct of the Partnership's affairs, and Exhibit A shall be deemed amended from
time to time to reflect the information so maintained by the General Partner,
whether or not a formal amendment to the Partnership Agreement has been executed
amending such Exhibit A. In addition to the designation of Series B Preferred
Units pursuant to this Tenth Amendment, such information shall reflect (and
Exhibit A shall be deemed amended from time to time to reflect) the issuance of
any additional Partnership Units to the General Partner or any other Person, the
transfer of Partnership Units and the redemption of any Partnership Units, all
as contemplated herein.

            B. The Partnership Agreement is hereby amended by attaching thereto
as Exhibit G the Exhibit G attached hereto.

       3. Certain Capitalized Terms. All capitalized terms used in this Tenth
          -------------------------                                           
Amendment and not otherwise defined shall have the meanings assigned in the
Partnership Agreement.  Except as modified herein, all terms and conditions of
the Partnership Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and affirms.


       IN WITNESS WHEREOF, the undersigned has executed this Tenth Amendment as
of the date first set forth above.

                       CHARLES E. SMITH RESIDENTIAL REALTY, INC.,
                       as General Partner of
                       Charles E. Smith Residential Realty L.P.
                       and on behalf of existing Limited Partners



                       By:
                       Name:
                       Title:

                                       2
<PAGE>
 
                                   EXHIBIT G

                   DESIGNATION OF THE PREFERENCES, CONVERSION
   AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO SERIES B
                                PREFERRED UNITS

       The Series B Preferred Units shall have the following designations,
preferences, rights, powers and duties:

          (1) Certain Defined Terms.  The following capitalized terms used in
              ---------------------                                          
     this Exhibit G shall have the respective meanings set forth below:

          "DISTRIBUTION DATE" means (i) for any Distribution Period with respect
     to which the Partnership pays a distribution on the Class A Units, the date
     on which such distribution is paid, or (ii) for any Distribution Period
     with respect to which the Partnership does not pay a distribution on the
     Class A Units, the date set by the General Partner for payment of dividends
     on the Series B Preferred Stock.

          "DISTRIBUTION PERIOD" means quarterly periods commencing on January 1,
     April 1, July 1 and October 1 of each year and ending on and including the
     day preceding the first day of the next succeeding Distribution Period,
     except that: (i) the initial Distribution Period shall commence on July 1,
     1997 and end on and include September 30, 1997, and (ii) the Distribution
     Period during which any Series B Preferred Units shall be redeemed pursuant
     to Section 4 shall end on and include the date of such redemption.

          "FULLY JUNIOR UNITS" shall mean the Common Units and any other class
     or series of Partnership Units now or hereafter issued and outstanding over
     which the Series B Preferred Units have a preference or priority in both
     (i) the payment of dividends and (ii) the distribution of assets on any
     liquidation, dissolution or winding up of the Partnership.

          "JUNIOR UNITS" shall mean the Common Units and any other class or
     series of Partnership Units now or hereafter issued and outstanding over
     which the Series B Preferred Units have a preference or priority in either
     (i) the payment of dividends or (ii) the distribution of assets on any
     liquidation, dissolution or winding up of the Partnership.

          "PARITY UNITS" has the meaning ascribed thereto in Section 6(B).

          (2)  Distributions.
               ------------- 

          (A) The General Partner, in its capacity as the holder of the then
     outstanding Series B Preferred Units, shall be entitled to receive out of
     funds legally available therefor, when, as and if declared by the General
     Partner, distributions payable in cash at the rate per Series B Preferred
     Unit equal to the greater of (a) $2.02 per annum, prorated as described in
     Section 2(B), or (b) 

                                      G-1
<PAGE>
 
     the ordinary cash distributions (determined on each Distribution Date) paid
     on the number of Class A Units, or portion thereof, into which a Series B
     Preferred Unit is convertible. The distributions referred to in clause (b)
     of the preceding sentence shall equal the number of Class A Units, or
     portion thereof, into which a Series B Preferred Unit is convertible,
     multiplied by the most recent quarterly distribution on a Class A Unit on
     or before the applicable Distribution Date. If the Partnership pays an
     ordinary cash distribution on the Class A Units with respect to a
     Distribution Period after the date on which the Distribution Date is
     declared pursuant to clause (ii) of the definition of Distribution Date and
     the distribution calculated with respect to clause (b) of the first
     sentence of this Section 2(A) is greater than the distribution previously
     declared on the Series B Preferred Units with respect to such Distribution
     Period, the Partnership shall pay an additional distribution in respect of
     the Series B Preferred Units on the date on which the distribution on the
     Class A Units is paid, in an amount equal to the difference between (y) the
     distribution calculated pursuant to clause (b) of the first sentence of
     this Section 2(A) and (z) the amount of distributions previously declared
     on the Series B Preferred Units with respect to such Distribution Period.
     Distributions shall begin to accrue and shall be fully cumulative from
     September 30, 1997, whether or not in any Distribution Period or Periods
     there shall be funds of the Partnership legally available for the payment
     of such distributions, and shall be payable quarterly, when, as and if
     declared by the General Partner, in arrears on each Distribution Date.
     Accrued and unpaid distributions for any past Distribution Periods may be
     declared and paid at any time and for such interim periods, without
     reference to any regular Distribution Date, to the General Partner, on such
     date as may be fixed by the General Partner for payment of the
     corresponding dividend on the Series B Preferred Stock. Any distribution
     made on the Series B Preferred Units shall first be credited against the
     earliest accrued but unpaid distribution due with respect to Series B
     Preferred Units which remains payable.

          (B) The amount of distributions referred to in clause (a) of the first
     sentence of Section 2(A) shall be equal to $0.505.  The distribution
     payable with respect to the initial Distribution Period will include a full
     distribution for such Distribution Period notwithstanding the fact that the
     Series B Preferred Units were issued after September 30, 1997 (i.e., the
     greater of $0.505 per Series B Preferred Unit or the ordinary cash
     distribution paid on the Class A Units with respect to the quarterly period
     ending on or about September 30, 1997).  The amount of distribution for any
     period on the Series B Preferred Units that represents less than a full
     quarter of a year shall be computed on the basis of a 360-day year of
     twelve 30-day months and the actual number of days in such Distribution
     Period.  No interest, or sum of money in lieu of interest, shall be payable
     in respect of any distribution payment or payments on the Series B
     Preferred Units that may be in arrears.

          (C) So long as any Series B Preferred Units are outstanding, no
     distributions, except as described in the immediately following sentence,
     shall be declared or paid or set apart for payment on any class or series
     of Parity Units for any period unless full cumulative distributions have
     been or 

                                      G-2
<PAGE>
 
     contemporaneously are declared and paid or declared and a sum sufficient
     for the payment thereof set apart for such payment on the Series B
     Preferred Units for all Distribution Periods terminating on or prior to the
     distribution payment date for such class or series of Parity Units. When
     distributions are not paid full or a sum sufficient for such payment is not
     set apart, as aforesaid, all distributions declared upon Series B Preferred
     Units and all distributions declared upon any other class or series of
     Parity Units shall be declared ratably in proportion to the respective
     amounts of distributions accumulated and unpaid on the Series B Preferred
     Units and accumulated and unpaid on such Parity Units.

          (D) So long as any Series B Preferred Units are outstanding, no
     distributions (other than distributions paid solely in Fully Junior Units
     or options, warrants or rights to subscribe for or purchase Fully Junior
     Units) shall be declared or paid or set apart for payment or other
     distribution shall be declared or made or set apart for payment upon Junior
     Units, nor shall any Junior Units be redeemed, purchased or otherwise
     acquired (other than a redemption, purchase or other acquisition of Class A
     Units made for purposes of an employee incentive or benefit plan of the
     General Partner or any subsidiary) for any consideration (or any moneys be
     paid to or made available for a sinking fund for the redemption of any such
     Junior Units) by the Partnership, directly or indirectly (except by
     conversion into or exchange for Fully Junior Units), unless in each case
     (i) the full cumulative distributions on all outstanding Series B Preferred
     Units and any other Parity Units of the Partnership shall have been paid or
     declared and set apart for payment for all past Distribution Periods with
     respect to the Series B Preferred Units and all past distribution periods
     with respect to such Parity Units and (ii) sufficient funds shall have been
     paid or set apart for the payment of the distribution for the current
     Distribution Period with respect to the Series B Preferred Units and the
     current distribution period with respect to such Parity Units.

          (E) No distributions on the Series B Preferred Units shall be declared
     by the General Partner or paid or set apart for payment by the Partnership
     at such time as the terms and provisions of any agreement of the General
     Partner or the Partnership, including any agreement relating to
     indebtedness of either of them, prohibits such declaration, payment, or
     setting apart for payment or provides that such declaration, payment or
     setting apart for payment would constitute a breach thereof or a default
     thereunder, or if such declaration or payment shall be restricted or
     prohibited by law.

          (3)  Liquidation Preference.
               ---------------------- 

          (A) In the event of any liquidation, dissolution or winding up of the
     Partnership, whether voluntary or involuntary, before any payment or
     distribution of the assets of the Partnership shall be made to or set apart
     for the holders of Junior Units, the General Partner, in its capacity as
     holder of the Series B Preferred Units, shall be entitled to receive Twenty
     Eight Dollars and Fifty Cents ($28.50) (the "Series B Liquidation
     PreferencE") per Series B 

                                      G-3
<PAGE>
 
     Preferred Unit plus an amount equal to all distributions (whether or not
     earned or declared) accumulated, accrued and unpaid thereon to the date of
     final distribution to the General Partner, in its capacity as such holder;
     but the General Partner, in its capacity as the holder of Series B
     Preferred Units shall not be entitled to any further payment; provided that
     the distribution payable with respect to the Distribution Period containing
     the date of final distribution shall be equal to the greater of (i) the
     distribution provided in clause (a) of the first sentence of Section 2(A)
     or (ii) the distribution determined pursuant to clause (b) of the first
     sentence of Section 2(A) for the preceding Distribution Period. Until the
     holders of Series B Preferred Units have been paid, the Series B
     Liquidation Preference in full, no payment will be made to any holder of
     Junior Units upon the liquidation, dissolution, or winding up of the
     General Partner. If, upon any such liquidation, dissolution or winding up
     of the Partnership, the assets of the Partnership, or proceeds thereof,
     distributable to the General Partner, in its capacity as the holder of
     Series B Preferred Units, shall be insufficient to pay in full the
     preferential amount aforesaid and liquidating payments on any other class
     or series of Parity Units, then such assets, or the proceeds thereof, shall
     be distributed among the General Partner, in its capacity as the holder of
     such Series B Preferred Units, and the holders of such other Parity Units
     ratably in accordance with the respective amounts that would be payable on
     such Series B Preferred Units and such other Parity Units if all amounts
     payable thereon were paid in full. For the purposes of this Section 3, (x)
     a consolidation or merger of the Partnership with one or more partnerships,
     limited liability companies, corporations, real estate investment trusts or
     other entities and (y) a sale, lease or conveyance of all or substantially
     all of the Partnership's property or business shall not be deemed to be a
     liquidation, dissolution or winding up, voluntary or involuntary, of the
     Partnership.

          (B) Subject to the rights of the holders of Partnership Units of any
     Parity Units upon any liquidation, dissolution or winding up of the
     Partnership, after payment shall have been made in full to the General
     Partner, in its capacity as the holder of the Series B Preferred Units, as
     provided in this Section 3, any other series or class or classes of Junior
     Units shall, subject to any respective terms and provisions applying
     thereto, be entitled to receive any and all assets remaining to be paid or
     distributed, and the General Partner, in its capacity as the holder of the
     Series B Preferred Units, shall not be entitled to share therein.

          4.  Redemption Right.
              ---------------- 

          (A) Except as provided in Section 4(B), the Series B Preferred Units
     shall be redeemable by the General Partner, at its option, in whole or in
     part, for Class A Units, subject to the following conditions:

          (i)  The Series B Preferred Units shall be redeemed only if  the
               General Partner shall concurrently therewith redeem an equivalent
               number of shares of Series B Preferred Stock for REIT

                                      G-4
<PAGE>
 
               Shares. Such redemption of Series B Preferred Units shall occur
               substantially concurrently with the redemption by the General
               Partner of such Series B Preferred Shares (such date of
               redemption the "REDEMPTION DATE").

          (ii) In the event that the General Partner redeems shares of Series B
               Preferred Stock in exchange for REIT Shares, an equivalent number
               of Series B Preferred Units shall be converted into a number of
               Class A Units equal to (x) the number of REIT Shares issued by
               the General Partner in redemption of such shares of Series B
               Preferred Stock divided by (y) the Conversion Factor.

          (iii)  Upon any redemption of Series B Preferred Units, the
               Partnership shall pay in cash to the holder of such Units an
               amount equal to all accumulated, accrued and unpaid distributions
               with respect to the Series B Preferred Units being redeemed for
               any Distribution Period ending on or prior to the Redemption Date
               whether or not earned or declared.  Immediately prior to
               authorizing any redemption of the Series B Preferred Units, and
               as a condition precedent for such redemption, the General
               Partner, by resolution of its Board of Directors, shall declare a
               mandatory distribution on the Series B Preferred Units, payable
               in cash on the Redemption Date in an amount equal to all
               accumulated, accrued, and unpaid distributions as of the
               Redemption Date on the Series B Preferred Units to be redeemed,
               which amount shall be added to the redemption price, except to
               the extent such distributions are to be paid pursuant to the
               immediately following sentence.  If the Redemption Date falls
               after a Partnership Record Date and prior to the corresponding
               Distribution Date, then the General Partner, in its capacity as
               the holder of the Series B Preferred Units being redeemed, shall
               be entitled to distributions payable on the corresponding
               Distribution Date notwithstanding the redemption of such Series B
               Preferred Units prior to such Distribution Date.  Except as
               provided above, the Partnership shall make no payment or
               allowance for accumulated or accrued distributions on Series B
               Preferred Units called for redemption or on the Class A Units
               issued upon such redemption.

          (iv) Any Class A Unit issued upon redemption of the Series B Preferred
               Units shall be validly issued, fully paid and non-assessable.

          (B) In the event that the General Partner is required to redeem any
     shares of Series B Preferred Stock pursuant to the terms thereof, the
     Partnership shall redeem an equivalent number of Series B Preferred Units
     for consideration equal to the consideration payable by the General Partner
     upon redemption of such shares of Series B Preferred Stock.

                                      G-5
<PAGE>
 
          5.  Conversion to Class A Units.
              --------------------------- 

          (A) In the event that a holder of Series B Preferred Stock exercises
     its right to convert such Series B Preferred Stock into REIT Shares, then,
     concurrently therewith, an equivalent number of Series B Preferred Units
     shall be automatically converted into a number of Class A Units equal to
     (x) the number of REIT Shares issued upon conversion of such Series B
     Preferred Shares divided by (y) the Conversion Factor.  Any such conversion
     will be effective at the same time as the conversion of Series B Preferred
     Stock into REIT Shares is effective.

          (B) The General Partner, in its capacity as the holder of Series B
     Preferred Units that are converted pursuant to this Section 4 effective
     during the period after a Partnership Record Date with respect to the
     Series B Preferred Shares and prior to the opening of business on the
     distribution payment record date with respect to the Class A Units for the
     corresponding Distribution Date, shall not be entitled to receive the
     distribution payable on such Series B Preferred Units on such Distribution
     Date notwithstanding such conversion thereof following the corresponding
     Partnership Record Date and prior to such Distribution Date.

          6.  Ranking.  Any class or series of  Partnership Units shall be
              -------                                                     
     deemed to rank:

          (A) prior to the Series B Preferred Units, as to the payment of
     distributions and as to distribution of assets upon liquidation,
     dissolution or winding up of the Partnership, if the holders of such class
     or series of Partnership Units shall be entitled to the receipt of
     distributions or of amounts distributable upon liquidation, dissolution or
     winding up, as the case may be, in preference or priority to the holders of
     Series B Preferred Units;

          (B) on a parity with the Series B Preferred Units as to the payment of
     distributions and as to the distribution of assets upon liquidation,
     dissolution or winding up of the Partnership, whether or not the
     distribution rates, distribution payment dates or redemption or liquidation
     prices per Partnership Unit be different from those of the Series B
     Preferred Units, if the holders of such class or series of Partnership
     Units and the Series B Preferred Units shall be entitled to the receipt of
     distributions and of amounts distributable upon liquidation, dissolution or
     winding up in proportion to their respective amounts of accrued and unpaid
     distributions per Partnership Unit or liquidation preferences, without
     preference or priority one over the other ("PARITY UNITS"); the outstanding
     Series A Cumulative Convertible Redeemable Preferred Units of the General
     Partner are Parity Units;

          (C) junior to the Series B Preferred Units, as to the payment of
     distributions or as to the distribution of assets upon liquidation,
     dissolution 

                                      G-6
<PAGE>
 
     or winding up of the Partnership, if such class or series of
     Partnership Units shall be Junior Units; and

          (D) junior to the Series B Preferred Units, as to the payment of
     distributions and as to the distribution of assets upon liquidation,
     dissolution or winding up of the Partnership, if such class or series of
     Partnership Units shall be Fully Junior Units;

          7.  Voting.  Except as required by law, the General Partner, in its
              ------                                                         
     capacity  as the holder of the Series B Preferred Units, shall not be
     entitled to vote at any meeting of the Partners or for any other purpose or
     otherwise to participate in any action taken by the Partnership or the
     Partners, or to receive notice of any meeting of the Partners.

          8.  Restriction on Ownership.  The Series B Preferred Units shall be
              ------------------------                                        
     owned and held solely by the General Partner.

          9.  General.  The rights of the General Partner, in its capacity as
              -------                                                        
     the holder of the Series B Preferred Units, are in addition to and not in
     limitation on any other rights or authority of the General Partner, in any
     other capacity, under the Agreement.  In addition, nothing contained in
     this Exhibit G shall be deemed to limit or otherwise restrict any rights or
          ---------                                                             
     authority of the General Partner under the Agreement, other than in its
     capacity as the holder of the Series B Preferred Units.

                                      G-7