<PAGE>   1











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

                           SECOND AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                        ARDEN REALTY LIMITED PARTNERSHIP

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

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                                TABLE OF CONTENTS


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ARTICLE 1 DEFINED TERMS......................................................................3
               Section 1.1   Definitions.....................................................3

ARTICLE 2 ORGANIZATIONAL MATTERS............................................................17
               Section 2.1   Organization...................................................17
               Section 2.2   Name...........................................................17
               Section 2.3   Resident Agent; Principal Office...............................18
               Section 2.4   Power of Attorney..............................................18
               Section 2.5   Term...........................................................19
               Section 2.6   Number of Partners.............................................19

ARTICLE 3 PURPOSE...........................................................................19
               Section 3.1   Purpose and Business...........................................19
               Section 3.2   Powers.........................................................20
               Section 3.3   Partnership Only for Purposes Specified........................20
               Section 3.4   Representations and Warranties by the Parties..................20

ARTICLE 4 CAPITAL CONTRIBUTIONS.............................................................22
               Section 4.1   Capital Contributions of the Partners..........................22
               Section 4.2   Loans by Third Parties.........................................23
               Section 4.3   Additional Funding and Capital Contributions...................23
               Section 4.4   Stock Plan.....................................................26
               Section 4.5   Other Contribution Provisions..................................26

ARTICLE 5 DISTRIBUTIONS.....................................................................26
               Section 5.1   Requirement and Characterization of Distributions..............26
               Section 5.2   Distributions in Kind..........................................27
               Section 5.3   Distributions Upon Liquidation.................................27
               Section 5.4   Distributions to Reflect Issuance of Additional
                               Partnership Interests........................................27

ARTICLE 6 ALLOCATIONS.......................................................................27
               Section 6.1   Timing and Amount of Allocations of Net Income and Net Loss....27
               Section 6.2   General Allocations............................................28
               Section 6.3   Additional Allocation Provisions...............................29
               Section 6.4   Tax Allocations................................................32

ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS.............................................32
               Section 7.1   Management.....................................................32
               Section 7.2   Certificate of Limited Partnership.............................35
               Section 7.3   Restrictions on General Partner's Authority....................36
               Section 7.4   Reimbursement of the General Partner...........................38
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               Section 7.5   Outside Activities of the General Partner......................38
               Section 7.6   Contracts with Affiliates......................................39
               Section 7.7   Indemnification................................................40
               Section 7.8   Liability of the General Partner...............................42
               Section 7.9   Other Matters Concerning the General Partner...................42
               Section 7.10  Title to Partnership Assets....................................43
               Section 7.11  Reliance by Third Parties......................................43

ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS........................................44
               Section 8.1   Limitation of Liability........................................44
               Section 8.2   Management of Business.........................................44
               Section 8.3   Outside Activities of Limited Partners.........................44
               Section 8.4   Return of Capital..............................................45
               Section 8.5   Rights of Limited Partners Relating to the Partnership.........45
               Section 8.6   Redemption Rights..............................................46

ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................47
               Section 9.1   Records and Accounting.........................................47
               Section 9.2   Fiscal Year....................................................48
               Section 9.3   Reports........................................................48

ARTICLE 10 TAX MATTERS......................................................................48
               Section 10.1  Preparation of Tax Returns.....................................48
               Section 10.2  Tax Elections..................................................48
               Section 10.3  Tax Matters Partner............................................49
               Section 10.4  Organizational Expenses........................................50
               Section 10.5  Withholding....................................................50

ARTICLE 11 TRANSFERS AND WITHDRAWALS........................................................51
               Section 11.1  Transfer.......................................................51
               Section 11.2  Transfer of General Partner's Partnership Interest.............51
               Section 11.3  Limited Partners' Rights to Transfer...........................52
               Section 11.4  Substituted Limited Partners...................................54
               Section 11.5  Assignees......................................................55
               Section 11.6  General Provisions.............................................55

ARTICLE 12 ADMISSION OF PARTNERS............................................................57
               Section 12.1  Admission of Successor General Partner.........................57
               Section 12.2  Admission of Additional Limited Partners.......................57
               Section 12.3  Amendment of Agreement and Certificate of Limited
                               Partnership..................................................58

ARTICLE 13 DISSOLUTION AND LIQUIDATION......................................................58
               Section 13.1  Dissolution....................................................58
               Section 13.2  Winding Up.....................................................59
               Section 13.3  Compliance with Timing Requirements of Regulations.............60
               Section 13.4  Deemed Distribution and Recontribution.........................61
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               Section 13.5  Rights of Limited Partners.....................................61
               Section 13.6  Notice of Dissolution..........................................61
               Section 13.7  Cancellation of Certificate of Limited Partnership.............61
               Section 13.8  Reasonable Time for Winding-Up.................................61
               Section 13.9  Waiver of Partition............................................62

ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS.....................................62
               Section 14.1  Amendments.....................................................62
               Section 14.2  Action by the Partners.........................................62

ARTICLE 15 GENERAL PROVISIONS...............................................................63
               Section 15.1  Addresses and Notice...........................................63
               Section 15.2  Titles and Captions............................................63
               Section 15.3  Pronouns and Plurals...........................................63
               Section 15.4  Further Action.................................................63
               Section 15.5  Binding Effect.................................................63
               Section 15.6  Creditors......................................................64
               Section 15.7  Waiver.........................................................64
               Section 15.8  Counterparts...................................................64
               Section 15.9  Applicable Law.................................................64
               Section 15.10 Invalidity of Provisions.......................................64
               Section 15.11 Limitation to Preserve REIT Status.............................64
               Section 15.12 Entire Agreement...............................................65
               Section 15.13 No Rights as Stockholders......................................65

ARTICLE 16 SERIES B PREFERRED UNITS.........................................................66
               Section 16.1  Designation and Number.........................................66
               Section 16.2  Distributions..................................................66
               Section 16.3  Liquidation Proceeds...........................................68
               Section 16.4  Optional Redemption............................................68
               Section 16.5  Voting Rights..................................................70
               Section 16.6  Transfer Restrictions..........................................71
               Section 16.7  Exchange Rights................................................71
               Section 16.8  No Conversion Rights...........................................75
               Section 16.9  No Sinking Fund................................................75
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<PAGE>   5
                           SECOND AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                        ARDEN REALTY LIMITED PARTNERSHIP


         THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of September 7, 1999, is entered into by and among Arden Realty, Inc.,
a Maryland corporation (the "REIT"), as the General Partner and the Persons
whose names are set forth on Exhibit A attached hereto ("Contributors"), as the
Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein.

         WHEREAS, the limited partnership was formed on May 20, 1996 and an
original agreement of limited partnership was entered into between the REIT, as
general partner, and Victor Coleman, as limited partner;

         WHEREAS, in connection with a public offering by the REIT of its common
stock, the acquisition by the Partnership of direct and indirect interests in 24
office properties and other assets, the Partnership entering into certain
mortgage financing transactions, and the contribution of the remaining net
proceeds from the public offering to the Partnership, the REIT, as General
Partner, entered into the Amended and Restated Agreement of Limited Partnership,
dated as of October 9, 1996 (the "Original Agreement");

         WHEREAS, in connection with the contribution of a tenancy-in-common
interest in certain real property by Hapsmith-Praxis Partners, a California
limited partnership, to the Partnership in exchange for Partnership Units, the
REIT, as General Partner, entered into the Admission of New Partner and
Amendment to Limited Partnership Agreement, dated as of December 20, 1996;

         WHEREAS, in connection with the contribution of certain improved real
property by CalTwin Investors, L.L.C., a Delaware limited liability company, to
the Partnership in exchange for Partnership Units, the REIT, as General Partner,
entered into the Admission of New Partner and Amendment to Limited Partnership
Agreement, dated as of March 27, 1997;

         WHEREAS, in connection with the contribution of an interest in a
certain improved leasehold estate by D&S Wilstein Family Trust-1989, to the
Partnership in exchange for Partnership Units, the REIT, as General Partner,
entered into the Admission of New Partner and Amendment to Limited Partnership
Agreement, dated as of December 10, 1997;

         WHEREAS, in connection with the contribution of an interest in a
certain improved leasehold estate by The 1987 Jensen Revocable Living Trust, to
the Partnership in exchange for Partnership Units, the REIT, as General Partner,
entered into the Admission of New Partner and Amendment to Limited Partnership
Agreement, dated as of December 10, 1997;

         WHEREAS, in connection with the contribution of an interest in a
certain improved leasehold estate by L&J Wilstein Revocable Trust-1986, to the
Partnership in

<PAGE>   6
exchange for Partnership Units, the REIT, as General Partner, entered into the
Admission of New Partner and Amendment to Limited Partnership Agreement, dated
as of December 10, 1997;

         WHEREAS, in connection with the contribution of certain improved real
property by Spectrum Investments III, L.P., a California limited partnership, to
the Partnership in exchange for Partnership Units, the REIT, as General Partner,
entered into the Admission of New Partner and Amendment to Limited Partnership
Agreement (Spectrum Investments III, L.P.), dated as of March 2, 1998;

         WHEREAS, in connection with the contribution of certain improved real
property by Highridge-Apollo Grand Plaza, L.P., a California limited
partnership, to the Partnership in exchange for Partnership Units, the REIT, as
General Partner, entered into the Admission of New Partner and Amendment to
Limited Partnership Agreement, dated as of April 15, 1998;

         WHEREAS, in connection with the contribution of certain improved real
property by 91 Freeway Partners, a California general partnership, to the
Partnership in exchange for Partnership Units, the REIT, as General Partner,
entered into the Admission of New Partner and Amendment to Limited Partnership
Agreement, dated as of August, 3, 1998;

         WHEREAS, in connection with the transfer by Spectrum Investment III,
L.P. and Spectrum Investment, L.P. of their Partnership Units in the Partnership
to certain of their limited partners to be held individually, the REIT as
General Partner, entered into the Admission of Substitute Partner and Amendment
to Limited Partnership Agreement (Phil Belling), the Admission of Substitute
Partner and Amendment to Limited Partnership Agreement (Steve Layton), the
Admission of Substitute Partner and Amendment to Limited Partnership Agreement
(David Thomas), the Admission of Substitute Partner and Amendment to Limited
Partnership Agreement (Steve Briggs), the Admission of Substitute Partner and
Amendment to Limited Partnership Agreement (Tom Rutherford), each dated as of
March 29, 1999;

         WHEREAS, certain of the foregoing amendments (the "Expired Amendments")
are no longer in effect because the related Limited Partners redeemed or
exchanged their Limited Partner Interests (the amendments other than the Expired
Amendments being referred to herein as the "Pre-existing Amendments");

         WHEREAS, on the date hereof, Salomon Smith Barney Tax Advantaged
Exchange Fund II, LLC, a Delaware limited liability company (the "Series B
Contributor") is making a Capital Contribution of $50,000,000 in cash to the
Partnership in exchange for an aggregate of 2,000,000 8-5/8% Series B Cumulative
Redeemable Preferred Units of limited partnership interest in the Partnership
with the rights, preferences, exchange and other rights, voting powers and
restrictions, limitations as to distributions, qualifications and terms and
conditions as set forth herein;

         WHEREAS, the REIT, as General Partner, desires to amend and restate the
Partnership Agreement to reflect (i) the issuance of 2,000,000 Series B
Cumulative Redeemable Preferred Units and (ii) certain other matters described
herein; and


                                       2
<PAGE>   7
         WHEREAS, the Series B Contributor desires to make the capital
contribution referenced above and to continue to be bound by all terms,
conditions and other provisions of the Partnership Agreement;

         NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE 1
                                  DEFINED TERMS

         Section 1.1 Definitions.

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

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

         "Additional Funds" shall have the meaning set forth in Section 4.3.A.

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

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

         (i)  decrease such deficit by any amounts which such Partner is
              obligated to restore pursuant to this Agreement or is deemed to be
              obligated to restore pursuant to Regulations Section
              1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of
              Regulations Sections 1.704-2(i)(5) and 1.704-2(g); and

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

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

         "Adjustment Date" means, with respect to any Capital Contribution, the
close of business on the Business Day last preceding the date of the Capital
Contribution, provided, that if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner's securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.


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<PAGE>   8
         "Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.

         "Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such
property is subject when contributed; and (iii) in the case of any property
distributed to a Partner by the Partnership, the fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any liabilities either assumed by such Partner upon such
distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.

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

         "Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith, such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.

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

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

         (i) the sum of:

             a. the Partnership's Net Income or Net Loss (as the case may be)
         for such period,

             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 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 the net proceeds from the sale, exchange,
         disposition, or refinancing of Partnership property for such period
         over the gain (or loss, as the case may be) recognized from any such
         sale, exchange, disposition, or refinancing during such period
         (excluding Terminating Capital Transactions), and


                                       4
<PAGE>   9
             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 during such period by the
         Partnership,

             b. capital expenditures made by the Partnership during such period,

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

             f. the amount of any increase in reserves established during such
         period which the General Partner determines are 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.

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

         "Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:

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

         (b) From each Partner's Capital Account there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3 hereof, and the


                                       5
<PAGE>   10
amount of any liabilities of such Partner assumed by the Partnership or which
are secured by any property contributed by such Partner to the Partnership.

         (c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement (which does not result in a
termination of the Partnership for federal income tax purposes), the transferee
shall succeed to the Capital Account of the transferor to the extent it relates
to the transferred interest.

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

         (e) The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification, 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) or Section 1.704-2.

         "Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership by such Partner.

         "Cash Amount" means, with respect to any Partnership Units subject to a
Redemption, an amount of cash equal to the Deemed Partnership Interest Value
attributable to such Partnership Units.

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

         "Charter" means the Articles of Incorporation of the General Partner
filed with the Maryland State Department of Assessments and Taxation on May 1,
1996, as amended or restated from time to time.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time or any successor statute thereto, as interpreted by the applicable
regulations thereunder. Any


                                       6
<PAGE>   11
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 Unit" means a Partnership Unit representing a Partnership
Interest that is without preference as to distributions and allocations or
rights upon voluntary or involuntary liquidation, dissolution or winding-up.

         "Consent" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14 hereof.

         "Consent of the Limited Partners" means the Consent of a Majority In
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.

         "Consent of the Partners" means the Consent of Partners holding
Percentage Interests that are greater than 66 % of the aggregate Percentage
Interests of all Partners, which Consent shall be obtained prior to the taking
of any action for which it is required by this Agreement and may be given or
withheld by such Partners, in their sole and absolute discretion.

         "Constructively Own" means ownership under the constructive ownership
rules described in Exhibit C.

         "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 (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).

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

         "Contribution Agreement" means the Private Placement Purchase
Agreement, dated as of the date of this Agreement, by and among the Series B
Contributor and the Partnership and the REIT and with respect to the Series B
Preferred Units.

         "Contributor" means the Person identified as a "Subscriber" in the
Contribution Agreement.

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<PAGE>   12
         "Deemed Partnership Interest Value" means, as of any date with respect
to any class of Partnership Interests, the Deemed Value of the Partnership
Interests of such class multiplied by the applicable Partner's Percentage
Interest of such class.

         "Deemed Value of the Partnership Interests" means, as of any date with
respect to any class or series of Partnership Interests, (i) the total number of
shares of capital stock of the General Partner corresponding to such class or
series of Partnership Interests (as provided for in Sections 4.1 and 4.3.D)
issued and outstanding as of the close of business on such date (excluding any
treasury shares) multiplied by the Fair Market Value of a share of such capital
stock on such date; (ii) divided by the Percentage Interest of the General
Partner in such class of Partnership Interests on such date.

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

         "Effective Date" means the date of closing of the initial public
offering of REIT Shares, upon which contributions set forth on Exhibit A that
are to be effective on the Effective Date shall become effective.

         "Election Notice" shall have the meaning set forth in Section 4.3.F.

         "Fair Market Value" means, with respect to any share of capital stock
of the General Partner, the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the date with respect to which
"Fair Market Value" must be determined hereunder or, if such date is not a
Business Day, the immediately preceding Business Day. The market price for each
such trading day shall be: (i) if such shares are listed or admitted to trading
on any securities exchange or the Nasdaq National Market, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day, (ii) if such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reliable quotation source designated by the General Partner, or
(iii) if such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 10 days prior to the date in question) for
which prices have been so reported; provided that, if there are no bid and asked
prices reported during the 10 days prior to the date in question, the


                                       8
<PAGE>   13
Fair Market Value of such 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 for such shares includes rights that a holder of such shares would be
entitled to receive, then the Fair Market Value of such 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; and provided further that, in connection with determining the
Deemed Value of the Partnership Interests for purposes of determining the number
of additional Partnership Units issuable upon a Capital Contribution funded by
an underwritten public offering of shares of capital stock of the General
Partner, the Fair Market Value of such shares shall be the public offering price
per share of such class of capital stock sold.

         "Funding Debt" means the incurrence of any Debt by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.

         "Funding Notice" shall have the meaning set forth in Section 4.3.B.

         "General Partner" means the REIT or its successors as general partner
of the Partnership.

         "General Partner Interest" means a Partnership Interest held by the
General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.

         "General Partner Loan" shall have the meaning set forth in Section
4.3.C.

         "General Partner Payment" shall have the meaning set forth in Section
15.11.

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

         (a) The initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the gross fair market value of such asset, as
determined by the contributing Partner and the General Partner; provided that,
if the contributing Partner is the General Partner then, except with respect to
the General Partner's capital contributions of cash, REIT Shares or other shares
of capital stock of the General Partner, the determination of the fair market
value of the contributed asset shall be determined by (i) the price paid by the
General Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership and (ii) by
Appraisal, if otherwise acquired by the General Partner.

         (b) The Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may adopt, provided
however, that for such purpose, the net value of all of the Partnership assets,
in the aggregate, shall be equal to the Deemed Value of the Partnership
Interests of all classes of Partnership Interests then outstanding, regardless
of the method of valuation adopted by the General Partner, as of the times
listed below:


                                       9
<PAGE>   14
         (i)    the acquisition of an additional interest in the Partnership by
                a new or existing Partner in exchange for more than a de minimis
                Capital Contribution, if the General Partner reasonably
                determines that such adjustment is necessary or appropriate to
                reflect the relative economic interests of the Partners in the
                Partnership;

         (ii)   the distribution by the Partnership to a Partner of more than a
                de minimis amount of Partnership property as consideration for
                an interest in the Partnership if the General Partner reasonably
                determines that such adjustment is necessary or appropriate to
                reflect the relative economic interests of the Partners in the
                Partnership;

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

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

         (c) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.

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

         (e) If the Gross Asset Value of a Partnership asset has been determined
or adjusted pursuant to subparagraph (a), (b) or (d), such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Net Income and Net Losses.

         "Holder" means either the Partner or Assignee owning a Partnership
Unit.

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

         "Immediate Family" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse, parents, parents-in-law,
children, siblings and grandchildren and any trust or estate, all of the
beneficiaries of which consist of such Person or such Person's spouse, parents,
parents-in-law, children, siblings or grandchildren.


                                       10
<PAGE>   15
         "Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
his or her 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 under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within 120 days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee, receiver
of liquidator has not been vacated or stayed within 90 days of such appointment,
or (h) an appointment referred to in clause (g) is not vacated within 90 days
after the expiration of any such stay.

         "Indemnitee" means (i) any Person made a party to a proceeding by
reason of his or her status as (A) the General Partner or (B) a director or
officer of the Partnership or the General Partner, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time, in its sole and absolute discretion.

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

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

         "Liquidating Events" shall have the meaning set forth in Section 13.1.

         "Liquidator" shall have the meaning set forth in Section 13.2.A.


                                       11
<PAGE>   16
         "Majority in Interest of the Limited Partners" means Limited Partners
(other than (i) any Limited Partner 50% or more of whose equity is owned,
directly or indirectly, by the General Partner and (ii) any Preferred Limited
Partners) holding in the aggregate Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Limited
Partners (other than (i) any Limited Partner 50% or more of whose equity is
owned, directly or indirectly, by the General Partner and (ii) any Preferred
Limited Partner).

         "Miscellaneous Rights Agreement" means the Miscellaneous Rights
Agreement dated October 9, 1996 by and among the General Partner and certain
Limited Partners including the Specified Limited Partner, as such agreement may
be amended, modified or restated from time to time.

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

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

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

         (c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;

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

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

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


                                       12
<PAGE>   17
increases the basis of the asset) or loss (if the adjustment decreases the basis
of the asset) from the disposition of the asset and shall be taken into account
for purposes of computing Net Income or Net Loss; and

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

         "New Securities" means (1) any rights, options, warrants or convertible
or exchangeable securities having the right to subscribe for or purchase REIT
Shares or other shares of capital stock of the General Partner, excluding grants
under any Stock Plan, or (ii) any Debt issued by the General Partner that
provides any of the rights described in clause (i).

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

         "Nonrecourse Liability" shall have 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 B to this Agreement.

         "Parity Preferred Stock" means any class or series of Preferred Shares
now or hereafter authorized, issued or outstanding expressly designated by the
General Partner to rank on a parity with REIT Series B Preferred Shares with
respect to distributions and rights upon voluntary or involuntary liquidation,
winding up or dissolution of the General Partner in accordance with the Series B
Articles Supplementary.

         "Parity Preferred Unit" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with Series B
Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation, winding up and dissolution of the Partnership.

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

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

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


                                       13
<PAGE>   18
         "Partner Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).

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

         "Partnership Interest" means, an ownership interest in the Partnership
of either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. There may be one or more
classes or series of Partnership Interests as provided in Section 4.3. A
Partnership Interest may be expressed as a number of Partnership Units. Unless
otherwise expressly provided for by the General Partner at the time of the
original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class
or series.

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

         "Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash with respect to
Partnership Interests that are not entitled to any preference in distribution
pursuant to Section 5.1 hereof which record date shall be the same as the record
date established by the General Partner for a distribution to its stockholders
of some or all of its portion of such distribution.

         "Partnership Unit" means, with respect to any class of Partnership
Interest, a fractional, undivided share of such class of Partnership Interest
issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership Units may
be evidenced by a certificate for units substantially in the form of Exhibit D
hereto or as the General Partner may determine with respect to any class of
Partnership Units issued from time to time under Section 4.1 and 4.3.

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

         "Percentage Interest" means, as to a Partner holding a class or series
of Partnership Interests, its interest in such class or series as determined by
dividing the Partnership Units of such class or series owned by such Partner by
the total number of Partnership Units of such class then outstanding as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time. If the Partnership issues more than one class or series of Partnership
Interests, the interest in the Partnership among the classes or series of
Partnership Interests shall be determined as set forth in the amendment to the
Partnership Agreement setting forth the rights and privileges of such additional
classes or series of Partnership Interest, if any, as contemplated by Section
4.3.D.


                                       14
<PAGE>   19
         "Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.

         "Pledge" shall have the meaning set forth in Section 11.3.A.

         "Preferred Distribution Shortfall" shall have the meaning given to such
term in Section 5.1.

         "Preferred Limited Partner" means any Person holding a Preferred Unit,
and named as a Preferred Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended from time to time, or any Substitute Limited Partner or
Additional Limited Partner, in such Person's capacity as a Preferred Limited
Partner in the Partnership.

         "Preferred Share" means a share of the General Partner's preferred
stock, par value $.01 per share, with such rights, priorities and preferences as
shall be designated by the Board of Directors in accordance with the Charter.

         "Preferred Unit" means a Series B Preferred Unit and any other
Partnership Unit representing a Limited Partnership Interest, with such rights,
priorities and preferences as shall be designated by the General Partner
pursuant to Section 4.3.D other than Common Units.

         "Properties" means such interests in real property and personal
property including without limitation, fee interests, interests, in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.

         "Pro Rata Contribution" shall have the meaning set forth in Section
4.3.F.

         "Pro Rata Participation" shall have the meaning set forth in Section
4.3.F.

         "Qualified REIT Subsidiary" means any Subsidiary of the General Partner
that is a "qualified REIT subsidiary" within the meaning of Section 856(i) of
the Code.

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

         "Redemption" shall have the meaning set forth in Section 8.6.A.

         "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).

         "Regulatory Allocations" shall have the meaning set forth in Section
6.3.A(viii) of this Agreement.

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

         "REIT Requirements" shall have the meaning set forth in Section 5.1.


                                       15
<PAGE>   20
         "REIT Series B Preferred Share" means a share of 8-5/8% Series B
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $25.00 per share, of the General Partner.

         "REIT Share" means a share of common stock of the General Partner.

         "REIT Shares Amount" means, as of any date, an aggregate number of REIT
Shares equal to the number of Tendered Units, as adjusted pursuant to Section
7.5 (in the event the General Partner acquires material assets, other than on
behalf of the Partnership) and for stock dividends and distributions, stock
splits and subdivisions, reverse stock splits and combinations, distributions of
rights, warrants or options, and distributions of evidences of indebtedness or
assets relating to assets not received by the General Partner pursuant to a pro
rata distribution by the Partnership.

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

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

         "Series B Limited Partner" means any Person holding Series B Preferred
Units and named as a Series B Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Series B Limited Partner in the
Partnership.

         "Series B Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series B Preferred Units then held by the
Holder (including the General Partner to the extent it holds such units),
multiplied by (ii) the sum of $25.00 and any Preferred Distribution Shortfall
per Series B Preferred Unit.

         "Series B Preferred Unit Distribution Payment Date" has the meaning set
forth in Section 16.2.A.

         "Series B Preferred Unit Partnership Record Date" has the meaning set
forth in Section 16.2.A.

         "Series B Priority Return" shall mean an amount equal to 8-5/8% per
annum, determined on the basis of a 360 day year of twelve 30 day months and for
any period shorter than a full quarterly period for which distributions are
computed, the amount of the distributions payable will be based on the ratio of
the actual number of days elapsed in such period to ninety (90) days cumulative
to the extent not distributed for any given distribution period pursuant to
Section 5.1 and 16.2 hereof, on the stated value of $25.00 per Series B
Preferred Unit, commencing on the date of the issuance of such Series B
Preferred Unit.

         "Specified Limited Partner" means Richard S. Ziman so long as Mr. Ziman
serves as the Chief Executive Officer of the General Partner.


                                       16
<PAGE>   21
         "Specified Redemption Date" means the day of receipt by the General
Partner of a Notice of Redemption.

         "Stock Plan" means any stock incentive, stock option, stock ownership
or employee benefits plan of the General Partner.

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

         "Subsidiary Partnership" means any partnership that is a Subsidiary of
the Partnership.

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

         "Tax Items" shall have the meaning set forth in Section 6.4.A.

         "Tenant" means any tenant from which the General Partner derives rent
either directly or indirectly through partnerships, including the Partnership.

         "Tendered Units" shall have the meaning set forth in Section 8.6.A.

         "Tendering Partner" shall have the meaning set forth in Section 8.6.A.

         "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.

                                   ARTICLE 2
                             ORGANIZATIONAL MATTERS

         Section 2.1 Organization

         The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, 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 Arden Realty 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


                                       17
<PAGE>   22
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 Resident Agent; Principal Office

         The name and address of the resident agent of the Partnership in the
State of Maryland are The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The address of the principal office of the
Partnership in the State of Maryland is c/o The Corporation Trust Incorporated
at such address. The principal office of the Partnership is located at 9100
Wilshire Boulevard, East Tower, Suite 700, Beverly Hills, California 90212, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Maryland as the General
Partner deems advisable.

         Section 2.4 Power of Attorney

         A. Each Limited Partner and each Assignee 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 and all
amendments or restatements thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the Limited Partners have limited liability) in the State of Maryland and
in all other jurisdictions in which the Partnership may conduct business or own
property; (b) all instruments that the General Partner or any Liquidator 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 any 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, 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.


                                       18
<PAGE>   23

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 any Liquidator, within 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.

         Section 2.5 Term

         The term of the Partnership commenced on May 20, 1996 and shall
continue until December 31, 2096 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.

         Section 2.6 Number of Partners

         Without the consent of the General Partner, which may be given or
withheld in its sole discretion, the Partnership shall not at any time have more
than 100 partners (including as partners those persons indirectly owning an
interest in the Partnership through a partnership, limited liability company, S
corporation or grantor trust (such entity, a "flow through entity"), but only if
substantially all of the value of such person's interest in the flow through
entity is attributable to the flow through entity's interest (direct or
indirect) in the Partnership).

                                   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
General Partner at all times to be classified as a REIT for federal income tax
purposes, unless the General Partner 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 or other


                                       19
<PAGE>   24

similar arrangement to engage in any business described in the foregoing clause
(i) or to own interests in any entity engaged, directly or indirectly, in any
such business and (iii) to do anything necessary or incidental to the foregoing.
In connection with the foregoing, and without limiting the General Partner's
right in its sole discretion to cease qualifying as a REIT, the Partners
acknowledge that the General Partner's current status as a REIT inures to the
benefit of all the Partners and not solely the General Partner.

         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 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 General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner to any
taxes under Section 857 or Section 4981 of the Code, or (iii) could violate any
law or regulation of any governmental body or agency having jurisdiction over
the General Partner or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented to by the
General Partner in writing.

         Section 3.3 Partnership Only for Purposes Specified

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

         Section 3.4 Representations and Warranties by the Parties

         A. Each Partner that is an individual represents and warrants to each
other Partner that (i) such Partner has the legal capacity to enter into this
Agreement and perform such Partner's obligations hereunder, (ii) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any agreement by which such Partner or any of such Partner's property is or are
bound, or any statute, regulation, order or other law to which such Partner is
subject, (iii) such Partner is


                                       20
<PAGE>   25

neither a "foreign person" within the meaning of Section 1445(f) of the Code nor
a "foreign partner" within the meaning of Section 1446(e) of the Code, and (iv)
this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms.

         B. Each Partner that is not an individual represents and warrants to
each other Partner that (i) all transactions contemplated by this Agreement to
be performed by it have been duly authorized by all necessary action, including
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership agreement, trust agreement,
charter or by-laws, as the case may be, any agreement by which such Partner or
any of such Partner's properties or any of its partners, beneficiaries, trustees
or stockholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
trustees, beneficiaries or stockholders, as the case may be, is or are subject,
(iii) such Partner is neither a "foreign person" within the meaning of Section
1445(f) of the Code nor a "foreign partner" within the meaning of Section
1446(e) of the Code, and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.

         C. Each Partner represents, warrants and agrees that it has acquired
and continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.

         D. Each Partner further represents, warrants and agrees as follows:

            (1) Except as provided in Exhibit E, it does not and will not,
without the prior written consent of the General Partner, actually own or
Constructively Own (a) with respect to any Tenant that is a corporation, any
stock of such Tenant, and (b) with respect to any Tenant that is not a
corporation, any interests in either the assets or net profits of such Tenant;
provided, however, that so long as there are fewer than 20 Partners, each
Partner may own or Constructively Own (x) with respect to any Tenant that is a
corporation, stock of such Tenant possessing up to, but not more than, one-half
of one percent (0.5%) of the total combined voting power of all classes of stock
entitled to vote and one-half of one percent (0.5%) of the total number of
shares of all classes of stock of such Tenant and (y) with respect to any Tenant
that is not a corporation, interests in such Tenant representing up to, but not
more than, one-half of one percent (0.5%) of the assets and one-half of one
percent (0.5%) of the net profits of such Tenant, so long as such actual or
Constructive Ownership otherwise permitted under clause (x) or (y) would not
cause the General Partner to receive amounts described in Section 856 (d)(2)(B)
of the Code.

            (2) Except as provided in Exhibit F, it does not, and agrees that it
will not without the prior written consent of the General Partner, actually own
or Constructively Own,



                                       21
<PAGE>   26

any stock in the General Partner, other than any REIT Shares or other shares of
capital stock of the General Partner such Partner may acquire (a) as a result of
an exchange of Tendered Units pursuant to Section 8.6, (b) upon the exercise of
options granted or delivery of REIT Shares pursuant to any Stock Plan or (c)
pursuant to the Miscellaneous Rights Agreement.

            (3) Upon request of the General Partner, it will disclose to the
General Partner the amount of REIT Shares or other shares of capital stock of
the General Partner that it actually owns or Constructively Owns.

            (4) It understands that if, for any reason, (a) the representations,
warranties or agreements set forth in D(i) or (ii) above are violated, or (b)
the Partnership's actual or Constructive ownership of REIT Shares or other
shares of capital stock of the General Partner violates the limitations set
forth in the Charter, then (1) some or all of the Redemption rights of the
Partners may become non-exercisable, and (2) some or all of the REIT Shares
owned by the Partners may be automatically transferred to a trust for the
benefit of a charitable beneficiary, as provided in the Charter.

         E. The representations and warranties contained in Sections 3.4.A,
3.4.B, 3.4.C and 3.4.D hereof shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and wind up of the Partnership.

         F. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

                                   ARTICLE 4
                              CAPITAL CONTRIBUTIONS

         Section 4.1 Capital Contributions of the Partners

         At the time of their respective execution of this Agreement, the
Partners shall make Capital Contributions as set forth in Exhibit A to this
Agreement. The Partners shall own Partnership Units of the class or series and
in the amounts set forth in Exhibit A and shall have a Percentage Interest in
the Partnership as set forth in Exhibit A, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the extent
necessary to reflect accurately exchanges, redemptions, Capital Contributions,
the issuance of additional Partnership Units or similar events having an effect
on a Partner's Percentage Interest. Except as required by law or as otherwise
provided in Sections 4.3, 4.4 and 10.5, no Partner shall be required or
permitted to make any additional Capital Contributions or loans to the
Partnership. Unless otherwise specified by the General Partner at the time of
the creation of any class of Partnership Interests, such Partnership Interests
shall be Common Units and the corresponding class or series of capital stock for
any Partnership Units issued shall be REIT Shares.



                                       22
<PAGE>   27

         Section 4.2 Loans by Third Parties

         Subject to Section 4.3, the Partnership may incur Debt, or enter into
other similar credit, guarantee, financing or refinancing arrangements for any
purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person that is not the General Partner upon
such terms as the General Partner determines appropriate; provided that, the
Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole
discretion.

         Section 4.3 Additional Funding and Capital Contributions

         A. General. The General Partner may, at any time and from time to time
determine that the Partnership requires additional funds ("Additional Funds")
for the acquisition of additional Properties or for such other Partnership
purposes as the General Partner may determine. Additional Funds may be raised by
the Partnership, at the election of the General Partner, in any manner provided
in, and in accordance with, the terms of this Section 4.3. No Person shall have
any preemptive, preferential or similar right or rights to subscribe for or
acquire any Partnership Interest, except as set forth in this Section 4.3.

         B. Funding Notice. The General Partner shall give written notice (the
"Funding Notice") to the Specified Limited Partner of the need for Additional
Funds and the anticipated source(s) thereof. No notice shall be given to any
Partners with respect to Capital Contributions pursuant to Section 4.4 below.

         C. General Partner Loans. Upon delivery of a Funding Notice to the
Specified Limited Partner, the General Partner, subject to Section 4.3.F below,
may enter into a Funding Debt, including, without limitation, a Funding Debt
that is convertible into REIT shares, and lend the Additional Funds to the
Partnership (a "General Partner Loan"); provided, however, that the General
Partner shall not be obligated to lend the net proceeds of any Funding Debt to
the Partnership in a manner that would be inconsistent with the General
Partner's ability to remain qualified as a REIT. If the General Partner enters
into such a Funding Debt, the General Partner Loan will consist of the net
proceeds from such Funding Debt and will be on comparable terms and conditions,
including interest rate, repayment schedule and costs and expenses, as shall be
applicable with respect to or incurred in connection with such Funding Debt.

         D. Issuance of Additional Partnership Interests. Upon delivery of a
Funding Notice to the Specified Limited Partner, the General Partner, in its
sole and absolute discretion, may raise all or any portion of the Additional
Funds by accepting additional Capital Contributions, subject to Section 4.3.F in
the event additional Capital Contributions are made in cash. In connection with
any such additional Capital Contributions (of cash or property), and subject to
Section 16.5 hereof, the General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner) 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 then existing Limited Partnership
Interests, all as shall be determined by the General Partner in its



                                       23
<PAGE>   28

sole and absolute discretion subject to Maryland law, including without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction, and credit to such class or series of Partnership Interests; (ii) the
right of each such class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership;
provided that no such additional Partnership Units or other Partnership
Interests shall be issued to the General Partner unless either (a) the
additional Partnership Interests are issued in connection with the grant, award,
or issuance of shares of the General Partner pursuant to Section 4.3.E below,
which shares have designations, preferences, and other rights (except voting
rights) such that the economic interests attributable to such shares 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 4.3.D, or (b) the additional Partnership Interests are issued
to all Partners holding Partnership Interests in the same class in proportion to
their respective Percentage Interests in such class. In the event that the
Partnership issues additional Partnership Interests pursuant to this Section
4.3.D, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.5, Section
6.2.B, and Section 8.6) as it determines are necessary to reflect the issuance
of such additional Partnership Interests.

         E. Issuance of REIT Shares or Other Securities by the General Partner.
The General Partner shall not issue any additional REIT Shares (other than REIT
Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend or
distribution (including any stock split) of REIT Shares to all of its
stockholders), other shares of capital stock of the General Partner or New
Securities unless (i) the General Partner shall make a Capital Contribution of
the net proceeds from the issuance of such additional REIT Shares, other shares
of capital stock or New Securities, as the case may be, and from the exercise of
the rights contained in such additional New Securities, as the case may be, and
(ii) except with respect to securities to be issued pursuant to any Stock Plan
or dividend reinvestment plan, the General Partner shall have delivered to the
Specified Limited Partner a Funding Notice regarding the securities to be
issued.

         F. Participation Rights of Specified Limited Partner. The Funding
Notice delivered by the General Partner prior to its making or accepting (on
behalf of the Partnership) any additional cash Capital Contributions pursuant to
Section 4.3.D or 4.3.E hereof herein shall contain the total amount of
additional Capital Contributions sought to be made to the Partnership, and the
terms and conditions pertaining thereto. Provided that the Specified Limited
Partner is then holding a Limited Partner Interest, the Specified Limited
Partner may elect to make an additional Capital Contribution not to exceed the
product of (i) the total amount of additional Capital Contributions being
sought, and (ii) the Specified Limited Partner's Percentage Interest (with such
product deemed the "Pro Rata Contribution"). For purposes of determining the
Specific Limited Partner's Pro Rata Contribution (or the Pro Rata Participation
(as defined below)), the Specified Limited Partner's Percentage Interest shall
mean the Percentage Interest with respect to the class of Partnership Interests
issued to the Specified Limited Partner on the Effective Date, whether the
Partnership proposes to issue the same class or a new class of Partnership
Interests in connection with such additional Capital Contributions. The Funding
Notice delivered by the General Partner prior to its making any loans to the
Partnership pursuant to Section 4.3.C herein shall contain the total amount of
the loan to be made to the Partnership. Provided that the Specified Limited
Partner is then holding a Limited Partner



                                       24
<PAGE>   29
Interest, the Specified Limited Partner may elect to participate in such loan in
an amount not to exceed the product of (i) the total amount of the loan, and
(ii) the Specified Limited Partner's Percentage Interest (with such product
deemed the "Pro Rata Participation"). Either such election shall be made, if at
all, by providing written notice thereof (the "Election Notice") to the General
Partner within five (5) days after delivery of the Funding Notice. Failure to
respond to such Funding Notice shall be deemed to be an election by the
Specified Limited Partner not to make such Capital Contribution or participate
in such loan. Such Election Notice shall contain the amount of the additional
Capital Contribution or the loan participation, if any, the Specified Limited
Partner is to make (such additional Capital Contribution not to exceed the Pro
Rata Contribution and such loan participation not to exceed the Pro Rata
Participation) equal to all or any portion of its Pro Rata Contribution or Pro
Rata Participation. Notwithstanding anything in this Section 4.3.F to the
contrary, (a) the Pro Rata Contribution right and the Pro Rata Participation
right of the Specified Limited Partner under this Section 4.3.F shall be reduced
to the extent that the Specified Limited Partner has exercised rights under the
Miscellaneous Rights Agreement with respect to the issuance of REIT Shares or
other shares of capital stock of the General Partner that has resulted in an
additional Capital Contribution by the General Partner; and (b) if, at any time,
the Specified Limited Partner ceases to serve as the Chief Executive Officer of
the General Partner, then effective as of such time, the Specified Limited
Partner shall no longer be entitled to the Pro Rata Contribution right or the
Pro Rata Participation right under this Section 4.3.F. or entitled to receive
Funding Notices pursuant to Sections 4.3.B. or 4.3.C.

         G. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for any class or series of Partnership Units, the Percentage
Interest related thereto shall be equal to a fraction, the numerator of which is
equal to the amount of cash and the Agreed Value of the Property contributed as
of the Business Day immediately preceding the date on which the additional
Capital Contributions are made (an "Adjustment Date") and the denominator of
which is equal to the sum of (i) the Deemed Value of the Partnership Interests
of such class or series (computed as of the Business Day immediately preceding
the Adjustment Date) and (ii) the aggregate amount of additional Capital
Contributions contributed to the Partnership on such Adjustment Date in respect
of such class or series of Partnership Interests. The Percentage Interest of
each other Partner holding Partnership Interests of such class or series not
making a full pro rata Capital Contribution shall be adjusted to equal a
fraction, the numerator of which is equal to the sum of (i) the Deemed
Partnership Interest Value of such Limited Partner in respect of such class or
series (computed as of the Business Day immediately preceding the Adjustment
Date) and (ii) the amount of additional Capital Contributions made by such
Partner to the Partnership in respect of such class or series of Partnership
Interests as of such Adjustment Date, and the denominator of which is equal to
the sum of (i) the Deemed Value of the Partnership Interests of such class or
series (computed as of the Business Day immediately preceding the Adjustment
Date), plus (ii) the aggregate amount of additional Capital Contributions
contributed by all Partners and/or third parties to the Partnership on such
Adjustment Date in respect of such class or series. Provided, however, solely
for purposes of calculating a Partner's Percentage Interest pursuant to this
Section 4.3.G, cash Capital Contributions by the General Partner will be deemed
to equal the cash contributed by the General Partner plus, in the case of cash
contributions funded by an offering of any capital stock of the General Partner,
the offering costs



                                       25
<PAGE>   30

attributable to the cash contributed to the Partnership. The General Partner
shall promptly give each Partner written notice of its Percentage Interest, as
adjusted.

         Section 4.4 Stock Plan

         If at any time or from time to time the General Partner sells REIT
Shares pursuant to any Stock Plan, the General Partner shall contribute the
proceeds therefrom to the Partnership as an additional Capital Contribution
pursuant to Section 4.3 in exchange for an amount of additional Partnership
Units equal to the number of REIT Shares so sold. The General Partner's Capital
Account shall be increased by the amount of cash so contributed.

         Section 4.5 Other Contribution Provisions

         In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership. In addition, with the
consent of the General Partner, one or more Limited Partners may enter into
contribution agreements with the Partnership which have the effect of providing
a guarantee of certain obligations of the Partnership.

                                   ARTICLE 5
                                  DISTRIBUTIONS

         Section 5.1 Requirement and Characterization of Distributions

         The General Partner shall cause the Partnership to distribute quarterly
all, or such portion as the General Partner may in its discretion determine, of
Available Cash generated by the Partnership to the Partners who are Partners on
the applicable record date with respect to such distribution, (1) first, to the
extent that the amount of cash distributed with respect to any Partnership
Interests that are entitled to any preference in distribution for any prior
distribution period was less than the required distribution for such outstanding
Partnership Interests for such prior distribution period, and to the extent such
deficiency has not been subsequently distributed pursuant to this Section 5.1 (a
"Preferred Distribution Shortfall"), in accordance with the rights of such class
of Partnership Interests (and within such class, pro rata in proportion to the
respective Percentage Interests on the applicable record date) and to the
Partners who are Partners on the applicable record date with respect to such
distribution, (2) second, with respect to any Partnership Interests that are
entitled to any preference in distribution, in accordance with the rights of
such class of Partnership Interests (and within such class, pro rata in
proportion to the respective Percentage Interests on the applicable record
date), and (3) third, with respect to Partnership Interests that are not
entitled to any preference in distribution, pro rata to each such class on a
quarterly basis and in accordance with the terms of such class to the Partners
who are Partners of such class on the Partnership Record Date with respect to
such distribution (and within each such class, pro rata in proportion with the
respective Percentage Interests on such Partnership Record Date). Unless
otherwise expressly provided for herein or in an agreement at the time a new
class of Partnership Interests is created in accordance with Article 4 hereof,
no Partnership Interest shall be entitled to a distribution in preference to any
other Partnership



                                       26
<PAGE>   31

Interest. The General Partner shall take such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with its qualification
as a REIT, to cause the Partnership to distribute sufficient amounts to enable
the General Partner to pay stockholder dividends that will (a) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements"), and (b) avoid any federal income or excise tax liability of the
General Partner, except to the extent that a distribution pursuant to clause (b)
would prevent the Partnership from making a distribution to the holders of
Series B Preferred Units in accordance with Section 16.2 and to distribute
Available Cash to 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.

         Section 5.2 Distributions in Kind

         No right is given to any Partner to demand and receive property other
than cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles
5, 6 and 10 ; provided, however, that, in such case, the General Partner shall
distribute only cash to the Series B Limited Partners.

         Section 5.3 Distributions Upon Liquidation

         Proceeds from a Terminating Capital Transaction shall be distributed to
the Partners in accordance with Section 13.2.

         Section 5.4 Distributions 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
Section 4.3.D or 4.4 hereof, the General Partner shall make such revisions to
this Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests.

                                   ARTICLE 6
                                  ALLOCATIONS

         Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss

         Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an allocation
to a Partner of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.



                                       27
<PAGE>   32

         Section 6.2 General Allocations

         A. In General. Except as otherwise provided in this Article 6, Net
Income and Net Loss shall be allocated to each of the Partners holding the same
class of Partnership Interests in accordance with their respective Percentage
Interest of such class.

         B. 1. Net Income. Net Income for any Partnership Year shall be
allocated in the following manner and order of priority:

            (a) First, 100% to the General Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to the General Partner
pursuant to Section 6.2.B.2(d) for all prior Partnership Years minus the
cumulative Net Income allocated to the General Partner pursuant to this Section
6.2.B.1(a) for all prior Partnership Years;

            (b) Second, 100% to each Holder of Partnership Interests in an
amount equal to the remainder, if any, of the cumulative Net Losses allocated to
each such Holder pursuant to Section 6.2.B.2(c) for all prior Partnership Years
minus the cumulative Net Income allocated to such Holder pursuant to this
Section 6.2.B.1(b) for all prior Partnership Years;

            (c) Third, 100% to the Holders of Preferred Units in an amount equal
to the remainder, if any, of the cumulative Net Losses allocated to each such
Holder pursuant to Section 6.2.B.2(b) for all prior Partnership Years minus the
cumulative Net Income allocated to such Holder pursuant to this Section
6.2.B.1(c) for all prior Partnership Years;

            (d) Fourth, 100% to the Holders of Common Units in an amount equal
to the remainder, if any, of (i) the cumulative Net Losses allocated to each
such Holder pursuant to Section 6.2.B.2(a) for all prior Partnership Years,
minus (ii) the cumulative Net Income allocated to each Holder pursuant to this
Section 6.2.B.1(d) for all prior Partnership Years;

            (e) Fifth, 100% to the Holders of Preferred Units, with respect to
each series of Preferred Units, in an amount equal to the excess of (i) the
cumulative Priority Return to the last day of the current Partnership Year or to
the date of redemption of such Preferred Units, to the extent such Preferred
Units are redeemed during such year, over (ii) the cumulative Net Income
allocated to the Holders of such Preferred Units pursuant to this Section
6.2.B.1(e) for all Partnership Years; and

            (f) Sixth, 100% to the Holders of Common Units in accordance with
their respective Percentage Interests in the Common Units.

To the extent the allocations of Net Income set forth above in any paragraph of
this Section 6.2.B.1 are not sufficient to entirely satisfy the allocation set
forth in such paragraph, such allocation shall be made in proportion to the
total amount that would have been allocated pursuant to such paragraph without
regard to such shortfall.

            (2) Net Losses. Net Losses for any Partnership Year shall be
allocated in the following manner and order of priority.



                                       28
<PAGE>   33

            (a) First, 100% to the Holders of Common Units in accordance with
their respective Percentage Interests in the Common Units (to the extent
consistent with this Section 6.2.B.2(a)) until the Adjusted Capital Account (not
taking into account any amounts a Holder is obligated to contribute to the
capital of the Partnership or is deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2) and ignoring the Holder's Series B
Preferred Capital) of each such Holder is zero;

            (b) Second, 100% to the Holders of Preferred Units, pro rata to each
such Holder's Adjusted Capital Account (ignoring for this purpose any amounts a
Holder is obligated to contribute to the capital of the Partnership or is deemed
obligated to contribute pursuant to Regulations Section 1.704-
1(b)(2)(ii)(c)(2)), until the Adjusted Capital Account (as so modified) of
each such Holder is zero;

            (c) Third, 100% to the Holders of Partnership Interests to the
extent of, and in proportion to, the positive balance (if any) in their Adjusted
Capital Accounts; and

            (d) Fourth, 100% to the General Partner.

         C. Allocations to Reflect Issuance of Additional Partnership Interests.
In the event that the Partnership issues additional Partnership Interests to the
General Partner, the Specified Limited Partner or any Additional Limited Partner
pursuant to Section 4.3 or 4.4 hereof, the General Partner shall make such
revisions to this Section 6.2 as it determines are necessary to reflect the
terms of the issuance of such additional Partnership Interests, including making
preferential allocations to certain classes of Partnership Interests, subject to
the terms of the Series B Preferred Units.

         D. Notwithstanding Section 6.2.A., but subject to the other provisions
of this Article 6, the following special allocations shall be made:

            (i) The deduction attributable to the Partnership's payment of
specified interest under certain loans made to predecessor entities, which were
assumed or taken subject to by the Partnership, shall be allocated as set forth
in Exhibit G.

            (ii) Any cancellation of indebtedness income of the Partnership
attributable to the loans made with respect to the property at 9911 West Pico
Boulevard, which property was contributed to the Partnership and which loans
were repaid by the Partnership, shall be allocated to the following Partners and
in the following percentages: Arthur Gilbert Trust (52.167%); Montour Realty
Associates (16.307%); Ziman Realty Partners (16.307%); Richard S. Ziman
(9.131%); and Victor J. Coleman (6.088%).

         Section 6.3 Additional Allocation Provisions

         Notwithstanding the foregoing provisions of this Article 6:

         A. Regulatory Allocations.

            (i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 of
the Agreement,



                                       29
<PAGE>   34

or any other provision of this Article 6, if there is a net decrease in
Partnership Minimum Gain during any fiscal 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 allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(i) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulation Section
1.704-2(f) which shall be controlling in the event of a conflict between such
Regulation and this Section 6.3.A(i).

            (ii) Partner Minimum Gain Chargeback. Except as otherwise provided
in Regulations Section 1.704-2(i)(4), and notwithstanding the provisions of
Section 6.2 of the Agreement, or any other provision of this Article 6 (except
Section 6.3.A(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year, each Holder
who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Holder's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Holder
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.A(ii) is intended to qualify as a "chargeback of partner nonrecourse debt
minimum gain" within the meaning of Regulation Section 1.704-2(i) which shall be
controlling in the event of a conflict between such Regulation and this Section
6.3.A(ii).

            (iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any
Nonrecourse Deductions for any fiscal year shall be specially allocated to the
Holders in accordance with their Percentage Interests attributable to such
deductions. Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Holder(s) who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with Regulations Sections
1.704-2(b)(4) and 1.704-2(i).

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



                                       30
<PAGE>   35

1(b)(2)(ii)(d), which shall be controlling in the event of a conflict between
such Regulations and this Section 6.3.A(iv).

            (v) Gross Income Allocation. In the event any Holder has a deficit
Capital Account at the end of any fiscal year which is in excess of the sum of
(1) the amount (if any) such Holder is obligated to restore to the Partnership,
and (2) the amount such Holder is deemed to be obligated to restore pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 6.3.A(v) shall be made if and only to the extent that such Holder would
have a deficit Capital Account in excess of such sum after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.A(v) and Section 6.3.A(iv) were not in the Agreement.

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

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

            (viii) Curative Allocation. The allocations set forth in Sections
6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory Allocations")
are intended to comply with certain regulatory requirements, including the
requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
provisions of Sections 6.1 and 6.2, the Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss and deduction among
the Holders so that, to the extent possible, the net amount of such allocations
of other items and the Regulatory Allocations to each Partner shall be equal to
the net amount that would have been allocated to each such Partner if the
Regulatory Allocations had not occurred.

         B. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be such Holder's Percentage Interest, provided that the Holders of Series
B Preferred Units shall have no share of such excess nonrecourse liabilities.



                                       31
<PAGE>   36

         Section 6.4 Tax Allocations

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

         B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A, Tax Items with respect to Partnership property that is
contributed to the Partnership by a Partner shall be shared among the Holders
for income tax purposes pursuant to Regulations promulgated under Section 704(c)
of the Code, so as to take into account the variation, if any, between the basis
of the property to the Partnership and its initial Gross Asset Value. With
respect to Partnership property that is initially contributed to the Partnership
upon its formation, such variation between basis and initial Gross Asset Value
shall be taken into account under the "traditional method" as described in
Regulations Section 1.704-3(b). With respect to properties subsequently
contributed to the Partnership, the Partnership shall account for such variation
under any method approved under Section 704(c) of the Code and the applicable
regulations as chosen by the General Partner. In the event the Gross Asset Value
of any Partnership asset is adjusted pursuant to subparagraph (b) of the
definition of Gross Asset Value (provided in Article 1 of this Agreement),
subsequent allocations of Tax Items with respect to such asset shall take
account of the variation, if any, between the adjusted basis of such asset and
its Gross Asset Value in the same manner as under Section 704(c) of the Code and
the applicable regulations consistent with the requirements of Regulations
Section 1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of
the Code and the applicable regulations as chosen by the General Partner.

                                   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
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, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Section 7.3, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:

         (1) the making of any expenditures, the lending or borrowing of money
(including, 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 General Partner (so long as the General Partner has
determined to qualify as a REIT) to avoid the



                                       32
<PAGE>   37

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
stockholders sufficient to permit the General Partner to maintain REIT status),
the assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of same by mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) 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;

         (3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership or the merger or
other combination of the Partnership with or into another entity;

         (4) the mortgage, pledge, encumbrance or hypothecation of any assets of
the Partnership, and 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 or the operations of the General Partner or the
Partnership, the lending of funds to other Persons (including, without
limitation, the General Partner (if necessary to permit the financing or
capitalization of a subsidiary of the General Partner or the Partnership) or any
Subsidiaries of the Partnership) and the repayment of obligations of the
Partnership, any of its Subsidiaries and any other Person in which it has an
equity investment;

         (5) the negotiation, execution, and performance of any contracts,
leases, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement;

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

         (7) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as "president,"
"vice president," "secretary" and "treasurer"), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership, the determination
of their compensation and other terms of employment or hiring, including waivers
of conflicts of interest and the payment of their expenses and compensation out
of the Partnership's assets;

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

         (9) 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,



                                       33
<PAGE>   38

and the contributions of property to any Subsidiary and any other Person in
which it has an equity investment from time to time); provided that, as long as
the General Partner has determined to continue to qualify as a REIT, the
Partnership may not engage in any such formation, acquisition or contribution
that would cause the General Partner to fail to qualify as a REIT;

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

         (11) the undertaking of any action in connection with the Partnership's
direct or indirect investment in any Person (including, without limitation,
contributing or loaning Partnership funds to, incurring indebtedness on behalf
of, or guarantying the obligations of any such Persons);

         (12) subject to the other provisions in this Agreement, the
determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as it may adopt, provided that
such methods are otherwise consistent with requirements of this Agreement;

         (13) 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 or any Person in which
the Partnership has made a direct or indirect equity investment;

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

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

         (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; and

         (19) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security agreements,
conveyances,



                                       34
<PAGE>   39

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.

         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 provisions of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.

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

         D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital reserves in such
amounts as the General Partner, in it sole and absolute discretion, deems
appropriate and reasonable from time to time.

         E. In exercising its authority under this Agreement, the General
Partner may, but, other than as expressly set forth in the Contribution
Agreement, shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
by the General Partner. The General Partner and the Partnership shall not have
liability to a Partner under any circumstances as a result of an income tax
liability incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner pursuant to its authority under this Agreement.

         Section 7.2 Certificate of Limited Partnership

         To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Maryland
and each other state, the District of Columbia or other jurisdiction, in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Maryland, any other
state, or the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.



                                       35
<PAGE>   40

         Section 7.3 Restrictions on General Partner's Authority

         A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement, including, without
limitation:

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

            (2) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose except as otherwise
provided in this Agreement;

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

            (4) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other liability except
as provided herein or under the Act; or

            (5) enter into any contract, mortgage, loan or other agreement that
expressly prohibits or restricts the ability of a Limited Partner to exercise
its rights to a Redemption in full, except with the written consent of such
Limited Partner.

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

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

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

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

            (4) confess a judgment against the Partnership;

            (5) approve or acquiesce to the transfer of the Partnership Interest
of the General Partner to any Person other than the Partnership; or

            (6) admit into the Partnership any Additional or Substitute General
Partners.



                                       36
<PAGE>   41

         C. Notwithstanding Section 7.3.B, the General Partner shall have the
exclusive power 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 issuance of additional Partnership Interests
pursuant to Section 4.3.D or the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;

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

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

            (5) to reflect such changes as are reasonably necessary for the
General Partner to maintain status as a REIT, including changes which may be
necessitated due to a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the IRS; and

            (6) to modify, as set forth in the definition of "Capital Account,"
the manner in which Capital Accounts are computed.

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

         D. Notwithstanding Section 7.3.B and 7.3.C hereof, this Agreement shall
not be amended with respect to any Partner adversely affected, and no action may
be taken by the General Partner, without the Consent of such Partner adversely
affected if such amendment or action would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest (except as the
result of the General Partner acquiring such interest), (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of the Partner to receive
distributions pursuant to Article 5 or Section 13.2.A(4), or the allocations
specified in Article 6 (except as permitted pursuant to Section 4.3 and Section
7.3.C(3) hereof), (iv) materially alter or modify the rights to a Redemption or
the REIT Shares Amount as set forth in Section 8.6, and related definitions
hereof or (v) amend this Section 7.3.D. Further, no amendment may alter the
restrictions on the General Partner's authority set forth elsewhere in this
Section 7.3 without the Consent specified in such section. This Section 7.3D
does not require unanimous consent of all Partners adversely affected unless the
amendment is to be effective against all partners adversely affected.



                                       37
<PAGE>   42

         E. So long as the Limited Partners own at least 5% of the aggregate
Percentage Interests of the Partnership, the General Partner shall not, on
behalf of the Partnership, take any of the following actions without the prior
Consent of the Limited Partners:

            (1) dissolve the Partnership, other than incident to (i) a sale,
disposition, conveyance or other transfer of all or substantially all of the
assets of the Partnership, in one or a series of related transactions (an "Asset
Sale"), (ii) a merger, consolidation, reorganization or other business
combination to which the Partnership is a party, or (iii) a Termination
Transaction (as defined in Section 11.2); or

            (2) prior to the expiration of seven (7) years from the Effective
Date, sell, dispose, convey or otherwise transfer the Partnership's property
located at 9911 West Pico Boulevard, Los Angeles, California and commonly known
as Century Park Center, other than incident to a merger, consolidation,
reorganization or other business combination to which the Partnership is a party
or an Asset Sale.

         Section 7.4 Reimbursement of the General Partner

         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. Subject to Section 15.11, the General Partner shall be reimbursed on
a monthly basis, or such other basis as the General Partner may determine in its
sole and absolute discretion, for all expenses it incurs relating to the
ownership of interests in and operation of, or for the benefit of, the
Partnership. The Limited Partners acknowledge that the General Partner's sole
business is the ownership of interests in and operation of the Partnership and
that such expenses are incurred for the benefit of the Partnership; provided
that, the General Partner shall not be reimbursed for expenses it incurs
relating to the organization of the Partnership and the General Partner or the
initial public offering or subsequent public offerings of REIT Shares, other
shares of capital stock or Funding Debt by the General Partner, but shall be
reimbursed for expenses it incurs with respect to any other issuance of
additional Partnership Interests pursuant to the provisions hereof. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.

         C. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.4 constitute gross income of the General Partner (as
opposed to the repayment of advances made by the General Partner on behalf of
the Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.

         Section 7.5 Outside Activities of the General Partner

         A. Except in connection with a transaction authorized in Section 11.2
hereof, without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly,



                                       38
<PAGE>   43

enter into or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner and
the management of the business of the Partnership, its operation as a public
reporting company with a class (or classes) of securities registered under the
Exchange Act, its operation as a REIT and such activities as are incidental to
the same. Without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly, participate in or otherwise acquire any interest in
any real or personal property, except its General Partner Interest, its minority
interest in any Subsidiary Partnership(s) (held directly or indirectly through a
Qualified REIT Subsidiary) that the General Partner holds in order to maintain
such Subsidiary Partnership's status as a partnership, and such bank accounts,
similar instruments or other short-term investments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the
Charter. Any Limited Partner Interests acquired by the General Partner, whether
pursuant to exercise by a Limited Partner of its right of Redemption, or
otherwise, shall be automatically converted into a General Partner Interest
comprised of an identical number of Partnership Units of the same class. If, at
any time, the General Partner acquires material assets (other than on behalf of
the Partnership) the definition of "REIT Shares Amount" shall be adjusted, as
reasonably agreed to by the General Partner and the Limited Partners, to reflect
the relative Fair Market Value of a share of capital stock of the General
Partner relative to the Deemed Partnership Interest Value of the related
Partnership Unit. The General Partner's General Partner Interest in the
Partnership, its minority interest in any Subsidiary Partnership(s) (held
directly or indirectly through a Qualified REIT Subsidiary) that the General
Partner holds in order to maintain such Subsidiary Partnership's status as a
partnership, and interests in such short-term liquid investments, bank accounts
or similar instruments as the General Partner deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter are interests
which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.A.

         B. In the event the General Partner exercises its rights under the
Charter to purchase REIT Shares or Preferred Shares, then the General Partner
shall cause the Partnership to purchase from it a number of Partnership Units of
the appropriate class or series as determined based on the REIT Shares Amount
equal to the number of REIT Shares so purchased or, in the case of Preferred
Shares, an equal number of Preferred Units which correspond in ranking to the
Preferred Shares so purchased, in each case on the same terms that the General
Partner purchased such REIT Shares or Preferred Shares, as applicable.

         Section 7.6 Contracts with Affiliates

         A. The Partnership may lend or contribute to 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 Person.

         B. Except as provided in Section 7.5.A, 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.



                                       39
<PAGE>   44

         C. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries. The General Partner also is expressly
authorized to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Partnership Units
from the General Partner to the extent necessary to permit the General Partner
to repurchase such REIT Shares in accordance with such plan.

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

         B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by



                                       40
<PAGE>   45

the Partnership as authorized in this Section 7.7.A has been met, and (ii) a
written undertaking by or on behalf of the Indemnitee to repay the amount if it
shall ultimately be determined that the standard of conduct has not been met.

         C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.

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

         E. 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.

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

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

         H. The provisions of this Section 7.7 are for the benefit of the
Indemnities, 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 limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

         I. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.7 constitute gross income of the General Partner (as
opposed to the repayment of advances made by the General Partner on behalf of
the Partnership) such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated



                                       41
<PAGE>   46

consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners' Capital
Accounts.

         J. Any indemnification hereunder is subject to, and limited by, the
provisions of Section 10-107 of the Act.

         Section 7.8 Liability of the General Partner

         A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable or accountable in damages or
otherwise to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law or any act or omission if the General
Partner acted in good faith.

         B. The Limited Partners expressly acknowledge that the General Partner
is acting for the benefit of the Partnership, the Limited Partners and the
General Partner's stockholders collectively, that the General Partner is under
no obligation to give priority to the separate interests of the Limited Partners
or the General Partner's stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions and
that the General Partner shall not be liable to the Partnership or to any
Partner 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 7.1.A hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.

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

         Section 7.9 Other Matters Concerning the General Partner

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

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



                                       42
<PAGE>   47

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 a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.

         D. Notwithstanding any other provisions of this Agreement or any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect the ability
of the General Partner to continue to qualify as a REIT or (ii) to avoid the
General Partner incurring any taxes under Section 857 or Section 4981 of the
Code (except with respect to the distribution of Available Cash to the Series B
Limited Partners in accordance with Section 16.2), 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 Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.

         Section 7.11 Reliance by Third Parties

         Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement



                                       43
<PAGE>   48

have been complied with or to inquire into the necessity or expedience of any
act or action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

                                   ARTICLE 8
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

         Section 8.1 Limitation of Liability

         The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement or under the Act.

         Section 8.2 Management of Business

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

         Section 8.3 Outside Activities of Limited Partners

         Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
stockholder 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 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. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefitting from the business conducted by the General Partner,
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.



                                       44
<PAGE>   49

         Section 8.4 Return of Capital

         Except pursuant to the rights of Redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his or her
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
as expressly set forth herein with respect to the rights, priorities and
preferences of the Preferred Limited Partners holding any series of Preferred
Units, no Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions, or
otherwise expressly provided in this Agreement, as to profits, losses,
distributions or credits.

         Section 8.5 Rights of Limited Partners Relating to the Partnership

         A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, 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 the Partnership's expense:

            (1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General Partner
pursuant to the Securities Exchange Act, and each communication sent to the
stockholders of the General Partner;

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

            (5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services contributed by
each Partner and 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 in writing of any
adjustment made in the calculation of the REIT Shares Amount within 10 Business
Days of the date such change becomes effective.

         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 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



                                       45
<PAGE>   50

Partnership or (ii) the Partnership or the General Partner is required by law or
by agreements with unaffiliated third parties to keep confidential.

         Section 8.6 Redemption Rights

         A. On or after the date one year after the Effective Date, each Limited
Partner shall have the right (subject to the terms and conditions set forth
herein) to require the Partnership to redeem all or a portion of the Partnership
Units held by such Limited Partner (such Partnership Units being hereafter
referred to as "Tendered Units") in exchange for the Cash Amount (a
"Redemption"); provided that the terms of such Partnership Units do not provide
that such Partnership Units are not entitled to a right of Redemption. Unless
otherwise expressly provided in this Agreement or in a separate agreement
entered into between the Partnership and the holders of such Partnership Units,
all Partnership Units shall be entitled to a right of Redemption hereunder. Any
Redemption shall be exercised pursuant to a Notice of Redemption delivered to
the General Partner by the Limited Partner who is exercising the right (the
"Tendering Partner"). The Cash Amount shall be delivered as a certified check
payable to the Tendering Partner within ten (10) days of the Specified
Redemption Date.

         B. Notwithstanding Section 8.6.A above, if a Limited Partner has
delivered to the General Partner a Notice of Redemption then the General Partner
may, in its sole and absolute discretion, (subject to the limitations on
ownership and transfer of REIT Shares set forth in the Charter) elect to acquire
some or all of the Tendered Units from the Tendering Partner in exchange for the
REIT Shares Amount (as of the Specified Redemption Date) and, if the General
Partner so elects, the Tendering Partner shall sell the Tendered Units to the
General Partner in exchange for the REIT Shares Amount. In such event, the
Tendering Partner shall have no right to cause the Partnership to redeem such
Tendered Units. The General Partner shall promptly give such Tendering Partner
written notice of its election, and the Tendering Partner may elect to withdraw
its redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.

         C. The REIT Shares Amount, if applicable, shall be delivered as duly
authorized, validly issued, fully paid and nonassessable REIT Shares and, if
applicable, free of any pledge, lien, encumbrance or restriction, other than
those provided in the Charter, the Bylaws of the General Partner, the Securities
Act, relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.D), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date.

         D. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or any
other provision of this Agreement, a Limited Partner (i) shall not be entitled
to effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such
Partner on the Specified Redemption Date would cause such Partner or any other
Person to violate the restrictions on ownership and transfer of REIT Shares set
forth in the Charter and (ii) shall have no rights under this Agreement to
acquire REIT Shares which would otherwise be prohibited under the Charter. To
the extent any attempted



                                       46
<PAGE>   51

Redemption or exchange for REIT Shares would be in violation of this Section
8.6.D, it shall be null and void ab initio and such Limited Partner shall not
acquire any rights or economic interest in the cash otherwise payable upon such
Redemption or the REIT Shares otherwise issuable upon such exchange.

         E. Notwithstanding anything herein to the contrary (but subject to
Section 8.6.D), with respect to any Redemption or exchange for REIT Shares
pursuant to this Section 8.6:

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

            (2) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption for less than 500 Partnership Units or, if the
Limited Partner holds less than 500 Partnership Units, all of the Partnership
Units held by such Limited Partner.

            (3) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption during the period after the Partnership Record Date
with respect to a distribution and before the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.

            (4) The consummation of any Redemption or exchange for REIT Shares
shall be subject to the expiration or termination of the applicable waiting
period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

            (5) Each Tendering Partner shall continue to own all Partnership
Units subject to any Redemption or exchange for REIT Shares, and be treated as a
Limited Partner with respect to such Partnership Units for all purposes of this
Agreement, until such Partnership Units are transferred to the General Partner
and paid for or exchanged on the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no rights as a stockholder of
the General Partner with respect to such Tendering Partner's Partnership Units.

         F. In the event that the Partnership issues additional Partnership
Interests to any Additional Limited Partner pursuant to Section 4.3.D 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.

                                   ARTICLE 9
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

         Section 9.1 Records and Accounting

         The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any



                                       47
<PAGE>   52

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.

         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 105 days after
the close of each Partnership Year, or such earlier date as they are filed with
the Securities and Exchange Commission, 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
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, 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 45 days after the
close of each calendar quarter (except the last calendar quarter of each year),
or such earlier date as they are filed with the Securities and Exchange
Commission, 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 General Partner, if such
statements are prepared solely on a consolidated basis with the applicable law
or regulation, or as the General Partner determines to be appropriate.

                                   ARTICLE 10
                                   TAX MATTERS

         Section 10.1 Preparation of Tax Returns

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

         Section 10.2 Tax Elections

         Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code, including the election under Section 754 of the Code. The
General Partner shall have the right to



                                       48
<PAGE>   53

seek to revoke any such election (including without limitation, any election
under Section 754 of the Code) upon the General Partner's determination in its
sole and absolute discretion that such revocation is 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 6223(c) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of each of the
Limited Partners and Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners and 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 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 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 United States Claims
Court, or the filing of a complaint for refund with the District Court of the
United States for the district in which the Partnership's principal place of
business is located;

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

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

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

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



                                       49
<PAGE>   54

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

         C. 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 his duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm to assist the tax matters partner
in discharging his duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.

         Section 10.4 Organizational Expenses

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

         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 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 (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at 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 two percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (i.e., 15 days after demand) until such amount is
paid in full. Each Limited Partner shall take



                                       50
<PAGE>   55

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 Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner purports to assign its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift (outright or
in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term "transfer" when used in this Article
11 does not include any Redemption or exchange for REIT Shares pursuant to
Section 8.6 or any exchange or redemption of Series B Preferred Units pursuant
to Section 16.7 except as otherwise provided herein. 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.

         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 Transfer of General Partner's Partnership Interest

         A. Except in connection with a transaction described in Section 11.2.B
or Section 11.2.C, the General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise)
without the consent of all of the Limited Partners, which may be given or
withheld by each Limited Partner in its sole and absolute discretion, and only
upon the admission of a successor General Partner pursuant to Section 12.1. Upon
any transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
obligations of the transferor General Partner under this Agreement with respect
to such transferred Partnership interest, and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Limited
Partners, in their reasonable discretion.



                                       51
<PAGE>   56

In the event the General Partner withdraws from the Partnership, in violation of
this Agreement or otherwise, or otherwise dissolves or terminates, or upon the
Incapacity of the General Partner, all of the remaining Partners may elect to
continue the Partnership business by selecting a Substitute General Partner in
accordance with the Act.

         B. Except as otherwise provided in Section 11.2.C, the General Partner
shall not engage in any merger, consolidation or other combination with or into
another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of its outstanding equity interests
("Termination Transaction"), unless the Termination Transaction has been
approved by a Consent of the Partners and in connection with which all Limited
Partners either will receive, or will have the right to elect to receive, for
each Partnership Unit an amount of cash, securities, or other property equal to
the product of the REIT Shares Amount and the greatest amount of cash,
securities or other property paid to a holder of one REIT Share in consideration
of one REIT Share at any time during the period from and after the date on which
the Termination Transaction is consummated; provided that, if, in connection
with the Termination Transaction, a purchase, tender or exchange offer shall
have been made to and accepted by the holders of more than fifty percent (50%)
of the outstanding REIT Shares, each holder of Partnership Units shall receive,
or shall have the right to elect to receive, the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised its right to Redemption (as set forth in Section 8.6) and received
REIT Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer.

         C. Notwithstanding Section 11.2.B, the General Partner may merge, or
otherwise combine its assets, with another entity if, immediately after such
merger or other combination, substantially all of the assets of the surviving
entity, other than Partnership Units held by such General Partner, are
contributed to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value, as reasonably determined by the
General Partner, equal to the Agreed Value of the assets so contributed.

         D. In connection with any transaction permitted by Section 11.2.B or
Section 11.2.C hereof, the General Partner shall use its commercially reasonable
efforts to structure such Termination Transaction to avoid causing the Limited
Partners to recognize gain for federal income tax purposes by virtue of the
occurrence of or their participation in such Termination Transaction. The sole
remedy for a breach by the General Partner of this section 11.2.D. shall be a
claim for damages.

         Section 11.3 Limited Partners' Rights to Transfer

         A. Prior to the first anniversary of the closing of the initial public
offering of REIT Shares, no Limited Partner shall transfer all or any portion of
its Partnership Interest to any transferee without the consent of the General
Partner, which consent may be withheld in its sole and absolute discretion;
provided, however, that any Limited Partner may, at any time (whether prior to
or after such first anniversary), without the consent of the General Partner,
(i) transfer all or any portion of its Partnership Interest to the General
Partner, (ii) transfer all or any portion of its Partnership Interest to an
Affiliate, another original Limited Partner or to an Immediate Family member,
subject to the provisions of Section 11.6, (iii) transfer all or any portion of
its



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<PAGE>   57
Partnership Interest to a trust for the benefit of a charitable beneficiary or
to a charitable foundation, subject to the provisions of Section 11.6, and (iv)
subject to the provisions of Section 11.6, pledge (a "Pledge") all or any
portion of its Partnership Interest to a lending institution, which is not an
Affiliate of such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, and transfer such pledged Partnership
Interest to such lending institution in connection with the exercise of remedies
under such loan or extension or credit, and the transfer of such pledged
Partnership Interest by the lender to any transferee. After such first
anniversary, each Limited Partner or Assignee (resulting from a transfer made
pursuant to clauses (i)-(iv) of the proviso of the preceding sentence) shall
have the right to transfer all or any portion of its Partnership Interest,
subject to the provisions of Section 11.6 and the satisfaction of each of the
following conditions (in addition to the right of each such Limited Partner or
Assignee to continue to make any such transfer permitted by clauses (i)-(iv) of
such proviso without satisfying either of the following conditions):

            (a) General Partner Right of First Refusal. The transferring Partner
shall give written notice of the proposed transfer to the General Partner, which
notice shall state (i) the identity of the proposed transferee, and (ii) the
amount and type of consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days upon which to
give the transferring Partner notice of its election to acquire the Partnership
Units on the proposed terms. If it so elects, it shall purchase the Partnership
Units on such terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer such Partnership
Units to a third party, on economic terms no more favorable to the transferee
than the proposed terms, subject to the other conditions of this Section 11.3.

            (b) Qualified Transferee. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.

         It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its reasonable
discretion. Notwithstanding the foregoing, any transferee of any transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Charter and the representations in Section 3.4.D. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substitute Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.

         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 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



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<PAGE>   58

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 otherwise permitted
under Section 11.3 by a Limited Partner of his or her Partnership Units if, in
the opinion of legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by the Partnership
or would otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Unit.

         D. No transfer by a Limited Partner of his or her Partnership Units
(including any Redemption or exchange for REIT Shares pursuant to Section 8.6)
may be made to any person if (i) in the opinion of legal counsel for the
Partnership, it would result in the Partnership being treated as an association
taxable as a corporation, or (ii) except with the consent of the General Partner
which may be given or withheld in its sole discretion, such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code.

         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 enter into an arrangement with the
Partnership and the General Partner to redeem or exchange for the REIT Shares
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 11.4 Substituted Limited Partners

         A. No Limited Partner shall have the right to substitute a transferee
as a Limited Partner in his or her place (including any transferee permitted by
Section 11.3). 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 11.4 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion. The
General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.

         B. 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. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the Partnership
an acceptance of all of the terms and conditions of this Agreement (including
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission).



                                       54
<PAGE>   59

         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 11.5 Assignees

         If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, the right of Redemption provided
in Section 8.6 and the right of redemption or exchange for REIT Series B
Preferred Shares provided in Section 16.7, but shall not be deemed to be a
holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to effect a Consent with respect to such Partnership Units
on any matter presented to the Limited Partners for approval (such Consent
remaining with the transferor Limited Partner). In the event any such transferee
desires to make a further assignment of any such Partnership Units, such
transferee shall be subject to all the provisions of this Article 11 to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.

         Section 11.6 General Provisions

         A. No Limited Partner may withdraw from the Partnership other than as a
result of (i) a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 and the transferee(s) of such Units
being admitted to the Partnership as a Substituted Limited Partner or (ii)
pursuant to the exercise of its right of Redemption of all of its Common Units
under Section 8.6 or a redemption or exchange of all such Limited Partner's
Series B Preferred Units under Section 16.7.

         B. Any Limited Partner who shall transfer all of such Limited Partner's
Partnership Units in a transfer permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner or pursuant to the
exercise of its rights of Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 or its rights of redemption or exchange of
all of its Series B Preferred Units under Section 16.7 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, assigned or redeemed
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article 11 or exchanged or redeemed pursuant to Section
8.6 or 16.7, 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
Partnership Interest for such fiscal year shall be divided and allocated



                                       55
<PAGE>   60

between the transferor Partner and the transferee Partner by taking into account
their varying interests during the fiscal year in accordance with Section 706(d)
of the Code, using the interim closing of the books method. Except as otherwise
determined by the General Partner in its sole discretion or as otherwise
required by Section 706(d) of the Code, solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer,
assignment or redemption occurs shall be allocated to the Person who is a
Partner as of midnight on the last day of said month and none of such items for
the calendar month in which a redemption or exchange occurs will be allocated to
the redeeming or exchanging Partner. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such
transfer, assignment, exchange or redemption shall be made to the transferor
Partner, and all distributions of Available Cash thereafter, in the case of a
transfer or assignment other than a redemption, shall be made to the transferee
Partner.

         E. In addition to any other restrictions on transfer herein contained,
including without limitation the provisions of this Article 11 and Section 2.6,
in no event may any transfer or assignment of a Partnership Interest by any
Partner (including by way of a Redemption, exchange of Series B Preferred Units
for REIT Series B Preferred Shares or redemption of Series B Preferred Units) be
made (i) to any person or entity who lacks the legal right, power or capacity to
own a Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) except with the consent of the General Partner, which
may be given or withheld in its sole discretion, if in the opinion of legal
counsel to the Partnership such transfer would cause a termination of the
Partnership for federal or state income tax purposes (except as a result of the
Redemption or exchange for REIT Shares or a redemption or exchange for cash or
REIT Series B Preferred Shares pursuant to Sections 16.4 and 16.7 of all
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 11.2); (v) if in the opinion of counsel to the
Partnership such transfer would cause the Partnership to cease to be classified
as a partnership for federal income tax purposes (except as a result of the
Redemption or exchange for REIT Shares or a redemption or exchange for cash or
REIT Series B Preferred Shares pursuant to Sections 16.4 and 16.7 of all
Partnership Units held by all Limited Partners); (vi) if 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); (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (viii) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (ix) except with the consent of the General Partner, which may be given or
withheld in its sole discretion, if such transfer is effectuated through an
"established securities market" or a "secondary market" (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code or such
transfer causes the Partnership to become a "Publicly Traded Partnership," as
such term is defined in Sections 469(k)(2) or 7704(b) of the Code; (x) if such
transfer subjects 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; (xi) except with the consent of
the General Partner, which may be given or withheld in its sole discretion, if
the transferee or assignee of such Partnership Interest is unable



                                       56
<PAGE>   61

to make the representations set forth in Section 3.4.D; or (xii) if in the
opinion of legal counsel for the Partnership such transfer would adversely
affect the ability of the General Partner to continue to qualify as a REIT or
subject the General Partner to any additional taxes under Section 857 or Section
4981 of the Code.

         F. The General Partner shall monitor the transfers of interests in the
Partnership (including any redemption of Series B Preferred Units or exchange of
Series B Preferred Units for REIT Series B Preferred Shares) to determine (i) if
such interests are being traded on an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or 7704 of the Code, and (ii) whether
such transfers of interests would result in the Partnership being the
substantial equivalent thereof)" within the meaning of Section 7704 of the Code)
(the "Safe Harbors"). The General Partner shall have the authority (but shall
not be required to) take any steps it determines are necessary or appropriate in
its sole discretion to prevent any trading of interests which could cause the
Partnership to become a "publicly traded partnership," or any recognition by the
Partnership of such transfers, or to insure that at least one of the Safe
Harbors is met.

                                   ARTICLE 12
                              ADMISSION OF PARTNERS

         Section 12.1 Admission of Successor General Partner

         A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective 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 Article 11 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
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.



                                       57
<PAGE>   62

         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 receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission. 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 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 the
interim closing books method. Solely for purposes of making such allocations,
each of such items for the calendar month in which an admission of an Additional
Limited Partner occurs shall be allocated among all the Partners and Assignees
including such Additional Limited Partner. 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 (other than in its capacity as an Assignee) and,
except as otherwise agreed to by the Additional Limited Partners and the General
Partner, all distributions of Available Cash thereafter shall be made to all
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
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

                                   ARTICLE 13
                           DISSOLUTION AND LIQUIDATION

         Section 13.1 Dissolution

         The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner (selected
as described in Section 13.1.B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
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;

         B. an event of withdrawal of the General Partner, as defined in the
Act, unless, within 90 days after the withdrawal, all of the remaining Partners
agree in writing, in their



                                       58
<PAGE>   63

sole and absolute discretion, to continue the business of the Partnership and to
the appointment, effective as of the date of withdrawal, of a substitute General
Partner;

         C. subject to compliance with Section 7.3.E(1) an election to dissolve
the Partnership made by the General Partner, in its sole and absolute
discretion,

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

         E. the sale of all or substantially all of the assets and properties of
the Partnership for cash or marketable securities;

         F. the Incapacity of the General Partner, unless all of the remaining
Partners in their sole and absolute discretion 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 Incapacity, of a substitute General Partner; or

         G. the Redemption or exchange for REIT Shares or REIT Series B
Preferred Shares of all Partnership Units (other than those of the General
Partner) pursuant to this Agreement.

         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
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:

            (1) First, to the 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;

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

            (4) The balance, if any, to the General Partner and Limited Partners
in accordance with their positive Capital Account balances, determined after
taking into account all Capital Account adjustments for the Partnership taxable
year during which the liquidation occurs



                                       59
<PAGE>   64

(other than those made as a result of the liquidating distribution set forth in
this Section 13.2.A(4)).

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.

         B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A 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.

         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 any Partner has a deficit balance in his or her Capital Account (after giving
effect to all contributions, distributions and allocations for the taxable
years, including the year during which such liquidation occurs), such Partner
shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:

         A. 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 of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions and 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

         B. withheld to provide a reasonable reserve for Partnership liabilities
(contingent or otherwise) and to reflect the unrealized portion of any
installment obligations



                                       60
<PAGE>   65

owed to the Partnership, provided that such withheld amounts shall be
distributed to the General Partner and Limited Partners as soon as practicable.

         Section 13.4 Deemed Distribution and Recontribution

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

         Section 13.5 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 his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner. Except as expressly set forth herein with respect to the
rights, priorities and preferences of the Preferred Limited Partners holding any
series of Preferred Units, no Limited Partner shall have priority over any other
Limited Partner as to the return of his Capital Contributions, distributions or
allocations.

         Section 13.6 Notice of Dissolution

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

         Section 13.7 Cancellation of Certificate of Limited Partnership

         Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Maryland shall be
cancelled 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



                                       61
<PAGE>   66

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; CONSENTS

         Section 14.1 Amendments

         A. The actions requiring consent or approval of Limited Partners
pursuant to this Agreement, including Section 7.3, or otherwise pursuant to
applicable law, are subject to the procedures in this Article 14.

         B. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partner. Following such proposal, the General Partner shall
submit any proposed amendment to the Limited Partners. The General Partner shall
seek the written consent of the Limited 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 consent, the General
Partner may require a response within a reasonable specified time, but not less
than 15 days, and failure to respond in such time period shall constitute a
consent which is consistent with the General Partner's recommendation (if so
recommended) with respect to the proposal; provided, that, an action shall
become effective at such time as requisite consents are received even if prior
to such specified time.

         Section 14.2 Action by 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 holding 25 percent or more of the Partnership Interests held by
Limited Partners. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven days nor more than 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 Limited Partners or of the Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in Section 14.1
hereof.

         B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by the percentage as is expressly required by this
Agreement for the action in question. Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of
the Percentage Interests of the Partners (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.



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<PAGE>   67

         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 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.

         D. Each meeting of Partners shall be conducted by the General Partner
or such other Person as the General Partner may appoint pursuant to such rules
for the conduct of the meeting as the General Partner or such other Person deems
appropriate.

                                   ARTICLE 15
                               GENERAL PROVISIONS

         Section 15.1 Addresses and Notice

         Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made 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
as the Partners shall notify the General Partner in writing.

         Section 15.2 Titles and Captions

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

         Section 15.3 Pronouns and Plurals

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

         Section 15.4 Further Action

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

         Section 15.5 Binding Effect

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



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         Section 15.6 Creditors

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

         Section 15.7 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 any breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.

         Section 15.8 Counterparts

         This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.

         Section 15.9 Applicable Law

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

         Section 15.10 Invalidity of Provisions

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

         Section 15.11 Limitation to Preserve REIT Status

         To the extent that any amount paid or credited to the General Partner
or its officers, directors, employees or agents pursuant to Section 7.4 or
Section 7.7 would constitute gross income to the General Partner for purposes of
Sections 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount of such
General Partner Payments for any fiscal year shall not exceed the lesser of:

            (i) an amount equal to the excess, if any, of (a) 4.17% of the
General Partners' total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) through (H) of Section 856(c)(2) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(2) of the Code) derived by the
General Partner from sources other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (but not including the amount of
any General Partner Payments); or



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<PAGE>   69

            (ii) an amount equal to the excess, if any, of (a) 25% of the
General Partners' total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) through (I) of Section 856(c)(3) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(3) of the Code) derived by the
General Partner from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including the amount of
any General Partner Payments);

provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner, as
a condition precedent, obtains an opinion of tax counsel that the receipt of
such excess amounts would not adversely affect the General Partner's ability to
qualify as a REIT. To the extent General Partner Payments may not be made in a
year due to the foregoing limitations, such General Partner Payments shall carry
over and be treated as arising in the following year, provided, however, that
such amounts shall not carry over for more than five years, and if not paid
within such five year period, shall expire; provided further, that (i) as
General Partner Payments are made, such payments shall be applied first to carry
over amounts outstanding, if any, and (ii) with respect to carry over amounts
for more than one Partnership Year, such payments shall be applied to the
earliest Partnership Year first.

         Section 15.12 Entire Agreement

         This Agreement (together with the Contribution Agreement as to rights
and obligations in respect of the Series B Preferred Units and the Pre-existing
Amendments) contains the entire understanding and agreement among the Partners
with respect to the subject matter hereof and supersedes any other prior written
or oral understandings or agreements among them with respect thereto. Any
cross-references in the Pre-existing Amendments to section numbers or exhibits
in the Original Agreement shall be deemed cross-references to the corresponding
substantive section or exhibit of this Agreement notwithstanding any change in
the numbering or lettering of such sections or exhibits.

         Section 15.13 No Rights as Stockholders

         Nothing contained in this Agreement shall be construed as conferring
upon the holders of Partnership Units any rights whatsoever as stockholders of
the General Partner, including without limitation any right to receive dividends
or other distributions made to stockholders of the General Partner or to vote or
to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.



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<PAGE>   70

                                   ARTICLE 16
                            SERIES B PREFERRED UNITS

         Section 16.1 Designation and Number

         A series of Partnership Units in the Partnership designated as 8 5/8%
Series B Cumulative Redeemable Preferred Units (the "Series B Preferred Units")
is hereby established. The number of Series B Preferred Units shall be
2,000,000.

         Section 16.2 Distributions

         A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions, pursuant to Section 5.1
hereof, holders of Series B Preferred Units will be entitled to receive, when,
as and if declared by the Partnership acting through the General Partner, out of
Available Cash, cumulative preferential cash distributions at the rate per annum
of 8 5/8% of the original Capital Contribution per Series B Preferred Unit. Such
distributions shall be cumulative, shall accrue from the original date of
issuance and will be payable (A) quarterly in arrears, on or before March 31,
June 30, September 30 and December 31 of each year commencing on December 31,
1999 and, (B), in the event of (i) an exchange of Series B Preferred Units into
REIT Series B Preferred Shares, or (ii) a redemption of Series B Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series B
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. The amount of
the distribution payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the
distribution payable will be computed based on the ratio of the actual number of
days elapsed in such period to ninety (90) days. If any date on which
distributions are to be made on the Series B Preferred Units is not a Business
Day, then payment of the distribution to be made on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series B Preferred Units will be
made to the holders of record of the Series B Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Preferred
Unit Distribution Payment Date (the "Series B Preferred Unit Partnership Record
Date").

         B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series B Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series B Preferred Units will accumulate as of
the Preferred Unit Distribution Payment Date on which they first become payable.
Accumulated and unpaid distributions will not bear interest.



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<PAGE>   71

         C. Priority as to Distributions.

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

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

            (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner or
(b) any other holder of Partnership Interest in the Partnership, in each case
ranking junior to or on parity with the Series B Preferred Units may be made,
without preserving the priority of distributions described in Sections 16.2.C(i)
and (ii), but only to the extent such distributions are required to preserve the
real estate investment trust status of the General Partner and, in addition, in
the case of any holder other than the General Partner only to the extent
required by the Partnership Agreement.

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



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<PAGE>   72

         Section 16.3 Liquidation Proceeds

         A. Upon voluntary or involuntary liquidation, dissolution or winding-up
of the Partnership, distributions on the Series B Preferred Units shall be made
in accordance with Article 13 of the Partnership Agreement.

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

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

         D. Consolidation, Merger or Certain Other Transactions. The
consolidation or merger or other business combination of the Partnership with or
into any corporation, trust or other entity (or of any corporation, trust or
other entity with or into the Partnership) shall not be deemed to constitute a
liquidation, dissolution or winding-up of the Partnership.

         Section 16.4 Optional Redemption

         A. Right of Optional Redemption. The Series B Preferred Units may not
be redeemed prior to September 7, 2004. On or after such date, the Partnership
shall have the right to redeem the Series B Preferred Units of any Holder
thereof, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' written notice, at a redemption price, payable in
cash, equal to the Capital Account balance of such holder of Series B Preferred
Units (the "Series B Redemption Price"); provided, however, that no redemption
pursuant to this Section 4 will be permitted if the Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series B Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series B Preferred
Units are to be redeemed, the Series B Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).

         B. Limitation on Redemption.

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



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<PAGE>   73

ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.

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

         C. Procedures for Redemption.

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

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


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<PAGE>   74

by the Partnership, distributions on such Series B Preferred Units will continue
to accumulate from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable Redemption Price.

         Section 16.5 Voting Rights

         A. General. Holders of the Series B Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Sections
7.3.D.

         B. Certain Voting Rights. So long as any Series B Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series B Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking senior to the Series B
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up, or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests, but only to the
extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than the General Partner to the extent the issuance of such
interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not affiliates of the Partnership or (iii) either
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity, or amend,
alter or repeal the provisions of the Partnership Agreement (including, without
limitation, this Article, whether by merger, consolidation or otherwise, in each
case in a manner that would materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the Series B Preferred Units
or the holders thereof; provided, however, that with respect to the occurrence
of any event set forth in (iii) above, so long as (a) the Partnership is the
surviving entity and the Series B Preferred Units remain outstanding with the
terms thereof unchanged, or (b) the resulting, surviving or transferee entity is
a partnership, limited liability company or other pass-through entity organized
under the laws of any state and substitutes, for the Series B Preferred Units,
other interests in such entity having substantially the same terms and rights as
the Series B Preferred Units, including with respect to distributions, voting
rights and rights upon liquidation, dissolution or winding-up, then the
occurrence of any such event shall not be deemed to materially and adversely
affect such rights, privileges or voting powers of the holders of the Series B
Preferred Units; and provided further, that any increase in the amount of
Partnership Interests or the creation or issuance of any other class or series
of Partnership Interests, in each case ranking (a) junior to the Series B
Preferred Units with respect to payment of distributions and the distribution of
assets upon liquidation, dissolution or winding-up, or (b) on a parity to the
Series B Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up to the extent
such Partnership Interest are not issued to an affiliate of the Partnership,
other than the General Partner to the extent the issuance of such



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interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not affiliates of the Partnership, shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.

         Section 16.6 Transfer Restrictions

         The Series B Preferred Units shall be subject to the provisions of
Article 11 hereof; provided, however, that the Series B Preferred Units shall
not be subject to the transfer restrictions described in Section 11.3.A hereof
except for the last paragraph of Section 11.3.A (to which the Series B Preferred
Units shall be subject). No transfer of the Series B Preferred Units is
permitted, without the consent of the General Partner, which consent may be
given or withheld in its sole and absolute discretion, if such transfer would
result in more than four partners holding all outstanding Series B Preferred
Units within the meaning of Treasury Regulation Section
1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer would not result in more than
ten partners holding all outstanding Series B Preferred Units within the meaning
of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury
Regulation Section 1.7704-1(h)(3)(ii)) and (b) the General Partner is relying on
a provision other than Treasury Regulation Section 1.7704-1(h) to avoid
classification of Operating Partnership as a "publicly traded partnership"
within the meaning of Code Section 7704 (a "PTP"). In addition, no transfer may
be made to any person if such transfer would cause the exchange of the Series B
Preferred Units for REIT Series B Preferred Shares, as provided herein, to be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws.

         Section 16.7 Exchange Rights

         A. Right to Exchange.

            (i) The Series B Preferred Units will be exchangeable in whole but
not in part unless expressly otherwise provided herein at any time on or after
September 7, 2009, at the option of 51% of the holders of all outstanding Series
B Preferred Units, for authorized but previously unissued REIT Series B
Preferred Shares at an exchange rate of one REIT Series B Preferred Share from
the General Partner for one Series B Preferred Unit, subject to adjustment as
described below (the "Exchange Price"), provided that the Series B Preferred
Units will become exchangeable at any time, in whole but not in part, unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series B Preferred Units for REIT Series B Preferred Shares, if (y)
at any time full distributions shall not have been timely made on any Series B
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in respect of
Series B Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Preferred Unit Distribution Payment Date if
at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series B Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by an outside nationally recognized



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<PAGE>   76

independent counsel familiar with such matters addressed to a holder or holders
of Series B Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition, the Series B Preferred Units may be exchanged for REIT
Series B Preferred Shares, in whole but not in part unless expressly otherwise
provided herein, at the option of 51% of the holders of all outstanding Series B
Preferred Units after September 7, 2002 and prior to September 7, 2009 if such
holders of a Series B Preferred Units shall deliver to the General Partner
either (i) a private ruling letter addressed to such holder of Series B
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series B Preferred Units at such earlier time would not
cause the Series B Preferred Units to be considered "stock and securities"
within the meaning of section 351(e) of the Code for purposes of determining
whether the holder of such Series B Preferred Units is an "investment company"
under section 721(b) of the Code if an exchange is permitted at such earlier
date. Furthermore, the Series B Preferred Units may be exchanged in whole but
not in part (regardless of whether held by the Series B Contributor) for REIT
Series B Preferred Shares, if the Series B Contributor concludes, based on
results or projected results, that there exists (in the reasonable judgment of
the Series B Contributor's interest in the Partnership represents or will
represent more than 19.5% of the total profits or capital interests in the
Partnership for a taxable year, determined in accordance with Treasury
Regulations Section 1.731-2(e)(4) (the "19.5% Limit").

            (ii) Notwithstanding anything to the contrary set forth in Section
16.7.A(i), if an Exchange Notice (as defined herein) has been delivered to the
General Partner, then the General Partner may, at its option, within ten (10)
Business Days after receipt of the Exchange Notice, elect to cause the
Partnership to redeem all or a portion of the outstanding Series B Preferred
Units for cash in an amount equal to the original Capital Contribution per
Series B Preferred Unit and all accrued and unpaid distributions thereon to the
date of redemption. If the General Partner elects to redeem fewer than all of
the outstanding Series B Preferred Units, the number of Series B Preferred Units
held by each holder to be redeemed shall equal such holder's pro-rata share
(based on the percentage of the aggregate number of outstanding Series B
Preferred Units that the total number of Series B Preferred Units held by such
holder represents) of the aggregate number of Series B Preferred Units being
redeemed.

            (iii) In the event an exchange of all Series B Preferred Units
pursuant to Section 16.7.A would violate the provisions on ownership limitation
of the General Partner set forth in Section 7 of the Articles Supplementary to
the Charter with respect to REIT Series B Preferred Shares (the "Series B
Articles Supplementary"), each holder of Series B Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 16.7.B, a number of
Series B Preferred Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in such Section 7 of the Series B
Articles Supplementary, with respect to such holder, and any Series B Preferred
Units not so exchanged (the "Excess Units") shall be redeemed by the Partnership
for cash in an amount equal to the original Capital Contribution per Excess
Unit, plus any accrued and unpaid distributions thereon to the date of
redemption, subject to any restriction thereon contained in any debt instrument
or agreement of the Partnership. In the event an exchange would result in Excess
Units, as a condition to such



                                       72
<PAGE>   77

exchange, each holder of such units agrees to provide representations and
covenants reasonably requested by the General Partner relating to (i) the widely
held nature of the interests in such holder, sufficient to assure the General
Partner that the holder's ownership of stock of the General Partner (without
regard to the limits described above) will not cause any individual to own in
excess of 9.8% of the stock of the General Partner; and (ii) to the extent such
holder can so represent and covenant without obtaining information from its
owners, the holder's ownership of tenants of the Partnership and its affiliates.
For purposes of determining the number of Excess Units under this Section
16.7.A(iii), the "Beneficial Ownership Limit" and "Constructive Ownership Limit"
set forth in the Series B Articles Supplementary shall be deemed to be 9%. To
the extent the General Partner would not be able to pay the cash set forth above
in exchange for the Excess Units, and to the extent consistent with the Charter,
the General Partner agrees that it will grant to the holders of the Series B
Preferred Units exceptions to the Beneficial Ownership Limit and Constructive
Ownership Limit set forth in the Series B Articles Supplementary sufficient to
allow such holders to exchange all of their Series B Preferred Units for REIT
Series B Preferred Stock, provided such holders furnish to the General Partner
representations acceptable to the General Partner in its sole and absolute
discretion which assure the General Partner that such exceptions will not
jeopardize the General Partner's tax status as a REIT for purposes of federal
and applicable state law. Notwithstanding any provision of this Agreement to the
contrary, no Series B Limited Partner shall be entitled to effect an exchange of
Series B Preferred Units for REIT Series B Preferred Shares to the extent that
ownership or right to acquire such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by the General Partner, may cause
the Partner or any other Person, to violate the restrictions on ownership and
transfer of REIT Series B Preferred Shares set forth in the Charter. To the
extent any such attempted exchange for REIT Series B Preferred Shares would be
in violation of the previous sentence, it shall be void ab initio and such
Series B Limited Partner shall not acquire any rights or economic interest in
the REIT Series B Preferred Shares otherwise issuable upon such exchange.

            (iv) The redemption of Series B Preferred Units described in Section
16.7.A(ii) and (iii) shall be subject to the provisions of Section 16.4.B(i) and
Section 16.4.C(ii); provided, however, that the term "Redemption Price" in such
Sections 16.4.B(i) and 16.4.C(ii) shall be read to mean the original Capital
Contribution per Series B Preferred Unit being redeemed plus all accrued and
unpaid distributions to the redemption date.

         B. Procedure for Exchange and/or Redemption of Series B Preferred
Units.

            (i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Exchange Notice") delivered to the General Partner by the Partners
representing at least 51% of the outstanding Series B Preferred Units (or by
Contributors and any assignees of Contributors that are REITs in the case of an
exchange pursuant to the last sentence of Section 16.7.A.(i) hereof) by (a) fax
and (b) by certified mail postage prepaid. The General Partner may effect any
exchange of Series B Preferred Units, or exercise its option to redeem any
portion of the Series B Preferred Units for cash pursuant to Section 16.7.A(ii)
or redeem Excess Units pursuant to Section 16.7.A(iii), by delivering to each
holder of record of Series B Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (a) if the General Partner elects to
cause the Partnership to exchange any of the Series B Preferred Units then


                                       73
<PAGE>   78

outstanding, (1) certificates representing the Series B Preferred Shares being
issued in exchange for the Series B Preferred Units of such holder being
exchanged and (2) a written notice (a "Redemption Notice") stating (A) the
redemption date, which may be the date of such Redemption Notice or any other
date which is not later than sixty (60) days following the receipt of the
Exchange Notice, (B) the redemption price, (C) the place or places where the
Series B Preferred Units are to be surrendered and (D) that distributions on the
Series B Preferred Units will cease to accrue on such redemption date, or (b) if
the General Partner elects to cause the Partnership to redeem all of the Series
B Preferred Units then outstanding in exchange for cash, a Redemption Notice.
Series B Preferred Units shall be deemed canceled (and any corresponding
Partnership Interest represented thereby deemed terminated) simultaneously with
the delivery of shares of Series B Preferred Shares (with respect to Series B
Preferred Units exchanged) or simultaneously with the redemption date (with
respect to Series B Preferred Units redeemed). Holders of Series B Preferred
Units shall deliver any canceled certificates representing Series B Preferred
Units which have been exchanged or redeemed to the office of General Partner
within ten (10) Business Days of the exchange or redemption with respect
thereto. Notwithstanding anything to the contrary contained herein, any and all
Series B Preferred Units to be exchanged for REIT Series B Preferred Stock
pursuant to this Section 16.7 shall be so exchanged in a single transaction at
one time. As a condition to exchange, the General Partner may require the
holders of Series B Preferred Units to make such representations as may be
reasonably necessary for the General Partner to establish that the issuance of
REIT Series B Preferred Shares pursuant to the exchange shall not be required to
be registered under the Securities Act of 1933, as amended, or any state
securities laws. Any Series B Preferred Shares issued pursuant to this Section
16.7 shall be delivered as shares which are duly authorized, validly issued,
fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the Charter, the By-Laws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.

         The certificates representing the Series B Preferred Shares issued upon
exchange of the Series B Preferred Units shall contain the following legend, in
addition to any other legend required by law or the Charter or Bylaws of the
General Partner:

         THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
         TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
         OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN
         EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
         ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE
         CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY
         OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES
         REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO
         THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT,
         PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
         FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE
         RULES AND REGULATIONS THEREUNDER.



                                       74
<PAGE>   79

            (ii) In the event of an exchange of Series B Preferred Units for
REIT Series B Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series B Preferred Units tendered
for exchange shall (i) accrue on the REIT Series B Preferred Shares into which
such Series B Preferred Units are exchanged, and (ii) continue to accrue on such
Series B Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such REIT Series B Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series B Preferred Unit that was validly exchanged for REIT
Series B Preferred Shares pursuant to this section (other than the General
Partner now holding such Series B Preferred Unit), receive a distribution out of
Available Cash of the Partnership, if such holder, after exchange, is entitled
to receive a distribution out of Available Cash with respect to the REIT Series
B Preferred Shares for which such Series B Preferred Unit was exchanged or
redeemed. Further, for purposes of the foregoing, in the event of an exchange of
Series B Preferred Units for REIT Shares, if the accrued and unpaid
distributions per Series B Preferred Unit is not the same for all Series B
Preferred Units, the accrued and unpaid distributions per Series B Preferred
Unit for all Series B Preferred Units shall be equal to the greatest amount of
such accrued and unpaid distributions per Series B Preferred Unit on any such
unit.

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

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

         Section 16.8 No Conversion Rights

         The holders of the Series B Preferred Units shall not have any rights
to convert such Partnership Units into any other class of Partnership Interests
or any interest in the Partnership.

         Section 16.9 No Sinking Fund

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



                                       75
<PAGE>   80

         Section 16.10 Certain Transfer Provisions

         Subject to the limitations on transferability and other requirements
contained herein, including without limitation the restrictions set forth in
Article 11, Section 16.6, and Section 3.4, if the Series B Contributor
concludes, based on results or projected results that there exists (in the
reasonable judgment of the Series B Contributor) an imminent and substantial
risk that the Series B Contributor's interest in the Partnership represents or
will exceed the 19.5% Limit, then the Series B Contributor shall be permitted to
transfer so much of its Preferred Units as may be appropriate to alleviate the
risk of not satisfying the 19.5% Limit.






                                       76
<PAGE>   81


         IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended and Restated Agreement of Limited Partnership as of the date first
written above.


                               ARDEN REALTY LIMITED PARTNERSHIP

                               By:  Arden Realty, Inc.,
                                    a Maryland corporation
                                    Its General Partner

                                    By: /s/ DIANA LAING
                                        --------------------------------------
                                        Diana Laing
                                        Executive Vice President and Chief
                                        Financial Officer

                               LIMITED PARTNERS:

                               By: Arden Realty Limited Partnership
                                   Attorneys-in-Fact for the Contributors

                                   By: Arden Realty, Inc.,
                                       a Maryland corporation
                                       Its General Partner

                                      By: /s/ DIANA LAING
                                          ------------------------------------
                                          Diana Laing
                                          Executive Vice President and Chief
                                          Financial Officer

                               SERIES B LIMITED PARTNERS:

                                   Salomon Smith Barney Tax Advantaged
                                   Exchange Fund II, LLC,
                                   a Delaware limited liability company

                                   By:  [ILLEGIBLE]
                                   Name:  [ILLEGIBLE]
                                   Its:  [ILLEGIBLE]



                                       77
<PAGE>   82

                                    EXHIBIT A

                PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS



<TABLE>
<CAPTION>
                                                                Agreed Value of
  Name and Address                             Cash               Contributed            Total        Partnership    Percentage
     of Partner                             Contributions          Property(*)       Contributions       Units        Interest
  ----------------                          -------------       ---------------      -------------    -----------    ----------
<S>                                           <C>              <C>                   <C>              <C>            <C>
COMMON UNITS

General Partner
Arden Realty, Inc.                             $1.00                         --      $        1.00           1

Limited Partners

Arden Realty, Inc.
Attorney-in-Fact for the Limited Partners      $1.00                         --      $          1.00         1

Hapsmith-Praxis Partners                                          $1,430,000.00      $  1,430,000.00    55,805

Tom Rutherford                                                    $  104,412.63      $    104,412.63      3,662        .0006

Steve Briggs                                                      $  652,593.19      $    652,593.19     22,888        .0349

David Thomas                                                      $1,333,782.03      $  1,333,782.03     46,779           .

Steve Layton                                                      $1,670,602.08      $  1,670,602.08     58,592        .0894

Phil Belling                                                      $2,038,610.06      $  2,038,610.06     71,499        .1091

CalTwin Investors                                                 $  762,720.00      $    762,720.00     26,880

91 Freeway Partners                                               $2,118,443.70      $  2,118,443.70     86,423

The 1987 Jensen Revocable Living Trust                            $  529,039.88      $    529,039.88     17,598          .04

Highridge-Apollo Grand Plaza                                      $9,024,467.37      $  9,024,467.37    313,213

D&S Wilstein Family Trust-1989                                    $3,944,500.63      $  3,944,500.63    131,210          .33

L&J Wilstein Revocable Trust-1986                                 $3,944,500.63      $  3,944,500.63    131,210          .33

PREFERRED UNITS

Series B Limited Partners

Salomon Smith Barney Tax Advantaged Exchange Fund II, LLC         $  50,000,000      $    50,000,000  2,000,000


</TABLE>



* Net of Debt (if any)


                                      A-1

<PAGE>   83

                                    EXHIBIT B

                              NOTICE OF REDEMPTION



         The undersigned hereby [irrevocably] (i) transfers ____________ Limited
Partnership Units in Arden Realty Limited Partnership in accordance with the
terms of the Limited Partnership Agreement of Arden Realty Limited Partnership
and the rights of Redemption referred to therein, (ii) surrenders such Limited
Partnership Units and all right, title and interest therein, and (iii) directs
that the cash (or, if applicable, REIT Shares) deliverable upon Redemption or
exchange be delivered to the address specified below, and if applicable, that
such REIT Shares be registered or placed in the name(s) and at the address(es)
specified below.

Dated:  ________________________

        Name of Limited Partner:


                                     __________________________________________
                                     (Signature of Limited Partner)

                                     __________________________________________
                                     (Street Address)

                                     __________________________________________
                                     (City) (State) (Zip Code)


                                     Signature Guaranteed by:


                                     __________________________________________



Issue REIT Shares to:

Please insert social security or identifying number:

Name:



                                      B-1
<PAGE>   84

                                    EXHIBIT C

                        CONSTRUCTIVE OWNERSHIP DEFINITION


         The term "Constructively Owns" means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:

         a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;

         b. an Ownership Interest that is owned, actually or constructively, by
or for a partnership or estate is considered as owned proportionately by its
partners or beneficiaries;

         c. an Ownership Interest that is owned, actually or constructively, by
or for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);

         d. if 10 percent or more in value of the stock in a corporation is
owned, actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;

         e. an Ownership Interest that is owned, actually or constructively, by
or for a partner of a partnership or a beneficiary of an estate or trust shall
be considered as owned by the partnership, estate, or trust (or, in the case of
a grantor trust, the grantors);

         f. if 10 percent or more in value of the stock in a corporation is
owned, actually or constructively, by or for any person, such corporation shall
be considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;

         g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;

         h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such


                                      C-1
<PAGE>   85

Ownership Interest, (iii) if an Ownership Interest may be considered as owned by
an individual under paragraphs (a) or (g), it shall be considered as owned by
him under paragraph (g), and (iv) for purposes of the above described rules, an
S corporation shall be treated as a partnership and any stockholder of the S
corporation shall be treated as a partner of such partnership except that this
rule shall not apply for purposes of determining whether stock in the S
corporation is constructively owned by any person.

         i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.




                                      C-2
<PAGE>   86

                                    EXHIBIT D
                      FORM OF PARTNERSHIP UNIT CERTIFICATE

                      CERTIFICATE FOR PARTNERSHIP UNITS OF
                        ARDEN REALTY LIMITED PARTNERSHIP



No.__________                                          _____________COMMON UNITS


         Arden Realty, Inc., as the General Partner of Arden Realty Limited
Partnership, a Maryland limited partnership (the "Operating Partnership"),
hereby certifies that __________________ is a Limited Partner of the Operating
Partnership whose Partnership Interests therein, as set forth in the Agreement
of Limited Partnership of Arden Realty Limited Partnership, (the "Partnership
Agreement"), under which the Operating Partnership is existing and as filed in
the office of the Maryland State Department of Assessments and Taxation (copies
of which are on file at the Operating Partnership's principal office at 9100
Wilshire Boulevard, East Tower, Suite 700, Beverly Hills, California 90212,
represent ___________ units of limited partnership interest in the Operating
Partnership.

         THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT AS
OF_________________ , 1996 AS IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF
WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED
IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE OP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER.


DATED:__________________ , 1996.



                                              ARDEN REALTY, INC..

                                              General Partner of
                                              Arden Realty Limited Partnership


ATTEST:

By:_______________________                    By:_______________________



                                      D-1
<PAGE>   87

                                    EXHIBIT E

                         SCHEDULE OF PARTNERS' OWNERSHIP
                             WITH RESPECT TO TENANTS








                                      E-1
<PAGE>   88

                                    EXHIBIT F
                             SCHEDULE OF REIT SHARES
              ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
                OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE


Richard S. Ziman may actually or Constructively acquire and own up to 13% of the
outstanding capital stock of Arden Realty, Inc., as set forth in a board
resolution of Arden Realty, Inc. dated as of September 16, 1996.



                                      F-1

<PAGE>   89

                                    EXHIBIT G

                        SPECIAL ALLOCATIONS OF DEDUCTIONS
               ATTRIBUTABLE TO THE REPAYMENT OF SPECIFIED INTEREST




                         [Add Description of Each Loan]


<TABLE>
<S>                                                             <C>
Total Interest Deduction to be Specially Allocated               $_______
Allocation of Deduction to Partners:
        [Name of Partners]                                       $_______

                                                                 $_______

                                                                 $_______
</TABLE>





                                      G-1