<PAGE>
                                                                 Execution Copy





                              AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                               PRIME RETAIL, L.P.


                          Dated as of September 8, 1997
<PAGE>
PARTNERS.DOC                                                     Execution Copy
                                                                    9/8/97
                                       E-2

                                TABLE OF CONTENTS
                                                                     PAGE

ARTICLE I DEFINITIONS;ETC...............................................1
         1.1        Definitions.........................................1
                    Accountants.........................................2
                    Act.............................................    2
                    Adjusted Capital Account Deficit....................2
                    Administrative Expenses.............................3
                    Affiliate...........................................3
                    Agreement.............................. ............3
                    Antidilution Provisions.............................4
                    Audited Financial Statements........................4
                    Bankruptcy..........................................4
                    Capital Account.....................................5
                    Capital Contribution................................7
                    Certificate.........................................7
                    Closing Price.......................................7
                    Code................................................8
                    Common Stock........................................8
                    Common Units........................................8
                    Consent of the Partners.............................9
                    Contributed Partnership Interests...................9
                    Control.............................................9
                    Convertible Preferred Distribution..................10
                    Convertible Preferred Distribution Shortfall........10
                    Convertible Preferred Stock.........................10
                    Convertible Preferred Unit Redemption Amount........10
                    Convertible Preferred Units.........................10
                    Current Per Share Market Price......................11
                    Depreciation........................................11
                    Entity..............................................11
                    ERISA...............................................12
                    GAAP................................................12
                    General Partner.....................................12
                    Gross Asset Value...................................12
                    Hart Scott Act......................................13
                    Immediate Family....................................13
                    Incentive Option....................................13
                    Incentive Option Agreement..........................14
                    Lien................................................14
                    Limited Partner.....................................14
                    Liquidating Events..................................14
                    Liquidating Trustee.................................14
                    Major Decisions.....................................14
                    Majority-in-Interest of the Partners................14
                    Minimum Gain Capital Account........................15
                    Net Cash Flow.......................................15
                    Net Income or Net Loss..............................16
                    Nonrecourse Deductions..............................18
                    Nonrecourse Liabilities.............................18
                    Original Agreement..................................18
                    Partner Minimum Gain................................18
                    Partner Nonrecourse Debt............................18
                    Partner Nonrecourse Deductions......................18
                    Partners............................................18
                    Partnership.........................................19
                    Partnership Interest................................19
                    Partnership Minimum Gain............................19
                    Partnership Payment Date............................19
                    Partnership Units...................................19
                    Permitted Transferee................................19
                    Person..............................................19
                    Preferred Distribution..............................20
                    Preferred Distribution Shortfall....................20
                    Preferred Stock.....................................20
                    Preferred Unit Redemption Amount....................20
                    Preferred Units.....................................20
<PAGE>
                    Property............................................20
                    Property Partnership Interests......................20
                    Property Partnerships...............................21
                    Purchase Price......................................21
                    Quarter.............................................21
                    Regulations.........................................21
                    Regulatory Allocations..............................21
                    REIT................................................21
                    REIT Expenses.......................................21
                    REIT Requirements...................................22
                    Rights..............................................22
                    SEC.................................................22
                    Section 704(c) Tax Items............................22
                    Series C Preferred Distribution.....................23
                    Series C Preferred Distribution Shortfall...........23
                    Series C Preferred Purchase Agreement...............23
                    Series C Preferred Rights...........................23
                    Series C Preferred Stock............................23
                    Series C Preferred Unit Redemption Amount...........23
                    Series C Preferred Units............................23
                    Shopping Center Project.............................24
                    Stock Incentive Plan................................24
                    Substituted Limited Partner.........................24
                    Tax Items...........................................24
                    Trading Day.........................................24
                    Transfer............................................25
         1.2        Exhibits, Etc.......................................25

ARTICLE II ORGANIZATION.................................................25
         2.1        Formation and Continuation..........................25
         2.2        Name................................................26
         2.3        Character of the Business...........................26
         2.4        Location of the Principal Place of Business.........27
         2.5        Registered Agent and Registered Office..............27
         2.6        Power of Attorney...................................28

ARTICLE III TERM; DISSOLUTION...........................................30
         3.1        Term................................................30
         3.2        Dissolution.........................................30
         3.3        Bankruptcy of a Limited Partner.....................31

ARTICLE IV CONTRIBUTIONS TO CAPITAL; FINANCING..........................31
         4.1        General Partner Capital Contribution................31
         4.2        Limited Partner Capital Contributions...............32
         4.3        Additional Funds; Restrictions on General Partner...32
         4.4        Issuance of Additional Partnership Interests;
                    Admission of Additional Limited Partners............35
         4.5        Stock Incentive Plan................................36
         4.6        No Third Party Beneficiary..........................36
         4.7        No Interest; No Return..............................37
         4.8        Conversion of Convertible Preferred Units or Series
                    C Preferred Units; Redemption or Purchase of Series
                    C Preferred Units, Convertible Preferred Units or
                    Preferred Units.....................................37
         4.9        Redemption of Series C Preferred Units..............39

ARTICLE V INTENTIONALLY OMITTED.........................................42

ARTICLE VI ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING
           MATTERS......................................................42
         6.1        Allocations.........................................42
         6.2        Distributions.......................................42
         6.3        Books of Account....................................45
         6.4        Reports.............................................46
         6.5        Audits..............................................46
         6.6        Tax Elections and Returns...........................46
         6.7        Tax Matters Partner.................................48

ARTICLE VII RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER......50
         7.1        Expenditures by Partnership.........................50
         7.2        Powers and Duties of General Partner................50
         7.3        Major Decisions.....................................55
         7.4        No Removal..........................................56
         7.5        General Partner Participation.......................56
         7.6        Proscriptions.......................................56
         7.7        Additional Partners.................................57
         7.8        Title Holder........................................57
         7.9        Compensation of the General Partner.................57
         7.10       Waiver and Indemnification..........................57
         7.11       Operation in Accordance with REIT Requirements......61
<PAGE>
ARTICLE VIII DISSOLUTION, LIQUIDATION AND WINDING-UP....................62
         8.1        Winding Up..........................................62
         8.2        Distribution on Dissolution and Liquidation.........64
         8.3        Timing Requirements.................................65
         8.4        Deemed Distribution and Recontribution..............65
         8.5        Distributions in Kind...............................66
         8.6        Documentation of Liquidation........................66
         8.7        Deficit Capital Account Balance.....................67

ARTICLE IX TRANSFER OF PARTNERSHIP INTERESTS; WITHDRAWAL; ADMISSION OF
           ADDITIONAL PARTNERS..........................................67
         9.1        General Partner Transfer; Withdrawal;
                    Substitute General Partner..........................67
         9.2        Transfers by Limited Partners.......................69
         9.3        Restrictions on Transfer............................71

ARTICLE X RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS................75
         10.1       No Participation in Management; No Personal
                    Liability...........................................75
         10.2       Duties and Conflicts................................76

ARTICLE XI GRANT OF RIGHTS TO LIMITED PARTNERS..........................77
         11.1       Grant of Rights.....................................77
         11.2       Terms of Rights.....................................78
         11.3       Reissuance or Reallocation of Common Units..........78

ARTICLE  XII GRANT OF RIGHTS TO  LIMITED  PARTNERS  HOLDING  SERIES C
             PREFERRED UNITS; REDEMPTION OF SERIES C PREFERRED UNITS....78
         12.1       Grant of Rights.....................................78
         12.2       Terms of Rights.....................................79
         12.3       Reissuance or Reallocation of Series C Preferred
                    Units...............................................79

ARTICLE XIII PARTNER REPRESENTATIONS AND WARRANTIES.....................80
                    (a)    Organization.................................80
                    (b)    Due Authorization; Binding Agreement.........80
                    (c)    Consents and Approvals.......................80

ARTICLE XIV GENERAL PROVISIONS..........................................80
         14.1       Notices.............................................80
         14.2       Successors..........................................81
         14.3       Effect and Interpretation...........................81
         14.4       Counterparts........................................81
         14.5       Partners Not Agents.................................81
         14.6       Entire Understanding, Etc...........................81
         14.7       Amendments..........................................81
         14.8       Severability........................................84
         14.9       Trust Provision.....................................84
         14.10      Pronouns and Headings...............................85
         14.11      Assurances..........................................85
         14.12      Remedies Cumulative.................................85
         14.13      Construction........................................85
         14.14      Incorporation by Reference..........................86
         14.15      Waiver of Action for Partition......................86
<PAGE>
EXHIBITS

A        Common Units, Preferred Units, Convertible Preferred Units and Series
          C Preferred Units
B        Allocations
C        Rights Terms
D        Conversion Rights of Series C Preferred Units
E        Section 6.2(e) Agreements


SCHEDULES TO EXHIBIT C

1        Exchange Exercise Notice
2        Election Notice
3        Registration Rights Agreement
<PAGE>
                              AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                               PRIME RETAIL, L.P.


                  THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into
as of the 8th day of September, 1997, by and among the undersigned parties.
                              W I T N E S S E T H:
                  WHEREAS,  the parties  hereto  desire to amend and restate the
Partnership's  Agreement of Limited  Partnership dated March 22, 1994 as amended
by a First  Amendment  thereto  dated  as of June  24,  1996  (as  amended,  the
"Original  Agreement")  to provide  for,  among other  things,  the creation and
issuance of Series C Preferred  Units and the admission of the holder or holders
thereof as a limited partner or limited partners of the Partnership;
                  NOW,  THEREFORE,  in consideration of the mutual covenants and
agreements  herein  contained  and other good and  valuable  consideration,  the
receipt, adequacy and sufficiency of which are hereby acknowledged,  the parties
hereto,  intending  legally to be bound,  hereby amend and restate the Agreement
and otherwise agree as follows:


                                    ARTICLE I
                                DEFINITIONS; ETC
                  I.1   Definitions.   Except  as  otherwise   herein  expressly
provided,  the  following  terms and phrases  shall have the  meanings set forth
below:

                "Accountants"  shall  mean  the  firm or  firms  of  independent
certified  public  accountants  selected by the General Partner on behalf of the
Partnership and the Property  Partnerships to audit the books and records of the
Partnership and the Property  Partnerships and to prepare statements and reports
in connection therewith.
                  "Act" shall mean the Revised Uniform  Limited  Partnership Act
as enacted in the State of  Delaware,  and as the same may  hereafter be amended
from time to time.
                  "Adjusted Capital Account Deficit" shall mean, with respect to
any Partner,  the deficit balance,  if any, in such Partner's Capital Account as
of the end of any relevant  fiscal year and after giving effect to the following
adjustments:
                  (a) credit to such  Capital  Account  any  amounts  which such
         Partner is obligated or treated as obligated to restore with respect to
         any deficit balance in such Capital Account  pursuant to this Agreement
         or the provisions of Section  1.704-1(b)(2)(ii)(c)  of the Regulations,
         or is deemed to be  obligated  to restore  with  respect to any deficit
         balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1)
         and 1.704-2(i)(5) of the Regulations; and

                  (b) debit to such Capital  Account the items described in
                      Sections  1.704-1(b)(2)(ii)(d)(4),  (5)
         and (6) of the Regulations.

The foregoing  definition  of Adjusted  Capital  Account  Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section  1.704-1(b)(2)(ii)(d)  of the  Regulations  and shall be  interpreted
consistently therewith.

                  "Administrative  Expenses"  shall mean (i) all  administrative
and  operating  costs  and  expenses  incurred  by  the  Partnership,  (ii)  all
administrative,  operating and other costs and expenses incurred by the Property
Partnerships,  which expenses are being assumed by the  Partnership  pursuant to
Section 7.1 hereof, (iii) those administrative costs and expenses of the General
Partner,  including  salaries  paid to  officers  of the  General  Partner,  and
accounting and legal expenses undertaken by the General Partner on behalf or for
the benefit of the  Partnership,  and (iv) to the extent not  included in clause
(iii) above, REIT Expenses.

                  "Affiliate"  shall mean,  with respect to any Partner (or with
respect to any other Person whose affiliates are relevant for purposes of any of
the  provisions of this  Agreement),  (i) any member of the Immediate  Family of
such Partner or a trust  established  for the benefit of such  member;  (ii) any
beneficiary  of a trust  described in (i); or (iii) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under  common  Control  with,  any  Partner  or any  Person  referred  to in the
preceding clauses (i) and (ii).
<PAGE>
                  "Agreement" shall mean this Amended and Restated  Agreement of
Limited   Partnership,   as  originally  executed  and  as  amended,   modified,
supplemented or restated from time to time, as the context requires.

                  "Antidilution Provisions" shall mean the provisions of Section
XI of Exhibit C hereto.

                  "Audited Financial Statements" shall mean financial statements
(which  shall  consist of a balance  sheet,  statement  of income,  statement of
partners' equity and statement of cash flows) prepared in accordance with GAAP.

                  "Bankruptcy" shall mean, with respect to any Partner,  (i) the
commencement  by  such  Partner  of any  proceeding  seeking  relief  under  any
provision  or chapter of the  federal  Bankruptcy  Code or any other  federal or
state  law  relating  to  insolvency,  bankruptcy  or  reorganization;  (ii)  an
adjudication  that such Partner is insolvent or bankrupt;  (iii) the entry of an
order for relief under the federal Bankruptcy Code with respect to such Partner;
(iv) the filing of any petition or the  commencement  of any case or  proceeding
against  such  Partner  seeking  relief  under any  provision  or chapter of the
federal  Bankruptcy  Code or other federal or state laws relating to insolvency,
bankruptcy  or  receivership,  unless such  petition  and the case or  proceedin
initiated  thereby are  dismissed  within ninety (90) days from the date of such
filing; (v) the filing of an answer by such Partner admitting the allegations of
any  petition  described  in (iv)  above;  (vi) the  appointment  of a  trustee,
receiver or custodian for all or substantially all of the assets of such Partner
unless such appointment is vacated or dismissed within ninety (90) days from the
date of such  appointment  but not less than five (5) days  before the  proposed
sale of any assets of such Partner;  (vii) the insolvency of such Partner or the
execution by such Partner of a general  assignment for the benefit of creditors;
(viii) the convening by such Partner of a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension or composition
of its  debts;  (ix)  the  levy,  attachment,  execution  or  other  seizure  of
substantially  all of the  assets of such  Partner  where  such  seizure  is not
discharged  within  thirty (30) days  thereafter;  or (x) the  admission by such
Partner in writing of its  inability  to pay its debts as they mature or that it
is generally not paying its debts as they become due.

                  "Capital Account" shall mean, with respect to any Partner, the
Capital  Account  maintained  for such Partner in accordance  with the following
provisions:
                  (i) To each Partner's  Capital Account there shall be credited
         such Partner's Capital Contributions, such Partner's distributive share
         of Net  Income  and any items in the nature of income or gain which are
         specially  allocated  pursuant to Section II or III of Exhibit B hereto
         and the amount of any Partnership  liabilities  assumed by such Partner
         or which are secured by any asset distributed to such Partner.

              (ii) To each Partner's  Capital Account there shall be debited 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
         II or III of  Exhibit B hereto,  and the amount of any  liabilities  of
         such  Partner  assumed by the  Partnership  or which are secured by any
         asset contributed by such Partner to the Partnership.

             (iii)  In  the  event  all  or a  portion  of an  Interest  in  the
         Partnership  is  transferred  in  accordance  with  the  terms  of this
         Agreement,  the transferee  shall succeed to the Capital Account of the
         transferor to the extent it relates to the transferred Interest.

         (iv) In  determining  the amount of any  liability  for purposes of the
         foregoing subparagraphs (i) and (ii), there shall be taken into account
         Code Section 752(c) and any other applicable provisions of the Code and
         Regulations.

                  For  purposes  of this  definition,  in the event that (i) the
date on  which a  Limited  Partner  is  paid,  or  constructively  receives  (if
earlier),  an  amount of Net Cash  Flow  under  Section  6.2(c)  in  respect  of
subsection  (a)(vii)  of  Section  6.2 is  after  the  date on  which  the  Cash
Conversion Price is paid and (ii) such Limited Partner  otherwise owns no Common
Units at such  time,  such  distribution  of Net Cash Flow shall be treated as a
distribution  to the General  Partner.  The foregoing  provisions  and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Sections 1.704-1(b) and 1.704-2 of the Regulations,  and
shall be interpreted and applied in a manner  consistent with such  Regulations.
In the event the General Partner shall  reasonably  determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits or credits
<PAGE>
thereto  (including,   without   limitation,   debits  or  credits  relating  to
liabilities which are secured by contributed or distributed  assets or which are
assumed by the  Partnership,  the General  Partner or any Limited  Partner)  are
computed in order to comply with such Regulations,  the General Partner may make
such  modification;  provided  that it does not have an  adverse  effect  on the
amounts  distributable  to any Partner  pursuant to Article VIII hereof 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  Section  1.704-1(b)(2)(iv)(q)  of  the  Regulations,  and  (ii)  make  any
appropriate  modifications  in the event  unanticipated  events might  otherwise
cause this  Agreement not to comply with  Sections  1.704-1(b) or 1.704-2 of the
Regulations.
                  "Capital   Contribution"  shall  mean,  with  respect  to  any
Partner,  the amount of money and the  initial  Gross  Asset  Value of any asset
other than money,  net of the amount of any  liabilities  to which such asset is
subject, contributed to the Partnership with respect to the Partnership Interest
held by such  Partner.  The  principal  amount of a promissory  note that is not
readily tradable on an established  securities market and that is contributed to
the  Partnership  by the maker of the note shall not be  included in the Capital
Account of any Person until the Partnership  makes a taxable  disposition of the
note or until (and to the extent) such Partner makes  principal  payments on the
note, all in accordance with Section 1.704-1(b)(2)(iv)(d)(2) of the Regulations

                  "Certificate"   shall   mean  the   Certificate   of   Limited
Partnership  establishing  the  Partnership,  as filed  with the  office  of the
Delaware  Secretary  of  State,  as it may be  amended  from  time  to  time  in
accordance with the terms of this Agreement and the Act.

                  "Closing  Price" on any date shall  mean the last sale  price,
regular  way,  or, in case no such sale takes place on such day,  the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal  consolidated  transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock  Exchange  or, if the Common
Stock is not listed or  admitted to trading on the New York Stock  Exchange,  as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national  securities exchange on which the
Common  Stock is listed or admitted  to trading  or, if the Common  Stock is not
listed or  admitted to trading on any  national  securities  exchange,  the last
quoted  price,  or if not so quoted,  the  average of the high bid and low asked
prices in the  over-the-counter  market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or, if such system is no
longer in use, the principal other automated  quotations system that may then be
in use or,  if the  Common  Stock is not  quoted by any such  organization,  the
average of the  closing  bid and asked  prices as  furnished  by a  professional
market maker making a market in the Common Stock as such person is selected from
time to time by the Board of Directors of the General Partner.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended from time to time or any successor statute thereto.

                  "Common Stock" shall mean the shares of the common stock,  par
value $.01 per share, of the General Partner.

                  "Common Units" shall mean the Partnership  Units designated as
Common  Units under this  Agreement,  received by the  Partners in exchange  for
their  capital  contributions  or a portion of their capital  contributions  and
having the  rights  described  in this  Agreement.  The  number of Common  Units
outstanding, and the allocation of Common Units to each Partner, is as set forth
opposite  its or his name in Exhibit A, as amended by the General  Partner  from
time to time.
                  "Consent  of the  Partners"  means the  written  consent  of a
Majority-in-Interest  of the 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 Partners,  unless otherwise
expressly provided herein, in their sole and absolute discretion.

                  "Contributed  Partnership  Interests" shall mean, with respect
to  each   Limited   Partner,   the   partnership   interests  in  the  Property
Partnership(s)  contributed to the  Partnership  by such Limited  Partner on the
date of formation of the Partnership.
<PAGE>
                  "Control"  shall  mean the  ability,  whether by the direct or
indirect  ownership  of  shares  or  other  equity  interests,  by  contract  or
otherwise, to elect a majority of the directors of a corporation,  to select the
managing partner of a partnership,  or otherwise to select, or have the power to
remove  and then  select,  a  majority  of those  persons  exercising  governing
authority over an Entity. In the case of a limited partnership, the sole general
partner,  all of the general  partners  to the extent each has equal  management
control and  authority,  or the  managing  general  partner or managing  general
partners thereof shall be deemed to have control of such partnership and, in the
case of a trust,  any trustee  thereof or any Person  having the right to select
any such trustee shall be deemed to have control of such trust.

                  "Convertible Preferred  Distribution" means an amount equal to
the quarterly dividend payable in respect of one share of Convertible  Preferred
Stock of the  General  Partner  pursuant  to  Section  4.5.1(a)  of the  General
Partner's Articles of Incorporation.

                  "Convertible Preferred Distribution  Shortfall" shall have the
meaning set forth in Section 6.2(a)(iii).

                  "Convertible  Preferred  Stock"  means the Series B Cumulative
Participating  Convertible  Preferred  Stock,  par value $.01 per share,  of the
General Partner.

                  "Convertible  Preferred Unit  Redemption  Amount" means,  with
respect to any  Convertible  Preferred  Unit,  the amount payable by the General
Partner on account of the redemption of one share of Convertible Preferred Stock
pursuant to Section 4.5.3 of the General Partner's Articles of Incorporation.

                  "Convertible Preferred Units" shall mean the Partnership Units
designated as Convertible Preferred Units under this Agreement,  received by the
General  Partner in exchange for a portion of its capital  contribution,  having
the rights  described in this  Agreement.  The number of  Convertible  Preferred
Units  outstanding from time to time is as set forth on Exhibit A, as amended by
the General Partner from time to time.

                  "Current  Per Share  Market  Price" on any date shall mean the
average of the Closing  Price for the five  consecutive  Trading  Days ending on
such date.
                  "Depreciation"  shall mean,  with  respect to any asset of the
Partnership for any fiscal year or other period,  the  depreciation,  depletion,
amortization  or other cost recovery  deduction,  as the case may be, allowed or
allowable  for  Federal  income tax  purposes  in respect of such asset for such
fiscal year or other period;  provided,  however,  that if there is a difference
between the Gross Asset  Value and the  adjusted  tax basis of such asset at the
beginning of such fiscal year or other period, Depreciation for such asset shall
be an amount  that bears the same ratio to the  beginning  Gross  Asset Value of
such asset as the Federal income tax  depreciation,  depletion,  amortization or
other cost recovery  deduction for such fiscal year or other period bears to the
beginning  adjusted  tax basis of such  asset;  provided,  further,  that if the
Federal income tax depreciation,  depletion, amortization or other cost recovery
deduction  for  such  asset  for  such  fiscal  year or  other  period  is zero,
Depreciation  for such asset shall be determined with reference to the beginning
Gross  Asset  Value of such asset using any  reasonable  method  selected by the
General Partner.

                  "Entity"   shall  mean  any   general   partnership,   limited
partnership,   corporation,   joint  venture,  trust,  business  trust,  limited
liability company, cooperative or association.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974,  as  amended  from  time to time (or any  corresponding  provisions  of
succeeding laws).

                  "GAAP" shall  mean  generally  accepted  accounting principles
consistently applied.

                  "General  Partner"  shall mean Prime Retail,  Inc., a Maryland
corporation, and any other Person who is admitted as a successor general partner
of the Partnership at the time of reference thereto.

                  "Gross Asset  Value" shall mean,  with respect to any asset of
the  Partnership,  such asset's  adjusted  basis for Federa 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
         Partnership;

                  (b) if the  General  Partner  reasonably  determines  that  an
         adjustment is necessary or appropriate to reflect the relative economic
         interests of the  Partners,  the Gross Asset Values of all  Partnership
         assets  shall be adjusted to equal their  respective  gross fair market
         values,  as  reasonably  determined by the General  Partner,  as of the
         following times:
<PAGE>
                     (i)  a  Capital  Contribution  (other  than  a  de  minimis
                          Capital  Contribution) to the Partnership by a  new or
                          existing  Partner  as  consideration for a Partnership
                          Interest;

                     (ii) the distribution  by the Partnership  to  a Partner of
                          more than a de minimis amount of Partnership assets as
                          consideration  for  the  redemption of  a  Partnership
                          Interest; and

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

                   (c) the Gross Asset Values of Partnership  assets distributed
         to any  Partner  shall be the gross fair  market  values of such assets
         (taking  Section  7701(g)  of the  Code  into  account)  as  reasonably
         determined by the General Partner as of the date of distribution; and

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

At all times,  Gross Asset  Values shall be adjusted by any  Depreciation  taken
into account with respect to the Partnership's  assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of Partnership
assets shall require an adjustment to the Partners' Capital Accounts; as for the
manner in which such  adjustments  are  allocated to the Capital  Accounts,  see
Exhibit B.
     
                   "Hart Scott Act" shall mean the  Hart-Scott-Rodino  Antitrust
Improvements Act of 1976, as amended.

                  "Immediate  Family"  shall mean,  with  respect to any Person,
such Person's spouse, parents, parents-in-law,  descendants,  nephews,   nieces,
brothers,  sisters,   brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law.

                  "Incentive  Option"  means an option to purchase  Common Stock
granted under the Stock Incentive Plan.

                  "Incentive  Option  Agreement"  means   the Incentive  Option
Agreement to be used under the Stock Incentive Plan.

                  "Lien" shall mean any liens,  security  interests,  mortgages,
deeds of trust, charges, claims, encumbrances, pledges, options, rights of first
offer or first  refusal and any other  rights or interests of others of any kind
or nature,  actual or contingent,  or other similar  encumbrances  of any nature
whatsoever.

                  "Limited  Partner"  shall mean any Person  named as a "Limited
Partner"  on Exhibit A hereto,  as it may be amended  from time to time,  or any
Person admitted as a Substituted  Limited Partner or additional Limited Partner,
in such Person's capacity as a limited partner of the Partnership.

                  "Liquidating Events" shall  have  the  meaning  set  forth  in
Section 3.2.
                  "Liquidating  Trustee"  shall mean the General  Partner or, if
there is no  remaining  General  Partner,  such  Person  as is  selected  as the
Liquidating  Trustee hereunder by the Consent of the Partners,  which Person may
include an Affiliate  of the General  Partner or any Limited  Partner;  provided
such  Liquidating  Trustee  agrees in  writing  to be bound by the terms of this
Agreement.
                  "Major Decisions" shall have the meaning set forth in  Section
7.3 hereof.

                  "Majority-in-Interest  of the Partners"  shall mean Partner(s)
who hold in the aggregate more than fifty percent (50%) of the Common Units.
<PAGE>
                  "Minimum Gain Capital Account" shall mean, with respect to the
General  Partner,  the sum of the General  Partner's  Capital  Account  plus the
General  Partner's  share of  Partner  Minimum  Gain,  as  described  in Section
1.704-2(i)(5) of the Regulations,  and Partnership Minimum Gain, as described in
Section 1.704-2(g) of the Regulations.  For purposes of determining Minimum Gain
Capital Account, Nonrecourse Deductions and Partner Nonrecourse Deductions for a
Partnership  fiscal year or other  applicable  period  shall be  allocated  in a
manner that is consistent  with the method of  allocation  adopted under Section
9.4 or Section 9.6(c) (to the extent Section 9.4 or Section 9.6(c) is applicable
to such fiscal year or other applicable period).

                  "Net Cash Flow" means,  with respect to the applicable  period
of measurement  (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing  immediately after the last day of the fiscal
year,  quarter  or other  applicable  period  for  purposes  of the most  recent
calculation  of Net Cash Flow for or with  respect to which a  distribution  has
been  made,  and  ending on the last day of the  fiscal  year,  quarter or other
applicable period immediately preceding the date of the calculation) the excess,
if any, as of such date, of (a) the gross cash receipts of the  Partnership  for
such period from all sources  whatsoever,  including,  without  limitation,  the
following:
               (i) all  rents,  revenues,  income  and  proceeds  derived by the
          Partnership  from  its  operations,   including,  without  limitation,
          distributions received by the Partnership from any Entity in which the
          Partnership has an interest;
            
               (ii)all  proceeds and  revenues  received by the  Partnership  on
          account  of  any  sales  of  property  of  the  Partnership  or  as  a
          refinancing  of or  payments  of  principal,  interest,  costs,  fees,
          penalties or otherwise on account of any  borrowings  or loans made by
          the  Partnership or financings or  refinancings of any property of the
          Partnership;

               (iii)  the  amount of any  insurance  proceeds  and  condemnation
          awards received by the Partnership;

               (iv)  all  capital   contributions   or  loans  received  by  the
          Partnership from its Partners;
         
               (v) any reduction in the cash amounts previously  reserved by the
          Partnership and described in subsection  (b)(ix) below, if the General
          Partner determines that such amounts are no longer needed; and

               (vi) the proceeds of liquidation of the Partnership's property in
          accordance with this Agreement, over (b) the sum of:

                  (i) all operating  costs and expenses of the  Partnership  and
         capital  expenditures  made  during  such  period  (without  deduction,
         however,  for any capital  expenditures,  charges for  depreciation  or
         other expenses not paid in cash or expenditures from reserves described
         in (ix)  below);  (ii) all costs and  expenses  expended or paid during
         such  period  in  connection  with the sale or  other  disposition,  or
         financing  or  refinancing,  of  property  of  the  Partnership  or the
         recovery of insurance or condemnation proceeds; (iii) all fees provided
         for under this Agreement;  (iv) all debt service,  including  principal
         and  interest,  paid  during  such  period on all  indebtedness  of the
         Partnership; (v) all capital contributions, advances, reimbursements or
         similar  payments  made to any Entity in which the  Partnership  has an
         interest; (vi) all loans made by the Partnership in accordance with the
         terms  of this  Agreement;  (vii)  all  reimbursements  to the  General
         Partner or its Affiliates during such period,  including Administrative
         Expenses (exclusive of REIT Expenses) to the extent not paid or payable
         by the General  Partner  pursuant to the last  sentence of Section 7.1;
         (viii) any distributions pursuant to Section 6.2(d); (ix) any increases
         in  reserves  reasonably  determined  by  the  General  Partner  to  be
         necessary  for  working  capital,  capital  improvements,  payments  of
         periodic   expenditures,   debt  service  or  other  purposes  for  the
         Partnership or any Person in which the Partnership has an interest; and
         (x) any amounts paid  pursuant to Section  4.8(b) in  redemption of any
         Preferred Units or Convertible Preferred Units.

                  "Net Income or Net Loss"  shall mean,  for each fiscal year or
other applicable period, an amount equal to the Partnership's net income or loss
for such year or period as  determined  for federal  income tax  purposes by the
General  Partner,  determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately  pursuant to Section  703(a) of the Code shall be included in taxable
income or loss),  adjusted  as  follows:  (i) by  including  as an item of gross
income any tax-exempt income received by the Partnership and not otherwise taken
into  account  in  computing  Net  Income or Net  Loss;  (ii) by  treating  as a
deductible  expense any  expenditure  of the  Partnership  described  in Section
705(a)(2)(B)  of the Code and not otherwise  taken into account in computing Net
Income  or Net  Loss,  including  amounts  paid  or  incurred  to  organize  the
Partnership  (unless an election is made pursuant to Section 709(b) of the Code)
or to  promote  the sale of  interests  in the  Partnership;  (iii) by  treating
deductions  for any losses  incurred in connection  with the sale or exchange of
Partnership  property  which are  disallowed  pursuant to Sections  267(a)(1) or
707(b) of the Code as  expenditures  described  in Section  705(a)(2)(B)  of the
Code;  (iv) by  taking  into  account  Depreciation  in  lieu  of  depreciation,
depletion,  amortization,  and other cost recovery deductions taken into account
in computing  taxable  income or loss;  (v) by computing  gain or loss resulting
from any disposition of Partnership  property with respect to which gain or loss
is  recognized  for federal  income tax purposes by reference to the Gross Asset
Value of such property rather than its adjusted tax basis;  (vi) in the event of
an adjustment of the Gross Asset Value of any  Partnership  asset which requires
that the Capital  Accounts of the  Partnership be adjusted  pursuant to Sections
1.704-1(b)(2)(iv)(e), (f) and (m) of the Regulations, by taking into account the
amount of such  adjustment  as  additional  Net Income or Net Loss  pursuant  to
Exhibit B; and (vii)  subject  to the  immediately  preceding  clause  (vi),  by
excluding the  Partnership  items of income,  gain,  loss or deduction  that are
specially allocated pursuant to Sections II or III of Exhibit B attached hereto.

               "Nonrecourse  Deductions"  shall  have the  meaning  set forth in
Sections 1.704-2(b)(1) and 1.704-2(c) of the Regulations.

               "Nonrecourse  Liabilities\"  shall have the  meaning set forth in
          Section 1.704-2(b)(3) of the Regulations.

               "Original  Agreement\"  shall have the  meaning  set forth in the
Recitals to this Agreement.

               "Partner Minimum Gain" shall mean 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  Section    1.704-2(i)(3) of the
Regulations.

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

               "Partner  Nonrecourse  Deductions"  shal   have  the  meaning set
forth in Section 1.704-2(i)(2) of the Regulations.

               "Partners"  shall  mean  the  General  Partner  and  the  Limited
Partners.
                  
               "Partnership" shall mean the limited  partnership  constituted by
the Original  Agreement,  as such limited partnership may from time to   time be
constituted.
                
               "Partnership  Interest" shall mean the ownership  interest now or
hereafter held  by a  Partner  in the  Partnership from  time to  time  pursuant
to this Agreement,  including,  but not limited to, Partnership Units,  exchange
rights, capital  accounts,  and profits and distributions relating thereto,  all
other payments  (if  any) due  or to  become  due in respect  of such  ownership
interest pursuant to this Agreement,  all  rights,   powers and  remedies  of  a
Partner under this Agreement, and all proceeds of all or any of the foregoing.

               "Partnership Minimum Gain" shall  have  the  meaning set forth in
Sections 1.704-2(b)(2) and (d) of the Regulations.

               "Partnership   Payment   Date"  shall   mean   the  payment  date
established  by the  General  Partner  for the  distribution  of Net  Cash  Flow
pursuant  to Section  6.2 hereof,  which  payment  date shall be the same as the
payment  date  established  by the  General  Partner for a  distribution  to its
shareholders of some or all of its portion of such distribution.

               "Partnership  Units"  shall  mean fractional, undivided shares of
Partnership Interests issued pursuant to this Agreement.

               "Permitted  Transferee"  shall   mean  any   Person   to whom any
Partnership  Units are  transferred in a Transfer  permitted  under the terms of
this Agreement.
               
               "Person" shall mean any individual or Entity.

               "Preferred   Distribution"   means  an   amount   equal   to  the
quarterly  dividend  payable in respect of one share of  Preferred  Stock of the
General Partner pursuant to Section 4.3.1(a) of the General  Partner's  Articles
of Incorporation

               "Preferred   Distribution  Shortfall" shall  have the meaning set
 forth in Section 6.2.

               "Preferred   Stock"  means  the  Series   A   Senior   Cumulative
Preferred Stock, par value $.01 per share, of the General Partner.

               "Preferred Unit Redemption  Amount"  means,  with  respect to any
Preferred  Unit,  the amount  payable by the  General  Partner on account of the
redemption  of one share of  Preferred  Stock  pursuant to Section  4.3.3 of the
General Partner's Articles of Incorporation.

               "Preferred  Units" shall mean  the  Partnership  Units designated
as  Preferred  Units under this  Agreement,  received by the General  Partner in
exchange for a portion of its capital contribution,  having the rights described
in this Agreement.  The number of Preferred Units  outstanding from time to time
is as set forth on Exhibit A, as amended by the General Partner.

               "Property"  shall mean any  Shopping  Center  Project  or   other
real  estate  project  in which the  Partnership  or any  Property  Partnership,
directly or indirectly, acquires ownership of a fee or leasehold interest.

               "Property  Partnership  Interests"   shall mean  and include  the
interest of the  Partnership  as a partner or other  equity  participant  in any
Property Partnership currently owned or hereafter acquired by the Partnership.

               "Property Partnerships" shall mean  and  include  any partnership
or other Entity in which the Partnership,  directly or indirectly, is or becomes
a partner or other  equity  participant  and which is formed for the  purpose of
acquiring, developing or owning a Property or a proposed Property.

               "Purchase Price" shall have the meaning set forth in Exhibit C.

               "Quarter"  shall  mean  each  of  the  three  (3)  month  periods
ending on March 31, June 30, September 30 and December 31 of any year.

               "Regulations"  shall  mean  the  final,   temporary  or  proposed
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
Exhibit B.

               "REIT" shall  mean  a  real estate investment trust as defined in
Section 856 of the Code.

               "REIT Expenses"  shall  mean (i) costs  and expenses  relating to
the  formation  and  continuity  of  existence  of the  General  Partner and its
subsidiaries, if any, (which subsidiaries shall, for purposes of this definition
be included within the definition of General Partner), including taxes, fees and
assessments associated therewith and any and all costs, expenses or fees payable
to any director,  officer or trustee of the General Partner or such subsidiaries
(including,  without limitation,  any costs of indemnification),  (ii) costs and
expenses  relating to any offer or  registration  of  securities  by the General
Partner and all  statements,  reports,  fees and  expenses  incidental  thereto,
including,  without limitation,  underwriting  discounts and selling commissions
applicable to any such offer of securities and any costs and expenses associated
with any claims  made by any holder of such  securities  or any  underwriter  or
placement  agent  therefor,   (iii)  costs  and  expenses  associated  with  the
preparation  and filing of any  periodic  reports by the General  Partner  under
federal,  state or local laws or  regulations,  including  filings with the SEC,
(iv) costs and expenses  associated  with compliance by the General Partner with
laws, rules and regulations  promulgated by any regulatory  body,  including the
SEC, and (v) all other operating or administrative  costs of the General Partner
incurred in the ordinary course of its business.

               "REIT Requirements" shall have the meaning set forth in
Section 6.2(b) hereof.

               "Rights" shall have the meaning set forth in Section 11.1
hereof.

               "SEC" shall  mean  the   United   States  Securities and Exchange
Commission.

               "Section  704(c) Tax Items" shall  have  the meaning set forth in
Exhibit B.
               "Series C   Preferred  Distribution" means an amount equal to the
quarterly  dividend  payable in respect of one share of Series C Preferred Stock
pursuant to Section 3 of the General Partner's Articles of Incorporation

               "Series  C  Preferred  Distribution  Shortfall"  shall  have  the
meaning set forth in Section 6.2.

               "Series C Preferred Purchase  Agreement"  shall  have the meaning
set forth in Section 4.2.

               "Series C Preferred  Rights"   shall  have  the meaning set forth
in Section 12.1.

               "Series C Preferred   Stock"  shall  mean the Series C Cumulative
Convertible Redeemable Preferred Stock, $.01 par value, of the General Partner.

               "Series C Preferred Unit Redemption  Amount" means, with  respect
to any Series C Preferred  Unit, the amount  payable by the General Partner with
respect to the redemption  of a share of Series C Preferred  Stock   pursuant to
Section 5(a) of  the General Partner's Articles of Incorporation and subject  to
Sections 5(b) and 5(c)  thereof, using the amount, if any, of Series C Preferred
Distribution shortfall as the amount of accrued and unpaid dividends thereon.

               "Series C Preferred  Units" s hall  mean  the  Partnership  Units
designated as Series C Preferred Units under this  Agreement,  having the rights
described in this Agreement.  The number of Series C Preferred Units outstanding
from time to time is set forth in Exhibit A hereto,  as  amended by the  General
Partner from time to time.

               "Shopping Center Project"   shall   mean   any   shopping center,
including construction  and   improvement  activities  undertaken  with  respect
thereto and off-site improvements, on-site  improvements,  structures, buildings
and/or related parking and other facilities.

               "Stock   Incentive  Plan"   means  the  Partnership's  1994 Stock
Incentive Plan, employee bonus plan and any other plan adopted from time to time
by the General Partner pursuant to which the General Partner issues Common Stock
or  options  to  acquire  Common  Stock to  employees  or  directors  in partial
consideration for services.

               "Substituted   Limited   Partner"  means any  Person   who (i) is
permitted to become a Limited Partner  pursuant to the terms of Sections 9.2 and
9.3 and (ii)  agrees in  writing to be bound by the terms of this  Agreement  by
execution  of a  copy  of  this  Agreement  or by  another  written  undertaking
acceptable to the General Partner.

               "Tax Items" shall have the meaning set forth in Exhibit B.

               "Trading Day"  shall  mean  a day on which the principal national
securities  exchange on which the Common  Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is not listed or
admitted  to trading on any  national  securities  exchange,  shall mean any day
other than a Saturday,  a Sunday or a day on which banking  institutions  in the
State of New York are  authorized  or  obligated  by law or  executive  order to
close.

               "Transfer"  as  a  noun,   shall   mean   any  sale,  assignment,
conveyance, pledge, hypothecation, gift, encumbrance or other transfer, and as a
verb, shall mean to sell, assign, convey, pledge, hypothecate, give, encumber or
otherwise transfer.

                  Certain  additional  terms and phrases  have the  meanings set
forth in Exhibit B, C or D. I.2  Exhibits,  Etc  References to

                  "Exhibit" or to a "Schedule" are, unless otherwise  specified,
to one of the Exhibits or Schedules  attached to this Agreement,  and references
to an "Article" or a "Section" are, unless  otherwise  specified,  to one of the
Articles or Sections  of this  Agreement.  Each  Exhibit and  Schedule  attached
hereto is hereby incorporated herein by reference as if fully set forth herein.
<PAGE>
                                   ARTICLE II
                                  ORGANIZATION

                  II.1 Formation and Continuation.  The parties hereto do hereby
continue the Partnership as a limited partnership  pursuant to the provisions of
the Act, and all other pertinent laws of the State of Delaware, for the purposes
and upon the terms and conditions hereinafter set forth. The Partners agree that
the rights and  liabilities  of the  Partners  shall be as  provided  in the Act
except as otherwise herein expressly  provided.  Promptly upon the execution and
delivery hereof, the General Partner shall cause any requisite  amendment to the
Certificate of Limited Partnership and such other notice, instrument,  document,
or certificate as may be required by applicable  law, and which may be necessary
to enable the  Partnership to conduct its business,  and to own its  properties,
under the Partnership  name, to be filed or recorded in all  appropriate  public
offices.
                  II.2 Name. The business of the Partnership  shall be conducted
under the name of Prime Retail,  L.P. or such other name as the General  Partner
may select, and all transactions of the Partnership,  to the extent permitted by
applicable law, shall be carried on and completed in such name.

                  II.3 Character of the Business. The purpose of the Partnership
shall be to acquire, hold, own, develop, construct,  improve, maintain, operate,
sell,  lease,  transfer,   encumber,  convey,  exchange,  mortgage,  pledge  and
otherwise dispose of or deal with (either directly or indirectly  through one or
more Property  Partnerships)  the Properties;  to acquire,  hold, own,  develop,
construct,  improve, maintain, operate, manage, sell, lease, transfer, encumber,
convey, exchange, mortgage, pledge and otherwise dispose of or deal with (either
directly or  indirectly  through  one or more  Property  Partnerships)  real and
personal  property of all kinds;  to exercise  all of the powers of a partner in
Property  Partnerships;  to  acquire,  own,  deal with and  dispose of  Property
Partnership  Interests;  to undertake such other activities as may be necessary,
advisable,  desirable or convenient to the business of the  Partnership,  and to
engage in such other activities as shall be necessary or desirable to effect the
foregoing purposes. The Partnership shall have all powers necessary or desirable
to accomplish the purposes  herein set forth.  In connection with the foregoing,
but subject to all of the terms, covenants, conditions and limitations contained
in this Agreement, the Partnership shall have full power and authority, directly
or through its interest in Property  Partnerships,  to enter into, perform,  and
carry out  contracts  of any kind,  to borrow  money and to issue  evidences  of
indebtedness,  whether or not secured by mortgage,  trust deed,  pledge or other
lien,  and,  directly  or  indirectly,   to  acquire  and  construct  additional
Properties necessary or useful in connection with its business.

                  II.4 Location of the Principal Place of Business. The location
of the principal place of business of the Partnership shall be at 100 East Pratt
Street, 19th Floor, Baltimore,  Maryland,  21202 or such other location as shall
be selected from time to time by the General Partner in its sole discretion.

                  II.5 Registered  Agent and Registered  Office.  The registered
agent of the Partnership in the State of Delaware shall be The Corporation Trust
Company, 1209 Orange Street, Wilmington,  Delaware 19801 or such other Person as
the General Partner may select in its sole discretion.  The registered office of
the Partnership in the State of Delaware shall be The Corporation Trust Company,
1209 Orange  Street,  Wilmington,  Delaware  19801 or such other location as the
General Partner may select in its sole and absolute discretion.

                  II.6     Power of Attorney.

                           (a)      Each Limited Partner  and each assignee of a
Limited  Partner  hereby  constitutes  and  appoints  the General  Partner,  any
Liquidating Trustee 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:

          (i)  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  Liquidating  Trustee  deems
               appropriate  or  necessary  to  form,  qualify  or  continue  the
               existence  or  qualification  of  the  Partnership  as a  limited
               partnership (or a partnership in which the Limited  Partners have
               limited  liability)  in the  State of  Delaware  and in all other
               jurisdictions  in which the  Partnership  may or plans to conduct
               business or own  property;  (b) all  instruments  that the Genera
               Partner or the Liquidating Trustee 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 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,  Articles IV, VIII or IX 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

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

Nothing  contained  herein shall be construed as authorizing the General Partner
or any  Liquidating  Trustee to amend this Agreement  except in accordance  with
Section 14.7 hereof.
                   (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  Liquidating  Trustee 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  of a Limited  Partner  and the  transfer of all or any portion of such
Limited  Partner's or  assignee's  Common Units and shall extend to such Limited
Partner's or assignee's heirs, successors, assigns and personal representatives.
Each such Limited  Partner or assignee of a Limited  Partner hereby agrees to be
bound by any  representation  made by the  General  Partner  or any  Liquidating
Trustee,  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 Liquidating Trustee, taken in good faith under such power of attorney and in
accordance  with the  provisions  of this  Agreement.  Each  Limited  Partner or
assignee of a Limited  Partner shall execute and deliver to the General  Partner
or the  Liquidating  Trustee,  within  fifteen  (15) days  after  receipt of the
General  Partner's  or  Liquidating  Trustee's  request  therefor,  such further
designation,  powers of attorney and other instruments as the General Partner or
the  Liquidating  Trustee,  as the case may be,  deems  necessary  to effect the
provisions of this Section 2.6.
<PAGE>
                                   ARTICLE III
                                TERM; DISSOLUTION

                  III.1  Term.  The  Partnership  shall  commence  business as a
limited  partnership  upon the date hereof and shall continue until December 31,
2050,  unless the Partnership is dissolved  sooner pursuant to the provisions of
Section 3.2 or as otherwise provided by law.

                  III.2  DissolutionExcept  as set forth in this Section 3.2, no
Partner shall have the right to dissolve the Partnership.  The Partnership shall
not be dissolved by the admission of Substituted  Limited Partners or additional
Limited  Partners  or  by  the  admission  of a  successor  General  Partner  in
accordance with the terms of this Agreement.  Upon the withdrawal of the General
Partner,  any  successor  General  Partner  shall  continue  the business of the
Partnership.  The Partnership shall dissolve, and its affairs shall be wound up,
upon the first to occur of any of the following ("Liquidating Events"):

                            (a)an event  described  in Section  17-402(a) of the
         Act by reason of which the  General  Partner  ceases to be the  general
         partner,   unless,   within  ninety  (90)  days  after  such  event,  a
         Majority-in-Interest  of the Partners (other than the General  Partner)
         that  remain   agree  in  writing  to  continue  the  business  of  the
         Partnership  and to appoint,  effective as of the date of such event, a
         successor General Partner;

                           (b)an election to dissolve the  Partnership   made by
         the General  Partner with the Consent of the Partners;

                           (c)the sale of all or substantially all of the assets
         and  properties  of the Partnership;

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

                           (e)the expiration  of the term of the Partnership  as
         provided  in Section  3.1 hereof.

                  III.3 Bankruptcy of a Limited  Partner.  The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of  such  Limited  Partner  to  share  in the  Net  Income  or Net  Loss  of the
Partnership  and to receive  distributions  from the  Partnership  shall, on the
happening of such event, devolve on its successors or assigns, subject to and in
accordance with the terms and conditions of this Agreement,  and the Partnership
shall  continue  as a  limited  partnership.  However,  in no event  shall  such
assignee(s)  become a Substituted  Limited  Partner  except in  accordance  with
Article IX hereof.
<PAGE>
                                   ARTICLE IV
                       CONTRIBUTIONS TO CAPITAL; FINANCING

                  IV.1     General Partner Capital Contribution

     (a) The General Partner has made  contributions  to the Partnership and has
the Common Units,  Preferred  Units,  Convertible  Preferred  Units and Series C
Preferred Units (if any) as set forth on Exhibit A.

     (b)In  the  event the  General  Partner  issues  Series C  Preferred  Stock
pursuant to the Series C Preferred Stock Purchase Agreement, the General Partner
shall  contribute  to the  Partnership  the proceeds or  consideration  received
therefor and receive from the  Partnership an equal number of Series C Preferred
Units, as contemplated by clause (B) of subsection (b) of Section 4.3.

                  IV.2     Limited Partner Capital Contributions.

     (a)Each  Limited  Partner  had made  contributions  to the  capital  of the
Partnership  and has the  Common  Units or  Series C  Preferred  Units set forth
opposite its name on Exhibit A.

     (b)The  General  Partner is  authorized to cause the  Partnership  to issue
Series C Preferred Units to an institutional investor from time to time pursuant
to that certain  Series C Purchase  Agreement  dated as of August 8, 1997 by and
among such institutional  investor, the General Partner and the Partnership (the
"Series  C  Preferred  Purchase  Agreement")  for the  consideration  set  forth
therein, and upon payment of such consideration such Person shall be admitted as
a Limited Partner of the Partnership.

                  IV.3 Additional  Funds;  Restrictions on General Partner
     (a)The sums of money  required to finance the  business  and affairs of the
Partnership shall be derived from the initial Capital  Contributions made to the
Partnership  from the  Partners  as set  forth in  Sections  4.1 and 4.2  hereof
(including the issuance of Series C Preferred  Units from time to time) and from
funds  generated from the operation and business of the  Partnership,  including
without  limitation   distributions  directly  or  indirectly  received  by  the
Partnership from the Property Partnerships. In the event additional financing is
needed from sources  other than as set forth in the  preceding  sentence for any
reason, the General Partner may, in its sole discretion,  in such amounts and at
such times as it solely shall  determine to be  necessary  or  appropriate,  (i)
issue  additional  Partnership  Interests in accordance with Section 4.4 hereof;
(ii) make  additional  Capital  Contributions  to the  Partnership  (subject  to
Section 4.3(b) below);  (iii) cause the Partnership to borrow money,  enter into
loan arrangements,  issue debt securities, obtain letters of credit or otherwise
borrow money on a secured or unsecured  basis;  (iv) make a loan or loans to the
Partnership  (subject  to  Section  4.3(b)  below);  or (v) sell any  assets  or
properties  of the  Partnership.  In no event  shall  the  Limited  Partners  be
required  to make any  additional  Capital  Contributions  or any  loan  to,  or
otherwise   provide  any  financial   accommodation  for  the  benefit  of,  the
Partnership.  (b)The General  Partner shall not issue any debt  securities,  any
preferred  stock  (including  any  additional  Preferred  Stock  or  Convertible
Preferred  Stock  (other than Series C Preferred  Stock  issued in exchange  for
Series C  Preferred  Units)) or common  stock  (including  additional  shares of
Common Stock (other than (i) as payment of the Stock  Exchange Price pursuant to
Article  XI  hereof,  (ii) in  connection  with the  conversion  of  Convertible
Preferred Stock as contemplated by Section 4.8 hereof or any other conversion or
exchange of securities of the General  Partner  solely in conversion or exchange
for other  securities of the General Partner or (iii) Common Stock exchanged for
Series C  Preferred  Stock or Series C  Preferred  Units)) or  rights,  options,
warrants or  convertible  or  exchangeable  securities  containing  the right to
subscribe  for or purchase any of the  foregoing  (collectively,  "Securities"),
other  than to all  holders  of Common  Stock (in which  event the  Antidilution
Provisions  shall apply to the extent  applicable),  unless the General  Partner
shall (A) in the case of debt  securities,  lend to the Partnership the proceeds
of or  consideration  received  for  such  Securities  on  the  same  terms  and
conditions,  including  interest  rate  and  repayment  schedule,  as  shall  be
applicable  with respect to or incurred in connection  with such  Securities and
from any subsequent  exercise,  exchange or conversion  thereof (if applicable);
(B) in the  case of  Preferred  Stock,  Convertible  Preferred  Stock,  Series C
Preferred Stock or other equity  Securities senior or junior to the Common Stock
as to dividends and distributions on liquidation,  contribute to the Partnership
the proceeds or consideration  (including any property or other non-cash assets)
received  for such  Securities  and from any  subsequent  exercise,  exchange or
conversion thereof (if applicable),  and receive from the Partnership  Preferred
Units,  Convertible Preferred Units, Series C Preferred Units or other interests
in the Partnership in consideration therefor with the same terms and conditions,
including  dividend,  dividend  priority  and  liquidation  preference,  as  are
applicable  to such  Securities;  and (C) in the case of  Common  Stock or other
equity  Securities  on a  parity  with the  Common  Stock  as to  dividends  and
distributions  on  liquidation,  contribute to the  Partnership the net proceeds
(including any property or other non-cash  assets)  received for such Securities
or from any subsequent exercise, exchange or conversion thereof (if applicable),
and  receive  from  the  Partnership  a number  of  additional  Common  Units in
consideration  therefor  equal to the  product  of (x) the  number  of shares of
Common  Stock  or  other  equity  Securities  issued  by  the  General  Partner,
multiplied by (y) a fraction the  numerator of which is one and the  denominator
of which is the  Exchange  Factor (as  defined in Exhibit C hereto) in effect on
the date of such contribution.

                  IV.4 Issuance of Additional Partnership  Interests;  Admission
of Additional  Limited  Partners.

                    (a) In addition to any Partnership Interests issuable by the
Partnership  pursuant to Section  4.2,  Section  4.3 or Section 4.8 hereof,  the
General  Partner is  authorized  to cause the  Partnership  to issue  additional
Partnership  Interests in the form of Common Units to any Persons at any time or
from time to time, for consideration  not less than the fair value thereof,  and
on such terms and  conditions,  as the General  Partner shall  establish in each
case in its sole and absolute  discretion,  without any approval  being required
from any Limited Partner or any other Person;  provided,  however, that there is
no material  adverse impact on (i) the right of any Limited  Partner to exercise
the Rights  pursuant to Article XI or (ii) the economic effect upon the existing
Limited  Partners  of the  allocations  set forth in Exhibit  B.  Subject to the
limitations  set forth in the preceding  sentence,  the General Partner may take
such steps as it, in its reasonable  discretion,  deems necessary or appropriate
to admit any Person as a Limited Partner of the Partnership,  including, without
limitation,  amending the Certificate,  Exhibit A or any other provision of this
Agreement.

                  IV.5 Stock Incentive Plan.

     If at any time or from time to time Incentive Options granted in connection
with the Stock  Incentive Plan are exercised in accordance with the terms of the
Incentive Option Agreement:

                  (a)the  General  Partner shall,  as soon as practicable  after
         such exercise,  contribute to the capital of the  Partnership an amount
         equal to the  exercise  price paid,  if any, to the General  Partner by
         such exercising  party in connection with the exercise of the Incentive
         Option; and

                  (b)the  General  Partner  shall  receive  the number of Common
         Units  corresponding  to the number of shares of Common Stock delivered
         by the  General  Partner  to  such  exercising  party  multiplied  by a
         fraction the numerator of which is one and the  denominator of which is
         the  Exchange  Factor (as defined in Exhibit C hereto) in effect on the
         date of such contribution.

                  IV.6 No Third  Party  Beneficiary.

     No creditor or other third party having dealings with the Partnership shall
have the right to enforce the right or obligation of any Partner to make Capital
Contributions  or loans or to pursue any other right or remedy  hereunder  or at
law or in equity,  it being  understood  and agreed that the  provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective  successors and assigns.  None of the rights
or obligations of the Partners herein set forth to make Capital Contributions or
loans to the  Partnership  shall be deemed an asset of the  Partnership  for any
purpose by any creditor or other third party, nor may such rights or obligations
be sold,  transferred or assigned by the Partnership or pledged or encumbered by
the Partnership to secure any debt or other  obligation of the Partnership or of
anyof the Partners.

                  IV.7 No Interest;  No Return.

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

                  IV.8  Conversion of  Convertible  Preferred  Units or Series C
Preferred Units; Redemption or Purchase of Series C Preferred Units, Convertible
Preferred Units or Preferred Units.

                  (a)If at any time holders of the General Partner's Convertible
Preferred Stock shall exercise their rights under the General Partner's Articles
of Incorporation to convert any shares of Convertible  Preferred Stock to Common
Stock,   in  whole  or  in  part  (including  any  fractions   thereof),   then,
simultaneously  with such conversion,  an equal number of Convertible  Preferred
Units shall be automatically  converted into the number of Common Units equal to
the  product  of (x) the  number  of  shares  of  Common  Stock  into  which the
Convertible  Preferred  Stock is  converted,  multiplied  by (y) a fraction  the
numerator of which is one and the  denominator  of which is the Exchange  Factor
(as defined in Exhibit C hereto) in effect on such date.

                   (b)If at any time shares of the General  Partner's  Preferred
Stock  are  to be  redeemed  pursuant  to  the  General  Partner's  Articles  of
Incorporation or purchased by the General Partner,  the Partnership shall redeem
an equal  number of  Preferred  Units by payment to the  General  Partner of the
Preferred  Unit  Redemption  Amount or purchase  price to be paid by the General
Partner  immediately  prior to or concurrently with such redemption or purchase.
If at any time shares of the General Partner's  Convertible  Preferred Stock are
to be redeemed  pursuant to the General  Partner's  Articles of Incorporation or
purchased by the General Partner,  the Partnership  shall redeem an equal number
of  Convertible  Preferred  Units by payment of the  Convertible  Preferred Unit
Redemption  Amount  therefor  or  purchase  price  paid by the  General  Partner
immediately prior to or concurrently with such redemption or purchase. If at any
time shares of the General Partner's Series C Preferred Stock are to be redeemed
pursuant to the General Partner's  Articles of Incorporation or purchased by the
General  Partner,  the  Partnership  shall  redeem  an equal  number of Series C
Preferred Units by payment of the Series C Preferred Unit  Redemption  Amount or
purchase  price  to be paid  by the  General  Partner  immediately  prior  to or
concurrently with such redemption or purchase.

                   (c)If at any time holders of the General  Partner's  Series C
Preferred Stock shall exercise their rights under the General Partner's Articles
of  Incorporation  to convert any shares of Series C  Preferred  Stock to Common
Stock, in whole or in part, then,  simultaneously with such conversion, an equal
number of Series C Preferred  Units shall be  automatically  converted  into the
number of Common  Units  which is equal to the number of shares of Common  Stock
into which the shares of the General  Partner's  Series C Preferred  Stock which
are being converted are so converted,  as such number is determined  pursuant to
the General Partner's Articles of Incorporation.

                  (d) The  Series  C  Preferred  Units  may be  redeemed  by the
Partnership  at the  option  of the  General  Partner  pursuant  to the terms of
Section 4.9.

                  (e)The General Partner shall amend Exhibit A hereto to reflect
(i)  each  conversion  of  Convertible  Preferred  Units,  and the  issuance  of
additional Common Units in connection therewith, (ii) each exchange by a Limited
Partner of Series C Preferred Units for Series C Preferred Stock or Common Stock
of the  General  Partner,  and the  allocation  or  reissuance  of such Series C
Preferred Units in the name of the General Partner,  pursuant to Section 12.3 as
Series C  Preferred  Units or Common  Units,  as the case may be, and (iii) each
redemption  of  Convertible  Preferred  Units,  Preferred  Units  and  Series  C
Preferred Units.

                  4.9  Redemption  of Series C Preferred  Units

                   (a) On and after  August 8,  2007,  the  Partnership,  at the
option of the General Partner, may redeem the Series C Preferred Units, in whole
at any time or from time to time in part at a redemption price for each Series C
Preferred  Unit,  payable in cash,in an amount  equal to the Series C  Preferred
Unit Redemption Amount therefor.

                   (b) Notice of the redemption of any Series C Preferred  Units
shall be mailed by first class mail to each Partner  which is a holder of record
of Series C Preferred  Units to be redeemed at the address of each such  Partner
as shown on the  Partnership's  records,  not less than 30 nor more than 90 days
prior to the date fixed for redemption (the "Call Date"). Neither the failure to
mail any notice  required by this  paragraph,  nor any defect  therein or in the
mailing thereof, to any particular Partner,  shall affect the sufficiency of the
notice or the validity of the  proceedings  for  redemption  with respect to the
other Partners.  Each such mailed notice shall state,  as  appropriate:  (1) the
Call Date;  (2) the number of Series C Preferred  Units to be  redeemed  and, if
fewer  than all the Series C  Preferred  Units  held by such  Partner  are to be
redeemed,  the number of such Series C Preferred  Units to be redeemed from such
Partner;  (3) the redemption  price;  (4) the place or places of the closing for
such redemption;  (5) the then-current conversion price; and (6) that the Series
C Preferred  Distribution  with  respect to the Series C  Preferred  Units shall
cease to accrue on such Call Date except as otherwise  provided  herein.  Notice
having  been  mailed as  aforesaid,  from and after  the Call Date  (unless  the
Partnership  shall fail to make  available an amount of cash necessary to effect
such  redemption),  (i)  except  as  otherwise  provided  herein,  the  Series C
Preferred  Distribution on the Series C Preferred Units so called for redemption
shall cease to accrue,  (ii) such  Series C  Preferred  Units shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as holders
of Series C Preferred  Units shall cease  (except the rights to receive the cash
payable upon such  redemption,  without  interest  thereon).  The  Partnership's
obligation to provide cash in accordance  with the preceding  sentence  shall be
deemed  fulfilled if, on or before the Call Date, the Partnership  shall deposit
with a bank or trust company (which may be an affiliate of the Partnership) that
has an office in the Borough of Manhattan, City of New York, and that has, or is
an  affiliate  of a bank or trust  company  that has,  capital and surplus of at
least  $50,000,000,  necessary for such redemption,  in trust,  with irrevocable
instructions  that  such  cash be  applied  to the  redemption  of the  Series C
Preferred  Units so called for  redemption.  No  interest  shall  accrue for the
benefit of the holders of Series C Preferred Units to be redeemed on any cash so
set aside by the Partnership.  Subject to applicable escheat laws, any such cash
unclaimed at the end of two years from the Call Date shall revert to the general
funds of the  Partnership,  after which  reversion  the holders of such Series C
Preferred Units so called for redemption shall look only to the general funds of
the Partnership for the payment of such cash.

                  If fewer than all the outstanding Series C Preferred Units are
to be redeemed,  units to be redeemed  shall be selected by the General  Partner
from outstanding  Series C Preferred Units not previously  called for redemption
pro rata (as nearly as may be), by lot or by any other method  determined by the
General Partner in its sole discretion to be equitable.

                                    ARTICLE V

                              INTENTIONALLY OMITTED

                                   ARTICLE VI

                           ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND
                              ACCOUNTING MATTERS

                  VI.1  Allocations.

     The Net Income,  Net Loss and/or other Partnership items shall be allocated
pursuant to the provisions of Exhibit B.

                  VI.2     Distributions.

                  (a)  Except  for  distributions  pursuant  to  Section  8.2 in
connection with the dissolution and liquidation of the Partnership,  the General
Partner  shall  cause the  Partnership  to  distribute  all Net Cash Flow to the
Partners  from time to time as  determined  by the General  Partner,  but in any
event not less frequently than quarterly, in such amounts as the General Partner
shall determine, and in the following priority:

                           (i)  First,  to the  extent  that the  amount of cash
                  distributed  to the  General  Partner  for all prior  Quarters
                  pursuant to Section  6.2(a)(ii)  (other  than the  immediately
                  preceding  Quarter) was less than the  Preferred  Distribution
                  for  each of the  outstanding  Preferred  Units  for all  such
                  Quarters,  and such deficiency was not previously  distributed
                  pursuant to this subsection (i) or paid as part of a Preferred
                  Unit Redemption Amount (a "Preferred Distribution Shortfall"),
                  Net Cash Flow shall be distributed  to the General  Partner in
                  an amount equal to such Preferred  Distribution  Shortfall for
                  all such prior Quarters.

                      (ii)  Second,  Net Cash Flow shall be  distributed  to the
                  General Partner on the  Partnership  Payment Date in an amount
                  equal  to  the  Preferred  Distribution  for  the  immediately
                  preceding  Quarter for each  outstanding  Preferred  Unit then
                  held by the General Partner.

                  (iii) Third,  to the extent the amount of cash  distributed to
                  the General  Partner  pursuant to Section  6.2(a)(iv)  for all
                  prior Quarters (other than the immediately  preceding Quarter)
                  was less than the Convertible Preferred  Distribution for each
                  of the  outstanding  Convertible  Preferred Units for all such
                  Quarters,  and such deficiency was not previously  distributed
                  pursuant  to  this  subsection   (iii)  or  paid  as  part  of
                  Convertible  Preferred Unit Redemption  Amount (a "Convertible
                  Preferred  Distribution  Shortfall"),  Net Cash Flow  shall be
                  distributed to the General  Partner in an amount equal to such
                  Convertible  Preferred  Distribution  Shortfall  for all  such
                  prior Quarters.

                      (iv)  Fourth,  Net Cash Flow shall be  distributed  to the
                  General Partner on the  Partnership  Payment Date in an amount
                  equal  to  the  Convertible  Preferred  Distribution  for  the
                  immediately preceding Quarter for each outstanding Convertible
                  Preferred Unit then held by the General Partner.

                           (v)  Fifth,  to the  extent  that the  amount of cash
                  distributed to Partners pursuant to Section 6.2(a)(vi) for all
                  prior Quarters (other than the immediately  preceding Quarter)
                  was less than the Series C Preferred  Distribution for each of
                  the  outstanding   Series  C  Preferred  Units  for  all  such
                  Quarters,  and such deficiency was not previously  distributed
                  pursuant to this  subsection (v) or paid as part of a Series C
                  Preferred  Unit  Redemption  Amount  (a  "Series  C  Preferred
                  Distribution Shortfall"),  Net Cash Flow in an amount equal to
                  such Series C Preferred  Distribution  Shortfall  for all such
                  prior quarters  shall be  distributed to the Partners  holding
                  Series C Preferred Units on the  Partnership  Payment Date for
                  the  immediately  preceding  Quarter,  pro rata, in accordance
                  with their respective Series C Preferred Units.

                      (vi)  Sixth,  Net Cash Flow  shall be  distributed  to the
                  Partners  holding Series C Preferred  Units in an amount equal
                  to the Series C  Preferred  Distribution  for the  immediately
                  preceding  Quarter  for each  outstanding  Series C  Preferred
                  Unit, pro rata, in accordance with their  respective  Series C
                  Preferred Units.

                     (vii)  Seventh,  the  balance  of any Net  Cash  Flow to be
                  distributed,  if any,  shall be  distributed  to the  Partners
                  holding  Common  Units on the  Partnership  Payment  Date with
                  respect  to the  immediately  preceding  Quarter,  pro rata in
                  accordance with their respective Common Units.

                   (b)The  General  Partner  shall use its best efforts to cause
the Partnership to distribute  sufficient  amounts to enable the General Partner
to pay  shareholder  dividends  that  will  (i)  satisfy  the  requirements  for
qualifying as a REIT under the Code and Regulations ("REIT  Requirements"),  and
(ii) avoid any federal income or excise tax liability of the General Partner.

                   (c)With  respect  to any  Limited  Partner(s)  from  whom the
General  Partner  receives an Exercise  Notice to exercise  Rights in accordance
with Article XI for which the General  Partner  elects to pay the Cash  Purchase
Price pursuant to Exhibit C, the General  Partner shall cause the Partnership to
distribute  to such  Limited  Partner(s),  with  respect to the Common Units for
which the Cash Purchase Price is paid, (i) on the  Partnership  Payment Date, if
any, thereafter occurring during the Quarter in which the Cash Purchase Price is
paid,  an  amount  equal to a full pro rata  share of any Net Cash Flow to which
such Limited  Partner  would have been  entitled to receive  pursuant to Section
6.2(a)(vii)  had such Limited  Partner held such Common Units on the Partnership
Payment Date occurring in such Quarter and (ii) on the Partnership Payment Date,
if any,  occurring during the next succeeding Quarter after such Exercise Notice
is received,  an amount equal to the Net Cash Flow to which such Limited Partner
would have been  entitled to receive  pursuant to Section  6.2(a)(vii)  had such
Limited  Partner  held  such  Common  Units  on the  Partnership  Payment  Date,
multiplied  by a fraction,  the  numerator of which is the number of days in the
preceding  Quarter (based on three 30-day months) that the Limited  Partner held
such Common Units and the denominator of which is 90.

                  (d)Notwithstanding any other provision in this Agreement, from
time to time and at such times as the General Partner shall determine, and prior
to any  determination  or  distribution  of Net Cash Flow  pursuant  to  Section
6.2(a),  there shall be  distributed  to the General  Partner from the revenues,
proceeds or other funds of the Partnership, an amount equal to any REIT Expenses
(other than those  described in clause (ii) of the definition of REIT Expenses),
to the extent not paid or payable by the General Partner from cash distributions
which it receives  directly  from any  Property  Partnerships  on account of any
interest in the  Property  Partnership  which it holds  directly  (as opposed to
through the Partnership).

                  (e)The  provisions  of Section 6.2 of this  Agreement  are not
intended to supersede or replace,  and are subject to, the  agreements set forth
on Exhibit E hereto.

                  VI.3 Books of Account.

At all times during the  continuance  of the  Partnership,  the General  Partner
shall maintain or cause to be maintained full, true,  complete and correct books
of account in accordance  with GAAP wherein shall be entered  particulars of all
monies,  goods or effects  belonging  to or owing to or by the  Partnership,  or
paid, received,  sold or purchased in the course of the Partnership's  business,
and all of such other transactions,  matters and things relating to the business
of the  Partnership  as are usually  entered in books of account kept by persons
engaged  in a  business  of a like kind and  character  as the  Partnership.  In
addition, the Partnership shall keep all records as required to be kept pursuant
to the Act.  The books and  records  of account  shall be kept at the  principal
office of the Partnership,  and each Partner shall at all reasonable  times, and
upon reasonable  notice,  have access to such books and records and the right to
inspect the same.

                  VI.4 Reports.

     The General  Partner  shall cause to be submitted  to the Limited  Partners
promptly  upon  receipt of the same from the  Accountants  and in no event later
than April 1 of each year, copies of Audited Financial  Statements prepared on a
consolidated  basis for the Partnership  and each of the Property  Partnerships,
together  with  the  reports  thereon,  and  all  supplementary   schedules  and
information, prepared by the Accountants. The Partnership also shall cause to be
prepared  such  reports  and/or  information  as are  necessary  for the General
Partner to determine its  qualification  as a REIT and its compliance  with REIT
Requirements.

                  VI.5 Audits.

     Not less frequently than annually, the books and records of the Partnership
shall  be  audited  by  the  Accountants.  The  General  Partner  shall,  unless
determined  otherwise by the General  Partner with the Consent of the  Partners,
engage  the  Accountants  to  audit  the  books  and  records  of  the  Property
Partnerships.

                  VI.6 Tax  Elections  and Returns.

     All elections required or permitted to be made by the Partnership under any
applicable tax law shall be made by the General Partner in its sole  discretion;
provided,  however, if requested by a transferee (or if the General Partner is a
transferee,  as it shall determine in its sole discretion),  the General Partner
shall file an election on behalf of the  Partnership  pursuant to Section 754 of
the Code to  adjust  the  basis  of the  Partnership  property  in the case of a
transfer of a Partnership Interest,  including transfers made in connection with
the  exercise  of  Rights,  made  in  accordance  with  the  provisions  of this
Agreement.  The General  Partner shall prepare and file, or cause to be prepared
and filed,  all state and  federal tax  returns on a timely  basis.  The General
Partner shall prepare and submit, or cause to be prepared and submitted,  to the
Limited  Partners  on or before  March 1 of each year for review all federal and
state income tax returns of the Partnership and, for the Property  Partnerships,
to submit, or cause to be prepared and submitted,  to the Limited Partners on or
before  March 1 of each year for review all federal and state income tax returns
of the  Property  Partnerships.  If the  Limited  Partners  determine  that  any
modifications to the tax returns of the Partnership or any Property  Partnership
should be  considered,  the  Limited  Partners  shall,  within  thirty (30) days
following receipt of such tax returns from the General Partner,  indicate to the
General Partner the suggested revisions to the tax returns,  which returns shall
be resubmitted to the Limited Partners for their review (but not approval).  The
Limited  Partners shall complete their review of the resubmitted  returns within
ten (10) days after  receipt  thereof  from the  General  Partner.  The  General
Partner  shall  consult in good faith with the Limited  Partners  regarding  any
proposed modifications to the tax returns of the Partnership and/or the Property
Partnerships.  A statement  of the  allocation  of Net Income or Net Loss of the
Partnership  shown on the annual  income tax  returns  prepared  by the  General
Partner or the  Accountants  and a statement of the  allocation of Net Income or
Net Loss shown on the income tax return of the  Property  Partnerships  shall be
transmitted  and delivered to the Limited  Partners  within ten (10) days of the
preparation or receipt thereof by the Partnership.  The General Partner shall be
responsible  for  preparing and filing all federal and state tax returns for the
Partnership  and  furnishing  copies  thereof  to the  Partners,  together  with
required  Partnership  schedules showing  allocations of Tax Items and copies of
the tax  returns  of all  Property  Partnerships  all  within the period of time
prescribed by law.

                  VI.7 Tax  Matters  Partner.

     The General Partner is hereby designated as the Tax Matters Partner for the
Partnership  within the  meaning of Section  6231(a)(7)  of the Code;  provided,
however,  (i) in exercising  its authority as Tax Matters  Partner,  the General
Partner  shall be limited by the  provisions  of this  Agreement  affecting  tax
aspects of the Partnership; (ii) the General Partner shall consult in good faith
with the  Limited  Partners  regarding  the  filing  of a Code  Section  6227(b)
administrative  adjustment request with respect to the Partnership or a Property
Partnership before filing such request, it being understood,  however,  that the
provisions  hereof  shall not be  construed to limit the ability of any Partner,
including the General Partner,  to file an administrative  adjustment request on
its own behalf  pursuant  to  Section  6227(a)  of the Code;  (iii) the  General
Partner  shall  consult in good faith with the Limited  Partners  regarding  the
filing of a petition for judicial review of an administrative adjustment request
under  Section 6228 of the Code,  or a petition  for judicial  review of a final
partnership  administrative  judgment under Section 6226 of the Code relating to
the Partnership before filing such petition; (iv) the General Partner shall give
prompt notice to the Limited  Partners of the receipt of any written notice that
the Internal Revenue Service or any state or local taxing  authority  intends to
examine  Partnership  income tax  returns  for any year,  the receipt of written
notice of the beginning of an administrative proceeding at the Partnership level
relating  to the  Partnership  under  Section  6223 of the Code,  the receipt of
written notice of the final Partnership  administrative  adjustment  relating to
the  Partnership  pursuant to Section  6223 of the Code,  and the receipt of any
request from the Internal  Revenue Service for waiver of any applicable  statute
of limitations  with respect to the filing of any tax return by the Partnership;
and (v) the General  Partner shall promptly  notify the Limited  Partners if the
General  Partner does not intend to file for judicial review with respect to the
Partnership.  The General Partner, in acting on behalf of the Partnership as tax
matters partner of a Property Partnership, shall afford the Limited Partners the
same rights with respect to Property  Partnership tax matters as afforded to the
Limited Partners under this Section 6.7.
<PAGE>
                                   ARTICLE VII
             RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER

                  VII.1  Expenditures  by  Partnership

     The  General  Partner  is  hereby   authorized  to  pay   compensation  for
accounting,  administrative,  legal,  technical,  management  and other services
rendered to the Partnership.  All of the aforesaid expenditures shall be made on
behalf of the Partnership  and,  except as provided  below,  the General Partner
shall be entitled  to  reimbursement  by the  Partnership  for any  expenditures
incurred by it on behalf of the  Partnership  which shall be made other than out
of the funds of the Partnership. The Partnership shall also assume, and pay when
due,  all  Administrative  Expenses  other than REIT  Expenses,  but only to the
extent  not paid or  payable  by the  General  Partner  from cash  distributions
received by the General  Partner  directly  from any Property  Partnership.  The
General Partner shall use any cash distributions which it receives directly from
any Property Partnerships on account of any interest in the Property Partnership
which it holds  directly  (as  opposed to through the  Partnership)  to pay REIT
Expenses.

                  VII.2  Powers  and  Duties of  General  Partner

     The  General  Partner  shall  be  responsible  for  the  management  of the
Partnership's  business  and  affairs.  Except  as  otherwise  herein  expressly
provided,  and subject to the  limitations  contained in Section 7.3 hereof with
respect to Major  Decisions,  the  General  Partner  shall  have,  and is hereby
granted,  full and complete power,  authority and discretion to take such action
for and on  behalf of the  Partnership  and in its name as the  General  Partner
shall,  in its sole and absolute  discretion,  deem  necessary or appropriate to
carry out the  purposes  for  which the  Partnership  was  organized.  Except as
otherwise  expressly  provided  herein,  and subject to Section 7.3 hereof,  the
General Partner shall have the following rights, powers and authorities,  to the
extent  necessary and  appropriate  to pursue and accomplish the purposes of the
Partnership:

                  (a)To manage, control, invest, reinvest,  acquire by purchase,
         lease or  otherwise,  sell,  contract  to  purchase  or sell,  hold for
         investment,  grant, obtain, or exercise options to purchase, options to
         sell or conversion rights, assign, transfer,  convey, deliver, endorse,
         exchange, pledge, mortgage, abandon, improve, repair, maintain, insure,
         lease  for any term and  otherwise  deal with any and all  property  of
         whatsoever kind and nature, and wheresoever situated, in furtherance of
         the business or purposes of the Partnership;

                   (b)To  acquire,  directly or  indirectly,  interests  in real
         estate of any kind and of any type,  and any and all kinds of interests
         therein,  and to determine  the manner in which title  thereto is to be
         held; to manage,  insure  against loss,  protect and subdivide any real
         estate,  interests  therein or parts  thereof;  to improve,  develop or
         redevelop  any such real estate;  to  participate  in the ownership and
         development of any property;  to dedicate for public use, to vacate any
         subdivisions or parts thereof, to resubdivide,  to contract to sell, to
         grant options to purchase or lease, or to sell on any terms; to convey,
         mortgage,  pledge or  otherwise  encumber  said  property,  or any part
         thereof;  to lease said property or any part thereof from time to time,
         upon any  terms  and for any  period  of time,  and to renew or  extend
         leases,  to amend,  change or modify  the terms and  provisions  of any
         leases and to grant  options to lease and  options to renew  leases and
         options to purchase; to partition or to exchange said real property, or
         any part  thereof,  for other  real or  personal  property  or to grant
         easements or charges of any kind; to relay, convey or assign any right,
         title or interest in or about or easement  appurtenant to said property
         or any part thereof;  to construct  and  reconstruct,  remodel,  alter,
         repair, add to or take from buildings on any real property in which the
         Partnership  owns an interest;  to insure any Person having an interest
         in or  responsibility  for  the  care,  management  or  repair  of such
         property;  to direct the trustee of any land trust to mortgage,  lease,
         convey or contract to convey the real estate held in such land trust or
         to  execute  and  deliver  deeds,  mortgages,  notes,  and  any and all
         documents  pertaining to the property  subject to such land trust or in
         any matter  regarding such trust; to execute  assignments of all or any
         part  of the  beneficial  interest  in any  land  trust  in  which  the
         Partnership owns a beneficial interest;

                  (c) To  employ,  engage  or  contract  with  or  dismiss  from
         employment or engagement  Persons to the extent deemed necessary by the
         General  Partner for the  operation and  management of the  Partnership
         business,  including but not limited to,  contractors,  subcontractors,
         engineers, architects, surveyors, mechanics, consultants,  accountants,
         attorneys,  insurance brokers, real estate brokers,  financial counsel,
         professional advisers and others;

                  (d)To  enter  into,  make,  amend,  perform  and carry out, or
         cancel and rescind, contracts and other obligations,  including without
         limitation   guaranties  and  indemnity   agreements  for  any  purpose
         pertaining  to  the  business  of  the   Partnership  or  any  Property
         Partnership;  and to loan  money to,  borrow  money  from and engage in
         transactions with Affiliates of the Partnership or any other Person;

                   (e)To  borrow money or procure  loans and  advances  from any
         Person for Partnership purposes,  and to apply for and secure, from any
         Person,  credit or accommodations,  without limitation as to amount; to
         contract liabilities and obligations, direct or contingent and of every
         kind and nature with or without security; to repay, discharge,  settle,
         adjust,  compromise,  or  liquidate  any such  loan,  advance,  credit,
         obligation or liability;  and to draw, make, accept,  endorse,  execute
         and issue promissory notes, drafts, bills of exchange, warrants, bonds,
         debentures,  evidences of indebtedness  and other  instruments,  and to
         secure  the  payment  thereof,  the  interest  thereon  and  any  other
         obligations or liabilities  relating thereto, in any manner,  including
         without  limitation by mortgage on, security  interest in or pledge of,
         or  conveyance  or assignment in trust of, the whole or any part of the
         assets of the Partnership,  real, personal or mixed, including contract
         rights and options,  whether at the time owned or thereafter  acquired,
         and future earnings,  and to sell,  pledge or otherwise dispose of such
         securities or other  obligations of the Partnership for the furtherance
         of any purpose of the  Partnership,  and to guaranty or  indemnify  any
         Person in connection with any of the foregoing or any other activity of
         the Partnership;

                  (f)To pledge, hypothecate, mortgage, assign, deposit, deliver,
         enter  into  sale  and  leaseback  arrangements  or  otherwise  give as
         security or as additional or substitute security,  or sell or otherwise
         dispose of any and all  Partnership  property,  tangible or intangible,
         including,  but not limited to, real estate and beneficial interests in
         land  trusts,  and to make  substitutions  thereof,  and to receive any
         proceeds  thereof  upon the  release  or  surrender  thereof;  to sign,
         execute and deliver any and all assignments,  deeds and other contracts
         and instruments in writing; to authorize,  give, make, procure,  accept
         and receive moneys, payments,  property,  notices,  demands,  vouchers,
         receipts,  releases,  compromises  and  adjustments;  to waive notices,
         demands,  and protests and authorize and execute  waivers of every kind
         and nature; to enter into, make,  execute,  deliver and receive written
         agreements,  undertakings and instruments of every kind and nature;  to
         give oral  instructions and make oral  agreements;  and generally to do
         any and all other acts and things incidental to any of the foregoing or
         with  reference  to any  dealings  or  transactions  which the  General
         Partner may deem necessary, proper or advisable to effect or accomplish
         any of the  foregoing  or to carry out the business and purposes of the
         Partnership;

                  (g)To  acquire and enter into any contract of insurance  which
         the General  Partner deems  necessary or appropriate for the protection
         of the Partnership, for the conservation of the Partnership's assets or
         for any purpose convenient or beneficial to the Partnership;

                  (h)To  conduct any and all banking  transactions  on behalf of
         the  Partnership;  to adjust and settle  checking,  savings,  and other
         accounts  with such  institutions  as the  General  Partner  shall deem
         appropriate;  to  draw,  sign,  execute,  accept,  endorse,  guarantee,
         deliver,  receive  and pay  any  checks,  drafts,  bills  of  exchange,
         acceptances, notes, obligations, undertakings and other instruments for
         or relating to the  payment of money in,  into,  or from any account in
         the Partnership's name; to execute,  procure,  consent to and authorize
         extensions and renewals of any of the foregoing;  to make deposits into
         and withdrawals from the  Partnership's  bank accounts and to negotiate
         or discount  commercial  paper,  acceptances,  negotiable  instruments,
         bills  of  exchange  and  dollar   drafts;   to  invest  funds  of  the
         Partnership;

                   (i)To demand,  sue for, receive,  and otherwise take steps to
         collect or recover all debt,  rents,  proceeds,  interests,  dividends,
         goods, chattels, income from property,  damages and all other property,
         to which the Partnership may be entitled or which are or may become due
         the Partnership from any Person; to commence,  prosecute or enforce, or
         to defend, answer or oppose,  contest and abandon all legal proceedings
         in which the  Partnership  is or may  hereafter be  interested;  and to
         settle,  compromise  or  submit to  arbitration  any  accounts,  debts,
         claims,  disputes and matters which may arise  between the  Partnership
         and any other  Person and to grant an extension of time for the payment
         or satisfaction thereof on any terms, with or without security;

                  (j) To make  arrangements for financing,  including the taking
         of all action deemed necessary or appropriate by the General Partner to
         cause any approved loans to be closed;

                  (k) To  take  all  reasonable  measures  necessary  to  insure
         compliance by the Partnership with applicable  arrangements,  and other
         contractual   obligations   and   arrangements   entered  into  by  the
         Partnership from time to time in accordance with the provisions of this
         Agreement,  including  periodic  reports as required to be submitted to
         lenders,  and using all due diligence to insure that the Partnership is
         in compliance with its contractual obligations;

                  (l) To maintain the Partnership's books and records;

                  (m) To  prepare  and  deliver,  or  cause to be  prepared  and
         delivered by the  Partnership's  Accountants,  all  financial and other
         reports  with  respect to the  operations  of the  Partnership  and all
         Federal and state tax returns and reports;

                  (n) To act in any state or nation in which the Partnership may
         lawfully act, for itself or as principal,  agent or representative  for
         any Person with respect to any business of the Partnership;

                  (o) To  become  a  partner  or  member  in,  and  perform  the
         obligations  of  a  partner  or  member  of,  any  general  or  limited
         partnership or limited liability company;

                  (p) To apply for,  register,  obtain,  purchase  or  otherwise
         acquire  trademarks,  trade  names,  labels and designs  relating to or
         useful in connection with any business of the Partnership,  and to use,
         exercise, develop and license the use of the same;

                  (q) To pay or  reimburse  any and all  actual  fees,  costs
         and  expenses  incurred  in the formation and organization of the
         Partnership;

                  (r) To  do  all  acts   which   are  necessary,  customary  or
         appropriate  for the  protection and preservation of the Partnership's
         assets, including the establishment of reserves; and

                  (s)  In  general,  to  exercise  all of  the  general  rights,
         privileges  and  powers  permitted  to be  had  and  exercised  by  the
         provisions of the Act.

Except as  otherwise  provided  herein,  to the extent the duties of the General
Partner require  expenditures of funds to be paid to third parties,  the General
Partner  shall not have any  obligations  hereunder  except to the  extent  that
Partnership  funds are  reasonably  available to it for the  performance of such
duties,  and  nothing  herein  contained  shall be deemed to require the General
Partner,  in its capacity as such,  to expend its  individual  funds to make any
payment  to third  parties  on behalf of the  Partnership  or to  undertake  any
individual liability or obligation on behalf of the Partnership.

                  VII.3 Major Decisions. 

     The General  Partner shall not,  without the prior Consent of the Partners,
on behalf of the Partnership, undertake any of the following actions (the "Major
Decisions"):

                  (a)Amend  and/or modify this Agreement other than as specified
         in Section 14.7.

                  (b)Take title to any personal or real property,  other than in
         the name of the  Partnership,  a Property  Partnership  or  pursuant to
         Section 7.5 or 7.8 hereof.

                  (c)Dissolve the Partnership prior to the occurrence of any of
         the Liquidating Events.

                  VII.4 No Removal.

In no event shall the Limited  Partners or any other  Persons  have the right to
remove the General Partner as general partner of the Partnership.

                  VII.5  General  Partner  Participation.

The General Partner agrees that all business  activities of the General Partner,
including activities pertaining to the acquisition, development and ownership of
properties,  shall be  conducted  through  the  Partnership;  provided  that the
General  Partner  may own up to a one  percent  (1%)  interest  in any  Property
Partnership.  The General  Partner agrees that all borrowings for the purpose of
making  distributions  to its  stockholders  will not be incurred by the General
Partner but will be incurred  only by the  Partnership  or by one or more of the
Property Partnerships.

                  VII.6  Proscriptions

The General Partner shall not have theauthority to:

                  (a)      Do any act in   contravention  of this  Agreement  or
         which  would make  it  impossible  to carry on the ordinary business of
         the Partnership;

                  (b)      Possess any Partnership  property or assign rights in
         specific  Partnership property for other than Partnership purposes; or

                  (c)      Do any act in contravention of applicable law.

Nothing herein contained shall impose any obligation on any Person or firm doing
business  with the  Partnership  to inquire  as to  whether  or not the  General
Partner has properly  exercised its authority in executing any contract,  lease,
mortgage,  deed or other instrument on behalf of the  Partnership,  and any such
third Person shall be fully protected in relying upon such authority.

                  VII.7    Additional  Partners.

     Additional  Partners may be admitted to the Partnership  only asprovided in
Section 4.4 hereof.

                  VII.8 Title Holder. 

     To the extent  allowable under  applicable law, title to all or any part of
the properties of the  Partnership may be held in the name of the Partnership or
in the name of any other Person,  the beneficial  interest in which shall at all
times be vested in the Partnership.  Any such title holder shall perform any and
all of its respective functions to the extent and upon such terms and conditions
as may be determined from time to time by the General  Partner,  consistent with
the business and purposes of the Partnership.

                  VII.9 Compensation of the General Partner. 

     The General Partner shall not be entitled to any  compensation for services
rendered  to the  Partnership  solely in its  capacity as General  Partner.  The
foregoing shall not limit the General Partner's right to reimbursement for those
costs and expenses constituting Administrative Expenses as provided elsewhere in
this Agreement.

                  VII.10   Waiver and Indemnification.

                   (a) Neither  any  Partner nor any Person  acting on behalf of
any Partner  (including the  Liquidating  Trustee),  pursuant  hereto,  shall be
liable, responsible or accountable in damages or otherwise to the Partnership or
to any Partner for any acts or omissions performed or omitted to be performed by
them or for their errors of judgment;  provided that the Partner's or such other
Person's  conduct or omission to act was taken in good  faith.  The  Partnership
shall,  and hereby  does,  indemnify  and hold  harmless  each  Partner  and its
Affiliates and any individual  acting on their behalf (including the Liquidating
Trustee) from any loss, damage, expense, claim or liability,  including, but not
limited to, reasonable attorneys' fees and expenses,  incurred by them by reason
of the  operations of the  Partnership  as set forth in this  Agreement in which
such Partner or other Person may be involved or in enforcing  the  provisions of
this indemnity,  unless it is established  that: (i) the act or omission of such
Partner or other  Person was  material  to the matter  giving  rise to the loss,
damage, expense, claim or liability and either was committed in bad faith or was
the  result of active  and  deliberate  dishonesty;  (ii) such  Partner or other
Person  actually  received an improper  personal  benefit in money,  property or
services; or (iii) in the case of any criminal proceeding, such Partner or other
Person had  reasonable  cause to believe that the act or omission was  unlawful.
Without limitation, the foregoing indemnity shall extend to any liability of any
Partner or other  Person,  pursuant  to a loan  guaranty or  otherwise,  for any
indebtedness of the Partnership or any Property  Partnership or other subsidiary
of the Partnership  (including,  without limitation,  any indebtedness which the
Partnership or any Property  Partnership or other  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 7.10 in favor of any
Partner or other Person  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 Person seeking  indemnification  did not
meet the  requisite  standard of conduct  set forth in this  Section  7.10.  The
termination of any proceeding by conviction of a Person seeking  indemnification
or upon a plea of nolo contendere or its equivalent by such Person, or any entry
of any order or  probation  against  such Person  prior to  judgment,  creates a
rebuttable  presumption  that such  Person  acted in a manner  contrary  to that
specified  in this  Section  7.10 with  respect  to the  subject  matter of such
proceeding.  No Partner  shall have any personal  liability  with respect to the
foregoing  indemnification,  any such indemnification to be satisfied solely out
of the assets of the Partnership.

                   (b)  Any  Person  entitled  to  indemnification   under  this
Agreement shall be entitled to receive, upon application  therefor,  advances to
cover the costs of defending  any  proceeding  against  such  Person;  provided,
however,  that  such  advances  shall  be  repaid  to the  Partnership,  without
interest,  if such  Person is found by a court of  competent  jurisdiction  upon
entry of a final judgment not to be entitled to such indemnification. All rights
of the indemnitee  hereunder shall survive the  dissolution of the  Partnership;
provided, however, that a claim for indemnification under this Agreement must be
made by or on behalf of the Person seeking indemnification prior to the time the
liquidation  of  the  Partnership  is  completed.   The  indemnification  rights
contained in this Agreement  shall be cumulative of, and in addition to, any and
all rights,  remedies and recourse to which the Person  seeking  indemnification
shall be entitled, whether at law or in equity. Indemnification pursuant to this
Agreement  shall be made solely and entirely from the assets of the  Partnership
and no Partner shall be liable therefor.

                  (c) The Partnership shall, and hereby does, indemnify and hold
harmless  the  General  Partner  from any  loss,  damage,  claim  or  liability,
including, but not limited to, reasonable attorneys' fees and expenses, incurred
by the General Partner by reason of (i) any indebtedness incurred by the General
Partner  in  compliance  with  Section  4.3  hereof or any  indebtedness  of the
Partnership or any subsidiary  thereof that is guaranteed by the General Partner
or (ii)  vicarious  liability by reason of its status as General  Partner of the
Partnership.  The  Partners  agree that in the event the  Partnership  becomes a
debtor in a  bankruptcy  proceeding  under a plan of  reorganization,  any funds
distributable to the General Partner and any funds  distributable to the Limited
Partners under such plan of reorganization, after discharging claims against the
General Partner from such funds, will be distributed to the Limited Partners and
the stockholders of the General Partner among the various classes of Partnership
Units in accordance  with the agreed  priorities  set forth in Section 6.2. Each
Partner  agrees to turn over any such  funds to the  General  Partners  to be so
distributed.

                   (d) The  Limited  Partners  expressly  acknowledge  that  the
General Partner is acting on behalf of the Partnership and the General Partner's
shareholders,  collectively,  that the General Partner is under no obligation to
consider the  separate  interests of the Limited  Partners  (including,  without
limitation,  the tax consequences to the Limited Partners or their assignees) in
deciding  whether  to cause the  Partnership  to take (or  decline  to take) any
actions and that the General  Partner  shall not be liable for monetary  damages
for losses  sustained,  liabilities  incurred or benefits not derived by Limited
Partners in connection  with such  decisions;  provided that the General Partner
has acted in good faith.

                  (e) Subject to its  obligations  and duties as General Partner
set forth in Section 7.2 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 through its agents.

                  (f) The  Partnership  may,  but  shall  not be  obligated  to,
purchase and maintain insurance, on behalf of any Person potentially entitled to
indemnification  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.

                  VII.11 Operation in Accordance with REIT Requirements.

The  General  Partner  agrees  and the  Limited  Partners  acknowledge  that the
Partnership  shall be operated in a manner that will enable the General  Partner
to (a)satisfy the REIT  Requirements and (b) avoid the imposition of any federal
income or excise tax liability,  unless the General Partner ceases to qualify as
a REIT for reasons other than the conduct of the business of the Partnership. In
connection with the foregoing, and without limiting the General Partner's rights
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
Partners and not solely the General Partner.  The Partnership shall avoid taking
any action,  or permitting any Property  Partnership  to take any action,  which
would result in the General Partner ceasing to satisfy the REIT  Requirements or
would result in the  imposition of any federal income or excise tax liability on
the General Partner.
<PAGE>



                                  ARTICLE VIII
                     DISSOLUTION, LIQUIDATION AND WINDING-UP

                  VIII.1   Winding Up

                            (a)     Upon   the  occurrence   of   an   event  of
dissolution  described in Section 3.2, 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 Liquidating
Trustee shall be responsible  for  overseeing the winding up and  liquidation of
the  Partnership's  assets  and shall  take full  account  of the  Partnership's
liabilities  and property and the  Partnership's  assets 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  Liquidating
Trustee,  include  shares of stock in the General  Partner) shall be applied and
distributed in accordance with the provisions of Section 8.2.

                           (b)      In   the  discretion  of   the   Liquidating
Trustee, a pro rata portion of the distributions that would otherwise be made to
the General Partner and Limited Partners pursuant to this Article VIII may be:

                                    (i)     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 Liquidating Trustee,
         in the same proportions as the amount  distributed to such trust by the
         Partnership  would  otherwise  have  been  distributed  to the  General
         Partner and the Limited Partners pursuant to this Agreement; or

                                    (ii)    withheld  or  escrowed  to provide a
         reasonable reserve for Partnership iabilities (contingent or otherwise)
         and to reflect the unrealized  portion of any  installment  obligations
         owed to the  Partnership;  provided  that  such  withheld  or  escrowed
         amounts  shall  be  distributed  to the  General  Partner  and  Limited
         Partners in the manner and order of  priority  set forth in Section 8.2
         as soon as possible.

                            (c)     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 8.1 hereof,  in order to minimize
any losses otherwise attendant upon such winding-up,  and the provisions of this
Agreement  shall  remain in effect  between  the  Partners  during the period of
liquidation.

                           (d)      The  liquidation  of  the Partnership  shall
not be deemed finally  completed until the Partnership  shall have received cash
payments in full with respect to  obligations  such as notes,  installment  sale
contracts or other similar receivables received by the Partnership in connection
with  the  sale of  Partnership  assets  and all  remaining  obligations  of the
Partnership  have been  satisfied  or assumed by the  Liquidating  Trustee.  The
Liquidating  Trustee  shall  continue to act to enforce all of the rights of the
Partnership  pursuant to any such obligations until such obligations are paid in
full or  otherwise  satisfied.  The  Liquidating  Trustee  shall use  reasonable
efforts to liquidate the Partnership in the same year in which substantially all
of the assets of the  Partnership  being disposed of in the liquidation are sold
or exchanged.

                           (e)      The    Liquidating    Trustee    shall    be
empowered to give and receive  notices,  reports and payments in connection with
the dissolution, liquidation and/or winding-up of the Partnership and shall hold
and exercise such other rights and powers as are necessary or required to permit
all  parties  to deal  with  the  Liquidating  Trustee  in  connection  with the
dissolution, liquidation and/or winding-up of the Partnership.

                  VIII.2  Distribution  on Dissolution and  Liquidation.

     In the event of the  dissolution and liquidation of the Partnership for any
reason,  the assets of the Partnership  shall be liquidated for  distribution in
the following rank and order:

                  (a)      Payment  of  creditors  of  the   Partnership  (other
         than  Partners)  in the  order  of priority as provided by law;

                  (b)      Establishment   of  reserves  as   determined  by the
         Liquidating  Trustee to provide for contingent liabilities, if any;

                  (c)      Payment  of debts of the   Partnership  to  Partners,
         if any,  in the order of  priority provided by law;

                  (d) To the Partners in accordance  with the positive  balances
         in  their  respective  Capital  Accounts  after  giving  effect  to all
         contributions, distributions and allocations for all periods, including
         the  period  in  which  such  distribution  occurs  (other  than  those
         adjustments made pursuant to this Section 8.2(d)).

Whenever  the  Liquidating  Trustee  reasonably  determines  that  any  reserves
established  pursuant  to  paragraph  (b) above are in excess of the  reasonable
requirements  of the  Partnership,  the amount  determined to be excess shall be
distributed to the Partners in accordance with paragraphs (c) and (d) above.

                  VIII.3 Timing Requirements. 

     In the event that the  Partnership  is  "liquidated"  within the meaning of
Section  1.704-1(b)(2)(ii)(g)  of the Regulations,  any and all distributions to
the Partners  pursuant to Section  8.2(d) hereof shall be made no later than the
later to occur of (i) the last day of the  taxable  year of the  Partnership  in
which such  liquidation  occurs or (ii)  ninety (90) days after the date of such
liquidation.

                  VIII.4 Deemed Distribution and Recontribution.

     Notwithstanding  any other provision of this Article VIII, in the event the
Partnership is considered  liquidated within the meaning of Regulations  Section
1.704-1(b)(2)(ii)(g) but no dissolution and liquidation has occurred pursuant to
this  Agreement,  the  Partnership's  property  shall  not  be  liquidated,  the
Partnership's liabilities shall not be paid or discharged, and the Partnership's
affairs  shall not be wound up.  Instead,  for federal  income tax  purposes and
purposes of maintaining  Capital  Accounts,  the Partnership  shall be deemed to
have contributed the property in kind to a new limited partnership,  which shall
be deemed to have  assumed and taken such  property  subject to all  Partnership
liabilities,  in  return  for the  interests  in such  partnership.  Immediately
thereafter, the Partnership shall be deemed to have distributed the interests in
the new limited  partnership to the General Partner and the Limited  Partners in
proportion to their  respective  interests in the  Partnership in liquidation of
the Partnership.

                  VIII.5  Distributions  in Kind.

     In  the  event  that  it  becomes  necessary  to  make  a  distribution  of
Partnership  property in kind, the Liquidating  Trustee may, with the Consent of
the Partners,  transfer and convey such property to the  distributees as tenants
in common,  subject to any liabilities  attached  thereto,  so as to vest in the
distributees  undivided interests in the whole of such property in proportion to
their  respective  rights to share in the proceeds of the sale of such  property
(other than as a creditor)  in  accordance  with the  provisions  of Section 8.2
hereof.

                  VIII.6  Documentation  of Liquidation.

     Upon the completion of the dissolution and liquidation of the  Partnership,
the  Partnership  shall  terminate  and the  Liquidating  Trustee shall have the
authority to execute and record any and all documents or instruments required to
effect the dissolution, liquidation and termination of the Partnership.

                  VIII.7 Deficit Capital Account  Balance. 

     If any Partner has a deficit  Capital  Account  (after giving effect to all
contributions,  distributions  and  allocations  for all  taxable  years  of the
Partnership,  including the year during which a liquidation  of the  Partnership
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.
<PAGE>
                                   ARTICLE IX

                       TRANSFER OF PARTNERSHIP INTERESTS;
                  WITHDRAWAL; ADMISSION OF ADDITIONAL PARTNERS

                  IX.1     General  Partner   Transfer;  Withdrawal;  Substitute
                           General Partner.

                           (a)      The General  Partner  shall not  voluntarily
withdraw (as provided in Section 17-602(a) of the Act) as general partner of the
Partnership and shall not sell, assign, pledge, encumber or otherwise dispose of
all or any portion of its  interest  in the  Partnership  without the  unanimous
consent of all of the Limited  Partners  which  consent may be withheld in their
sole and absolute discretion.

                   (b) Upon any Transfer of a Partnership Interest in accordance
with the  provisions of this Section 9.1, the transferee  General  Partner shall
become 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  effect  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  or other Entity by operation of
law) shall relieve the transferor  General Partner of its obligations under this
Agreement without the Consent of the Partners, in their reasonable discretion.

                   (c) In the  event  the  General  Partner  withdraws  from the
Partnership,  in  violation  of this  Agreement  or  otherwise,  or dissolves or
terminates or upon the Bankruptcy of the General Partner, a Majority-in-Interest
of the  Limited  Partners  may elect to  continue  the  Partnership  business by
selecting a substitute  general  partner.  Upon any such event,  the Partnership
Interest of the  General  Partner  shall  cease to be the  interest of a general
partner,  and shall be converted to the interest of a "Special Limited Partner."
Upon such a conversion, the Special Limited Partner shall retain all Partnership
Units  allocated to the General  Partner and shall have the right to (i) receive
distributions  of Net Cash Flow  pursuant to Section 6.2 and 8.2,  (ii) inspect,
copy or review  financial  records of the Partnership and (iii) vote or exercise
consent  rights with  respect to the number of Common Units held by it from time
to time for any matter for which the  Consent of the  Partners  is  required  or
sought.  Notwithstanding  the  conversion of the General  Partner's  Partnership
Interest  into the  Interest of a Special  Limited  Partner  pursuant to Section
9.1(c),  the  General  Partner  shall  retain  all  management  powers and shall
continue to manage the business  and affairs of the  Partnership  in  accordance
with the terms of this Agreement until such time as a successor  General Partner
is so selected and thereafter admitted,  or a Liquidating Trustee other than the
General Partner is selected.

                  IX.2  Transfers by Limited  Partners.

     No Limited Partner may Transfer any part of its Partnership Interest except
in  accordance  with the  provisions of this Sections 9.2 and 9.3. Any purported
Transfer of any  Partnership  Interest by a Limited  Partner in violation of any
provision  of this  Agreement  shall be void ab  initio  and  shall not be given
effect for any purpose by the Partnership.

                  (a)  Intentionally Omitted.

                  (b) Each Limited  Partner shall,  subject to the provisions of
         Section  9.3,  have the right to  Transfer  all or any  portion  of its
         Common  Units to any  Person,  whether  or not in  connection  with the
         exercise  of a  Limited  Partner's  Rights.  It is a  condition  to any
         Transfer  otherwise  permitted  under  this  Section  9.2(b)  that  the
         transferee  assumes by  operation  of law or express  agreement  (which
         agreement,  in the event of a pledge of Common  Units,  may be  entered
         into  and  become  effective  at  the  time  of  foreclosure  or  other
         realization on such pledged Common Units) all of the obligations of the
         transferor  Limited  Partner under this  Agreement with respect to such
         transferred Common Units 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  or other  Entity 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.

                  (c) Upon any Transfer in  accordance  with the  provisions  of
         this Section 9.2 and Section 9.3, the transferee shall be admitted as a
         Substituted  Limited  Partner  (as such term is defined in the Act) and
         shall succeed to all of the rights and obligations (including,  without
         limitation,  the Rights) of the transferor  Limited  Partner under this
         Agreement with respect to the  transferred  Common Units,  in the place
         and stead of such transferor Limited Partner (which succession,  in the
         event of a pledge of  Common  Units,  may be  entered  into and  become
         effective  at the  time of  foreclosure  or other  realization  on such
         pledged Common  Units).  Any  transferee,  whether or not admitted as a
         Substituted  Limited Partner,  shall take the transferred  Common Units
         subject to the obligations of the transferor hereunder. Unless admitted
         as a Substituted Limited Partner, no transferee, whether by a voluntary
         Transfer, by operation of law or otherwise, shall have any rights under
         this Agreement or with respect to the Partnership Property,  other than
         to receive such portion of the distributions made by the Partnership as
         are allocable to the Common Units transferred.

                  (d)      Intentionally Omitted.

                  (e)   Notwithstanding   anything  in  this  Agreement  to  the
         contrary,  any  transferee  of any  transferred  Common  Units shall be
         subject to any and all ownership limitations contained in the corporate
         charter of the  General  Partner  as may be  amended  from time to time
         applicable  to Persons  which may limit or restrict  such  transferee's
         ability to exercise the Rights.

                   (f) No Limited  Partner  may  withdraw  from the  Partnership
         without the prior written consent of the General Partner, other than as
         a result of a Transfer  of all of such  Limited  Partner's  Partnership
         Interest in accordance  with this Agreement or pursuant to the exercise
         of the Rights  with  respect to all of such  Limited  Partner's  Common
         Units or Series C Preferred  Units.  Except pursuant to Section 6.2(c),
         no Limited Partner shall be entitled to any  distribution in respect of
         its Partnership Interest upon any such withdrawal.

                  IX.3  Restrictions  on  Transfer. 

     In  addition  to any  other  restrictions  on  Transfer  contained  in this
Agreement, in no event may any Transfer of a Partnership Interest by any Partner
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  securities or
other law;  (iii) of any component  portion of a Partnership  Unit,  such as the
Capital Account,  or rights to Net Cash Flow,  separate and apart from all other
components of a Partnership  Unit;  (iv) in the event such Transfer  would cause
the General Partner to cease to comply with the REIT  Requirements;  (v) if such
Transfer  would cause a termination  of the  Partnership  for federal income tax
purposes;  (vi) if  such  Transfer  would,  in the  opinion  of  counsel  to the
Partnership,  cause the  Partnership  to cease to be classified as a partnership
for  Federal  income tax  purposes or cause the  Partnership  to be treated as a
publicly  traded  partnership  as provided in Code Section  7704;  (vii) if such
Transfer  would cause the  Partnership  to become,  with respect to any employee
benefit plan subject to Title 1 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);  (viii) 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
Section  2510.3-101 of the Regulations;  and (ix) 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"  (within  the meaning of Section  1.752-1(a)(2)  of the
Regulations)  without  the  consent  of the  General  Partner,  in its  sole and
absolute discretion, unless the Partnership's basis in the Property Partnerships
or applicable  Property or any Partner's basis in its  Partnership  Interest for
tax  purposes  would  not be  reduced  as a result of such  Transfer;  provided,
however, that the restriction set forth in this clause (ix) of Section 9.3 shall
not apply to any Transfer to a lender or a related  Person to such lender if the
interest  (direct or indirect) of such lender or related  Person in each item of
Partnership income,  gain, loss, deduction or credit for every taxable year that
the partner is a partner in the Partnership is ten percent (10%) or less and the
loan constitutes  qualified  nonrecourse financing within the meaning of Section
465(b)(6) of the Code and the Regulations thereunder (without regard to the type
of activity financed).

                  IX.4  Proration  in Event  of  Transfers. 

     If any  Partnership  Interest is transferred or assigned in compliance with
the  provisions  of this  Article IX or  exchanged  or  transferred  pursuant to
Article  XI, on any day other  than the  first day of the  Partnership's  fiscal
year, Net Income, Net Losses, each item thereof and all other items attributable
to such interest for such fiscal year shall be divided and allocated between the
transferor  Partner  and the  transferee  Partner by taking into  account  their
varying  interests  during the fiscal year in accordance  with Section 706(d) of
the Code,  using the  interim  closing of the books  method  (unless the General
Partner, in its sole and absolute discretion, elects to adopt another reasonable
method  permitted  by law).  Other  than as  provided  in  Section  6.2(c),  all
distributions  of Net Cash Flow  attributable  to such  Common  Unit or Series C
Preferred Unit with respect to which the Partnership  Payment Date is before the
date of such transfer,  assignment or redemption shall be made to the transferor
Partner or the  exchanging  Partner,  as the case may be,  and, in the case of a
transfer or assignment  other than a redemption,  all  distributions of Net Cash
Flow  thereafter  attributable  to such  Partnership  Unit  shall be made to the
transferee Partner.

                  IX.5 Admission of Successor  General  Partner.

     A successor to all of the General Partner's  Partnership  Interest pursuant
to Section 9.1 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.  The  admission  of any such  transferee  shall not cause a
dissolution of the  Partnership,  and such successor shall carry on the business
of the  Partnership.  In each case,  the  admission of such  successor  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's  Partnership
Interest for such fiscal year shall be allocated between the General Partner and
its successor as provided in Section 9.4 hereof.

                  IX.6     Admission of Additional Limited Partners.

                           (a)A Person who makes a Capital  Contribution  to the
Partnership  in  accordance  with this  Agreement or who  exercises an option to
receive  any  Partnership  Units  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  2.6  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.

                           (b)Notwithstanding  anything to the  contrary in this
Section  9.6,  no Person  shall be  admitted as an  additional  Limited  Partner
without  the  consent of the  General  Partner,  which  consent  may be given or
withheld in the General Partner's sole and absolute discretion. The admission of
any Person as an additional  Limited Partner shall become  effective on the date
upon which the name of such  Person is  recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.

                            (c)     If any  additional  Limited  Partner is
admitted  to the  Partnership  on any day  other  than the first day of a fiscal
year, Net Income,  Net Losses,  each item thereof and all other items  allocable
among  Partners and  assignees of Partners  for such  Partnership  Year shall be
allocated  among such  additional  Limited  Partner and all other  Partners  and
assignees by taking into account their varying  interests during the fiscal year
in accordance with Section 706(d) of the Code,  using the interim closing of the
books method (unless the General Partner,  in its sole and absolute  discretion,
elects to adopt another reasonable method permitted by law). Solely for purposes
of making such  allocations,  each of such items for the calendar month in which
an admission of any additional  Limited  Partner occurs shall be allocated among
all the Partners and assignees  including such additional  Limited Partner.  All
distributions  of Net Cash Flow with  respect to which the  Partnership  Payment
Date is before the date of such  admission  shall be made solely to Partners and
assignees other than the additional  Limited Partner,  and all  distributions of
Net  Cash  Flow  thereafter  shall  be made to all the  Partners  and  assignees
including such additional Limited Partner.
<PAGE>
                                    ARTICLE X
                 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS

                  X.1 No  Participation  in Management;  No Personal  Liability.

     Except as expressly  permitted  hereunder,  the Limited  Partners shall not
take part in the management 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.  Except for any liability to the Partnership  pursuant to
Section  17-607  of the Act for  the  amount  of  certain  distributions  and as
otherwise specifically provided in this Agreement, no Limited Partner shall have
any  personal  liability,  beyond the amount of such Limited  Partner's  Capital
Contributions,  whether to the  Partnership,  to the  General  Partner or to the
creditors of the  Partnership,  including,  without  limitation,  for the debts,
obligations, expenses or liabilities of the Partnership or any of its losses.

                  X.2 Duties and Conflicts.

     The  General  Partner  recognizes  that  the  Limited  Partners  and  their
Affiliates   have  or  may  have  other  business   interests,   activities  and
investments,  some of which may be in conflict or competition  with the business
of the  Partnership,  and  that,  subject  to  the  provisions  of any  separate
noncompete or similar restrictive  agreement with the Partnership or the General
Partner,  such persons are entitled to carry on such other  business  interests,
activities and investments and may engage in or possess an interest in any other
business  or venture of any kind,  independently  or with  others,  on their own
behalf  or on  behalf  of other  entities  with  which  they are  affiliated  or
associated,  and such  persons  may  engage in any  activities,  whether  or not
competitive with the  Partnership,  without any obligation to offer any interest
in such  activities to the  Partnership  or to any Partner.  Except as otherwise
provided in any separate  noncompete or similar  restrictive  agreement with the
Partnership  or the General  Partner,  neither the  Partnership  nor any Partner
shall have any right, by virtue of this Agreement, in or to such activities,  or
the income or profits  derived  therefrom,  or any  portion  thereof or interest
therein,  and the  pursuit  of such  activities,  even if  competitive  with the
business  of  the  Partnership,  shall  not  be  deemed  wrongful,  improper  or
actionable.
<PAGE>
                                   ARTICLE XI
                       GRANT OF RIGHTS TO LIMITED PARTNERS

                  XI.1 Grant of Rights.

     The General  Partner  does hereby  grant to the  Limited  Partners  holding
Common Units and such Limited  Partners do hereby accept the right,  but not the
obligations  (hereinafter such right sometimes referred to as the "Rights"),  to
exchange  all or a portion of their Common Units on the terms and subject to the
conditions and restrictions contained in Exhibit C. The Rights granted hereunder
may be  exercised by any one or more of the Limited  Partners,  on the terms and
subject to the conditions and restrictions contained in Exhibit C, upon delivery
to the General Partner of an Exchange  Exercise Notice in the form of Schedule 1
to Exhibit C, which  notice  shall  specify the Common  Units to be exchanged by
such Limited  Partner.  Once  delivered,  the Exchange  Exercise Notice shall be
irrevocable,  subject to payment by the General Partner of the Purchase Price in
respect of such Common Units in accordance with the terms hereof.

                  XI.2 Terms of Rights.

     The terms and provisions  applicable to the Rights shall be as set forth in
Exhibit C.

                  XI.3 Reissuance or  Reallocation  of Common Units.

     Any Common Units acquired by the General Partner pursuant to an exercise by
any  Limited  Partner  of the  Rights  shall be  deemed  to be  acquired  by and
reallocated or reissued to the General Partner.  The General Partner shall amend
Exhibit A hereto to reflect each such exchange and reallocation or reissuance of
Common  Units and each  corresponding  recalculation  of the Common Units of the
Partners.
<PAGE>
                                   ARTICLE XII

              GRANT OF RIGHTS TO LIMITED PARTNERS HOLDING SERIES C
             PREFERRED UNITS; REDEMPTION OF SERIES C PREFERRED UNITS

                  XII.1 Grant of Rights.

     The General Partner does hereby grant to any Limited Partner holding Series
C Preferred Units the right (hereinafter such right sometimes referred to as the
"Series C Preferred  Rights"),  to exchange  all or a portion of their  Series C
Preferred  Units on the terms and  subject to the  conditions  and  restrictions
contained in Exhibit D. The Series C Preferred  Rights granted  hereunder may be
exercised on the terms and subject to the conditions and restrictions  contained
in Exhibit D upon delivery to the General Partner of an Exchange Exercise Notice
in the form of Schedule 1 to Exhibit D, which notice shall  specify the Series C
Preferred Units to be exchanged by such Limited  Partner.  Once  delivered,  the
Exchange Exercise Notice shall be irrevocable, subject to payment by the General
Partner  of the Series C Purchase  Price in respect of such  Series C  Preferred
Units in accordance with the terms hereof.

                  XII.2 Terms of Rights.

     The terms and provisions  applicable to the Series C Preferred Rights shall
be as set forth in Exhibit D.

                  XII.3  Reissuance or Reallocation of Series C Preferred Units.

     Any Series C Preferred Units acquired by the General Partner pursuant to an
exercise by any Limited Partner of the Series C Preferred Rights shall be deemed
to be acquired by and  reallocated  or reissued to the General  Partner.  In the
event that a Limited  Partner  exercising  Series C Preferred  Rights  elects to
receive the Common Stock Purchase Price and not the Series C Preferred  Purchase
Price (as such terms are  defined  in  Exhibit  D) with  respect to any Series C
Preferred  Units,  then the Series C  Preferred  Units  acquired  by the General
Partner upon payment of the Common Stock  Purchase Price shall be reallocated to
the General Partner and reissued as the number of Common Units which is equal to
the  number  of  shares  of the  General  Partner's  Common  Stock  paid  to the
exercising  Limited  Partner  pursuant  to the terms of  Exhibit D hereto as the
Common Stock Purchase Price therefor.  The General Partner shall amend Exhibit A
hereto to reflect each such exchange and  reallocation or reissuance of Series C
Preferred Units and each  corresponding  recalculation of the Series C Preferred
Units or Common Units of the Partners.
<PAGE>
                                  ARTICLE XIII
                     PARTNER REPRESENTATIONS AND WARRANTIES

                  Each  Partner   severally   represents  and  warrants  to  the
Partnership and the other Partners as follows:

                  (a)      Organization.  Such  Partner (if such Partner is an
         Entity) is duly  organized,  validly existing and in good standing
         under the laws of its state of organization.

                  (b)  Due  Authorization;  Binding  Agreement.  The  execution,
         delivery  and  performance  of this  Agreement  by it has been duly and
         validly  authorized  by all  necessary  action  of such  Partner.  This
         Agreement  has been duly executed and delivered by it, or an authorized
         representative,   and   constitutes   its  legal,   valid  and  binding
         obligation, enforceable against it in accordance with the terms hereof.

                  (c) Consents and Approvals.  No consent,  waiver,  approval or
         authorization  of, or filing,  registration or  qualification  with, or
         notice to, any governmental  unit or any other person is required to be
         made,  obtained  or  given  by it in  connection  with  the  execution,
         delivery  and  performance  of  this  Agreement  other  than  consents,
         waivers,  approvals or authorizations which have been obtained prior to
         the date hereof.
<PAGE>
                                   ARTICLE XIV

                               GENERAL PROVISIONS

                  XIV.1  Notices.

 All notices,  offers or other  communications
required or permitted to be given pursuant to this Agreement shall be in writing
and may be personally served, telecopied or sent by United States mail and shall
be deemed to have been given when delivered in person,  upon receipt of telecopy
and oral or written  confirmation  by the  addressee of such  receipt,  or three
business  days after  deposit in United  States mail,  registered  or certified,
postage prepaid,  and properly  addressed,  by or to the appropriate  party. For
purposes of this Section 14.1,  the addresses of the parties  hereto shall be as
set forth below their name on a signature page hereof.  The address of any party
hereto  may be  changed  by a notice in  writing  given in  accordance  with the
provisions hereof.

                  XIV.2  Successors.

     This  Agreement  and all the terms and  provisions  hereof shall be binding
upon and shall inure to the benefit of all Partners,  and their respective legal
representatives,  heirs, legatees,  successors and permitted assigns,  except as
expressly herein otherwise provided.

                  XIV.3  Effect  and  Interpretation.  

     This  Agreement  shall be governed by and construed in conformity  with the
laws of the State of Delaware.

                  XIV.4   Counterparts. 

     This Agreement may be executed in  counterparts,  each of which shall be an
original, but all of which shall constitute one and the same instrument.

                  XIV.5 Partners Not Agents. 

     Nothing  contained  herein shall be construed to constitute any Partner the
agent of another  Partner,  except as specifically  provided  herein,  or in any
manner  to  limit  the  Partners  in the  carrying  on of their  own  respective
businesses or activities.

                  XIV.6 Entire Understanding, Etc.

     This Agreement constitutes the entire agreement and understanding among the
Partners  and  supersedes  any  prior  understandings  and/or  written  or  oral
agreements among them respecting the subject matter hereof.

                  XIV.7 Amendments.

     This Agreement may not be amended, except by a written instrument signed by
the General Partner (and approved on behalf of the General Partner by at least a
majority of its directors who are not Affiliates of any of the Limited Partners)
and by a  Majority-in-Interest  of the  Partners;  provided,  however,  that any
amendment  which  materially and adversely  alters the rights,  preferences  and
terms of the Common Units held by the Limited Partners  relative to those of the
Common Units held by the General  Partner  shall  require the consent of Limited
Partners  holding a  majority-in-interest  of the  Common  Units held by Limited
Partners; and provided further, that so long as any Series C Preferred Units are
held by Limited  Partners,  the  consent of  Limited  Partners  holding at least
66-2/3% of the Series C Preferred  Units shall be necessary for  effecting:  (a)
any amendment that materially and adversely affects the voting powers, rights or
preferences  of the  holders of the Series C  Preferred  Units  except  that any
amendment to authorize  or create or to increase the  authorized  amount of, any
Partnership  Interests  that  are not  senior  in any  respect  to the  Series C
Preferred  Units or are on a parity with the Series C Preferred  Units shall not
be deemed to  materially  and  adversely  affect  the voting  powers,  rights or
preferences   of  the  holders  of  Series  C  Preferred   Units;   or  (b)  the
authorization,   reclassification  or  creation  of,  or  the  increase  in  the
authorized  amount of, any  Partnership  Interests of any class ranking prior to
the Series C Preferred Units in the  distribution of assets on any  liquidation,
dissolution  or winding up of the  Partnership  or in the payment of  dividends;
provided,  however,  that no such  consent of the  holders of Series C Preferred
Units shall be required (1) for the issuance of additional Convertible Preferred
Units to the General Partner in connection with the General  Partner's  issuance
and  sale of up to $57  million  (before  deducting  underwriting  discounts  or
commissions) of its 8.5% Series B Cumulative Participating Convertible Preferred
Stock,  $.01 par value $.01 per share,  at a price equal to or greater  than $22
per share (before deducting underwriting discounts or commissions) as long as no
modification  has been made to the General  Partner's  Articles of Incorporation
from the date hereof  affecting  the rights or  privileges  of such  Convertible
Preferred  Units,  or (2) if,  at or  prior  to the time  when  such  amendment,
alteration  or repeal is to take effect,  or when the issuance of any such prior
units or  convertible  security is to be made, as the case may be,  provision is
made for the redemption of all Series C Preferred Units at the time  outstanding
to the extent such redemption is authorized by this Agreement.

                  Notwithstanding the preceding  paragraph,  the General Partner
may amend this  Agreement  without the Consent of the Partners or the consent of
the holders of the Series C Preferred  Units (i) to add to the  representations,
duties or obligations  of the General  Partner;  (ii) to cure any ambiguity,  to
correct or supplement any provision  herein which may be  inconsistent  with any
other provisions  herein, to reflect a change that does not adversely affect any
of the Limited Partners, or to make any other provisions with respect to matters
or questions  arising under this Agreement which will not be  inconsistent  with
the  provisions  of this  Agreement;  (iii) to effect or reflect a conversion or
redemption of Preferred Units, Convertible Preferred Units or Series C Preferred
Units   pursuant  to  Section  4.8  hereof;   (iv)  to  reflect  the  admission,
substitution,  termination  or withdrawal  of Partners in  accordance  with this
Agreement;  (v) to reflect the Transfer of any  Partnership  Units;  (vi) to set
forth the designations, rights, powers, duties and preferences of any holders of
any  additional  Partnership  Interests  issued  pursuant  to Section 4.3 or 4.4
hereof and the  modification of the provisions  relating to distributions of Net
Cash  Flow  and  allocations  of  income,  loss,  gain and  deduction  resulting
therefrom;  and (vii) 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.

                  XIV.8 Severability.

     If any provision of this Agreement, or the application of such provision to
any  person  or  circumstance,  shall be held  invalid  by a court of  competent
jurisdiction,  the  remainder  of this  Agreement,  or the  application  of such
provision  to  persons  or  circumstances  other  than those to which it is held
invalid by such court, shall not be affected thereby.

                  XIV.9 Trust Provision.

     This  Agreement,  to the extent  executed  by the  trustee  of a trust,  is
executed  by such  trustee  solely as trustee  and not in a  separate  capacity.
Nothing  herein  contained  shall  create  any  liability  on,  or  require  the
performance  of any  covenant  by,  any such  trustee  individually,  nor  shall
anything  contained  herein  subject  the  individual  personal  property of any
trustee to any liability.

                  XIV.10  Pronouns and  Headings.

     As used herein,  all pronouns  shall  include the  masculine,  feminine and
neuter,  and all defined  terms shall  include the singular  and plural  thereof
wherever the context and facts require such construction.  The headings,  titles
and subtitles  herein are inserted for  convenience of reference only and are to
be ignored in any construction of the provisions  hereof. Any references in this
Agreement to "including" shall be deemed to mean "including without limitation".

                  XIV.11  Assurances.

     Each of the  Partners  shall  hereafter  execute and deliver  such  further
instruments  and do such further acts and things as may be required or useful to
carry out the intent and purpose of this  Agreement and as are not  inconsistent
with the terms hereof.

                  XIV.12 Remedies  Cumulative.

     No remedy  herein  conferred  upon any party is intended to be exclusive of
any other remedy and each and every such remedy shall be cumulative and shall be
in addition to every other remedy given  hereunder or now or hereafter  existing
at law or in equity or by statute or otherwise. No single or partial exercise by
any party of any right,  power or remedy  hereunder  shall preclude any other or
further exercise thereof.

                  XIV.13  Construction. 

     Every  covenant,  term and provision of this  Agreement  shall be construed
simply  according  to its fair  meaning  and not  strictly  for or  against  any
Partner.

                  XIV.14 Incorporation by Reference.

     Every exhibit,  schedule and other appendix  attached to this Agreement and
referred to herein is hereby incorporated in this Agreement by reference.

                  XIV.15  Waiver of Action for  Partition.

     Each of the  Partners  irrevocably  waives  any  right  that it may have to
maintain  any  action for  partition  with  respect to any of the  Partnership's
property.
<PAGE>
                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement or caused this  Agreement to be executed as of the date and year first
above written. GENERAL PARTNER:

PRIME  RETAIL,  INC.,  a Maryland  corporation  100 East Pratt Street 19th Floor
Baltimore, Maryland 212022


By:      ______________________________

Its:     ______________________________