Document:

THIRD AMENDED AND RESTATED
                       AGREEMENT OF LIMITED PARTNERSHIP OF
                       COLONIAL REALTY LIMITED PARTNERSHIP

                  THIS  THIRD   AMENDED  AND   RESTATED   AGREEMENT  OF  LIMITED
PARTNERSHIP OF COLONIAL REALTY LIMITED  PARTNERSHIP  ("Agreement"),  dated as of
October 19, 1999, is entered into by and among  Colonial  Properties  Trust,  an
Alabama  real  estate  investment  trust,  as  the  General  Partner  ("Colonial
Properties" or the "General Partner"), and the Persons whose names are set forth
on  Exhibit A as  attached  hereto who were  admitted  as  limited  partners  in
accordance  with the provisions of the Second Amended and Restated  Agreement of
Limited  Partnership,  dated as of October 27, 1994,  and the First  Amended and
Restated  Agreement  of Limited  Partnership,  dated as of  September  29,  1993
(collectively,  the "Prior Agreements"),  as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein, for
certain limited purposes set forth in this Agreement.

                  In consideration of the mutual covenants set forth herein, and
for other good and valuable  consideration  the receipt and sufficiency of which
are hereby  acknowledged,  the  parties  hereto  hereby  agree to  continue  the
Partnership as a limited  partnership under the Delaware Revised Uniform Limited
Partnership  Act (6 Del. C. ss. 17-101,  et seq.),  as amended from time to time
(the "Act"), as follows:

                                    ARTICLE 1
                                  DEFINED TERMS

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

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

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

                  "Adjusted   Capital   Account"   means  the  Capital   Account
maintained for each Partner as of the end of each Partnership Year (i) increased
by any  amounts  which such  Partner is  obligated  to restore  pursuant  to any
provision of this Agreement or is deemed to be obligated to restore  pursuant to
the   penultimate   sentences  of   Regulations   Sections   1.704-2(g)(1)   and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations  Sections
1.704-1(b)(2)(ii)(d)(4),  l.704-l(b)(2)(ii)(d)(5),  and 1.704-1(b)(2)(ii)(d)(6).
The foregoing  definition of Adjusted Capital Account is intended to comply with
the  provisions  of  Regulations  Section   1.704-1(b)(2)(ii)(d)  and  shall  be
interpreted consistently therewith.

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

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

                  "Affiliate"  means, with respect to any Person, (i) any Person
directly or indirectly  controlling,  controlled by or under common control with
such Person,  (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person,  (iii) any Person of which such
Person owns or controls ten percent  (10%) or more of the voting  interests,  or
(iv) any officer,  director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.

                  "Agreed  Value"  means  (i) in  the  case  of any  Contributed
Property  set forth in Exhibit D and as of the time of its  contribution  to the
Partnership,  the Agreed Value of such  property as set forth in Exhibit D; (ii)
in the case of any Contributed Property not set forth in Exhibit D and as of the
time of its contribution to the Partnership,  the 704(c) Value of such property,
reduced  by  any  liabilities  either  assumed  by  the  Partnership  upon  such
contribution or to which such property is subject when contributed, and (iii) in
the case of any  property  distributed  to a  Partner  by the  Partnership,  the
Partnership's  Carrying  Value of such  property  at the time such  property  is
distributed,  reduced by any  indebtedness  either  assumed by such Partner upon
such  distribution  or to  which  such  property  is  subject  at  the  time  of
distribution  as determined  under  Section 752 of the Code and the  Regulations
thereunder.

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

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

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

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

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

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

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

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

                  (ii)     less the sum of:

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

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

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

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

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

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

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

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

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

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

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

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

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

                  "Cash  Amount"  means an amount of cash  equal to the Value on
the Valuation Date of the REIT Shares Amount.

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

                  "Class A" means the Partners who are holders of Class A Units.

                  "Class A Share"  means that  portion of  Available  Cash for a
Distribution  Period to be distributed  with respect to Class A as determined by
multiplying  the amount of Available  Cash for such  Distribution  Period by the
fraction set forth in Section 5.1.B.1 hereof.

                  "Class A Unit" means any Partnership Unit other than a Class B
Unit,  a Preferred  Unit,  or any other  Partnership  Unit that is  specifically
designated by the General Partner pursuant to Section 4.2 as being another class
of Partnership Units.

                  "Class B" means the Partners who are holders of Class B Units.

                  "Class B Share"  means that  portion of  Available  Cash for a
Distribution  Period to be distributed  with respect to Class B as determined by
multiplying  the amount of Available  Cash for such  Distribution  Period by the
fraction set forth in Section  5.1.B.2  hereof (as such fraction may be adjusted
in accordance with Section 5.1.B hereof).

                  "Class  B  Unit"   means  a   Partnership   Unit   with   such
designations,  preferences,  rights,  powers and duties as are  described  in or
pursuant to Section 4.2.C.

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

                  "Common Unit" means a Partnership Unit that is not a Preferred
Unit. The Class A Units and Class B Units, and any other  Partnership Units that
may be issued from time to time by the  General  Partner as set forth in Section
4.2 and designated as Common Units, are Common Units.

                  "Common  Unit  Available  Cash" has the  meaning  set forth in
Section 5.1.B.

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

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

                  "Conversion Factor" means 1.0, provided that in the event that
the General  Partner (i)  declares  or pays a dividend on its  outstanding  REIT
Shares in REIT Shares or makes a distribution  to all holders of its outstanding
REIT Shares in REIT Shares;  (ii)  subdivides its  outstanding  REIT Shares;  or
(iii) combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion  Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend,  distribution,  subdivision or
combination  assuming  for  such  purpose  that  such  dividend,   distribution,
subdivision or combination  has occurred as of such time, and the denominator of
which shall be the actual  number of REIT Shares  (determined  without the above
assumption)  issued  and  outstanding  on the  record  date for  such  dividend,
distribution,  subdivision  or  combination.  Any  adjustment to the  Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

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

                  "Declaration  of Trust" means the  Declaration of Trust of the
General  Partner filed in the State of Alabama on August 21, 1995, as amended or
restated from time to time.

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

                  "Distribution  Period"  means any calendar  quarter or shorter
period with respect to which a  distribution  of Available Cash is to be made to
the Partners by the Partnership.

          "Effective  Date"  means the date of  closing  of the  initial  public
offering of shares of the General  Partner  pursuant to that  certain  agreement
among the Former General  Partner,  the Partnership,  the General  Partner,  and
Lehman Brothers Inc., Bear, Stearns & Co. Inc., Merrill Lynch, Pierce,  Fenner &
Smith  Incorporated and The  Robinson-Humphrey  Company,  Inc. as agents for the
underwriters.

                  "Exercise  Percentage"  has the  meaning  set forth in Section
4.4.

                  "Former  General  Partner" means Colonial  Properties  Holding
Company,  Inc., an Alabama corporation formed by Colonial Properties as a wholly
owned  subsidiary of Colonial  Properties to serve as the general partner of the
Partnership.  The separate existence of the Former General Partner terminated on
December 31, 1998, when the Former General Partner merged with and into Colonial
Properties, whereupon Colonial Properties became the General Partner.

                  "General Partner" means Colonial  Properties Trust, an Alabama
real estate  investment  trust,  in its  capacity as the general  partner of the
Partnership, or its successors as general partner of the Partnership,  and shall
also be deemed to refer to,  where the context so requires,  the Former  General
Partner, in its capacity as the predecessor to Colonial Properties.

                  "General Partner  Interest" means a Partnership  Interest held
by the General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.

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

                  "Immediate  Family" means, with respect to any natural Person,
such  natural  Person's  spouse and such  natural  Person's  natural or adoptive
parents, descendants, nephews, nieces, brothers, and sisters.

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

                  "Indemnitee" means (i) any Person made a party to a proceeding
by reason of his status as (A) the General Partner, (B) a director or officer of
the Partnership or the General Partner,  or (C) a guarantor,  pursuant to a loan
guarantee or any other  guarantee  given to a third party in connection with any
partnership  property  or loan (other than in  connection  with the  transfer of
properties to the  Partnership in connection with the initial public offering of
REIT  Shares),   including  without   limitation,   environmental   indemnities,
reimbursements  agreements or guaranties to credit  enhancers under bond issues,
undertakings  or  indemnities  to  title  companies,   or  otherwise,   for  any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation,  any indebtedness which the Partnership or any Subsidiary of
the  Partnership  has assumed or taken  assets  subject to), and (ii) such other
Persons (including  Affiliates of the General Partner or the Partnership) as the
General  Partner may designate  from time to time  (whether  before or after the
event giving rise to potential liability), in its sole and absolute discretion.

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

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

                  "Liquidation  Preference  Amount"  means,  with respect to any
Preferred Unit as of any date of determination,  the amount  (including  accrued
and unpaid  distributions to the date of determination)  payable with respect to
such Preferred Unit (as established by the instrument designating such Preferred
Unit)  upon the  voluntary  or  involuntary  dissolution  or  winding  up of the
Partnership as a preference  over  distributions  to  Partnership  Units ranking
junior to such Preferred Unit.

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

                  "Management Corporation" means Colonial Properties Services,
Inc.

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

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

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

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

                  "Nonrecourse   Liability"   has  the   meaning  set  forth  in
Regulations Section 1.752-1(a)(2).

                  "Notice  of   Redemption"   means  the  Notice  of  Redemption
substantially in the form of Exhibit E to this Agreement.

                  "Original  Limited  Partner" means a Limited  Partner who is a
Partner on the date of this Agreement and who owns one or more Original  Limited
Partnership Units on the date action is called for under Section 13.1.

                  "Original  Limited  Partnership Unit" means a Partnership Unit
held by an Original  Limited  Partner on the date of this  Agreement and held by
such  Original  Limited  Partner on the date action is called for under  Section
18.3.

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

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

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

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

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

                  "Partnership  Interest"  means an  ownership  interest  in the
Partnership  representing a Capital  Contribution by either a Limited Partner or
the General  Partner and  includes  any and all  benefits to which the holder of
such a  Partnership  Interest  may be entitled  as  provided in this  Agreement,
together  with all  obligations  of such  Person  to  comply  with the terms and
provisions  of this  Agreement.  A  Partnership  Interest  may be expressed as a
number of Partnership Units.

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

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

                  "Partnership  Unit" means a  fractional  undivided  share of a
class or series of Partnership  Interests.  The ownership of  Partnership  Units
shall be evidenced by such form of certificate as the General  Partner may adopt
from  time to time on  behalf  of the  Partnership.  Without  limitation  on the
authority of the General Partner as set forth in Section 4.2 hereof (but subject
to the limitations  thereof),  the General Partner may designate any Partnership
Units,  when issued,  as Common Units or as Preferred  Units,  may establish any
other class of  Partnership  Units,  and may designate one or more series of any
class of Partnership Units.

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

                  "Percentage  Interest" means, as to a Partner, with respect to
any class or series of Partnership  Units held by such Partner,  its interest in
such class or series of  Partnership  Units as determined by dividing the number
of Partnership  Units in such class or series owned by such Partner by the total
number of  Partnership  Units in such class or series  then  outstanding  and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.  For purposes of  determining  the rights and  relationships  among the
various  classes and series of Partnership  Units,  Preferred Units shall not be
considered  to have  any  share  of the  aggregate  Percentage  Interest  in the
Partnership unless, and only to the extent, provided otherwise in the instrument
creating such class or series of Preferred Units.

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

                  "Preferred  REIT Share" means a preferred  share of beneficial
interest in the General Partner.

                  "Preferred  Unit"  means  Series A Preferred  Units,  Series B
Preferred Units and any other Partnership Unit issued from time to time pursuant
to Section 4.2 hereof that is specifically  designated by the General Partner at
the time of its issuance as a Preferred  Unit. Each class or series of Preferred
Units shall have such designations,  preferences,  and relative,  participating,
optional, or other special rights, powers, and duties, including rights, powers,
and duties senior to the Common Units, all as determined by the General Partner,
subject to compliance with the requirements of Section 4.2 hereof.

                  "Prior  Agreements"  mean  the  Second  Amended  and  Restated
Agreement of Limited  Partnership,  dated October 27, 1994, which is amended and
restated in its entirety by this  Agreement  and which amended the First Amended
and Restated Agreement of Limited Partnership, dated as of September 29, 1993.

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

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

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

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

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

                  "REIT Share" shall mean a common share of beneficial  interest
in the General Partner.

                  "REIT  Shares  Amount"  means a number of REIT Shares equal to
the product of the number of Common Units offered for  redemption by a Redeeming
Partner,  multiplied by the  Conversion  Factor;  provided that in the event the
General Partner issues to all holders of REIT Shares rights,  options,  warrants
or  convertible  or  exchangeable   securities  entitling  the  shareholders  to
subscribe  for or purchase  REIT  Shares,  or any other  securities  or property
(collectively, the "rights") and if the Partnership does not issue to all of the
holders  of  Common  Units  at  such  time  (other  than  the  General  Partner)
corresponding  rights  to  subscribe  for or  purchase  Common  Units  or  other
securities or property  corresponding  to the securities or property  covered by
the rights  granted by the General  Partner,  then the REIT Shares  Amount shall
also  include  such rights that a holder of that number of REIT Shares  would be
entitled  to receive  had it owned such REIT Shares at the time such rights were
issued,  provided  further that, if the rights issued by the General Partner are
issued pursuant to a shareholder  rights plan (or other  arrangement  having the
same objective and substantially  the same effect),  then the REIT Shares Amount
shall  include such rights only to the extent that (i) the Common Units  offered
for redemption were issued other than pursuant to Section 4.4 of this Agreement,
and (ii) such rights have not been  exercised  by the holders  thereof (and have
not otherwise terminated or been redeemed or eliminated).

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

                  "Series A Preferred Unit" has the meaning set forth in Section
4.2.D.

                  "Series B Preferred Unit" has the meaning set forth in Section
4.2.E.

                  "704(c) Value" of any Contributed  Property means the value of
such  property  as set forth in Exhibit D or if no value is set forth in Exhibit
D, the fair market value of such property or other  consideration at the time of
contribution as determined by the General  Partner using such reasonable  method
of valuation as it may adopt;  provided,  however,  that the 704(c) Value of any
property  deemed  contributed to the Partnership for federal income tax purposes
upon termination and reconstitution  thereof pursuant to Section 708 of the Code
shall be determined in  accordance  with Exhibit B hereof.  Subject to Exhibit B
hereof, the General Partner shall, in its sole and absolute discretion, use such
method as it deems  reasonable and  appropriate to allocate the aggregate of the
704(c) Values of  Contributed  Properties in a single or integrated  transaction
among the separate  properties on a basis  proportional to their respective fair
market values.

                  "Specified  Redemption  Date" means the tenth (10th)  Business
Day after  receipt by the General  Partner of a Notice of  Redemption;  provided
that no Specified  Redemption Date shall occur before one (1) year from the date
of this Agreement,  provided  further that if the General  Partner  combines its
outstanding  REIT  Shares,  no Specified  Redemption  Date shall occur after the
record date and prior to the effective date of such combination.

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

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

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

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

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

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

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

                                    ARTICLE 2
                             ORGANIZATIONAL MATTERS

                  Section 2.1       Organization and Continuation

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

                  Section 2.2       Name

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

                  Section 2.3      Registered Office and Agent; Principal Office

                  The address of the registered office of the Partnership in the
State of Delaware  shall be located at 1013 Centre  Road,  County of New Castle,
Wilmington,  Delaware 19805,  and the registered agent for service of process on
the  Partnership  in the State of Delaware at such  registered  office  shall be
Corporation  Service Company.  The principal office of the Partnership  shall be
Colonial Plaza, Suite 900, 2101 Sixth Avenue North,  Birmingham,  Alabama 35203,
or such other place as the General  Partner may from time to time  designate  by
notice to the Limited  Partners.  The Partnership  may maintain  offices at such
other place or places  within or outside  the States of Delaware  and Alabama as
the General Partner deems advisable.

                  Section 2.4       Power of Attorney

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

                  (1)      execute,  swear to,  acknowledge,  deliver,  file and
                           record  in the  appropriate  public  offices  (a) all
                           certificates,   documents   and   other   instruments
                           (including,  without  limitation,  this Agreement and
                           the  Certificate  and all amendments or  restatements
                           thereof) that the General  Partner or the  Liquidator
                           deems  appropriate  or necessary to form,  qualify or
                           continue  the  existence  or   qualification  of  the
                           Partnership   as  a   limited   partnership   (or   a
                           partnership  in  which  the  limited   Partners  have
                           limited  liability)  in the State of Delaware  and in
                           all other  jurisdictions in which the Partnership may
                           or plans to conduct business or own property; (b) all
                           instruments    that   the   General   Partner   deems
                           appropriate  or necessary  to reflect any  amendment,
                           change, modification or restatement of this Agreement
                           in accordance with its terms; (c) all conveyances and
                           other  instruments  or  documents  that  the  General
                           Partner  or  the  Liquidator  deems   appropriate  or
                           necessary to reflect the  dissolution and liquidation
                           of the  Partnership  pursuant  to the  terms  of this
                           Agreement,    including,    without   limitation,   a
                           certificate  of  cancellation;  (d)  all  instruments
                           relating  to the  admission,  withdrawal,  removal or
                           substitution  of any  Partner  pursuant  to, or other
                           events  described in,  Article 11, 12 or 13 hereof or
                           the Capital  Contribution of any Partner; and (e) all
                           certificates,   documents   and   other   instruments
                           relating   to  the   determination   of  the  rights,
                           preferences and privileges of Partnership  Interests;
                           and

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

Nothing  contained  herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement  except in accordance  with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.

                  B. The  foregoing  power of attorney is hereby  declared to be
irrevocable  and a power coupled with an interest,  in  recognition  of the fact
that each of the Partners will be relying upon the power of the General  Partner
and any  Liquidator to act as  contemplated  by this  Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer  of all  or  any  portion  of  such  Limited  Partner's  or  Assignee's
Partnership  Units and shall  extend to such  Limited  Partner's  or  Assignee's
heirs,  successors,  assigns and  personal  representatives.  Each such  Limited
Partner or Assignee hereby agrees to be bound by any representation  made by the
General Partner or any  Liquidator,  acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses  which may be available to contest,  negate or disaffirm  the action of
the General Partner or any  Liquidator,  taken in good faith under such power of
attorney.  Each  Limited  Partner or Assignee  shall  execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's  request therefor,  such further  designation,
powers  of  attorney  and  other  instruments  as  the  General  Partner  or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.

                  Section 2.5       Term

                  The term of the  Partnership  commenced on August 9, 1993, the
date the  Certificate  was  filed in the  office  of the  Secretary  of State of
Delaware in accordance  with the Act and shall continue until December 31, 2092,
unless,  the  Partnership  is dissolved  sooner  pursuant to the  provisions  of
Article l3 or as otherwise provided by law.

<PAGE>

                                    ARTICLE 3
                                     PURPOSE

                  Section 3.1       Purpose and Business

                  The purpose and nature of the  business to be conducted by the
Partnership  is (i) to conduct any business that may be lawfully  conducted by a
limited partnership organized pursuant to the Act, provided,  however, that such
business  shall be  limited to and  conducted  in such a manner as to permit the
General  Partner at all times to be  classified  as a REIT,  unless the  General
Partner  ceases to qualify as a REIT for  reasons  other than the conduct of the
business of the Partnership,  (ii) to enter into any partnership,  joint venture
or  other  similar  arrangement  to  engage  in any of the  foregoing  or to own
interests  in any  entity  engaged  in any of the  foregoing,  and  (iii)  to do
anything  necessary or  incidental  to the  foregoing.  In  connection  with the
foregoing,  and  without  limiting  the  General  Partner's  right,  in its sole
discretion,  to cease qualifying as a REIT, the Partners acknowledge the General
Partner's  current status as a REIT inures to the benefit of all of the Partners
and not solely to the benefit of the General Partner.

                  Section 3.2       Powers

                  The Partnership is empowered to do any and all acts and things
necessary,  appropriate,  proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take any action which, in the judgment of the General Partner,  in its
sole and  absolute  discretion,  (i) could  adversely  affect the ability of the
General Partner to continue to qualify as a REIT, (ii) could subject the General
Partner to any  additional  taxes under Section 857 or Section 4981 of the Code,
or (iii) could violate any law or regulation of any governmental  body or agency
having  jurisdiction  over the General  Partner or its  securities,  unless such
action  shall have been  specifically  consented  to by the  General  Partner in
writing.

                                    ARTICLE 4
                              CAPITAL CONTRIBUTIONS

                  Section 4.1      Capital Contributions of the Limited Partners
and the Former General Partner

                  On the Effective Date, certain of the Limited Partners and the
Former General Partner made the Capital  Contributions  described in the section
captioned "Formation of the Company" in the final Prospectus dated September 24,
1993 of the General  Partner in connection  with the initial public  offering of
the REIT  Shares.  To the extent the  Partnership  acquires  any property by the
merger of any other Person into the Partnership, Persons who receive Partnership
Interests  in  exchange  for their  interests  in the  Person  merging  into the
Partnership  shall  become  Partners  and shall be  deemed to have made  Capital
Contributions as provided in the applicable merger agreement. The Partners shall
own Partnership Units in the amounts set forth for such Partner in Exhibit A and
shall have a  Percentage  Interest in the  Partnership  as set forth  Exhibit A,
which  Percentage  Interest  shall be adjusted in Exhibit A from time to time by
the General Partner to the extent necessary to reflect  accurately  redemptions,
Capital Contributions, the issuance of additional Partnership Units (pursuant to
any merger or  otherwise),  or similar  events  having an effect on a  Partner's
Percentage Interest.  The Capital  Contributions of the Partners shall be at all
times as shown on the books and  records of the General  Partner.  The number of
Partnership  Units held by the General  Partner equal to one percent (1%) of all
outstanding  Partnership  Units  from  time to time  shall be  deemed  to be the
general  partner  Partner Units and shall be the General  Partnership  Interest.
Except  as  provided  in  Sections  4.2 and 10.5,  the  Partners  shall  have no
obligation  to  make  any  additional  Capital  Contributions  or  loans  to the
Partnership.

                  Section 4.2      Issuances of Additional Partnership Interests

                  A. The  General  Partner  is  hereby  authorized  to cause the
Partnership  from time to time to issue to the Partners  (including  the General
Partner) or other  Persons  additional  Partnership  Units or other  Partnership
Interests in one or more classes,  or one or more series of any of such classes,
with such  designations,  preferences and relative,  participating,  optional or
other special rights,  powers and duties,  including  rights,  powers and duties
senior to Limited Partner  Interests,  all as shall be determined by the General
Partner in its sole and absolute  discretion subject to Delaware law, including,
without limitation,  (i) the allocations of items of Partnership  income,  gain,
loss,  deduction  and  credit  to each  such  class  or  series  of  Partnership
Interests;  (ii) the right of each such class or series of Partnership Interests
to share in Partnership  distributions;  and (iii) the rights of each such class
or series of  Partnership  Interests  upon  dissolution  and  liquidation of the
Partnership;  provided  that no  such  additional  Partnership  Units  or  other
Partnership  Interests  shall be issued to the  General  Partner  unless  either
(a)(1) the  additional  Partnership  Interests are issued in connection  with an
issuance  of  additional  REIT  Shares or  Preferred  REIT Shares of the General
Partner, which shares have designations,  preferences and other rights such that
the economic interests  attributable to such shares are substantially similar to
the  designations,  preferences  and other rights of the additional  Partnership
Interests  issued to the General  Partner in accordance with this Section 4.2.A,
and (2) the General Partner shall make a Capital Contribution to the Partnership
in an amount equal to the net proceeds raised in connection with the issuance of
such additional REIT Shares or Preferred REIT Shares of the General Partner,  or
(b) the additional  Partnership  Interests in the applicable class or series are
issued to all Partners in proportion to their respective Percentage Interests in
such class or series.

                  B. The General  Partner  shall not issue any  additional  REIT
Shares or  Preferred  REIT Shares  (other than REIT  Shares  issued  pursuant to
Section  8.6),  or rights,  options,  warrants or  convertible  or  exchangeable
securities  containing  the right to  subscribe  for or purchase  REIT Shares or
Preferred REIT Shares  (collectively "New Securities") other than to all holders
of REIT Shares  unless (i) the General  Partner shall cause the  Partnership  to
issue to the General Partner Partnership Interests or rights, options,  warrants
or   convertible  or   exchangeable   securities  of  the   Partnership   having
designations, preferences and other rights, all such that the economic interests
are substantially  similar to those of the New Securities,  and (ii) the General
Partner  contributes  the net proceeds from the issuance of such New  Securities
and from  the  exercise  of  rights  contained  in such  New  Securities  to the
Partnership.  Without  limiting the foregoing,  the General Partner is expressly
authorized  to issue New  Securities  for less than fair market  value,  and the
General Partner is expressly authorized to cause the Partnership to issue to the
General Partner corresponding  Partnership Interests, so long as (x) the General
Partner  concludes in good faith that such  issuance is in the  interests of the
General Partner and the Partnership (for example,  and not by way of limitation,
the issuance of REIT Shares and  corresponding  Partnership Units pursuant to an
employee stock purchase plan providing for employee  purchases of REIT Shares at
a  discount  from fair  market  value or  employee  stock  options  that have an
exercise  price  that is less  than the fair  market  value of the REIT  Shares,
either at the time of issuance or at the time of exercise),  and (y) the General
Partner  contributes  all  proceeds  from  such  issuance  and  exercise  to the
Partnership.

                  C. Under the  authority  granted to it by Section  4.2.A,  the
General  Partner  hereby  establishes an additional  class of Partnership  Units
entitled  "Class B Units"  that is  available  to be  issued  in lieu of Class A
Units,  at the  election  of the  General  Partner,  in its  sole  and  absolute
discretion,  to newly admitted Partners in exchange for the contribution by such
Partners  of cash,  real estate  partnership  interests,  stock,  notes or other
assets or consideration. Except as otherwise provided below and in Section 5.1.B
hereof, each Class B Unit shall have the same designations, rights, preferences,
powers and duties as each Class A Unit:

          (1)       The amount of Available Cash  distributable  with respect to
                    Class B Units shall be determined in accordance with Section
                    5.1.B hereof.

          (2)       Each Class B Unit shall be  converted  automatically  into a
                    Class  A  Unit  on  the  day   immediately   following   the
                    Partnership  Record  Date for the  Distribution  Period  (as
                    defined  in  Section  5.1.B)  in which  the Class B Unit was
                    issued, without the requirement for any action by either the
                    Partnership or the Partner holding the Class B Unit.

          (3)       A holder of Class B Units will not have the Redemption Right
                    under  Section  8.6 with  respect to its Class B Units.  The
                    Redemption  Right for a holder of Class A Units  into  which
                    Class B Units  have been  converted  pursuant  to clause (2)
                    above  shall be the same as set forth in Section  8.6 except
                    that such  Redemption  Right shall not be exercisable  for a
                    period of one (1) year  following the issuance of such Class
                    B Units  (or such  longer  or  shorter  period as may be set
                    forth in the  contribution  agreement  or  amendment to this
                    Agreement pursuant to which such Class B Units were issued).

          (4)       A holder of either Class B Units or Class A Units into which
                    Class B Units  have been  converted  pursuant  to clause (2)
                    above  shall be  subject  to the  restrictions  on  transfer
                    imposed by Sections  11.3.C through 11.3.E of this Agreement
                    (in addition to any other restrictions on transfer as may be
                    set forth in the contribution agreement or amendment to this
                    Agreement pursuant to which such Class B Units were issued).

          (5)       The General  Partner  shall cause Class B Units to be issued
                    by the  Partnership  only  pursuant to an  amendment to this
                    Agreement under the authority granted to the General Partner
                    by Section 14.1.B.3 hereof,  which amendment shall designate
                    that the newly issued  Partnership  Units are Class B Units.
                    The General  Partner  shall have the right,  in its sole and
                    absolute  discretion,  subject to Section  4.2.A  above,  to
                    determine  whether  the  Partnership  should  issue  Class A
                    Units,  Class B Units (or one or more  series  thereof),  or
                    another class of Partnership  Interests in connection with a
                    contribution   of   property,   other   assets,   or   other
                    consideration to the Partnership.

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

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

                  F. Series 1998 Preferred Units. Under the authority granted to
it by Section 4.2.A hereof, the General Partner hereby establishes an additional
class of Partnership Units entitled "Series 1998 Junior Participating  Preferred
Units" (the "Series 1998 Preferred  Units").  Series 1998 Preferred  Units shall
have the designations,  preferences,  rights,  powers and duties as set forth in
Exhibit I hereto.

                  Section 4.3       Contribution of Proceeds of Issuance of REIT
Shares

                  In  connection  with the  issuance of REIT Shares or Preferred
REIT Shares  pursuant to Section 4.2, the General  Partner shall  contribute any
net proceeds raised in connection with such issuance the  Partnership;  provided
that if the net proceeds  actually received by the General Partner are less than
the gross proceeds of such issuance as a result of any underwriter's discount or
other  expenses  paid or incurred in  connection  with such  issuance,  then the
General  Partner  shall be deemed to have  made a  Capital  Contribution  to the
Partnership  in the amount equal to the sum of the net proceeds of such issuance
plus the amount of such  underwriter's  discount and other  expenses paid by the
General Partner.

                  Section 4.4       "Flip-in" Preemptive Rights

                  If the General  Partner  acquires  any Class A Units using the
proceeds  from any exercise of any rights (as defined in the  definition of REIT
Shares  Amount)  issued under a  shareholder  rights plan (or other  arrangement
having the same  objective  and  substantially  the same  effect),  then (a) the
holders of Common Units at such time (other than the General Partner) as a group
shall have the right to acquire,  at the same price per Class A Unit paid by the
General Partner, a total number of additional Class A Units equal to the product
of (i) the total number of Common Units held by such holders, multiplied by (ii)
a fraction,  the numerator of which is the number of Class A Units issued to the
General  Partner as a result of the exercise of such rights and the  denominator
of which  is the  total  number  of Class A Units  held by the  General  Partner
immediately  prior  to such  issuance  (which  fraction  is  referred  to as the
"Exercise Percentage"), and (b) each holder of a Class A Unit or Class B Unit at
such time  shall have the right to  acquire,  at the same price per Class A Unit
paid by the General  Partner,  a number of Class A Units equal to the product of
(iii) the aggregate  number of Common Units that such holder holds at such time,
multiplied by (iv) the Exercise Percentage.

                  Thus,  for  example,  if the General  Partner  were to acquire
2,000,000  Class A Units at $5 per Unit from the  proceeds  of the  exercise  of
outstanding  rights  issued under a  shareholder  rights plan at a time when the
General  Partner  already  owned  8,000,000  Class  A Units  out of a  total  of
12,000,000 outstanding Common Units (which would represent a 25% increase in the
number of Class A Units held by the General Partner),  then the other holders of
Common  Units as a group would have the right to  purchase a total of  1,000,000
Class A Units at $5 per Class A Unit, and each holder of a Class A Unit or Class
B Unit would be  entitled to purchase  his  proportionate  share of such Class A
Units,  or .25 Class A Units for each  Class A Unit or Class B Unit then held by
such holder.

                  In the event Partnership Units or Partnership  Interests other
than Class A Units (including,  without limitation, Series 1998 Preferred Units)
are issued to the  General  Partner  using  proceeds  of any  exercise of rights
issued under a shareholder  rights plan (or other  arrangement),  the holders of
Common Units shall be granted the right to acquire such other  Partnership Units
or Partnership Interests at the same price as paid by the General Partner and in
such  amounts  as would be  comparable  to their  rights  had Class A Units been
issued  instead.  The General Partner shall provide prompt written notice to the
holders  of  Common  Units  of its  acquisition  of  Class  A  Units  (or  other
Partnership  Units or  Partnership  Interests)  using  such  proceeds  and shall
establish  in good faith such  procedures  as it deems  appropriate  (including,
without   limitation,   procedures  to  eliminate  the  issuance  of  fractional
Partnership  Units if the General  Partner deems  appropriate) to effectuate the
rights of the holders of Common  Units under the  preceding  provisions  of this
Section 4.4. Except to the extent expressly granted by the Partnership  pursuant
to this Section 4.4 or another  agreement,  no person shall have any preemptive,
preferential  or other  similar  right with  respect to (i)  additional  Capital
Contributions  or  loans to the  Partnership;  or (ii)  issuance  or sale of any
Partnership Units or other Partnership Interests.

<PAGE>

                                    ARTICLE 5
                                  DISTRIBUTIONS

                  Section 5.1       Requirement and Characterization of
Distributions

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

                  (i)      First,  to the  holders  of  Preferred  Units in such
                           amount as is required for the  Partnership to pay all
                           distributions  with respect to such  Preferred  Units
                           due or payable  in  accordance  with the  instruments
                           designating such Preferred Units through the last day
                           of such quarter or shorter period; such distributions
                           shall  be made  to such  Partners  in such  order  of
                           priority  and  with  such  preferences  as have  been
                           established  with respect to such Preferred  Units as
                           of the last day of such  calendar  quarter or shorter
                           period; and then

                  (ii)     To the holders of Common Units in proportion to their
                           respective  Percentage  Interests in the Common Units
                           on  such  Partnership  Record  Date,  subject  to the
                           provisions of Sections 5.1.B and 5.1.C;

         provided  that in no event may a  Partner  receive  a  distribution  of
         Available  Cash with respect to a  Partnership  Unit if such Partner is
         entitled  to receive a  distribution  out of such  Available  Cash with
         respect  to a REIT  Share  for  which  such  Partnership  Unit has been
         redeemed or exchanged.  The General  Partner shall take such reasonable
         efforts,  as determined by it in its sole and absolute  discretion  and
         consistent with its  qualification  as a REIT, to distribute  Available
         Cash to the Limited Partners so as to preclude any such distribution or
         portion thereof from being treated as part of a sale of property to the
         Partnership  by a Limited  Partner under Section 707 of the Code or the
         Regulations  thereunder;  provided  that the  General  Partner  and the
         Partnership  shall not have  liability to a Limited  Partner  under any
         circumstances  as a result of any  distribution  to a  Limited  Partner
         being so treated.

                           B. If for any quarter or shorter  period with respect
         to which a distribution is to be made (a "Distribution Period") Class B
         Units  are  outstanding  on  the  Partnership   Record  Date  for  such
         Distribution  Period,  the General Partner shall allocate the Available
         Cash  with  respect  to  such   Distribution   Period   available   for
         distribution pursuant to Section 5.1.A(ii) above after distributions to
         all Preferred  Units  provided for in Section  5.1.A(i) above have been
         made  ("Common  Unit  Available  Cash")  between the  Partners  who are
         holders of Class A Units  ("Class A") and the  Partners who are holders
         of Class B Units ("Class B") as follows:

                           1) Class A shall  receive  that portion of the Common
                  Unit  Available  Cash  (the  "Class A  Share")  determined  by
                  multiplying  the amount of Common Unit  Available  Cash by the
                  following fraction:

                                      A x Y
                                ----------------

                                 (A x Y)+(B x X)

                           2) Class B shall  receive  that portion of the Common
                  Unit  Available  Cash  (the  "Class B  Share")  determined  by
                  multiplying  the amount of Common Unit  Available  Cash by the
                  following fraction:

                                      B x X
                               ------------------

                                 (A x Y)+(B x X)

                           3) For purposes of the  foregoing  formulas,  (i) "A"
                  equals  the  number  of  Class  A  Units  outstanding  on  the
                  Partnership Record Date for such Distribution Period; (ii) "B"
                  equals  the  number  of  Class  B  Units  outstanding  on  the
                  Partnership  Record Date for such Distribution  Period;  (iii)
                  "Y" equals the number of days in the Distribution  Period; and
                  (iv) "X" equals the number of days in the Distribution  Period
                  for which the Class B Units were issued and outstanding.

                  The Class A Share shall be distributed  among Partners holding
         Class A Units  on the  Partnership  Record  Date  for the  Distribution
         Period in  accordance  with the  number  of Class A Units  held by each
         Partner on such Partnership Record Date;  provided that in no event may
         a Partner  receive a  distribution  of Available Cash with respect to a
         Class A Unit if a Partner is entitled to receive a distribution  out of
         such Available Cash with respect to a REIT Share for which such Class A
         Unit  has  been  redeemed  or  exchanged.  The  Class B Share  shall be
         distributed among the Partners holding Class B Units on the Partnership
         Record Date for the  Distribution  Period in accordance with the number
         of Class B Units held by each Partner on such Partnership  Record Date.
         In no  event  shall  any  Class B Units  be  entitled  to  receive  any
         distribution of Available Cash for any Distribution Period ending prior
         to the date on which such Class B Units are issued.

                           C. In the event  that  Class B Units  which have been
         issued on different  dates are  outstanding on the  Partnership  Record
         Date for any Distribution Period, then the Class B Units issued on each
         particular  date shall be treated as a separate  series of Common Units
         for purposes of making the allocation of Common Unit Available Cash for
         such  Distribution  Period  among the holders of Common  Units (and the
         formula for making such  allocation,  and the  definitions of variables
         used therein, shall be modified accordingly). Thus, for example, if two
         series of Class B Units are outstanding on the Partnership  Record Date
         for any Distribution  Period,  the allocation  formula for each series,
         "Series B1" and "Series B2," would be as follows:

                           1) Series B1 shall receive that portion of the Common
                  Unit  Available Cash  determined by multiplying  the amount of
                  Common Unit Available Cash by the following fraction:

                                     B1 x X1
                          -----------------------------

                           (A x Y)+(B1 x X1)+(B2 x X2)

<PAGE>

                           2) Series B2 shall receive that portion of the Common
                  Unit  Available Cash  determined by multiplying  the amount of
                  Common Unit Available Cash by the following fraction:

                                     B2 x X2
                          -----------------------------

                           (A x Y)+(B1 x X1)+(B2 x X2)

                           3)  For  purposes  of  the  foregoing   formulas  the
                  definitions  set  forth in  Section  5.1.B.3  remain  the same
                  except  that (i) "B1"  equals  the  number of Common  Units in
                  Series B1 outstanding on the Partnership  Record Date for such
                  Distribution  Period;  (ii) "B2"  equals  the number of Common
                  Units in Series B2 outstanding on the Partnership  Record Date
                  for such Distribution  Period; (iii) "X1" equals the number of
                  days in the  Distribution  Period  for which  the  Partnership
                  Units in Series B1 were issued and outstanding;  and (iv) "X2"
                  equals the number of days in the Distribution Period for which
                  the Common Units in Series B2 were issued and outstanding.

                           D. Notwithstanding anything to the contrary contained
         herein, in no event shall a Partner receive a distribution of Available
         Cash with  respect to any Common  Unit with  respect to any  quarter or
         shorter period until such time as the  Partnership  has  distributed to
         the  holders  of  Preferred  Units  an  amount  sufficient  to pay  all
         distributions  payable with respect to such Preferred Units through the
         last day of such  quarter or shorter  period,  in  accordance  with the
         instruments designating such Preferred Units.

                  Section 5.2       Amounts Withheld

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

                  Section 5.3       Distributions Upon Liquidation

                  Proceeds from a Terminating  Capital Transaction and any other
cash  received  or  reductions  in  reserves  made  after  commencement  of  the
liquidation  of  the  Partnership  shall  be  distributed  to  the  Partners  in
accordance with Section 13.2.

                                    ARTICLE 6
                                   ALLOCATIONS

                  Section 6.1       Allocations for Capital Account Purposes

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

                  A.       Net Income.  After giving effect to the special
allocations set forth in Section 1 of Exhibit C (including Section 1.F thereof),
Net Income shall be allocated:

                                            (i) first, to the General Partner to
                           the extent that Net Losses  previously  allocated  to
                           the General  Partner  pursuant  to Section  6.1B(iii)
                           below exceed Net Income  previously  allocated to the
                           General Partner pursuant to this Section 6.1A(i);

                                            (ii)  second,  to  Partners  holding
                           Preferred  Units  (and if there are  Preferred  Units
                           with   different    priorities   in   preference   in
                           distribution,  then in the order of their  preference
                           in  distribution)  to  the  extent  that  Net  Losses
                           previously  allocated  to such  Partners  pursuant to
                           Section  6.1B(ii) below exceed Net Income  previously
                           allocated to such  Partners  pursuant to this Section
                           6.1A(ii);

                                            (iii)  third,  to  Partners  holding
                           Common Units to the extent that Net Losses previously
                           allocated  to  such  Partners   pursuant  to  Section
                           6.1.B(i) below exceed Net Income previously allocated
                           to such Partners pursuant to this Section 6.1A(iii);

                                            (iv)  fourth,  to  Partners  holding
                           Series B Preferred  Units until each such Partner has
                           been  allocated Net Income equal to the excess of (x)
                           the amount of the  cumulative  Priority  Return  such
                           Partner is  entitled  to the last day of the  current
                           taxable  year or to the  date of  redemption,  to the
                           extent  such Series B  Preferred  Units are  redeemed
                           during such taxable year, over (y) the cumulative Net
                           Income  allocated to such  Partners  pursuant to this
                           Section 6.1A(iv) for all prior taxable years; and

                                            (v)      fifth, to the Partners in
                           accordance with their respective Percentage Interests
                           in Common Units.

                  B.       Net Losses.  After giving effect to the special
                           allocations set forth in Section 1 of Exhibit C
                          (including Section 1.F thereof), Net Losses shall be
                           allocated:

                                            (i) first,  to the Partners  holding
                           Common  Units in  accordance  with  their  respective
                           Percentage  Interests  in  Common  Units,  until  the
                           Adjusted  Capital Account  (ignoring for this purpose
                           any amounts a Partner is obligated to  contribute  to
                           the capital of the Partnership or is deemed obligated
                           to  contribute   pursuant  to   Regulations   Section
                           1.704-1(b)(2)(ii)(c)(2))  of each  Partner is reduced
                           to zero;

                                            (ii)  second,  to  Partners  holding
                           Preferred   Units  in   accordance   with  each  such
                           Partner's  respective  percentage  interests  in  the
                           Preferred Units determined under the respective terms
                           of the  Preferred  Units (and if there are  Preferred
                           Units with  different  priorities  in  preference  in
                           distribution,  then in the  reverse  order  of  their
                           preference  in  distribution),   until  the  Adjusted
                           Capital  Account  (modified  in the same manner as in
                           clause  (i)) of each such  holder is reduced to zero;
                           and

                           (iii)    third, to the General Partner.

                  To the extent  permitted  under Sections  704(b) and 704(c) of
the Code and the Regulations  thereunder,  solely for purposes of allocating Net
Income or Net Losses in any taxable year (or a portion  thereof) to the Partners
holding Series B Preferred  Units with respect to such Units pursuant to Section
6.1  hereof,  items of Net Income or Net Losses,  as the case may be,  shall not
include  Depreciation  with respect to properties that are "ceiling  limited" in
respect of holders of Series B Preferred  Units.  For purposes of the  preceding
sentence,  Partnership property shall be considered "ceiling limited" in respect
of a holder of Series B Preferred  Units if  Depreciation  attributable  to such
Partnership property which would otherwise be allocable to such holder,  without
regard to this paragraph, exceeds depreciation determined for federal income tax
purposes  attributable  to such  Partnership  property which would  otherwise be
allocable  to such  holder  by  more  than  5%.  Notwithstanding  the  foregoing
sentences in this  paragraph,  in applying this  paragraph,  the General Partner
may, in its discretion for  administrative  ease and convenience,  calculate Net
Income or Net Loss in any taxable year (or a portion  thereof)  allocable to the
Partners holding Series B Preferred Units by excluding Depreciation with respect
to all properties of the Partnership.

                                    ARTICLE 7
                      MANAGEMENT AND OPERATIONS OF BUSINESS

                  Section 7.1       Management

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

          (1)       the making of any expenditures,  the lending or borrowing of
                    money (including,  without limitation, making prepayments on
                    loans and borrowing  money to permit the Partnership to make
                    distributions to its Partners in such amounts as will permit
                    the  General   Partner  (so  long  as  the  General  Partner
                    qualifies  as a REIT) to avoid the  payment  of any  federal
                    income  tax  (including,  for this  purpose,  any excise tax
                    pursuant   to  Section   4981  of  the  Code)  and  to  make
                    distributions  to the General  Partner such that the General
                    Partner  can   distribute   to  its   shareholders   amounts
                    sufficient  to permit the General  Partner to maintain  REIT
                    status),   the   assumption   or  guarantee   of,  or  other
                    contracting  for,  indebtedness and other  liabilities,  the
                    issuance  of  evidences  of   indebtedness   (including  the
                    securing of same by deed to secure debt,  mortgage,  deed of
                    trust  or other  lien or  encumbrance  on the  Partnership's
                    assets)  and  the  incurring  of any  obligations  it  deems
                    necessary   for  the  conduct  of  the   activities  of  the
                    Partnership;

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

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

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

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

          (6)       the   negotiation,   execution,   and   performance  of  any
                    contracts, conveyances or other instruments that the General
                    Partner  considers useful or necessary to the conduct of the
                    Partnership's   operations  or  the  implementation  of  the
                    General  Partner's  powers under this  Agreement,  including
                    contracting  with  contractors,   developers,   consultants,
                    accountants,  legal counsel, other professional advisors and
                    other   agents  and  the  payment  of  their   expenses  and
                    compensation out of the Partnership's assets;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                  E. In  exercising  its  authority  under this  Agreement,  the
General  Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner of any action taken by it; provided that, if the
General  Partner  decides to refinance  (directly or indirectly) any outstanding
indebtedness  of the  Partnership,  the  General  Partner  shall use  reasonable
efforts to structure such refinancing in a manner that minimizes any adverse tax
consequences  therefrom to the Limited  Partners,  and provided further that, in
deciding whether or not to dispose of any property that represents more than one
percent of the Partnership's total assets, the General Partner shall consider in
good faith the income tax  consequences of such disposition for both the General
Partners and the Limited Partners. The General Partner and the Partnership shall
not have liability to a Limited Partner under any  circumstances  as a result of
an income  tax  liability  incurred  by such  Limited  Partner as a result of an
action (or inaction) by the General Partner pursuant to its authority under this
Agreement.

                  Section 7.2       Certificate of Limited Partnership

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

                  Section 7.3       Restrictions on General Partner's Authority

                  A.  The   General   Partner   may  not  take  any   action  in
contravention of an express  prohibition or limitation of this Agreement without
the written Consent of all of the Limited  Partners  (including  Limited Partner
Interests held by the General  Partner) (or such lower percentage of the Limited
Partners as may be specifically provided for under a provision of this Agreement
or the Act).

                  B.  Except as  provided  in  Article l3  hereof,  the  General
Partner  may  not  sell,  exchange,  transfer  or  otherwise  dispose  of all or
substantially  all of the  Partnership's  assets  in a single  transaction  or a
series of related  transactions  (including by way of merger,  consolidation  or
other  combination  with any other  Person)  without  the  Consent of holders of
three-fourths  (3/4) of the  outstanding  Common Units held by Limited  Partners
(including  Common  Units  held  by  the  General  Partner  as  Limited  Partner
Interests).

                  Section 7.4       Reimbursement of the General Partner

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

                  B. The General Partner shall be reimbursed on a monthly basis,
or such  other  basis  as the  General  Partner  may  determine  in its sole and
absolute  discretion,  for all expenses that it incurs relating to the ownership
and  operation  of, or for the benefit of, the  Partnership;  provided  that the
amount of any such reimbursement  shall be reduced by any interest earned by the
General  Partner with respect to bank accounts or other  instruments or accounts
held by it on behalf of the  Partnership  as  permitted  in Section  7.5.A.  The
Limited  Partners  acknowledge  that,  for purposes of this Section  7.4.B,  all
expenses  of the  General  Partner  are deemed  incurred  for the benefit of the
Partnership.  Such  reimbursements  shall be in addition to any reimbursement to
the  General  Partner as a result of  indemnification  pursuant  to Section  7.7
hereof.

                  C. As set forth in Section 4.3, the General  Partner  shall be
treated as having made a Capital Contribution in the amount of all expenses that
it incurs relating to any issuance of additional  Partnership  Interests or REIT
Shares pursuant to Section 4.2 hereof.

                  D. In the  event  that  the  General  Partner  shall  elect to
purchase REIT Shares from its  shareholders  for the purpose of delivering  such
REIT Shares to satisfy an  obligation  under any dividend  reinvestment  program
adopted by the General Partner,  any employee stock purchase plan adopted by the
General  Partner,  or any similar  obligation or  arrangement  undertaken by the
General  Partner in the future,  the purchase price paid by the General  Partner
for such REIT Shares and any other expenses  incurred by the General  Partner in
connection  with such purchase shall be considered  expenses of the  Partnership
and shall be reimbursed to the General  Partner,  as the case may be, subject to
the condition that: (i) if such REIT Shares  subsequently  are to be sold by the
General  Partner,  the General Partner shall pay to the Partnership any proceeds
received by the General  Partner for such REIT Shares  (provided that a transfer
of REIT Shares for Units  pursuant to Section 8.6 would not be considered a sale
for such purposes);  and (ii) if such REIT Shares are not  retransferred  by the
General Partner within 30 days after the purchase  thereof,  the General Partner
shall  cause the  Partnership  to  cancel a number of Class A Units  held by the
General  Partner equal to the product  obtained by  multiplying  the  Conversion
Factor by the number of such REIT Shares.

                  Section 7.5       Outside Activities of the General Partner

          A. The General Partner shall not directly or indirectly  enter into or
conduct any business other than in connection  with the  ownership,  acquisition
and disposition of Partnership Interests as a General Partner or Limited Partner
and the  management  of the business of the  Partnership,  the  ownership of the
stock of the  Management  Corporation  and  such  activities  as are  incidental
thereto. The General Partner shall not incur any debts other than that for which
the  General  Partner may be liable in its  capacity  as General  Partner of the
Partnership  and other than a debt incurred by the General  Partner  pursuant to
Article III of the Declaration of Trust. The assets of the General Partner shall
be limited to Partnership Interests and stock of the Management Corporation. The
General Partner shall not hold any assets other than (i)  Partnership  Interests
as  a  General  Partner  or  Limited  Partner,  (ii)  stock  of  the  Management
Corporation,  and (iii) other than such bank accounts or similar  instruments or
accounts as it deems  necessary to carry out its  responsibilities  contemplated
under this Agreement and its organizational  documents.  The General Partner and
any Affiliates of the General Partner may acquire Limited Partner  Interests and
shall be entitled to exercise all rights of a Limited  Partner  relating to such
Limited Partner Interests.

          B.  Except as  provided  in Section  7.4.D,  in the event the  General
Partner  exercises  its rights under Article VI of the  Declaration  of Trust to
purchase REIT Shares,  then the General  Partner shall cause the  Partnership to
purchase  from it that number of Class A Units equal to the product  obtained by
multiplying  the number of REIT Shares to be  purchased  by the General  Partner
times the Conversion  Factor on the same terms and for the same aggregate  price
that the General Partner purchased such REIT Shares.

                  Section 7.6       Contracts with Affiliates

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

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

                  C. Except as expressly  permitted by this  Agreement,  neither
the General Partner nor any of its Affiliates shall sell, transfer or convey any
property  to, or  purchase  any  property  from,  the  Partnership,  directly or
indirectly,  except pursuant to transactions  that are determined by the General
Partner in good faith to be fair and  reasonable  and no less  favorable  to the
Partnership than would be obtained from an unaffiliated third party.

                  D. The General  Partner,  in its sole and absolute  discretion
and without  the  approval  of the  Limited  Partners,  may propose and adopt on
behalf of the  Partnership  employee  benefit  plans,  stock option  plans,  and
similar  plans  funded by the  Partnership  for the benefit of  employees of the
General  Partner,  the  Partnership,  Subsidiaries  of  the  Partnership  or any
Affiliate  of  any of  them  in  respect  of  services  performed,  directly  or
indirectly,  for the benefit of the Partnership,  the General Partner, or any of
the Partnership's Subsidiaries.

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

                  Section 7.7       Indemnification

                  A. The  Partnership  shall  indemnify each Indemnitee from and
against  any and all losses,  claims,  damages,  liabilities,  joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all  claims,   demands,   actions,   suits  or  proceedings,   civil,  criminal,
administrative  or   investigative,   that  relate  to  the  operations  of  the
Partnership  as set forth in this  Agreement  in which  such  Indemnitee  may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established  that: (i) the act or omission of the Indemnitee was material to the
matter  giving rise to the  proceeding  and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money,  property or services;  or (iii)
in the case of any criminal  proceeding,  the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. Without limitation, the foregoing
indemnity  shall extend to any liability of any  Indemnitee,  pursuant to a loan
guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary
of the Partnership  (including  without  limitation,  any indebtedness which the
Partnership  or any Subsidiary of the  Partnership  has assumed or taken subject
to)  except  as set  forth in  Exhibit  F, and the  General  Partner  is  hereby
authorized and  empowered,  on behalf of the  Partnership,  to enter into one or
more indemnity agreements  consistent with the provisions of this Section 7.7 in
favor of any  Indemnitee  having or  potentially  having  liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a  presumption  that the  Indemnitee  did not meet the requisite
standard of conduct set forth in this Section  7.7.A with respect to the subject
matter of such proceeding. The termination of any proceeding by conviction of an
Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee,
or an entry of an order of probation  against an  Indemnitee  prior to judgment,
creates a rebuttable presumption that such Indemnitee acted in a manner contrary
to that specified in this Section 7.7.A.  Any  indemnification  pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and neither
the  General  Partner  nor any  Limited  Partner  shall have any  obligation  to
contribute to the capital of the  Partnership  or otherwise  provide  funds,  to
enable the Partnership to fund its obligations under this Section 7.7.

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

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

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

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

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

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

                  H. The  provisions  of this Section 7.7 are for the benefit of
the Indemnitees,  their heirs, successors,  assigns and administrators and shall
not be deemed to create  any rights for the  benefit of any other  Persons.  Any
amendment,  modification  or repeal of this Section 7.7 or any provision  hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's  liability to any  Indemnitee  under this Section 7.7 as in effect
immediately  prior to such  amendment,  modification,  or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment,  modification  or repeal,  regardless of when such claims may
arise or be asserted.

<PAGE>

                  Section 7.8       Liability of the General Partner

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

                  B. The Limited Partners expressly acknowledge that the General
Partner  is  acting  on  behalf  of  the   Partnership,   and  its  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 Limited Partners or 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.

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

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

                  Section 7.9       Other Matters Concerning the General Partner

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

                  B.  The  General  Partner  may  consult  with  legal  counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance  upon the opinion of
such Persons as to matters which such General Partner reasonably  believes to be
within such Person's  professional  or expert  competence  shall be conclusively
presumed to have been done or omitted in good faith and in accordance  with such
opinion.

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

                  D.  Notwithstanding  any other provisions of this Agreement or
the Act, any action of the General  Partner on behalf of the  Partnership or any
decision  of the  General  Partner  to  refrain  from  acting  on  behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary  or  advisable  in order to (i)  protect  the  ability of the  General
Partner to  continue  to qualify as a REIT or (ii) avoid the  General  Partner's
incurring  any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized  under this  Agreement  and is deemed  approved by all of the Limited
Partners.

                  Section 7.10      Title to Partnership Assets

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

                  Section 7.11      Reliance by Third Parties

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

                                    ARTICLE 8
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

                  Section 8.1       Limitation of Liability

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

                  Section 8.2       Management of Business

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

                  Section 8.3       Outside Activities of Limited Partners

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

                  Section 8.4       Return of Capital

                  Except  pursuant  to the  right  of  redemption  set  forth in
Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
to the extent  provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise  expressly provided in this Agreement,  no Limited Partner or Assignee
shall have priority over any other Limited  Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.

                  Section 8.5       Rights of Limited Partners Relating to the
Partnership

                  A. In addition to other rights  provided by this  Agreement or
by the Act, and except as limited by Section 8.5.C hereof,  each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited  partner in the  Partnership,  upon written  demand with a
statement  of the  purpose of such  demand  and at such  Limited  Partner's  own
expense  (including  such  copying  and  administrative  charges as the  General
Partner may establish from time to time):

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

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

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

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

                  (5)      to obtain  true and full  information  regarding  the
                           amount of cash and a description and statement of any
                           other  property  or  services   contributed  by  each
                           Partner   and  which  each   Partner  has  agreed  to
                           contribute in the future,  and the date on which each
                           became a Partner.

                  B.       The Partnership shall notify each Limited Partner
upon request  of the then current Conversion Factor.

                  C.  Notwithstanding  any other  provision of this Section 8.5,
the General Partner may keep confidential  from the Limited  Partners,  for such
period  of time as the  General  Partner  determines  in its sole  and  absolute
discretion  to be  reasonable,  any  information  that (i) the  General  Partner
reasonably  believes to be in the nature of trade  secrets or other  information
the disclosure of which the General Partner in good faith believes is not in the
best  interests  of the  Partnership  or could  damage  the  Partnership  or its
business or (ii) the  Partnership  is required by law or by  agreements  with an
unaffiliated third party to keep confidential.

                  Section 8.6       Redemption Right

                  A. Subject to Sections 4.2.C.3 and 8.6.C, on or after the date
one (1) year after the closing of the initial public  offering of REIT Shares by
the General Partner, each Limited Partner, other than the General Partner, shall
have the right (the "Redemption  Right") to require the Partnership to redeem on
a Specified  Redemption  Date all or a portion of the Class A Units held by such
Limited  Partner  at a  redemption  price  equal  to and in the form of the Cash
Amount to be paid by the  Partnership.  The Redemption  Right shall be exercised
pursuant to a Notice of Redemption  delivered to the Partnership (with a copy to
the General  Partner) by the Limited  Partner who is exercising  the  redemption
right  (the  "Redeeming  Partner").  A  Limited  Partner  may not  exercise  the
Redemption  Right for less than one thousand  (1,000)  Class A Units or, if such
Limited Partner holds less than one thousand  (1,000) Class A Units,  all of the
Class A Units held by such Limited Partner.  The Redeeming Partner shall have no
right,  with  respect to any  Partnership  Units so  redeemed,  to  receive  any
distributions  paid after the  Specified  Redemption  Date.  The Assignee of any
Limited Partner may exercise the rights of such Limited Partner pursuant to this
Section 8.6,  and such Limited  Partner  shall be deemed to have  assigned  such
rights to such  Assignee  and shall be bound by the  exercise  of such rights by
such Limited Partner's Assignee.  In connection with any exercise of such rights
by such  Assignee on behalf of such  Limited  Partner,  the Cash Amount shall be
paid by the  Partnership  directly  to  such  Assignee  and not to such  Limited
Partner.

                  B.  Notwithstanding  the  provisions  of  Section  8.6.A,  the
General  Partner  may,  in its sole and  absolute  discretion,  elect to  assume
directly  and  satisfy  a  Redemption  Right by either  paying to the  Redeeming
Partner  the Cash  Amount or issuing to the  Redeeming  Partner  the REIT Shares
Amount, as elected by the General Partner (in its sole and absolute  discretion)
on the Specified  Redemption  Date,  whereupon the General Partner shall acquire
the Partnership  Units offered for redemption by the Redeeming Partner and shall
be  treated  for all  purposes  of this  Agreement  as the owner of such Class A
Units.  Unless the General Partner (in its sole and absolute  discretion)  shall
exercise its right to assume  directly  and satisfy the  Redemption  Right,  the
General  Partner shall not have any  obligation to the Redeeming  Partner or the
Partnership with respect to the Redeeming  Partner's  exercise of the Redemption
Right.  In the event the General Partner shall exercise its right to satisfy the
Redemption  Right in the manner  described in the first sentence of this Section
8.6.B,  the  Partnership  shall  have no  obligation  to pay any  amount  to the
Redeeming  Partner  with  respect to such  Redeeming  Partner's  exercise of the
Redemption Right, and each of the Redeeming  Partner,  the Partnership,  and the
General Partner shall treat the transaction between the General Partner, and the
Redeeming  Partner for federal  income tax  purposes as a sale of the  Redeeming
Partner's Class A Units to the General Partner. Each Redeeming Partner agrees to
execute  such  documents  as the  General  Partner  may  reasonably  require  in
connection  with the  issuance of REIT Shares  upon  exercise of the  Redemption
Right.

                  C. Notwithstanding the provisions of Section 8.6.A and Section
8.6.B, a Partner shall not be entitled to exercise the Redemption Right pursuant
to Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner pursuant to Section 8.6.B  (regardless of
whether or not the General  Partner or would in fact  exercise  its rights under
Section  8.6.B) would be  prohibited  under the  Declaration  of Trust.  Without
limitation on the preceding sentence,  the following restrictions shall apply to
the exercise of a Redemption Right by a Partner:  (i) neither a Person who is an
"Excluded Holder" as defined in the Declaration of Trust, nor any Person related
to an  "Excluded  Holder" by either  blood or  marriage,  nor any  Person  whose
ownership  of REIT Shares would be  attributed  to an  "Excluded  Holder"  under
Section 318 of the Code, nor any Person who would be considered by reason of the
application  of  Section  318 of  the  Code  to  own  REIT  Shares  actually  or
constructively  owned by an "Excluded Holder" shall be permitted to exercise the
Redemption  Right if (A) after  giving  effect to such  exercise,  The  Colonial
Company or any direct or indirect  Subsidiary  of The Colonial  Company would be
regarded  as a "related  party  tenant" of the General  Partner for  purposes of
Section  856(d)(2)(B)  of the Code and (B) the total  rental  income  considered
derived by the General Partner from all "related party tenants" could reasonably
be  expected  to exceed  one  percent  (1%) of the gross  income of the  General
Partner (as determined for the purposes of Section  856(c)(2) of the Code);  and
(ii)  neither  an  "Excluded  Holder",  nor any Person  related to an  "Excluded
Holder" by either  blood or  marriage,  nor any Person  whose  ownership of REIT
Shares would be attributed to an "Excluded  Holder" under Section  544(a) of the
Code,  nor any Person who would be  considered by reason of the  application  of
Section 544(a) of the Code to own REIT Shares actually or  constructively  owned
by an "Excluded  Holder" shall be permitted to exercise the Redemption Right if,
after giving effect to such exercise (A) any single Person described above would
be  considered  to own more than 29 percent of the  outstanding  REIT Shares (as
determined  for purposes of Sections  542(a)(2) and 856(a)(6) of the Code);  (B)
any two Persons  described above would be considered to own more than 34 percent
of the outstanding REIT Shares (as determined for purposes of Sections 542(a)(2)
and  856(a)(6)  of the Code);  (C) any three  Persons  described  above would be
considered  to own more than 39  percent  of the  outstanding  REIT  Shares  (as
determined for purposes of Sections 542(a)(2) and 856(a)(6) of the Code); or (D)
any four Persons described above would be considered to own more than 44 percent
of the outstanding REIT Shares (as determined for purposes of Sections 542(a)(2)
and 856(a)(6) of the Code).

                  D.  Notwithstanding  anything  contained  in  Sections  8.6.A,
8.6.B, or 8.6.C,  no Partner shall be entitled to exercise the Redemption  Right
pursuant to Section  8.6.A with  respect to any  Preferred  Unit unless (i) such
Preferred  Unit has  been  issued  to and is held by a  Partner  other  than the
General  Partner,  and (ii) the General  Partner has  expressly  granted to such
Partner the right to redeem such Preferred Units pursuant to Section 8.6.A.

                  E.  Preferred  Units  shall be  redeemed,  if at all,  only in
accordance with such redemption  rights or options as are set forth with respect
to such  Preferred  Units  (or  class  or  series  thereof)  in the  instruments
designating such Preferred Units (or class or series thereof).

                                    ARTICLE 9
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

                  Section 9.1        Records and Accounting

                  The  General  Partner  shall  keep or  cause to be kept at the
principal office of the Partnership  those records and documents  required to be
maintained by the Act and other books and records deemed by the General  Partner
to be appropriate with respect to the Partnership's business, including, without
limitation,  all books and records  necessary to provide to the Limited Partners
any information,  lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the Partnership
in the  regular  course  of its  business  may be kept on, or be in the form of,
punch cards, magnetic tape, photographs,  micrographics or any other information
storage  device,  provided that the records so maintained are  convertible  into
clearly  legible  written form within a reasonable  period of time. The books of
the Partnership shall be maintained,  for financial and tax reporting  purposes,
on an accrual basis in accordance with generally accepted accounting principles,
or such  other  basis as the  General  Partner  determines  to be  necessary  or
appropriate.

                  Section 9.2       Fiscal Year

                  The fiscal year of the Partnership shall be the calendar year.

                  Section 9.3       Reports

                  A. As soon as  practicable,  but in no  event  later  than one
hundred five (105) days after the close of each  Partnership  Year,  the General
Partner shall cause to be mailed to each Limited  Partner as of the close of the
Partnership  Year,  an annual  report  containing  financial  statements  of the
Partnership, or of the General Partner if such statements are prepared solely on
a  consolidated  basis with the  General  Partner,  for such  Partnership  Year,
presented in accordance  with generally  accepted  accounting  principles,  such
statements to be audited by a nationally  recognized firm of independent  public
accountants selected by the General Partner.

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

                                   ARTICLE 10
                                   TAX MATTERS

                  Section 10.1      Preparation of Tax Returns

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

                  Section 10.2      Tax Elections

                  Except as  otherwise  provided  herein,  the  General  Partner
shall,  in its sole  and  absolute  discretion,  determine  whether  to make any
available  election pursuant to the Code;  provided,  however,  that the General
Partner shall make the election under Section 754 of the Code in accordance with
applicable regulations  thereunder.  The General Partner shall have the right to
seek to revoke any such election  (including,  without limitation,  the election
under Section 754 of the Code) upon the General  Partner's  determination in its
sole and absolute  discretion  that such  revocation is in the best interests of
the Partners.

                  Section 10.3      Tax Matters Partner

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

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

          (1)       to enter into any  settlement  with the IRS with  respect to
                    any   administrative   or  judicial   proceedings   for  the
                    adjustment of  Partnership  items  required to be taken into
                    account  by  a  Partner  for  income  tax   purposes   (such
                    administrative  proceedings  being  referred  to  as a  "tax
                    audit" and such judicial  proceedings  being  referred to as
                    "judicial review"),  and in the settlement agreement the tax
                    matters  partner  may  expressly  state that such  agreement
                    shall  bind  all  Partners,   except  that  such  settlement
                    agreement  shall not bind any  Partner  (i) who  (within the
                    time prescribed  pursuant to the Code and Regulations) files
                    a  statement  with the IRS  providing  that the tax  matters
                    partner  shall  not  have  the  authority  to  enter  into a
                    settlement  agreement  on behalf of such Partner or (ii) who
                    is a "notice  partner" (as defined in Section  6231(a)(8) of
                    the Code) or a member of a "notice  group"  (as  defined  in
                    Section 6223(b)(2) of the Code);

          (2)       in  the  event  that  a  notice  of a  final  administrative
                    adjustment at the Partnership  level of any item required to
                    be taken  into  account  by a Partner  for tax  purposes  (a
                    "final adjustment") is mailed to the tax matters partner, to
                    seek judicial review of such final adjustment, including the
                    filing of a petition for readjustment  with the Tax Court or
                    the filing of a complaint  for refund with the United States
                    Claims Court or the District  Court of the United States for
                    the district in which the  Partnership's  principal place of
                    business is located;

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

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

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

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

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

                  C. The tax matters partner shall receive no  compensation  for
its  services.  All third party costs and  expenses  incurred by the tax matters
partner in performing its duties as such  (including  legal and accounting  fees
and  expenses)  shall be  borne  by the  Partnership.  Nothing  herein  shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters  partner in  discharging  its duties  hereunder,  so long as the
compensation paid by the Partnership for such services is reasonable.

                  Section 10.4      Organizational Expenses

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

                  Section 10.5      Withholding

                  Each Limited  Partner  hereby  authorizes  the  Partnership to
withhold  from or pay on behalf of or with respect to such  Limited  Partner any
amount of federal,  state,  local,  or foreign  taxes that the  General  Partner
determines  that the  Partnership is required to withhold or pay with respect to
any amount  distributable  or allocable to such Limited Partner pursuant to this
Agreement,  including,  without limitation, any taxes required to be withheld or
paid by the Partnership  pursuant to Sections 1441,  1442,  1445, or 1446 of the
Code.  Any amount paid on behalf of or with respect to a Limited  Partner  shall
constitute a loan by the Partnership to such Limited  Partner,  which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General  Partner  that such  payment  must be made  unless  (i) the  Partnership
withholds such payment from a distribution  which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership  which would,  but for such payment,  be  distributed to the Limited
Partner.  Any amounts  withheld  pursuant to the  foregoing  clauses (i) or (ii)
shall be  treated as having  been  distributed  to such  Limited  Partner.  Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security  interest in such Limited  Partner's  Partnership  Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section  10.5.  In the event that a Limited  Partner
fails to pay any amounts owed to the  Partnership  pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the  payment  to the  Partnership  on  behalf  of such  defaulting  Limited
Partner,  and in such event  shall be deemed to have  loaned such amount to such
defaulting  Limited  Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner.  Without limitation,  in
such event the  General  Partner  shall have the right to receive  distributions
that would otherwise be distributable  to such defaulting  Limited Partner until
such time as such loan,  together  with all interest  thereon,  has been paid in
full,  and any such  distributions  so received by the General  Partner shall be
treated  as having  been  distributed  to the  defaulting  Limited  Partner  and
immediately  paid by the defaulting  Limited  Partner to the General  Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear  interest  at the lesser of (A) the base rate on  corporate  loans at large
United States money center  commercial  banks, as published from time to time in
the Wall Street  Journal,  plus four (4) percentage  points,  or (B) the maximum
lawful  rate of interest on such  obligation,  such  interest to accrue from the
date such amount is due (i.e., fifteen (15) days after demand) until such amount
is paid in full. Each Limited Partner shall take such actions as the Partnership
or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.

<PAGE>

                                   ARTICLE 11
                            TRANSFERS AND WITHDRAWALS

                  Section 11.1      Transfer

                  A. The term  "transfer,"  when  used in this  Article  11 with
respect to a  Partnership  Unit,  shall be deemed to refer to a  transaction  by
which the  General  Partner  purports  to assign all or any part of its  General
Partner  Interest to another  Person or by which a Limited  Partner  purports to
assign all or any part of its Limited Partner  Interest to another  Person,  and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise.  The term "transfer" when
used in this Article 11 does not include any redemption of Partnership  Units by
a Limited Partner or acquisition of Partnership  Units from a Limited Partner by
the General Partner pursuant to Section 8.6.

                  B. No Partnership  Interest shall be transferred,  in whole or
in part,  except in accordance  with the terms and  conditions set forth in this
Article 11. Any transfer or  purported  transfer of a  Partnership  Interest not
made in accordance with this Article 11 shall be null and void.

                  Section 11.2      Transfer of General Partner's Partnership
Interest

                  A. The  General  Partner may not  transfer  any of its General
Partner Interest or Limited Partnership Interests or withdraw as General Partner
except as  provided  in  Section  11.2.B  or in  connection  with a  transaction
described in Section 11.2.C.

                  B. The General Partner may transfer Limited Partner  Interests
held by it either to the  Partnership in accordance with Section 7.5.B hereof or
to a  purported  holder of REIT  Shares in  accordance  with the  provisions  of
Section 6.6 of the Declaration of Trust.

                  C. Except as otherwise provided in Section 11.2.D, the General
Partner shall not engage in any merger,  consolidation or other combination with
or into another Person or sale of all or substantially all of its assets, or any
reclassification,  or  recapitalization  or change of  outstanding  REIT  Shares
(other  than a change in par value,  or from par value to no par value,  or as a
result of a  subdivision  or  combination  as  described  in the  definition  of
"Conversion Factor") ("Transaction"), unless (i) the Transaction also includes a
merger of the  Partnership  or sale of  substantially  all of the  assets of the
Partnership  which has been  approved by the  requisite  Consent of the Partners
pursuant  to  Section  7.3 and as a result of which all  Limited  Partners  will
receive for each Common Unit an amount of cash,  securities,  or other  property
equal to the product of the Conversion  Factor and the greatest  amount of cash,
securities or other property paid to a holder of one REIT Share in consideration
of one REIT Share at any time during the period from and after the date on which
the  Transaction  is  consummated,  provided  that if,  in  connection  with the
Transaction,  a purchase,  tender or exchange  offer shall have been made to and
accepted by the holders of more than fifty percent (50%) of the outstanding REIT
Shares,  each holder of Common Units shall receive the greatest  amount of cash,
securities,  or other  property  which such holder  would have  received  had it
exercised  the  Redemption  Right and  received  REIT Shares in exchange for its
Common Units  immediately  prior to the expiration of such  purchase,  tender or
exchange  offer and had  thereupon  accepted such  purchase,  tender or exchange
offer; and (ii) no more than forty-nine  percent (49%) of the equity  securities
of the acquiring Person in such transaction shall be owned,  after  consummation
of such Transaction, by the General Partner or Persons who are Affiliates of the
Partnership or the General  Partner  immediately  prior to the date on which the
Transaction is consummated.

                  D.  Notwithstanding  Section  11.2.C,  the General Partner may
merge with another entity if immediately after such merger  substantially all of
the assets of the surviving  entity,  other than  Partnership  Units held by the
General Partner (whether such  Partnership  Units constitute the General Partner
Interest or a Limited Partner Interest), are contributed to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value,
as reasonably  determined by the General  Partner,  equal to the 704(c) Value of
the assets so contributed.

                  Section 11.3      Limited Partners' Rights to Transfer

                  A.  Subject to the  provisions  of  Sections  11.3.C,  11.3.D,
11.3.E, and 11.4, a Limited Partner may transfer, with or without the consent of
the General Partner, all or any portion of its Partnership  Interest,  or any of
such Limited Partner's economic rights as a Limited Partner.

                  B.  If  a  Limited  Partner  is  subject  to  Incapacity,  the
executor,  administrator,  trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more  rights  than those  enjoyed  by other  Limited  Partners,  for the
purpose of settling or managing  the estate and such power as the  Incapacitated
Limited Partner  possessed to transfer all or any part of his or its interest in
the Partnership.  The Incapacity of a Limited Partner,  in and of itself,  shall
not dissolve or terminate the Partnership.

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

                  D. No transfer by a Limited Partner of its  Partnership  Units
may be made  to any  Person  if (i) in the  opinion  of  legal  counsel  for the
Partnership,  it would result in the Partnership being treated as an association
taxable  as a  corporation,  or (ii) such  transfer  is  effectuated  through an
"established  securities  market" or a  "secondary  market  (or the  substantial
equivalent thereof)" within the meaning of Section 7704 of the Code.

                  E.  No  transfer  of any  Partnership  Units  may be made to a
lender to the  Partnership  or any Person who is related  (within the meaning of
Section  1.752-4(b) of the  Regulations) to any lender to the Partnership  whose
loan  constitutes  a Nonrecourse  Liability,  without the consent of the General
Partner,  in its sole and absolute  discretion,  provided that as a condition to
such consent the lender will be required to enter into an  arrangement  with the
Partnership and the General Partner to exchange or redeem for the Cash Amount or
REIT Shares Amount, at the election of the Partnership, any Partnership Units in
which a security  interest  is held  simultaneously  with the time at which such
lender  would be deemed to be a  partner  in the  Partnership  for  purposes  of
allocating liabilities to such lender under Section 752 of the Code.

                  Section 11.4      Substituted Limited Partners

                  A. The  General  Partner's  failure  or  refusal  to  permit a
transferee of any such interests to become a Substituted  Limited  Partner shall
not give rise to any cause of action against the Partnership or any Partner.

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

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

                  Section 11.5      Assignees

                  If the General Partner,  in its sole and absolute  discretion,
does not consent to the admission of any permitted transferee under Section 11.3
as a Substituted  Limited Partner, as described in Section 11.4, such transferee
shall be  considered  an Assignee  for purposes of this  Agreement.  An Assignee
shall be deemed to have had  assigned  to it, and shall be  entitled  to receive
distributions  from the  Partnership  and the share of Net  Income,  Net Losses,
Recapture  Income,  and any other items,  gain, loss deduction and credit of the
Partnership  attributable to the Partnership  Units assigned to such transferee,
but  shall  not be  deemed  to be a holder  of  Partnership  Units for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Units  in  any  matter  presented  to the  Limited  Partners  for a  vote  (such
Partnership  Units  being  deemed to have been voted on such  matter in the same
proportion  as all other  Partnership  Units of the same class or series held by
Limited Partners are voted, to the extent such Partnership Units are entitled to
vote on such matter). In the event any such transferee desires to make a further
assignment of any such  Partnership  Units,  such transferee shall be subject to
all the  provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.

                  Section 11.6      General Provisions

                  A. No Limited Partner may withdraw from the Partnership  other
than as a  result  of a  permitted  transfer  of all of such  Limited  Partner's
Partnership  Units in accordance  with this Article 11 or pursuant to redemption
of all of its Partnership Units under Section 8.6.

                  B.  Any  Limited   Partner  who  shall  transfer  all  of  its
Partnership  Units in a transfer  permitted  pursuant  to this  Article 11 shall
cease to be a  Limited  Partner  upon the  admission  of all  Assignees  of such
Partnership Units as Substitute Limited Partners. Similarly, any Limited Partner
who shall transfer all of its Partnership  Units pursuant to a redemption of all
of its  Partnership  Units  under  Section 8.6 of this  Agreement,  Section 4 of
Exhibit I and Section 4 of Exhibit J shall cease to be a Limited Partner.

                  C.  Transfers  pursuant to this Article 11 may only be made on
the first day of a month, unless the General Partner otherwise agrees; provided,
however,  that a transfer of Partnership Units pursuant to exercise of rights by
a secured party in connection with a pledge of such Partnership  Units may occur
at any time.

                  D. If any  Partnership  Interest  is  transferred  or assigned
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article 11 or redeemed or transferred pursuant to Section
8.6 of this Agreement,  Section 4 of Exhibit G or Section 4 of Exhibit H, or any
day other than the first day of a Partnership Year, then Net Income, Net Losses,
each item  thereof and all other items  attributable  to such  interest for such
Partnership Year shall be divided and allocated  between the transferor  Partner
and the transferee Partner by taking into account their varying interests during
the  Partnerships  year in accordance with Section 706(d) of the Code, using the
interim  closing  of the books  method.  Solely  for  purposes  of  making  such
allocations,  each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a redemption  occurs shall be allocated to
the Redeeming Partner.  All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date or the Series
B Preferred Unit Partnership Record Date, as the case may be, is before the date
of such  transfer,  assignment,  or redemption  shall be made to the  transferor
Partner  or the  Redeeming  Partner,  as the case  may be,  and in the case of a
transfer or assignment other than a redemption,  all  distributions of Available
Cash  thereafter  attributable  to such  Partnership  Unit  shall be made to the
transferee Partner.

                                   ARTICLE 12
                              ADMISSION OF PARTNERS

                  Section 12.1      Admission of Successor General Partner

                  A successor to all of the General Partner Interest pursuant to
Section  11.2 hereof who is  proposed  to be  admitted  as a  successor  General
Partner shall be admitted to the Partnership as the General  Partner,  effective
upon such  transfer.  Any such  transferee  shall  carry on the  business of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor  General  Partner  executing and delivering to the  Partnership an
acceptance of all of the terms and  conditions of this  Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items  attributable to the General Partner  Interest for such  Partnership  year
shall be allocated  between the transferring  General Partner and such successor
as provided in Section 11.6.D hereof.

                  Section 12.2 Admission of Additional Limited Partners

                  A.  A  Person  who  makes  a  Capital   Contribution   to  the
Partnership  in  accordance  with  this  Agreement  shall  be  admitted  to  the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form  satisfactory  to the General Partner
of all of the  terms  and  conditions  of  this  Agreement,  including,  without
limitation,  the power of  attorney  granted in Section 2.4 hereof and (ii) such
other  documents  or  instruments  as may be required in the  discretion  of the
General  Partner in order to effect such  Person's  admission  as an  Additional
Limited Partner.

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

                  C.  If any  Additional  Limited  Partner  is  admitted  to the
Partnership on any day other than the first day of a Partnership  Year, then Net
Income,  Net  Losses,  each item  thereof and all other  items  allocable  among
Partners and Assignees for such  Partnership  Year shall be allocated among such
Additional  Limited  Partner and all other Partners and Assignees by taking into
account their varying  interests  during the Partnership Year in accordance with
Section  706(d) of the Code,  using the  interim  closing  of the books  method.
Solely  for  purposes  of  making  such  allocations,  each of such item 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 Available Cash with respect to
which the Partnership  Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited Partner,
and all  distributions  of Available Cash thereafter shall be made to all of the
Partners and Assignees including such Additional Limited Partner.

                  Section 12.3      Amendment of Agreement and Certificate of
Limited Partnership

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

                                   ARTICLE 13
                    DISSOLUTION, LIQUIDATION AND TERMINATION

                  Section 13.1      Dissolution

                  The  Partnership  shall not be dissolved  by the  admission of
Substituted  Limited Partners or Additional Limited Partners or by the admission
of a successor  General  Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner,  any successor General Partner shall
continue the business of the Partnership.  The Partnership  shall dissolve,  and
its affairs  shall be wound up, upon the first to occur of any of the  following
("Liquidating Events"):

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

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

                  C. from and after the  Effective  Date  through  December  31,
2013,  an election  to dissolve  the  Partnership  made by the General  Partner,
unless any  Original  Limited  Partner  who holds one or more  Original  Limited
Partnership Units objects in writing to such dissolution within thirty (30) days
of receiving written notice of such election from the General Partner;

                  D. from and after  January 1, 2014 through  December 31, 2043,
an election to dissolve  the  Partnership  made by the General  Partner,  unless
Original  Limited  Partners  holding at least five  percent (5%) of the Original
Limited  Partnership  Units object in writing to such dissolution  within thirty
(30) days of receiving written notice of such election from the General Partner;

                  E.    on or after January 1, 2043 an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;

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

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

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

                  Section 13.2      Winding Up

                  A. Upon the occurrence of a Liquidating Event, the Partnership
shall  continue  solely for the purposes of winding up its affairs in an orderly
manner,  liquidating its assets,  and satisfying the claims of its creditors and
Partners.  No Partner  shall take any action that is  inconsistent  with, or not
necessary to or appropriate  for, the winding up of the  Partnership's  business
and affairs. The General Partner, or, in the event there is no remaining General
Partner,  any Person  elected by a majority in interest of the Limited  Partners
(the  General  Partner  or such other  Person  being  referred  to herein as the
"Liquidator"),   shall  be  responsible   for  overseeing  the  winding  up  and
dissolution of the Partnership and shall take full account of the  Partnership's
liabilities  and property and the  Partnership  property  shall be liquidated as
promptly  as is  consistent  with  obtaining  the fair  value  thereof,  and the
proceeds  therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:

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

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

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

          (4)       The  balance,  if any,  to the  General  Partner and Limited
                    Partners in accordance  with their Capital  Accounts,  after
                    giving   effect   to   all   contributions,   distributions,
                    adjustments, and allocations for all periods, and subject to
                    the rights of the  holders of  Preferred  Units to receive a
                    liquidation  preference,  with an appropriate  adjustment to
                    the Capital  Accounts of such holders  entitled to receive a
                    liquidation  preference  to reflect  the payment of any such
                    liquidation preference.

Prior to the  foregoing  distributions,  the  General  Partner  shall  have made
adjustments to Capital Accounts of the Partners to reflect the fair market value
of the Partnership  assets as of the date of the Partnership's  liquidation in a
manner consistent with Regulations Section 1.704-1(b)(2)(iv)(f).

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

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

                  C.       In the discretion of the Liquidator, a pro rata
portion of the distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this Article l3 may be:

                  (1)      distributed to a trust established for the benefit of
                           the  General  Partner and  Limited  Partners  for the
                           purposes   of   liquidating    Partnership    assets,
                           collecting  amounts  owed  to  the  Partnership,  and
                           paying any  contingent or unforeseen  liabilities  or
                           obligations  of the  Partnership  or 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 Liquidator,  in the same proportions as
                           the   amount   distributed   to  such  trust  by  the
                           Partnership  would otherwise have been distributed to
                           the General Partner and Limited Partners  Pursuant to
                           this Agreement; or

                  (2)      withheld or escrowed to provide a reasonable  reserve
                           for Partnership liabilities (contingent or otherwise)
                           and  to  reflect  the   unrealized   portion  of  any
                           installment  obligations  owed  to  the  Partnership,
                           provided that such withheld or escrowed amounts shall
                           be  distributed  to the  General  Partner and Limited
                           Partners  in the  manner  and order of  priority  set
                           forth in Section 13.2.A as soon as practicable.

                  Section 13.3      Compliance with Timing Requirements of
Regulations

                  In the  event  the  Partnership  is  "liquidated"  within  the
meaning of Regulations Section 1.704-l(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 13 to the General Partner and Limited Partners who have
positive   Capital    Accounts   in   compliance   with   Regulations    Section
1.704-1(b)(2)(ii)(b)(2).  If any  Partner  has a deficit  balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the  Partnership  with respect to such  deficit,  and such deficit  shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.

                  Section 13.4.       Deemed Distribution and Recontribution

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

                  Section 13.5      Rights of Limited Partners

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

                       Section 13.6 Notice of Dissolution

                  In the event a  Liquidating  Event  occurs or an event  occurs
that would,  but  provisions of an election or objection by one or more Partners
pursuant  to Section  13.1,  result in a  dissolution  of the  Partnership,  the
General  Partner  shall,  within thirty (30) days  thereafter,  provide  written
notice thereof to each of the Partners.

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

                  Upon the completion of the liquidation of the Partnership cash
and  property as provided  in Section  13.2  hereof,  the  Partnership  shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited  partnership in jurisdictions other than
the  State of  Delaware  shall be  canceled  and such  other  actions  as may be
necessary to terminate the Partnership shall be taken.

                  Section 13.8      Reasonable Time for Winding-Up

                  A reasonable time shall be allowed for the orderly  winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant  to Section  13.2  hereof,  in order to minimize  any losses  otherwise
attendant  upon such  winding-up,  and the  provisions of this  Agreement  shall
remain in effect between the Partners during the period of liquidation.

                  Section 13.9      Waiver of Partition

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

                                   ARTICLE 14
                  AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

                  Section 14.1      Amendments

                  A. Amendments to this Agreement may be proposed by the General
Partner or by any Limited  Partners  holding twenty percent (20%) or more of the
outstanding  Common Units.  Following such proposal,  the General  Partner shall
submit any proposed amendment to the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed  amendment or shall call a
meeting to vote  thereon and to  transact  any other  business  that it may deem
appropriate.  For purposes of obtaining a written vote, the General  Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days,  and failure to respond in such time period  shall  constitute a vote
which is consistent with the General  Partner's  recommendation  with respect to
the  proposal.  Except as  provided  in Section  14.1.B,  14.1.C or  14.,1.D,  a
proposed  amendment shall be adopted and be effective as an amendment  hereto if
it is approved by the  General  Partner and it receives  the Consent of Partners
holding a majority of the outstanding  Common Units (including Common Units held
by the General Partner).

                  B.  Notwithstanding  Section 14.1.A, the General Partner shall
have the power,  without  the  consent of the  Limited  Partners,  to amend this
Agreement as may be required to  facilitate  or implement  any of the  following
purposes:

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

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

          (3)       to set forth the designations,  rights,  powers, duties, and
                    preferences  of the  holders of any  additional  Partnership
                    Interests issued pursuant to Section 4.2.A hereof;

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

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

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

                  C.  Notwithstanding  Section  14.1.A and 14.1.B  hereof,  this
Agreement  shall not be amended  without the Consent of each  Partner  adversely
affected if such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner  interest,  (ii) modify the limited liability
of a Limited  Partner in a manner adverse to such Limited  Partner,  (iii) alter
rights of the  Partner to receive  distributions  pursuant  to Article 5, or the
allocations  specified in Article 6 (except as permitted pursuant to Section 4.2
and Section  14.1.B(3)  hereof),  (iv) alter or modify the Redemption  Right and
REIT  Shares  Amount as set forth in Sections  8.6 and  11.2.B,  and the related
definitions,  in a manner adverse to such Partner,  (v) cause the termination of
the  Partnership  prior to the time set forth in Sections  2.5 or 13.1,  or (vi)
amend this Section 14.1.C.  Further,  no amendment may alter the restrictions on
the  General  Partner's  authority  set forth in Section 7.3 without the Consent
specified in that section.

                  D.  Notwithstanding  Section  14.1.A or Section 14.1.B hereof,
the General  Partner  shall not amend  Sections  4.2.A,  7.5,  7.6, 11.2 or 14.2
without the Consent of a majority of the  Percentage  Interests  in Common Units
held by the Limited  Partners,  excluding  Limited Partner Interests held by the
General Partner in Common Units.

                  Section 14.2      Meetings of the Partners

                  A.  Meetings  of the  Partners  may be called  by the  General
Partner and shall be called upon the receipt by the General Partner of a written
request  by  Limited  Partners  holding  twenty  percent  (20%)  or  more of the
outstanding  Common Units. The call shall state the nature of the business to be
transacted.  Notice of any such meeting  shall be given to all Partners not less
than  seven (7) days nor more than  thirty  (30) days  prior to the date of such
meeting.  Partners may vote in person or by proxy at such meeting.  Whenever the
vote or Consent of the Partners is permitted or required  under this  Agreement,
such vote or Consent  may be given at a meeting of the  Partners or may be given
in accordance with the procedure prescribed in Section 14.1.A hereof.  Except as
otherwise  expressly  provided  in this  Agreement,  the Consent of holders of a
majority of the  Percentage  Interests in Common Units held by Limited  Partners
(including  Limited  Partnership  Interests  held by the General  Partner) shall
control.

                  B. Any action  required or  permitted to be taken at a meeting
of the  Partners  may be taken  without a meeting if a written  consent  setting
forth the action so taken is signed by a majority of the Percentage Interests of
the  Partners  (or  such  other  percentage  as is  expressly  required  by this
Agreement). Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of a majority  of the  Percentage
Interests of the Partners (or such other percentage as is expressly  required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting  held on the  effective
date so certified.

                  C. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all  matters in which a Limited  Partner is  entitled to
participate, including waiving notice of any meeting, or voting or participating
at a  meeting.  Every  proxy  must  be  signed  by the  Limited  Partner  or his
attorney-in-fact.  No proxy shall be valid after the  expiration  of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be  revocable at the pleasure of the Limited  Partner  executing  it, such
revocation to be effective upon the  Partnership's  receipt of or written notice
such revocation from the Limited Partner executing such proxy.

                  D. Each meeting of Partners  shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.  Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the  shareholders  of the General Partner and may
be held at the same time, and as part of,  meetings of the  shareholders  of the
General Partner.

                                   ARTICLE 15
                               GENERAL PROVISIONS

                  Section 15.1      Addresses and Notice

                  Any notice, demand, request or report required or permitted to
be given or made to a Partner  or  Assignee  under  this  Agreement  shall be in
writing and shall be deemed given or made when  delivered in person or when sent
by first class United States mail or by other means of written  communication to
the  Partner or  Assignee  at the  address  set forth in Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.

                  Section 15.2      Titles and Captions

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

                  Section 15.3      Pronouns and Plurals

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

                  Section 15.4      Further Action

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

                  Section 15.5      Binding Effect

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

                  Section 15.6      Creditors

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

                  Section 15.7      Waiver

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

                  Section 15.8      Counterparts

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

                  Section 15.9      Applicable Law

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

                  Section 15.10     Invalidity of Provisions

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

                  Section 15.11     Entire Agreement

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

                  Section 15.12     HUD Limitations

                  As long as the Secretary of Housing and Urban Development,  or
his  successors  or assigns  ("HUD"),  is the insurer or holder of the  mortgage
loans (the "HUD Mortgages")  relating to the real property consisting of the two
apartment  projects known as Pointe West Apartments and Ashford Place Apartments
located at 1601 Hillcrest Road,  Mobile,  Alabama and 6075 Grelot Road,  Mobile,
Alabama,  respectively (the "Mitchell  Properties"),  that are encumbered by the
two Regulatory Agreements for Multi-Family Housing Projects that are recorded in
Book 2179,  Page 760 and Book  2617,  Page 207 in the  Probate  Office of Mobile
County, Alabama (the "Regulatory  Agreements"),  no amendment to the Partnership
Agreement  which results in any of the  following  shall be of force and effect,
without the prior written  consent of HUD: (i) any amendment  which modifies the
duration of the Partnership  Agreement;  (ii) any amendment which results in the
requirement  that a Form 92530 HUD Prior  Participation  Certificate be obtained
for any additional  party;  and (iii) any amendment  which in any way impacts or
affects the HUD Mortgages or the

<PAGE>

Regulatory  Agreements.  In addition, as long as HUD is the insurer or holder of
the HUD Mortgages relating to the Mitchell  Properties,  upon any dissolution of
the  Partnership,  no title or right to  possession  and control of the Mitchell
Properties,  and no right to  collect  the rents  therefrom,  shall  pass to any
person  who is not bound by the  terms of the HUD  Mortgages  or the  Regulatory
Agreements in a manner satisfactory to HUD.

<PAGE>

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

                                 GENERAL PARTNER:
                                 Colonial Properties Trust,
                                 an Alabama real estate investment trust

                                      /s/ Howard B. Nelson, Jr.
                                          ----------------------------
                                 By:      Howard B. Nelson, Jr.
                                 Title:   Chief Financial Officer and Secretary

                                 LIMITED PARTNERS:
                                 By:      Colonial Properties Trust
                                          as Attorney-in-Fact for the
                                          Limited Partners

                                     /s/ Howard B. Nelson, Jr.
                                         ----------------------------
                                 By:     Howard B. Nelson, Jr.
                                 Title:  Chief Financial Officer and SecretaryREGISTRATION RIGHTS AND LOCK-UP AGREEMENT

                           Dated as of April 30, 1999

                                  by and among

                           COLONIAL PROPERTIES TRUST,

                       COLONIAL REALTY LIMITED PARTNERSHIP

                                       and

                                   MJE, L.L.C.

<PAGE>

                    REGISTRATION RIGHTS AND LOCK-UP AGREEMENT

                  THIS   REGISTRATION   RIGHTS  AND  LOCK-UP   AGREEMENT   (this
"Agreement")  is made  and  entered  into as of April  30,  1999,  by and  among
Colonial  Properties  Trust,  an  Alabama  real  estate  investment  trust  (the
"Company"),  Colonial Realty Limited Partnership, a Delaware limited partnership
(the "Operating  Partnership"),  and MJE, L.L.C.,  an Alabama limited  liability
company (the "Holder").

                  WHEREAS,  on the date hereof the Operating  Partnership is the
acquiring from the Holder its 20.2% minority  interest in certain property known
as the "Colonial Village at Haverhill",  and in connection  therewith the Holder
will  receive  Class B Units of limited  partnership  interest in the  Operating
Partnership  (these  Class B Units and the Class A Units of limited  partnership
interest  into  which the Class B Units  will be  converted  being  referred  to
hereinafter as the "Units");

                  WHEREAS,  in order to  induce  the  Holder to  consummate  the
closing contemplated  hereunder,  the Company has agreed to grant the Holder the
registration rights set forth in Section 3 hereof; and

                  WHEREAS,  in order to  induce  the  Operating  Partnership  to
consummate  the  closing  contemplated  hereunder,  the Holder has agreed to the
Lock-up (as defined in Section 2(a) hereof).

                  NOW,  THEREFORE,  the parties hereto,  in consideration of the
foregoing,  the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:

                  1.       Definitions.

                  As used in this Agreement,  the following  capitalized defined
terms shall have the following meanings:

                  "Common Shares" shall mean common shares of beneficial
interest, par value $ .01 per share, in the Company.

                  "Company" shall have the meaning set forth in the Preamble and
also shall include the Company's successors.

                  "Dispose  of" shall have the meaning set forth in Section 2(a)
hereof.

<PAGE>

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.

                  "Holder(s)"  shall have the meaning set forth in the  Preamble
and also shall include any Holder's heirs, executors, administrators, successors
and permitted assigns.

                  "Lock-up"  shall have the  meaning  set forth in Section  2(a)
hereof.

                  "Lock-up  Period"  shall have the meaning set forth in Section
2(a) hereof.

                  "NASD"  shall  mean the  National  Association  of  Securities
Dealers, Inc.

                  "Operating  Partnership"  shall have the  meaning set forth in
the Preamble and also shall include the Operating Partnership's successors.

                  "Person" shall mean an individual,  partnership,  corporation,
trust,  estate,  or  unincorporated  organization,  or a government or agency or
political subdivision thereof.

                  "Prospectus"   shall  mean  the   prospectus   included  in  a
Registration  Statement,  including  any  preliminary  prospectus,  and any such
prospectus as amended or supplemented by any prospectus  supplement with respect
to the  terms of the  offering  of any  portion  of the  Registrable  Securities
covered  by a Shelf  Registration  Statement,  and by all other  amendments  and
supplements to such prospectus, including post-effective amendments, and in each
case including all material incorporated by reference therein.

                  "Registrable  Securities" shall mean the Shares, excluding (i)
Shares for which a  Registration  Statement  relating to the sale thereof  shall
have become  effective  under the  Securities Act and that have been disposed of
under such  Registration  Statement  and (ii) Shares  sold  pursuant to Rule 144
under the  Securities  Act or Shares that,  when  combined with all other Shares
then owned by the Holder(s), are eligible for sale pursuant to Rule 144 during a
single 90-day period.

<PAGE>

                  "Registration  Expenses"  shall  mean  any  and  all  expenses
incident to performance of or compliance with this Agreement, including, without
limitation:  (i) all SEC, stock exchange or NASD  registration  and filing fees;
(ii) all fees and expenses  incurred in connection  with  compliance  with state
securities or "blue sky" laws (including  reasonable fees and  disbursements  of
counsel in connection  with "blue sky"  qualification  of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD;  (iii) all  expenses of any Persons in preparing or assisting
in  preparing,  word  processing,  printing and  distributing  any  Registration
Statement,  any Prospectus,  certificates  and other  documents  relating to the
performance of and compliance  with this  Agreement;  (iv) all fees and expenses
incurred in  connection  with the  listing,  if any,  of any of the  Registrable
Securities  on any  securities  exchange or  exchanges  pursuant to Section 4(1)
hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent  public  accountants  of the Company,  including the expenses of any
special  audits  or "cold  comfort"  letters  required  by or  incident  to such
performance and compliance.  Registration  Expenses shall  specifically  exclude
underwriting  discounts and commissions,  the fees and  disbursements of counsel
representing the Holder(s),  and transfer taxes, if any, relating to the sale or
disposition  of Registrable  Securities by the Holder(s),  all of which shall be
borne by the Holder(s) in all cases.

                  "Registration  Notice"  shall  have the  meaning  set forth in
Section 3(a) hereof.

                  "Registration  Statement"  or "Shelf  Registration  Statement"
shall mean a "shelf" registration  statement of the Company and any other Person
required to be a registrant  with respect to such shelf  registration  statement
pursuant to the  requirements of the Securities Act which covers the issuance or
resale of the Registrable Securities on an appropriate form under Rule 415 under
the Securities  Act, or any similar rule that may be adopted by the SEC, and all
amendments  and   supplements   to  such   registration   statement,   including
post-effective  amendments,  in each case  including  the  Prospectus  contained
therein,  all  exhibits  thereto and all  materials  incorporated  by  reference
therein.

                  "SEC" shall mean the Securities and Exchange Commission.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended from time to time.

                  "Shares"  shall mean any Common  Shares issued or to be issued
to the Holder(s) upon redemption of their Units.

                  "Shelf Registration" shall mean a registration required to be
effected pursuant to Section 3 hereof.

                  "Units" shall have the meaning set forth in the Preamble.

                  2.       Lock-up Agreement.

                           2(a)     The Holder hereby agrees that, except as set
forth in Section 2(b) below, for one year following the date hereof (the "Lock-
up Period"), such Holder will not, without the prior written consent of the
Company,  offer, pledge, sell, contract to sell, grant any options for the sale
of or otherwise  dispose of, directly or indirectly (collectively, "Dispose of")
, any Units (the "Lock-up").

                           2(b)     The following transfers of Units shall not
be subject to the Lock-up set forth in Section 2(a):

<PAGE>

(i)       a Holder  may  Dispose  of Units as a gift or other  transfer  without
          consideration;

(ii)      a Holder who is a natural  person  may  Dispose of Units (x) to his or
          her spouse,  siblings,  parents or any natural or adopted  children or
          other  descendants  or to any  personal  trust  in which  such  family
          members or such Holder  retain the entire  beneficial  interest or (y)
          pursuant to the terms of any will or trust or by intestacy;

(iii)     a Holder may Dispose of Units to any entity or person  that  controls,
          is controlled by, or is under common control with such Holder;

(iv)      a Holder  that is a  partnership  or  limited  liability  company  may
          Dispose of Units to any partner or member of such Holder in redemption
          of  such  partner's  or  member's  interest  in  such  Holder  or as a
          distribution to such partner or member, provided, in either case, that
          such partner or member is then an  "accredited  investor" as that term
          is defined in Regulation D under the Securities Act; and

(v)       a Holder may Dispose of Units pursuant to a pledge,  grant of security
          interest or other encumbrance effected in a bona fide transaction with
          an unrelated and unaffiliated pledgee.

In the event that a Holder  Disposes of Units as permitted by this Section 2(b),
such Units shall  remain  subject to this  Agreement  and, as a condition of the
validity of such  disposition,  the transferee  shall be required to execute and
deliver a  counterpart  of this  Agreement  (except that a pledgee  shall not be
required  to  execute  and  deliver a  counterpart  of this  Agreement  until it
forecloses upon such Units). Thereafter, such transferee shall be deemed to be a
Holder for purposes of this Agreement.

                  3.       Shelf Registration Under the Securities Act.

<PAGE>

                           3(a)     Filing of Shelf Registration Statement.
                                    Beginning after the expiration of the
Lock-up  Period,  each Holder shall be entitled to offer for sale  pursuant to a
Registration  Statement any Registrable  Securities held by such Holder, subject
to the terms and  conditions  hereof.  Upon  receipt by the Company of a written
notice (a  "Registration  Notice") from one or more Holders that such  Holder(s)
propose  to  make a  registered  offer  of a  specified  number  of  Registrable
Securities  (which number shall not be less than 50,000 or, if less,  all of the
Registrable  Securities  owned by the Holder(s)),  the Company shall cause to be
filed  within 60 days of receipt by the  Company  of the  Registration  Notice a
Shelf  Registration  Statement  providing for the sale by such  Holder(s) of the
Registrable  Securities  specified  in such  Registration  Notice  (and,  if the
Company  so  elects,  any  Registrable  Securities  held by any other  Holder or
Holders) in accordance with the terms hereof and will use its reasonable efforts
to cause such Shelf  Registration  Statement to be declared effective by the SEC
as soon as practicable. The Company agrees to use its reasonable efforts to keep
the Shelf Registration Statement continuously effective for a period expiring on
the  date on  which  all of the  Registrable  Securities  covered  by the  Shelf
Registration  Statement  have  been  sold  pursuant  to the  Shelf  Registration
Statement  or have  become  eligible  for sale  pursuant  to Rule 144  under the
Securities  Act during a single 90-day  period and,  subject to Section 4(b) and
Section  4(i),  further  agrees to  supplement  or amend the Shelf  Registration
Statement,  if and  as  required  by  the  rules,  regulations  or  instructions
applicable  to  the  registration  form  used  by the  Company  for  such  Shelf
Registration  Statement  or by the  Securities  Act or by any  other  rules  and
regulations  thereunder  for shelf  registration;  provided,  however,  that the
Company  shall  not be  deemed to have  used its  reasonable  efforts  to keep a
Registration  Statement effective during the applicable period if it voluntarily
takes any action that would result in the selling  Holder(s) covered thereby not
being able to sell such Registrable  Securities during that period,  unless such
action  is  required   under   applicable   law  or  the  Company  has  filed  a
post-effective  amendment  to the  Registration  Statement  and  the SEC has not
declared it effective.  Notwithstanding the foregoing,  the Company shall not be
required to file a Registration  Statement or to keep a  Registration  Statement
effective if the  negotiation or  consummation of a transaction is pending or an
event has  occurred,  which  negotiation,  consummation  or event would  require
additional  disclosure by the Company in the Registration  Statement of material
information  which the  Company  has a bona fide  business  purpose  for keeping
confidential and the nondisclosure of which in the Registration  Statement might
cause the  Registration  Statement to fail to comply with applicable  disclosure
requirements,  and the Company so advises the  affected  Holder(s)  in a writing
signed by an  executive  officer of the  Company;  provided,  however,  that the
Company may not delay,  suspend or withdraw a  Registration  Statement  for such
reason for more than 60 days or more  often  than twice  during any period of 12
consecutive months.

                           3(b)     Expenses.  The Company shall pay all
                                    Registration Expenses in connection with
any   registration   pursuant  to  Section  3(a).  Each  Holder  shall  pay  all
underwriting  discounts,  if any, sales  commissions,  fees and disbursements of
counsel  representing  such Holder,  and transfer taxes, if any, relating to the
sale or  disposition  of such Holder's  Registrable  Securities  pursuant to the
Shelf Registration Statement or Rule 144 under the Securities Act.

                           3(c)     Inclusion in Shelf Registration Statement.
                                    Any Holder who does not timely
provide the information  reasonably  requested by the Company in connection with
the Shelf  Registration  Statement  shall not be entitled to have such  Holder's
Registrable Securities included in the Shelf Registration Statement.

<PAGE>

                           3(d)     Repurchase Option.  In lieu of registering
                                    Registrable Securities that a
Holder seeks to register  pursuant to Section  3(a) hereof,  the Company may, by
delivery  of written  notice to such  Holder  within 30 days after  receipt of a
Registration  Notice from such  Holder,  elect to  repurchase  such  Registrable
Securities  for cash, in an amount per Share equal to the average of the closing
prices of the  Common  Shares on the New York Stock  Exchange  (or on such other
exchange or in such other market as the Common Shares are then listed or traded)
on the ten trading days  preceding  the Company's  receipt of such  Registration
Notice  (or,  if the Common  Shares  have not traded on all ten of such  trading
days,  in an amount equal to the fair value of such  Registrable  Securities  as
determined in good faith by the Board of Trustees of the Company).

                  4.       Registration Procedures.

                  In connection with the obligations of the Company with respect
to the Registration Statement pursuant to Section 3 hereof, the Company shall:

          4(a)  prepare and file with the SEC,  within the time period set forth
in Section 3 hereof, a Shelf  Registration  Statement,  which Shelf Registration
Statement (i) shall be available for the sale of the  Registrable  Securities in
accordance  with the intended method or methods of distribution by the Holder(s)
thereof  and (ii)  shall  comply as to form in all  material  respects  with the
requirements  of the  applicable  form  and  include  all  financial  statements
required by the SEC to be filed therewith;

          4(b)  subject to the last three  sentences  of this  Section  4(b) and
Section  4(i)  hereof,  (i)  prepare and file with the SEC such  amendments  and
post-effective  amendments  to  each  such  Registration  Statement  as  may  be
necessary  to keep such  Registration  Statement  effective  for the  applicable
period;  (ii) cause each such  Prospectus  to be  supplemented  by any  required
prospectus  supplement,  and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities  Act; (iii) respond
as promptly as practicable to any comments received from the SEC with respect to
the Shelf Registration Statement, or any amendment,  post-effective amendment or
supplement  relating  thereto;  and  (iv)  comply  with  the  provisions  of the
Securities Act with respect to the disposition of all securities covered by each
Registration  Statement  during the  applicable  period in  accordance  with the
intended  method  or  methods  of   distribution   by  the  Holder(s)   thereof.
Notwithstanding anything to the contrary contained herein, the Company shall not
be required to take any of the actions  described in  subsections  (i),  (ii) or
(iii) above with respect to a Holder unless and until the Company has received a
notice from such  Holder that such Holder  intends to make offers or sales under
the Registration  Statement as specified in such Registration Notice;  provided,
however,  that the Company  shall have ten business days to prepare and file any
such  amendment or supplement  after  receipt of such notice.  Once a Holder has
delivered a  Registration  Notice to the  Company,  such Holder  shall  promptly
provide to the Company such  information as the Company  reasonably  requests in
order to identify such Holder and the method of  distribution  in a Registration
Statement  or  post-effective  amendment  to  the  Registration  Statement  or a
supplement  to the  Prospectus.  Such  Holder  also shall  notify the Company in
writing upon  completion of such offer or sale or at such time as such Holder no
longer intends to make offers or sales under the Registration Statement;

<PAGE>

          4(c)  furnish  to each  Holder  of  Registrable  Securities  that  has
delivered a Registration  Notice to the Company,  without charge, as many copies
of each Prospectus,  including each preliminary Prospectus, and any amendment or
supplement  thereto  and such other  documents  as such  Holder  may  reasonably
request,  in order to  facilitate  the public sale or other  disposition  of the
Registrable  Securities;  the  Company  consents  to the use of the  Prospectus,
including  each  preliminary  Prospectus,  by each such  Holder  of  Registrable
Securities  in  connection  with  the  offering  and  sale  of  the  Registrable
Securities covered by the Prospectus or the preliminary Prospectus;

          4(d) use its reasonable efforts to register or qualify the Registrable
Securities  by the  time  the  applicable  Registration  Statement  is  declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such  jurisdictions  as  any  Holder  of  Registrable  Securities  covered  by a
Registration  Statement  shall  reasonably  request in  writing,  keep each such
registration  or  qualification  effective  during the period such  Registration
Statement is required to be kept  effective or during the period offers or sales
are being made by any such  Holder,  whichever  is  shorter,  and do any and all
other acts and things which may be  reasonably  necessary or advisable to enable
each such Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall  not  be  required  to  (i)  qualify  generally  to  do  business  in  any
jurisdiction or to register as a broker or dealer in such jurisdiction  where it
would not  otherwise  be  required to qualify but for this  Section  4(d),  (ii)
subject  itself to taxation  in any such  jurisdiction,  or (iii)  submit to the
general service of process in any such jurisdiction;

          4(e) notify each Holder of Registrable Securities that has delivered a
Registration  Notice to the  Company  promptly  and,  if  requested  by any such
Holder,  confirm such advice in writing (i) when a  Registration  Statement  has
become effective and when any post-effective  amendments and supplements thereto
become  effective,  (ii)  of the  issuance  by the SEC or any  state  securities
authority  of any stop order  suspending  the  effectiveness  of a  Registration
Statement or the initiation of any  proceedings  for that purpose,  (iii) if the
Company  receives  any  notification  with  respect  to  the  suspension  of the
qualification of the Registrable  Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose,  and (iv) of the happening of any
event during the period a Registration Statement is effective which is of a type
specified  in the last  sentence of Section  3(a) hereof or as a result of which
such  Registration  Statement  or the  related  Prospectus  contains  any untrue
statement of a material  fact or omits to state any material fact required to be
stated  therein or necessary  to make the  statements  therein,  in light of the
circumstances  under which they were made (in the case of the  Prospectus),  not
misleading;

          4(f) make  every  reasonable  effort to obtain the  withdrawal  of any
order suspending the  effectiveness of a Registration  Statement at the earliest
possible moment;

<PAGE>

          4(g)  furnish  to each  Holder  of  Registrable  Securities  that  has
delivered a Registration  Notice to the Company,  without  charge,  at least one
conformed copy of each Registration  Statement and any post-effective  amendment
thereto  (without  documents  incorporated  therein  by  reference  or  exhibits
thereto, unless requested);

          4(h) cooperate with the selling Holder(s) of Registrable Securities to
facilitate  the timely  preparation  and delivery of  certificates  representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable  certificates  for such  Registrable  Securities  to be  issued  for such
numbers  of Shares and  registered  in such names as the  selling  Holder(s  may
reasonably  request at least two business days prior to any sale of  Registrable
Securities;

          4(i) subject to the last  sentence of Section 3(a) hereof and the last
three  sentences  of  Section  4(b)  hereof,  upon the  occurrence  of any event
contemplated by Section 4(e)(iv) hereof,  use its reasonable efforts promptly to
prepare and file a supplement  or prepare,  file and obtain  effectiveness  of a
post-effective  amendment to a Registration  Statement or the related Prospectus
or any document  incorporated  therein by  reference or file any other  required
document so that, as thereafter  delivered to the purchasers of the  Registrable
Securities,  such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in the light of the circumstances  under which
they were made, not misleading;

          4(j) make available for inspection by representatives of the Holder(s)
of  Registrable  Securities  and any  counsel  or  accountant  retained  by such
Holder(s),  all financial and other records,  pertinent  corporate documents and
properties  of the Company,  and cause the  respective  officers,  directors and
employees of the Company to supply all information  reasonably  requested by any
such  representative,  counsel or accountant in connection  with a  Registration
Statement;  provided, however, that such records, documents or information which
the Company  determines,  in good faith,  to be  confidential  and notifies such
representatives,  counsel or accountants in writing that such records, documents
or information are confidential  shall not be disclosed by the  representatives,
counsel or accountants  unless (i) the disclosure of such records,  documents or
information is necessary to avoid or correct a material misstatement or omission
in a  Registration  Statement,  (ii) the release of such  records,  documents or
information  is ordered  pursuant  to a subpoena  or other order from a court of
competent  jurisdiction,  or (iii) such records,  documents or information  have
been generally made available to the public;

          4(k) a  reasonable  time  prior  to  the  filing  of any  Registration
Statement,  any  Prospectus,  any  amendment  to  a  Registration  Statement  or
amendment or supplement to a  Prospectus,  provide  copies of such document (not
including any documents  incorporated by reference  therein unless requested) to
any Holder of Registrable  Securities that has provided a Registration Notice to
the Company;

<PAGE>

          4(l) use its reasonable  efforts to cause all  Registrable  Securities
covered by a Registration  Statement to be listed on any securities  exchange on
which similar securities issued by the Company are then listed;

          4(m) provide a CUSIP number for all Registrable Securities,  not later
than the effective date of a Registration Statement;

          4(n)  otherwise  use  its  reasonable   efforts  to  comply  with  all
applicable  rules and  regulations of the SEC and make available to its security
holders,  as soon as reasonably  practicable,  an earnings statement covering at
least 12 months  which shall  satisfy  the  provisions  of Section  11(a) of the
Securities Act and Rule 158 thereunder; and

          4(o) use its reasonable  efforts to cause the  Registrable  Securities
covered by a  Registration  Statement to be registered  with or approved by such
other governmental  agencies or authorities as may be necessary by virtue of the
business  and  operations  of the  Company to enable the  selling  Holder(s)  to
consummate the disposition of such Registrable Securities.

                  The Company may require each Holder of Registrable  Securities
to furnish to the Company in writing  such  information  regarding  the proposed
distribution  by such Holder of such  Registrable  Securities as the Company may
from time to time reasonably request in writing.

                  In  connection  with  and  as a  condition  to  the  Company's
obligations  with respect to the  Registration  Statement  pursuant to Section 3
hereof and this  Section 4, each  Holder  agrees  that (i) such  Holder will not
offer or sell  such  Holder's  Registrable  Securities  under  the  Registration
Statement  until such  Holder has  provided a  Registration  Notice  pursuant to
Section  4(b)  hereof and has  received  copies of the  supplemental  or amended
Prospectus  contemplated  by Section  4(b) hereof and  received  notice that any
post-effective  amendment has become effective,  (ii) upon receipt of any notice
from the Company of the happening of any event of the kind  described in Section
4(e)(iv)  hereof,  such  Holder  will  forthwith   discontinue   disposition  of
Registrable  Securities  pursuant to a Registration  Statement until such Holder
receives  copies of the  supplemented  or  amended  Prospectus  contemplated  by
Section 4(i) hereof and receives  notice that any  post-effective  amendment has
become effective,  and, if so directed by the Company,  such Holder will deliver
to the Company (at the expense of the Company)  all copies in their  possession,
other than  permanent  file  copies  then in such  Holder's  possession,  of the
Prospectus  covering such Registrable  Securities current at the time of receipt
of such notice, and (iii) all offers and sales under the Registration  Statement
shall be  completed  within sixty (60) days after the first date on which offers
or sales can be made pursuant to clause (i) above,  and upon  expiration of such
sixty  (60) day  period  such  Holder  will  not  offer  or sell  such  Holder's
Registrable  Securities under the  Registration  Statement until such Holder has
again complied with the provisions of clause (i) above.

<PAGE>

                  5.       Indemnification; Contribution.

                           5(a)     Indemnification by the Company.  The Company
agrees to indemnify and hold harmless each Holder and its members as follows:

                                    (i)  against  any and all  loss,  liability,
                           claim,  damage and expense  whatsoever,  as incurred,
                           arising out of any untrue statement or alleged untrue
                           statement  of  a  material  fact   contained  in  any
                           Registration  Statement  (or any  amendment  thereto)
                           pursuant  to  which   Registrable   Securities   were
                           registered  under the Securities  Act,  including all
                           documents  incorporated therein by reference,  or the
                           omission or alleged omission  therefrom of a material
                           fact  required to be stated  therein or  necessary to
                           make the statements therein not misleading or arising
                           out  of  any  untrue   statement  or  alleged  untrue
                           statement  of  a  material  fact   contained  in  any
                           Prospectus (or any amendment or supplement  thereto),
                           including  all  documents   incorporated  therein  by
                           reference,   or  the  omission  or  alleged  omission
                           therefrom  of a material  fact  necessary in order to
                           make  the  statements  therein,  in the  light of the
                           circumstances   under  which  they  were  made,   not
                           misleading;

                                    (ii)  against  any and all loss,  liability,
                           claim, damage and expense whatsoever, as incurred, to
                           the extent of the aggregate amount paid in settlement
                           of any litigation,  or investigation or proceeding by
                           any  governmental   agency  or  body,   commenced  or
                           threatened, or of any claim whatsoever based upon any
                           such  untrue  statement  or  omission,  or  any  such
                           alleged  untrue   statement  or  omission,   if  such
                           settlement  is effected  with the written  consent of
                           the Company; and

                                    (iii)    against   any   and   all   expense
                           whatsoever,  as incurred  (including  reasonable fees
                           and disbursements of counsel), reasonably incurred in
                           investigating,  preparing  or  defending  against any
                           litigation,  or  investigation  or  proceeding by any
                           governmental agency or body, commenced or threatened,
                           in each  case  whether  or not a party,  or any claim
                           whatsoever  based upon any such untrue  statement  or
                           omission,  or any such  alleged  untrue  statement or
                           omission,  to the extent that any such expense is not
                           paid under subparagraph (i) or (ii) above;

<PAGE>

provided,  however,  that the indemnity  provided  pursuant to this Section 5(a)
does not apply to any Holder with respect to any loss, liability,  claim, damage
or expense to the extent arising out of (x) any untrue  statement or omission or
alleged  untrue  statement or omission  made in reliance  upon and in conformity
with written  information  furnished to the Company by such Holder expressly for
use in a Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement  thereto) or (y) such Holder's failure to deliver an
amended or supplemental  Prospectus if such loss,  liability,  claim,  damage or
expense would not have arisen had such delivery occurred.

          5(b)  Indemnification by Holders.  Each Holder agrees to indemnify and
hold harmless the Company and its trustees and officers  (including each trustee
and  officer of the  Company who signed the  Registration  Statement),  and each
Person, if any, who controls the Company within the meaning of Section 15 of the
Securities  Act, to the same extent as the  indemnity  contained in Section 5(a)
hereof  (except  that any  settlement  described  in Section  5(a)(ii)  shall be
effected  with the written  consent of such  Holder),  but only  insofar as such
loss,  liability,  claim,  damage or expense  arises out of or is based upon any
untrue statement or omission, or alleged untrue statements or omissions, made in
a  Registration  Statement (or any amendment  thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information  furnished to the Company by such Holder  expressly  for use in such
Registration  Statement (or any amendment  thereto) or such  Prospectus  (or any
amendment or supplement thereto).

<PAGE>

          5(c) Conduct of  Indemnification  Proceedings.  Each indemnified party
shall give reasonably prompt notice to each indemnifying  party of any action or
proceeding  commenced  against it in respect  of which  indemnity  may be sought
hereunder,  but failure to so notify an indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity  agreement  provided
in Section  5(a) or 5(b)  above,  unless and to the extent it did not  otherwise
learn of such action and the lack of notice by the indemnified  party results in
the forfeiture by the indemnifying  party of substantial rights and defenses and
(ii)  shall  not,  in  any  event,  relieve  the  indemnifying  party  from  any
obligations to any indemnified party other than the  indemnification  obligation
provided under Section 5(a) or 5(b) above. If the  indemnifying  party so elects
within a reasonable time after receipt of such notice,  the  indemnifying  party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel  chosen by the  indemnifying  party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties  reasonably  determine that a conflict of interest exists where it is
advisable for such  indemnified  party or parties to be  represented by separate
counsel or that, upon advice of counsel,  there may be legal defenses  available
to them  which are  different  from or in  addition  to those  available  to the
indemnifying  party, then the indemnifying party shall not be entitled to assume
such  defense  and the  indemnified  party or parties  shall be  entitled to one
separate  counsel  at  the  indemnifying  party's  or  parties'  expense.  If an
indemnifying  party is not  entitled  to assume the  defense  of such  action or
proceeding  as  a  result  of  the  proviso  to  the  preceding  sentence,  such
indemnifying  party's  counsel  shall be entitled to conduct  such  indemnifying
party's  defense  and  counsel  for the  indemnified  party or parties  shall be
entitled to conduct the defense of such indemnified  party or parties,  it being
understood  that both such counsel will cooperate with each other to conduct the
defense  of  such  action  or  proceeding  as  efficiently  as  possible.  If an
indemnifying  party is not so  entitled  to assume the defense of such action or
does not assume such defense,  after having  received the notice  referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the  reasonable  fees and  expenses  of  counsel  for the  indemnified  party or
parties.  In such event,  however,  no indemnifying party will be liable for any
settlement  effected without the written consent of such indemnifying  party. If
an indemnifying  party is entitled to assume,  and assumes,  the defense of such
action or proceeding in accordance with this paragraph,  such indemnifying party
shall not be liable for any fees and  expenses  of counsel  for the  indemnified
parties incurred thereafter in connection with such action or proceeding.

          5(d)  Contribution.  In  order  to  provide  for  just  and  equitable
contribution in circumstances in which the indemnity  agreement  provided for in
this Section 5 is for any reason held to be unenforceable although applicable in
accordance  with  its  terms,  the  Company  and  the  selling  Holder(s)  shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature  contemplated by such indemnity agreement incurred by the Company and
such  Holder(s),  in such  proportion as is  appropriate to reflect the relative
fault of the  Company  on the one hand and such  Holder  on the  other  (in such
proportions that the Holder(s) are severally,  not jointly,  responsible for the
balance),  in connection with the statements or omissions which resulted in such
losses, claims, damages,  liabilities or expenses, as well as any other relevant
equitable  considerations.  The  relative  fault of the  indemnifying  party and
indemnified  parties  shall be  determined  by reference to, among other things,
whether the action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information  supplied by, such indemnifying party or
the indemnified parties, and the parties' relative intent, knowledge,  access to
information and opportunity to correct or prevent such action.

                  The  parties  hereto  agree  that  it  would  not be  just  or
equitable if  contribution  pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of  the  equitable  considerations  referred  to in  the  immediately  preceding
paragraph.  Notwithstanding  the  provisions  of this Section  5(d),  no selling
Holder shall not be required to contribute any amount in excess of the amount by
which the total price at which the  Registrable  Securities  of such Holder were
offered to the public  exceeds the amount of any damages which such Holder would
otherwise  have  been  required  to pay by reason of such  untrue  statement  or
omission.  The  liability  of any  Holder  selling  Registrable  Securities  for
contribution shall not exceed an amount equal to the offering price per share of
the Registrable  Securities,  multiplied by the number of Registrable Securities
sold by such Holder.

                  Notwithstanding the foregoing,  no Person guilty of fraudulent
misrepresentation  (within the meaning of Section 11(f) of the  Securities  Act)
shall be  entitled  to  contribution  from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), each trustee of
the Company,  each officer of the Company who signed the Registration  Statement
and each Person,  if any, who controls the Company within the meaning of Section
15 of the  Securities  Act shall  have the same  rights to  contribution  as the
Company.

<PAGE>

                  6.       Rule 144 Sales.

          6(a) The Company  covenants that it will file the reports  required to
be filed by the Company under the  Securities  Act and the Exchange Act so as to
enable the  Holder(s) to sell Shares  pursuant to Rule 144 under the  Securities
Act.

          6(b) In connection with any sale,  transfer or other  disposition by a
Holder of any Shares  pursuant to Rule 144 under the Securities Act, the Company
shall  cooperate  with such  Holder to  facilitate  the timely  preparation  and
delivery  of  certificates  representing  Shares to be sold and not  bearing any
Securities Act legend,  and enable  certificates  for such Shares to be for such
number of shares  and  registered  in such names as such  Holder may  reasonably
request at least two business days prior to any sale of Shares.

                  7.       Miscellaneous.

          7(a)  Amendments  and  Waivers.  The  provisions  of  this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given without the written consent of the Company and the Holder(s) of
a majority in amount of the outstanding  Registrable  Securities.  Notice of any
amendment,  modification  or supplement to this Agreement  adopted in accordance
with this  Section  7(a) shall be provided by the  Company to the  Holder(s)  at
least  thirty  (30)  days  prior  to  the  effective  date  of  such  amendment,
modification or supplement.

          7(b)  Notices.  All notices and other  communications  provided for or
permitted  hereunder  shall  be made in  writing  by  hand-delivery,  registered
first-class  mail,  telex,  telecopier,  or any courier  guaranteeing  overnight
delivery,  to the parties at their respective addresses set forth opposite their
signatures  below or at such other  address as a party may  indicate  by written
notice to the other party or parties.

                  All such  notices and  communications  shall be deemed to have
been duly given: at the time delivered by hand, if personally  delivered;  three
(3) business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged,  if telecopied; or
at the time  delivered,  if delivered by an air courier  guaranteeing  overnight
delivery.

<PAGE>

          7(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the  successors,  assigns and  transferees of each of the
parties,  including,  without  limitation  and  without  the need for an express
assignment,  subsequent Holders. If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the  terms  of this  Agreement,  and by  taking  and  holding  such  Registrable
Securities  such Person  shall be entitled  to receive the  benefits  hereof and
shall be conclusively  deemed to have agreed to be bound by all of the terms and
provisions hereof.

          7(d)  Counterparts.  This  Agreement  may be executed in any number of
counterparts and by the parties hereto in separate  counterparts,  each of which
when so  executed  shall be  deemed  to be an  original  and all of which  taken
together shall constitute one and the same agreement.

          7(e) Headings.  The headings in this Agreement are for  convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

          7(f) GOVERNING LAW. THIS AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT  GIVING EFFECT TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.

          7(g) Specific  Performance.  The parties hereto acknowledge that there
would be no  adequate  remedy at law if any party  fails to  perform  any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity,  shall be entitled
to compel specific  performance of the obligations of any other party under this
Agreement in accordance  with the terms and  conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction.

          7(h) Entire Agreement.  This Agreement is intended by the parties as a
final  expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the  subject  matter  contained  herein.  This  Agreement  supersedes  all prior
agreements and  understandings  between the parties with respect to such subject
matter.

<PAGE>

                  IN WITNESS  WHEREOF,  each of the parties  hereto has executed
this Agreement,  or caused this Agreement to be duly executed on its behalf,  as
of the date first written above.

Address:
-------

2101 6th Avenue North,                     COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35203         By:  /s/ Thomas H. Lowder
                                           -----------------------
                                           Thomas H. Lowder
                                  Its:     Chairman of the Board, President and
                                           Chief Executive Officer

2101 6th Avenue North,                    COLONIAL REALTY LIMITED
Suite 750                                 PARTNERSHIP
Birmingham, Alabama 35202
                                 By:      Colonial Properties Trust
                                 Its:     General Partner

                                 By:  /s/ Thomas H. Lowder
                                          -----------------------
                                          Thomas H. Lowder
                                 Its:     Chairman of the Board, President
                                          and Chief Executive Officer

729 30th Street South                     MJE, L.L.C.
Birmingham, Alabama  35233
                                 By: /s/  M.Miller Gorrie
                                          ----------------------
                                          M. Miller Gorrie
                                 Its:     Managing Member

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