As filed with the Securities and Exchange Commission on July 31, 1998
                                                      Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
                            Colonial Properties Trust
             (Exact name of Registrant as specified in its charter)

       Alabama                                                     59-7007599
   (State or other                                               (IRS Employer
   jurisdiction of                                               Identification
  incorporation or            2101 Sixth Avenue North               Number)
    organization)                    Suite 750
                            Birmingham, Alabama 35202
                                 (205) 250-8700
                         (Address of Principal Executive
                               Offices) (Zip Code)

 Colonial Properties Trust Second Amended and Restated Employee Share Option and
                              Restricted Share Plan
                            (Full title of the plan)

                                Thomas H. Lowder
                      President and Chief Executive Officer
                            Colonial Properties Trust
                             2101 Sixth Avenue North
                                    Suite 750
                            Birmingham, Alabama 35202
                     (Name and address of agent for service)

                                 (205) 250-8700
          (Telephone number, including area code, of agent for service)
   --------------------------------------------------------------------------
                                    Copy to:
                                   Alan L. Dye
                             Hogan & Hartson L.L.P.
                           555 Thirteenth Street, N.W.
                           Washington, D.C. 20004-1109
                                 (202) 637-5600
      ---------------------------------------------------------------------

                         CALCULATION OF REGISTRATION FEE

---------------------------------------------------------------------------
 Title of securities   Amount to be  Proposed maximum  Proposed      Amount
    to be              registered     offering price    maximum        of
  registered                             per           aggregate
                                                      offering    registration
                                      share (1)         price (1)    fee
---------------------------------------------------------------------------
Common shares of
benefi-              2,525,000      $28.59375       $72,199,218.75    $21,299
cial interest, par
value $.01
per share
----------------------------------------------------------------------------
(1) Estimated  pursuant to Rule 457(c) and (h) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee, based on
the  average  of the high and low  prices  per  share of the  common  shares  of
beneficial  interest of Colonial  Properties Trust, par value $.01 per share, on
July 29, 1998, as reported on the New York Stock Exchange.

This Registration  Statement incorporates by reference the information contained
in the earlier registration statements relating to the Colonial Properties Trust
Employee  Share Option and Restricted  Share Plan,  filed on September 29, 1994,
(Registration No. 33-84510), and May 15, 1997 (Registration No. 333-27203).

==============================================================================
                         The Exhibit Index is on Page 3.


<PAGE>

                                   SIGNATURES

            Pursuant to the  requirements  of the  Securities  Act of 1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Birmingham, State of Alabama, as of July 30, 1998.


                                        Colonial Properties Trust



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


                                POWER OF ATTORNEY

            We, the  undersigned  trustees and  officers of Colonial  Properties
Trust,  do hereby  constitute and appoint Thomas H. Lowder and Howard B. Nelson,
Jr.,  jointly  and  severally,  each in his own  capacity,  as true  and  lawful
attorneys-in-fact and agents, to do any and all acts and things in our names and
on our behalf in our  capacities as trustees and officers and to execute any and
all instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or either of them, may deem necessary or advisable to
enable said Company to comply with the Securities  Act of 1933, as amended,  and
any  rules,   regulations  and  requirements  of  the  Securities  and  Exchange
Commission,  in connection with this registration statement, or any registration
statement for this offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities  Act of 1933,  including  specifically,  but without
limitation, any and all amendments (including post-effective amendments) hereto;
and we hereby ratify and confirm all that said  attorneys and agents,  or either
of them, shall do or cause to be done by virtue thereof.

          Pursuant  to the  requirements  of the  Securities  Act of 1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities indicated as of July 30, 1998:

       SIGNATURE                        TITLE



/s/ Thomas H. Lowder             President, Chief Executive Officer
Thomas H. Lowder                 and Chairman of the Board
                                 (Principal Executive Officer)



/s/ Howard B. Nelson, Jr.        Chief Financial Officer and Secretary
Howard B. Nelson, Jr.            (Principal Financial Officer)




/s/ Kenneth E. Howell_____________  Controller
Kenneth E. Howell                (Principal Accounting Officer)


                                       1.
<PAGE>

/s/ James K. Lowder              Trustee
James K. Lowder



/s/ Carl F. Bailey               Trustee
Carl F. Bailey



/s/ M. Miller Gorrie             Trustee
M. Miller Gorrie



/s/ Donald T. Senterfitt         Trustee
Donald T. Senterfitt



/s/ Claude B. Nielsen            Trustee
Claude B. Nielsen



/s/ Harold W. Ripps              Trustee
Harold W. Ripps



/s/ Herbert A. Meisler           Trustee
Herbert A. Meisler


/s/ William M. Johnson           Trustee
William M. Johnson










                                       2.
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number                             Description

5.1       Opinion of Hogan & Hartson L.L.P.

5.2       Opinion of Sirote & Permutt, P.C., regarding matters of
          Alabama law
15        Letter from  PricewaterhouseCoopers  LLP regarding  unaudited  interim
          financial information.

23.1      Consent of Hogan & Hartson L.L.P. (included as part of
          Exhibit 5.1).

23.2      Consent of Sirote & Permutt, P.C. (included as part of
          Exhibit 5.2).
23.3
          Consent of PricewaterhouseCoopers LLP

24 Power of Attorney (included as part of signature page).

99.1      Colonial Properties Trust Second Amended and Restated
          Employee Share Option and Restricted Share Plan.
















                                       3.
<PAGE>

                                                                     Exhibit 5.1
                                             Opinion of Hogan & Hartson L.L.P.


<PAGE>

                             HOGAN & HARTSON, L.L.P
                                 Columbia Square
                           555 Thirteenth Street, N.W.
                           Washington, D.C. 20004-1109
                                 (202)-637-5600
                                 (202) 637-5910


                                  July 30, 1998



Board of Trustees
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama   35202

Ladies and Gentlemen:

            This firm has acted as  counsel to  Colonial  Properties  Trust,  an
Alabama real estate investment trust (the "Registrant"),  in connection with its
registration  statement on Form S-8 (the "Form S-8"),  filed with the Securities
and Exchange Commission,  of an additional 2,525,000 common shares of beneficial
interest,  par value $.01 per share (the "Shares"),  issuable in connection with
the  Registrant's   Second  Amended  and  Restated  Employee  Share  Option  and
Restricted Share Plan (the "Plan").  This letter is furnished to you pursuant to
the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. ss.
229.601(b)(5), in connection with such registration.

            For  purposes  of this  opinion,  we  have  examined  copies  of the
following documents:

                  1.     An executed copy of the Form S-8.

            2.    A copy of the Plan,  as  certified  on the date  hereof by the
                  Secretary of the Registrant as being complete, accurate and in
                  effect.

            3.    The Declaration of Trust of the  Registrant,  dated August 21,
                  1995,  as certified on the date hereof by the Secretary of the
                  Registrant as being complete, accurate and in effect.

            4.    The Bylaws of the Registrant,  as certified on the date hereof
                  by the Secretary of the Registrant as being complete, accurate
                  and in effect.

            5.    Resolutions of the Board of Trustees of the Registrant adopted
                  at a meeting  held on January 24,  1998,  as  certified by the
                  Secretary  of the  Registrant  on the  date  hereof  as  being
                  complete,  accurate and in effect, relating to the adoption of
                  the Plan, subject to approval by the Company's shareholders.

            6.    A  certificate  of the Secretary of the Company dated the date
                  hereof,  certifying  that  the  resolutions  relating  to  the
                  approval  of  the  Plan  were   submitted  to  the   Company's
                  shareholders   and   approved   at  the   annual   meeting  of
                  shareholders held on April 23, 1997.

            7. Opinion of Sirote & Permutt, P.C. of even date herewith.

            In our examination of the aforesaid  documents,  we have assumed the
genuineness of all signatures,  the legal capacity of all natural  persons,  the
accuracy and completeness of all documents  submitted to us, the authenticity of
all original documents and the conformity to authentic original documents of all
documents submitted to us as copies (including telecopies).  This opinion letter
is given, and all statements herein are made, in the context of the foregoing.

<PAGE>

Board of Trustees
Colonial Properties Trust
July 30, 1998
Page 2

            This  opinion  letter is based as to  matters  of law  solely on the
Alabama  Real  Estate  Investment  Trust Act of 1995,  and we express no opinion
herein as to any other laws, statutes,  regulations or ordinances.  In rendering
this opinion letter, we are relying,  to the extent that the laws of Alabama are
relevant  (without any  independent  verification  or  investigation),  upon the
opinion letter of Sirote & Permutt,  P.C., special counsel to the Company in the
State of Alabama,  described in  paragraph 7 above,  with respect to the matters
addressed therein.

            Based upon, subject to, and limited by the foregoing,  we are of the
opinion  that the  Shares,  when issued and  delivered  in the manner and on the
terms described in the Form S-8 and the Plan (assuming receipt by the Company of
the consideration  therefor,  the form of which is in accordance with applicable
law), will be legally issued, fully paid and non-assessable.

            We  assume  no  obligation  to  advise  you  of any  changes  in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared  solely for you use in connection  with the filing of the Form
S-8 on the date of this letter,  and should not be quoted in whole or in part or
otherwise be referred  to, nor be filed with or  furnished  to any  governmental
agency or other person or entity, without the prior written consent of the firm.

            We hereby consent to the filing of this opinion letter as an exhibit
to the Form S-8. In giving this consent,  we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.

                                    Very truly yours,


                                    /s/ Hogan & Hartson L.L.P.
                                    HOGAN & HARTSON L.L.P.


<PAGE>


                                                                     Exhibit 5.2
                                             Opinion of Sirote & Permutt, P.C.


<PAGE>

July 30, 1998

Board of Trustees
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, AL  35202

RE:   Colonial Properties Trust

Ladies and Gentlemen:

We have acted as  special  Alabama  counsel to  Colonial  Properties  Trust,  an
Alabama real estate  investment  trust (the  "Company"),  in connection with its
registration  statement on Form S-8 (the "Registration  Statement"),  filed with
the  Securities  and Exchange  Commission,  relating to the  registration  of an
additional  2,525,000 common shares of beneficial  interest,  par value $.01 per
share (the "Shares"),  issuable in connection with the Company's  Second Amended
and Restated Employee Share Option and Restricted Share Plan (the "Plan").  This
opinion  letter is furnished to you at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulations  S-K, 17 C.F.R.  ss.229.601(b)(5),
in connection with the Registration Statement.

For purposes of this opinion  letter,  we have examined  copies of the following
documents:

1. An executed copy of the Registration Statement.

2. A copy of the Plan,  as certified on the date hereof by the  Secretary of the
Company as being complete, accurate and in effect.

3. The  Declaration  of Trust of the  Company,  as amended,  as certified by the
Secretary of the Company on the date hereof as then being complete, accurate and
in effect.


<PAGE>


Board of Trustees
Colonial Properties Trust
July 30, 1998
Page 2


4. The Bylaws of the Company,  as  certified by the  Secretary of the Company on
the date hereof as then being complete, accurate and in effect.

5.  Certain  resolutions  of the Board of Trustees  of the Company  adopted at a
meeting held on January 24,  1998,  approving  and  ratifying  the  preparation,
execution  and  filing  of  the  Registration  Statement,  as  certified  by the
Secretary of the Company on the date hereof as being  complete,  accurate and in
effect.

6. A  Secretary's  Certificate,  as certified by the Secretary of the Company on
the date hereof as being  complete,  accurate and in effect,  certifying  that a
resolution  relating to the approval of the Plan was  submitted to the Company's
shareholders  and approved at the annual meeting of  shareholders  held on April
23, 1998.

7. Opinion Letter, of even date herewith, of Hogan & Hartson L.L.P.,  counsel to
the Company.

We have not,  except as  specifically  identified  above,  made any  independent
review or investigation of factual or other matters, including the organization,
existence,  good standing,  assets,  business or affairs of the Company.  In our
examination of the aforesaid  documents,  we have assumed the genuineness of all
signatures,  the legal capacity of natural persons,  the authenticity,  accuracy
and completeness of all documents  submitted to us as originals,  the conformity
to  the  original  documents  of all  documents  submitted  to us as  certified,
telecopied,  photostatic,  or reproduced copies, and the authenticity,  accuracy
and completeness of the originals of such latter documents.  This opinion letter
is given, and all statements herein are made, in the context of the foregoing.

This  opinion  letter is based as to matters of law solely on the  Alabama  Real
Estate  Investment  Trust Act of 1995 and we express no opinion herein as to any
other laws, statutes, regulations, or ordinances.

Based upon, subject to, and limited by the foregoing, we are of the opinion that
the Shares,  when issued and delivered in the manner and on the terms  described
in the Registration  Statement and the Plan (assuming  receipt by the Company of
the consideration  therefor,  the form of which is in accordance with applicable
law), will be validly issued,  fully paid and  non-assessable  under the Alabama
Real Estate Investment Trust Act of 1995.


<PAGE>

In  accordance  with the general  policies of this law firm in  rendering  legal
opinions, we have assumed for the purposes of the opinions expressed herein that
no fraud  exists  with  respect to any of the matters  relevant to the  opinions
expressed  herein,  although we have no reason to believe  that there exists any
fraud which would render invalid the opinions expressed below.

We are  members of the Bar of the State of  Alabama,  and we do not  express any
opinion  concerning  any law other than the law of the State of Alabama  and the
Federal law of the United  States.  We assume no obligation to advise you of any
changes in the  foregoing  subsequent to delivery of this opinion  letter.  This
opinion  letter has been prepared  solely in  connection  with the filing by the
Company of a Current Report on Form 8-K on the date hereof,  which Form 8-K will
be  incorporated  by reference  into the  Registration  Statement.  This opinion
letter should not be quoted in whole or in part or otherwise be referred to, nor
filed with or  furnished to any  governmental  agency or other person or entity,
without the prior written consent of this firm.

We hereby  consent to the filing of this  opinion  letter as Exhibit  5.2 to the
Form 8-K of the Company and to the  reference  to this firm in the  Registration
Statement.  In giving  this  consent,  we do not  thereby  admit  that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.

Very truly yours,



/s/ Sirote & Permutt, P.C.
SIROTE & PERMUTT, P.C.

<PAGE>

                                                                      Exhibit 15
                                        Letter from PricewaterhouseCoopers LLP
                                                   Regarding Unaudited Interim
                                                         Financial Information


<PAGE>


Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

                                                Re:  Colonial Properties Trust
                                            Registration Statement on Form S-8


We are aware  that our  report  dated  April 22,  1998 on our  review of interim
financial  information  of Colonial  Properties  Trust (the  "Company")  for the
period ended March 31, 1998 and included in the  Company's  quarterly  report on
Form 10-Q for the quarter  then  ended,  is  incorporated  by  reference  in the
Company's  registration  statement on Form S-8 relating to the  registration  of
2,525,000  additional  common  shares of  beneficial  interest  pursuant  to the
Colonial  Properties Trust Second Amended and Restated Employee Share Option and
Restricted Share Plan. Pursuant to Rule 436(c) under the Securities Act of 1933,
as amended  (the  "Act"),  this report  should not be  considered  a part of the
registration  statement  prepared  or  certified  by us within  the  meaning  of
Sections 7 and 11 of the Act.



                                          /s/ PricewaterhouseCoopers LLP
                                          PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama
July 30, 1998



<PAGE>


                                                                    Exhibit 23.2
                                         Consent of PricewaterhouseCoopers LLP


<PAGE>



                       Consent of Independent Accountants


We consent to the incorporation by reference in this  registration  statement of
Colonial  Properties Trust on Form S-8 relating to the Colonial Properties Trust
Second Amended and Restated  Employee Share Option and Restricted  Share Plan of
our report,  dated January 19, 1998 (except for Note 14 thereto, as to which the
date  is  February  17,  1998),  on our  audits  of the  consolidated  financial
statements and financial  statement schedules of Colonial Properties Trust as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996, and
1995,  which  report  is  included  in the  1997  Annual  Report  on  Form  10-K
incorporated by reference in such Registration Statement.


                                          /s/ PricewaterhouseCoopers LLP
                                          PRICEWATERHOUSECOOPERS LLP


Birmingham, Alabama
July 30, 1998





<PAGE>

                                                                    Exhibit 99.1
                                                     Colonial Properties Trust
                                          Second Amended and Restated Employee
                                        Share Option and Restricted Share Plan


<PAGE>


                            COLONIAL PROPERTIES TRUST

                           SECOND AMENDED AND RESTATED
                 EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN

      This Colonial  Properties Trust Second Amended and Restated Employee Share
Option  and  Restricted  Share Plan (the  "Plan")  amends  and  restates  in its
entirety the Colonial  Properties  Trust  Employee  Share Option and  Restricted
Share  Plan,  which  was duly  adopted  by the  Board of  Trustees  of  Colonial
Properties  Trust  (the  "Company")  and  approved  by the  shareholders  of the
Company,  on September  28,  1993.  Set forth herein are all of the terms of the
three plans  comprising  the Plan,  one for the benefit of the  employees of the
Company  (the  "Company  Plan"),  one for the benefit of  employees  of Colonial
Realty Limited Partnership (the "Operating Partnership") its general partner and
any Affiliate of the Operating  Partnership (the "Operating  Partnership  Plan")
and one for the benefit of employees of Colonial Properties Services,  Inc. (the
"Management   Company")  and  any  Affiliate  of  the  Management  Company  (the
"Management Company Plan").


1.   PURPOSE

      The  Plan is  intended  to  advance  the  interests  of the  Company,  the
Operating   Partnership  and  the  Management   Company  by  providing  eligible
individuals  (as designated  pursuant to Section 5 below) with an opportunity to
acquire or increase a  proprietary  interest  in the  Company by  granting  them
options,  bonuses and  restricted  shares in  accordance  with the terms  stated
herein,  which thereby will create a stronger incentive to expend maximum effort
for the growth and success of the Company,  the  Operating  Partnership  and the
Management Company, and encourage such eligible individuals to continue to serve
the Company,  the Operating  Partnership or the Management  Company.  Each share
option  granted  under the Plan is intended to be an  "incentive  stock  option"
except (i) to the extent that any such Option would exceed the  limitations  set
forth in Section 9 below,  (ii) for Options granted to an employee other than an
employee of the Company or any  Subsidiary  of the Company and (iii) for Options
specifically  designated  at the  time of grant as not  being  "incentive  stock
options".


2.   DEFINITIONS

      For purposes of  interpreting  the Plan and related  documents  (including
Share  Option  Agreements  and  Restricted  Share  Agreements),   the  following
definitions shall apply:

      "Affiliate" means with respect to an entity, any company or other trade or
business  that is  controlled  by or  under  common  control  with  such  entity
(determined  in accordance  with the  principles of Section 414(b) and 414(c) of
the Code and the  regulations  thereunder)  or is an  affiliate  of such  entity
within the meaning of Rule 405 of Regulation C under the 1933 Act.

      "Agreement"  means  a  written  agreement  that  sets  out the  terms  and
conditions of the grant of an Incentive Award.
<PAGE>

      "Applicable  Committee"  means,  with  respect to the Company Plan and the
Operating  Partnership  Plan,  the Company  Committee,  and, with respect to the
Management Company Plan, the Management Company Committee.

      "Board of Directors" means the Board of Directors of Colonial
Properties Services, Inc.

      "Board of Trustees" means the Board of Trustees of the Company.

      "Bonus  Shares" means Shares awarded to eligible  individuals  pursuant to
Section 15 of the Plan.

      "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

      "Company" means Colonial Properties Trust.

      "Company  Committee"  means the  Executive  Compensation  Committee of the
Board of Trustees, which must consist of no fewer than two members of such board
and shall be  appointed by such board,  or such other  committee as the Board of
Trustees or the Plan shall designate.

      "Company  Plan"  means the Plan as  administered  pursuant  to Section 3.1
hereof for the benefit of employees of the Company.

      "Effective Date" means September 28, 1993.

      "Employer"  means the Company,  the Operating  Partnership  or its general
partner,  the Management Company, or any Affiliate of the Management Company, in
their capacity as Employers of persons  eligible to be designated  recipients of
Incentive Awards.

      "Exchange Act" means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.

      "Exercise Price" means the Option Price multiplied by the number of Shares
purchased pursuant to the exercise of an Option.

      "Expiration  Date" means the tenth (10th)  anniversary  of the Grant Date,
or, if earlier, the termination of the Option pursuant to Section 20.3 hereof.

      "Fair  Market  Value"  means the value of each  Share  subject to the Plan
determined  as  follows:  if on the Grant Date or other  determination  date the
Shares are listed on an  established  national or regional stock  exchange,  are
admitted  to  quotation  on  the  National  Association  of  Securities  Dealers
Automated Quotation System, or are publicly traded on an established  securities
market,  the Fair Market Value of the Shares  shall be the closing  price of the
Shares on such  exchange or in such market (the highest  such  closing  price if
there is more than one such  exchange or market) on the trading day  immediately
preceding the Grant Date or such other determination date (or if there is no

<PAGE>

such reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest  asked  prices or between the high and low sale prices on
such trading day) or, if no sale of the Shares is reported for such trading day,
on the next  preceding  day on which any sale shall have been  reported.  If the
Shares are not listed on such an  exchange,  quoted on such  System or traded on
such a market, Fair Market Value shall be determined by the Board of Trustees in
good faith.

      "General Partner" means Colonial Properties Holding Company, the
general partner of Colonial Realty Limited Partnership.

      "Grant Date" means,  as determined by the  Applicable  Committee,  (i) the
date as of which the Applicable  Committee  approves the grant, (ii) the date as
of which the  Optionee or Holder and the  Employer  enter into the  relationship
resulting  in the Optionee or Holder  being  eligible for grants,  or (iii) such
other date as the Applicable Committee shall determine.

      "Grantee" means a person who is awarded Bonus Shares under the Plan.

      "Granting  Employer" means the Company,  the Operating  Partnership or the
Management  Company,  each with respect to Incentive Awards made pursuant to the
Company Plan, the Operating  Partnership  Plan and the Management  Company Plan,
respectively, unless the Applicable Committee as to any grant designates another
Employer as the Granting Employer.

      "Holder" means a person who holds Restricted Shares under the Plan.

      "Immediate  Family  Members"  means  the  spouse,   ex-spouse,   children,
step-children or grandchildren of the Optionee.

      "Incentive Award" means an award of an Option,  Bonus Shares or Restricted
Shares under the Plan.

      "Incentive  Share  Option" means an  "incentive  stock option"  within the
meaning of Section 422 of the Code.

      "Limited Partnership Agreement" means the agreement of limited partnership
of  Colonial  Realty  Limited  Partnership,  as now in  effect  or as  hereafter
amended.

      "Management Company" means Colonial Properties Services, Inc.

      "Management  Company  Committee"  means  the  Board  of  Directors  of the
Management  Company  or  any  committee  thereof  appointed  by  such  board  or
designated in the Plan to administer the Management Company Plan.

      "Management  Company  Plan"  means the Plan as  administered  pursuant  to
Section 3.3 hereof for the benefit of the employees of the Management Company or
its Affiliates.

      "Operating Partnership" means Colonial Realty Limited Partnership.


<PAGE>

      "Operating  Partnership  Plan" means the Plan as administered  pursuant to
Section  3.2  hereof  for  the  benefit  of  the   employees  of  the  Operating
Partnership, its general partner and its Affiliates.

      "Option" means an option to purchase one or more Shares pursuant to the
Plan.

      "Option Agreement" means the written agreement evidencing the grant of
an Option hereunder.

      "Optionee" means a person who holds an Option under the Plan.

      "Option  Period" means the period during which Options may be exercised as
defined in Section 12.

      "Option Price" means the purchase price for each Share subject to an
Option.

      "Partnership Agreement" means the Second Amended and Restated Agreement
of Limited Partnership of Colonial Realty Limited Partnership, as amended.

      "Plan" means this Second  Amended and Restated  Employee  Share Option and
Restricted  Share Plan  (which  encompasses  the  Company  Plan,  the  Operating
Partnership Plan and the Management  Company Plan), as the same may be hereafter
amended from time to time.

      "Reporting  Person"  means a person who is required to file reports  under
Section  16(a) of the Exchange Act with respect to the Company or the  Operating
Partnership.

      "Restricted Shares" means Shares which are subject to a risk of forfeiture
pursuant to the Plan.

      "Restricted  Share Agreement" means the written  agreement  evidencing the
grant of Restricted Shares hereunder.

      "Restricted  Share  Award"  means an award of  restricted  Shares  granted
pursuant to Section 13 of this Plan.

      "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.

      "Shares" mean the common shares of beneficial interest, par value $.01 per
Share, of the Company.
      "Share Option Agreement" means the written agreement  evidencing the grant
of an Option hereunder.

      "Subsidiary" means any "subsidiary  corporation" of the Company within the
meaning of Section 425(f) of the Code.
<PAGE>

      "Units" means units of partnership  interest of the Operating  Partnership
(but does not include preferred interests in the Operating Partnership).

      "Unit Option" means an option to purchase one or more Units pursuant to
the Plan.


3.   ADMINISTRATION


3.1.  Company Plan.

      The Company Plan shall be  administered  by the Company  Committee,  which
shall be  appointed  by the  Board  of  Trustees.  Each  member  of the  Company
Committee must qualify in all respects as a  "non-employee  director" as defined
in Rule 16b-3 under the Exchange Act and as an "outside  director" as defined in
Treasury Regulations ss.  1.162-27(e)(3).  The Company Committee shall have such
powers and authorities  related to the administration of the Company Plan as are
consistent  with  the  Company's  declaration  of  trust  and  by-laws  and with
applicable  law. The Company  Committee  shall have the full power and authority
(subject to any  restrictions  imposed by the Board of Trustees,  the  Company's
declaration  of trust or by-laws or  applicable  law) to take all actions and to
make all  determinations  required or provided for under the Company  Plan,  any
Incentive Award granted by the Company  Committee under the Company Plan and any
Agreement entered into in connection therewith and shall have the full power and
authority to take all such other  actions and  determinations  not  inconsistent
with the  specific  terms and  provisions  of the Company  Plan that the Company
Committee  deems to be necessary or  appropriate  to the  administration  of the
Company Plan,  any Incentive  Award granted by the Company  Committee  under the
Company  Plan  and any  Agreement  entered  into in  connection  therewith.  The
interpretation and construction by the Company Committee of any provision of the
Company Plan,  any Incentive  Award granted by the Company  Committee  under the
Company Plan and any  Agreement  entered into in connection  therewith  shall be
final and conclusive.  In addition,  the Chief Executive Officer of the Company,
acting as a committee of the Board of Trustees, shall have the authority to make
awards of Bonus  Shares  pursuant  to Section 15 hereof to any  employee  of the
Company  other than a  Reporting  Person,  and to make  Incentive  Awards to new
employees of the Company (other than awards of Reporting  Persons) in connection
with their assuming employment with the Company.


3.2.  Operating Partnership Plan.

      The  Operating  Partnership  Plan  shall be  administered  by the  Company
Committee, which shall be appointed by the Board of Trustees. Each member of the
Company  Committee must qualify in all respects as a "non-employee  director" as
defined in Rule 16b-3 under the Exchange Act. The Company  Committee  shall have
the full  power and  authority  (subject  to any  restrictions  imposed  on such
Company  Committee  by Section  3.1  hereof) to take all actions and to make all
determinations  required or provided for under the Operating  Partnership  Plan,
any  Incentive  Award  granted  by the  Company  Committee  under the  Operating
Partnership  Plan and any  Agreement  entered into in  connection  therewith and
shall have the full power and authority to take all such other actions and

<PAGE>

determinations  not  inconsistent  with the specific terms and provisions of the
Operating  Partnership Plan that the Company  Committee deems to be necessary or
appropriate  to  the  administration  of the  Operating  Partnership  Plan,  any
Incentive Award granted by the Company Committee under the Operating Partnership
Plan and any Agreement entered into in connection therewith.  The interpretation
and  construction  by the Company  Committee of any  provision of the  Operating
Partnership Plan, any Incentive Award granted by the Company Committee under the
Operating  Partnership  Plan  and  any  Agreement  entered  into  in  connection
therewith  shall be final and  conclusive.  In  addition,  the  Chief  Executive
Officer of the Company,  acting as a committee  of the Board of Trustees,  shall
have the authority to make awards of Bonus Shares  pursuant to Section 15 hereof
to any employee of the Operating  Partnership other than a Reporting Person, and
to make  Incentive  Awards to new employees of the Operating  Partnership or its
affiliates  (other than  Reporting  Persons) in connection  with their  assuming
employment with the Operating Partnership or its affiliates.


3.3.  Management Company Plan.

      The  Management  Company  Plan  shall be  administered  by the  Management
Company  Committee.  The Management Company Committee shall have such powers and
authorities  related to the administration of the Management Company Plan as are
consistent with the Management  Company's  articles of incorporation and by-laws
and with  applicable law. The Management  Company  Committee shall have the full
power  and  authority  (subject  to any  restrictions  imposed  by the  Board of
Directors  of the  Management  Company,  the  Management  Company's  articles of
incorporation  or by-laws or applicable law) to take all actions and to make all
determinations  required or provided for under the Management  Company Plan, any
Incentive Award granted by the Management Company Committee under the Management
Company Plan and any Agreement  entered into in  connection  therewith and shall
have  the  full  power  and  authority  to  take  all  such  other  actions  and
determinations  not  inconsistent  with the specific terms and provisions of the
Management  Company  Plan  that  the  Management  Company  Committee  deem to be
necessary or appropriate to the  administration of the Management  Company Plan,
any  Incentive  Award  granted by the  Management  Company  Committee  under the
Management Company Plan and any Agreement entered into in connection  therewith.
The  interpretation  and construction by the Management Company Committee of any
provision of the  Management  Company Plan,  any Incentive  Award granted by the
Management Company Committee under the Management Company Plan and any Agreement
entered into in connection therewith shall be final and conclusive. In addition,
the Chief Executive Officer of the Management Company,  acting as a committee of
the Board of Directors,  shall have the authority to make awards of Bonus Shares
pursuant  to  Section  15 hereof to any  employee  of the  Company  other than a
Reporting  Person,  and  to  make  Incentive  Awards  to  new  employees  of the
Management  Company  (other than  Reporting  Persons) in  connection  with their
assuming employment with the Management Company.


3.4.  No Liability.

      No member of the Company  Committee or the  Management  Company  Committee
shall be liable to any Optionee, Holder or Grantee or to the Company, the

<PAGE>

Operating  Partnership,  or the  Management  Company or any their  Subsidiaries,
Affiliates, employees, shareholders, or partners for any action or determination
made in good faith with respect to the Plan or any  Incentive  Award  granted or
Agreement entered into hereunder.


3.5.  Applicability of Rule 16b-3.

      Those  provisions  of the Plan that make  express  reference to Rule 16b-3
shall apply only to Reporting Persons.


4.   SHARES

      The Shares  that are the subject of an  Incentive  Award may be (i) issued
and outstanding Shares owned or acquired by the Granting Employer, (ii) treasury
Shares (to the extent  permitted  by  applicable  law) or (iii)  authorized  but
unissued  Shares.  The  aggregate  total  number  of  Shares  that may be issued
pursuant to  Incentive  Awards under the Plan shall be  3,200,000,  as increased
from  time to time to equal  ten  percent  (10%) of the  number  of  issued  and
outstanding  Shares and Units  (excluding  Units held by the  General  Partner),
provided that no more than 3,200,000  Shares may be issued pursuant to Incentive
Share Options and no more than 750,000  Restricted Shares may be issued pursuant
to Restricted Share Awards.  If any Incentive Award expires,  terminates,  or is
terminated or canceled for any reason prior to exercise or vesting in full,  the
Shares that were subject to the unexercised, forfeited, or terminated portion of
such  Incentive  Award  shall be  available  immediately  for  future  grants of
Incentive Awards under the Plan.


5.   ELIGIBILITY


5.1.  Designated Recipients.

      Incentive  Awards  may be  granted  under  the  Plan to (i) any  full-time
employee of the Company,  the Operating  Partnership or its general partner, any
Affiliate of the Operating Partnership,  the Management Company or any Affiliate
of the Management  Company,  as the  Applicable  Committee  shall  determine and
designate from time to time  (including  officers,  trustees or directors of the
Company, the Operating  Partnership or its general partner, any Affiliate of the
Operating  Partnership  or  the  Management  Company  or  any  Affiliate  of the
Management Company, except that no officer,  trustee or director of the Company,
the  General  Partner or the  Management  Company  shall be  eligible to receive
grants of Bonus Shares) or (ii) any other individual whose  participation in the
Plan is determined by the Company  Committee to be in the best  interests of the
Company and is so designated by the Company Committee.


5.2.  Successive Grants.

      An  individual  may hold more than one  Incentive  Award,  subject to such
restrictions as are provided herein.
<PAGE>

6.   EFFECTIVE DATE AND TERM OF THE PLAN


6.1.  Effective Date.

      The Plan is effective as of the Effective Date.


6.2.  Term.

      The Plan has no termination  date;  provided,  however,  that no Incentive
Share Option may be granted on or after the tenth  anniversary  of the Effective
Date.


7.   PARACHUTE LIMITATIONS

      Notwithstanding  any  other  provision  of  this  Plan  or  of  any  other
agreement,  contract,  or understanding  heretofore or hereafter entered into by
the  Optionee,  Grantee or Holder with any  Employer  that is not an  agreement,
contract,  or understanding entered into after the Effective Date that expressly
modifies or excludes  application of this paragraph (an "Other Agreement"),  and
notwithstanding  any formal or informal plan or other arrangement for the direct
or indirect provision of compensation by the Employers to the Optionee,  Grantee
or Holder (including groups or classes of participants or beneficiaries of which
the Optionee,  Grantee or Holder is a member),  whether or not such compensation
is deferred,  is in cash, or is in the form of a benefit to or for the Optionee,
Grantee or Holder (a "Benefit Arrangement"),  if the Optionee, Grantee or Holder
is a  "disqualified  individual," as defined in Section 280G(c) of the Code, any
Option  held by that  Optionee  and any right to  receive  any  payment or other
benefit under this Plan shall not become exercisable or vested (i) to the extent
that such right to exercise,  vesting,  payment, or benefit, taking into account
all other  rights,  payments,  or  benefits to or for the  Optionee,  Grantee or
Holder  under this Plan,  all Other  Agreements,  and all Benefit  Arrangements,
would cause any payment or benefit to the Optionee, Grantee or Holder under this
Plan to be  considered  a  "parachute  payment"  within  the  meaning of Section
280G(b)(2) of the Code as then in effect (a "Parachute Payment") and (ii) if, as
a result of  receiving a Parachute  Payment,  the  aggregate  after-tax  amounts
received by the Optionee,  Grantee or Holder from all Employers under this Plan,
all  Other  Agreements,  and all  Benefit  Arrangements  would be less  than the
maximum  after-tax  amount that could be received  by the  Optionee,  Grantee or
Holder without  causing any such payment or benefit to be considered a Parachute
Payment.  In the event that the receipt of any such right to exercise,  vesting,
payment,  or benefit  under this Plan,  in  conjunction  with all other  rights,
payments, or benefits to or for the Optionee,  Grantee or Holder under any Other
Agreement or any Benefit Arrangement would cause the Optionee, Grantee or Holder
to be considered to have received a Parachute Payment under this Plan that would
have the effect of  decreasing  the after-tax  amount  received by the Optionee,
Grantee or Holder as described in clause (ii) of the  preceding  sentence,  then
the  Optionee,  Grantee  or Holder  shall  have the  right,  in the  Optionee's,
Grantee's or Holder's sole discretion,  to designate those rights,  payments, or
benefits under this Plan,  any Other  Agreements,  and any Benefit  Arrangements
that  should be  reduced or  eliminated  so as to avoid  having  the  payment or
benefit to the  Optionee,  Grantee  or Holder  under this Plan be deemed to be a
Parachute Payment.

<PAGE>
8.   GRANT OF OPTIONS


8.1.  General.


      Subject to the terms and conditions of the Plan, the Company Committee and
the  Management  Company  Committee may from time to time grant to such eligible
individuals as the Applicable Committee may determine,  Options to purchase such
number of Shares on such terms and  conditions as the  Applicable  Committee may
determine,  including any terms or conditions  which may be necessary to qualify
such Options as Incentive Share Options.  Such authority  specifically  includes
the  authority,  in order to  effectuate  the  purposes  of the Plan but without
amending  the Plan,  to modify  grants to eligible  individuals  who are foreign
nationals  or are  individuals  who are  employed  outside the United  States to
recognize differences in local law, tax policy, or custom.


8.2.  Limitation on Grants of Options to Executives.


      The maximum  number of Shares subject to Options that can be awarded under
the Plan to any executive officer of the Company,  the Operating  Partnership or
its general partner or the Management  Company,  or to any other person eligible
for a grant of an Incentive Award under Section 5.1 hereof in any calendar year,
is 500,000 Shares.


9.   LIMITATION OF INCENTIVE SHARE OPTIONS


      An Option (other than an Option  described in exceptions  (ii) or (iii) of
Section 1) shall  constitute  an  Incentive  Share Option to the extent that the
aggregate  fair market value  (determined  at the time the Option is granted) of
the Shares with respect to which Incentive Share Options are exercisable for the
first time by any  Optionee  during any  calendar  year  (under the Plan and all
other plans of the Optionee's  employer and its parent and Subsidiary)  does not
exceed $100,000. This limitation shall be applied by taking Options into account
in the order in which they were granted.


10.  SHARE OPTION AGREEMENTS

      All  Options  granted  pursuant  to the Plan shall be  evidenced  by Share
Option Agreements,  to be executed by the Granting Employer and by the Optionee,
in such  form or forms  as the  Applicable  Committee  shall  from  time to time
determine. Share Option Agreements covering Options granted from time to time or
at the same time need not contain similar provisions;  provided,  however,  that
all such Option Agreements shall comply with all terms of the Plan.

<PAGE>
11.  OPTION PRICE

      The Option Price shall be fixed by the Applicable  Committee and stated in
each Share  Option  Agreement.  The Option Price shall not be less than the Fair
Market Value of the Shares on the Grant Date of the Option;  provided,  however,
that in the event the  Optionee  would  otherwise  be  ineligible  to receive an
Incentive  Share Option by reason of the  provisions  of Sections  422(b)(6) and
424(d) of the Code (relating to stock  ownership of more than ten percent),  the
Option Price of an Option that is intended to be an Incentive Share Option shall
be not less than the  greater  of par value or 110  percent  of the Fair  Market
Value of a Share at the time such Option is granted.


12.  TERM AND EXERCISE OF OPTIONS


12.1. Term.

      Each  Option  granted  under the Plan  shall  terminate  and all rights to
purchase shares thereunder shall cease upon the expiration of ten years from the
date such  Option is granted,  or on such date prior  thereto as may be fixed by
the Applicable  Committee and stated in the Share Option  Agreement  relating to
such Option;  provided,  however, that in the event the Optionee would otherwise
be ineligible to receive an Incentive  Share Option by reason of the  provisions
of Sections  422(b)(6)  and 424(d) of the Code  (relating to stock  ownership of
more than ten percent),  an Option  granted to such Optionee that is intended to
be an  Incentive  Share  Option  shall  in no  event be  exercisable  after  the
expiration of five years from the date it is granted.


12.2. Option Period and Limitations on Exercise.

      Each Option  granted under the Plan shall be  exercisable,  in whole or in
part, at any time and from time to time over a period commencing on or after the
Grant Date and ending upon the expiration or  termination of the Option,  as the
Applicable Committee shall determine and set forth in the Share Option Agreement
relating  to  such  Option.  Without  limiting  the  foregoing,  the  Applicable
Committee,  subject  to the terms and  conditions  of the Plan,  may in its sole
discretion provide that an Option may not be exercised in whole or in part for a
stated  period or  periods of time  during  which  such  Option is  outstanding;
provided,  however,  that any  such  limitation  on the  exercise  of an  Option
contained in any Share Option Agreement may be rescinded,  modified or waived by
the Applicable Committee,  in its sole discretion,  at any time and from time to
time after the Grant Date of such Option,  so as to accelerate the time at which
the Option may be exercised.


12.3. Termination of Employment.

      Upon the  termination  of the  employment of an Optionee with the Granting
Employer,  other than by reason of the death or "permanent and total disability"
(within the meaning of Section  22(e)(3) of the Code),  any Option granted to an
Optionee pursuant to the Plan shall terminate, and such Optionee shall have no

<PAGE>

further right to purchase Shares pursuant to such Option; provided further, that
the Applicable  Committee may provide,  by inclusion of appropriate  language in
any Share  Option  Agreement,  that an  Optionee  may  (subject  to the  general
limitations  on  exercise  set forth in  Section  12.2  above),  in the event of
termination of employment of the Optionee with the Granting  Employer,  exercise
an Option,  in whole or in part, at any time  subsequent to such  termination of
employment  and prior to  termination  of the Option  pursuant  to Section  12.2
above,  either  subject to or without  regard to any  installment  limitation on
exercise imposed pursuant to Section 12.2 above, as the Applicable Committee, in
its sole and absolute  discretion,  shall  determine  and set forth in the Share
Option Agreement.  Whether a leave of absence or leave on military or government
service shall  constitute a termination  of employment for purposes of the Plan,
shall be determined by the Applicable  Committee,  which  determination shall be
final and conclusive. For purposes of the Plan, a termination of employment with
the  Granting  Employer  shall  not  be  deemed  to  occur  if the  Optionee  is
immediately thereafter employed with any other Employer.


12.4. Rights in the Event of Death.

      If an Optionee dies while employed by the Granting Employer, the executors
or  administrators  or legatees or distributees of such Optionee's  estate shall
have the right  (subject to the  general  limitations  on exercise  set forth in
Section  12.2  above),  at any  time  within  one  year  after  the date of such
Optionee's death and prior to termination of the Option pursuant to Section 12.1
above,  to  exercise  any  Option  held by  such  Optionee  at the  date of such
Optionee's death,  whether or not such Option was exercisable  immediately prior
to such Optionee's death;  provided,  however, that the Applicable Committee may
provide by inclusion of appropriate language in any Share Option Agreement that,
in the event of the death of an Optionee,  the  executors or  administrators  or
legatees  or  distributees  of such  Optionee's  estate may  exercise  an Option
(subject  to the  general  limitations  on  exercise  set forth in Section  12.2
above), in whole or in part, at any time subsequent to such Optionee's death and
prior to  termination  of the Option  pursuant  to Section  12.1  above,  either
subject to or without regard to any installment  limitation on exercise  imposed
pursuant to Section 12.2 above,  as the  Applicable  Committee,  in its sole and
absolute  discretion,  shall  determine  and  set  forth  in  the  Share  Option
Agreement.


12.5. Rights in the Event of Disability.

      If an Optionee terminates  employment with the Granting Employer by reason
of the "permanent and total disability"  (within the meaning of Section 22(e)(3)
of the Code) of such Optionee,  then such Optionee shall have the right (subject
to the general  limitations on exercise set forth in Section 12.2 above), at any
time  within  one  year  after  such  termination  of  employment  and  prior to
termination of the Option pursuant to Section 12.1 above, to exercise,  in whole
or in part, any Option held by such Optionee at the date of such  termination of
employment, whether or not such Option was exercisable immediately prior to such
termination of employment;  provided, however, that the Applicable Committee may
provide,  by inclusion of  appropriate  language in any Share Option  Agreement,
that an Optionee may (subject to the general limitations on exercise set forth

<PAGE>

in Section 12.2 above),  in the event of the  termination  of  employment of the
Optionee  with the  Granting  Employer  by  reason of the  "permanent  and total
disability"  (within  the  meaning  of  Section  22(e)(3)  of the  Code) of such
Optionee,  exercise an Option,  in whole or in part,  at any time  subsequent to
such  termination of employment and prior to termination of the Option  pursuant
to Section 12.1 above,  either subject to or without  regard to any  installment
limitation on exercise imposed pursuant to Section 12.2 above, as the Applicable
Committee, in its sole and absolute discretion, shall determine and set forth in
the  Share  Option  Agreement.  Whether a  termination  of  employment  is to be
considered by reason of "permanent  and total  disability"  for purposes of this
Plan shall be determined by the Applicable Committee,  which determination shall
be final and conclusive.


12.6. Limitations on Exercise of Option.

      Notwithstanding  the  foregoing  Sections,  in no event may the  Option be
exercised,  in whole or in part,  after ten years  following the date upon which
the Option is granted,  as set forth in Section 1 above, or after the occurrence
of an event  referred to in Section 20.3 below which results in  termination  of
the Option. In no event may the Option be exercised for a fractional Share.


12.7. Method of Exercise.

      An Option that is exercisable hereunder may be exercised by the Optionee's
delivery to the  Granting  Employer of written  notice of the  exercise  and the
number of Shares for which the Option is being  exercised.  Such delivery  shall
occur  on  any  business  day,  at the  Granting  Employer's  principal  office,
addressed  to the  attention  of the  Applicable  Committee.  Such notice  shall
specify the number of Shares with respect to which the Option is being exercised
and shall be  accompanied  by payment in full of the Option  Price of the Shares
for which the  Option is being  exercised.  The  minimum  number of Shares  with
respect to which an Option may be  exercised,  in whole or in part,  at any time
shall be the  lesser of (i) 100  shares or such  lesser  number set forth in the
Share  Option  Agreement  and (ii) the maximum  number of Shares  available  for
purchase  under the Option at the time of exercise.  Payment of the Option Price
for the Shares purchased pursuant to the exercise of an Option shall be made (i)
in cash or in cash equivalents; (ii) through the tender to the Granting Employer
of Shares, which Shares, if acquired from the Company or any of its Affiliates,

<PAGE>

have been held for at least six months  and which  Shares  shall be valued,  for
purposes  of  determining  the  extent to which the  Option  Price has been paid
thereby,  at their  Fair  Market  Value on the date of  exercise;  or (iii) by a
combination of the methods  described in (i) and (ii). The Applicable  Committee
may provide,  by inclusion of appropriate  language in a Share Option Agreement,
that payment in full of the Option Price need not accompany  the written  notice
of exercise  provided the notice of exercise directs that the Share  certificate
or certificates for the Shares for which the Option is exercised be delivered to
a licensed  broker  acceptable  to the  Granting  Employer  as the agent for the
individual  exercising  the Option  and, at the time such Share  certificate  or
certificates are delivered, the broker tenders to the Granting Employer cash (or
cash equivalents  acceptable to the Granting Employer) equal to the Option Price
for the Shares purchased  pursuant to the exercise of the Option plus the amount
(if any) of federal  and/or other taxes which the  Granting  Employer may in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted  hereunder  other than as set forth above
shall be invalid  and of no force and  effect.  Unless  otherwise  stated in the
applicable Share Option Agreement, an individual holding or exercising an Option
shall  have  none of the  rights of a  shareholder  (for  example,  the right to
receive  cash or dividend  payments  attributable  to the  subject  Shares or to
direct the voting of the subject  Shares) until the Shares  covered  thereby are
fully paid and issued to him or her.  Except as provided in Section 20 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.


12.8. Transfer of Shares to Employee.


      Promptly  after  the  exercise  of a Share  Option by an  employee  of the
Company  and the  payment  in full of the  Option  Price of the  Shares  covered
thereby, the individual  exercising the Option shall be entitled to the issuance
of a Share certificate or Share certificates  evidencing his or her ownership of
such Shares.


12.9. Transfer of Shares to Other Employees


            (a) Promptly  after the exercise of a Share Option by an employee of
an Employer  that is not the Company and the payment in full of the Option Price
of the Shares covered thereby:


                  (i)   The Company  shall sell to the  Employer  employing  the
                        Optionee the number of Shares as to which the Option was
                        exercised  for a price equal to the Fair Market Value of
                        such Shares.


                  (ii)  The Employer shall deliver to the individual  exercising
                        the  Option a Share  certificate  or Share  certificates
                        evidencing his or her ownership of such Shares.


13.  GRANT AND EXERCISE OF UNIT OPTIONS



13.1. Issuance of Unit Options

      Upon the issuance of an Option,  and in accordance  with Section 4.2(B) of
the Partnership Agreement,  the General Partner shall be deemed automatically to
have  caused  the  Operating  Partnership  to issue  to the  General  Partner  a
corresponding Unit Option on terms identical to those of such Option.

<PAGE>

13.2. Exercise of Unit Options.

      A Unit Option shall be deemed exercised  automatically,  upon the exercise
by an Optionee of the  corresponding  Option, as to the number of Units equal to
the number of Shares for which such Option is  exercised.  The  General  Partner
shall then cause the  Operating  Partnership  to issue such Units to the General
Partner,  and the  Company  shall  remit  payment  for such Units to the General
Partner,  which shall then remit  payment to the Operating  Partnership,  all in
accordance with Section 4.2(B) of the Partnership Agreement.


13.3. Termination of Unit Options.

      Upon the  termination  of an Option,  the  corresponding  Unit Option also
shall terminate.


14.  GRANT OF RESTRICTED SHARES


14.1. Restricted Share Awards.


            (a) The Company  Committee and the Management  Company Committee may
from time to time,  and  subject  to the  provisions  of the Plan and such other
terms and conditions as the Applicable Committee may determine, grant Restricted
Share Awards under the Plan. Each Restricted Share Award shall be evidenced by a
written  instrument  which shall state the number of Shares covered by the award
and  the  terms  and  conditions  which  the  Applicable  Committee  shall  have
determined with respect to such award.  Upon the grant of each Restricted  Share
Award,  subject to Sections  14.1(d) and 14.3 hereof,  the Company shall cause a
certificate representing the Shares covered by the award to be registered in the
name of the Holder and to be delivered to the Holder without payment on his part
(unless such Shares are newly issued  Shares  granted under the Company Plan, in
which  case the  Company  may  require a payment  equal to the par value of each
Share for each Share  issued).  The Holder shall  generally  have the rights and
privileges  of a  shareholder  of the  Company  with  respect  to  such  Shares,
including  the  right  to  vote  and  to  receive  dividends,   subject  to  the
restrictions specified in paragraphs (b) and (c) hereof.


            (b) The  Applicable  Committee  shall  determine  a  period  of time
("Limitation  Period")  during  which  restrictions  shall  apply to the  Shares
transferred to a Holder with respect to each  Restricted  Share Award,  provided
that in no event shall the Limitation  Period be less than two years.  Except as
otherwise  determined  by the  Applicable  Committee,  the  Holder may not sell,
transfer,  assign, pledge or otherwise encumber or dispose of the Shares covered
by such  Restricted  Share Award during the Limitation  Period  applicable  with
respect  to  such  Restricted  Share  Award.  The  Applicable  Committee  in its
discretion may prescribe conditions for the incremental lapse of the preceding

<PAGE>

restrictions  during the Limitation  Period, and for the lapse or termination of
such restrictions upon the occurrence of certain events before the expiration of
the  Limitation  Period.  The Applicable  Committee in its  discretion  also may
shorten or terminate the Limitation Period or waive any conditions for the lapse
or  termination  of the  restrictions  with respect to all or any portion of the
Shares covered by the Restricted Share Award.  The restrictions  applicable to a
Restricted  Share Award shall lapse upon the earliest of the following:  (1) the
expiration of the Limitation  Period  applicable to the Restricted  Share Award;
(2) the  occurrence of an event  prescribed by the  Applicable  Committee  which
results  in the  lapse  of the  restrictions;  or (3)  such  other  time  as the
Applicable Committee may determine.


            (c)  The  Shares  covered  by a  Restricted  Share  Award  shall  be
forfeited by the Holder upon  termination  of the Holder's  employment  with the
Granting  Employer  for any reason  before the  occurrence  of any of the events
described  in the last  sentence  of  paragraph  (b)  hereof.  The Holder  shall
thereupon  immediately  transfer  the  Shares  to his or her  Granting  Employer
without payment by the Granting  Employer.  If the Granting  Employer is not the
Company or the Operating Partnership,  the Company and the Operating Partnership
shall have the right to purchase any such  forfeited  Shares from such  Granting
Employer at a price equal to Fair Market  Value at any time  subsequent  to such
forfeiture.


            (d)  Promptly  after the grant of a  Restricted  Share  Award by the
Operating  Partnership  or its general  partner,  any Affiliate of the Operating
Partnership,  the Management Company or an Affiliate of the Management  Company,
such company shall notify the Company of the grant and of the recipient's  name,
address and social security number, and shall either (i) pay or cause to be paid
to the Company an amount  equal to the Fair Market Value of the Shares which are
subject to the  Restricted  Share  Award or (ii)  deliver  free and clear of any
liens or encumbrances  certificates representing outstanding Shares in an amount
equivalent to the number of Shares granted.


14.2. Restricted Share Agreement.

      All  Restricted  Share  Awards  granted  pursuant  to the  Plan  shall  be
evidenced  by  Restricted  Share  Agreements,  to be  executed  by the  Granting
Employer and by the Holder,  in such form or forms as the  Applicable  Committee
shall  from  time  to  time  determine.  Restricted  Share  Agreements  covering
Restricted Shares granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Restricted Share Agreements
shall comply with all terms of the Plan.


14.3. Certificates for Restricted Shares.

      The Applicable Committee may require that the certificates  evidencing the
grant of a  Restricted  Share  Award  hereunder  be held in  escrow  until  such
restrictions have expired. The Company shall also cause a legend to be placed on
such  certificates  that  complies  with  the  applicable  securities  laws  and
regulations  and makes  appropriate  reference to the  restrictions to which the
Shares are subject. Upon attainment of the specified objectives and requirements
(or, to the extent  specified in the grant, the portion of such Shares earned by
partial  attainment  of the  objectives  and  requirements,  as  applicable),  a
certificate  for the number of Shares with  respect to which  restrictions  have
lapsed shall be delivered to the Holder free of restrictions  upon submission of
the certificate originally issued with respect to such Shares.
<PAGE>


15.  AWARDS OF UNRESTRICTED BONUS SHARES

      The Chief  Executive  Officer  of the  Company,  on behalf of the Board of
Trustees,  and the Chief Executive Officer of the Management  Company, on behalf
of the Board of Directors, may from time to time, as frequently as once a month,
subject  to the  provisions  of the Plan,  grant up to ten Bonus  Shares to such
eligible individuals as he or she may designate. Upon the grant of Bonus Shares,
the Company,  the General  Partner or the Management  Company,  as  appropriate,
shall cause a certificate  representing the Bonus Shares to be registered in the
name of the Grantee and delivered to the Grantee.  Upon delivery to the Grantee,
Bonus Shares shall be deemed validly issued, fully paid, and nonassessable,  and
the  Grantee  shall have all the rights of a  shareholder  with  respect to such
Bonus Shares.


16.  TRANSFERABILITY OF OPTIONS AND RESTRICTED SHARES


16.1. Transferability of Options.

      During the lifetime of the Optionee,  only such Optionee (or, in the event
of legal incapacity or incompetency, the guardian or legal representative of the
Optionee), may exercise the Option, except that the Applicable Committee may, in
its  discretion,  authorize  all or a  portion  of the  Option  (other  than  an
Incentive  Share  Option) to be granted to an  Optionee  on terms  which  permit
transfer  by such  Optionee  during  his or her  lifetime  to  Immediate  Family
Members,  (ii) a trust or trusts for the  exclusive  benefit  of such  Immediate
Family Members or (iii) a partnership in which such Immediate Family Members are
the only partners,  provided that the Share Option  Agreement  pursuant to which
such Options are granted is approved by the  Applicable  Committee and expressly
provides for  transferability  in a manner consistent with this Section 15.1, in
which case such  transferees  may  exercise  the Option.  Except as noted in the
preceding  sentence,  transfers of Options shall be prohibited except by will or
the laws of descent and distribution. Following transfer, any such Options shall
continue  to be  subject  to the same terms and  conditions  as were  applicable
immediately  prior to transfer,  provided that for purposes of Section 12 hereof
(excluding Sections 12.3, 12.4 and 12.5), the term "Optionee" shall be deemed to
refer to the  transferee.  The events of termination  of  employment,  death and
disability set forth in Sections 12.3, 12.4 and 12.5 hereof, respectively, shall
continue to be applied with respect to the original  Optionee,  following  which
the Options shall be exercisable  by the  transferee  only to the extent and for
the  periods  specified  in Section  12.  Except as may be provided in the Share
Option  Agreement,  no  Option  shall  be  pledged  or  hypothecated  (by law or
otherwise) or subject to execution, attachment or similar processes.


16.2. Transferability of Restricted Shares.

      No Restricted  Shares shall be assignable or  transferable,  other than by
will or the  laws of  descent  and  distribution,  before  the  satisfaction  of
applicable  performance and service requirements with respect to such Shares, as
set forth in the applicable Restricted Share Agreement.

<PAGE>

17.  USE OF PROCEEDS

      The proceeds  received by the Company from the sale of Shares  pursuant to
Incentive  Awards granted under the Plan shall  constitute  general funds of the
Company.  As soon as  practicable  after  receipt  by the  Company of the amount
described in Sections 12.9(a)(i) and 14.1(d) above, the Company shall contribute
an amount of cash equal to such payment to the wholly owned subsidiary that owns
its interests in the Operating  Partnership,  which in turn will contribute such
cash to the Operating  Partnership,  and the Operating  Partnership  shall issue
additional  partnership  interests to such  subsidiary with a value equal to the
amount of such contribution.


18.  REQUIREMENTS OF LAW


18.1. General.

      The Company  shall not be  required to sell or issue any Shares  under any
Incentive  Award if the sale or  issuance  of such  Shares  would  constitute  a
violation  by the  Optionee,  the  Holder,  the  Grantee  or the  Company of any
provisions  of any law or regulation of any  governmental  authority,  including
without  limitation any federal or state  securities laws or regulations.  If at
any time the Company  shall  determine,  in its  discretion,  that the  listing,
registration  or  qualification  of any  Shares  subject  to an Option  upon any
securities  exchange or under any governmental  regulatory body, is necessary or
desirable as a condition of, or in connection  with, the issuance or purchase of
Shares  hereunder,  the Option may not be  exercised  in whole or in part unless
such listing  registration,  qualification,  consent or approval shall have been
effected or obtained free of any conditions  not  acceptable to the Company,  as
applicable,  and any delay  caused  thereby  shall in no way  affect the date of
termination of the Option.  Specifically in connection with the 1933 Act, at the
time of grant of  Restricted  Shares or Bonus  Shares,  or when such  Restricted
Shares become vested, or upon the exercise of any Option,  unless a registration
statement  under such Act is in effect with respect to the Shares covered by the
Option,  the Company  shall not be required to sell or issue such Shares  unless
the  Company  Committee  has  received  evidence  satisfactory  to it  that  the
Optionee,  Holder or Grantee may acquire  such Shares  pursuant to an  exemption
from  registration  under such Act. Any  determination in this connection by the
Company Committee shall be final, binding, and conclusive.  The Company may, but
shall in no event be  obligated  to,  register  any  securities  covered  hereby
pursuant  to the 1933  Act.  The  Company  shall  not be  obligated  to take any
affirmative  action in order to cause the  exercise of an Option or the issuance
of Shares  pursuant  thereto,  the  issuance of Bonus  Shares or the issuance of
Shares pursuant to a Restricted Share Award to comply with any law or regulation
of any governmental authority. As to any jurisdiction that expressly imposes the
requirement  that an Option shall not be  exercisable  or that Shares may not be
issued pursuant to a grant of Bonus Shares or Restricted Shares unless and until
the Shares  covered by such  Option or grant are  registered  or are exempt from
registration,  the exercise of such Option or the issuance of Shares pursuant to
such grant (under  circumstances in which the laws of such  jurisdiction  apply)
shall be deemed  conditioned upon the  effectiveness of such registration or the
availability of such an exemption. <PAGE>

18.2. Rule 16b-3.

      The intent of this Plan is to qualify for the  exemption  provided by Rule
16b-3 under the Exchange  Act. To the extent any provision of the Plan or action
by the Plan  administrators does not comply with the requirements of Rule 16b-3,
it shall be  deemed  inoperative,  to the  extent  permitted  by law and  deemed
advisable by the Plan  administrators,  and shall not affect the validity of the
Plan. In the event Rule 16b-3 is revised or replaced,  the Board of Trustees may
exercise  discretion to modify this Plan in any respect necessary to satisfy the
requirements of the revised exemption or its replacement.


18.3. REIT Qualification.

      The Company  shall not be  required to sell or issue any Shares  under any
Incentive  Award if the sale or issuance of such Shares  would cause the Company
to fail to qualify as a real  estate  investment  trust for  Federal  income tax
purposes or would result in the Optionee's,  Grantee's or Holder's  ownership of
Shares in violation of the  restrictions on ownership and transfer of Shares set
forth in the Company's declaration of trust.


19.  AMENDMENT AND TERMINATION OF THE PLAN

      The  Board of  Trustees  may,  at any time and from  time to time,  amend,
suspend,  or terminate  the Plan as to any Shares as to which  Incentive  Awards
have not been granted;  provided,  however, no amendment that materially affects
the terms of Incentive  Awards  under the  Operating  Partnership  Plan shall be
effective with respect to the Operating Partnership Plan without the approval of
the Board of  Directors of the  Operating  Partnership,  and no  amendment  that
materially  affects the terms of  Restricted  Share Awards under the  Management
Company Plan shall be  effective  with  respect to the  Management  Company Plan
without the approval of the Board of Directors of the  Management  Company.  The
Employer  may  retain the right in an  Agreement  to cause a  forfeiture  of the
Options or the Shares or gain realized by a Holder on account of the Optionee or
Holder  taking  actions  prohibited  by  the  applicable  Agreement.  Except  as
permitted under this Section 19 or Section 20 hereof, no amendment,  suspension,
or termination of the Plan shall,  without the consent of the Optionee,  Grantee
or Holder,  alter or impair  rights or  obligations  under any  Incentive  Award
theretofore granted under the Plan.


20.  EFFECT OF CHANGES IN CAPITALIZATION


20.1. Changes in Shares.

      If the number of  outstanding  Shares is  increased  or  decreased  or the
Shares are changed into or exchanged for a different number or kind of Shares or
other   securities   of  the   Company,   in  each  case  on   account   of  any
recapitalization,  reclassification,  Share split, reverse split, combination of
Shares, exchange of Shares, Share dividend or other distribution payable in

<PAGE>
capital  stock,  or other increase or decrease in such Shares  effected  without
receipt of consideration  by the Company,  occurring after the Effective Date of
the Plan,  the number and kinds of Shares for the  issuance of which  Restricted
Share  Awards  or awards of Bonus  Shares  may be  granted  and  Shares  for the
acquisition  of which  Options  may be granted  under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of Shares for which Restricted Share Awards or Options are outstanding  shall be
adjusted  proportionately and accordingly so that the proportionate  interest of
the Holder of the Restricted Share Awards or Optionee immediately following such
event shall, to the extent  practicable,  be the same as immediately before such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to Shares that are subject to the  unexercised
portion  of  the  Option   outstanding   but  shall   include  a   corresponding
proportionate adjustment in the Option Price per Share.

20.2. Reorganization in Which the Company Is the Surviving Entity.

      Subject to Section  20.3  hereof,  if the Company  shall be the  surviving
entity in any  reorganization,  merger, or consolidation of the Company with one
or more other  entities,  any Option  theretofore  granted  pursuant to the Plan
shall pertain to and apply to the  securities to which a holder of the number of
Shares  subject to such Option would have been  entitled  immediately  following
such   reorganization,   merger,   or   consolidation,   with  a   corresponding
proportionate  adjustment  of the Option  Price per Share so that the  aggregate
Option Price  thereafter  shall be the same as the aggregate Option Price of the
Shares remaining subject to the Option immediately prior to such reorganization,
merger,  or  consolidation.  Subject to any contrary  language in the applicable
Restricted  Share  Agreement,  any  restrictions  that  were  applicable  to any
previously granted Restricted Share Award shall apply as well to any replacement
shares  received by the Holder as a result of such  reorganization,  merger,  or
consolidation.


20.3. Reorganization in Which the Company Is Not the Surviving Entity or Sale
            of Assets or Shares.

      Upon the  dissolution  or  liquidation  of the Company,  or upon a merger,
consolidation,  or reorganization of the Company with one or more other entities
in  which  the  Company  is  not  the  surviving  entity,  or  upon  a  sale  of
substantially  all of the assets of the Company to another  entity,  or upon any
transaction (including,  without limitation, a merger or reorganization in which
the Company is the  surviving  entity)  approved  by the Board of Trustees  that
results  in any person or entity  (or  person or  entities  acting as a group or
otherwise in concert)  owning 80 percent or more of the combined voting power of
all classes of securities of the Company (other than the Company or wholly owned
subsidiaries of the Company), the Plan and all Options outstanding hereunder

<PAGE>
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan or the assumption of such
Options  theretofore  granted,  or for the  substitution for such Options of new
options  covering the stock of a successor  Company,  or a parent or  subsidiary
thereof,  with appropriate  adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options  theretofore  granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan, each individual  holding an Option shall have the right
(subject to the prior  expiration of such Option in  accordance  with its terms)
immediately  before the  occurrence of such  termination  and during such period
occurring  before  such  termination  as  the  Company  Committee  in  its  sole
discretion shall determine and designate, to exercise such Option in whole or in
part,  whether or not such  Option was  otherwise  exercisable  at the time such
termination  occurs.  Any  exercise of an Option  during  such  period  shall be
conditioned  upon the  consummation  of the event and  shall be  effective  only
immediately  before the consummation of the event.  The Company  Committee shall
send written  notice of an event that will result in such a  termination  to all
individuals  who hold Options not later than the time at which the Company gives
notice thereof to its  shareholders.  Unvested  Restricted Share Awards shall be
vested in the case of an event described in this Section 20.3.


20.4. Adjustments.

      Adjustments  under this Section 20 related to Shares or  securities of the
Company  shall be made by the Company  Committee,  whose  determination  in that
respect shall be final,  binding, and conclusive.  No fractional Shares or units
of other  securities  shall be issued pursuant to any such  adjustment,  and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole Share.


20.5. No Limitations on Company.

 The grant of Incentive Awards pursuant to the Plan shall not affect or limit in
any  way  the   right   or   power   of  the   Company   to  make   adjustments,
reclassifications,  reorganizations,  or  changes  of its  capital  or  business
structure  or to  merge,  consolidate,  dissolve,  or  liquidate,  or to sell or
transfer all or any part of its business or assets.


21.  DISCLAIMER OF RIGHTS

      No provision in the Plan or in any  Incentive  Award  granted or Agreement
entered  into  pursuant  to the  Plan  shall be  construed  to  confer  upon any
individual  the right to remain in the employ or service of any Employer,  or to
interfere  in any way with any  contractual  or other right or  authority of any
Employer  either to increase or decrease the  compensation  or other payments to
any individual at any time, or to terminate any employment or other relationship
between any individual and such Employer. In addition,  notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the applicable
Agreement,  no Incentive  Award  granted under the Plan shall be affected by any
change of duties or position of the  Optionee,  Grantee or Holder  (including  a
transfer to or from any Employer),  so long as such Optionee,  Grantee or Holder
continues  to  be  a  trustee,  director,  officer,  consultant,   employee,  or
independent  contractor  (as the case may be) of any  Employer  (the  "Successor
Granting  Employer").  The Plan shall in no way be  interpreted  to require  any
Employer to transfer any Shares to a third party  trustee or otherwise  hold any
Shares in trust or escrow for any participant or beneficiary  under the terms of
the Plan. <PAGE>

22.  NONEXCLUSIVITY OF THE PLAN

      Neither  the  adoption of the Plan nor the  submission  of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon  the  right  and  authority  of  the  Company,  the  Operating
Partnership or its general partner or the Management Company or any Affiliate of
the  Operating  Partnership  or the  Management  Company  to  adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual  or  particular  individuals)  as such  entities in their  discretion
determine desirable.


23.  CAPTIONS

      The use of captions in this Plan or any  Agreement is for the  convenience
of reference  only and shall not affect the meaning of any provision of the Plan
or such Agreement.


24.  WITHHOLDING TAXES


24.1. Withholding.

      The Granting  Employer shall have the right to deduct from payments of any
kind  otherwise  due to an Optionee,  Grantee or Holder any Federal,  state,  or
local  taxes of any kind  required  by law to be  withheld  with  respect to any
Shares  issued  upon the  exercise of an Option,  to any Bonus  Shares or to the
termination of the Limitation Period for Restricted Share Awards. At the time of
termination  of the  Limitation  Period,  the Holder  shall pay to the  Granting
Employer any amount that the Granting  Employer may  reasonably  determine to be
necessary to satisfy such withholding obligation.  Subject to the prior approval
of the Granting Employer, which may be withheld by the Granting Employer (and/or
the Successor Granting Employer) in its sole discretion,  the Optionee,  Grantee
or Holder may elect to satisfy  such  obligations,  in whole or in part,  (i) by
causing such Granting Employer to withhold Shares otherwise issuable pursuant to
the exercise of an Option or (ii) by delivering to such Granting Employer Shares
already  owned by the  Optionee,  Grantee or Holder.  The Shares so delivered or
withheld shall have a Fair Market Value equal to such  withholding  obligations,
determined  as of the  date  that  the  amount  of tax to be  withheld  is to be
determined. An Optionee,  Grantee or Holder who has made an election pursuant to
this Section 24.1 may satisfy his or her withholding obligation only with Shares
that are not subject to any  repurchase,  forfeiture,  unfulfilled  vesting,  or
other similar requirements.


24.2. Limitations for Reporting Person.

      Notwithstanding  the  foregoing,  in the case of a  Reporting  Person,  no
election to use Shares for the payment of  withholding  taxes shall be effective
unless made in compliance with any applicable  requirements  under Rule 16b-3(e)
or any successor rule under the Exchange Act. <PAGE>

25.  OTHER PROVISIONS

      Each  Incentive  Award granted under the Plan may contain such other terms
and  conditions  not  inconsistent  with  the Plan as may be  determined  by the
Applicable Committee, in its sole discretion.


26.  NUMBER AND GENDER

      With respect to words used in this Plan,  the singular  form shall include
the plural form, the masculine gender shall include the feminine  gender,  etc.,
as the context requires.


27.  SEVERABILITY

      If any  provision of the Plan or any  Agreement  shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction,  the remaining
provisions  hereof and thereof shall be severable and  enforceable in accordance
with their  terms,  and all  provisions  shall remain  enforceable  in any other
jurisdiction.


28.  GOVERNING LAW

      The validity and construction of this Plan and the instruments  evidencing
the  Incentive  Awards  granted  hereunder  shall be governed by the laws of the
State of Maryland.
[{"type": "S-8", "sequence": "1", "description": "COLONIAL PROPERTIES TRUST FORM S-8", "secsgml_size_bytes": 87679}]
{"company-data": {"conformed-name": "COLONIAL PROPERTIES TRUST", "cik": "0000909111", "assigned-sic": "6798", "irs-number": "597007599", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-60333", "film-number": "98675351"}, "business-address": {"street1": "2101 SIXTH AVE N STE 750", "street2": "STE 750", "city": "BIRMINGHAM", "state": "AL", "zip": "35203", "phone": "2052508700"}, "mail-address": {"street1": "2101 6TH AVE N STE 750", "city": "BIRMINGHAM", "state": "AL", "zip": "35203"}}
As filed with the Securities and Exchange Commission on July 31, 1998
                                                      Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
                            Colonial Properties Trust
             (Exact name of Registrant as specified in its charter)

       Alabama                                                     59-7007599
   (State or other                                               (IRS Employer
   jurisdiction of                                               Identification
  incorporation or            2101 Sixth Avenue North               Number)
    organization)                    Suite 750
                            Birmingham, Alabama 35202
                                 (205) 250-8700
                         (Address of Principal Executive
                               Offices) (Zip Code)

 Colonial Properties Trust Second Amended and Restated Employee Share Option and
                              Restricted Share Plan
                            (Full title of the plan)

                                Thomas H. Lowder
                      President and Chief Executive Officer
                            Colonial Properties Trust
                             2101 Sixth Avenue North
                                    Suite 750
                            Birmingham, Alabama 35202
                     (Name and address of agent for service)

                                 (205) 250-8700
          (Telephone number, including area code, of agent for service)
   --------------------------------------------------------------------------
                                    Copy to:
                                   Alan L. Dye
                             Hogan & Hartson L.L.P.
                           555 Thirteenth Street, N.W.
                           Washington, D.C. 20004-1109
                                 (202) 637-5600
      ---------------------------------------------------------------------

                         CALCULATION OF REGISTRATION FEE

---------------------------------------------------------------------------
 Title of securities   Amount to be  Proposed maximum  Proposed      Amount
    to be              registered     offering price    maximum        of
  registered                             per           aggregate
                                                      offering    registration
                                      share (1)         price (1)    fee
---------------------------------------------------------------------------
Common shares of
benefi-              2,525,000      $28.59375       $72,199,218.75    $21,299
cial interest, par
value $.01
per share
----------------------------------------------------------------------------
(1) Estimated  pursuant to Rule 457(c) and (h) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee, based on
the  average  of the high and low  prices  per  share of the  common  shares  of
beneficial  interest of Colonial  Properties Trust, par value $.01 per share, on
July 29, 1998, as reported on the New York Stock Exchange.

This Registration  Statement incorporates by reference the information contained
in the earlier registration statements relating to the Colonial Properties Trust
Employee  Share Option and Restricted  Share Plan,  filed on September 29, 1994,
(Registration No. 33-84510), and May 15, 1997 (Registration No. 333-27203).

==============================================================================
                         The Exhibit Index is on Page 3.
SIGNATURES

            Pursuant to the  requirements  of the  Securities  Act of 1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Birmingham, State of Alabama, as of July 30, 1998.

                                        Colonial Properties Trust

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

                                POWER OF ATTORNEY

            We, the  undersigned  trustees and  officers of Colonial  Properties
Trust,  do hereby  constitute and appoint Thomas H. Lowder and Howard B. Nelson,
Jr.,  jointly  and  severally,  each in his own  capacity,  as true  and  lawful
attorneys-in-fact and agents, to do any and all acts and things in our names and
on our behalf in our  capacities as trustees and officers and to execute any and
all instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or either of them, may deem necessary or advisable to
enable said Company to comply with the Securities  Act of 1933, as amended,  and
any  rules,   regulations  and  requirements  of  the  Securities  and  Exchange
Commission,  in connection with this registration statement, or any registration
statement for this offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities  Act of 1933,  including  specifically,  but without
limitation, any and all amendments (including post-effective amendments) hereto;
and we hereby ratify and confirm all that said  attorneys and agents,  or either
of them, shall do or cause to be done by virtue thereof.

          Pursuant  to the  requirements  of the  Securities  Act of 1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities indicated as of July 30, 1998:

       SIGNATURE                        TITLE

/s/ Thomas H. Lowder             President, Chief Executive Officer
Thomas H. Lowder                 and Chairman of the Board
                                 (Principal Executive Officer)

/s/ Howard B. Nelson, Jr.        Chief Financial Officer and Secretary
Howard B. Nelson, Jr.            (Principal Financial Officer)

/s/ Kenneth E. Howell_____________  Controller
Kenneth E. Howell                (Principal Accounting Officer)

                                       1.
/s/ James K. Lowder              Trustee
James K. Lowder

/s/ Carl F. Bailey               Trustee
Carl F. Bailey

/s/ M. Miller Gorrie             Trustee
M. Miller Gorrie

/s/ Donald T. Senterfitt         Trustee
Donald T. Senterfitt

/s/ Claude B. Nielsen            Trustee
Claude B. Nielsen

/s/ Harold W. Ripps              Trustee
Harold W. Ripps

/s/ Herbert A. Meisler           Trustee
Herbert A. Meisler

/s/ William M. Johnson           Trustee
William M. Johnson

                                       2.
EXHIBIT INDEX

Exhibit
Number                             Description

5.1       Opinion of Hogan & Hartson L.L.P.

5.2       Opinion of Sirote & Permutt, P.C., regarding matters of
          Alabama law
15        Letter from  PricewaterhouseCoopers  LLP regarding  unaudited  interim
          financial information.

23.1      Consent of Hogan & Hartson L.L.P. (included as part of
          Exhibit 5.1).

23.2      Consent of Sirote & Permutt, P.C. (included as part of
          Exhibit 5.2).
23.3
          Consent of PricewaterhouseCoopers LLP

24 Power of Attorney (included as part of signature page).

99.1      Colonial Properties Trust Second Amended and Restated
          Employee Share Option and Restricted Share Plan.

                                       3.
Exhibit 5.1
                                             Opinion of Hogan & Hartson L.L.P.
HOGAN & HARTSON, L.L.P
                                 Columbia Square
                           555 Thirteenth Street, N.W.
                           Washington, D.C. 20004-1109
                                 (202)-637-5600
                                 (202) 637-5910

                                  July 30, 1998

Board of Trustees
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama   35202

Ladies and Gentlemen:

            This firm has acted as  counsel to  Colonial  Properties  Trust,  an
Alabama real estate investment trust (the "Registrant"),  in connection with its
registration  statement on Form S-8 (the "Form S-8"),  filed with the Securities
and Exchange Commission,  of an additional 2,525,000 common shares of beneficial
interest,  par value $.01 per share (the "Shares"),  issuable in connection with
the  Registrant's   Second  Amended  and  Restated  Employee  Share  Option  and
Restricted Share Plan (the "Plan").  This letter is furnished to you pursuant to
the requirements of Item 601(b)(5) of Regulation S-K, 17 C.F.R. ss.
229.601(b)(5), in connection with such registration.

            For  purposes  of this  opinion,  we  have  examined  copies  of the
following documents:

                  1.     An executed copy of the Form S-8.

            2.    A copy of the Plan,  as  certified  on the date  hereof by the
                  Secretary of the Registrant as being complete, accurate and in
                  effect.

            3.    The Declaration of Trust of the  Registrant,  dated August 21,
                  1995,  as certified on the date hereof by the Secretary of the
                  Registrant as being complete, accurate and in effect.

            4.    The Bylaws of the Registrant,  as certified on the date hereof
                  by the Secretary of the Registrant as being complete, accurate
                  and in effect.

            5.    Resolutions of the Board of Trustees of the Registrant adopted
                  at a meeting  held on January 24,  1998,  as  certified by the
                  Secretary  of the  Registrant  on the  date  hereof  as  being
                  complete,  accurate and in effect, relating to the adoption of
                  the Plan, subject to approval by the Company's shareholders.

            6.    A  certificate  of the Secretary of the Company dated the date
                  hereof,  certifying  that  the  resolutions  relating  to  the
                  approval  of  the  Plan  were   submitted  to  the   Company's
                  shareholders   and   approved   at  the   annual   meeting  of
                  shareholders held on April 23, 1997.

            7. Opinion of Sirote & Permutt, P.C. of even date herewith.

            In our examination of the aforesaid  documents,  we have assumed the
genuineness of all signatures,  the legal capacity of all natural  persons,  the
accuracy and completeness of all documents  submitted to us, the authenticity of
all original documents and the conformity to authentic original documents of all
documents submitted to us as copies (including telecopies).  This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
Board of Trustees
Colonial Properties Trust
July 30, 1998
Page 2

            This  opinion  letter is based as to  matters  of law  solely on the
Alabama  Real  Estate  Investment  Trust Act of 1995,  and we express no opinion
herein as to any other laws, statutes,  regulations or ordinances.  In rendering
this opinion letter, we are relying,  to the extent that the laws of Alabama are
relevant  (without any  independent  verification  or  investigation),  upon the
opinion letter of Sirote & Permutt,  P.C., special counsel to the Company in the
State of Alabama,  described in  paragraph 7 above,  with respect to the matters
addressed therein.

            Based upon, subject to, and limited by the foregoing,  we are of the
opinion  that the  Shares,  when issued and  delivered  in the manner and on the
terms described in the Form S-8 and the Plan (assuming receipt by the Company of
the consideration  therefor,  the form of which is in accordance with applicable
law), will be legally issued, fully paid and non-assessable.

            We  assume  no  obligation  to  advise  you  of any  changes  in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared  solely for you use in connection  with the filing of the Form
S-8 on the date of this letter,  and should not be quoted in whole or in part or
otherwise be referred  to, nor be filed with or  furnished  to any  governmental
agency or other person or entity, without the prior written consent of the firm.

            We hereby consent to the filing of this opinion letter as an exhibit
to the Form S-8. In giving this consent,  we do not thereby admit that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.

                                    Very truly yours,

                                    /s/ Hogan & Hartson L.L.P.
                                    HOGAN & HARTSON L.L.P.
Exhibit 5.2
                                             Opinion of Sirote & Permutt, P.C.
July 30, 1998

Board of Trustees
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, AL  35202

RE:   Colonial Properties Trust

Ladies and Gentlemen:

We have acted as  special  Alabama  counsel to  Colonial  Properties  Trust,  an
Alabama real estate  investment  trust (the  "Company"),  in connection with its
registration  statement on Form S-8 (the "Registration  Statement"),  filed with
the  Securities  and Exchange  Commission,  relating to the  registration  of an
additional  2,525,000 common shares of beneficial  interest,  par value $.01 per
share (the "Shares"),  issuable in connection with the Company's  Second Amended
and Restated Employee Share Option and Restricted Share Plan (the "Plan").  This
opinion  letter is furnished to you at your request to enable you to fulfill the
requirements of Item 601(b)(5) of Regulations  S-K, 17 C.F.R.  ss.229.601(b)(5),
in connection with the Registration Statement.

For purposes of this opinion  letter,  we have examined  copies of the following
documents:

1. An executed copy of the Registration Statement.

2. A copy of the Plan,  as certified on the date hereof by the  Secretary of the
Company as being complete, accurate and in effect.

3. The  Declaration  of Trust of the  Company,  as amended,  as certified by the
Secretary of the Company on the date hereof as then being complete, accurate and
in effect.
Board of Trustees
Colonial Properties Trust
July 30, 1998
Page 2

4. The Bylaws of the Company,  as  certified by the  Secretary of the Company on
the date hereof as then being complete, accurate and in effect.

5.  Certain  resolutions  of the Board of Trustees  of the Company  adopted at a
meeting held on January 24,  1998,  approving  and  ratifying  the  preparation,
execution  and  filing  of  the  Registration  Statement,  as  certified  by the
Secretary of the Company on the date hereof as being  complete,  accurate and in
effect.

6. A  Secretary's  Certificate,  as certified by the Secretary of the Company on
the date hereof as being  complete,  accurate and in effect,  certifying  that a
resolution  relating to the approval of the Plan was  submitted to the Company's
shareholders  and approved at the annual meeting of  shareholders  held on April
23, 1998.

7. Opinion Letter, of even date herewith, of Hogan & Hartson L.L.P.,  counsel to
the Company.

We have not,  except as  specifically  identified  above,  made any  independent
review or investigation of factual or other matters, including the organization,
existence,  good standing,  assets,  business or affairs of the Company.  In our
examination of the aforesaid  documents,  we have assumed the genuineness of all
signatures,  the legal capacity of natural persons,  the authenticity,  accuracy
and completeness of all documents  submitted to us as originals,  the conformity
to  the  original  documents  of all  documents  submitted  to us as  certified,
telecopied,  photostatic,  or reproduced copies, and the authenticity,  accuracy
and completeness of the originals of such latter documents.  This opinion letter
is given, and all statements herein are made, in the context of the foregoing.

This  opinion  letter is based as to matters of law solely on the  Alabama  Real
Estate  Investment  Trust Act of 1995 and we express no opinion herein as to any
other laws, statutes, regulations, or ordinances.

Based upon, subject to, and limited by the foregoing, we are of the opinion that
the Shares,  when issued and delivered in the manner and on the terms  described
in the Registration  Statement and the Plan (assuming  receipt by the Company of
the consideration  therefor,  the form of which is in accordance with applicable
law), will be validly issued,  fully paid and  non-assessable  under the Alabama
Real Estate Investment Trust Act of 1995.
In  accordance  with the general  policies of this law firm in  rendering  legal
opinions, we have assumed for the purposes of the opinions expressed herein that
no fraud  exists  with  respect to any of the matters  relevant to the  opinions
expressed  herein,  although we have no reason to believe  that there exists any
fraud which would render invalid the opinions expressed below.

We are  members of the Bar of the State of  Alabama,  and we do not  express any
opinion  concerning  any law other than the law of the State of Alabama  and the
Federal law of the United  States.  We assume no obligation to advise you of any
changes in the  foregoing  subsequent to delivery of this opinion  letter.  This
opinion  letter has been prepared  solely in  connection  with the filing by the
Company of a Current Report on Form 8-K on the date hereof,  which Form 8-K will
be  incorporated  by reference  into the  Registration  Statement.  This opinion
letter should not be quoted in whole or in part or otherwise be referred to, nor
filed with or  furnished to any  governmental  agency or other person or entity,
without the prior written consent of this firm.

We hereby  consent to the filing of this  opinion  letter as Exhibit  5.2 to the
Form 8-K of the Company and to the  reference  to this firm in the  Registration
Statement.  In giving  this  consent,  we do not  thereby  admit  that we are an
"expert" within the meaning of the Securities Act of 1933, as amended.

Very truly yours,

/s/ Sirote & Permutt, P.C.
SIROTE & PERMUTT, P.C.
Exhibit 15
                                        Letter from PricewaterhouseCoopers LLP
                                                   Regarding Unaudited Interim
                                                         Financial Information
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549

                                                Re:  Colonial Properties Trust
                                            Registration Statement on Form S-8

We are aware  that our  report  dated  April 22,  1998 on our  review of interim
financial  information  of Colonial  Properties  Trust (the  "Company")  for the
period ended March 31, 1998 and included in the  Company's  quarterly  report on
Form 10-Q for the quarter  then  ended,  is  incorporated  by  reference  in the
Company's  registration  statement on Form S-8 relating to the  registration  of
2,525,000  additional  common  shares of  beneficial  interest  pursuant  to the
Colonial  Properties Trust Second Amended and Restated Employee Share Option and
Restricted Share Plan. Pursuant to Rule 436(c) under the Securities Act of 1933,
as amended  (the  "Act"),  this report  should not be  considered  a part of the
registration  statement  prepared  or  certified  by us within  the  meaning  of
Sections 7 and 11 of the Act.

                                          /s/ PricewaterhouseCoopers LLP
                                          PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama
July 30, 1998
Exhibit 23.2
                                         Consent of PricewaterhouseCoopers LLP
Consent of Independent Accountants

We consent to the incorporation by reference in this  registration  statement of
Colonial  Properties Trust on Form S-8 relating to the Colonial Properties Trust
Second Amended and Restated  Employee Share Option and Restricted  Share Plan of
our report,  dated January 19, 1998 (except for Note 14 thereto, as to which the
date  is  February  17,  1998),  on our  audits  of the  consolidated  financial
statements and financial  statement schedules of Colonial Properties Trust as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996, and
1995,  which  report  is  included  in the  1997  Annual  Report  on  Form  10-K
incorporated by reference in such Registration Statement.

                                          /s/ PricewaterhouseCoopers LLP
                                          PRICEWATERHOUSECOOPERS LLP

Birmingham, Alabama
July 30, 1998
Exhibit 99.1
                                                     Colonial Properties Trust
                                          Second Amended and Restated Employee
                                        Share Option and Restricted Share Plan
COLONIAL PROPERTIES TRUST

                           SECOND AMENDED AND RESTATED
                 EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN

      This Colonial  Properties Trust Second Amended and Restated Employee Share
Option  and  Restricted  Share Plan (the  "Plan")  amends  and  restates  in its
entirety the Colonial  Properties  Trust  Employee  Share Option and  Restricted
Share  Plan,  which  was duly  adopted  by the  Board of  Trustees  of  Colonial
Properties  Trust  (the  "Company")  and  approved  by the  shareholders  of the
Company,  on September  28,  1993.  Set forth herein are all of the terms of the
three plans  comprising  the Plan,  one for the benefit of the  employees of the
Company  (the  "Company  Plan"),  one for the benefit of  employees  of Colonial
Realty Limited Partnership (the "Operating Partnership") its general partner and
any Affiliate of the Operating  Partnership (the "Operating  Partnership  Plan")
and one for the benefit of employees of Colonial Properties Services,  Inc. (the
"Management   Company")  and  any  Affiliate  of  the  Management  Company  (the
"Management Company Plan").

1.   PURPOSE

      The  Plan is  intended  to  advance  the  interests  of the  Company,  the
Operating   Partnership  and  the  Management   Company  by  providing  eligible
individuals  (as designated  pursuant to Section 5 below) with an opportunity to
acquire or increase a  proprietary  interest  in the  Company by  granting  them
options,  bonuses and  restricted  shares in  accordance  with the terms  stated
herein,  which thereby will create a stronger incentive to expend maximum effort
for the growth and success of the Company,  the  Operating  Partnership  and the
Management Company, and encourage such eligible individuals to continue to serve
the Company,  the Operating  Partnership or the Management  Company.  Each share
option  granted  under the Plan is intended to be an  "incentive  stock  option"
except (i) to the extent that any such Option would exceed the  limitations  set
forth in Section 9 below,  (ii) for Options granted to an employee other than an
employee of the Company or any  Subsidiary  of the Company and (iii) for Options
specifically  designated  at the  time of grant as not  being  "incentive  stock
options".

2.   DEFINITIONS

      For purposes of  interpreting  the Plan and related  documents  (including
Share  Option  Agreements  and  Restricted  Share  Agreements),   the  following
definitions shall apply:

      "Affiliate" means with respect to an entity, any company or other trade or
business  that is  controlled  by or  under  common  control  with  such  entity
(determined  in accordance  with the  principles of Section 414(b) and 414(c) of
the Code and the  regulations  thereunder)  or is an  affiliate  of such  entity
within the meaning of Rule 405 of Regulation C under the 1933 Act.

      "Agreement"  means  a  written  agreement  that  sets  out the  terms  and
conditions of the grant of an Incentive Award.
"Applicable  Committee"  means,  with  respect to the Company Plan and the
Operating  Partnership  Plan,  the Company  Committee,  and, with respect to the
Management Company Plan, the Management Company Committee.

      "Board of Directors" means the Board of Directors of Colonial
Properties Services, Inc.

      "Board of Trustees" means the Board of Trustees of the Company.

      "Bonus  Shares" means Shares awarded to eligible  individuals  pursuant to
Section 15 of the Plan.

      "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

      "Company" means Colonial Properties Trust.

      "Company  Committee"  means the  Executive  Compensation  Committee of the
Board of Trustees, which must consist of no fewer than two members of such board
and shall be  appointed by such board,  or such other  committee as the Board of
Trustees or the Plan shall designate.

      "Company  Plan"  means the Plan as  administered  pursuant  to Section 3.1
hereof for the benefit of employees of the Company.

      "Effective Date" means September 28, 1993.

      "Employer"  means the Company,  the Operating  Partnership  or its general
partner,  the Management Company, or any Affiliate of the Management Company, in
their capacity as Employers of persons  eligible to be designated  recipients of
Incentive Awards.

      "Exchange Act" means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.

      "Exercise Price" means the Option Price multiplied by the number of Shares
purchased pursuant to the exercise of an Option.

      "Expiration  Date" means the tenth (10th)  anniversary  of the Grant Date,
or, if earlier, the termination of the Option pursuant to Section 20.3 hereof.

      "Fair  Market  Value"  means the value of each  Share  subject to the Plan
determined  as  follows:  if on the Grant Date or other  determination  date the
Shares are listed on an  established  national or regional stock  exchange,  are
admitted  to  quotation  on  the  National  Association  of  Securities  Dealers
Automated Quotation System, or are publicly traded on an established  securities
market,  the Fair Market Value of the Shares  shall be the closing  price of the
Shares on such  exchange or in such market (the highest  such  closing  price if
there is more than one such  exchange or market) on the trading day  immediately
preceding the Grant Date or such other determination date (or if there is no
such reported closing price, the Fair Market Value shall be the mean between the
highest bid and lowest  asked  prices or between the high and low sale prices on
such trading day) or, if no sale of the Shares is reported for such trading day,
on the next  preceding  day on which any sale shall have been  reported.  If the
Shares are not listed on such an  exchange,  quoted on such  System or traded on
such a market, Fair Market Value shall be determined by the Board of Trustees in
good faith.

      "General Partner" means Colonial Properties Holding Company, the
general partner of Colonial Realty Limited Partnership.

      "Grant Date" means,  as determined by the  Applicable  Committee,  (i) the
date as of which the Applicable  Committee  approves the grant, (ii) the date as
of which the  Optionee or Holder and the  Employer  enter into the  relationship
resulting  in the Optionee or Holder  being  eligible for grants,  or (iii) such
other date as the Applicable Committee shall determine.

      "Grantee" means a person who is awarded Bonus Shares under the Plan.

      "Granting  Employer" means the Company,  the Operating  Partnership or the
Management  Company,  each with respect to Incentive Awards made pursuant to the
Company Plan, the Operating  Partnership  Plan and the Management  Company Plan,
respectively, unless the Applicable Committee as to any grant designates another
Employer as the Granting Employer.

      "Holder" means a person who holds Restricted Shares under the Plan.

      "Immediate  Family  Members"  means  the  spouse,   ex-spouse,   children,
step-children or grandchildren of the Optionee.

      "Incentive Award" means an award of an Option,  Bonus Shares or Restricted
Shares under the Plan.

      "Incentive  Share  Option" means an  "incentive  stock option"  within the
meaning of Section 422 of the Code.

      "Limited Partnership Agreement" means the agreement of limited partnership
of  Colonial  Realty  Limited  Partnership,  as now in  effect  or as  hereafter
amended.

      "Management Company" means Colonial Properties Services, Inc.

      "Management  Company  Committee"  means  the  Board  of  Directors  of the
Management  Company  or  any  committee  thereof  appointed  by  such  board  or
designated in the Plan to administer the Management Company Plan.

      "Management  Company  Plan"  means the Plan as  administered  pursuant  to
Section 3.3 hereof for the benefit of the employees of the Management Company or
its Affiliates.

      "Operating Partnership" means Colonial Realty Limited Partnership.
"Operating  Partnership  Plan" means the Plan as administered  pursuant to
Section  3.2  hereof  for  the  benefit  of  the   employees  of  the  Operating
Partnership, its general partner and its Affiliates.

      "Option" means an option to purchase one or more Shares pursuant to the
Plan.

      "Option Agreement" means the written agreement evidencing the grant of
an Option hereunder.

      "Optionee" means a person who holds an Option under the Plan.

      "Option  Period" means the period during which Options may be exercised as
defined in Section 12.

      "Option Price" means the purchase price for each Share subject to an
Option.

      "Partnership Agreement" means the Second Amended and Restated Agreement
of Limited Partnership of Colonial Realty Limited Partnership, as amended.

      "Plan" means this Second  Amended and Restated  Employee  Share Option and
Restricted  Share Plan  (which  encompasses  the  Company  Plan,  the  Operating
Partnership Plan and the Management  Company Plan), as the same may be hereafter
amended from time to time.

      "Reporting  Person"  means a person who is required to file reports  under
Section  16(a) of the Exchange Act with respect to the Company or the  Operating
Partnership.

      "Restricted Shares" means Shares which are subject to a risk of forfeiture
pursuant to the Plan.

      "Restricted  Share Agreement" means the written  agreement  evidencing the
grant of Restricted Shares hereunder.

      "Restricted  Share  Award"  means an award of  restricted  Shares  granted
pursuant to Section 13 of this Plan.

      "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.

      "Shares" mean the common shares of beneficial interest, par value $.01 per
Share, of the Company.
      "Share Option Agreement" means the written agreement  evidencing the grant
of an Option hereunder.

      "Subsidiary" means any "subsidiary  corporation" of the Company within the
meaning of Section 425(f) of the Code.
"Units" means units of partnership  interest of the Operating  Partnership
(but does not include preferred interests in the Operating Partnership).

      "Unit Option" means an option to purchase one or more Units pursuant to
the Plan.

3.   ADMINISTRATION

3.1.  Company Plan.

      The Company Plan shall be  administered  by the Company  Committee,  which
shall be  appointed  by the  Board  of  Trustees.  Each  member  of the  Company
Committee must qualify in all respects as a  "non-employee  director" as defined
in Rule 16b-3 under the Exchange Act and as an "outside  director" as defined in
Treasury Regulations ss.  1.162-27(e)(3).  The Company Committee shall have such
powers and authorities  related to the administration of the Company Plan as are
consistent  with  the  Company's  declaration  of  trust  and  by-laws  and with
applicable  law. The Company  Committee  shall have the full power and authority
(subject to any  restrictions  imposed by the Board of Trustees,  the  Company's
declaration  of trust or by-laws or  applicable  law) to take all actions and to
make all  determinations  required or provided for under the Company  Plan,  any
Incentive Award granted by the Company  Committee under the Company Plan and any
Agreement entered into in connection therewith and shall have the full power and
authority to take all such other  actions and  determinations  not  inconsistent
with the  specific  terms and  provisions  of the Company  Plan that the Company
Committee  deems to be necessary or  appropriate  to the  administration  of the
Company Plan,  any Incentive  Award granted by the Company  Committee  under the
Company  Plan  and any  Agreement  entered  into in  connection  therewith.  The
interpretation and construction by the Company Committee of any provision of the
Company Plan,  any Incentive  Award granted by the Company  Committee  under the
Company Plan and any  Agreement  entered into in connection  therewith  shall be
final and conclusive.  In addition,  the Chief Executive Officer of the Company,
acting as a committee of the Board of Trustees, shall have the authority to make
awards of Bonus  Shares  pursuant  to Section 15 hereof to any  employee  of the
Company  other than a  Reporting  Person,  and to make  Incentive  Awards to new
employees of the Company (other than awards of Reporting  Persons) in connection
with their assuming employment with the Company.

3.2.  Operating Partnership Plan.

      The  Operating  Partnership  Plan  shall be  administered  by the  Company
Committee, which shall be appointed by the Board of Trustees. Each member of the
Company  Committee must qualify in all respects as a "non-employee  director" as
defined in Rule 16b-3 under the Exchange Act. The Company  Committee  shall have
the full  power and  authority  (subject  to any  restrictions  imposed  on such
Company  Committee  by Section  3.1  hereof) to take all actions and to make all
determinations  required or provided for under the Operating  Partnership  Plan,
any  Incentive  Award  granted  by the  Company  Committee  under the  Operating
Partnership  Plan and any  Agreement  entered into in  connection  therewith and
shall have the full power and authority to take all such other actions and
determinations  not  inconsistent  with the specific terms and provisions of the
Operating  Partnership Plan that the Company  Committee deems to be necessary or
appropriate  to  the  administration  of the  Operating  Partnership  Plan,  any
Incentive Award granted by the Company Committee under the Operating Partnership
Plan and any Agreement entered into in connection therewith.  The interpretation
and  construction  by the Company  Committee of any  provision of the  Operating
Partnership Plan, any Incentive Award granted by the Company Committee under the
Operating  Partnership  Plan  and  any  Agreement  entered  into  in  connection
therewith  shall be final and  conclusive.  In  addition,  the  Chief  Executive
Officer of the Company,  acting as a committee  of the Board of Trustees,  shall
have the authority to make awards of Bonus Shares  pursuant to Section 15 hereof
to any employee of the Operating  Partnership other than a Reporting Person, and
to make  Incentive  Awards to new employees of the Operating  Partnership or its
affiliates  (other than  Reporting  Persons) in connection  with their  assuming
employment with the Operating Partnership or its affiliates.

3.3.  Management Company Plan.

      The  Management  Company  Plan  shall be  administered  by the  Management
Company  Committee.  The Management Company Committee shall have such powers and
authorities  related to the administration of the Management Company Plan as are
consistent with the Management  Company's  articles of incorporation and by-laws
and with  applicable law. The Management  Company  Committee shall have the full
power  and  authority  (subject  to any  restrictions  imposed  by the  Board of
Directors  of the  Management  Company,  the  Management  Company's  articles of
incorporation  or by-laws or applicable law) to take all actions and to make all
determinations  required or provided for under the Management  Company Plan, any
Incentive Award granted by the Management Company Committee under the Management
Company Plan and any Agreement  entered into in  connection  therewith and shall
have  the  full  power  and  authority  to  take  all  such  other  actions  and
determinations  not  inconsistent  with the specific terms and provisions of the
Management  Company  Plan  that  the  Management  Company  Committee  deem to be
necessary or appropriate to the  administration of the Management  Company Plan,
any  Incentive  Award  granted by the  Management  Company  Committee  under the
Management Company Plan and any Agreement entered into in connection  therewith.
The  interpretation  and construction by the Management Company Committee of any
provision of the  Management  Company Plan,  any Incentive  Award granted by the
Management Company Committee under the Management Company Plan and any Agreement
entered into in connection therewith shall be final and conclusive. In addition,
the Chief Executive Officer of the Management Company,  acting as a committee of
the Board of Directors,  shall have the authority to make awards of Bonus Shares
pursuant  to  Section  15 hereof to any  employee  of the  Company  other than a
Reporting  Person,  and  to  make  Incentive  Awards  to  new  employees  of the
Management  Company  (other than  Reporting  Persons) in  connection  with their
assuming employment with the Management Company.

3.4.  No Liability.

      No member of the Company  Committee or the  Management  Company  Committee
shall be liable to any Optionee, Holder or Grantee or to the Company, the
Operating  Partnership,  or the  Management  Company or any their  Subsidiaries,
Affiliates, employees, shareholders, or partners for any action or determination
made in good faith with respect to the Plan or any  Incentive  Award  granted or
Agreement entered into hereunder.

3.5.  Applicability of Rule 16b-3.

      Those  provisions  of the Plan that make  express  reference to Rule 16b-3
shall apply only to Reporting Persons.

4.   SHARES

      The Shares  that are the subject of an  Incentive  Award may be (i) issued
and outstanding Shares owned or acquired by the Granting Employer, (ii) treasury
Shares (to the extent  permitted  by  applicable  law) or (iii)  authorized  but
unissued  Shares.  The  aggregate  total  number  of  Shares  that may be issued
pursuant to  Incentive  Awards under the Plan shall be  3,200,000,  as increased
from  time to time to equal  ten  percent  (10%) of the  number  of  issued  and
outstanding  Shares and Units  (excluding  Units held by the  General  Partner),
provided that no more than 3,200,000  Shares may be issued pursuant to Incentive
Share Options and no more than 750,000  Restricted Shares may be issued pursuant
to Restricted Share Awards.  If any Incentive Award expires,  terminates,  or is
terminated or canceled for any reason prior to exercise or vesting in full,  the
Shares that were subject to the unexercised, forfeited, or terminated portion of
such  Incentive  Award  shall be  available  immediately  for  future  grants of
Incentive Awards under the Plan.

5.   ELIGIBILITY

5.1.  Designated Recipients.

      Incentive  Awards  may be  granted  under  the  Plan to (i) any  full-time
employee of the Company,  the Operating  Partnership or its general partner, any
Affiliate of the Operating Partnership,  the Management Company or any Affiliate
of the Management  Company,  as the  Applicable  Committee  shall  determine and
designate from time to time  (including  officers,  trustees or directors of the
Company, the Operating  Partnership or its general partner, any Affiliate of the
Operating  Partnership  or  the  Management  Company  or  any  Affiliate  of the
Management Company, except that no officer,  trustee or director of the Company,
the  General  Partner or the  Management  Company  shall be  eligible to receive
grants of Bonus Shares) or (ii) any other individual whose  participation in the
Plan is determined by the Company  Committee to be in the best  interests of the
Company and is so designated by the Company Committee.

5.2.  Successive Grants.

      An  individual  may hold more than one  Incentive  Award,  subject to such
restrictions as are provided herein.
6.   EFFECTIVE DATE AND TERM OF THE PLAN

6.1.  Effective Date.

      The Plan is effective as of the Effective Date.

6.2.  Term.

      The Plan has no termination  date;  provided,  however,  that no Incentive
Share Option may be granted on or after the tenth  anniversary  of the Effective
Date.

7.   PARACHUTE LIMITATIONS

      Notwithstanding  any  other  provision  of  this  Plan  or  of  any  other
agreement,  contract,  or understanding  heretofore or hereafter entered into by
the  Optionee,  Grantee or Holder with any  Employer  that is not an  agreement,
contract,  or understanding entered into after the Effective Date that expressly
modifies or excludes  application of this paragraph (an "Other Agreement"),  and
notwithstanding  any formal or informal plan or other arrangement for the direct
or indirect provision of compensation by the Employers to the Optionee,  Grantee
or Holder (including groups or classes of participants or beneficiaries of which
the Optionee,  Grantee or Holder is a member),  whether or not such compensation
is deferred,  is in cash, or is in the form of a benefit to or for the Optionee,
Grantee or Holder (a "Benefit Arrangement"),  if the Optionee, Grantee or Holder
is a  "disqualified  individual," as defined in Section 280G(c) of the Code, any
Option  held by that  Optionee  and any right to  receive  any  payment or other
benefit under this Plan shall not become exercisable or vested (i) to the extent
that such right to exercise,  vesting,  payment, or benefit, taking into account
all other  rights,  payments,  or  benefits to or for the  Optionee,  Grantee or
Holder  under this Plan,  all Other  Agreements,  and all Benefit  Arrangements,
would cause any payment or benefit to the Optionee, Grantee or Holder under this
Plan to be  considered  a  "parachute  payment"  within  the  meaning of Section
280G(b)(2) of the Code as then in effect (a "Parachute Payment") and (ii) if, as
a result of  receiving a Parachute  Payment,  the  aggregate  after-tax  amounts
received by the Optionee,  Grantee or Holder from all Employers under this Plan,
all  Other  Agreements,  and all  Benefit  Arrangements  would be less  than the
maximum  after-tax  amount that could be received  by the  Optionee,  Grantee or
Holder without  causing any such payment or benefit to be considered a Parachute
Payment.  In the event that the receipt of any such right to exercise,  vesting,
payment,  or benefit  under this Plan,  in  conjunction  with all other  rights,
payments, or benefits to or for the Optionee,  Grantee or Holder under any Other
Agreement or any Benefit Arrangement would cause the Optionee, Grantee or Holder
to be considered to have received a Parachute Payment under this Plan that would
have the effect of  decreasing  the after-tax  amount  received by the Optionee,
Grantee or Holder as described in clause (ii) of the  preceding  sentence,  then
the  Optionee,  Grantee  or Holder  shall  have the  right,  in the  Optionee's,
Grantee's or Holder's sole discretion,  to designate those rights,  payments, or
benefits under this Plan,  any Other  Agreements,  and any Benefit  Arrangements
that  should be  reduced or  eliminated  so as to avoid  having  the  payment or
benefit to the  Optionee,  Grantee  or Holder  under this Plan be deemed to be a
Parachute Payment.
8.   GRANT OF OPTIONS

8.1.  General.

      Subject to the terms and conditions of the Plan, the Company Committee and
the  Management  Company  Committee may from time to time grant to such eligible
individuals as the Applicable Committee may determine,  Options to purchase such
number of Shares on such terms and  conditions as the  Applicable  Committee may
determine,  including any terms or conditions  which may be necessary to qualify
such Options as Incentive Share Options.  Such authority  specifically  includes
the  authority,  in order to  effectuate  the  purposes  of the Plan but without
amending  the Plan,  to modify  grants to eligible  individuals  who are foreign
nationals  or are  individuals  who are  employed  outside the United  States to
recognize differences in local law, tax policy, or custom.

8.2.  Limitation on Grants of Options to Executives.

      The maximum  number of Shares subject to Options that can be awarded under
the Plan to any executive officer of the Company,  the Operating  Partnership or
its general partner or the Management  Company,  or to any other person eligible
for a grant of an Incentive Award under Section 5.1 hereof in any calendar year,
is 500,000 Shares.

9.   LIMITATION OF INCENTIVE SHARE OPTIONS

      An Option (other than an Option  described in exceptions  (ii) or (iii) of
Section 1) shall  constitute  an  Incentive  Share Option to the extent that the
aggregate  fair market value  (determined  at the time the Option is granted) of
the Shares with respect to which Incentive Share Options are exercisable for the
first time by any  Optionee  during any  calendar  year  (under the Plan and all
other plans of the Optionee's  employer and its parent and Subsidiary)  does not
exceed $100,000. This limitation shall be applied by taking Options into account
in the order in which they were granted.

10.  SHARE OPTION AGREEMENTS

      All  Options  granted  pursuant  to the Plan shall be  evidenced  by Share
Option Agreements,  to be executed by the Granting Employer and by the Optionee,
in such  form or forms  as the  Applicable  Committee  shall  from  time to time
determine. Share Option Agreements covering Options granted from time to time or
at the same time need not contain similar provisions;  provided,  however,  that
all such Option Agreements shall comply with all terms of the Plan.
11.  OPTION PRICE

      The Option Price shall be fixed by the Applicable  Committee and stated in
each Share  Option  Agreement.  The Option Price shall not be less than the Fair
Market Value of the Shares on the Grant Date of the Option;  provided,  however,
that in the event the  Optionee  would  otherwise  be  ineligible  to receive an
Incentive  Share Option by reason of the  provisions  of Sections  422(b)(6) and
424(d) of the Code (relating to stock  ownership of more than ten percent),  the
Option Price of an Option that is intended to be an Incentive Share Option shall
be not less than the  greater  of par value or 110  percent  of the Fair  Market
Value of a Share at the time such Option is granted.

12.  TERM AND EXERCISE OF OPTIONS

12.1. Term.

      Each  Option  granted  under the Plan  shall  terminate  and all rights to
purchase shares thereunder shall cease upon the expiration of ten years from the
date such  Option is granted,  or on such date prior  thereto as may be fixed by
the Applicable  Committee and stated in the Share Option  Agreement  relating to
such Option;  provided,  however, that in the event the Optionee would otherwise
be ineligible to receive an Incentive  Share Option by reason of the  provisions
of Sections  422(b)(6)  and 424(d) of the Code  (relating to stock  ownership of
more than ten percent),  an Option  granted to such Optionee that is intended to
be an  Incentive  Share  Option  shall  in no  event be  exercisable  after  the
expiration of five years from the date it is granted.

12.2. Option Period and Limitations on Exercise.

      Each Option  granted under the Plan shall be  exercisable,  in whole or in
part, at any time and from time to time over a period commencing on or after the
Grant Date and ending upon the expiration or  termination of the Option,  as the
Applicable Committee shall determine and set forth in the Share Option Agreement
relating  to  such  Option.  Without  limiting  the  foregoing,  the  Applicable
Committee,  subject  to the terms and  conditions  of the Plan,  may in its sole
discretion provide that an Option may not be exercised in whole or in part for a
stated  period or  periods of time  during  which  such  Option is  outstanding;
provided,  however,  that any  such  limitation  on the  exercise  of an  Option
contained in any Share Option Agreement may be rescinded,  modified or waived by
the Applicable Committee,  in its sole discretion,  at any time and from time to
time after the Grant Date of such Option,  so as to accelerate the time at which
the Option may be exercised.

12.3. Termination of Employment.

      Upon the  termination  of the  employment of an Optionee with the Granting
Employer,  other than by reason of the death or "permanent and total disability"
(within the meaning of Section  22(e)(3) of the Code),  any Option granted to an
Optionee pursuant to the Plan shall terminate, and such Optionee shall have no
further right to purchase Shares pursuant to such Option; provided further, that
the Applicable  Committee may provide,  by inclusion of appropriate  language in
any Share  Option  Agreement,  that an  Optionee  may  (subject  to the  general
limitations  on  exercise  set forth in  Section  12.2  above),  in the event of
termination of employment of the Optionee with the Granting  Employer,  exercise
an Option,  in whole or in part, at any time  subsequent to such  termination of
employment  and prior to  termination  of the Option  pursuant  to Section  12.2
above,  either  subject to or without  regard to any  installment  limitation on
exercise imposed pursuant to Section 12.2 above, as the Applicable Committee, in
its sole and absolute  discretion,  shall  determine  and set forth in the Share
Option Agreement.  Whether a leave of absence or leave on military or government
service shall  constitute a termination  of employment for purposes of the Plan,
shall be determined by the Applicable  Committee,  which  determination shall be
final and conclusive. For purposes of the Plan, a termination of employment with
the  Granting  Employer  shall  not  be  deemed  to  occur  if the  Optionee  is
immediately thereafter employed with any other Employer.

12.4. Rights in the Event of Death.

      If an Optionee dies while employed by the Granting Employer, the executors
or  administrators  or legatees or distributees of such Optionee's  estate shall
have the right  (subject to the  general  limitations  on exercise  set forth in
Section  12.2  above),  at any  time  within  one  year  after  the date of such
Optionee's death and prior to termination of the Option pursuant to Section 12.1
above,  to  exercise  any  Option  held by  such  Optionee  at the  date of such
Optionee's death,  whether or not such Option was exercisable  immediately prior
to such Optionee's death;  provided,  however, that the Applicable Committee may
provide by inclusion of appropriate language in any Share Option Agreement that,
in the event of the death of an Optionee,  the  executors or  administrators  or
legatees  or  distributees  of such  Optionee's  estate may  exercise  an Option
(subject  to the  general  limitations  on  exercise  set forth in Section  12.2
above), in whole or in part, at any time subsequent to such Optionee's death and
prior to  termination  of the Option  pursuant  to Section  12.1  above,  either
subject to or without regard to any installment  limitation on exercise  imposed
pursuant to Section 12.2 above,  as the  Applicable  Committee,  in its sole and
absolute  discretion,  shall  determine  and  set  forth  in  the  Share  Option
Agreement.

12.5. Rights in the Event of Disability.

      If an Optionee terminates  employment with the Granting Employer by reason
of the "permanent and total disability"  (within the meaning of Section 22(e)(3)
of the Code) of such Optionee,  then such Optionee shall have the right (subject
to the general  limitations on exercise set forth in Section 12.2 above), at any
time  within  one  year  after  such  termination  of  employment  and  prior to
termination of the Option pursuant to Section 12.1 above, to exercise,  in whole
or in part, any Option held by such Optionee at the date of such  termination of
employment, whether or not such Option was exercisable immediately prior to such
termination of employment;  provided, however, that the Applicable Committee may
provide,  by inclusion of  appropriate  language in any Share Option  Agreement,
that an Optionee may (subject to the general limitations on exercise set forth
in Section 12.2 above),  in the event of the  termination  of  employment of the
Optionee  with the  Granting  Employer  by  reason of the  "permanent  and total
disability"  (within  the  meaning  of  Section  22(e)(3)  of the  Code) of such
Optionee,  exercise an Option,  in whole or in part,  at any time  subsequent to
such  termination of employment and prior to termination of the Option  pursuant
to Section 12.1 above,  either subject to or without  regard to any  installment
limitation on exercise imposed pursuant to Section 12.2 above, as the Applicable
Committee, in its sole and absolute discretion, shall determine and set forth in
the  Share  Option  Agreement.  Whether a  termination  of  employment  is to be
considered by reason of "permanent  and total  disability"  for purposes of this
Plan shall be determined by the Applicable Committee,  which determination shall
be final and conclusive.

12.6. Limitations on Exercise of Option.

      Notwithstanding  the  foregoing  Sections,  in no event may the  Option be
exercised,  in whole or in part,  after ten years  following the date upon which
the Option is granted,  as set forth in Section 1 above, or after the occurrence
of an event  referred to in Section 20.3 below which results in  termination  of
the Option. In no event may the Option be exercised for a fractional Share.

12.7. Method of Exercise.

      An Option that is exercisable hereunder may be exercised by the Optionee's
delivery to the  Granting  Employer of written  notice of the  exercise  and the
number of Shares for which the Option is being  exercised.  Such delivery  shall
occur  on  any  business  day,  at the  Granting  Employer's  principal  office,
addressed  to the  attention  of the  Applicable  Committee.  Such notice  shall
specify the number of Shares with respect to which the Option is being exercised
and shall be  accompanied  by payment in full of the Option  Price of the Shares
for which the  Option is being  exercised.  The  minimum  number of Shares  with
respect to which an Option may be  exercised,  in whole or in part,  at any time
shall be the  lesser of (i) 100  shares or such  lesser  number set forth in the
Share  Option  Agreement  and (ii) the maximum  number of Shares  available  for
purchase  under the Option at the time of exercise.  Payment of the Option Price
for the Shares purchased pursuant to the exercise of an Option shall be made (i)
in cash or in cash equivalents; (ii) through the tender to the Granting Employer
of Shares, which Shares, if acquired from the Company or any of its Affiliates,
have been held for at least six months  and which  Shares  shall be valued,  for
purposes  of  determining  the  extent to which the  Option  Price has been paid
thereby,  at their  Fair  Market  Value on the date of  exercise;  or (iii) by a
combination of the methods  described in (i) and (ii). The Applicable  Committee
may provide,  by inclusion of appropriate  language in a Share Option Agreement,
that payment in full of the Option Price need not accompany  the written  notice
of exercise  provided the notice of exercise directs that the Share  certificate
or certificates for the Shares for which the Option is exercised be delivered to
a licensed  broker  acceptable  to the  Granting  Employer  as the agent for the
individual  exercising  the Option  and, at the time such Share  certificate  or
certificates are delivered, the broker tenders to the Granting Employer cash (or
cash equivalents  acceptable to the Granting Employer) equal to the Option Price
for the Shares purchased  pursuant to the exercise of the Option plus the amount
(if any) of federal  and/or other taxes which the  Granting  Employer may in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted  hereunder  other than as set forth above
shall be invalid  and of no force and  effect.  Unless  otherwise  stated in the
applicable Share Option Agreement, an individual holding or exercising an Option
shall  have  none of the  rights of a  shareholder  (for  example,  the right to
receive  cash or dividend  payments  attributable  to the  subject  Shares or to
direct the voting of the subject  Shares) until the Shares  covered  thereby are
fully paid and issued to him or her.  Except as provided in Section 20 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.

12.8. Transfer of Shares to Employee.

      Promptly  after  the  exercise  of a Share  Option by an  employee  of the
Company  and the  payment  in full of the  Option  Price of the  Shares  covered
thereby, the individual  exercising the Option shall be entitled to the issuance
of a Share certificate or Share certificates  evidencing his or her ownership of
such Shares.

12.9. Transfer of Shares to Other Employees

            (a) Promptly  after the exercise of a Share Option by an employee of
an Employer  that is not the Company and the payment in full of the Option Price
of the Shares covered thereby:

                  (i)   The Company  shall sell to the  Employer  employing  the
                        Optionee the number of Shares as to which the Option was
                        exercised  for a price equal to the Fair Market Value of
                        such Shares.

                  (ii)  The Employer shall deliver to the individual  exercising
                        the  Option a Share  certificate  or Share  certificates
                        evidencing his or her ownership of such Shares.

13.  GRANT AND EXERCISE OF UNIT OPTIONS

13.1. Issuance of Unit Options

      Upon the issuance of an Option,  and in accordance  with Section 4.2(B) of
the Partnership Agreement,  the General Partner shall be deemed automatically to
have  caused  the  Operating  Partnership  to issue  to the  General  Partner  a
corresponding Unit Option on terms identical to those of such Option.
13.2. Exercise of Unit Options.

      A Unit Option shall be deemed exercised  automatically,  upon the exercise
by an Optionee of the  corresponding  Option, as to the number of Units equal to
the number of Shares for which such Option is  exercised.  The  General  Partner
shall then cause the  Operating  Partnership  to issue such Units to the General
Partner,  and the  Company  shall  remit  payment  for such Units to the General
Partner,  which shall then remit  payment to the Operating  Partnership,  all in
accordance with Section 4.2(B) of the Partnership Agreement.

13.3. Termination of Unit Options.

      Upon the  termination  of an Option,  the  corresponding  Unit Option also
shall terminate.

14.  GRANT OF RESTRICTED SHARES

14.1. Restricted Share Awards.

            (a) The Company  Committee and the Management  Company Committee may
from time to time,  and  subject  to the  provisions  of the Plan and such other
terms and conditions as the Applicable Committee may determine, grant Restricted
Share Awards under the Plan. Each Restricted Share Award shall be evidenced by a
written  instrument  which shall state the number of Shares covered by the award
and  the  terms  and  conditions  which  the  Applicable  Committee  shall  have
determined with respect to such award.  Upon the grant of each Restricted  Share
Award,  subject to Sections  14.1(d) and 14.3 hereof,  the Company shall cause a
certificate representing the Shares covered by the award to be registered in the
name of the Holder and to be delivered to the Holder without payment on his part
(unless such Shares are newly issued  Shares  granted under the Company Plan, in
which  case the  Company  may  require a payment  equal to the par value of each
Share for each Share  issued).  The Holder shall  generally  have the rights and
privileges  of a  shareholder  of the  Company  with  respect  to  such  Shares,
including  the  right  to  vote  and  to  receive  dividends,   subject  to  the
restrictions specified in paragraphs (b) and (c) hereof.

            (b) The  Applicable  Committee  shall  determine  a  period  of time
("Limitation  Period")  during  which  restrictions  shall  apply to the  Shares
transferred to a Holder with respect to each  Restricted  Share Award,  provided
that in no event shall the Limitation  Period be less than two years.  Except as
otherwise  determined  by the  Applicable  Committee,  the  Holder may not sell,
transfer,  assign, pledge or otherwise encumber or dispose of the Shares covered
by such  Restricted  Share Award during the Limitation  Period  applicable  with
respect  to  such  Restricted  Share  Award.  The  Applicable  Committee  in its
discretion may prescribe conditions for the incremental lapse of the preceding
restrictions  during the Limitation  Period, and for the lapse or termination of
such restrictions upon the occurrence of certain events before the expiration of
the  Limitation  Period.  The Applicable  Committee in its  discretion  also may
shorten or terminate the Limitation Period or waive any conditions for the lapse
or  termination  of the  restrictions  with respect to all or any portion of the
Shares covered by the Restricted Share Award.  The restrictions  applicable to a
Restricted  Share Award shall lapse upon the earliest of the following:  (1) the
expiration of the Limitation  Period  applicable to the Restricted  Share Award;
(2) the  occurrence of an event  prescribed by the  Applicable  Committee  which
results  in the  lapse  of the  restrictions;  or (3)  such  other  time  as the
Applicable Committee may determine.

            (c)  The  Shares  covered  by a  Restricted  Share  Award  shall  be
forfeited by the Holder upon  termination  of the Holder's  employment  with the
Granting  Employer  for any reason  before the  occurrence  of any of the events
described  in the last  sentence  of  paragraph  (b)  hereof.  The Holder  shall
thereupon  immediately  transfer  the  Shares  to his or her  Granting  Employer
without payment by the Granting  Employer.  If the Granting  Employer is not the
Company or the Operating Partnership,  the Company and the Operating Partnership
shall have the right to purchase any such  forfeited  Shares from such  Granting
Employer at a price equal to Fair Market  Value at any time  subsequent  to such
forfeiture.

            (d)  Promptly  after the grant of a  Restricted  Share  Award by the
Operating  Partnership  or its general  partner,  any Affiliate of the Operating
Partnership,  the Management Company or an Affiliate of the Management  Company,
such company shall notify the Company of the grant and of the recipient's  name,
address and social security number, and shall either (i) pay or cause to be paid
to the Company an amount  equal to the Fair Market Value of the Shares which are
subject to the  Restricted  Share  Award or (ii)  deliver  free and clear of any
liens or encumbrances  certificates representing outstanding Shares in an amount
equivalent to the number of Shares granted.

14.2. Restricted Share Agreement.

      All  Restricted  Share  Awards  granted  pursuant  to the  Plan  shall  be
evidenced  by  Restricted  Share  Agreements,  to be  executed  by the  Granting
Employer and by the Holder,  in such form or forms as the  Applicable  Committee
shall  from  time  to  time  determine.  Restricted  Share  Agreements  covering
Restricted Shares granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Restricted Share Agreements
shall comply with all terms of the Plan.

14.3. Certificates for Restricted Shares.

      The Applicable Committee may require that the certificates  evidencing the
grant of a  Restricted  Share  Award  hereunder  be held in  escrow  until  such
restrictions have expired. The Company shall also cause a legend to be placed on
such  certificates  that  complies  with  the  applicable  securities  laws  and
regulations  and makes  appropriate  reference to the  restrictions to which the
Shares are subject. Upon attainment of the specified objectives and requirements
(or, to the extent  specified in the grant, the portion of such Shares earned by
partial  attainment  of the  objectives  and  requirements,  as  applicable),  a
certificate  for the number of Shares with  respect to which  restrictions  have
lapsed shall be delivered to the Holder free of restrictions  upon submission of
the certificate originally issued with respect to such Shares.
15.  AWARDS OF UNRESTRICTED BONUS SHARES

      The Chief  Executive  Officer  of the  Company,  on behalf of the Board of
Trustees,  and the Chief Executive Officer of the Management  Company, on behalf
of the Board of Directors, may from time to time, as frequently as once a month,
subject  to the  provisions  of the Plan,  grant up to ten Bonus  Shares to such
eligible individuals as he or she may designate. Upon the grant of Bonus Shares,
the Company,  the General  Partner or the Management  Company,  as  appropriate,
shall cause a certificate  representing the Bonus Shares to be registered in the
name of the Grantee and delivered to the Grantee.  Upon delivery to the Grantee,
Bonus Shares shall be deemed validly issued, fully paid, and nonassessable,  and
the  Grantee  shall have all the rights of a  shareholder  with  respect to such
Bonus Shares.

16.  TRANSFERABILITY OF OPTIONS AND RESTRICTED SHARES

16.1. Transferability of Options.

      During the lifetime of the Optionee,  only such Optionee (or, in the event
of legal incapacity or incompetency, the guardian or legal representative of the
Optionee), may exercise the Option, except that the Applicable Committee may, in
its  discretion,  authorize  all or a  portion  of the  Option  (other  than  an
Incentive  Share  Option) to be granted to an  Optionee  on terms  which  permit
transfer  by such  Optionee  during  his or her  lifetime  to  Immediate  Family
Members,  (ii) a trust or trusts for the  exclusive  benefit  of such  Immediate
Family Members or (iii) a partnership in which such Immediate Family Members are
the only partners,  provided that the Share Option  Agreement  pursuant to which
such Options are granted is approved by the  Applicable  Committee and expressly
provides for  transferability  in a manner consistent with this Section 15.1, in
which case such  transferees  may  exercise  the Option.  Except as noted in the
preceding  sentence,  transfers of Options shall be prohibited except by will or
the laws of descent and distribution. Following transfer, any such Options shall
continue  to be  subject  to the same terms and  conditions  as were  applicable
immediately  prior to transfer,  provided that for purposes of Section 12 hereof
(excluding Sections 12.3, 12.4 and 12.5), the term "Optionee" shall be deemed to
refer to the  transferee.  The events of termination  of  employment,  death and
disability set forth in Sections 12.3, 12.4 and 12.5 hereof, respectively, shall
continue to be applied with respect to the original  Optionee,  following  which
the Options shall be exercisable  by the  transferee  only to the extent and for
the  periods  specified  in Section  12.  Except as may be provided in the Share
Option  Agreement,  no  Option  shall  be  pledged  or  hypothecated  (by law or
otherwise) or subject to execution, attachment or similar processes.

16.2. Transferability of Restricted Shares.

      No Restricted  Shares shall be assignable or  transferable,  other than by
will or the  laws of  descent  and  distribution,  before  the  satisfaction  of
applicable  performance and service requirements with respect to such Shares, as
set forth in the applicable Restricted Share Agreement.
17.  USE OF PROCEEDS

      The proceeds  received by the Company from the sale of Shares  pursuant to
Incentive  Awards granted under the Plan shall  constitute  general funds of the
Company.  As soon as  practicable  after  receipt  by the  Company of the amount
described in Sections 12.9(a)(i) and 14.1(d) above, the Company shall contribute
an amount of cash equal to such payment to the wholly owned subsidiary that owns
its interests in the Operating  Partnership,  which in turn will contribute such
cash to the Operating  Partnership,  and the Operating  Partnership  shall issue
additional  partnership  interests to such  subsidiary with a value equal to the
amount of such contribution.

18.  REQUIREMENTS OF LAW

18.1. General.

      The Company  shall not be  required to sell or issue any Shares  under any
Incentive  Award if the sale or  issuance  of such  Shares  would  constitute  a
violation  by the  Optionee,  the  Holder,  the  Grantee  or the  Company of any
provisions  of any law or regulation of any  governmental  authority,  including
without  limitation any federal or state  securities laws or regulations.  If at
any time the Company  shall  determine,  in its  discretion,  that the  listing,
registration  or  qualification  of any  Shares  subject  to an Option  upon any
securities  exchange or under any governmental  regulatory body, is necessary or
desirable as a condition of, or in connection  with, the issuance or purchase of
Shares  hereunder,  the Option may not be  exercised  in whole or in part unless
such listing  registration,  qualification,  consent or approval shall have been
effected or obtained free of any conditions  not  acceptable to the Company,  as
applicable,  and any delay  caused  thereby  shall in no way  affect the date of
termination of the Option.  Specifically in connection with the 1933 Act, at the
time of grant of  Restricted  Shares or Bonus  Shares,  or when such  Restricted
Shares become vested, or upon the exercise of any Option,  unless a registration
statement  under such Act is in effect with respect to the Shares covered by the
Option,  the Company  shall not be required to sell or issue such Shares  unless
the  Company  Committee  has  received  evidence  satisfactory  to it  that  the
Optionee,  Holder or Grantee may acquire  such Shares  pursuant to an  exemption
from  registration  under such Act. Any  determination in this connection by the
Company Committee shall be final, binding, and conclusive.  The Company may, but
shall in no event be  obligated  to,  register  any  securities  covered  hereby
pursuant  to the 1933  Act.  The  Company  shall  not be  obligated  to take any
affirmative  action in order to cause the  exercise of an Option or the issuance
of Shares  pursuant  thereto,  the  issuance of Bonus  Shares or the issuance of
Shares pursuant to a Restricted Share Award to comply with any law or regulation
of any governmental authority. As to any jurisdiction that expressly imposes the
requirement  that an Option shall not be  exercisable  or that Shares may not be
issued pursuant to a grant of Bonus Shares or Restricted Shares unless and until
the Shares  covered by such  Option or grant are  registered  or are exempt from
registration,  the exercise of such Option or the issuance of Shares pursuant to
such grant (under  circumstances in which the laws of such  jurisdiction  apply)
shall be deemed  conditioned upon the  effectiveness of such registration or the
availability of such an exemption.
18.2. Rule 16b-3.

      The intent of this Plan is to qualify for the  exemption  provided by Rule
16b-3 under the Exchange  Act. To the extent any provision of the Plan or action
by the Plan  administrators does not comply with the requirements of Rule 16b-3,
it shall be  deemed  inoperative,  to the  extent  permitted  by law and  deemed
advisable by the Plan  administrators,  and shall not affect the validity of the
Plan. In the event Rule 16b-3 is revised or replaced,  the Board of Trustees may
exercise  discretion to modify this Plan in any respect necessary to satisfy the
requirements of the revised exemption or its replacement.

18.3. REIT Qualification.

      The Company  shall not be  required to sell or issue any Shares  under any
Incentive  Award if the sale or issuance of such Shares  would cause the Company
to fail to qualify as a real  estate  investment  trust for  Federal  income tax
purposes or would result in the Optionee's,  Grantee's or Holder's  ownership of
Shares in violation of the  restrictions on ownership and transfer of Shares set
forth in the Company's declaration of trust.

19.  AMENDMENT AND TERMINATION OF THE PLAN

      The  Board of  Trustees  may,  at any time and from  time to time,  amend,
suspend,  or terminate  the Plan as to any Shares as to which  Incentive  Awards
have not been granted;  provided,  however, no amendment that materially affects
the terms of Incentive  Awards  under the  Operating  Partnership  Plan shall be
effective with respect to the Operating Partnership Plan without the approval of
the Board of  Directors of the  Operating  Partnership,  and no  amendment  that
materially  affects the terms of  Restricted  Share Awards under the  Management
Company Plan shall be  effective  with  respect to the  Management  Company Plan
without the approval of the Board of Directors of the  Management  Company.  The
Employer  may  retain the right in an  Agreement  to cause a  forfeiture  of the
Options or the Shares or gain realized by a Holder on account of the Optionee or
Holder  taking  actions  prohibited  by  the  applicable  Agreement.  Except  as
permitted under this Section 19 or Section 20 hereof, no amendment,  suspension,
or termination of the Plan shall,  without the consent of the Optionee,  Grantee
or Holder,  alter or impair  rights or  obligations  under any  Incentive  Award
theretofore granted under the Plan.

20.  EFFECT OF CHANGES IN CAPITALIZATION

20.1. Changes in Shares.

      If the number of  outstanding  Shares is  increased  or  decreased  or the
Shares are changed into or exchanged for a different number or kind of Shares or
other   securities   of  the   Company,   in  each  case  on   account   of  any
recapitalization,  reclassification,  Share split, reverse split, combination of
Shares, exchange of Shares, Share dividend or other distribution payable in
capital  stock,  or other increase or decrease in such Shares  effected  without
receipt of consideration  by the Company,  occurring after the Effective Date of
the Plan,  the number and kinds of Shares for the  issuance of which  Restricted
Share  Awards  or awards of Bonus  Shares  may be  granted  and  Shares  for the
acquisition  of which  Options  may be granted  under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of Shares for which Restricted Share Awards or Options are outstanding  shall be
adjusted  proportionately and accordingly so that the proportionate  interest of
the Holder of the Restricted Share Awards or Optionee immediately following such
event shall, to the extent  practicable,  be the same as immediately before such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to Shares that are subject to the  unexercised
portion  of  the  Option   outstanding   but  shall   include  a   corresponding
proportionate adjustment in the Option Price per Share.

20.2. Reorganization in Which the Company Is the Surviving Entity.

      Subject to Section  20.3  hereof,  if the Company  shall be the  surviving
entity in any  reorganization,  merger, or consolidation of the Company with one
or more other  entities,  any Option  theretofore  granted  pursuant to the Plan
shall pertain to and apply to the  securities to which a holder of the number of
Shares  subject to such Option would have been  entitled  immediately  following
such   reorganization,   merger,   or   consolidation,   with  a   corresponding
proportionate  adjustment  of the Option  Price per Share so that the  aggregate
Option Price  thereafter  shall be the same as the aggregate Option Price of the
Shares remaining subject to the Option immediately prior to such reorganization,
merger,  or  consolidation.  Subject to any contrary  language in the applicable
Restricted  Share  Agreement,  any  restrictions  that  were  applicable  to any
previously granted Restricted Share Award shall apply as well to any replacement
shares  received by the Holder as a result of such  reorganization,  merger,  or
consolidation.

20.3. Reorganization in Which the Company Is Not the Surviving Entity or Sale
            of Assets or Shares.

      Upon the  dissolution  or  liquidation  of the Company,  or upon a merger,
consolidation,  or reorganization of the Company with one or more other entities
in  which  the  Company  is  not  the  surviving  entity,  or  upon  a  sale  of
substantially  all of the assets of the Company to another  entity,  or upon any
transaction (including,  without limitation, a merger or reorganization in which
the Company is the  surviving  entity)  approved  by the Board of Trustees  that
results  in any person or entity  (or  person or  entities  acting as a group or
otherwise in concert)  owning 80 percent or more of the combined voting power of
all classes of securities of the Company (other than the Company or wholly owned
subsidiaries of the Company), the Plan and all Options outstanding hereunder
shall terminate, except to the extent provision is made in writing in connection
with such transaction for the continuation of the Plan or the assumption of such
Options  theretofore  granted,  or for the  substitution for such Options of new
options  covering the stock of a successor  Company,  or a parent or  subsidiary
thereof,  with appropriate  adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options  theretofore  granted shall
continue in the manner and under the terms so provided. In the event of any such
termination of the Plan, each individual  holding an Option shall have the right
(subject to the prior  expiration of such Option in  accordance  with its terms)
immediately  before the  occurrence of such  termination  and during such period
occurring  before  such  termination  as  the  Company  Committee  in  its  sole
discretion shall determine and designate, to exercise such Option in whole or in
part,  whether or not such  Option was  otherwise  exercisable  at the time such
termination  occurs.  Any  exercise of an Option  during  such  period  shall be
conditioned  upon the  consummation  of the event and  shall be  effective  only
immediately  before the consummation of the event.  The Company  Committee shall
send written  notice of an event that will result in such a  termination  to all
individuals  who hold Options not later than the time at which the Company gives
notice thereof to its  shareholders.  Unvested  Restricted Share Awards shall be
vested in the case of an event described in this Section 20.3.

20.4. Adjustments.

      Adjustments  under this Section 20 related to Shares or  securities of the
Company  shall be made by the Company  Committee,  whose  determination  in that
respect shall be final,  binding, and conclusive.  No fractional Shares or units
of other  securities  shall be issued pursuant to any such  adjustment,  and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole Share.

20.5. No Limitations on Company.

 The grant of Incentive Awards pursuant to the Plan shall not affect or limit in
any  way  the   right   or   power   of  the   Company   to  make   adjustments,
reclassifications,  reorganizations,  or  changes  of its  capital  or  business
structure  or to  merge,  consolidate,  dissolve,  or  liquidate,  or to sell or
transfer all or any part of its business or assets.

21.  DISCLAIMER OF RIGHTS

      No provision in the Plan or in any  Incentive  Award  granted or Agreement
entered  into  pursuant  to the  Plan  shall be  construed  to  confer  upon any
individual  the right to remain in the employ or service of any Employer,  or to
interfere  in any way with any  contractual  or other right or  authority of any
Employer  either to increase or decrease the  compensation  or other payments to
any individual at any time, or to terminate any employment or other relationship
between any individual and such Employer. In addition,  notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the applicable
Agreement,  no Incentive  Award  granted under the Plan shall be affected by any
change of duties or position of the  Optionee,  Grantee or Holder  (including  a
transfer to or from any Employer),  so long as such Optionee,  Grantee or Holder
continues  to  be  a  trustee,  director,  officer,  consultant,   employee,  or
independent  contractor  (as the case may be) of any  Employer  (the  "Successor
Granting  Employer").  The Plan shall in no way be  interpreted  to require  any
Employer to transfer any Shares to a third party  trustee or otherwise  hold any
Shares in trust or escrow for any participant or beneficiary  under the terms of
the Plan.
22.  NONEXCLUSIVITY OF THE PLAN

      Neither  the  adoption of the Plan nor the  submission  of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon  the  right  and  authority  of  the  Company,  the  Operating
Partnership or its general partner or the Management Company or any Affiliate of
the  Operating  Partnership  or the  Management  Company  to  adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual  or  particular  individuals)  as such  entities in their  discretion
determine desirable.

23.  CAPTIONS

      The use of captions in this Plan or any  Agreement is for the  convenience
of reference  only and shall not affect the meaning of any provision of the Plan
or such Agreement.

24.  WITHHOLDING TAXES

24.1. Withholding.

      The Granting  Employer shall have the right to deduct from payments of any
kind  otherwise  due to an Optionee,  Grantee or Holder any Federal,  state,  or
local  taxes of any kind  required  by law to be  withheld  with  respect to any
Shares  issued  upon the  exercise of an Option,  to any Bonus  Shares or to the
termination of the Limitation Period for Restricted Share Awards. At the time of
termination  of the  Limitation  Period,  the Holder  shall pay to the  Granting
Employer any amount that the Granting  Employer may  reasonably  determine to be
necessary to satisfy such withholding obligation.  Subject to the prior approval
of the Granting Employer, which may be withheld by the Granting Employer (and/or
the Successor Granting Employer) in its sole discretion,  the Optionee,  Grantee
or Holder may elect to satisfy  such  obligations,  in whole or in part,  (i) by
causing such Granting Employer to withhold Shares otherwise issuable pursuant to
the exercise of an Option or (ii) by delivering to such Granting Employer Shares
already  owned by the  Optionee,  Grantee or Holder.  The Shares so delivered or
withheld shall have a Fair Market Value equal to such  withholding  obligations,
determined  as of the  date  that  the  amount  of tax to be  withheld  is to be
determined. An Optionee,  Grantee or Holder who has made an election pursuant to
this Section 24.1 may satisfy his or her withholding obligation only with Shares
that are not subject to any  repurchase,  forfeiture,  unfulfilled  vesting,  or
other similar requirements.

24.2. Limitations for Reporting Person.

      Notwithstanding  the  foregoing,  in the case of a  Reporting  Person,  no
election to use Shares for the payment of  withholding  taxes shall be effective
unless made in compliance with any applicable  requirements  under Rule 16b-3(e)
or any successor rule under the Exchange Act.
25.  OTHER PROVISIONS

      Each  Incentive  Award granted under the Plan may contain such other terms
and  conditions  not  inconsistent  with  the Plan as may be  determined  by the
Applicable Committee, in its sole discretion.

26.  NUMBER AND GENDER

      With respect to words used in this Plan,  the singular  form shall include
the plural form, the masculine gender shall include the feminine  gender,  etc.,
as the context requires.

27.  SEVERABILITY

      If any  provision of the Plan or any  Agreement  shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction,  the remaining
provisions  hereof and thereof shall be severable and  enforceable in accordance
with their  terms,  and all  provisions  shall remain  enforceable  in any other
jurisdiction.

28.  GOVERNING LAW

      The validity and construction of this Plan and the instruments  evidencing
the  Incentive  Awards  granted  hereunder  shall be governed by the laws of the
State of Maryland.