<PAGE>   1
                                                                     Exhibit 3.1


                   AMENDED AND RESTATED DECLARATION OF TRUST


                                       OF


                           STARWOOD HOTELS & RESORTS


                         Dated as of August 15, 1969 as
                     Amended and Restated as of June 6, 1988
                         Amended as of February 23, 1998


<PAGE>   2
                    AMENDED AND RESTATED DECLARATION OF TRUST
                                       OF
                           STARWOOD HOTELS & RESORTS

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                PAGE
<S>                                                                                             <C>
ARTICLE I.        The Trust; Definitions.......................................................   1
         1.1      Name.........................................................................   1
         1.2      Place of Business............................................................   1
         1.3      Nature of Trust..............................................................   1
         1.4      Definitions..................................................................   2

ARTICLE II.       Trustees.....................................................................   6
         2.1      Number, Term of Office, Qualifications of Trustees...........................   6
         2.2      Compensation and Other Remuneration..........................................   7
         2.3      Resignation, Removal and Death of Trustees...................................   7
         2.4      Vacancies....................................................................   8
         2.5      Successor and Additional Trustees............................................   8
         2.6      Actions by Trustees..........................................................   8
         2.7      Executive Committee..........................................................   8
         2.8      Names and Addresses of Trustees and Officers.................................   8
         2.9      Non-Affiliated Trustees......................................................   9

ARTICLE III.  Trustees' Powers.................................................................   9
         3.1      Power and Authority of Trustees..............................................   9
         3.2      Specific Powers and Authorities..............................................  10
         3.3      Trustees Regulations.........................................................  14
         3.4      Additional Powers............................................................  14
         3.5      Incorporation................................................................  14

ARTICLE IV.  Advisor; Limitation on Operating Expenses.........................................  14
         4.1      Employment of Advisor........................................................  14
         4.2      Term.........................................................................  15
         4.3      Restrictions on Advisor......................................................  15
         4.4      Limitation on Operating Expenses.............................................  15
         4.5      Initial Advisor..............................................................  18
         4.6      Sale of Shares of the Advisor................................................  18

ARTICLE V.  Investment Policy..................................................................  18
         5.1      General Statement of Policy..................................................  18
         5.2      [Deleted.]...................................................................  19
         5.3      [Deleted.]...................................................................  19
         5.4      Obligor's Default............................................................  19
         5.5      Changes Investment Policies and Restrictions.................................  19
         5.6      [Deleted.]...................................................................  19
</TABLE>


<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                PAGE
<S>                                                                                             <C>
ARTICLE VI.  The Shares and Shareholders.......................................................  19
         6.1      Shares.......................................................................  19
         6.2      Legal Ownership of Trust Estate..............................................  20
         6.3      Shares Deemed Personal Property..............................................  21
         6.4      Share Record: Issuance and Transferability Shares............................  21
         6.5      Dividends or Distributions to Shareholders...................................  22
         6.6      Transfer Agent, Dividend Distributing Agent and Registrar....................  22
         6.7      Shareholders' Meeting........................................................  22
         6.8      Proxies......................................................................  23
         6.9      Reports to Shareholders......................................................  23
         6.10     Fixing Record Date...........................................................  23
         6.11     Notice to Shareholders.......................................................  24
         6.12     Restrictions on Transfer.....................................................  24
         6.13     Excess Shares................................................................  29
         6.14     Pairing......................................................................  32
         6.15     See Exhibit A................................................................  32
         6.16     See Exhibit A................................................................  32

ARTICLE VII.  Liability of Trustees, Shareholders and Officers, and Other Matters..............  32
         7.1      Exculpation of Trustee and Officers..........................................  32
         7.2      Limitation of Liability of Shareholders, Trustees and Officers...............  33
         7.3      Express Exculpatory Clauses and Instruments..................................  33
         7.4      Indemnification of Trustees, Officers, Employees and Other Agents............  34
         7.5      Right of Trustees and officers to Own Shares or Other Property and
                  to Engage in Other Business..................................................  34
         7.6      Transactions Between the Trustees and the Trust..............................  35
         7.7      Restriction of Duties and Liabilities........................................  37
         7.8      Persons Dealing with Trustees or Officers....................................  37
         7.9      Reliance.....................................................................  37
         7.10     Income Tax Status............................................................  37

ARTICLE VIII.  Duration, Amendment, Termination and Qualification of Trust.....................  38
         8.1      Duration of Trust............................................................  38
         8.2      Termination of Trust.........................................................  38
         8.3      Amendment Procedure..........................................................  39
         8.4      Qualification Under the REIT Provisions of the Internal Revenue Code.........  39

ARTICLE IX.  Miscellaneous.....................................................................  39
         9.1      Applicable Law...............................................................  39
         9.2      Index and Headings for Reference Only........................................  39
         9.3      Successors in Interest.......................................................  39
         9.4      Inspection of Records........................................................  39
         9.5      Counterparts.................................................................  40
</TABLE>


<PAGE>   4
<TABLE>
<CAPTION>
                                                                                                PAGE
<S>                                                                                             <C>
         9.6      Provisions of the Trust in Conflict with Law or Regulations..................  40
         9.7      Certifications...............................................................  40
         9.8      Recording and Filing.........................................................  41
         9.9      Resident Agent...............................................................  41
</TABLE>


<PAGE>   5
                    AMENDED AND RESTATED DECLARATION OF TRUST

         As of August 15, 1969, the initial Trustees agreed, pursuant to a
Declaration of Trust dated as of said date (the "Declaration of Trust"), to hold
in trust as trustees any and all property, real, personal or otherwise, tangible
or intangible, which is transferred, conveyed or paid to them as such Trustees
and all rents, income, profits and gains therefrom for the benefit of the
Shareholders thereunder, subject to the terms and conditions and for the uses
and purposes set forth therein. As of August 5, 1970, the Trustees who were a
majority of the Trustees on said date agreed, pursuant to an Amended Declaration
of Trust dated as of said date to restate in its entirety the Declaration of
Trust, as theretofore amended, The effect of this Amended and Restated
Declaration of Trust shall be to restate in its entirety said Amended
Declaration of Trust as heretofore amended (the "Amended Declaration of Trust"),
and it shall not have the effect of dissolving or terminating or in any way
affecting the continuity of, but shall continue without interruption, the trust
created by the Declaration of Trust (the "Trust").

         The undersigned, being a majority of the Trustees as of June 6, 1988,
under the Amended Declaration of Trust, do hereby set forth this Amended and
Restated Declaration of Trust, do hereby agree to be bound by this Amended and
Restated Declaration of Trust and do hereby certify that the amendments to the
Amended Declaration of Trust included in this Amended and Restated Declaration
of Trust were duly adopted by the Shareholders of the Trust in accordance with
the Amended Declaration of Trust.


                                   ARTICLE I.

                             The Trust; Definitions

         1.1 Name. The name of the Trust shall be "Starwood Hotels & Resorts."
As far as practicable and except as otherwise provided in this Declaration, the
Trustees shall conduct the Trust's activities, execute all documents, and sue or
be sued in the name of Starwood Hotels & Resorts, or in their names as Trustees
of Starwood Hotels & Resorts.

         1.2 Place of Business. The principal office of the Trust shall be in
the State of Maryland. However, the Trustees may, from time to time, change such
location and maintain other offices or places of business.

         1.3 Nature of Trust. The Trust is a real estate investment trust
organized under Article 78C of the Annotated Code of the State of Maryland. It
is intended that the Trust shall carry on business as a "real estate investment
trust" (hereinafter called "REIT" or "Real Estate Investment Trust") as
described in the REIT Provisions of the Internal Revenue Code. The Trust is not
a general partnership, limited partnership, joint venture, corporation or joint
stock company or association (but nothing herein shall preclude the Trust from
being taxed as an association under the REIT Provisions of the Internal Revenue
Code) nor shall the Trustees or Shareholders or any of them for any purpose be,
or be deemed to be treated in any way whatsoever to be, liable or responsible
hereunder as partners or joint ventures. The


<PAGE>   6
relationship of the Shareholders to the Trustees shall be solely that of
beneficiaries of the Trust and their rights shall be limited to those conferred
upon them by this Declaration.

         1.4 Definitions. The terms defined in this Section 1.4 whenever used in
this Declaration shall unless the context otherwise requires, have the
respective meanings hereinafter specified in this Section 1.4. In this
Declaration, words in the singular number include the plural and in the plural
number include the singular.

         (a) Accommodations Field. "Accommodations Field" shall mean the hotel,
motel, motor inn, restaurant, and lodgings field generally, and shall also be
deemed to include activities undertakings and businesses directly allied or
connected with, or directly related to, hotels, motels, motor inns, restaurants
or lodgings.

         (b) Advisor. "Advisor" shall mean the Person employed by the Trustees
under the provisions of Article IV.

         (c) Affiliate. "Affiliate" shall mean (i) with respect to any Person,
any other Person (A) which such Person directly or indirectly controls, is
controlled by, or is under common control with or (B) of which such Person is a
director, officer, employee, partner or trustee or (C) of which such Person
directly or indirectly owns, controls or holds with power to vote five percent
(5%) or more of the outstanding voting securities or (D) which directly or
indirectly owns, controls or holds with power to vote five percent (5%) or more
of the outstanding voting securities of such Person and (ii) with respect to the
Trust, the Advisor and any other investment adviser, manager or independent
contractor (as that term is defined in Section 856(d)(3) of the Internal Revenue
Code) of the Trust.

         (d) Annual Meeting of Shareholders. "Annual Meeting of Shareholders"
shall have the meaning set forth in the first sentence of Section 6.7.

         (e) Annual Report. "Annual Report" shall have the meaning set forth in
Section 6.9.

         (f) Appraisal. "Appraisal" shall mean the fair market value, as of the
date of the appraisal, of Real Property in its existing state or in a state as
to be created or improved, as determined by the Trustees or as determined by any
bank, insurance company or other Person which makes appraisals in connection
with its lending or services activities or as determined by a disinterested
Person having no interest in the Real Property, provided, however, that, any
such Person, is, in the sole judgment of the Trustees properly qualified to make
a determination; provided further that an appraisal shall be included within the
meaning of the term Appraisal as used herein upon which the Trustees may in good
faith rely if it is made on behalf of a Person or Persons other than the Trust
at or prior to the time of the investment by the Trust if the Trust is acquiring
an interest (either in whole or in part) in the investment with respect to which
such appraisal is or has been made.


<PAGE>   7
         (g) Construction Loans. "Construction Loans" shall mean Mortgage Loans
incurred to finance all or part of the cost of acquiring and improving land
(including leaseholds therein) and the construction or improvement of buildings
and other improvements thereon.

         (h) Declaration. "Declaration" shall mean this Declaration of Trust and
all amendments or modifications thereof, References in this Declaration to
"herein" and "hereunder" shall be deemed to refer to this Declaration and shall
not be limited to the particular text, article or section in which such words
appear.

         (i) Development Loans. "Development Loans" shall mean Mortgage Loans
incurred to finance all or part of the cost of acquiring and improving vacant
land and developing it into a site or sites suitable for the construction of
buildings thereon or suitable for other residential, commercial, industrial or
public uses.

         (j) Equity Investments. "Equity Investments" shall mean investments in
Real Property (other than Mortgage Loans), or in borrowing or leasing entities
or other organizations owning, operating or managing Real Property.

         (k) Equity Participations. "Equity Participations" shall mean
participations acquired in connection with making any Real Property Investment
including, but not limited to, participations in contingent interest based upon
operating revenues, participations in the ownership of Real Property,
participations in rental based upon operating revenues or based upon a
percentage of sales or room rents, or participations in the ownership of
borrowing or leasing entities or other organizations owning, operating or
managing Real Property.

         (l) First Mortgage. "First Mortgage" shall mean a Mortgage which takes
priority or precedence over all other charges or liens upon the Real Property
and which must be satisfied before such other charges are entitled to
participate in the proceeds of any sale. Such priority shall not be deemed as
abrogated by liens for taxes, or assessments which are not delinquent or remain
payable without penalty, contracts (other than contracts for repayment of
borrowed moneys), or leases, mechanics and materialman's liens for work
performed and materials furnished which are not in default or are in good faith
being contested and other claims normally deemed in the same local jurisdiction
not to abrogate the priority of a first mortgage.

         (m) First Mortgage Loans. "First Mortgage Loans" shall mean Mortgage
Loans secured or collateralized at the time of acquisition thereof by the Trust
by First Mortgages.

         (n) Interim Loans, "Interim Loans" shall mean Mortgage Loans secured or
collateralized by Mortgages made on improved properties and having a maturity of
three years or less,

         (o) Junior Mortgage. "Junior Mortgage" shall mean any Mortgage (other
than a Mortgage securing a Wrap-Around Mortgage Loan or a Mortgage securing the
junior portion of a Mortgage Loan with respect to which a Senior Participation
has been issued) which has the same priority or precedence over all charges or
encumbrances on Real Property as is


<PAGE>   8
required for a First Mortgage, except that it is subject to the priority of one
or more Mortgages which must be satisfied before such Junior Mortgage is
entitled to participate in the proceeds of any sale or other disposition of such
Real Property,

         (p) Junior Mortgage Loans. "Junior Mortgage Loans" shall mean Mortgage
Loans (other than Wrap-Around Mortgage Loans and the junior portion of Mortgage
Loans with respect to which a Senior Participation has been sold) secured or
collateralized by Junior Mortgages.

         (q) Long Term. "Long Term" shall mean, when used with respect to a
Mortgage Loan, a Mortgage Loan other than an Interim Loan or a Construction Loan
and, when used with respect to any other Real Property Investment, shall mean
such an investment which is not expected to be amortized in full within a period
of three years from the date on which such investment is made.

         (r) Mortgage Loans. "Mortgage Loans" shall mean notes, debentures,
bonds and other evidence of indebtedness or obligation which are negotiable or
non-negotiable and which are secured or collateralized by Mortgages.

         (s) Mortgages. "Mortgages" shall mean mortgages, deeds of trust or
other security deeds on Real Property or rights or interests in Real Property.

         (t) National Hotel Companies. "National Hotel Companies" shall mean
Hilton Hotels Corporation, Marriott Corporation, Holiday Inns, Inc., TraveLodge
International, Inc. and any other nationally known hotel companies which are
engaged in operations in the Accommodations Field or the granting of franchises
to other Persons with respect to such operations and the Affiliates of any of
them.


         (u) Net Assets. "Net Assets" shall mean the "Total Assets of the
Trust", after deducting therefrom all liabilities of the Trust; provided,
however, that depreciable assets shall be included in such Assets at the lesser
of either:

                  (i) the cost of such Assets on the books of the Trust less
         depreciation thereof on a straight-line basis over the useful life of
         such Assets in accordance with generally accepted accounting
         principles, and in making such calculation the useful life of such
         Assets shall correspond to the useful life used as the basis of
         depreciation on the Trust's federal income tax returns; or

                  (ii) fair market value of such Assets, in the judgment of the
Trustees.

         (v) Person. "Person" shall mean and include individuals, corporations,
limited partnerships, general partnerships, joint stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.


<PAGE>   9
         (w) Real Property. "Real Property" shall mean and include land, rights
in land, leasehold interests (including but not limited to interests of a lessor
or lessee therein), and any building, structures, improvements, fixtures and
equipment located on or used in connection with land, leasehold interests and
rights in land or interest therein, but does not include Mortgages, Mortgage
Loans or interests therein.

         (x) Real Property Investments. "Real Property Investments" shall mean
and include investments in Real Property or in obligations secured, directly or
indirectly, by liens on Real Property, including, but not limited to, Long-Term
Mortgage Loans (with or without Equity Participations), interim Loans,
Development Loans, Construction Loans, First Mortgage Loans, Junior Mortgage
Loans, Wrap-Around Mortgage Loans and Equity Investments in Real Property
(including, but not limited to, land leaseback and leasehold mortgage loans, net
lease financings and sale and leaseback transactions).

         (y) REIT Provisions of the Internal Revenue Code. "REIT Provisions of
the Internal Revenue Code" shall mean Part 11, Subchapter M of Chapter 1, of the
Internal Revenue Code of 1954, as now enacted or hereafter amended, or successor
statutes and regulations promulgated thereunder.

         (z) Securities. "Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes, or other evidences of indebtedness, or
in general any instruments commonly known as "securities" or any certificates of
interest shares or participations in temporary or interim certificates for,
receipts for, guarantees of, or warrants, options or rights to subscribe to,
purchase or acquire any of the foregoing.

         (aa) Senior Participation. "Senior Participation" shall mean a
participation or interest which shall have been sold by the Trust in a Mortgage
Loan, on terms and conditions satisfactory to the Trustees, pursuant to which
the participation sold takes priority or precedence as to charges and liens upon
the mortgaged property and satisfaction out of the proceeds of any sale over the
junior portion of the Mortgage Loan retained by the Trust; provided, however,
that a participation sold in a Mortgage Loan shall not be deemed to be a Senior
Participation as such term is used in this Declaration unless such Mortgage
Loan, considered as a single Mortgage Loan including the junior portion retained
by the Trust, would satisfy all of the requirements relating to the investment
by the Trust in a First Mortgage Loan.

         (bb) Shares, "Shares" shall mean the shares of beneficial interest of
the Trust as described in Section 6.1.

         (cc) Shareholders. "Shareholders" shall mean, as of any particular
time, all holders of record of outstanding Shares at such time.


         (dd) Total Assets of the Trust. "Total Assets of the Trust" shall mean
the value of all the assets of the Trust Estate as such value appears an the
most recent quarterly balance sheet of :he Trust available to the Trustees.


<PAGE>   10
         (ee) Trust. "Trust" shall mean the Trust created by this Declaration.

         (ff) Trustees. "Trustees" shall mean, as of any particular time
Trustees holding office under this Declaration at such time, whether they be the
Trustees named herein or additional or successor Trustees, and shall not include
the officers, representatives or agents of the Trust, or the Shareholders, but
nothing herein shall be deemed to preclude the Trustees from also serving as
officers, representatives, or agents of the Trust, or owning Shares.

         (gg) Trust Estate. "Trust Estate" shall mean. as of any particular
time, any and all property, real, personal, or otherwise, tangible or
intangible, which is owned or held by the Trust or the Trustees, including, but
not limited to, property which is transferred, conveyed or paid to the Trust or
Trustees, and all rents, income, profits and gains therefrom.

         (hh) Trustees' Regulations. "Trustees' Regulations" shall have the
meaning set forth in Section 3.3.

         (ii) Wrap-Around Mortgage Loans. "Wrap-Around Mortgage Loans" shall
mean Mortgage Loans which are subject to prior First Mortgages (which have been
created prior to or simultaneously with the creation of the Wrap-Around Mortgage
Loan) and are made on the basis of the current values of the mortgaged
properties without regard to and without discharging the prior First Mortgages;
provided, however, that a Mortgage Loan shall not be included in the term
Wrap-Around Mortgage Loan for purposes of this Declaration unless the
indebtedness evidenced by the Wrap-Around Mortgage Loan when added to the
indebtedness evidenced by the prior First Mortgage and considered as a single
First Mortgage Loan would comply in all respects with the requirements relating
to an investment by the Trust in such a First Mortgage Loan.

                                   ARTICLE II.
                                    Trustees

         2.1 Number, Term of Office, Qualifications of Trustees. There shall be
no less than three (3) nor more than fifteen (15) Trustees. The initial Trustees
shall be the signatories to this Declaration as originally executed. Within the
limits set forth in this Section 2.1, the number of Trustees may be fixed,
increased or decreased from time to time by the Trustees or by the Shareholders
at any particular time provided however that, subject to the provisions of
section 2.3, each Trustee shall hold office until the expiration of his term and
until the election and qualification of his successor, Trustees may be
re-elected, The Trustee shall be an individual at least twenty-one (21) years of
age who is not under legal disability Such individual shall qualify as a Trustee
when he has either signed the Declaration or agreed in writing to be bound by
it. Unless otherwise required by law, no Trustee shall be required to give bond,
surety or security in any jurisdiction for the performance of any duties or
obligations hereunder. The Trustees, in their capacity as trustees, shall no; be
required to devote their entire time to the business and affairs of the Trust.

         The Trustees shall be divided, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
reasonably possible, with the term of


<PAGE>   11
office of the first class to expire at the 1995 Annual Meeting of Shareholders,
the term of office of the second class to expire at the 1996 Annual Meeting of
Shareholders and the term of office of the third class to expire at the 1997
Annual Meeting of Shareholders, with each Trustee to hold office until his or
her successor shall have been duly elected and qualified. At each Annual Meeting
of Shareholders, commencing with the 1995 Annual Meeting, (i) Trustees elected
to succeed those Trustees whose terms then expire shall be elected for a term of
office to expire at the third succeeding Annual Meeting of Shareholders after
their election, with each Trustee to hold office until his or her successor
shall have been duly elected and qualified, and (ii) if authorized by a
resolution of the Board of Trustees, Trustees may be elected to fill any vacancy
on the Board of Trustees, regardless of how such vacancy shall have been
created.

         2.2 Compensation and Other Remuneration. The Trustees shall be entitled
to receive such reasonable compensation for their services as Trustees as they
may determine from time to time. The Trustees, either directly or indirectly,
shall also be entitled to receive remuneration for services rendered to the
Trust in any other capacity. Such services may include, without limitation,
services as an officer of the Trust, legal, accounting or other professional
services, or services as a broker, transfer agent or underwriter, whether
performed by a Trustee or any person affiliated with a Trustee. Notwithstanding
the foregoing, except as provided in Section 7.6, no Trustee shall receive any
fee or other remuneration, directly or indirectly, as a result of any sale of
property to or purchase of property from the Trust.

         2.3 Resignation, Removal and Death of Trustees. A Trustee may resign at
any time by giving written notice in recordable form to the remaining Trustees
at the principal office of the Trust. Such resignation shall take effect on the
date such notice is given, or at any later time specified in the notice, without
need for prior accounting. A Trustee may be removed at any time, with or without
cause, by vote or written consent of holders of two-thirds (2/3rds) of the
outstanding Shares entitled to vote thereon, or with cause by all remaining
Trustees. A Trustee judged incompetent, or for whom a guardian or conservator
has been appointed, shall be deemed to have resigned as of the date of such
adjudication or appointment. Upon the resignation or removal of any Trustee, or
his otherwise ceasing to be a Trustee, he shall execute and deliver such
documents as the remaining Trustee shall require for the conveyance of any Trust
property held in his name, and shall account to the remaining Trustee or
Trustees, as they require, for all property which he holds as Trustee, and shall
thereupon be discharged as Trustee. Upon the incapacity or death of any Trustee,
his legal representative shall perform the acts set forth in the preceding
sentence and the discharge mentioned therein shall run to such legal
representative and to the incapacitated Trustee or the estate of the deceased
Trustee, as the case may be.

         2.4 Vacancies. If any or all of the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate the Trust or affect its continuity,
Until vacancies are filled, the remaining Trustee or Trustees, if any (even
though less than three (3)), may exercise the powers of the Trustees hereunder.
Vacancies occurring among the Trustees (including vacancies created by increases
in number) may be filled by a majority of the remaining Trustees, though less
than a quorum,


<PAGE>   12
or by a sole remaining Trustee, and the person so appointed shall hold office
for a term expiring at the Annual Meeting of Shareholders at which the term of
office of the class to which they have been appointed expires and until his
successor is elected and qualified. If at any time there shall be no Trustees in
office, successor Trustees shall be elected by the Shareholders as provided in
Section 6.7.

         2.5 Successor and Additional Trustees. The right, title and interest of
the Trustees in and to the Trust Estate shall also vest in successor and
additional Trustees upon their qualification, and they shall thereupon have all
the rights and obligations of Trustees hereunder. Such right, title and interest
shall vest in the Trustees, whether or not conveyance documents have been
executed and delivered pursuant to Section 2.3, or otherwise.

         2.6 Actions by Trustees. A quorum for all meetings of the Trustees
shall be a majority of the Trustees. Common or interested Trustees may be
counted in determining the presence of a quorum at a meeting of the Trustees.
Unless specifically provided otherwise in this Declaration, the Trustees may act
by a vote or resolution at a meeting at which a quorum is present, or without a
meeting by a written vote, resolution, or other writing consenting to said
action, signed by a majority of the Trustees. Any agreement, deed, mortgage,
lease or other instrument or writing executed by one or more of the Trustees, or
by any authorized person, shall be valid and binding upon the Trustees and upon
the Trust when ratified by action of the Trustees.

         2.7 Executive Committee. The Trustees may appoint from among their own
number an executive committee of two or more persons to whom they may delegate
from time to time such of the powers herein given to the Trustees as they may
deem advisable.

         2.8 Names and Addresses of Trustees and Officers. The names and
addresses of the Trustees and officers of the Trust on the date hereof2 are as
follows:


<TABLE>
<CAPTION>
                  Name                                                 Address
                  ----                                                 -------
<S>                                                       <C>
         John P. Traynor                                  6308 Midnight Pass Road Villa 4
           Trustee and Chairman                           Sarasota, Florida 33581

         Harold W, Milner                                 1503 Walden Drive
           Trustee and President                          McLean, Virginia

         Raymond C. Brophy                                1725 DeSales N.W.
           Trustee                                        Washington, D.C.

         Richard S. Ellwood                               10 Heron Road
           Trustee                                        Middletown, New Jersey 07748

         Charles J, Kelley, Jr.                           400 East 57th Street
</TABLE>

2 Refers to date of the Amended Declaration of Trust (August 5, 1970).


<PAGE>   13
<TABLE>
<CAPTION>
                  Name                                                 Address
                  ----                                                 -------
<S>                                                       <C>
           Trustee                                        New York, New-York

         Frederick X. Wilson                              7009 Chansory Lane
           Trustee                                        Hyattsville, Maryland 20782

         C. Lawrence Wiser                                12702 Littleton Street
           Trustee and Secretary                          Silver
                                                          Spring, Maryland 20906
           - Treasurer
</TABLE>


         2.9 Non-Affiliated Trustees. Affiliates of the Advisor and of any
National Hotel Company may be Trustees; however, there shall at all times be at
least a majority of the Trustees who are not Affiliates of the Advisor or of any
National Hotel Company or Affiliates of such Affiliates. If at any time, by
reason of one or more vacancies, there shall not be at least a majority of such
Trustees who are not such Affiliates, then within sixty (60) days after such
vacancy occurs, the continuing Trustee or Trustees then in office shall appoint,
pursuant to Section 2.4, a sufficient number of other Persons who are not such
Affiliates so that there shall be at least a majority of such Trustees in
office.

                                  ARTICLE III.
                                Trustees' Powers

         3.1 Power and Authority of Trustees. The Trustees, subject only to the
specific limitations contained in this Declaration, shall have without further
or other authorization, and free from any power or control on the part of the
Shareholders, full, absolute and exclusive power, control and authority over the
Trust Estate and over the business and affairs of the Trust to the same extent
as if the Trustees were the sole owners thereof in their own right, and to do
all such acts and things as in their sole judgment and discretion are necessary
or incidental to, or desirable, for the carrying out of any of the purposes of
the Trust or conducting the business of the Trust. Any determination made in
good faith by the Trustees of the purposes of the Trust or the existence of any
power or authority hereunder shall be conclusive. In construing the provisions
of this Declaration, presumption shall be in favor of the grant of powers and
authority to the Trustees. The enumeration of any specific power or authority
herein shall not be construed as limiting the general powers or authority or any
other specified power or authority conferred herein upon the Trustees.

         3.2 Specific Powers and Authorities. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authorities conferred by this Declaration or which the Trustees may have by
virtue of any present or future statute or rule or law, the Trustees without any
action or consent by the Shareholders shall have and may exercise at any time
and from time to time the following powers and authorities which may or may not
be exercised by them in their sole judgment and discretion and in such manner
and upon such terms and conditions as they may from time to time deem proper:

         (a) To retain, invest and reinvest the capital or other funds of the
Trust in real or personal property of any kind, all without regard to whether
any such property is authorized


<PAGE>   14
by law for the investment of trust funds and to possess and exercise all the
rights, powers and privileges appertaining to the ownership of the Trust Estate
and to increase the capital of the Trust at any time by the issuance of
additional Shares for such consideration as they deem appropriate.

         (b) For such consideration as they deem proper, to invest in, purchase
or otherwise acquire for cash or other property or through the issuance of
Shares or through the issuance of notes, debentures, bonds or other obligations
of the Trust and hold for investment the entire of any participating interest in
notes, bonds, or other obligations which are secured by Mortgages, In connection
with any such investment, purchase or acquisition, the Trustees shall have the
power to acquire a share of rents, lease payments or other gross income from or
a share of the profits from or a share in the equity or ownership of Real
Property, either directly or through joint venture, general or limited
partnership, or other lawful combinations or associations; to invest in loans
secured by the pledge or transfer of mortgage obligations; to develop, operate,
pool, utilize, grant production payments out of or lease or otherwise dispose of
mineral, oil and gas properties and rights.

         (c) To sell, rent, lease, hire, exchange, release, partition, assign,
mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate,
convey, transfer or otherwise dispose of any and all of the Trust Estate by
deeds, trust deeds, assignments, bills of sale, transfers, leases, mortgages,
financing statements, security agreements and other instruments for any of such
purposes executed and delivered for and on behalf of the Trust or the Trustees
by one or more of the Trustees or by a duly authorized officer, employee, agent
or any nominee of the Trust.

         (d) To issue Shares, bonds, debentures, notes or other evidences of
indebtedness which may be secured or unsecured and may be subordinated to any
indebtedness of the Trust and may be convertible into Shares and which may
include options, warrants and rights to subscribe to, purchase or acquire any of
the foregoing, all without vote of or other action by the Shareholders to such
Persons for such cash, property or other consideration (including Securities
issued or created by, or interest in any Person) at such time or times and on
such terms as the Trustees may deem advisable and to list any of the foregoing
Securities issued by the Trust on any securities exchange and to purchase or
otherwise acquire, hold, cancel, reissue, sell and transfer any of such
Securities.

         (e) To enter into leases, contracts, obligations, and other agreements
for a term extending beyond the term of office of the Trustees and beyond the
possible termination of the Trust or for a lesser term.

         (f) To borrow money and give negotiable or non-negotiable instruments
therefor; to guarantee, indemnify or act as surety with respect to payment or
performance of obligations of third parties; to enter into other obligations on
behalf of the Trust; and to assign, convey, transfer, mortgage, subordinate,
pledge, grant security interests in, encumber or hypothecate the Trust Estate to
secure any of the foregoing.

         (g) To lend money, whether secured or unsecured.


<PAGE>   15
         (h) To create reserve funds for any purpose.

         (i) To incur and pay out of the Trust Estate any charges or expenses,
and disburse any funds of the Trust, which charges, expenses or disbursements
are, in the opinion of the Trustees, necessary or incidental to or desirable for
the carrying out of any of the purposes of the Trust or conducting the business
of the Trust, including without limitation taxes and other governmental levies,
charges and assessments, of whatever kind, or nature, imposed upon or against
the Trustees in connection with the Trust or the Trust Estate or upon or against
the Trust Estate or any part thereof, and for any of the purposes herein.

         (j) To deposit funds of the Trust in banks, trust companies, savings
and loan associations and other depositories, whether or not such deposits will
draw interest, the same to be subject to withdrawal on such terms and in such
manner and by such Person or Persons (including any one or more Trustees, of
officers, agents or representatives) all the Trustees may determine.

         (k) To possess and exercise all the rights, powers and privileges
appertaining to the ownership of ill or any Mortgages or Securities, issued or
created by, or interests in, any Person, forming part of the Trust Estate, to
the same extent that an individual might, and, without limiting the generality
of the foregoing, to vote or give any consent, request or notice, or waive any
notice, either in person or by proxy or power of attorney, with or without power
of substitution, to one or more Persons, which proxies and powers of attorney
may be for meetings or action generally or for any particular meeting or action,
and may include the exercise of discretionary powers,

         (l) To cause to be organized or assist in organizing any Person under
the laws of any jurisdiction to acquire the Trust Estate or any part or parts
thereof or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, rent, lease, hire, convey, negotiate,
assign, exchange or transfer the Trust Estate or any part or parts thereof to or
with any such Person in exchange for the Securities thereof or otherwise, and to
lend money to, subscribe for the Securities of, and enter into any contracts
with, any such Person in which the Trust holds or is about to acquire Securities
or any other interest.

         (m) To enter into joint ventures, general or limited partnerships and
any other lawful combinations or associations.

         (n) To elect, appoint, engage or employ officers for the Trust
(including a President, Secretary, Treasurer and such Vice Presidents and other
officers as the Trustees may determine), who may be removed or discharged at the
discretion of the Trustees, such officers to have such powers and duties, and to
serve such terms, as may be prescribed by the Trustees or by the Trustees'
Regulations; to engage or employ any Persons (including, subject to the
provisions of Sections 7.5 and 7.6, any Trustee or officer and any Person in
which any Trustee or officer is directly or indirectly interested or with which
he is directly or indirectly connected) as agents, representatives, employees,
or independent contractors (including without limitation, real estate advisors,
investment advisors, transfer agents, registrars, underwriters, accountants,
attorneys at law, real estate agents, managers, appraisers, brokers,


<PAGE>   16
architects, engineers, construction managers, general contractors or otherwise)
in one or more capacities, and to pay compensation from the Trust for services
in as many capacities as such Person may be so engaged or employed; and, except
as prohibited by law, to delegate any of the powers and duties of the Trustees
to any one or more Trustees, agents, representatives, officers, employees
independent contractors or other Persons. The Trustees may elect one of the
Trustees as Chairman, to preside at meetings of the Trustees and exercise such
other powers and duties as the Trustees may from time to time assign to him;
provided that the Chairman shall not be or act as an officer of the Trust.

         (o) To determine whether moneys, Securities or other assets received by
the Trust shall be charged or credited to income or capital or allocated between
income and capital, including the power to amortize or fail to amortize any part
or all of any premium or discount, to treat any part of all of the profit
resulting from the maturity or sale of any asset whether purchased at a premium
or at a discount, as income or capital, or apportion the same between income and
capital, to apportion the sales price of any asset between income and capital,
and to determine in what manner any expenses or disbursements are to be borne as
between income and capital, whether or not in the absence of the power and
authority conferred by this subsection such moneys, Securities or other assets
would be regarded as income or as capital or such expense or disbursement would
be charged to income or to capital; to treat any dividend or other distribution
on any investment as income or capital or apportion the same between income and
capital; to provide or fail to provide reserves for depreciation, amortization
or obsolescence in respect of all or any part of the Trust Estate subject to
depreciation, amortization or obsolescence in such amounts and by such methods
as they shall determine; and to determine the method or form in which the
accounts and records of the Trust shall be kept and to change from time to time
such method or form.


         (p) To determine from time to time, the value of all or any part of the
Trust Estate and of any services, Securities, property or other consideration to
be furnished to or acquired by the Trust, and from time to time to revalue all
or any part of the Trust Estate in accordance with such appraisals or other
information as are, in the Trustees' sole judgment, necessary and/or
satisfactory.

         (q) To collect, sue for, and receive all sums of money coming due to
the Trust, and to engage in, intervene in, prosecute, join, defend, compound,
compromise, abandon or adjust, by arbitration or otherwise, any actions, suits,
proceeding, disputes, claims, controversies demands or other litigation relating
to the Trust, the Trust Estate or the Trust's affairs, to enter into agreements
therefor, whether or not any suit is commenced or claim accrued or asserted and,
in advance of any controversy, to enter into agreements regarding arbitration,
adjudication or settlement thereof.

         (r) To renew, modify, release, compromise, extend, consolidate, or
cancel, in whole or in part, any obligation to or of the Trust.

         (s) To purchase and pay for out of the Trust Estate insurance contracts
and policies insuring the Trust Estate against any and all risks and insuring
the Trust and/or any or all of


<PAGE>   17
the Trustees, the Shareholders or officers against any and all claims and
liabilities of every nature asserted by any Person arising by reason of any
action alleged to have been taken or omitted by the Trust or by the Trustees,
Shareholders, or officers.

         (t) To cause legal title to any of the Trust Estate to be held by
and/or in the name of the Trustees, or except as prohibited by law, by and/or in
the name of the Trust or one or more of the Trustees or any other Person, on
such terms, in such manner, with such powers in such Person as the Trustees may
determine, and with or without disclosure that the Trust or Trustees are
interested therein.

         (u) To adopt a fiscal year for the Trust, and from time to time to
change such fiscal year.

         (v) To adopt and use a seal (but the use of a seal shall not be
required for the execution of instruments or obligations of the Trust).

         (w) To make, perform, and carry out, or cancel and rescind, contracts
of every kind for any lawful purpose without limit as to amount, with any
person, firm, trust, association, corporation, municipality, county, parish,
state, territory, government or other municipal or governmental subdivision.
These contracts shall be for such duration and upon such terms as the Trustees
in their sole discretion shall determine.

         (x) To do all other such acts and things as are incident to the
foregoing, and to exercise all powers which are necessary or useful to carry on
the business of the Trust, to promote any of the purposes for which the Trust is
formed, and to carry out the provisions of this Declaration.

         3.3 Trustees Regulations. The Trustees may make, adopt, amend or repeal
regulations (the "Trustees' Regulations") containing provisions relating to the
business of the Trust, the conduct of its affairs, its rights or powers and the
rights or powers of its Shareholders, Trustees or officers not inconsistent with
law or with this Declaration.

         3.4 Additional Powers. The Trustees shall additionally have and
exercise all the powers conferred by the laws of the State of Maryland upon real
estate investment trusts formed under such laws, insofar as such laws are not in
conflict with the provisions of this Declaration.

         3.5 Incorporation. With the approval of the holders of a majority of
the shares, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or any other
trust, partnership, association, or other organization to take over the Trust
property or any part or parts thereof or to carry on any business in which the
Trust shall directly or indirectly have any interest, and to sell, convey and
transfer the Trust property or any part or parts thereof to any such
corporation, trust, association, or organization in exchange for the shares or
securities thereof or otherwise, and to lend money to, subscribe for the shares
or securities of, and enter into any contracts with any such corporation, trust,
association, or organization, or any corporation, trust, partnership,


<PAGE>   18
association, or organization in which the Trust holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation if and to the extent permitted by law, provided that under the law
then in effect, the federal income tax benefits available to Real Estate
Investment Trusts, or substantially similar benefits, are also available to such
corporation, trust, association or organization.

                                   ARTICLE IV.
                    Advisor; Limitation on Operating Expenses

         4.1 Employment of Advisor. The Trustees are responsible for the general
policies of the Trust and for such general supervision of the business of the
Trust conducted by all officers, agents, employees, advisors, managers or
independent contractors of the Trust as may be necessary to insure that such
business conforms to the provisions of this Declaration. However, the Trustees
shall not be required personally to conduct the business of the Trust, and
consistent with their ultimate responsibility as stated above, the Trustees
shall have the power to appoint, employ or contract with such Person or Persons
(including one or more of themselves or any corporation, partnership, or trust
in which one or more of them may be directors, officers, stockholders, partners
or trustees) as the Trustees may deem necessary or proper for the transaction of
the business of the Trust. The Trustees may therefor employ or contract with
such Person (herein referred to as the "Advisor") as an investment adviser and
administrator of the affairs of the Trust and may grant or delegate such
authority to the Advisor as the Trustees may in their sole discretion deem
necessary or desirable without regard to whether such authority is normally
granted or delegated by Trustees.

         The Trustees shall have the power to determine the terms and
compensation of the Advisor or any other Person whom they may employ or with
whom they may contract; provided, however, that any determination to employ or
contract with any Trustee or any Person in which a Trustee may be a director,
Officer, stockholder, partner, employee or trustee, shall be valid only if made,
approved or ratified by a majority of the other Trustees. The Trustees may
exercise broad discretion in allowing the Advisor to administer and regulate the
operations of the Trust, to act as agent for the Trust, to execute documents on
behalf of the Trustees, and to make executive decisions which conform to general
policies and general principles previously established by the Trustees.

         4.2 Term. The Trustees shall not enter into any contract with the
Advisor unless such contract has an initial term expiring at the end of the
Trust's fiscal year commencing in 1971 and provides for annual renewal or
extension thereafter. The Trustees shall not enter into such a contract with any
Person unless such contract provides for renewal or extension thereof only by
the affirmative vote of a majority of the other Trustees. Any such contract
shall provide that it may be terminated (a) by the Trust upon sixty (60) days'
written notice by unanimous vote of the Trustees who are not affiliated with the
Advisor, (b) by the Advisor upon one hundred twenty (120) days' written notice
by unanimous vote of the directors of the Advisor who are not Trustees or (c) by
the holders of more than a majority of the shares of the Trust.



<PAGE>   19
         4.3 Restrictions on Advisor. The Advisor may administer the Trust as
its sole and exclusive function or engage in other activities including the
rendering of advice to other investors and the management of other investments.
The Advisor shall not, however, without prior written consent of a majority of
the Trustees, render advice or service to any other Real Estate Investment
Trust, except that the Advisor may with respect to any loan or other investment
in which the Trust may participate or allot a participation, render advice and
service, with or without remuneration, to each and every participant in such
loan or other investment.

         4.4 Limitation on Operating Expenses. Each contract made with the
Advisor shall provide that, within 120 days after the end of any Fiscal Year
which begins on a date following the effective date of the Trust's first
Registration Statement filed under the Securities Act of 1933, the Advisor will
refund to the Trust (or, at the election of the Trustees, reduce its
compensation payable by) (A) the amount, if any, by which the Operating Expenses
of the Trust during such Fiscal Year exceed the lesser of (a) 1.2% of the
Average Value of Invested Assets for such Fiscal Year or (b) the greater of (i)
1.2% of the Month-end Average Net Assets of the Trust for such Fiscal Year or
(ii) 25% of the Net Income of the Trust for such Fiscal Year and (B) the amount,
if any, by which the aggregate of fees and expenses (including travel expenses
and other out-of-pocket expenses) paid to Trustees who are not affiliates of the
Advisor and expenses of the type referred to in clause (m) of the definition of
operating Expenses contained in this Section 4.4 during such Fiscal Year
exceeded 0.3% of the Average Value of Invested Assets for such Fiscal Year.

         For purposes of this Section 4.4 the following terms shall have the
meanings set forth below:

         (a) "Average Value" for any period shall mean the arithmetic average of
the aggregate Value of the assets reflected in the computation at the close of
the last business day of each month during the period to which such computation
relates.

         (b) "Average Value of Invested Assets" shall mean the Average Value of
the Trust's total assets (without deduction of any liabilities) plus the
undisbursed commitments of the Trust in respect of closed loans or other closed
investments, but excluding good will and other intangible assets, cash, cash
items and obligations of municipal, state and the federal governments and
governmental agencies (other than obligations secured by a lien on real property
owned, or to be acquired, by such governments or governmental agencies and
securities of the Federal Housing Administration, the Federal National Mortgage
Administration, and other governmental agencies issuing securities backed by a
pool of mortgages).

         (c) "Value" of an asset or assets shall mean the value of such asset or
assets on the books of the Trust, reduced by provision for amortization,
depreciation or depletion but before deducting any indebtedness or other
liability in respect thereof. Depreciable assets shall be valued at the lesser
or fair market value (in the judgment of the Trustees) or cost less straight
line depreciation.


<PAGE>   20
         (d) "Fiscal Year" shall mean any period for which an income tax return
is submitted to the Internal Revenue Service and which is treated by the
Internal Revenue Service as a reporting period.

         (e) "Net Income" for any period shall mean the net income of the Trust
for such period computed on the basis of its results of operations for such
period, after deduction of all expenses other than the regular, incentive and
additional compensation payable to the Advisor or fees payable to any mortgage
service, and excluding extraordinary items and gains and losses from the
disposition of assets of the Trust.

         (f) "Month-End Average Net Assets" shall mean the Average Value of all
the assets of the Trust minus all the liabilities of the Trust reflected in the
computation at the close of each month during the period to which such
computation relates.

         (g) "Operating Expenses" during any Fiscal Year shall mean the
aggregate annual expenses of every character regarded as operating expenses in
accordance with generally accepted accounting principles, as determined by the
independent public or certified accountants who shall have reported on the
financial statements of the Trust at the end of and for such Fiscal Year but
excluding:

                  (a) interest, discount and other costs of borrowed money;

                  (b) taxes on income and taxes and assessments on real property
         and all other taxes (including license fees) applicable to the Trust;

                  (c) legal, audit, accounting, underwriting, brokerage,
         listing, registration and other fees, printing, engraving and other
         expenses and taxes incurred in connection with the issuance,
         distribution, transfer, registration and stock exchange listing of the
         Trust's securities;

                  (d) fees and expenses (including travel expenses and other
         out-of-pocket expenses) paid to Trustees (other than fees paid to
         Trustees who are affiliates of the Advisor), independent contractors,
         consultants, managers, closing i d disbursement agents, and other
         agents employed by or on behalf of the Trust (other than the Advisor);

                  (e) expenses connected with the acquisition, disposition and
         ownership of real estate interests or mortgage loans or other property
         (including the costs of closing, foreclosure, insurance premiums, legal
         services, brokerage and sales commissions, maintenance, repair and
         improvement of property);

                  (f) expenses of maintenance, up-keep and management of real
         estate equity interests and processing and servicing mortgage,
         construction and other loans;

                  (g) insurance as required by the Trustees (including Trustees'
liability insurance);


<PAGE>   21
                  (h) the expenses of organizing, revising, amending,
converting, modifying or terminating the Trust;

                  (i) expenses connected with payments of dividends or interest
         or distributions in cash or any other form made or caused to be made by
         the Trustees to holders of securities of the Trust;

                  (j) all expenses connected with communications to holders of
         securities of the Trust and the other bookkeeping and clerical work
         necessary in maintaining relations with holders of securities,
         including the cost of printing and mailing certificates for securities
         and proxy solicitation materials and reports to holders of the Trust's
         securities;

                  (k) the cost of any accounting, statistical, or bookkeeping
         equipment necessary for the maintenance of the books and records of the
         Trust;

                  (l) transfer agent's, registrars and indenture trustees fees
         and charges;

                  (m) legal, accounting and auditing fees and expenses incurred
         in connection with the administration and operation of the business of
         the Trust in the ordinary course of its business and not included in
         clauses (a) through (1) of this definition; and

                  (n) depletion, depreciation, amortization and losses on
         disposition of investments and reserves therefor.

         All calculations made in accordance with this Section 4.4 shall be
based upon statements (which may be unaudited, except as provided herein)
prepared on an accrual basis consistent with generally accepted accounting
principles, regardless of whether the Trust may also prepare statements on a
different basis.

         4.5 Initial Advisor. Hotel Advisors, Inc. shall serve as the initial
Advisor.

         4.6 Sale of Shares of the Advisor. Any advisory agreement entered into
by the Trustees with an Advisor shall contain, among other provisions, a
provision permitting any transfer, directly or indirectly, of securities of the
Advisor without the consent of the Trust or its shareholders and a waiver to the
fullest extent permitted by law of any rights which the Trust or its
shareholders might have to any income or profits realized on any such direct or
indirect transfer by the transferor of such securities. By purchasing Shares of
the Trust, each shareholder shall be deemed to have consented to any such
transfer and to have expressly and irrevocably waived any interest in or rights
to any such income or profits. Such waiver shall not be effective as to any
transfer of a majority of the voting stock of the Advisor unless such transfer
shall have been consented to by the holders of a majority of the Shares of the
Trust.


                                   ARTICLE V.
                                Investment Policy


<PAGE>   22
         5.1 General Statement of Policy. The Trust has been established to
provide investors with the opportunity to invest in a portfolio of Real Property
investments consisting primarily of Long-Term Mortgage Loans with Equity
Participations and Equity Investments in Real Property made in transactions not
relating to the Trust's lending activities. The Trust may also make Construction
Loans primarily in connection with Long-Term Real Property Investments. It is
the policy of the Trust to concentrate its Real Property Investments in the
Accommodations Field; however, other types of income producing Real Property
Investments may be made by the Trust if, in the opinion of the Trustees, such
investments are more advantageous to the Trust than available Real Property
Investments in the Accommodations Field. In addition to the foregoing the Trust
is empowered to make any other investment or engage in any other activity which
does not adversely affect the Trust's status as a real estate investment trust
under the REIT Provisions of the Internal Revenue Code. In each case the
Trustees may make the Trust's investments or engage in an activity alone or in
participation with others, including the granting of Senior Participations to
other lenders.

         5.2 [Deleted.]

         5.3 [Deleted.]

         5.4 Obligor's Default. Notwithstanding any provision of this
Declaration, when an obligor to the Trust is in default under the terms of any
obligation to the Trust, the Trustees shall have the power to pursue any
remedies permitted by law which in their sole judgment are in the interest of
the Trust, and the Trustees shall have the power to enter into any necessary
investment, commitment or obligation of the Trust which results from the pursuit
of such remedies or which is necessary or desirable to dispose of property
acquired in the pursuit of such remedies.

         5.5 Changes Investment Policies and Restrictions. Notwithstanding the
foregoing provisions of this Article 5, the investment policies and the
restrictions thereon set forth in Sections 5.1 through 5.6 of this Declaration
may be altered or modified by the Trustees, or additional or substitute policies
or restrictions may be adopted by the Trustees if they shall determine, and so
specify in a duly adopted resolution, that the alteration or modification of
such policies or restrictions or the adoption of additional or substitute
policies or restrictions are in the best interests of the Trust and its
Shareholders and are not prohibited by the Real Estate Investment Trust
provisions of the Internal Revenue Code and no consent or approval of, or other
action by, Shareholders shall be required for any such alteration, modification
or adoption. Any policy or restriction altered, modified, or adopted pursuant to
this Section 5.8 shall be subject to subsequent alteration or modification only
with the consent of Shareholders- holding a majority of the outstanding Shares
entitled to vote on such alteration or modification if the Trustees shall so
specify in the resolution adopted with respect to such policy or restriction.
Any resolution adopted by the Trustees pursuant to this Section 5.8 shall be
recorded within the State of Maryland in such public offices as this Declaration
and any amendments hereto shall have been recorded in accordance with Section
9.8 of this Declaration.

         5.6 [Deleted.]


<PAGE>   23
                                   ARTICLE VI.
                           The Shares and Shareholders

         6.1 Shares. The units into which the beneficial interests in the Trust
will be divided shall be designated as Shares consisting of (a) 1,000,000,000
Trust Shares with a par value of $0.01 per share and having equal dividend,
distribution, liquidation and other rights but without preference, pre-emptive,
appraisal, conversion or exchange rights of any kind, (b) 200,000,000 Excess
Trust Shares with a par value of $0.01 per share and having the rights provided
in Article VI hereof, (c) 100 million Trust Preferred Shares with a par value of
$0.01 per share and having the rights provided in Article VI hereof and (d)
50,000,000 Excess Preferred Shares with a par value of $0.01 per share and
having the rights provided in Article VI hereof, provided, however, that the
Trustees may, in their discretion, create and authorize the issuance of Shares
of one or more additional classes, or one or more series within any such class,
with or without par value, having such voting rights, such rights to dividends,
distributions and in liquidation, such conversion, exchange and redemption
rights, and such designations, preferences, participation, and other limitations
or restrictions, as shall not be prohibited by this Declaration or the Real
Estate Investment Trust provisions of the Internal Revenue Code or the laws of
the State of Maryland and as shall be specified by the Board of Trustees in
their discretion in a resolution or resolutions duly adopted by the Board of
Trustees and filed and accepted for record with the State Department of
Assessments and Taxation of Maryland. As used herein, the term "Shares" shall
mean and include (i) the Trust Shares, Excess Trust Shares, Trust Preferred
Shares and Excess Preferred Shares, and (ii) from and after the issuance of
Shares of any other and additional classes of Shares so created and authorized
by the Trustees, such Shares. The certificates evidencing the Shares shall be in
such form and signed (manually or by facsimile) on behalf of the Trust in such
manner as the Trustees may from time to time prescribe or as may be prescribed
in the Trustees' Regulations. The certificates shall be negotiable and title
thereto and to the Shares evidenced thereby shall be transferred by assignment
and delivery thereof to the same extent and in all respects as a share
certificate of a Maryland corporation. The Shares may be issued for such
consideration as the Trustees shall determine or by way of share dividend or
share split in the discretion of the Trustees. Shares reacquired by the Trust
shall no longer be deemed outstanding and shall have no voting or other rights
unless and until reissued. Shares reacquired by the Trust may be canceled and
restored to the status of authorized and unissued Shares by action of the
Trustees. All Shares shall be fully paid and non-assessable by or on behalf of
the Trust upon receipt of full consideration for which they have been issued or
without additional consideration if issued by way of share dividend or share
split. The Board of Trustees may authorize the issuance from time to time of
shares of beneficial interest of the Trust of any class or series, whether now
or hereafter authorized, or securities or rights convertible into shares of
beneficial interest of any class or series, whether now or hereafter authorized,
for such consideration (whether in cash, property, past or future services,
obligation for future payment or otherwise) as the Board of Trustees may deem
advisable (or without consideration in the case of a share split, share dividend
or contribution), subject to such restrictions or limitations, if any, as may be
set forth in this Declaration or the Trustees' Regulations.


<PAGE>   24
         6.2 Legal Ownership of Trust Estate. The legal ownership of the Trust
Estate and the right to conduct the business of the Trust are vested exclusively
in the Trustees and the Shareholders shall have no interest therein other than
beneficial interest in the Trust conferred by their Shares issued hereunder and
they shall have no right to compel any partition, division, dividend or
distribution of the Trust or any of the Trust Estate.

         6.3 Shares Deemed Personal Property. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and rights
specifically set forth in this Declaration. The death, insolvency or incapacity
of a Shareholder shall not dissolve or terminate the Trust or affect its
continuity nor give his legal representative any rights whatsoever, whether
against or in respect of other Shareholders, the Trustees or the Trust Estate or
otherwise except the sole right to demand and, subject to the provisions of this
Declaration, the Trustees' Regulations and any requirements of law, to receive a
new certificate for Shares registered in the name of such legal representative,
in exchange for the certificate held by such Shareholder.

         6.4 Share Record: Issuance and Transferability Shares. Records shall be
kept by or on behalf of and under the direction of the Trustees, which shall
contain the names and addresses of the Shareholders, the number of Shares held
by them respectively, and the numbers of the certificates representing the
Shares, and in which there shall be recorded all transfers of Shares.
Certificates shall be issued, listed and transferred in accordance with the
Trustees, Regulations. The Persons in whose names certificates are registered on
the records of the Trust shall be deemed the absolute owners of the shares
represented thereby for all purposes of this Trust; but nothing herein shall be
deemed to preclude the Trustees or officers, or their agents or representatives,
from inquiring as to the actual ownership of Shares. Prior to due presentment
for registration of transfer, the Trustees shall not be affected by any notice
of such transfer, either actual or constructive. The receipt by the person in
whose name any Shares age registered on the records of the Trust or of the duly
authorized agent of such Person, or if such Shares are so registered in the
names of more than one Person, the receipt of any one of such Persons, or of the
duly authorized agent of such Person, shall be a sufficient discharge for all
dividends or distributions payable or deliverable in respect of such Shares and
from all liability to see to the application thereof.

         Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing upon
delivery to the Trustees or a transfer agent of the certificate or certificates
therefor, properly endorsed or accompanied by duly executed instruments of
transfer and accompanied by all necessary documentary stamps together with such
evidence of the genuineness of each such endorsement, execution or authorization
and of other matters as may reasonably be required by the Trustees or such
transfer agent. Upon such delivery, the transfer shall be recorded in the
records of the Trust and a new certificate for the Shares so transferred shall
be issued to the transferee and in case of a transfer of only a part of the
Shares represented by any certificate, a new certificate for the balance shall
be issued to the transferor. Any Person becoming entitled to any Shares in
consequence of the death of a Shareholder or otherwise by operation of law shall
be recorded as the holder of such Shares and shall receive a new certificate
therefor but only upon delivery to the Trustees or a transfer agent of
instruments and other evidence required by the Trustees


<PAGE>   25
or the transfer agent to demonstrate such entitlement, the existing certificate
for such Shares and such necessary releases from applicable governmental
authorities. In case of the loss, mutilation or destruction of any certificate
for Shares, the Trustees may issue or cause to be issued a replacement
certificate on such terms and subject to such rules and regulations as the
Trustees may from time to time prescribe. Nothing in this Declaration shall
impose upon the Trustees or a transfer agent a duty or limit their rights to
inquire into adverse claims.

         6.5 Dividends or Distributions to Shareholders. The Trustees may from
time to time declare and pay to Shareholders such dividends or distributions in
cash or other form, out of current or accumulated income, capital, capital
gains, principal, surplus, proceeds from the increase or refinancing of Trust
obligations, or from the sale of portions of the Trust Estate or from any other
source as the Trustees in their discretion shall determine. Shareholders shall
have no right to any dividend or distribution unless and until declared by the
Trustees. The Trustees shall furnish the Shareholders at the time of each such
distribution with a statement in writing advising as to the source of the funds
so distributed or, if the source thereof has not then been determined, the
communication shall so state and in such event the statement as to such source
shall be sent to the Shareholders not later than sixty (60) days after she close
of the fiscal year in which the distribution was made.

         6.6 Transfer Agent, Dividend Distributing Agent and Registrar. The
Trustees shall have power to employ one or more transfer agents, dividend
disbursing agents and registrars and to authorize them on behalf of the Trust to
keep records, to hold and disburse any dividends and distributions, and to have
and perform in respect of all original issues and transfers of Shares, dividends
and distributions and reports and communications to Shareholders, the powers and
duties usually had and performed by transfer agents, dividend disbursing agents
and registrars of a Maryland corporation.

         6.7 Shareholders' Meeting. There shall be an Annual Meeting of the
Shareholders which shall be held at the principal office of the Trust, or at
such other convenient location as may be determined by the Trustees or by the
written consent of all Shareholders entitled to vote thereat, at such time as
the Trustees shall determine, at which the Trustees shall be elected and any
other proper business may be conducted. The Annual Meeting shall be held after
delivery to the Shareholders of the Annual Report. At least ten (10) days and
not more than forty (40) days notice shall be given of the time and place of the
Annual Meeting of the Shareholders, Special meetings of Shareholders may be
called by the Trustees and shall be called upon the written request of
Shareholders holding not less than twenty-five percent (25%) of the outstanding
Shares of the Trust entitled to vote in the manner provided in the Trustees'
Regulations. If there shall be no Trustees, the officers of the Trust shall
promptly call a special meeting of the Shareholders for the election of
successor Trustees. Notice of any special meeting shall state the purposes of
the meeting. A majority of the outstanding Shares entitled to vote at any
meeting represented in person or by proxy shall constitute a quorum at any such
meeting. Whenever any action is to be taken by the Shareholders, such action
shall, except as otherwise required by this Declaration or by law, be authorized
by a majority of the votes cast at a meeting of Shareholders by holders of
Shares entitled to vote thereon.


<PAGE>   26
         Notwithstanding anything in this Declaration to the contrary, the Trust
shall not consummate a merger, the shareholder approval of which is required by
the applicable laws unless such transaction is approved by the shareholders by
the affirmative vote of a majority of all the votes entitled to be cast on the
matter.

         The affirmative vote at a meeting of Shareholders of the holders of a
majority of all outstanding Shares shall be required to approve the principal
terms of the transaction and the nature and amount of the consideration
involving any sale, lease, exchange or other disposition of more than 50% of the
Trust Estate. Whenever Shareholders are required or permitted to take any
action, such action may be taken without a meeting on written consent setting
forth the action so taken, signed by the holders of a majority of all
outstanding Shares entitled to vote thereon, or such larger proportion thereof
as would be required for a vote of Shareholders at a meeting. The vote or
consent of Shareholders shall not be required for the pledging, hypothecating,
granting security interest in, mortgaging, or encumbering of all or any of the
Trust Estate, or for the sale, lease, exchange or other disposition of less than
50% of the Trust Estate.

         6.8 Proxies. Whenever the vote or consent of Shareholders is required
or permitted under this Declaration, such vote or consent may be given either
directly by the Shareholder or to a proxy in the form prescribed in the Trustees
Regulations, The Trustees may solicit such proxies from the Shareholders or any
of them in any manner requiring or permitting the Shareholders' vote or consent.

         6.9 Reports to Shareholders. Not later than ninety (90) days after the
close of each fiscal year of the Trust, the Trustees shall mail a report of the
business and operation of the Trust during such fiscal year to the Shareholders,
which report shall constitute the accounting of the Trustees for such fiscal
year. The report (herein "Annual Report") shall be in such form and have such
content as the Trustees deem proper, The Annual Report shall include a balance
sheet and a statement of income and surplus of the Trust. Such financial
statement shall be accompanied by a certificate of an independent certified
public accountant thereon, based on a full examination of the books and records
of the Trust and made in accordance with generally accepted auditing procedure,
A manually signed copy of the accountant's certificate shall be filed with the
Trustees, A signed copy of the Annual Report and accountant's certificate shall
be filed with the Department of Assessments and Taxation of the State of
Maryland within ninety (90) days after the close of each fiscal year.

         6.10 Fixing Record Date. The Trustees' Regulations may provide for
fixing or in the absence of such provision, the Trustees may fix, in advance, a
date as the record date for determining the Shareholders entitled to notice of
or to vote at any meeting of Shareholders or to express consent to any proposal
without a meeting, or for the purpose of determining Shareholders entitled to
receive payment of any dividend or distribution (whether before or after
termination of the Trust) or any Annual Report or other communication from the
Trustees, or for any other purpose. The record date so fixed shall be not less
than five (5) days nor more than fifty (50) days prior to the date of the
meeting or event for the purposes of which it is fixed.


<PAGE>   27
         6.11 Notice to Shareholders. Any notice of meeting o ocher notice,
communication or report to any Shareholder shall be deemed duly delivered as
such Shareholder when such notice, communication or report is deposited, with
postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust or is
delivered in person to such Shareholder.

         6.12 Restrictions on Transfer.

         (a) Definitions. The following terms shall have the following meanings:

         "Beneficial Ownership" shall mean ownership of Shares by a Person who
would be treated as an owner of such Shares directly, indirectly-or
constructively through the application of Section 318 (a) of the Code, as
modified by Section 856(d) (5) of the Code, or Section 544 of the Code, as
modified by Section 856(h) of the Code, The terms "Beneficial Owner",
"Beneficially Owns* and *Beneficially Owned" shall have correlative meanings,

                  "Charitable Beneficiary" shall mean the organization or
         organizations described in Section 170(c)(2) and 501(c)(3) of the Code
         selected by the Excess Share Trustee,

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended from time to time.

                  "Excess Shares" shall mean the Excess Trust Shares and the
         Excess Preferred Shares.

                  "Excess Share Trust" shall mean the trust created pursuant to
         Section 6.13 hereof.

                  "Excess Share Trust Beneficiary' shall mean a beneficiary of
         the Excess Share Trust as determined pursuant to Section 6.13 hereof,

                  "Excess Share Trustee" shall mean Nina Matis or any successor
         appointed pursuant to Section 6.13 hereof.

                  "Market Price" of any class of Shares on any date shall mean
         the average of the Closing Price for the five (5) consecutive trading
         days ending on such date, or if such date is not a trading date, the
         five consecutive trading days preceding such date. The "Closing Price"
         on any date shall mean (i) the last sale price, regular way, or, in
         case no such sale takes place on such day, the average of the closing
         bid and asked prices, regular way, in either case as reported in the
         principal consolidated transaction reporting system with respect to
         securities listed or admitted to trading on the New York Stock
         Exchange, or (ii) if such class of Shares is not listed or admitted to
         trading on the New York Stock Exchange, as reported in the principal
         consolidated transaction reporting system with respect to securities
         listed on the principal national securities exchange on which such
         class of Shares is listed or admitted to trading, or (iii) if such
         class of Shares is not listed or admitted to trading on any national
         securities exchange,


<PAGE>   28
         the last quoted price, or if not so quoted, the average of the high bid
         and low asked prices in the over-the-counter market, as reported by the
         National Association of Securities Dealers! Inc. Automated Quotation
         System or, if such system is no longer in use, the principal other
         automated quotations system that may then be in use, or (iv) if such
         class of Shares is not quoted by any such organization, the average of
         the closing bid and asked prices as furnished by a professional market
         maker making a market in such class of Shares selected by the Trustees.

                  "Ownership Limit" shall mean (i) in the case of a Person other
         than an Existing Holder (as defined below) Beneficial Ownership of more
         than eight percent (8.0%t), by value, vote or number, of the Shares and
         (ii) in the case of a Person who or which was the Beneficial Owner, as
         of February 1, 1995 (the "Amendment Date"), of more than 8.0% (by vote,
         value or number) of the Shares (any such Person being referred to as an
         "Existing Holder"), a percentage (by vote, value or number) equal to
         the lesser of (a) 9.9% and (b) the percentage of Shares Beneficially
         Owned by such Existing Holder as of the Amendment Date; provided that
         if, at any time and from time to time after the Amendment Date, the
         percentage of Shares Beneficially Owned by an Existing Holder shall
         decrease (whether by reason of a disposition b such Existing Holder, an
         increase in the number of outstanding Shares or otherwise), then from
         and after the time of such decrease the Ownership Limit in the case of
         such Existing Holder shall be a percentage (by vote, value or number)
         equal to the greater of (x) 8.O% and (y) the percentage of Shares
         Beneficially Owned by such Existing Holder after giving effect to such
         decrease.

                  "Purported Beneficial Holder" shall mean, with respect to any
         event (other than a purported Transfer) which result in Excess Shares,
         the Person for whom the Purported Record Holder held Shares that were,
         pursuant to Section 6.12(c) hereof, automatically converted into Excess
         Shares upon the occurrence of such event.

                  "Purported Beneficial Transferee" shall mean, with respect to
         any purported Transfer which results in Excess Shares, the purported
         beneficial transferee for whom the Purported Record Transferee would
         have acquired Shares if such Transfer had been valid under Section
         6.12(b) hereof.

                  "Purported Record Holder" Shall mean, with respect to any
         event (other than a purported Transfer) which results in Excess Shares,
         the record holder of the Shares that were, pursuant to Section 6.12(c)
         hereof, automatically converted into Excess Shares upon the occurrence
         of such event,

                  "Purported Record Transferee" shall mean, with respect to any
         purported Transfer which results in Excess Shares, the record holder of
         the Shares if such Transfer had been valid under Section 6.12(b)
         hereof.

                  "Restriction Termination Date" shall mean the first day of the
         taxable year for which the Trustees have determined to terminate the
         Trust's status as a REIT.


<PAGE>   29
                  "Transfer" shall mean any sale, transfer, gift, hypothecation,
         pledge, assignment, devise or other disposition of Shares (including
         (i) the granting of any option or interest similar to an option
         (including an option to acquire an option or any series of such
         options) or entering into any agreement for the sale, transfer or other
         disposition of Shares or (ii) the sale, transfer, assignment or other
         disposition of any securities or rights convertible into or
         exchangeable for Shares), whether voluntary or involuntary, whether of
         record, constructively or beneficially and whether by operation of law
         or otherwise. For purposes of this definition, whether securities or
         rights are convertible or exchangeable for Shares shall be determined
         in accordance with Sections 318 and 544 of the Code.

         (b) Restrictions of Transfers and Other Events. On or after the
Restriction Termination Date, the provisions of Sections 6.12 and 6.13 hereof
shall be of no further force and effect. Prior to the Restriction Termination
Date and except as provided in Section 6.12(i) hereof:

                  (1) No Person shall Beneficially Own Shares in excess of the
         Ownership Limit;

                  (2) Any Transfer that, if effective, would result in any
         Person Beneficially Owning Shares in excess of the ownership Limit
         shall be void ab initio as to the Transfer of that number of Shares
         which would be otherwise Beneficially Owned by such Person in excess of
         the ownership Limit and the intended transferee shall acquire no rights
         in such Shares in excess of the Ownership Limit;

                  (3) Any Transfer that, if effective, would result in the
         Shares being Beneficially Owned by fewer than one hundred (100) Persons
         (determined without reference to any rules of attribution) shall be
         void ab initio and the intended transferee shall acquire no rights in
         such Shares; and

                  (4) Any Transfer of Shares that, if effective, would result in
         the Trust being "closely held" within the meaning of Section 856(h) of
         the Code shall be void ab initio as to the Transfer of that number of
         Shares which would cause the Trust to be "closely held" within the
         meaning of Section 856(h) of the Code and the intended transferee shall
         acquire no rights in such Shares.

         (c) Conversion into Excess Shares.

                  (1) If, notwithstanding the other Provisions contained in this
         Article VI, at any time prior to the Restriction Termination Date,
         there is a purported Transfer or other event such that any Person would
         Beneficially Own Shares in excess of the Ownership Limit, then, except
         as otherwise provided in Section 6.12(i) hereof, such Shares which
         would be in excess of the Ownership Limit (rounded up to the nearest
         whole share), shall automatically be converted into that number of
         shares of Excess Trust Shares or Excess Preferred Shares, as
         appropriate, equal to the number of Shares being converted, as further
         described in Section 6.12(c)(3) hereof. Such conversion


<PAGE>   30
         shall be effective as of the close of business on the business day
         prior to the date of the Transfer or other event.

                  (2) If, notwithstanding the other provisions contained in this
         Article VI, at any time prior to the Restriction Termination Date,
         there is a purported Transfer or other event which, if effective, would
         cause the Trust to become "closely held" within the meaning of Section
         856(h) of the Code, then the Shares being Transferred or which are
         otherwise affected by such event and which, in either case, would
         cause, when taken together with all other Shares, the Trust to be
         "closely held" within the meaning of Section 856(h) of the Code
         (rounded up to the nearest whole share) shall automatically be
         converted into that number of Excess Trust Shares or Excess Preferred
         Shares, as appropriate, equal to the number of Shares being converted,
         as further described in Section 6.12(c)(3) hereof. Such conversion
         shall be effective as of the close of business on the business day
         prior to the date of the Transfer or change in capital structure.

                  (3) Upon conversion of Trust Shares or Preferred Shares into
         Excess Shares pursuant to this Section 6.12(c), Trust Shares shall be
         converted into Excess Trust Shares and Preferred Shares shall be
         converted in Excess Preferred Shares.

         (d) Remedies for Breach. If the Trustees or their designees shall at
any time determine in good faith that a purported Transfer or other event has
taken place in violation of Section 6.12(b) hereof or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership of any Shares in
violation of Section 6-12(b) hereof, the Trustees or their designees may take
such action as they deem advisable to refuse to give effect to or to prevent
such Transfer or other event, including, but not limited to, refusing to give
effect to such Transfer or other event on the books of the Trust or instituting
proceedings to enjoin such Transfer or other event or transaction; provided,
however, that any Transfers or attempted Transfers (or, in the case of events
other than a Transfer, Beneficial Ownership) in violation of Section 6.12(b)
hereof shall be void ab initio And automatically result in the conversion
described in Section 6.12(c)(3) hereof, irrespective of any action (or
non-action) by the Trustees or their designees,

         (e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire Shares in violation of Section 6.12(b) hereof, or any Person who is a
purported transferee such that Excess Shares result under Section 6.12(c)
hereof, shall immediately give written notice to the Trust of such Transfer,
attempted Transfer or other event and shall provide to the Trust such other
information as the Trust may request in order to determine the effect, if any,
of such Transfer or attempted Transfer or other event on the Trust*s status as a
REIT.

         (f) Owners Required to Provide Information. Prior to the Restriction
Termination Date:

                  (1) Every Beneficial Owner of five percent (5%) or more, by
         vote, value or number, or such lower percentages as required pursuant
         to regulations under the Code, of the outstanding Shares shall, before
         January 30 of each year, give written notice to


<PAGE>   31
         the Trust stating the name and address of such Beneficial Owner, the
         general ownership structure of such Beneficial Owner, the number of
         shares of each class of Shares Beneficially Owned, and a description of
         how such Shares are held.

                  (2) Each Person who is a Beneficial Owner of Shares and each
         Person (including the shareholder of record) who is holding Shares for
         a Beneficial Owner shall provide on demand to the Trust such
         information as the Trust may request from time to time in order to
         determine the Trust's status as a REIT and to ensure compliance with
         the Ownership Limit and the REIT requirements of the Code and the
         regulations published thereunder.

         (g) Remedies Not Limited. Subject to Section 6.12(l) hereof, nothing
contained in this Article VI shall limit the authority of the Trustees to take
such ocher action as they-deem necessary or advisable to protect the Trust and
the interests of its Shareholders by preservation of the Trust's status as a
REIT and to ensure compliance with the ownership Limit.

         (h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Section 6.12 or Section 6.13, including any definition
contained in Section 6.12(a) hereof, the Trustees shall have the power to
determine the application of the provisions of this Section 6.12 and Section
6.13 with respect to any situation based on the facts known to them.

         (i) Exception. The Trustees upon receipt of a ruling from the Internal
Revenue Service or an opinion of tax counsel, satisfactory to them in their sole
and absolute discretion, in each case to the effect that the Trust*s status as a
REIT will not be jeopardized, may exempt a Person from the Ownership Limit if
the Trustees obtain such representations and undertakings from such Person as
are reasonably necessary to ascertain that such Person's Beneficial Ownership of
Shares will not jeopardize the Trust's status as a REIT.

         (j) Legend. Until the Restriction Termination Date, each certificate
for the respective class of Shares shall bear the following legend:

                  The Shares represented by this certificate are subject to
         restrictions on transfer. Unless excepted by the Trustees, no Person
         may (1) Beneficially Own Shares in excess of 8.0% of the outstanding
         Shares, by value, vote or number, determined as provided in the Trust's
         Declaration of Trust, as the same may be amended from time to time (the
         "Declaration"), and computed which regard to all outstanding Shares
         and, to the extent provided by the Code, all Shares issuable under
         existing options and exchange rights that have not been exercised; or
         (2) Beneficially Own Shares which would result in the Trust being
         "closely held". Unless so excepted, any acquisition of Shares and
         continued holding of ownership constitutes a continuous representation
         of compliance with the above limitations, and any Person who attempts
         to Beneficially own Shares in excess of the above limitations has an
         affirmative obligation to notify the Trust immediately upon such
         attempt. If the restrictions on transfer are violated, the transfer
         will be void ab initio and the Shares represented hereby will be
         automatically converted into Excess Shares that will be held in trust.
         Excess Shares may not be transferred at a


<PAGE>   32
         profit and may be purchased by the Trust. In addition, certain
         Beneficial Owners must give written notice as to certain information on
         demand and an annual basis. All terms not defined in this legend have
         the meanings provided in the Declaration, The Trust will mail without
         charge to any requesting shareholder a copy of the Declaration,
         including the express terms of each class and series of the authorized
         Shares of the Trust, within five (5) days after receipt of a written
         request therefor.

         (k) Severability. If any provision of this Article VI or any
application of any such provision is determined to be invalid by any Federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected, and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.

         (l) New York Stock Exchange Transactions. Nothing in this Article VI
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.

         (m) Amendment of Sections 6.12 or 6.13

         Notwithstanding any other provisions of this Declaration or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of Shares required by law or this Declaration, the affirmative vote of
the holders of at least two-thirds (2/3) of the voting power of all the then
outstanding Shares, voting together as a single class, shall be required to
alter, amend or repeal this Section 6.12 or Section 6.13.

         6.13 Excess Shares.

         (a) Ownership In Trust. Upon any purported Transfer or other event that
results in Excess Shares pursuant to Section 6.12(c) hereof, such Excess Shares
shall be deemed to have been transferred to Nina Matis (or any successor Excess
Share Trustee), as Excess Share Trustee of the Excess Share Trust for the
benefit of such Excess Share Trust Beneficiary or Beneficiaries and the
Charitable Beneficiary effective as of the close of business on the business day
prior to the date of the Transfer or other event. Excess Shares so held in trust
shall be issued and outstanding shares of the Trust. The Purported Record
Transferee or Purported Record Holder shall have no rights in such Excess
Shares. The Purported Beneficial Transferee or Purported Beneficial Holder shall
have no rights in such Excess Shares except as provided in Section 6.13(e). Nina
Matis, or any successor Excess Share Trustee, may resign by appointing a person
independent of the Trust, the Corporation (as defined in Section 6.14) or any
Excess Share Trust Beneficiary as the Excess Share Trustee. The Excess Share
Trustee shall, from time to time, designate one or more charitable organization
or organizations as the Charitable Beneficiary.

         (b) Dividend Rights. Excess Shares shall be entitled to the same
dividends determined as if no conversion into Excess Shares had occurred. Pay
dividend or distribution paid prior to the discovery by the Trust that the
Shares have been converted into Excess Shares


<PAGE>   33
shall be repaid to the Excess Share Trust upon demand. Any dividend or
distribution declared but unpaid shall be paid to the Excess Share Trust. All
dividends received or other income earned by the Excess Share Trust shall be
paid over to the Charitable Beneficiary.

         (c) Rights Upon Liquidation. Excess Shares shall not be entitled to
receive any portion of the assets of the Trust on the liquidation or dissolution
of the Trust. Upon conversion of Excess Shares into Shares pursuant to Section
6.13 (e) hereof, such shares shall be entitled to receive their pro rata share
of the assets of the Trust as a result of the liquidation or dissolution of the
Trust.

         (d) Voting Rights. The Excess Share Trustee shall vote the Excess
Shares which shall have the same voting rights as the Shares into which they are
to be converted pursuant to Section 6.13(e) hereof. Any vote cast by the
Purported Beneficial Transferee or Purported Record Transferee will, at the
election of the Excess Share Trustee, be void ab initio.

         (e) Restrictions On Transfer; Designation of Excess Share Trust
Beneficiary.

                  (1) Excess Shares shall not be transferrable. The Excess Share
         Trustee may freely designate an Excess Share Trust Beneficiary of all
         or any portion of the beneficial interest in the Excess Share Trust
         (representing the number of Excess Shares held by the Excess Share
         Trust attributable to a purported Transfer or other event that results
         in Excess Shares and designated as to number and class of shares
         pursuant to the notice provision of this Section 6.13(e)(1)), if the
         Excess Shares held in the Excess Share Trust would not be Excess Shares
         in the hands of such Excess Share Trust Beneficiary. If the Excess
         Shares resulted from a purported Transfer, the Purported Beneficial
         Transferee shall receive a payment from the Excess Share Trustee that
         reflects a price per share for such Excess Shares equal to the lesser
         of (A) the price per share received by the Excess Share Trustee and (B)
         (x) the price per share such Purported Beneficial Transferee paid for
         the Share of Beneficial interest in the purported Transfer that
         resulted in the Excess Shares, or (y) if the Purported Beneficial
         Transferee did not give value for such shares of Excess Shares (through
         a gift, devise or other transaction) a price per share of Excess Shares
         equal to the Market Price of the Shares on the date of the purported
         Transfer that resulted in the Excess Shares. If the Excess Shares
         resulted from an event other than a purported Transfer, the Purported
         Beneficial Holder shall receive a payment from the Excess Share Trustee
         that reflects a price per share of Excess Shares equal to the lesser of
         (A) the price per share received by the Excess Share Trustee and (B)
         the Market Price of the Shares on the date of the event that resulted
         in Excess Shares. Upon such transfer of an interest in the Excess Share
         Trust, the corresponding shares of Excess Shares in the Excess Share
         Trust shall be automatically converted into such number of Shares (of
         the same class as the shares that were converted into such Excess
         Shares) as is equal to the number of shares of Excess Shares, and such
         Shares shall be transferred of record to the Excess Share Trust
         Beneficiary of the interest in the Excess Share Trust designated by the
         Excess Share Trustee as described above if such Shares would not be
         Excess Shares in the hands of such Excess Share Trust Beneficiary.
         Prior to any transfer of any interest in the Excess Share Trust, the
         Trust must have waived in writing its purchase rights, if any, under


<PAGE>   34
         Section 6.13(f) hereof. Any funds received by the Excess Share Trustee
         in excess of the funds payable to the Purported Beneficial Holder or
         the Purported Beneficial Transferor shall be paid to the Charitable
         Beneficiary. The Trust shall pay the costs and expenses of the Excess
         Share Trustee.

                  (2) Notwithstanding the foregoing, if a Purported Beneficial
         Transferee, Purported Beneficial Holder or Excess Share Trustee
         receives a price for designating an Excess Share Trust Beneficiary of
         an interest in the Excess Share Trust that exceeds the amounts
         allowable under Section 6.13(e) (1) hereof, such Purported Beneficial
         Transferee or Purported Beneficial Holder shall be personally liable
         to, and shall pay, or cause the Excess Share Trust Beneficiary of the
         interest in the Excess Share Trust to pay, such excess to the Excess
         Share Trustee who shall pay over such excess to the Charitable
         Beneficiary.

                  (3) Notwithstanding the foregoing, if the provisions of this
         Section 6.13(e) are determined to be void or invalid by virtue of any
         legal decision, statute, rule or regulation, then the Purported
         Beneficial Transferee or Purported Beneficial Holder of any shares of
         Excess Shares may be deemed, at the option of the Trust, to have acted
         as an agent on behalf of the Trust, in acquiring or holding such Excess
         Shares and to hold such Excess Shares on behalf of the Trust.

         (f) Purchase Right in Excess Shares. Excess Shares shall be deemed to
have been offered for sale by the Excess Share Trustee to the Trust, or its
designee, at a price per Excess Share equal to (i) in the case of Excess Shares
resulting from a purported Transfer, the lesser of (A) the price per share of
the Shares in the transaction that created such Excess Shares (or, in the case
of devise or gift, the Market Price of the Shares at the time of such devise or
gift), or (B) the lowest Market Price of the class of Shares which resulted in
the Excess Shares at any time after the date such shares were converted into
Excess Shares and prior to the date the Trust, or its designee, accepts such
offer or (ii) in the case of Excess Shares resulting from an event other than a
purported Transfer, the lesser of (A) the Market Price of the Shares on the date
of such event or (B) the lowest Market Price for Shares which resulted in the
Excess Shares at any time from the date of the event resulting in such Excess
Shares and prior to the date the Trust, or its designee, accepts such offer. The
Trust shall have the right to accept such offer for a period of ninety (90) days
after the later of (i) the date of the Transfer which resulted in such Excess
Shares and (ii) the date the Trustees determine in good faith that a Transfer or
other event resulting in Excess Shares has occurred, if the Trust does not
receive a notice of such Transfer or other event pursuant to Section 6.12(e)
hereof,

         6.14 Pairing. Beginning at the time that the payment of a distribution
in kind to the Shareholders of the Trust of the shares of common stock of
Starwood Lodging Corporation, a Maryland corporation ("Corporation"), shall have
occurred ("effective time of the restriction*), and continuing thereafter until
such time as the limitation on transfer provided for in the Pairing Agreement to
be entered into by the Trust and the Corporation shall be terminated:


<PAGE>   35
         (a) The Trust Shares having a par value of $0.01 per share shall not be
transferable, and shall not be transferred on the books of the Trust, unless (1)
a simultaneous transfer is made by the same transferor to the same transferee,
or (2) such transfer has previously arranged with the Corporation for the
acquisition by the transferee, of a like number of shares of the Corporation and
such shares and Trust Shares are paired with one another.

         (b) Each certificate evidencing ownership of Trust Shares issued and
not canceled prior to the effective time of the restriction shall be deemed to
evidence a like number of shares of common stock of the Corporation.

         (c) Any registered holder of a certificate evidencing ownership of
Trust Shares issued prior to the effective time of the restriction may, upon
request and presentation of said certificate to the Corporations transfer agent,
obtain in substitution therefor a certificate or certificates registered in such
holder's name evidencing the same number of shares of common stock of the
Corporation and a like number of Trust Shares.

         (d) A legend shall be placed on the face of each certificate evidencing
ownership of Trust Shares issued after the effective time of the restriction,
referring to the restrictions on transfer set forth herein.

         6.15 See Exhibit A

         6.16 See Exhibit A

         6.17 Redemption. In the event that the Corporation shall redeem any
shares of its capital stock pursuant to Article FIFTEENTH of the Articles of
Incorporation of the Corporation and such shares are subject to the limitation
on transfer provided for in the Pairing Agreement, the Trust shall
simultaneously redeem, upon the terms of such Article FIFTEENTH, any Shares
that are paired with such shares of the Corporation's capital stock pursuant to
the Pairing Agreement.

                                  ARTICLE VII.

                       Liability of Trustees, Shareholders
                         and Officers, and Other Matters

         7.1 Exculpation of Trustee and Officers. No Trustee, officer or agent
of the Trust shall be liable or held to any personal liability whatsoever for an
obligation or contract of the Trust. The provisions of section 2-405,1 of the
Corporations and Associations Article of the Annotated Code of Maryland (as
amended and interpreted from time to time, and any successor statute thereto),
which sets forth the standard of care required of directors of corporations
organized under the laws of the State of Maryland, and all other statutory or
decisional law (as amended or interpreted from time to time) which sets forth
the standard of care required of officers, employees and agents for corporations
organized under the laws of the State of Maryland, shall be fully applicable to
the Trust, and to the Trustees, officers, employees and agents of the Trust, as
if the Trust were a corporation organized under the laws


<PAGE>   36
of the State of Maryland and its Trustees, officers, employees and agents were
respectively, directors, officers, employees and agents of such corporation.

         Notwithstanding the foregoing, to the fullest extent permitted by
Maryland statutory or decisional law, as amended or interpreted from time to
time, no Trustee or officer of the Trust shall be liable to the Trust or its
shareholders for money damages arising out of acts or omissions occurring on or
after the date of this provision is approved by the shareholders of the Trust
(which date was June 6, 1988) provided however, that this provision shall not
restrict or limit the liability of the Trust's Trustees or officers to the Trust
or its shareholders (i) to the extent that it is proved that such Person
actually received an improper benefit or profit in money, property or services,
for the amount of the benefit or profit in money, property or services actually
received, or (ii) to the extent that a judgment or final adjudication adverse to
such Person is entered in a proceeding based on a finding in the proceeding that
such Person's action, or failure to act, was the result of active and deliberate
dishonesty which was material to the cause of action adjudicated in the
proceeding. No amendment to this Section 7.1 or repeal of any of its provisions
shall limit or eliminate the effect of this Section 7.1 with respect to any act
or omission which occurs prior to such amendment or repeal.

         7.2 Limitation of Liability of Shareholders, Trustees and Officers. The
Trustees and officers in incurring any debts, liabilities or obligations, or in
taking or omitting any other actions for or in connection with the Trust are,
and shall be deemed to be, acting as Trustees or officers of the Trust and no in
their own individual capacities. Except to the extent provided by applicable
law, no Trustee, Shareholder, officer, employee or other agent shall be liable
for any debt, claim, demand, judgment, decree, liability or obligation of any
kind of, against or with respect to the Trust, arising out of any action taken
or omitted for or on behalf of the Trust and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Estate for the payment or
performance thereof. Each Shareholder shall be entitled to pro rata indemnity
from the Trust Estate if, contrary to the provisions hereof, such Shareholder
shall be held to any personal liability.

         7.3 Express Exculpatory Clauses and Instruments. In all agreements
obligations, instruments, and actions in regard to the affairs of this Trust,
this Trust and not the Shareholders, officers, or agents shall be the principal
and entitled as such to enforce the same, collect damages, and take all other
action. All such agreements, obligations, instruments, and actions shall be
made, executed, incurred, or taken by or in the name and on behalf of this Trust
or by the Trustees as Trustees hereunder, but not personally. All such
agreements, obligations, and instruments shall acknowledge notice of this
paragraph or shall refer to this Declaration and contain a statement to the
effect that the name of this Trust refers to the Trustees as Trustees but not
personally, and that no Trustee, Shareholder, officer, or agent shall be held to
any personal liability thereunder; and neither the Trustees nor any officer or
agent shall have any power or authority to make, execute, incur, or take any
agreement, obligation, instrument or action unless the requirements of this
paragraph are met; however, the omission of such provision from any such
instrument shall not render the Shareholders or any Trustee or officer liable
nor shall the Trustees or any officer of the Trust be liable to anyone for such
omission.


<PAGE>   37
         7.4 Indemnification of Trustees, Officers, Employees and Other Agents.
The provisions of Section 218 of the Corporations and Associations Article of
the Annotated Code of Maryland (as amended and interpreted from time to time,
and any successor statute thereto), which empowers a corporation organized under
the laws of the State of Maryland to indemnify its directors, officers,
employees and other agents against certain liabilities and obligations, and for
the light of directors, officers, employees and other agents of such corporation
to be so indemnified (as amended, interpreted and superseded, "Section 2-418"),
shall be fully applicable to the Trust and to the Trustees, officers, employees
and other agents of the Trust as if the Trust were a corporation organized under
the laws of the State of Maryland and its Trustees, officers, employees and
other agents were, respectively, directors, officers, employees and agents of
such corporation. In each and every situation where the Trust may do so under
said Section 2418 or other applicable law, the Trust hereby obligates itself to
so indemnify its Trustees, officers, employees and other agents, and in each
case where thy Trust must make certain investigations on a case-by-case basis
prior to Indemnification, the Trust hereby obligates itself to pursue such
investigations diligently, it being the specific intention of this Section 7.4
to obligate the Trust to indemnify each Person whom the Trust may indemnify to
the fullest extent permitted by Section 2-148 or by other applicable law at any
time and from time to time. The rights accruing to any Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled, nor shall anything contained-herein restrict the right of the Trust to
indemnify or reimburse such Person in any proper case even though not
specifically provided for herein, nor shall anything contained herein restrict
such right of a Trustee to contribution as may be available under applicable
law. In addition, and without limiting the generality of the foregoing, the
Trust shall have the power to purchase and maintain insurance on behalf of any
Person entitled to indemnify hereunder against any liability asserted against
him and incurred by him in a capacity mentioned above, or arising out of his
status as such, whether or not the Trust would have the power to indemnify him
against such liability under the provisions hereof.

         7.5 Right of Trustees and officers to Own Shares or Other Property and
to Engage in Other Business. Any Trustee or officer may acquire, own, hold and
dispose of Shares in the Trust, for his individual account, and may exercise all
rights of a Shareholder to the same extent and in the same manner as if he were
not a Trustee or officer. Any Trustee or officer may have personal business
interests and may engage in personal business activities, which interest and
activities may include the acquisition, syndication, holding, management,
operation or disposition, for his own account or for the account of others, or
interests in Mortgages, interests in Real Property, or interests in Persons
engaged in the real estate business, including serving as a trustee or officer
of any other Real Estate Investment Trust. Subject to the provisions of Article
IV any Trustee or officer may be interested as trustee, officer, director,
stockholder, partner, member, advisor or employee, or otherwise have a direct or
indirect interest in any Person who may be engaged to render advice or services
to the Trust, and may receive compensation from such Person as well as
compensation as Trustee, officer, or otherwise hereunder, None of these
activities shall be deemed to conflict with his duties and powers as Trustee or
officer.

         7.6 Transactions Between the Trustees and the Trust.


<PAGE>   38
         (a) If subsection (b) of this Section 7.6 is complied with, a contract
or other transaction between the Trust and any corporation, firm or other entity
in which any of the Trustees is a director or has a material financial interest
is not void or voidable solely because any one or more of the following: (i) the
common directorship or interest; (ii) the presence of the Trustee at the meeting
of the Board of Trustees or a committee of the Board of Trustees which
authorizes, approves or ratifies the contract or transaction; or (iii) the
counting of the vote of the Trustee for the authorization, approval or
ratification of the contract or transaction.

         (b) Subsection (a) of this Section 7.6 applies if:

                  (i) The fact of the common directorship or interest is
         disclosed or known to (a) the Board of Trustees or the committee, and
         the Board of Trustees or committee authorizes, approves or ratifies the
         contract or transaction by the affirmative vote of a majority of
         disinterested Trustees, even if the disinterested Trustees constitute
         less than a quorum; or (b) the shareholders entitled to vote, and the
         contract or transaction is authorized, approved or ratified by a
         majority of the votes cast by the shareholders entitled to vote other
         than the votes of shares owned of record or beneficially by the
         interested Trustee or corporation, firm or other entity; or

                  (ii) The contract or transaction is fair and reasonable to the
Trust.

         (c) Common or interested Trustees, or the Shares of Beneficial Interest
owned by them or by an interested corporation, firm or other entity, may be
counted in determining the presence of a quorum at a meeting of the Board of
Trustees or a committee of the Board of Trustees or at a meeting of the
shareholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.

         (d) If a contract or transaction is not authorized, approved or
ratified in one of the ways provided for in subsection (b)(i) of this Section
7.6. the person asserting the validity of the contract or transactions bears the
burden of proving that the contract or transaction was fair and reasonable to
the Trust at the time it was authorized, approved or ratified. This subsection
(d) does not apply to the fixing by the Board of Trustees of reasonable
compensation for a Trustee, whether as a Trustee or in any other capacity.

         (e) Any procedures authorized by Section 7.4 of this Declaration shall
be deemed to satisfy subsection (b)(i) of this Section 7.6. Any provision of
this Declaration, the Trustees' Regulations or any contract, or any transaction,
requiring or permitting indemnification of Trustees, including advances of
expenses, is fair and reasonable to the Trust.

         (f) Any Trustee or officer, employee or agent of the Trust may acquire,
own, hold and dispose of Securities of the Trust, for his individual account,
and may exercise all rights of a holder of such Securities to the same extent
and in the same manner as if he were not such a Trustee or officer, employee or
agent. The Trustees shall use their best efforts to obtain through an Advisor or
other Persons a continuing and suitable investment program, consistent with the
investment policies and objectives of the Trust, and the Trustees shall be
responsible for reviewing and approving or rejecting investment opportunities
presented by the Advisor or


<PAGE>   39
such other Persons, So long as there is such Advisor or other Person, the
Trustees shall have no responsibility for the origination of investment
opportunities for the Trust. Any Trustee or officer, employee, or agent of the
Trust may, in his personal capacity, or in a capacity of trustee, officer,
director, stockholder, partner, member, advisor or employee of any Person, have
business interests and engage in business activities in addition to those
relating to the Trust, which interests and activities may include the
acquisition, syndication, holding, management, operation or disposition, for his
own account or for the account of such Person, of interests in Mortgages,
interests in Real Property, or interests in Persons engaged in the real estate
business, and each Trustee, officer, employee and agent of the Trust shall be
free of any obligation to present to the Trust any investment opportunity which
comes to him in any capacity other than solely as Trustee, officer, employee or
agent of the Trust, even if such opportunity is of a character which, if
presented to the Trust, could be taken by the Trust; provided, however, that the
provisions of this sentence shall not extend to any of such Trustees or agents
of the Trust who are affiliates of the Advisor, or to any officer or employee of
the Trust or (at a time when there is no such Advisor or other Person providing
an investment program for the Trust as aforesaid) to any Trustee of the Trust,
in each case who is not acting as a trustee, officer, director, stockholder,
partner, member, advisor or employee of any Person but is acting for his own
personal account. Subject to the provisions of this Section 7.6, any Trustee or
officer, employee or agent of the Trust may be interested as trustee, officer,
director, stockholder, partner, member, advisor or employee of, or otherwise
have a direct or indirect interest in, any Person who may be engaged to render
advice or services to the Trust, and ray receive compensation from such Person
as well as compensation as Trustee, officer, employee or agent of the Trust or
otherwise hereunder, None of the activities in this paragraph shall be deemed to
conflict with his duties and powers as Trustee, officer, employee or agent of
the Trust.

         (g) Nothing contained in this Declaration shall prohibit or in any way
limit any person described in Section 3.2(n) of this Declaration from
contracting with others for the performing of services similar or identical to
those undertaken by such Person pursuant to this Declaration or from conducting
the usual and normal business operations of such Person. The Trustees are not
restricted by this Section 7.6 from forming a corporation, partnership, trust or
other business association owned by the Trustees or by their nominees for the
purpose of holding title to property of the Trust or managing property of the
Trust providing the Trustees' motive for :he formation of such business
association is not their own enrichment.

         7.7 Restriction of Duties and Liabilities. To the extent that the
nature of this Trust (that is, a Maryland real estate investment trust) will
permit, the duties and liabilities of Shareholders, Trustees and officers shall
in no event be greater than the duties and liabilities of shareholders,
directors and officers of a Maryland corporation. The Shareholders, Trustees and
officers shall in no event have any greater duties or liabilities than those
imposed by applicable law as shall be in effect from time to time.

         7.8 Persons Dealing with Trustees or Officers. Any act of the Trustees
or officers purporting to be done in their capacity as such, shall, as to any
persons dealing with such Trustees or officers, be conclusively deemed to be
within the purposes of this Trust and within the power of the Trustees and
officers. No Person dealing with the Trustees or any of them,


<PAGE>   40
or with the authorized officers, agents or representatives of the Trust, shall
be bound to see to the application, of any funds or property passing into their
hands of control. The receipt of the Trustees, or any of them, or of authorized
officers, agents, or representatives of the Trust, for moneys or other
consideration, shall be binding upon the Trust.

         7.9 Reliance. The Trustees and officers may consult with counsel and
the advice or opinion of such counsel shall be full and complete personal
protection to all of the Trustees and officers in respect to any action taken or
suffered by them in good faith and in reliance on and in accordance with such
advice or opinion. In discharging their duties, Trustees and officers, when
acting in good faith, may rely upon financial statements of the Trust
represented to them to be correct by the President or the officer of the Trust
having charge of its books of account, or stated in a written report by an
independent certified public accountant fairly to present the financial position
of the Trust. The Trustees may rely, and shall be personally protected in
acting, upon any instrument or other document believed by them to be genuine.

         7.10 Income Tax Status. Anything to the contrary herein notwithstanding
and without limitation of any rights of indemnification or non-liability of the
Trustees herein, said Trustees by this Declaration make no commitment or
representation that the Trust will qualify for the dividends paid deduction
permitted by the Internal Revenue Code, by Article 81, Section 3I3A of the
Annotated Code of Maryland, or by any-Rules and Regulations hereunder pertaining
to Real Estate Investment Trusts, in any given year, The failure of the Trust to
qualify as a Real Estate Investment Trust under the Internal Revenue Code or
under the Maryland Code shall not render the Trustees liable to the Shareholders
or to any other person or in any manner operate to annul the Trust.

                                  ARTICLE VIII.

                      Duration, Amendment, Termination and
                             Qualification of Trust

         8.1 Duration of Trust. The Trust shall continue without limitation of
time, unless terminated as provided in Section 8.2.

         8.2      Termination of Trust.

         (a) The Trust may be terminated by the affirmative vote of the holders
of two-thirds (2/3) in interest of all outstanding Shares entitled to vote
thereon, at any meeting of Shareholders. Upon termination of the Trust:

                  (i) The Trust shall carry on no business except for the
         purpose of winding up its affairs.

                  (ii) The Trustees shall proceed to wind up the affairs of the
         Trust and all of the powers of the Trustees under this Declaration
         shall continue until the affairs of the Trust shall have been wound up,
         including the power to fulfill or discharge the


<PAGE>   41
         contracts of the Trust, collect its assets, sell, convey, assign,
         exchange, transfer, or otherwise dispose of all or any part of the
         remaining Trust Estate to one or more persons at public or private sale
         for consideration which may consist in whole or in part of cash,
         securities or other property of any kind, discharge or pay its
         liabilities and do all other acts appropriate to liquidate its
         business; provided, that any sale, conveyance, assignment, exchange,
         transfer or other disposition of more than fifty percent (50%) of the
         Trust Estate shall require approval of the principal terms of the
         transaction and the nature and amount of the consideration by vote or
         consent of the holders of a majority of all the outstanding Shares
         entitled to vote thereon.

                   (iii) After paying or adequately providing for the payment of
         all liabilities, and upon the receipt of such releases, indemnities,
         and refunding agreements as they deem necessary for their protection
         the Trustees may distribute the remaining Trust Estate, in case or in
         kind, or partly each, among the Shareholders, according to their
         respective rights,

         (b) After termination of the Trust and distribution to the shareholders
as herein provided, the Trustees shall execute and lodge among the records of
the Trust an instrument in writing, setting forth the fact of such termination,
and the Trustees shall thereupon be discharged from all further liabilities and
duties hereunder, and the rights and interests of all Shareholders shall
thereupon cease.

         8.3 Amendment Procedure.

         (a) This Declaration may be amended by the vote or written consent of
Shareholders holding a majority of the outstanding Shares entitled to vote
thereon. The Trustees may also amend this Declaration without the vote or
consent of Shareholders as provided in Section 9.6.

         (b) A certification, in recordable form, signed by a majority of the
Trustees, setting forth an amendment and reciting that it was duly adopted by
the Shareholders or by the Trustees as aforesaid, or a copy of the Declaration,
as amended, in recordable form, and executed by a majority of the Trustees,
shall be conclusive evidence of such amendment when lodged among the records of
the Trust.

         (c) Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exception from personal liability of the
Shareholders, Trustees officers, and agents of this Trust,

         8.4 Qualification Under the REIT Provisions of the Internal Revenue
Code. It is intended that the Trust shall qualify as a "real estate investment
trust" under the REIT Provisions of the Internal Revenue Code during such period
as the Trustees shall deem it advisable so to qualify the Trust.

                                   ARTICLE IX.
                                  Miscellaneous


<PAGE>   42
         9.1 Applicable Law. This Declaration has been executed and acknowledged
by the Trustees with reference to the statutes and laws-of the State of Maryland
and the rights of all parties and the construction and effect of every provision
hereof shall be subject to and construed according to statutes and laws of said
State.

         9.2 Index and Headings for Reference Only. The index and headings
preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction or effect of this Declaration.

         9.3 Successors in Interest. This Declaration and the Trustees,
Regulations shall be binding upon and inure to the benefit of the undersigned
Trustees and their successors assigns, heirs, distributes and legal
representatives, and every Shareholder and his successors, assigns, heirs,
distributees and legal representatives.

         9.4 Inspection of Records. Trust records shall be available for
inspection by Shareholders at the same time and in the same manner and to the
extent that comparable records of a Maryland corporation would be available for
inspection by corporate shareholders under the laws of the State of Maryland.
Except as specifically provided for in this Declaration, Shareholders shall have
no greater right than shareholders of a Maryland corporation to require
financial or other information from the Trust, Trustees or officers. Any Federal
or state securities administration, the Department of Assessments and Taxation
of the State of Maryland, or other similar authority shall have the right, at
reasonable times during business hours and for proper purposes, to inspect the
books and records of the Trust.

         9.5 Counterparts. This instrument may be simultaneously executed in
several counterparts, each of which when so executed shall be deemed to be an
original and such counterparts together shall constitute one in the same
instrument, which shall be sufficiently evidenced by any such original
counterparts

         9.6 Provisions of the Trust in Conflict with Law or Regulations.

         (a) The provisions of this Declaration are severable, and if the
Trustees shall determine with the advice of counsel, that any one or more of
such provisions (the "Conflicting Provisions") are in conflict with the REIT
Provisions of the Internal Revenue Code, with other applicable federal laws and
regulations, or with the REIT provisions of the Annotated Code of Maryland, the
Conflicting Provisions shall be deemed never to have constituted a part of the
Declaration; provided, however, that such determination by the Trustees shall
not affect or impair any of the remaining provisions of this Declaration or
render invalid or improper any action taken or omitted (including but not
limited to the election of Trustees) prior to such determination. A
certification in recordable form signed by a majority of the Trustees setting
forth any such determination and reciting that it was duly adopted by the
Trustees, or a copy of this Declaration, with the Conflicting Provisions removed
pursuant to such determination, in recordable form, signed by a majority of the
Trustees, shall be conclusive evidence of such determination when lodged in the
records of the Trust, The Trustees shall not be liable for failure to make any
determination under this Section


<PAGE>   43
9.6(a), Nothing in this Section 9.6(a) shall in any way limit or affect the
right of the Shareholders to amend this Declaration as provided in Section
8.3(a).

         (b) If any provisions of this Declaration shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other provision of this Declaration, and this Declaration shall be carried
out as if any such invalid or unenforceable provision were not contained herein.

         9.7 Certifications. The following certifications shall be final and
conclusive as to any persons dealing with the Trust:

         (a) A certification of a vacancy among the Trustees by reason of
resignation, removal, increase in the number of Trustees, incapacity, death or
otherwise, when made in writing by majority of the remaining Trustees;

         (b) A certification as to the persons holding office as Trustees or
officers at any particular time, when made in writing by the Secretary of the
Trust or by any Trustee;

         (c) A certification that a copy of this Declaration or of the Trustees'
Regulations is a true and correct copy thereof as then in force, when made in
writing by the Secretary of the Trust or by any Trustee;

         (d) The certification referred to in Section 8.3(b) and 9.6(a) hereof;

         (e) A certification as to any action by Trustees, other than the above,
when made in writing by the Secretary of the Trust, or by any Trustee.

         9.8 Recording and Filing. A copy of this instrument and any other
amendments to the Declaration shall be filed with the Department of Assessments
and Taxation of Maryland, and in the office of the County Recorder or its
equivalent in every county of Maryland where the Trust is or the Trustees are
the record owner or owners of Real Property; provided, however, that provision
is made in such county for such recording, and further provided that this
Declaration is accepted for recording, This Declaration and any amendments may
also be filed or recorded in such other places as the Trustees deem appropriate.

         9.9 Resident Agent. The name and post office address of the resident
agent of the Trust in the State of Maryland is Lawrence Wiser, 12702 Littleton
Street, Silver Spring, Maryland 20906.(3) Said resident is a citizen of the
State of Maryland actually residing therein. The resident agent may be removed a
vacancy existing in such office for any reason may be filled by majority of the
Trustees.


(3) The resident agent of the Trust was changed to The Corporation Trust, 33
South Street, Baltimore, Maryland 21202, pursuant to documents recorded
on-January 16, 1976 on Film No. 2246, Frame No. 684 and on May 3, 1984, on Film
No. 2644, Frame No. 2123.


<PAGE>   44
                                    EXHIBIT A
                                       to
                               ARTICLES OF MERGER
                   *******************************************

     Pursuant to the authority granted to the Board of Trustees of the Trust
under Section 6.1 of the Amended and Restated Declaration of Trust of the Trust,
as heretofore amended (the "Declaration"), the Board of Trustees of the Trust,
by resolution adopted by the Board of Trustees of the Trust on September 8,
1997, classified and designated 30,000,000 shares of beneficial interest in the
Trust as Class A Exchangeable Preferred Shares, par value $.01 per share, with
the following preferences, exchange and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption, such classification and
designation to become effective upon the effective time of the merger of Westin
Hotels & Resorts Worldwide, Inc., a Delaware corporation, with and into the
Trust:

6.15 Class A Exchangeable Preferred Shares Articles Supplementary

                  6.15.1. NUMBER OF SHARES AND DESIGNATION.

                  The class of shares of beneficial interest in the Trust being
created by these Articles Supplementary shall be designated as "Class A
Exchangeable Preferred Shares", par value $.01 per share ("Class A EPS"), and
30,000,000 shall be the number of shares of Class A EPS constituting such class.

                  6.15.2.  DEFINITIONS.

                  For purposes of the Class A EPS, the following terms have the
meanings indicated:
                  "Affiliate" shall mean with respect to any Person, any other
         Person which directly or indirectly controls, is controlled by or is
         under common control with such Person.

                  "Articles Supplementary" shall mean either this Article 6.15
         or Article 6.16, as the case may be, of the Declaration of Trust.

                  "Board of Trustees" shall mean the Board of Trustees of the
         Trust or any committee authorized by the Board of Trustees from time to
         time to exercise any of its powers or perform any of its
         responsibilities with respect to the Class A EPS.

                  "Business Day" shall mean any day other than a Saturday,
         Sunday or a day on which state or federally chartered banking
         institutions in New York, New York are not required to be open.


                                       40


<PAGE>   45
                  "Cash Equivalent" of Paired Shares or any other shares of
         beneficial interest or other securities of the Trust or any other
         issuer as of any date shall mean an amount of cash equal to (i) the
         average of the daily Current Market Prices per unit of such Paired
         Shares or other shares or securities during the five (5) consecutive
         Trading Days immediately preceding such date or (ii) if the Paired
         Shares or such other shares or securities are not publicly traded on
         such date, the fair market value of such Paired Shares or other
         securities as of such date as determined by the Board of Trustees in
         good faith (subject to the rights of the holders of the Class A EPS to
         request a valuation from a nationally recognized investment banking
         firm as provided in paragraph (g)(v) of Article 6.15.5 hereof).

                  "Class A Articles Supplementary" shall mean this Article 6.15.

                  "Class A Dividend Replacement Shares" shall have the meaning
         set forth in paragraph (d)(v) of Article 6.15.5 hereof.

                  "Class A EPS" shall have the meaning set forth in Article
         6.15.1 hereof.

                  "Class A Exchange Notice" shall have the meaning set forth in
         paragraph (a)(i) of Article 6.15.5 hereof.

                  "Class A Exchange Right" shall have the meaning set forth in
         paragraph (a)(i) of Article 6.15.5 hereof.

                  "Class A Liquidation Preference" shall have the meaning set
         forth in paragraph (b) of Article 6.15.4 hereof.

                  "Class A Liquidation Participation Right" shall have the
         meaning set forth in paragraph (a) of Article 6.15.4 hereof.

                  "Class A Participation Dividend" shall have the meaning set
         forth in paragraph (a) of Article 6.15.3 hereof.

                  "Class A Preferred Dividend" shall have the meaning set forth
         in paragraph (a) of Article 6.15.3 hereof.

                  "Class A Underlying Corporation Shares" as of any time shall
         mean the Corporation Shares component of the Class A Underlying Paired
         Shares as of such time.

                  "Class A Underlying Paired Shares" as of any time shall mean
         the Paired Shares (including, unless otherwise expressly provided
         herein, fractional units of Paired Shares) for which each share of
         Class A EPS is then exchangeable upon exercise of the Class A


                                       41


<PAGE>   46
         Exchange Right but excluding (except for the purposes of an actual
         exercise of the Class A Exchange Right) any Class A Dividend
         Replacement Shares.

                  "Class A Underlying Trust Shares" as of any time shall mean
         the Trust Shares component of the Class A Underlying Paired Shares as
         of such time.
                  "Class B Articles Supplementary" shall mean Article 6.16 of
         the Declaration of Trust pursuant to which the Trust has classified and
         designated 15,000,000 shares of beneficial interest in the Trust as
         "Class B Exchangeable Preferred Shares".

                  "Class B EPS" shall mean the Class B Exchangeable Preferred
         Shares, par value $0.01 per share, of the Trust created pursuant to the
         Class B Articles Supplementary.

                  "Class B Liquidation Preference" shall have the meaning set
         forth in paragraph (b) of Articles 6.16.4 hereof.

                  "Class B Liquidation Participation Right" shall have the
         meaning set forth in paragraph (a) of Article 6.16.4 hereof.

                  "Class B Participation Dividend" shall have the meaning set
         forth in paragraph (a) of Article 6.16.3 hereof.

                  "Class B Preferred Dividend" shall have the meaning set forth
         in paragraph (a) of Article 6.16.3 hereof.

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended.

                  "Conditionally Declared Class A Dividend" shall have the
         meaning set forth in paragraph (b)(i) of Article 6.15.3 hereof.

                  "Constituent Person" shall have the meaning set forth in
         paragraph (e)(ii) of Article 6.15.5 hereof.

                  "Corporation" shall mean Starwood Lodging Corporation, a
         Maryland corporation, and any successor.

                  "Corporation Common Adjustment Event" shall mean any of the
         following events that occurs after the Issue Date:

                           (i) The payment by the Corporation of a dividend on
                  the outstanding Corporation Shares that is payable in
                  additional Corporation Shares;

                           (ii) The subdivision of the outstanding Corporation
                  Shares into a greater number of shares (whether by share split
                  or otherwise);


                                       42


<PAGE>   47
                           (iii) The combination of the outstanding Corporation
                  Shares into a smaller number of shares (whether by reverse
                  share split or otherwise); or

                           (iv) The issuance of any shares of stock of the
                  Corporation by reclassification of the Corporation Shares.

                  "Corporation Common Distribution" shall mean any dividend or
         distribution paid or made by the Corporation (including, without
         limitation, any distribution of assets on any liquidation, dissolution
         or winding up of the Corporation) in respect of the Corporation Shares,
         other than a dividend or distribution that constitutes a Corporation
         Common Adjustment Event. In addition, a distribution to the holders of
         Corporation Shares of rights to subscribe for or purchase additional
         Corporation Shares under a shareholders protective rights plan or
         agreement shall not be deemed to constitute a Corporation Common
         Distribution to the extent that the Corporation makes provision so that
         such rights, to the extent still outstanding with respect to the
         outstanding Corporation Shares, shall be issued to the holders of any
         Corporation Shares issued upon exercise of the Class A Exchange Right
         (and, to the extent applicable, shall attach to such Corporation
         Shares) in an amount and manner and to the extent provided in such
         shareholders protective rights plans or agreements with respect to
         already outstanding Corporation Shares.

                  "Corporation Shares" shall mean the shares of common stock,
         par value $.01 per share, of the Corporation or any stock of the
         Corporation into which such common stock may hereafter be changed.

                  "Current Market Price" of publicly traded Paired Shares or any
         other shares of beneficial interest or other securities of the Trust or
         any other issuer as of any Trading Day shall mean the last reported
         sales price, regular way, on such day, or, if no sale takes place on
         such day, the average of the reported closing bid and asked prices on
         such day, regular way, in either case as reported on the NYSE or, if
         such shares or other securities are not listed or admitted for trading
         on the NYSE, on the principal national securities exchange on which
         such shares or other securities are listed or admitted for trading or,
         if not listed or admitted for trading on any national securities
         exchange, on the NASDAQ National Market or, if such shares or other
         securities are not quoted on such NASDAQ National Market, the average
         of the closing bid and asked prices on such day in the
         over-the-counter market as reported by NASDAQ or, if bid and asked
         prices for such shares or other securities on such day shall not have
         been reported through NASDAQ, the average of the bid and asked prices
         on such day as furnished by any NYSE member firm regularly making a
         market in such shares or other securities selected for such purpose by
         the Chief Executive Officer or Chief Financial Officer of the Trust or
         the Board of Trustees.

                  "Declaration" shall mean the Amended and Restated Declaration
         of Trust of the Trust, as amended from time to time.


                                       43


<PAGE>   48
                  "Delivered Shares" shall have the meaning set forth in
         paragraph (a)(ii) of Article 6.15.5 hereof.

                  "Dividend Correspondence Ratio" shall have the meaning set
         forth in paragraph (b)(i) of Article 6.15.3 hereof.

                  "Excess Shares" shall have the meaning set forth in paragraph
         (a)(ii) of Article 6.15.5 hereof.
                  "Exchange Election Notice" shall have the meaning set forth in
         paragraph (a)(i) of Article 6.15.5 hereof.

                  "Exchange Issuance Date" shall have the meaning set forth in
         paragraph (b) of Article 6.15.5 hereof.

                  "Exchange Promissory Note" shall mean an unsecured promissory
         note of the Trust in such form as the Trust shall reasonably prescribe
         with a maturity date ninety (90) days after the date of issuance of
         such note. Such Exchange Promissory Note shall bear interest in a
         amount equal to the amount of any dividends paid during the period that
         such note remains outstanding on a number of Paired Shares equal to the
         number of Excess Shares for which such Exchange Promissory Note is
         being substituted pursuant to paragraph (a)(ii) of Article 6.15.5
         hereof, which interest shall be payable on the dates of payment of the
         corresponding dividends.

                  "Exchange Ratio" shall have the meaning set forth in paragraph
         (d)(i) of Article 6.15.5 hereof.

                  "Issue Date" shall mean the first date on which any shares of
         Class A EPS are issued by the Trust.

                  "Junior Dividend" means a dividend payable in respect of any
         class or series of shares of beneficial interest in the Trust over
         which the Class A Preferred Dividends have preference or priority as to
         the payment of dividends, including, without limitation, any Trust
         Common Dividend, any Class A Participation Dividend and any Class B
         Participation Dividend.

                  "Junior Liquidating Distribution" shall mean any distribution
         of assets of the Trust in connection with a Liquidation Event to
         holders of any class or series of shares of beneficial interest in the
         Trust over which the Class A Liquidation Preference has preference or
         priority in the distribution of assets upon the occurrence of such
         Liquidation Event, including, without limitation, any such distribution
         of assets to holders of Trust Shares or in respect of the Class A
         Liquidation Participation Right or the Class B Liquidation
         Participation Right.

                  "Junior Shares" shall mean the Trust Shares and any other
         class or series of shares of beneficial interest in the Trust now or
         hereafter issued and outstanding over which the Class A Preferred
         Dividends have full preference or priority in the payment of dividends
         or over


                                       44


<PAGE>   49
         which the Class A Liquidation Preference has full preference or
         priority in the distribution of assets on the occurrence of any
         Liquidation Event, including, without limitation, the Trust Shares but
         excluding the Class B EPS.

                  "Liquidation Date" shall have the meaning set forth in
         paragraph (a) of Article 6.15.4 hereof.

                  "Liquidation Event" shall mean any liquidation, dissolution or
         winding up of the affairs of the Trust, whether voluntary or
         involuntary. For the purposes hereof, (i) a consolidation or merger of
         the Trust with one or more entities, (ii) a statutory share exchange
         and (iii) a sale or transfer of all or substantially all of the Trust's
         assets shall not be deemed to be a Liquidation Event.

                  "Non-Electing Shares" shall have the meaning set forth in
         paragraph (e)(ii) of Article 6.15.5 hereof.

                  "NYSE" shall mean the New York Stock Exchange.

                  "Offered Shares" shall have the meaning set forth in paragraph
         (a)(ii) of Article 6.15.5 hereof.

                  "Ownership Limit" shall have the meaning set forth in Section
         6.12 of the Declaration.

                  "Paired Shares" shall mean units consisting of one Trust Share
         paired with one Corporation Share (subject to adjustment as
         contemplated provided in paragraph (e) of Article 6.15.5 hereof) and
         represented by a single share certificate, as provided in the Pairing
         Agreement dated as of June 25, 1980, between the Trust and the
         Corporation, as amended from time to time.

                  "Paired Shares Adjustment Event" shall have the meaning set
         forth in paragraph (d)(i) of Article 6.15.5 hereof.

                  "Parity Liquidation Preference" shall mean the liquidation
         preference of any class or series of shares of beneficial interest in
         the Trust that ranks on a parity with the Class A Liquidation
         Preference.

                  "Parity Preferred Dividend" shall mean any dividend payable in
         respect of any class or series of shares of beneficial interest in the
         Trust that ranks on a parity in right of payment with the Class A
         Preferred Dividends, whether or not the dividend rate, dividend payment
         dates, liquidation preference, redemption rights, conversion or
         exchange rights or other features of such class or series are different
         from those of the Class A EPS.


                                       45


<PAGE>   50
                  "Person" shall mean any individual, firm, partnership,
         corporation, limited liability company or other entity, and shall
         include any successor (by merger or otherwise) of such entity.

                  "Registered Sale Option" shall have the meaning set forth in
         paragraph (a)(ii) of Article 6.15.5 hereof.

                  "REIT Rules" shall mean the requirements (i) for the Trust to
         qualify as a real estate investment trust under the Code as set forth
         in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
         Corporation or any affiliate of the Corporation which is a tenant of
         the Trust to not be treated as a related party pursuant to Section
         856(d)(2)(B) of the Code.

                  "Requested Shares" shall have the meaning set forth in
         paragraph (a)(ii) of Article 6.15.5 hereof.

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

                  "set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Trust in its
         accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to a declaration of dividends or other distribution
         by the Board of Trustees, the allocation of funds to be so paid on any
         series or class of shares of beneficial interest of the Trust;
         provided, however, that if any funds for any class or series of Junior
         Shares or any class or series of shares of beneficial interest of the
         Trust ranking on a parity with the Class A EPS as to the payment of
         dividends are placed in a separate account of the Trust or delivered to
         a disbursing, paying or other similar agent, then "set apart for
         payment" with respect to the Class A EPS shall mean placing such funds
         in a separate account or delivering such funds to a disbursing, paying
         or similar agent.

                  "Trading Day" with respect to publicly traded Paired Shares or
         any other shares of beneficial interest or other securities of the
         Trust or any other issuer shall mean any day on which the shares or
         other securities in question are traded on the NYSE, or if such shares
         or other securities are not listed or admitted for trading on the NYSE,
         on the principal national securities exchange on which such shares or
         other securities are listed or admitted, or if not listed or admitted
         for trading on any national securities exchange, on the NASDAQ National
         Market, or if such shares or other securities are not quoted on such
         NASDAQ National Market, in the applicable securities market in which
         such shares or other securities are traded.

                  "Transaction" shall have the meaning set forth in paragraph
         (e)(ii) of Article 6.15.5 hereof.

                  "Transfer Agent" shall mean ChaseMellon Shareholder Services,
         L.L.C. (or any successor thereof), or such other agent or agents of the
         Trust as may be designated by the Board of Trustees or their designee
         as the transfer agent for the Class A EPS and the Class B EPS.


                                       46


<PAGE>   51
                  "Trust" shall mean Starwood Lodging Trust, a Maryland real
         estate investment trust, and any successor.

                  "Trust Common Adjustment Event" shall mean any of the
         following events that occurs after the Issue Date:

                           (i) The payment by the Trust of a dividend on the
                  outstanding Trust Shares that is payable in additional Trust
                  Shares;
                           (ii) The subdivision of the outstanding Trust Shares
                  into a greater number of shares (whether by share split or
                  otherwise);

                           (iii) The combination of the outstanding Trust Shares
                  into a smaller number of shares (whether by reverse share
                  split or otherwise); or

                           (iv) The issuance of any shares of beneficial
                  interest in the Trust by reclassification of the Trust Shares.

                  "Trust Common Dividend" shall mean any dividend or
         distribution paid or made by the Trust pro rata on the outstanding
         Trust Shares other than (i) a distribution of assets of the Trust upon
         the occurrence of a Trust Liquidation Event or (ii) on a dividend or
         distribution that constitutes a Trust Common Adjustment Event. In
         addition, a distribution to the holders of shares of beneficial
         interest in the Trust of rights to subscribe for or purchase additional
         Trust Shares under a shareholders protective rights plan or agreement
         or any similar plan or agreement shall not be deemed to constitute a
         Trust Common Dividend to the extent that the Trust makes provision so
         that such rights, to the extent still outstanding with respect to the
         outstanding Trust Shares, shall be issued to the holders of any Trust
         Shares issued upon exercise of the Class A Exchange Right (and, to the
         extent applicable, shall attach to such Trust Shares) in an amount and
         manner and to the extent provided in such plans or agreements with
         respect to already outstanding Trust Shares.

                  "Trust Shares" shall mean the common shares of beneficial
         interest in the Trust, par value $.01 per share, or any shares of
         beneficial interest in the Trust into which such common shares may be
         changed.

                  "Westin Transaction Agreement" shall mean the Transaction
         Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
         Investor Partnership, Nomura Asset Capital Corporation, Juergen
         Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
         Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
         Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
         Limited Partnership, the Corporation and SLC Operating Limited
         Partnership, as such agreement may be amended from time to time.

                  "Westin Transaction Securities" shall mean, with respect to a
         holder of Class A EPS or an Affiliate thereof, any shares of Class A
         EPS, shares of Class B EPS, Starwood


                                       47


<PAGE>   52
         Operating Partnership Units and Starwood Realty Partnership Units (as
         such terms are defined in the Westin Transaction Agreement) received by
         such holder or Affiliate pursuant to the Westin Transaction Agreement,
         together with any shares of Class B EPS, Class A EPS or Paired Shares
         (or other securities) issued upon exchange or conversion of any such
         Westin Transaction Securities.

                  6.15.3.  DIVIDENDS.

                  (a) In General. The holders of Class A EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class A Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based on
the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class A Participation Dividend").

                  (b) Class A Preferred Dividend.

                           (i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class A Preferred Dividend will automatically accrue with
respect to each share of Class A EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the corresponding Class A
Preferred Dividend either (A) in the same form as such Corporation Common
Distribution (i.e., by delivery of the same type of securities or other property
as distributed in the Corporation Common Distribution), (B) in cash in an amount
equal to the fair market value of such securities or other property as
determined in good faith by the Board of Trustees (subject to the rights of the
affected holders of Class A EPS to request a valuation from a nationally
recognized investment banking firm as provided in paragraph (g)(v) of Article
6.15.5 hereof) or (C) a combination thereof. Each Class A Preferred Dividend
will be cumulative from the payment date for the related Corporation Common
Distribution and will be payable to holders of record of Class A EPS on such
record date as shall be fixed by the Board of Trustees, which record date shall
be the same as the record date for the corresponding Class B Preferred Dividend
that will have accrued or will accrue based on such Corporation Common
Distribution and not earlier than the record date for such Corporation Common
Distribution. The Board of Trustees may, at any time between the declaration of
a Corporation Common Distribution and the related payment date, declare a
corresponding Class A Preferred Dividend conditioned on the actual payment of
such Corporation Common Distribution (any such Class A Preferred Dvidend being
sometimes referred to herein as a AConditionally Declared Class A Dividend@
until such time as the corresponding Corporation Common Distribution is paid, at
which time it will no longer be a Conditionally Declared Class A Dividend but
will instead be deemed to be an accrued Class A Preferred Dividend). The
"Dividend Correspondence Ratio" for the purposes of determining the amount of
any Class A Preferred Dividend shall mean the number of Class A Underlying
Corporation Shares for which each share of Class A EPS is exchangeable as


                                       48


<PAGE>   53
of the record date for the related Corporation Common Distribution upon exercise
of the Class A Exchange Right, as such number shall be proportionately adjusted
to reflect any share dividend, share split, reverse share split or other
combination or subdivision of the Class A EPS that becomes effective between
(or, if the record date for such event is different from the effective date
therefor, that has a record date that falls between) (A) the record date for the
Corporation Common Distribution and (B) the date of payment of such Corporation
Common Distribution or, if earlier, the record date for such Class A Preferred
Dividend.

                           (ii) So long as any shares of Class A EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment, (B)
no Parity Preferred Dividend shall be declared or paid or set aside for payment
unless a ratable portion of all accrued but unpaid Class A Preferred Dividends
and Conditionally Declared Class A Dividends has been or is concurrently
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment (with such ratable portion being based on the portion of the
accrued but unpaid Parity Preferred Dividends being paid) and (C) no Junior
Shares may be redeemed, purchased or otherwise acquired by the Trust (other than
a redemption, purchase or other acquisition of Trust Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Trust or any subsidiary or upon any exchange or redemption of other
securities at the option of the holders thereof, or as required or permitted
under Article VI of the Declaration) for consideration (or any moneys paid or
made available for a sinking fund for the redemption of any Junior Shares),
directly or indirectly (except for conversion into or exchange for Junior
Shares) unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment.

                  (c) Class A Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class A Participation Dividend entitling each share of
Class A EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class A
Underlying Trust Shares for which each share of Class A EPS is then exchangeable
upon exercise of the Class A Exchange Right as of the record date for such Trust
Common Dividend. Such Class A Participation Dividend shall be payable on the
same date on which the corresponding Trust Common Dividend is payable, shall be
payable in the same form as the corresponding Trust Common Dividend and shall be
paid to holders of record of the Class A EPS on the same record date as is fixed
by the Board of Trustees for the payment of such Trust Common Dividend.

                  6.15.4.  LIQUIDATION RIGHTS.

                  (a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class A EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class A Liquidation


                                       49


<PAGE>   54
Preference described in paragraph (b) below determined as of the effective date
of such Liquidation Event or, if no effective date is provided, as of the record
date of the first liquidating distribution relating to such Liquidation Event
(in either such case, the "Liquidation Date") and (ii) to participate on the
basis described in paragraph (c) below in any liquidating distribution to
holders of Trust Shares (the "Class A Liquidation Participation Right"). In
determining whether a distribution (other than upon the occurrence of a
Liquidation Event), by dividend, redemption or other acquisition of shares of
beneficial interest in the Trust or otherwise, is permitted under Maryland law,
amounts that would be needed, if the Trust were to be dissolved at the time of
the distribution, to satisfy the preferential rights upon dissolution of the
holders of Class A EPS whose preferential rights upon dissolution are senior to
those receiving the distribution shall not be added to the Trust's total
liabilities.

                  (b) Class A Liquidation Preference. The "Class A Liquidation
Preference" of a share of Class A EPS as of the applicable Liquidation Date
shall mean the sum of (A) the fair market value (as determined in good faith by
the Board of Trustees, subject to the right of the holders of Class A EPS to
request a valuation from a nationally recognized investment banking firm
pursuant to paragraph (g)(v) of Article 6.15.5 hereof) as of such date of the
number of Class A Underlying Corporation Shares for which each Class A EPS is
exchangeable as of such date upon exercise of the Class A Exchange Right plus
(B) the amount of any accrued but unpaid Class A Preferred Dividends in respect
of each share of Class A EPS as of such date (other than any such accrued but
unpaid Class A Preferred Dividends that have been declared with a record date
prior to such Liquidation Date, which the Trust shall separately be obligated to
pay to the holders of record of the Class A EPS as of such record date). Until
each holder of shares of Class A EPS has received distributions equal to the
Class A Liquidation Preference, no Junior Liquidating Distributions may be paid
to holders of any other class or series of shares of beneficial interest in the
Trust. Subject to the rights of the holders of shares of beneficial interest in
the Trust with liquidation preferences ranking prior to or on a parity with the
Class A Liquidation Preference, after payment shall have been made in full of
the Class A Liquidation Preference as provided in this paragraph (b), Junior
Liquidating Distributions may be paid to the holders of any shares of beneficial
interest entitled to receive such distributions and the holders of the Class A
EPS shall not be entitled to share therein except as provided in paragraph (c)
of this Article 6.15.4. In the event that the assets of the Trust available for
liquidating distributions to holders of shares of beneficial interest in the
Trust in connection with any Liquidation Event are insufficient to pay the Class
A Liquidation Preference on all outstanding Class A PS and any Parity
Liquidation Preferences in respect of any other classes or series of shares of
beneficial interest in the Trust, then the holders of the Class A EPS and such
other classes and series of shares of beneficial interest in the Trust shall
share ratably in any such distribution of assets in proportion to the Class A
Liquidation Preference and the Parity Liquidation Preferences to which they
would otherwise be respectively entitled.

                  (c) Class A Liquidation Participation Right. In addition to
being entitled to receive the Class A Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of Class A EPS shall be entitled
to participate, pursuant to the Class A Liquidation Participation Right, ratably
with the holders of Trust Shares in any liquidating distributions to such
holders. For such purpose, each share of Class A EPS shall be deemed to
represent a number of Trust Shares equal to the number of Class A Underlying
Trust Shares for which each share of Class A EPS could be


                                       50


<PAGE>   55
exchanged upon exercise of the Class A Exchange Right as of the record date for
such distribution.

                  6.15.5.  EXCHANGE RIGHT.

                  (a) Class A Exchange Right. (i) A holder of shares of Class A
EPS shall have the right to exchange such shares in whole or in part at any time
for fully paid and non-assessable Paired Shares to the extent described below
(the "Class A Exchange Right"). A holder of shares of Class A EPS desiring to
exchange such shares for Paired Shares shall surrender the certificate or
certificates evidencing such shares, duly endorsed or assigned to the Trust or
in blank, to the Transfer Agent together with a duly completed and executed
exchange notice (a "Class A Exchange Notice") in such form as the Trust shall
prescribe from time to time and such related certifications as the Trust may
reasonably prescribe from time to time. Unless any Paired Shares to be issued in
exchange for such shares of Class A EPS are to be issued in the same name as the
name in which such shares of Class A EPS are registered, each share certificate
surrendered shall be accompanied by instruments of transfer, in form reasonably
satisfactory to the Trust, duly executed by the holder or such holder=s duly
authorized attorney and an amount sufficient to pay any applicable transfer or
similar tax (or evidence reasonably satisfactory to the Trust demonstrating that
such taxes have been paid). As promptly as practicable (and in any event within
five (5) Business Days after receipt of a Class A Exchange Notice and such
required certificates and documents, the Trust shall elect, pursuant to an
election notice given to the exchanging holder (an "Exchange Election Notice"),
to either: (i) deliver to such holder the number of Paired Shares corresponding
to the number of shares of Class A EPS being exchanged based on the Exchange
Ratio described in paragraph (d) of this Article 6.15.5 (including procuring the
issuance by the Corporation of the Corporation Shares component of such Paired
Shares) or (ii) pay to the holder the Cash Equivalent of such Paired Shares or
(iii) a combination of (i) and (ii).

                           (ii) If the delivery to such holder of the full
number of Paired Shares requested to be delivered pursuant to the Class A
Exchange Notice (the "Requested Shares") would result in a violation of either
the Ownership Limit or the REIT Rules, the Trust may elect in the Exchange
Election Notice to either (A) deliver to such holder the maximum number of
Paired Shares that may be delivered without causing such a violation (the
"Delivered Shares", with the number of Requested Shares in excess of the
Delivered Shares being referred to herein as the "Excess Shares"), together with
either the Cash Equivalent (determined as of the date of delivery of the
applicable Class A Exchange Notice and the related certificates and other
documents described above) of the Excess Shares or an Exchange Promissory Note
in a principal amount equal to such Cash Equivalent or (B) deliver to such
holder the Cash Equivalent (determined as of such notice delivery date) of the
Requested Shares. Notwithstanding the foregoing, in the event that the delivery
of the full number of Requested Shares pursuant to a Class A Exchange Notice
would violate either the Ownership Limit or the REIT Rules because the
exchanging Class A EPS holder, together with such holder's Affiliates (but
without giving effect to any other applicable attribution rules under the Code),
beneficially owns, as of the date the Exchange Election Notice is given, Paired
Shares other than through the ownership of Westin Transaction Securities, the
Trust will have the option (the "Registered Sale Option"), exercisable in the
Exchange Election Notice, in lieu of delivering an Exchange Promissory Note in a
principal amount equal to the Cash Equivalent of the Excess Shares, to procure
the filing of a registration statement under the Securities Act, and to publicly
offer and sell


                                       51


<PAGE>   56
pursuant to such registration statement in such manner as the Trust in good
faith determines to be appropriate a number of Paired Shares equal to the number
of such Excess Shares (the "Offered Shares"), the net roceeds of which sale
(after deducting any applicable underwriting discounts or commissions and the
expenses of such offering) shall be paid to such holder.

                           (iii) In the event that the issuance of the full
number of Requested Shares upon any exercise of the Class A Exchange Right would
violate either the Ownership Limit or the REIT Rules and either (i) the Trust
elects to deliver the Delivered Shares together with an Exchange Promissory Note
in a principal amount equal to the Cash Equivalent of the Excess Shares or (ii)
the Trust exercises the Registered Sale Option, the holder of the shares of
Class A EPS being exchanged will have the right to withdraw his or her Class A
Exchange Notice as to the Excess Shares, which withdrawal must be made by
written notice to the Transfer Agent within ten (10) Business Days after receipt
of the Trust's Exchange Election Notice.

                  (b) Delivery of Securities and Cash. If the Exchange Election
Notice relating to an exercise of the Class A Exchange Right does not give rise
to a withdrawal right pursuant to paragraph (a)(iii) above, such Exchange
Election Notice shall be accompanied by the delivery of the Paired Shares and/or
cash required to be delivered pursuant to such Exchange Election Notice. If the
Exchange Election Notice does give rise to such a withdrawal right, but such
right is not exercised by the exchanging holder, the Trust shall deliver the
Paired Shares, Exchange Promissory Note and/or cash required to be delivered
pursuant to such Exchange Election Notice within five (5) Business Days after
the expiration of such withdrawal right. If the Exchange Election Notice
includes the exercise of the Registered Sale Option, the proceeds from the sale
of the Offered Shares shall be paid over to the applicable holder promptly upon
receipt. Any cash payable to an exchanging holder hereunder shall be payable at
the election of the Trust by check or by wire transfer to an account designated
in writing by the exchanging holder, if one has been so designated. With respect
to any Paired Shares to be issued pursuant to an Exchange Election Notice, the
Trust shall issue and deliver (and shall cause the Corporation to issue and
deliver) at the office of the Transfer Agent to the exchanging holder, or on his
or her written order, a certificate or certificates for the number of full
Paired Shares deliverable in accordance with the provisions of this Article
6.15.5, and any fractional interest in respect of a unit of Paired Shares
arising upon such exercise of the Class A Exchange Right shall be settled as
provided in paragraph (c) of this Article 6.15.5 (the date of delivery of such
certificate or certificates being sometimes referred to herein as the "Exchange
Issuance Date"). Any such Paired Shares issued upon such exercise shall be
deemed to have been issued immediately prior to the close of business on the
Exchange Issuance Date, and the Person or Persons in whose name or nmes any
certificate or certificates for Paired Shares shall be issuable pursuant to such
Class A Exchange Notice shall be deemed to have become the holder or holders of
record of the Paired Shares represented thereby at such time on such date unless
the share transfer records for the Paired Shares shall be closed on such date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such share transfer books are open. If less than the full number of shares
of Class A EPS represented by the certificate or certificates surrendered to the
Trust in connection with an exercise of the Class A Exchange Right are being
exchanged pursuant to such exercise, the Trust shall also deliver to the
exchanging holder a new certificate or certificates evidencing the excess shares
not being exchanged.


                                       52


<PAGE>   57
                  (c) Fractional Interests. No fractional Paired Share units or
scrip evidencing fractions of Paired Shares shall be issued upon exercise of the
Class A Exchange Right. Instead of any fractional interest in a unit of Paired
Shares that would otherwise be deliverable upon such exercise, the Trust shall
pay to the exchanging holder an amount in cash equal to the corresponding
fraction of the Current Market Price of the Paired Shares on the Trading Day
immediately preceding the Exchange Issuance Date. If more than one share of
Class A EPS shall be surrendered for exchange at one time by the same holder,
the number of full Paired Shares issuable upon exercise of the Class A Exchange
Right shall be computed on the basis of the aggregate number of shares of Class
A EPS so surrendered.

                  (d)  Exchange Ratio and Adjustments.

                           (i) Initially, one unit of Paired Shares will be
issuable upon exchange of each share of Class A EPS pursuant to the exercise of
the Class A Exchange Right (the "Exchange Ratio"). If, at any time after the
Issue Date, a Trust Common Adjustment Event shall occur in conjunction with the
occurrence of a corresponding Corporation Common Adjustment Event as a result of
which the number of outstanding Paired Shares is increased or decreased but
neither the nature of the securities comprising the Paired Shares nor the ratio
of outstanding Trust Shares to Common Shares is affected (a "Paired Shares
Adjustment Event"), the Exchange Ratio in effect as of the close of business on
the record date for such Paired Shares Adjustment Event or, if no such record
date applies, the effective date of such Paired Shares Adjustment Event shall be
adjusted so that a holder of shares of Class A EPS who thereafter exercises the
Class A Exchange Right with respect to such shares will be entitled to receive
upon such exercise the number of Paired Shares that such holder would have owned
or have been entitled to receive after the happening of such Paired Shares
Adjustment Event if such holder had exercised the Class A Exchange Right
immediately prior to such record date or effective date. An adjustment pursuant
to this subparagraph (i) shall become effective (subject to subparagraph (iv)
below) immediately upon the opening of business on the Business Day next
following the record date for the applicable Paired Shares Adjustment Event or,
if no such record date applies, the Business Day next following the effective
date of such Paired Shares Adjustment Event.

                           (ii) No adjustment in the Exchange Ratio shall be
required pursuant to subparagraph (i) above unless such adjustment would require
a cumulative increase or decrease of at least one percent (1%) in such ratio;
provided, however, that any adjustments that by reason of this subparagraph (ii)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment until made. All calculations of the Exchange Ratio
under this paragraph (d) shall be made to the nearest one-tenth of a share (with
 .05 of a share being rounded upward).

                           (iii) Notwithstanding any other provisions of this
Article 6.15.5, the Trust shall not be required to make any adjustment to the
Exchange Ratio based on any issuance of Paired Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Trust (or the Corporation) and the investment of additional optional amounts
in Paired Shares under such plan.


                                       53


<PAGE>   58
                           (iv) In any case in which this paragraph (d) provides
that an adjustment to the Exchange Ratio shall become effective immediately
following the record date for an event, the Trust may defer until the occurrence
of such event (A) issuing to the holder of any shares of Class A EPS exchanged
after such record date but before the occurrence of such event the additional
Paired Shares (or the cash, Exchange Promissory Notes or other property to be
delivered in lieu thereof pursuant to this Article 6.15.5) issuable pursuant to
such exchange by reason of the adjustment required pursuant to this paragraph
(d) in respect of such event and (B) paying to the exchanging holder any amount
of cash in lieu of any fractional interest in Paired Shares pursuant to
paragraph (c) of this Article 6.15.5.

                           (v) If at the time of any exercise of the Class A
Exchange Right there are any accrued but unpaid Class A Preferred Dividends or
Class A Participation Dividends other than Class A Preferred Dividends or Class
A Participation Dividends that have been declared with a record date prior to
such exercise, the Exchange Ratio shall be adjusted so that the number of Paired
Shares into which the shares of Class A EPS being exchanged are then
exchangeable is increased by a number of Paired Shares (the "Class A Dividend
Replacement Shares") equal to (A) the aggregate amount of such accrued but
unpaid Class A Preferred Dividends and Class A Participation Dividends with
respect to each share of Class A EPS being exchanged divided by (B) the Current
Market Price of the Paired Shares during the five (5) Trading Days immediately
preceding the date of delivery of the applicable Class A Exchange Notice and all
related certificates and other documents.

                  (e) Adjustments to Composition of Paired Shares Issuable Upon
Exchange.

                           (i) If, at any time after the Issue Date, a Trust
Common Adjustment Event or a Corporation Common Adjustment Event shall occur
other than as part of a Paired Shares Adjustment Event, each unit of Paired
Shares issuable upon exercise of the Class A Exchange Right shall be adjusted
(subject to subparagraph (iii) below) as of the close of business on the record
date for such event or, if no such record date applies, the effective date of
such event so as to consist of the number of Trust Shares, the number of
Corporation Shares and the number of any other shares of beneficial interest in
the Trust or shares of stock of the Corporation that a holder of one unit of
Paired Shares would have held or have been entitled to receive after giving
effect to such event.

                           (ii) If, at any time after the Issue Date, the Trust
or the Corporation shall become a party to any transaction, including, without
limitation, a merger, consolidation, statutory share exchange, self tender offer
for all or substantially all outstanding Trust Shares and/or Corporation Shares,
sale of all or substantially all of the Trust=s or the Corporation=s assets or
recapitalization of the Trust Shares and/or the Corporation Shares (but
excluding any event constituting a Trust Common Adjustment Event or a
Corporation Common Adjustment Event) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which the outstanding
Trust Shares and/or Corporation Shares shall be converted into or exchanged for
the right to receive stock, securities or other property (including cash or any
combination thereof), effective as of the effective date of such Transaction,
each unit of Paired Shares issuable upon exercise of the Class A Exchange Right
with respect to any shares of Class A EPS that are not converted into or
exchanged for the right to receive stock, securities or other property in
connection


                                       54


<PAGE>   59
with such Transaction shall thereafter be deemed to consist of the kind and
amount of shares of beneficial interest in the Trust, shares of stock of the
Corporation and other securities and property (including cash or any combination
thereof) that would have been held or receivable upon the consummation of such
Transaction by a holder of a number of Paired Shares equal to the number of
Class A Underlying Paired Shares for which one share of Class A EPS would have
been exchangeable immediately prior to such Transaction, assuming such holder of
Paired Shares (A) is not a Person with which the Trust or the Corporation
consolidated or into which the Trust or the Corporation was merged or which
merged into the Trust or the Corporation or to which such sale or transfer was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person and (B) failed to exercise his or her rights of election, if
any, as to the kind or amount of stock, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
stock, securities and other property (including cash) receivable upon such
Transaction is not the same for each unit of Paired Shares held immediately
prior to such Transacion by other than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("Non-Electing Shares"), then for the purposes of this subparagraph
(ii) the kind and amount of stock, securities and other property (including
cash) receivable upon such Transaction in respect of each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-Electing Shares). The provisions of this paragraph (e) shall
similarly apply to successive transactions.

                           (iii) In any case in which this paragraph (e)
provides that an adjustment to the composition of the units of Paired Shares
issuable upon exercise of the Class A Exchange Right shall become effective
immediately following the record date for an event, the Trust may defer until
the occurrence of such event (A) issuing to the holder of any shares of Class A
EPS exchanged after such record date but before the occurrence of such event the
additional Paired Shares (or the cash, Exchange Promissory Notes or other
property to be delivered in lieu thereof pursuant to this Article 6.15.5)
issuable pursuant to such exchange before giving effect to such adjustment and
(B) paying to the exchanging holder any amount of cash in lieu of any fractional
interest in Paired Shares pursuant to paragraph (c) of this Article 6.15.5.

                  (f) Notice of Adjustments. Whenever the Exchange Ratio or the
composition of a unit of Paired Shares is adjusted as provided in paragraph (d)
or (e) above, the Trust shall promptly file with the Transfer Agent an officer=s
certificate setting forth the Exchange Ratio after such adjustment and, in the
case of an adjustment pursuant to paragraph (e), describing the kind and amount
of stock, securities and other property (including cash) then constituting a
unit of Paired Shares. Such certificate shall also set forth a brief statement
of the facts requiring such adjustment and shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly after delivery of
such certificate, the Trust shall prepare a notice of such adjustment setting
forth the adjusted Exchange Ratio, the effective date of such adjustment and, in
the case of an adjustment pursuant to paragraph (e), a description of the kind
and amount of stock, securities and other property (including cash) then
constituting a unit of Paired Shares, and shall mail such notice of such
adjustment to the holder of each share of Class A EPS, and to the extent that
any shares of Class B EPS are then outstanding to each holder of Class B EPS, at
such holder=s last address as shown on the share records of the Trust.


                                       55


<PAGE>   60
                  (g) Miscellaneous Provisions.

                           (i) There shall be no adjustment of the Exchange
Ratio or the composition of the units of Paired Shares issuable upon exercise of
the Class A Exchange Right in case of the issuance of any shares of beneficial
interest in the Trust in a reorganization, acquisition or other similar
transaction except as specifically set forth in this Article 6.15.5.

                           (ii) If the Trust shall take any action affecting the
Trust Shares or the Corporation shall take any action affecting the Corporation
Shares, other than an action described in this Article 6.15.5, that in the
opinion of the Board of Trustees would materially affect the exchange rights of
the holders of the Class A EPS provided for in this Article 6.15.5, the Exchange
Ratio and/or the composition of the units of Paired Shares may be adjusted, to
the extent permitted by law, in such manner, if any, and at such time, as the
Board of Trustees, in its sole discretion, may determine to be equitable in the
circumstances.

                           (iii) The Trust covenants that any Paired Shares
issued upon exercise of the Class A Exchange Right will be validly issued, fully
paid and non-assessable. The Trust shall reserve and shall at all times have
reserved out of its authorized but unissued Trust Shares, solely for issuance
pursuant to exercise of the Class A Exchange Right and shall use its best
efforts to cause the Corporation to reserve and at all times have, solely for
issuance pursuant to exercise of the Class A Exchange Right, sufficient
Corporation shares to permit the exercise of such Class A Exchange Right. The
Trust shall use its best efforts to cause the Corporation not to close its
transfer books so as to prevent the timely issuance of Corporation Shares upon
the exercise of the Class A Exchange Right. The Trust shall not close its
transfer books so as to prevent the timely issuance of Trust Shares upon the
exercise of the Class A Exchange Right. The Trust shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of Paired Shares or other securities or property upon exercise
of the Class A Exchange Right; provided, however, that the Trust shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of any Paired Shares or other securities or property in
a name other than that of the holder of the shares of Class A EPS being
exchanged, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Trust the amount of any
such tax or established, to the reasonable satisfaction of the Trust, that such
tax has been paid.

                           (iv) Except as provided in paragraph (g)(v) below,
any determination required or permitted to be made by the Board of Trustees by
these Articles Supplementary shall be final, conclusive and binding on the
holders of Class A EPS.

                           (v) In the event that: (A) the Trust elects to pay
the Cash Equivalent of Paired Shares or other securities pursuant to an exercise
of the Class A Exchange Right and in connection therewith the Board of Trustees
makes a determination of the value of the Paired Shares or other securities at a
time when the Paired Shares or such other securities are not publicly traded,
(B) the Trust elects to pay in cash a Class A Preferred Dividend corresponding
to a Corporation Common Distribution in the form of securities or other property
and in connection therewith the Board of Trustees makes a determination of the
fair market value of such securities or


                                       56


<PAGE>   61
other property or (C) the Board of Trustees makes a determination of the fair
market value of Class A Underlying Corporation Shares for the purpose of
determining the amount of the Class A Liquidation Preference in connection with
a Liquidation Event, then the Trust shall deliver to each affected holder of
Class A EPS a written notice (which, in the case of an exercise of the Class A
Exchange Right may be set forth in the related Exchange Election Notice) setting
forth the valuation determined by the Board of Trustees. At any time within ten
(10) Business Days after receipt of such notice, any affected holder of Class A
EPS may request in writing that the Trust obtain a written valuation of such
Paired Shares, Class A Underlying Corporation Shares or other securities or
property from an investment banking firm. Promptly after receipt of any such
request, the Trust shall select a nationally recognized investment banking firm
to perform such valuation and shall provide such investment banking firm with
such relevant information as the Trust may have in relation thereto. Such
investment banking firm shall be instructed to prepare a written valuation
report within thirty (30) days after its appointment, and upon receipt of such
valuation report, the Trust shall mail a copy to each affected holder of Class A
EPS. If the valuation as determined by such investment banking firm is greater
than the valuation as determined by the Board of Trustees, the Trust shall
promptly pay the amount of such difference to each affected holder of Class A
EPS. If, however, the valuation as determined by such investment banking firm is
less than the valuation determined by the Board of Trustees, the Trust may at
its option require each affected holder of Class A EPS to repay the amount of
such difference to the Trust, which amount shall be so repaid by each such
holder promptl after receipt of the Trust's request. The fees and expenses of
such investment banking firm shall be paid by the Trust.

                  6.15.6.  REACQUIRED SHARES TO BE RETIRED.

                  All shares of Class A EPS which shall have been issued and
reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued shares of beneficial interest in the Trust without
designation as to class.

                  6.15.7.  VOTING.

                  (a) General Voting Rights. The holders of shares of Class A
EPS shall be entitled to vote upon all matters upon which holders of Trust
Shares have the right to vote, and shall be entitled to the number of votes
equal to the largest whole number of Class A Underlying Trust Shares for which
such shares of Class A EPS could be exchanged pursuant to the provisions of
Article 6.15.5 hereof as of the record date for determination of the
shareholders entitled to vote on such matters, or, if no such record date is
established, as of the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of beneficial interest in the Trust having general voting powers and not
separately as a class.

                  (b) Special Voting Rights. So long as any shares of Class A
EPS are outstanding, in addition to any other vote or consent of holders of such
shares required by the Declaration or these Articles Supplementary, the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of all outstanding shares of Class A EPS, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for that
purpose, shall be necessary for


                                       57


<PAGE>   62
effecting or validating any amendment, alteration or repeal of any of the
provisions of the Declaration or these Articles Supplementary that materially
and adversely affects the voting powers, rights or preferences of the holders of
the Class A EPS disproportionately (based on the number of Underlying Class A
Trust Shares at the time) to the effect of such amendment, alteration or repeal
on the holders of Trust Shares; provided, however, that (i) any amendment of the
provisions of the Declaration so as to authorize or create, or to increase the
authorized amount of, any class or series of shares of beneficial interest in
the Trust, whether ranking prior to, on a parity with or junior to the Class A
EPS shall not be deemed to materially and adversely affect the voting powers,
rights or preferences of the holders of Class A EPS and (ii) no filing with the
State Department of Assessments and Taxation of Maryland by the Trust in
connection with a merger, consolidation or sale of all or substantially all of
the assets of the Trust shall be deemed to be an amendment, alteration or repeal
of any of the provisions of the Declaration or these Articles Supplementary
unless such filing expressly purports to amend, alter or repeal one or more of
such provisions. For the purposes of this paragraph (b), each share of Class A
EPS will have one vote per share.

                  6.15.8.  RECORD HOLDERS.

                  The Trust and the Transfer Agent may deem and treat the record
holder of any shares of Class A EPS as the true and lawful owner thereof for all
purposes, and neither the Trust nor the Transfer Agent shall be affected by any
notice to the contrary.

                  6.15.9.  RESTRICTIONS ON OWNERSHIP AND TRANSFER.

                  The Class A EPS constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class A EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.



                       **********************************


                                       58


<PAGE>   63
         Pursuant to the authority granted to the Board of Trustees of the Trust
under Section 6.1 of the Amended and Restated Declaration of Trust of the Trust,
as heretofore amended (the "Declaration"), the Board of Trustees of the Trust,
by resolution adopted by the Board of Trustees of the Trust on September 8,
1997, classified and designated 15,000,000 shares of beneficial interest in the
Trust as Class B Exchangeable Preferred Shares, par value $.01 per share, with
the following preferences, exchange and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption, such classification and
designation to become effective upon the effective time of the merger of Westin
Hotels & Resorts Worldwide, Inc., a Delaware corporation, with and into the
Trust:


6.16     Class B Exchangeable Preferred Shares Articles Supplementary

                  6.16.1.  NUMBER OF SHARES AND DESIGNATION.

                  There are hereby designated 15,000,000 "Class B Exchangeable
Preferred Shares", par value $.01 per share ("Class B EPS").

                  6.16.2.  DEFINITIONS.

                  For purposes of the Class B EPS, the following terms have the
meanings indicated:

                  "Affiliate" shall mean with respect to any Person, any other
         Person which directly or indirectly controls, is controlled by or is
         under common control with such Person.

                  "Articles Supplementary" shall mean either Article 6.15 or
         Article 6.16, as the case may be, of the Declaration of Trust.

                  "Base Preference Amount" per share of Class B EPS as of any
         date shall mean the Stated Value per share as of such date.

                  "Board of Trustees" shall mean the Board of Trustees of the
         Trust or any committee authorized by the Board of Trustees from time to
         time to exercise any of its powers or perform any of its
         responsibilities with respect to the Class B EPS.

                  "Business Day" shall mean any day other than a Saturday,
         Sunday or a day on which state or federally chartered banking
         institutions in New York, New York are not required to be open.

                  "Class A Articles Supplementary" shall mean Article 6.15
         hereof pursuant to which the Trust has classified and designated
         30,000,000 shares of beneficial interest in the Trust as "Class A
         Exchangeable Preferred Shares".


                                       59


<PAGE>   64
                  "Class A EPS" means the Class A Exchangeable Preferred Shares,
         par value $0.01 per share, created by the Class A Articles
         Supplementary.

                  "Class A EPS Adjustment Event" shall mean any of the following
         events that occurs after the Issue Date:

                           (i) The payment by the Trust of a dividend on the
                  outstanding Class A EPS that is payable in additional shares
                  of Class A EPS;

                           (ii) The subdivision of the outstanding Class A EPS
                  into a greater number of shares (whether by share split or
                  otherwise);

                           (iii) The combination of the outstanding Class A EPS
                  into a smaller number of shares (whether by reverse share
                  split or otherwise); or

                           (iv) The issuance of any shares of beneficial
                  interest in the Trust by reclassification of the Class A EPS.

                  "Class A Exchange Right" shall have the meaning set forth in
         paragraph (a) of Article 6.15.5 hereof.

                  "Class A Liquidation Preference" shall have the meaning set
         forth in paragraph (b) of Article 6.15.4 hereof.

                  "Class A Liquidation Participation Right" shall have the
         meaning set forth in paragraph (a) of Article 6.15.4 hereof.

                  "Class A Participation Dividend" shall have the meaning set
         forth in paragraph (a) of Article 6.15.3 hereof.

                  "Class A Preferred Dividend" shall have the meaning set forth
         in paragraph (a) of Article 6.15.3 hereof.

                  "Class B Articles Supplementary" shall mean this Article 6.16.

                  "Class B Conversion Notice" shall have the meaning set forth
         in paragraph (b)(ii) of Article 6.16.5 hereof.

                  "Class B Conversion/Redemption Election Right" shall have the
         meaning set forth in Article 6.16.7 hereof.

                  "Class B Conversion/Redemption Notice" shall have the meaning
         set forth in Article 6.16.7 hereof.


                                       60


<PAGE>   65
                  "Class B Conversion Right" shall have the meaning set forth in
         paragraph (b)(i) of Article 6.16.5 hereof.


                                       61


<PAGE>   66
                  "Class B Dividend Replacement Shares" shall have the meaning
         set forth in paragraph (e)(v) of Article 6.16.5 hereof.

                  "Class B EPS" shall have the meaning set forth in Article
6.16.1 hereof.

                  "Class B Liquidation Preference" shall have the meaning set
         forth in paragraph (b) of Article 6.16.4 hereof.

                  "Class B Liquidation Participation Right" shall have the
         meaning set forth in paragraph (a) of Article 6.16.4 hereof.

                  "Class B Participation Dividend" shall have the meaning set
         forth in paragraph (a) of Article 6.16.3 hereof.

                  "Class B Preferred Dividend" shall have the meaning set forth
         in paragraph (a) of Article 6.16.3 hereof.

                  "Class B Redemption Date" shall have the meaning set forth in
         paragraph (c)(ii) of Article 6.16.6 hereof.

                  "Class B Redemption Notice" shall have the meaning set forth
         in paragraph (c)(ii) of Article 6.16.6 hereof.

                  "Class B Redemption Right" shall have the meaning set forth in
         paragraph (a) of Article 6.16.6 hereof.

                  "Class B Underlying Class A EPS" with respect to any shares of
         Class B EPS as of a specified date shall mean the number of shares of
         Class A EPS issuable on such date upon exercise of the Class B
         Conversion Right with respect to such shares of Class B EPS (including
         fractional interests but without taking into account any Class B
         Dividend Replace ment Shares except for the purposes of an actual
         exercise of the Class B Conversion Right).

                  "Class B Underlying Corporation Shares" as of any time shall
         mean the Corporation Shares component of the Class B Underlying Paired
         Shares as of such time.

                  "Class B Underlying Paired Shares" as of any time shall mean
         the Paired Shares for which each share of Class B EPS is then
         indirectly exchangeable assuming both (i) the conversion at such time
         of such share of Class B EPS into the corresponding number of shares of
         Class B Underlying Class A EPS upon exercise of the Class B Conversion
         Right and (ii) the simultaneous exchange of such shares of Class A EPS
         for Paired Shares (including, unless otherwise expressly provided
         herein, fractional shares but excluding any Class A Dividend
         Replacement Shares, as defined in paragraph (d)(v) of Article 6.15.5
         hereof) upon exercise of the Class A Exchange Right.


                                       62


<PAGE>   67
                  "Class B Underlying Trust Shares" as of any time shall mean
         the Trust Shares component of the Class B Underlying Paired Shares as
         of such time.

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended.

                  AConditionally Declared Class B Dividend@ shall have the
         meaning set forth in paragraph (b)(i) of Article 6.16.3 hereof.

                  "Constituent Person" shall have the meaning set forth in
         paragraph (f) of Article 6.16.5 hereof.

                  "Conversion Ratio" shall have the meaning set forth in
         paragraph (e)(i) of Article 6.16.5 hereof.

                  "Corporation" shall mean Starwood Lodging Corporation, a
         Maryland corporation, and any successor.

                  "Corporation Common Adjustment Event" shall mean any of the
         following events that occurs after the Issue Date:

                           (i) The payment by the Corporation of a dividend on
                  the outstanding Corporation Shares that is payable in
                  additional Corporation Shares;

                           (ii) The subdivision of the outstanding Corporation
                  Shares into a greater number of shares (whether by stock split
                  or otherwise);

                           (iii) The combination of the outstanding Corporation
                  Shares into a smaller number of shares (whether by reverse
                  stock split or otherwise); or

                           (iv) The issuance of any shares of stock of the
                  Corporation by reclassification of the Corporation Shares.

                  "Corporation Common Distribution" shall mean any dividend or
         distribution paid or made by the Corporation (including, without
         limitation, any distribution of assets on any liquidation, dissolution
         or winding up of the Corporation) in respect of the Corporation Shares,
         other than a dividend or distribution that constitutes a Corporation
         Common Adjustment Event. In addition, a distribution to the holders of
         Corporation Shares of rights to subscribe for or purchase additional
         Corporation Shares under a shareholders protective rights plan or
         agreement shall not be deemed to constitute a Corporation Common
         Distribution to the extent that the Corporation makes provision so that
         such rights, to the extent still outstanding with respect to the
         outstanding Corporation Shares, shall be issued to the holders of any
         Corporation Shares issued upon exercise of the Class A Exchange Right
         (and, to the extent applicable, shall attach to such Corporation
         Shares) in an amount and


                                       63


<PAGE>   68
         manner and to the extent provided in such shareholders protective
         rights plans or agreements with respect to already outstanding
         Corporation Shares.

                  "Corporation Shares" shall mean the shares of common stock,
         par value $.01 per share, of the Corporation or any stock of the
         Corporation into which such common stock may hereafter be changed.

                  "Cross-Over Date" shall mean the fifth anniversary of the
         Issue Date, subject to extension as described in paragraph (a) of
         Article 6.16.9 hereof.

                  "Current Market Price" of publicly traded Paired Shares or any
         other shares of beneficial interest or other securities of the Trust or
         any other issuer as of any Trading Day shall mean the last reported
         sales price, regular way, on such day, or, if no sale takes place on
         such day, the average of the reported closing bid and asked prices on
         such day, regular way, in either case as reported on the NYSE or, if
         such shares or other securities are not listed or admitted for trading
         on the NYSE, on the principal national securities exchange on which
         such shares or other securities are listed or admitted for trading or,
         if not listed or admitted for trading on any national securities
         exchange, on the NASDAQ National Market or, if such shares or other
         securities are not quoted on such NASDAQ National Market, the average
         of the closing bid and asked prices on such day in the over-the-counter
         market as reported by NASDAQ or, if bid and asked prices for such
         shares or other securities on such day shall not have been reported
         through NASDAQ, the average of the bid and asked prices on such day as
         furnished by any NYSE member firm regularly making a market in such
         security selected for such purpose by the Chief Executive Officer or
         Chief Financial Officer of the Trust or the Board of Trustees.

                  "Declaration" shall mean the Amended and Restated Declaration
         of Trust of the Trust, as amended from time to time.

                  "Default Rate Dividends" shall have the meaning set forth in
         paragraph (d) of Article 6.16.3 hereof.

                  "Dividend Correspondence Ratio" shall have the meaning set
         forth in paragraph (b)(i) of Article 6.16.3 hereof.

                  "Issue Date" shall mean the first date on which any Class B
         EPS are issued by the Trust.

                  "Junior Dividend" means a dividend payable in respect of any
         class or series of shares of beneficial interest in the Trust over
         which the Class B Preferred Dividends have preference or priority as to
         the payment of dividends, including, without limitation, any Trust
         Common Dividend, any Class B Participation Dividend and any Class A
         Preferred Dividend and any Class A Participation Dividend.


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<PAGE>   69
                  "Junior Liquidating Distribution" shall mean any distribution
         of assets of the Trust in connection with a Liquidation Event to
         holders of any class or series of shares of beneficial interest in the
         Trust over which the Class B Liquidation Preference has preference or
         priority in the distribution of assets upon the occurrence of such
         Liquidation


                                       65


<PAGE>   70
         Event, including, without limitation, any such distribution of assets
         to holders of Trust Shares or in respect of the Class B Liquidation
         Participation Right, the Class A Liquidation Preference or the Class A
         Liquidation Participation Right.

                  "Junior Shares" shall mean the Trust Shares and any other
         class or series of shares of beneficial interest in the Trust now or
         hereafter issued and outstanding over which the Class B Preferred
         Dividends have full preference or priority in the payment of dividends
         or over which the Class B Liquidation Preference has full preference or
         priority in the distribution of assets on the occurrence of any
         Liquidation Event. Without limiting the generality of the foregoing,
         for the purposes hereof the Class A EPS and the Trust Shares constitute
         Junior Shares.

                  "LIBOR" as of any date shall mean the rate of interest per
         annum for United States dollar deposits in the amount of $100,000,000
         with a one-month maturity which appears on "Telerate Page 3750" (as
         defined below) as of 11:00 a.m. (London time) on such date; provided
         that if such rate is no longer published, an interest rate per annum
         equal to the arithmetic mean (rounded if necessary to the nearest
         one-hundredth of one percent (0.01%) of the interest rates per annum
         for United States dollar deposits in such amount and with such a
         maturity quoted on Reuters Screen Page "LIBO" (or if such page on such
         service ceases to display such information, such other page as may
         replace it on that service for the purpose of displaying such
         information) as of 11:00 a.m. on such date (the rate determined as
         aforesaid being the "LIBO Screen Rate"). For such purposes, the term
         "Telerate Page 3750" shall mean the display designated as "Page 3750"
         on the Associated Press-Dow Jones Telerate Service (or such other page
         as may replace Page 3750 on the Associated Press-Dow Jones Telerate
         Service or such other service as may be nominated by the British
         Bankers' Association as the information vendor for the purpose of
         displaying British Bankers' Association interest rate settlement rates
         for United States dollar deposits). Any LIBOR rate determined on the
         basis of the rate displayed on Telerate Page 3750 or the LIBO Screen
         Rate determined in accordance with the foregoing provisions of this
         definition shall be subject to corrections, if any, made in such rate
         and displayed by the Associated Press-Dow Jones Telerate Service or
         Reuters, as applicable, within one hour of the time when such rate is
         first displayed by such service. For the purposes of paragraph (d) of
         Article 6.16.3, the LIBOR rate shall be determined in accordance with
         the foregoing as of the date on which an Uncured Default arises and on
         the nearest corresponding day of each subsequent calendar month and
         shall apply for the approximate one-month period between the date of
         such determination and the next succeeding date of determination.

                  "Liquidation Date" shall have the meaning set forth in
         paragraph (a) of Article 6.16.4 hereof.

                  "Liquidation Event" shall mean any liquidation, dissolution or
         winding up of the affairs of the Trust, whether voluntary or
         involuntary. For the purposes hereof, (i) a consolidation or merger of
         the Trust with one or more entities, (ii) a statutory share exchange
         and (iii) a sale


                                       66


<PAGE>   71
         or transfer of all or substantially all of the Trust's assets shall not
         be deemed to be a Liquidation Event.

                  "Non-Electing Shares" shall have the meaning set forth in
         paragraph (f) of Article 6.16.5 hereof.

                  "NYSE" shall mean the New York Stock Exchange.

                  "Ownership Limit" shall have the meaning set forth in Section
         6.12 of the Declaration.

                  "Paired Shares" shall mean units consisting of one Trust Share
         paired with one Corporation Share (subject to adjustment as
         contemplated in paragraph (e) of Article 6.15.5 hereof) and represented
         by a single share certificate, as provided in the Pairing Agreement
         dated as of June 25, 1980, between the Trust and the Corporation, as
         amended from time to time.

                  "Parity Liquidation Preference" shall mean the liquidation
         preference of any class or series of shares of beneficial interest in
         the Trust that ranks on a parity with the Class B Liquidation
         Preference. For such purposes: (i) the Base Preference Amount portion
         of the Class B Liquidation Preference will rank on a parity with the
         liquidation preferences of any class or series of Preferred Shares
         issued by the Trust (other than the Class A EPS to which said portion
         of the Class B Liquidation Preference will rank senior in liquidation
         preference), unless the articles supplementary creating such class or
         series provide that such class or series will rank junior to such
         portion of the Class B Liquidation Preference in the distribution of
         assets upon the occurrence of a Liquidation Event, and (ii) the
         Supplemental Preference Amount portion of the Class B Liquidation
         Preference will rank junior to the liquidation preferences of any class
         or series of Preferred Shares issued by the Trust (other than the Class
         A EPS), unless the articles supplementary creating such class or series
         provide that such class or series will rank junior to or on a parity
         with such portion of the Class B Liquidation Preference in the
         distribution of assets upon the occurrence of a Liquidation Event.

                  "Parity Preferred Dividend" shall mean any dividend payable in
         respect of any class or series of shares of beneficial interest in the
         Trust that ranks on a parity in right of payment with the Class B
         Preferred Dividends, whether or not the dividend rate, dividend payment
         dates, liquidation preference or redemption price are different from
         those of the Class B EPS.

                  "Person" shall mean any individual, firm, partnership,
         corporation, limited liability company or other entity, and shall
         include any successor (by merger or otherwise) of such entity.

                  "Preferred Shares" shall mean any class or series of shares of
         beneficial interest in the Trust now or hereafter issued and
         outstanding that have preference or priority over Trust Shares in the
         payment of dividends or in the distribution of assets on the occurrence
         of any Liquidation Event.


                                       67


<PAGE>   72
                  "Redemption Price" shall have the meaning set forth in
         paragraph (b)(i) of Article 6.16.6 hereof.

                  "Registration Rights Agreement" means the Registration Rights
         Agreement entered into by the Trust, the Corporation and the other
         parties thereto pursuant to the Westin Transaction Agreement.

                  "REIT Rules" shall mean the requirements (i) for the Trust to
         qualify as a real estate investment trust under the Code as set forth
         in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
         Corporation or any affiliate of the Corporation which is a tenant of
         the Trust to not be treated as a related party pursuant to Section
         856(d)(2)(B) of the Code.

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

                  "set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Trust in its
         accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to a declaration of dividends or other distribution
         by the Board of Trustees, the allocation of funds to be so paid on any
         series or class of shares of beneficial interest in the Trust;
         provided, however, that if any funds for any class or series of Junior
         Shares or any class or series of shares of beneficial interest in the
         Trust ranking on a parity with the Class B EPS as to the payment of
         dividends are placed in a separate account of the Trust or delivered to
         a disbursing, paying or other similar agent, then "set apart for
         payment" with respect to the Class B EPS shall mean placing such funds
         in a separate account or delivering such funds to a disbursing, paying
         or similar agent.

                  "Stated Value" of each share of Class B EPS shall initially
         mean Thirty-Eight Dollars and Fifty Cents ($38.50) per share. Upon the
         occurrence of any share split, reverse share split or other subdivision
         or combination of the Class B EPS subsequent to the Issue Date, the
         Stated Amount shall be proportionately adjusted as determined in good
         faith by the Board of Trustees.

                  "Supplemental Preference Amount" shall have the meaning set
         forth in paragraph (b) of Article 6.16.4 hereof.

                  "Trading Day" with respect to publicly traded Paired Shares or
         any other shares of beneficial interest or other securities of the
         Trust or any other issuer shall mean any day on which the securities in
         question are traded on the NYSE, or if such securities are not listed
         or admitted for trading on the NYSE, on the principal national
         securities exchange on which such securities are listed or admitted, or
         if not listed or admitted for trading on any national securities
         exchange, on the NASDAQ National Market, or if such securities are not
         quoted on such NASDAQ National Market, in the applicable securities
         market in which such securities are traded.


                                       68


<PAGE>   73
                  "Transaction" shall have the meaning set forth in paragraph
         (f) of Article 6.16.5 hereof.

                  "Transfer Agent" shall mean ChaseMellon Shareholder Services,
         L.L.C. (or any successor thereof), or such other agent or agents of the
         Trust as may be designated by the Board of Trustees or their designee
         as the transfer agent for the Class B EPS and the Class A EPS.

                  "Trust" shall mean Starwood Lodging Trust, a Maryland real
         estate investment trust, and any successor.

                  "Trust Common Adjustment Event" shall mean any of the
         following events that occurs after the Issue Date:

                           (i) The payment by the Trust of a dividend on the
                  outstanding Trust Shares that is payable in additional Trust
                  Shares;

                           (ii) The subdivision of the outstanding Trust Shares
                  into a greater number of shares (whether by share split or
                  otherwise);

                           (iii) The combination of the outstanding Trust Shares
                  into a smaller number of shares (whether by reverse share
                  split or otherwise); or

                           (iv) The issuance of any shares of beneficial
                  interest in the Trust by reclassification of the Trust Shares.

                  "Trust Common Dividend" shall mean any dividend or
         distribution paid or made by the Trust pro rata on the outstanding
         Trust Shares other than (i) a distribution of assets of the Trust upon
         the occurrence of a Trust Liquidation Event or (ii) on a dividend or
         distribution that constitutes a Trust Common Adjustment Event. In
         addition, a distribution to the holders of shares of beneficial
         interest in the Trust of rights to subscribe for or purchase additional
         Trust Shares under a shareholders protective rights plan or agreement
         or any similar plan or agreement shall not be deemed to constitute a
         Trust Common Dividend to the extent that the Trust makes provision so
         that such rights, to the extent still outstanding with respect to the
         outstanding Trust Shares, shall be issued to the holders of any Trust
         Shares issued upon exercise of the Class A Exchange Right (and, to the
         extent applicable, shall attach to such Trust Shares) in an amount and
         manner and to the extent provided in such plans or agreements with
         respect to already outstanding Trust Shares.

                  "Trust Conversion Notice" shall have the meaning set forth in
         paragraph (c)(ii) of Article 6.16.5 hereof.

                  "Trust Conversion Right" shall have the meaning set forth in
         paragraph (c)(i) of Article 6.16.5 hereof.


                                       69


<PAGE>   74
                  "Trust Redemption Date" shall have the meaning set forth in
         paragraph (b)(ii) of Article 6.16.6 hereof.

                  "Trust Redemption Notice" shall have the meaning set forth in
         paragraph (b)(ii) of Article 6.16.6 hereof.

                  "Trust Redemption Right" shall have the meaning set forth in
         paragraph (a) of Article 6.16.6 hereof.

                  "Trust Shares" shall mean the common shares of beneficial
         interest in the Trust, par value $.01 per share, or any shares of
         beneficial interest in the Trust into which such common shares may be
         changed.

                  "Uncured Default" shall have the meaning set forth in
         paragraph (a) of Article 6.16.9 hereof.

                  "Westin Transaction Agreement" shall mean the Transaction
         Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
         Investor Partnership, Nomura Asset Capital Corporation, Juergen
         Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
         Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
         Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
         Limited Partnership, the Corporation and SLC Operating Limited
         Partnership, as such agreement may be amended from time to time.

                  6.16.3.  DIVIDENDS.

                  (a) In General. The holders of Class B EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class B Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based on
the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class B Participation Dividend"). In certain circumstances,
the holders of Class B EPS will also be entitled to receive a Default Rate
Dividend, as provided in paragraph (d) below.

                  (b)  Class B Preferred Dividend.

                           (i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class B Preferred Dividend will automatically accrue with
respect to each share of Class B EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the


                                       70


<PAGE>   75
corresponding Class B Preferred Dividend either (A) in the same form as such
Corporation Common Distribution (i.e., by delivery of the same type of
securities or other property as distributed in the Corporation Common
Distribution), (B) in cash in an amount equal to the fair market value of such
securities or other property as determined in good faith by the Board of
Trustees subject to the rights of the holders of the Class B EPS to request a
valuation from a nationally recognized investment banking firm as provided in
paragraph (h)(v) of Article 6.16.5 hereof or (C) a combination thereof. Each
Class B Preferred Dividend will be cumulative from the payment date for the
related Corporation Common Distribution and will be payable to holders of record
of Class B EPS on such record date as shall be fixed by the Board of Trustees,
which record date shall be the same as the record date for the corresponding
Class A Preferred Dividend based on such Corporation Common Distribution and not
earlier than the record date for such Corporation Common Distribution. The Board
of Trustees may, at any time between the declaration of a Corporation Common
Distribution and the related payment date, declare a corresponding Class B
Preferred Dividend conditioned on the actual payment of such Corporation Common
Distribution (any such Class B Preferred Dividend being sometimes referred to
herein asa AConditionally Declared Class B Dividend@ until such time as the
corresponding Corporation Common Distribution is paid, at which time it will no
longer be deemed to be a Conditionally Declared Class B Dividend but will
instead be deemed to be an accrued Class A Preferred Dividend). The "Dividend
Correspondence Ratio" for the purposes of determining the amount of any Class B
Preferred Dividend accrual shall mean the number of Class B Underlying
Corporation Shares for which each share of Class B EPS is indirectly
exchangeable as of the record date for the related Corporation Common
Distribution upon exercise of the Class B Exchange Right, as such number shall
be proportionately adjusted to reflect any share dividend, share split, reverse
share split or other combination or subdivision of the Class B EPS or the Class
A EPS that becomes effective between (or, if the record date for such event is
different from the effective date therefor, that has a record date that falls
between) (A) the record date for the Corporation Common Distribution and (B) the
date of payment of such Corporation Common Distribution or, if earlier, the
record date for such Class B Preferred Dividend.

                           (ii) So long as any shares of Class B EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class B Preferred Dividends and Conditionally
Declared Class B Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment, (B)
no Parity Preferred Dividend shall be declared or paid or set aside for payment
unless a ratable portion of all accrued but unpaid Class B Preferred Dividends
and Conditionally Declared Class B Dividends has been or is concurrently
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment (with such ratable portion being based on the portion of the
accrued but unpaid Parity Preferred Dividends being paid) and (C) no Junior
Shares may be redeemed, purchased or otherwise acquired by the Trust (other than
a redemption, purchase or other acquisition of Trust Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Trust or any subsidiary or upon any exchange or redemption of other
securities at the option of the holders thereof, or as required or permitted
under Article VI of the Declaration) for consideration (or any moneys paid or
made available for a sinking fund for the redemption of any Junior Shares),
directly or indirectly (except for conversion into or exchange for Junior
Shares) unless all accrued Class B Preferred Dividends and Conditionally
Declared Class B Dividends have been or


                                       71


<PAGE>   76
are concurrently declared and paid, or declared and a sum sufficient for the
payment thereof set apart for payment.

                  (c) Class B Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class B Participation Dividend entitling each share of
Class B EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class B
Underlying Trust Shares for which each share of Class B EPS is indirectly
exchangeable upon exercise of the Class B Conversion Right as of the record date
for such Trust Common Dividend. Such Class B Participation Dividend shall be
payable on the same date on which the corresponding Trust Common Dividend is
payable, shall be payable in the same form as the corresponding Trust Common
Dividend and shall be paid to holders of record of the Class B EPS on the same
record date as is fixed by the Board of Trustees for the payment of such Trust
Common Dividend.

                  (d) Default Rate Dividends. Notwithstanding the foregoing
provisions of this Article 6.16.3 but subject to paragraph (b) of Article
6.16.9, upon the occurrence and during the continuation of any Uncured Default,
dividends ("Default Rate Dividends") shall accrue with respect to the
outstanding shares of Class B EPS in an amount equal to the product of (i) the
Stated Value of each such share multiplied by (ii) an interest rate per annum
equal to LIBOR plus four percent (4%). Any such Default Rate Dividends shall be
cumulative, shall be deemed to constitute Class B Preferred Dividends for the
purposes hereof and shall be payable quarterly on March 1, June 1, September 1
and December 1 of each year, when, as and if declared by the Board of Trustees
out of assets of the trust legally available for that purpose; provided that,
if, at any time when there are accrued but unpaid Default Rate Dividends on the
Class B EPS, a Class B Preferred Dividend or Class B Participation Dividend
accrues pursuant to paragraph (b) or (c) of this Article 6.16.3 in an amount per
share that exceeds the amount of such accrued but unpaid Default Rate Dividends
per share, the holders of shares of Class B EPS shall be entitled to receive
such Class B Preferred Dividend or Class B Participation Dividend in accordance
with the provisions of such paragraphs (b) and (c) and the Default Rate
Dividends accrued through the date of accrual of such Class B Preferred Dividend
or Class B Participation Dividend shall be reduced to zero (although additional
Default Rate Dividends shall again commence to accrue immediately following such
date of accrual to the extent that the Uncured Default continues unremedied).

                  6.16.4.  LIQUIDATION RIGHTS.

                  (a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class B EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class B Liquidation Preference described in paragraph (b) below determined as of
the effective date of such Liquidation Event or, if no effective date is
provided, as of the record date of the first liquidating distribution relating
to such Liquidation Event (in either such case, the "Liquidation Date") and (ii)
to participate on the basis described in paragraph (c) below in any liquidating
distribution to holders of Trust Shares (the "Class B Liquidation Participation
Right"). In determining whether a distribution (other than


                                       72


<PAGE>   77
upon the occurrence of a Liquidation Event), by dividend, redemption or other
acquisition of shares of beneficial interest in the Trust or otherwise, is
permitted under Maryland law, amounts that would be needed, if the Trust were to
be dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of the holders of Class A EPS whose preferential rights upon
dissolution are senior to those receiving the distribution shall not be added to
the Trust's total liabilities.

                  (b) Class B Liquidation Preference. The "Class B Liquidation
Preference" of a share of Class B EPS as of the applicable Liquidation Date
shall mean the sum of (A) the Base Preference Amount as of such date and (B) the
amount of any accrued but unpaid dividends in respect of each share of Class B
EPS as of such date (other than any such accrued but unpaid Class B Preferred
Dividends that have been declared with a record date prior to such Liquidation
Date, which the Trust shall separately be obligated to pay to the holders of
record of the Class B EPS as of such record date)(the "Supplemental Preference
Amount"). Until each holder of shares of Class B EPS has received distributions
equal to the Class B Liquidation Preference, no Junior Liquidating Distributions
may be paid to holders of any other class or series of shares of beneficial
interest in the Trust. Subject to the rights of the holders of shares of
beneficial interest in the Trust with liquidation preferences ranking prior to
or on a parity with the Class B Liquidation Preference, after payment shall have
been made in full of the Class B Liquidation Preference as provided in this
paragraph (b), Junior Liquidating Distributions may be paid to the holders of
any shares of beneficial interest entitled to receive such distributions and the
holders of the Class B EPS shall not be entitled to share therein except as
provided in paragraph (c) of this Article 6.16.4. In the event that the assets
of the Trust available for liquidating distributions to holders of shares of
beneficial interest in the Trust in connection with any Liquidation Event are
insufficient to pay the Class B Liquidation Preference on all outstanding Class
B EPS and any Parity Liquidation Preferences in respect of any other classes or
series of shares of beneficial interest in the Trust, then the holders of the
Class B EPS and such other classes and series of shares of beneficial interest
in the Trust shall share ratably in any such distribution of assets in
proportion to the Class B Liquidation Preference and the Parity Liquidation
Preferences to which they would otherwise be respectively entitled.

                  (c) Class B Liquidation Participation Rights. In addition to
being entitled to receive the Class B Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of Class B EPS shall be entitled
to participate, pursuant to the Class B Liquidation Participation Right, ratably
with the holders of Trust Shares in any liquidating distributions to such
holders. For such purpose, each share of Class B EPS shall be deemed to
represent a number of Trust Shares equal to the number of Class B Underlying
Trust Shares for which each share of Class B EPS can be indirectly exchanged as
of the record date for such distribution.

                  6.16.5.  CONVERSION RIGHTS.

                  (a) In General. Shares of Class B EPS shall be convertible
into shares of Class A EPS (A) at the option of the holder upon exercise of the
Class B Conversion Right at any time after the first anniversary of the Issue
Date and on or prior to the first anniversary of the Cross-Over Date, to the
extent provided in paragraph (b) of this Article 6.16.5, or (B) at the option of
the Trust upon exercise of the Trust Conversion Right at any time after the
Cross-Over Date, to the extent provided


                                       73


<PAGE>   78
in paragraph (c) of this Article 6.16.5. In addition, as more specifically
provided in Article 6.16.7 hereof, upon receipt of a Class B
Conversion/Redemption Notice from any holder of shares of Class B EPS at any
time after the first anniversary of the Cross-Over Date, the Trust will be
required to elect to either exercise the Trust Conversion Right or the Trust
Redemption Right with respect to the shares specified in such Class B
Conversion/Redemption Notice.

                  (b)  Class B Conversion Right.

                           (i) A holder of shares of Class B EPS shall have the
right, exercisable in the manner described in paragraph (b)(ii) below, at such
holder's option at any time after the first anniversary of the Issue Date and on
or prior to the first anniversary of the Cross-Over Date, to convert such shares
in whole or in part into fully paid and non-assessable shares of Class A EPS
based on the applicable Conversion Ratio described in paragraph (e) of this
Article 6.16.5 (the "Class B Conversion Right"); provided, however, that the
Class B Conversion Right may not be exercised (A) with respect to any shares of
Class B EPS that are already subject to a Trust Conversion Notice, (B) with
respect to any shares of Class B EPS that are already subject to a Class B
Redemption Notice or a Class B Conversion/Redemption Notice or (C) after the
applicable Redemption Date if the Trust has already given a Trust Redemption
Notice with respect to the applicable shares of Class B EPS, unless, in the case
of either (B) or (C), the Trust shall default in its obligations hereunder
arising as a result of such notice and such default shall not have been cured
within ten (10) days thereafter.

                           (ii) A holder of shares of Class B EPS desiring to
exercise the Class B Conversion Right with respect to such shares shall
surrender the certificate or certificates evidencing such shares, duly endorsed
or assigned to the Trust or in blank, to the Transfer Agent together with a duly
completed and executed conversion notice (a "Class B Conversion Notice") in such
form as the Trust shall prescribe from time to time and such related
certifications as the Trust may reasonably prescribe from time to time. Such
form of Class B Conversion Notice will also permit the holder of the Class B EPS
being converted to concurrently elect to exercise the Class A Exchange Right
with respect to the Class A EPS Shares to be issued pursuant to the exercise of
the Class B Conversion Right. Unless any shares of Class A EPS to be issued upon
conversion of such shares of Class B EPS are to be issued in the same name as
the name in which such shares of Class B EPS are registered, each share
certificate surrendered shall be accompanied by instruments of transfer, in form
reasonably satisfactory to the Trust, duly executed by the holder or such
holder=s duly authorized attorney and an amount sufficient to pay any applicable
transfer or similar tax (or evidence reasonably satisfactory to the Trust
demonstrating that such taxes have been paid).

                           (iii) As promptly as practicable after receipt by the
Transfer Agent of a Class B Conversion Notice and the certificates and other
documents described above, the Trust shall issue and deliver at the office of
the Transfer Agent to the holder of the shares of Class B EPS being converted,
or on his or her written order, a certificate or certificates for the full
number of shares of Class A EPS issuable upon such conversion in accordance with
the provisions of this Article 6.16.5, and any fractional interest in respect of
a share of Class A EPS resulting from such conversion shall be settled as
provided in paragraph (d) of this Article 6.16.5; provided, however, that to the
extent that the holder of shares of Class B EPS with respect to which the Class
B Conversion Right has been


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exercised has simultaneously exercised the Class A Exchange Right with respect
to the shares of Class A EPS issuable upon such conversion, no such certificate
or certificates shall be issued with respect to such shares of Class A EPS (and
there shall be no settlement of any such fractional interests), but such Class A
Exchange Right shall be deemed to have been exercised with respect to such
shares of Class A EPS (including any such fractional interests) as of the date
of receipt of the Class B Conversion Notice and the certificates and other
documents described above, and the rights and obligations of the Trust and such
holder arising therefrom shall be governed by Article 6.15.5 hereof. If less
than the full number of shares of Class B EPS represented by the certificate or
certificates surrendered to the Trust are to be converted pursuant to an
exercise of the Class B Conversion Right, the Trust shall also deliver to the
holder a new certificate or certificates evidencing the excess shares not being
converted.

                           (iv) The conversion resulting from any exercise of
the Class B Conversion Right shall be deemed to have been effected immediately
prior to the close of business on the date of receipt by the Transfer Agent of
the Class B Conversion Notice and the certificates and other documents described
above, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A EPS shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Class A EPS represented thereby at such time on such date, unless the
sharetransfer books of the Trust for the Class A EPS shall be closed on such
date, in which event such Person or Persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such sharetransfer books are open.

                  (c)  Trust Conversion Right.

                           (i) Shares of Class B EPS will also be convertible at
any time after the first anniversary of the Cross-Over Date in whole or in part
at the option of the Trust into fully paid and non-assessable shares of Class A
EPS based on the applicable Conversion Ratio described below (the "Trust
Conversion Right"); provided, however, that the Trust Conversion Right may not
be exercised with respect to any shares of Class B EPS with respect to which (A)
the holder has already given a Class B Redemption Notice or a Class B Conversion
Notice or (B) the Trust has already given a Trust Redemption Notice.

                           (ii) The Trust Conversion Right may be exercised by
the Trust giving written notice of such exercise to the holders of the shares of
the Class B EPS with respect to which the Trust desires to exercise such right
(a "Trust Conversion Notice"). (iii) The shares of Class B EPS of a holder
specified in such Trust Conversion Notice shall be deemed to have been converted
as of the date of the applicable Trust Conversion Notice into the full number of
shares of Class A EPS issuable upon such conversion in accordance with the
provisions of this Article 6.16.5, and any fractional interest in respect of a
share of Class A EPS resulting from such conversion shall be settled as provided
in paragraph (d) of this Article 6.16.5. The conversion provided for in this
paragraph (c) shall be automatic without the requirement of any action on the
part of the affected holders of shares of Class B EPS and whether or not the
certificates evidencing such shares of Class B EPS are surrendered to the Trust
or the Transfer Agent;


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provided that the Trust shall not be obligated to issue to any such holders
certificates evidencing the shares of Class A EPS into which such Class B EPS
shares have been converted until certificates evidencing the shares of Class B
EPS held by such holder have been delivered to the Trust or the Transfer Agent.
If less than the full number of shares of Class B EPS represented by the
certificate or certificates surrendered to the Trust in connection with an
exercise of the Trust Conversion Right have been converted pursuant to such
exercise, the Trust shall also deliver to the holder a new certificate or
certificates evidencing the excess shares not being converted.

                  (d) Fractional Interests. No fractional shares or scrip
evidencing fractions of shares of Class A EPS shall be issued upon exercise of
the Class B Conversion Right or the Trust Conversion Right. Instead of any
fractional interest in a share of Class A EPS that would otherwise be
deliverable upon the conversion of shares of Class B EPS, the Trust shall pay to
the holder of such shares of Class B EPS an amount in cash equal to the product
of (A) such fraction, (B) the then current Exchange Ratio of Class A EPS for
Paired Shares, as determined pursuant to the provisions of paragraph (d) of
Article 6.15.5 hereof, and (C) the Current Market Price of the Paired Shares as
of the Trading Day immediately preceding the date on which the applicable Class
B Conversion Notice or Trust Conversion Notice (as applicable) and all related
certificates and other documents were received by the Transfer Agent.

                  (e)  Conversion Ratio and Adjustments.

                           (i) Initially, one share of Class A EPS will be
issuable upon conversion of each share of Class B EPS pursuant to an exercise of
the Class B Conversion Right or the Trust Conversion Right (the "Conversion
Ratio"), which Conversion Ratio will be subject to adjustment from the Issue
Date through the Cross-Over Date. After such date, the Conversion Ratio will be
equal to the Class B Liquidation Preference (determined without taking into
consideration any accrued but unpaid dividends other than Default Rate
Dividends) as of the date of exercise of the Class B Conversion Right or the
Trust Conversion Right, as applicable, divided by the product of (A) the number
of Class A Underlying Paired Shares (including fractional interests) for which
each share of Class A EPS is exchangeable as of such date pursuant to Article
6.15.5 hereof multiplied by (B) the Current Market Price of the Paired Shares as
of such date. All calculations of the Conversion Ratio under this paragraph (e)
shall be made to the nearest one-tenth of a share (with .05 of a share being
rounded upward).

                           (ii) If, at any time between the Issue Date and the
Cross-Over Date, a Class A EPS Adjustment Event shall occur, the Conversion
Ratio in effect as of the close of business on the record date for such Class A
EPS Adjustment Event or, if no such record date applies, the effective date of
such Class A EPS Adjustment Event shall be adjusted so that in connection with
any exercise of the Class B Conversion Right or the Trust Conversion Right the
shares of Class B EPS subject to such exercise will be converted into the number
of shares of Class A EPS that such holder would have owned or been entitled to
receive after the happening of such Class A EPS Adjustment Event if such Class B
Conversion Right or Trust Conversion Right had been exercised immediately prior
to such record date or effective date. An adjustment pursuant to this
subparagraph (ii) shall become effective (subject to subparagraph (iv) below)
immediately upon the opening of business on the Business Day


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<PAGE>   81
next following the record date for the applicable Class A EPS Adjustment Event
or, if no such record date applies, the Business Day next following the
effective date of such Class A EPS Adjustment Event.

                           (iii) No adjustment in the Conversion Ratio shall be
required pursuant to subparagraph (ii) above unless such adjustment would
require a cumulative increase or decrease of at least one percent (1%) in such
ratio; provided, however, that any adjustments that by reason of this
subparagraph (iii) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment until made.

                           (iv) In any case in which subparagraph (ii) above
provides that an adjustment to the Conversion Ratio shall become effective
immediately following the record date for a Class A EPS Adjustment Event, the
Trust may defer until the occurrence of such event (A) issuing to the holder of
any shares of Class B EPS converted after such record date but before the
occurrence of such event the additional shares of Class A EPS issuable pursuant
to such conversion by reason of the adjustment required pursuant to subparagraph
(ii) in respect of such Class A EPS Adjustment Event and (B) paying to such
holder any amount of cash in lieu of any fractional interest in shares of Class
EPS pursuant to paragraph (d) of this Article 6.16.5.

                           (v) If at the time of any exercise of the Class B
Conversion Right on or prior to the Cross-Over Date there are any accrued but
unpaid Default Rate Dividends with respect to the shares of Class B EPS being
converted, the Conversion Ratio shall be adjusted so that the number of shares
of Class A EPS issuable upon such exercise is increased by a number of shares
(the "Class B Dividend Replacement Shares", which term shall also be deemed to
refer to any shares of Class A EPS issued upon exercise of the Class B
Conversion Right in respect of accrued but unpaid Default Rate Dividends
pursuant to subparagraph (ii) above) equal to (A) the amount of the accrued but
unpaid Default Rate Dividends with respect to the shares of Class B EPS being
exchanged divided by (B) the product of (1) the number of Paired Shares for
which each share of Class A EPS is then exchangeable upon exercise of the Class
A Exchange Right multiplied by (2) the Current Market Price of the Paired Shares
during the five (5) Trading Days immediately preceding the date of delivery of
the applicable Class B Conversion Notice or Trust Conversion Notice and all
related certificates and other documents.

                  (f) Effect of Mergers and Certain Other Transactions. If, at
any time after the Issue Date, the Trust shall become a party to any
transaction, including, without limitation, a merger, consolidation, statutory
share exchange, self tender offer for all or substantially all outstanding Trust
Shares, sale of all or substantially all of the Trust=s assets or
recapitalization of the Class A EPS (but excluding any event constituting a
Class A EPS Adjustment Event)(each of the foregoing being referred to herein as
a "Transaction"), in each case as a result of which the outstanding shares of
Class A EPS shall be converted into or exchanged for the right to receive stock,
securities or other property (including cash or any combination thereof),
effective as of the effective date of such Transaction, each share of Class A
EPS issuable upon exercise of the Class B Conversion Right or the Trust
Conversion Right with respect to any shares of Class B EPS that are not
converted into or exchanged for the right to receive stock, securities or other
property in connection with such Transaction shall


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<PAGE>   82
thereafter be deemed to consist of the kind and amount of shares of stock and
other securities and property (including cash or any combination thereof) that
would have been held or receivable upon the consummation of such Transaction by
a holder of a number of shares of Class A EPS equal to the number of Class B
Underlying Class A EPS Shares into which each share of Class B EPS would have
been convertible immediately prior to such Transaction, assuming such holder of
shares of Class A EPS (A) is not a Person with which the Trust consolidated or
into which the Trust was merged or which merged into the Trust or to which such
sale or transfer was made, as the case may be (a "Constituent Person"), or an
Affiliate of a Constituent Person and (B) failed to exercise his or her rights
of election, if any, as to the kind or amount of stock, securities an other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each share of Class A EPS
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Share"), then for the purposes of this
subparagraph (ii) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Shares
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-Electing Shares). The provisions of this paragraph (f) shall
similarly apply to successive Transactions.

                  (g) Notice of Adjustment. Whenever the Conversion Ratio or the
nature and amount of the securities and other property issuable upon exercise of
the Class B Conversion Right or the Trust Conversion Right is adjusted as
provided in paragraph (e) or (f) above, the Trust shall promptly file with the
Transfer Agent an officer=s certificate setting forth the Conversion Ratio after
such adjustment and, in the case of an adjustment pursuant to paragraph (f),
describing the kind and amount of stock, securities and other property
(including cash) thereafter issuable upon such exercise. Such certificate shall
also set forth a brief statement of the facts requiring such adjustment and
shall be conclusive evidence of the correctness of such adjustment absent
manifest error. Promptly after delivery of such certificate, the Trust shall
prepare a notice of such adjustment setting forth the adjusted Conversion Ratio,
the effective date of such adjustment and, in the case of an adjustment pursuant
to paragraph (f), a description of the kind and amount of stock, securities and
other property (including cash) thereafter issuable upon exercise of the Class B
Conversion Right or the Trust Conversion Right, and shall mail such notice of
such adjustment to the holder of each share of Class B EPS at such holder=s last
address as shown on the sharerecords of the Trust.

                  (h)  Miscellaneous Provisions.

                           (i) There shall be no adjustment of the Conversion
Ratio in case of the issuance of any shares of beneficial interest in the Trust
in a reorganization, acquisition or other similar transaction except as
specifically set forth in this Article 6.16.5.


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<PAGE>   83
                           (ii) If the Trust shall take any action affecting the
Trust Shares or the Corporation shall take any action affecting the Corporation
Shares, other than an action described in this Article 6.16.5, that in the
opinion of the Board of Trustees would materially and adversely affect the
conversion rights of the holders of the Class B EPS provided for in this Article
6.16.5, the Conversion Ratio may be adjusted, to the extent permitted by law, in
such manner, if any, and at such time, as the Board of Trustees, in its sole
discretion, may determine to be equitable in the circumstances.

                           (iii) The Trust covenants that any shares of Class A
EPS issued upon exercise of the Class B Conversion Right or the Trust Conversion
Right will be validly issued, fully paid and non-assessable. The Trust shall
reserve and shall at all times have reserved out of its authorized but unissued
Class A EPS sufficient Class A EPS to permit the exercise of the Class B
Conversion Right. The Trust shall also comply with its obligations under
paragraph (g)(iii) of Article 6.15.5 hereof as if such shares of Class A EPS
issuable upon exercise of the Class B Conversion Right were issued and
outstanding. The Trust shall pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of Class
A EPS or other securities or property upon exercise of the Class B Conversion
Right or the Trust Conversion Right; provided, however, that the Trust shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of any shares of Class A EPS or other
securities or property in a name other than that of the holder of the shares of
Class B EPS being converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue or delivery has paid to the Trust the
amount of any such tax or established, to the reasonable satisfaction of the
Trust, that such tax has been paid.

                           (iv) Except as provided in paragraph (g)(v) below,
any determination required or permitted to be made by the Board of Trustees by
these Articles Supplementary shall be final, conclusive and binding on the
holders of Class B EPS.

                           (v) In the event that the Trust elects to pay in cash
a Class B Preferred Dividend corresponding to a Corporation Common Distribution
in the form of securities or other property and in connection therewith the
Board of Trustees makes a determination of the fair market value of such
securities or other property, the Trust shall deliver to each affected holder of
Class B EPS a written notice setting forth the valuation determined by the Board
of Trustees. At any time within ten (10) Business Days after receipt of such
notice, any affected holder of Class B EPS may request in writing that the Trust
obtain a written valuation of such securities or other property from an
investment banking firm. Promptly after receipt of any such request, the Trust
shall select a nationally recognized investment banking firm to perform such
valuation and shall provide such investment banking firm with such relevant
information as the Trust may have in relation thereto. Such investment banking
firm shall be instructed to prepare a written valuation report within thirty
(30) days after its appointment, and upon receipt of such valuation report, the
Trust shall mail a copy to each affected holder of Class B EPS. If the valuation
as determined by such investment banking firm is greater than the valuation as
determined by the


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Board of Trustees, the Trust shall promptly pay the amount of such difference to
each affected holder of Class B EPS. If, however, the valuation as determined by
such investment banking firm is less than the valuation determined by the Board
of Trustees, the Trust may at its option require each affected holder of Class B
EPS to repay the amount of such difference to the Trust, which amount shall be
so repaid by each such holder promptly after receipt of the Trust's request. The
fees and expenses of such investment banking firm shall be paid by the Trust.

                  6.16.6.  REDEMPTION RIGHTS.

                  (a) In General. Shares of Class B EPS will be redeemable at
the option of the Trust at any time after the Cross-Over Date in accordance with
the provisions of paragraph (b) of this Article 6.16.6 (the "Trust Redemption
Right") and will be redeemable at the option of the holders at any time during
the period commencing on the Cross-Over Date and ending on the first anniversary
of the Cross-Over Date in accordance with the provisions of paragraph (c) of
this Article 6.16.6 (the "Class B Redemption Right"). Prior to the Cross-Over
Date, shares of Class B EPS will not be redeemable at the option of either the
Trust or the holder. In addition, as more specifically provided in Article
6.16.7 hereof, upon receipt of a Class B Conversion/Redemption Notice from any
holder of shares of Class B EPS at any time after the first anniversary of the
Cross-Over Date, the Trust will be required to elect to either exercise the
Trust Conversion Right or the Trust Redemption Right with respect to the shares
specified in such Class B Conversion/Redemption Notice.

                  (b) Redemption at the Option of the Trust.

                           (i) Pursuant to the Trust Redemption Right, shares of
Class B EPS may be redeemed in cash in whole or in part at the option of the
Trust at any time and from time to time (in the case of partial redemptions)
after the Cross-Over Date at a redemption price (the "Redemption Price") equal
to the Class B Liquidation Preference of such shares as of the applicable Trust
Redemption Date; provided, however, that the Trust Redemption Right may not be
exercised with respect to any shares of Class B EPS that are already subject to
(A) a Trust Conversion Notice or (B) a Class B Conversion Notice or a Class B
Redemption Notice. Such redemption shall be deemed to have been made as of the
close of business on the applicable Trust Redemption Date, and after such Trust
Redemption Date, provided that the Trust Redemption Price has been duly paid or
set apart for payment, dividends shall cease to accrue on the shares of Class B
EPS called for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as shareholders of the
Trust shall cease, except the right to receive the Redemption Price, without
interest thereon, upon surrender of the certificates evidencing such shares.

                           (ii) Notice of any exercise of the Trust Redemption
Right (a "Trust Redemption Notice") shall be given to the holders of the shares
of Class B EPS to be redeemed not less than ten (10) nor more than sixty (60)
days prior to the date fixed for redemption (the "Trust Redemption Date"). Each
Trust Redemption Notice shall be given by first class mail to each holder of
shares to be redeemed at such holder's address as shown on the sharebooks of the
Trust and shall specify (A) the Trust Redemption Date, (B) the number of shares
of Class B EPS to be redeemed from such holder, (C) the Trust Redemption Price,
(D) the place or places where certificates for the


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<PAGE>   85
shares of Class B EPS to be redeemed are to be surrendered for payment of the
Trust Redemption Price, (E) that dividends will cease to accrue on the shares of
Class B EPS to be redeemed on the Redemption Date and (F) that the ability of
the holders to exercise the Class B Conversion Right with respect to the shares
to be redeemed will terminate on the Trust Redemption Date. If less than all
outstanding shares of Class B EPS are to be redeemed upon exercise of the Trust
Redemption Right, the shares to be redeemed shall be selected in such manner as
the Trust deems appropriate.

                           (iii) Upon receipt of a Trust Redemption Notice, each
holder of shares of Class B EPS being redeemed shall surrender to the Transfer
Agent a certificate or certificates evidencing such shares. As soon as
practicable, and in any event within five (5) Business Days, after such
surrender, the Trust shall pay the applicable Redemption Price to such holder
and, if less than the full number of shares represented by the certificate or
certificates so surrendered are to be redeemed, the Trust shall deliver to such
holder a certificate or certificates evidencing the excess shares not being
redeemed. The Redemption Price shall be payable at the election of the Trust by
check or by wire transfer to an account designated in writing by the holder at
least two (2) Business Days prior to the applicable Trust Redemption Date, if
one has been so designated.

                  (c) Redemption at the Option of the Holders.

                           (i) Under the Class B Redemption Right, to the extent
permitted under applicable law, each holder of shares of Class B EPS shall have
the right, at his or her option, to require the Trust at any time or from time
to time (in the case of partial redemptions) after the CrossOver Date and on or
prior to the first anniversary of the Cross-Over Date to redeem some or all of
such shares in cash at the Redemption Price (determined as of the Class B
Redemption Date); provided, however, that the Class B Redemption Right may not
be exercised with respect to any shares of Class B EPS that are already subject
to (A) a Trust Conversion Notice or a Trust Redemption Notice or (B) a Class B
Conversion Notice. Such redemption shall be deemed to have been made as of the
close of business on the applicable Class B Redemption Date, and after such
Class B Redemption Date, provided that the Redemption Price has been duly paid
or set apart for payment, dividends shall cease to accrue on the shares of Class
B EPS surrendered for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as shareholders of the
Trust shall cease, except the right to receive the Redemption Price, without
interest thereon.

                           (ii) A holder of shares of Class B EPS may exercise
the Class B Redemption Right with respect to some or all of such shares by
surrendering a certificate or certificates evidencing the shares to be redeemed,
duly endorsed or assigned to the Trust in blank, to the Transfer Agent
accompanied by a written notice (a "Class B Redemption Notice") in such form as
the Trust shall prescribe from time to time specifying the number of shares
(which shall be a whole number) to be redeemed in accordance with the provisions
of this paragraph (c). As soon as practicable, and in any event within five (5)
Business Days, after receipt of a Class B Redemption Notice and the related
certificates (the date of such receipt being sometimes referred to herein as the
"Class B Redemption Date"), to the extent permitted under applicable law, the
Trust shall pay the Redemption Price to the holder and, if less than the full
number of shares of Class B EPS represented by the certificate or


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<PAGE>   86
certificates surrendered together with such Class B Redemption Notice are to be
redeemed, the Trust shall deliver to such holder a certificate or certificates
evidencing the excess shares not being redeemed. The Redemption Price shall be
payable at the election of the Trust by check or by wire transfer to an account
designated in writing by the holder at least two (2) Business Days prior to the
applicable Class B Redemption Date, if one has been so designated.

                  6.16.7.  CLASS B CONVERSION/REDEMPTION ELECTION RIGHT.

                  In addition to the Class B Conversion Right and the Class B
Redemption Right, at any time after the first anniversary of the Cross-Over
Date, each holder of shares of Class B EPS will have the right (the "Class B
Conversion/Redemption Election Right"), upon written notice to the Trust in such
form as the Trust shall prescribe from time to time (a "Class B
Conversion/Redemption Notice"), to require that the Trust elect either to
exercise the Trust Conversion Right or the Trust Redemption Right described
below with respect to the shares of Class B EPS held by such holder and
designated in the Class B Conversion/Redemption Notice; provided, however, that
the Class B Conversion Right may not be exercised with respect to any shares of
Class B EPS (A) with respect to which the holder has already given a Class B
Redemption Notice or (B) after the applicable Redemption Date if the Trust has
already given a Trust Redemption Notice with respect to such shares unless, in
either such case, the Trust shall default in the payment of the applicable
Redemption Price required to be paid pursuant to Article 6.16.6 above. Within
five (5) Business Days after receipt of any such Class B Conversion/Redemption
Notice, the Trust shall either give the relevant holder a Trust Conversion
Notice or a Trust Redemption Notice with respect to the shares of Class B EPS
specified in such Class B Conversion/Redemption Notice.

                  6.16.8.  REACQUIRED SHARES TO BE RETIRED.

                  All shares of Class B EPS which shall have been issued and
reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued shares of beneficial interest in the Trust without
designation as to class.

                  6.16.9.  DEFAULT RIGHTS.

                  (a) Consequences of Uncured Default. Subject to paragraph (b)
of this Article 6.16.9, in the event that the Trust at any time defaults in its
obligations with respect to any exercise of the Class B Redemption Right, the
Class B Conversion Right or the Class B Conversion/Redemption Election Right,
and such default shall continue for a period of thirty (30) days from the date
that performance of such obligations was due (an "Uncured Default"), then: (i)
the holders of the outstanding shares of Class B EPS will have the rights with
respect to the election of two additional members of the Board of Trustees
described in paragraph (c) of Article 6.16.10 hereof, (ii) the dividend rate on
the Class B EPS will be increased as provided in paragraph (d) of Article 6.16.3
hereof, (iii) the Registration Rights Agreement will be amended to provide the
holders of Class B EPS with registration rights thereunder and (iv) the
Cross-Over Date (if not already past) will be extended by a number of days equal
to the number of days that an Uncured Default continues unremedied. Any


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Uncured Default may be waived at any time by the holders of shares of Class B
EPS constituting a majority of all shares of Class B EPS then outstanding.

                  6.16.10.  VOTING.

                  (a) General Voting Rights. The holders of shares of Class B
EPS shall be entitled to vote upon all matters upon which holders of Trust
Shares have the right to vote, and shall be entitled to the number of votes
equal to the largest whole number of Class B Underlying Trust Shares for which
such shares of Class B EPS could be indirectly exchanged (assuming the exercise
of the Class B Conversion Right and the concurrent exercise of the Class A
Exchange Right with respect to the shares of Class A EPS issuable upon exercise
of such Class B Conversion Right) as of the record date for determination of the
shareholders entitled to vote on such matters, or, if no such record date is
established, as of the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of beneficial interest in the Trust having general voting powers and not
separately as a class.

                  (b) Special Voting Rights. So long as any shares of Class B
EPS are outstanding, in addition to any other vote or consent of holders of such
shares required by the Declaration or these Articles Supplementary, the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of all outstanding shares of Class B EPS, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for that
purpose, shall be necessary for effecting or validating any amendment,
alteration or repeal of any of the provisions of the Declaration or these
Articles Supplementary that materially and adversely affects the voting powers,
rights or preferences of the holders of the Class B EPS disproportionately
(based on the number of Underlying Class B Trust Shares at the time) to the
effect of such amendment, alteration or repeal on the holders of the Trust
Shares; provided, however, that (i) any amendment of the provisions of the
Declaration so as to authorize or create, or to increase the authorized amount
of, any class or series of shares of beneficial interest in the Trust, whether
ranking prior to, on a parity with or junior to the Class B EPS shall not be
deemed to materially and adversely affect the voting powers, rights or
preferences of the holders of Class B EPS and (ii) no filing with the State
Department of Assessments and Taxation of Maryland by the Trust in connection
with a merger, consolidation or sale of all or substantially all of the assets
of the Trust shall be deemed to be an amendment, alteration or repeal of any of
the provisions of the Declaration or these Articles Supplementary unless such
filing expressly purports to amend, alter or repeal one or more of such
provisions. For the purposes of this paragraph (b), each share of Class B EPS
will have one vote per share.

                  (c)  Default Voting Rights.

                           (i) Upon the occurrence of any Uncured Default, the
number of trustees then constituting the Board of Trustees shall be increased by
two and the holders of the outstanding shares of Class B EPS shall be entitled
to elect the two additional trustees to serve on the Board of Trustees at any
annual meeting of shareholders, or at a special meeting of the holders of Class
B EPS then outstanding called as provided in subparagraph (ii) below. If such
Uncured Default shall at any time cease to be continuing or shall be waived,
then the right of the holders of the Class B EPS to elect


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such additional two trustees shall cease (but subject always to the same
provision for the vesting of such voting rights upon the occurrence of any
subsequent Uncured Default) and the terms of office of all persons elected as
trustees by such holders shall forthwith terminate and the number of trustees
constituting the Board of Trustees shall be reduced accordingly. For the
purposes of this paragraph (c), each share of Class B EPS will have one vote per
share.

                           (ii) At any time after the voting power described in
subparagraph (i) above shall have been vested in the holders of shares of Class
B EPS, the Secretary of the Trust may, and upon the written request of any
holder of Class B EPS (addressed to the Secretary at the principal office of the
Trust) shall, call a special meeting of the holders of the Class B EPS for the
election of the two trustees to be elected by them as herein provided, such call
to be made by notice similar to that provided in the Trustees' Regulations of
the Trust for a special meeting of the shareholders or as required by law. If
any such special meeting required to be called as above provided shall not be
called by the Secretary within twenty (20) days after receipt of such request,
then any holder of shares of Class B EPS may call such meeting, upon the notice
above provided and for that purpose shall have access to the sharebooks of the
Trust. The trustees elected at any such special meeting shall hold office until
the next annual meeting of the shareholders or special meeting held in lieu
thereof if such office shall not have previously terminated as above provided.
If any vacancy shall occur among the trustees elected by the holders of the
Class B EPS, a successor shall be elected by the Board of Trustees, upon the
nomination of the then-remaining trustee elected by the holders of the Class B
EPS or the successor of such remaining trustee, to serve until the next annual
meeting of the shareholders if such office shall not have previously terminated
as provided above.

                  6.16.11.  RECORD HOLDERS.

                  The Trust and the Transfer Agent may deem and treat the record
holder of any Class B EPS as the true and lawful owner thereof for all purposes,
and neither the Trust nor the Transfer Agent shall be affected by any notice to
the contrary.

                  6.16.11.  RESTRICTIONS ON OWNERSHIP AND TRANSFER.

                  The Class B EPS constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class B EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.


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