<PAGE>
                                                                     EXHIBIT 4.1


                            STATEMENT OF DESIGNATION
                                       OF
             6-3/4% SERIES A CONVERTIBLE CUMULATIVE PREFERRED SHARES
                                       OF
                      CRESCENT REAL ESTATE EQUITIES COMPANY


         The undersigned, the Chief Executive Officer of Crescent Real Estate
Equities Company, a real estate investment trust organized and existing under
the Texas Real Estate Investment Trust Act, as amended (the "Company"),
certifies that pursuant to the authority granted to and vested in the Board of
Trust Managers of the Company by the provisions of the Restated Declaration of
Trust of the Company, the Board of Trust Managers, acting through an authorized
committee thereof, has adopted the following resolution increasing the number of
securities of the Company designated as Series A preferred shares.

         WHEREAS, in February 1998 the Company designated and authorized the
issuance of 9,200,000 6-3/4% Series A Convertible Cumulative Preferred Shares of
beneficial interest, $.01 par value per share (Liquidation Preference $25.00 Per
Share) (the "Series A Preferred Shares").

         RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Trust Managers of the Company by the provisions of the
Restated Declaration of Trust of the Company, the Board of Trust Managers,
acting through an authorized committee thereof, hereby designates an additional
2,800,000 Series A Preferred Shares, and authorizes the issuance thereof, and
hereby fixes the designation and number thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
such shares, and the qualifications, limitations or restrictions thereto as
follows:

         A. Certain Definitions.

                  Unless the context otherwise requires, the terms defined in
this Paragraph A shall have, for all purposes of this Statement of Designation,
the meanings herein specified (with terms defined in the singular having
comparable meanings when used in the plural).

                  "Board of Trust Managers" shall mean the Board of Trust
Managers of the Company or any committee authorized by such Board of Trust
Managers to perform any of its responsibilities with respect to the Series A
Preferred Shares.

                  "Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
in New York City, New York or Dallas, Texas are authorized or required by law,
regulation or executive order to close.

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



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

                  "Constituent Person" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.

                  "Conversion Price" shall mean the conversion price per Common
Share for which the Series A Preferred Shares are convertible, as such
Conversion Price may be adjusted pursuant to subsection (d) of subparagraph (7)
hereof. The initial conversion price per Common Share shall be $40.86
(equivalent to a conversion rate of .6119 Common Shares for each Series A
Preferred Share).

                  "Current Market Price" of publicly traded common shares or any
other class of shares of beneficial interest or other security of the Company or
any other issuer for any 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 New York Stock Exchange ("NYSE") or, if such security is not
listed or admitted for trading on the NYSE, on the principal national securities
exchange on which such security is 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 security is 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 security 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 and selected for such purpose by
the Chief Executive Officer of the Company or the Board of Trust Managers.

                  "Declaration of Trust" shall mean the Company's Restated
Declaration of Trust, as the same may be amended from time to time.

                  "Distribution Payment Date" shall have the meaning set forth
in subparagraph (3) of paragraph B.

                  "Distribution Period" shall have the meaning set forth in
subparagraph (3) of paragraph B.

                  "Fair Market Value" shall mean the average of the daily
Current Market Prices of a Common Share during the five (5) consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. The term "ex date" when used with respect to any issuance or
distribution, means the first day on which the Common Shares trade regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that day's Current Market
Price.



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                  "Issue Date" shall mean the first date on which Series A
Preferred Shares are issued and sold.

                  "Junior Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.

                  "Non-Electing Share" shall have the meaning set forth in
subsection (e) of subparagraph (7) of paragraph B.

                  "Parity Shares" shall have the meaning set forth in
subparagraph (2) of paragraph B.

                  "Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity, and also includes a group as that
term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; but does not include an underwriter which participates in a
public offering of the Series A Preferred Shares provided that the ownership of
Series A Preferred Shares by such Underwriter would not result in the Company
being "closely held" within the meaning of Section 856(h) of the Code, or would
otherwise result in the Company failing to qualify as a REIT.

                  "Preferred Shares" shall mean preferred shares of beneficial
interest, $.01 par value per share, of the Company.

                  "Record Date" shall have the meaning set forth in subparagraph
(3) of paragraph B.

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

                  "Securities" shall have the meaning set forth in subsection
(d)(iii) of subparagraph (7) of paragraph B.

                  "Series A Preferred Shares" shall mean the Company's 6-3/4%
Series A Convertible Cumulative Preferred Shares of beneficial interest, $.01
par value per share, liquidation value $25.00 per share.

                  "Series A Preferred Shares Redemption Date" shall have the
meaning set forth in subsection (d) of subparagraph (5) of paragraph B hereof.

                  "set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Company in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of distributions by the Board of Trust Managers, the
allocation of funds to be so paid on any series or class of shares of beneficial
interest; provided, however, that if any funds for any class or series of Junior
Shares or any class



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or series of shares of beneficial interest ranking on a parity with the Series A
Preferred Shares as to the payment of distributions are placed in a separate
account of the Company or delivered to a disbursing, paying or other similar
agent, then "set apart for payment" with respect to the Series A Preferred
Shares shall mean placing such funds in a separate account or delivering such
funds to a disbursing, paying or other similar agent.

                  "Trading Day" 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 the securities are traded.

                  "Transaction" shall have the meaning set forth in subsection
(e) of subparagraph (7) of paragraph B hereof.

                  "Transfer Agent" means EquiServe Trust Company, N.A. or such
other agent or agents of the Company as may be designated by the Board of Trust
Managers or their designee as the transfer agent for the Series A Preferred
Shares.

         B. Series A Preferred Shares.

                  (1) Number. The maximum additional number of Series A
Preferred Shares shall be 2,800,000.

                  (2) Relative Seniority. In respect of rights to receive
distributions and to participate in distributions or payments in the event of
any liquidation, dissolution or winding up of the Company, the Series A
Preferred Shares shall rank pari passu with any other preferred shares of
beneficial interest of the Company (the "Parity Shares"), and will rank senior
to the Common Shares and any other class or series of shares of beneficial
interest of the Company ranking, as to distributions and upon liquidation,
junior (collectively, the "Junior Shares") to the Parity Shares.

                  (3) Distributions. The holders of the then outstanding Series
A Preferred Shares shall be entitled to receive, when and as declared by the
Board of Trust Managers out of any funds legally available therefor, cumulative
cash distributions at the rate of $1.6875 per share per year, payable in equal
amounts of $.421875 per share quarterly in cash on the 15th day, or if not a
Business Day, the next succeeding Business Day, of February, May, August and
November in each year, beginning May 15, 1998 (each such day being hereinafter
called a "Distribution Payment Date" and each period ending on a Distribution
Payment Date being hereinafter called a "Distribution Period"), with respect to
each Distribution Period, to shareholders of record at the close of business on
such date as shall be fixed by the Board of Trust Managers at the time of
declaration of the distribution (the "Record Date"), which shall not be less
than 10 nor more than 30 days preceding the Distribution Payment Date. The
amount of any distribution payable for the initial Distribution Period and for
any other Distribution Period shorter than a full Distribution Period shall be
prorated and computed on the basis of a 360-day year of twelve 30-day months.



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Distributions on each Series A Preferred Share issued hereunder shall accrue and
be cumulative from and including the first day of the Distribution Period in
which such share was issued, whether or not (i) distributions on such shares are
earned or declared or (ii) on any Distribution Payment Date there shall be funds
legally available for the payment of distributions. Distributions paid on the
Series A Preferred Shares in an amount less than the total amount of such
distributions at the time accrued and payable on such shares shall be allocated
pro rata on a per share basis among all such shares at the time outstanding.
Distributions on account of arrears for any past distribution periods may be
declared and paid at such time, if any, as may be fixed by the Board of Trust
Managers, and shall first be credited against the earliest accrued but unpaid
distributions due and payable with respect to such Series A Preferred Shares.

                  The amount of any distributions accrued on any Series A
Preferred Shares at any Distribution Payment Date shall be the amount of any
unpaid distributions accumulated thereon through and during such Distribution
Period, to and including such Distribution Payment Date, whether or not earned
or declared, and the amount of distributions accrued on any Series A Preferred
Shares at any date other than a Distribution Payment Date shall be equal to the
sum of the amount of any unpaid distributions accumulated thereon, to and
including the last preceding Distribution Payment Date, whether or not earned or
declared, plus an amount calculated on the basis of the annual distribution rate
of $1.6875 for the period after such last preceding Distribution Payment Date to
and including the date as of which the calculation is made, based on a 360-day
year of twelve 30-day months.

                  If any Series A Preferred Shares are outstanding, no full
distributions shall be declared or paid or set apart for payment on any other
series of Parity Shares or any other class or series of Junior Shares for any
period unless full cumulative distributions have been declared and paid or
declared and a sum sufficient for the payment thereof has been set apart for
such payment on the Series A Preferred Shares for all past distribution periods
and the then current distribution period. If distributions are not paid in full,
or not declared in full and a sum sufficient for such full payment is not set
apart for the payment thereof, upon the Series A Preferred Shares and any class
or series of Parity Shares, all distributions declared upon Series A Preferred
Shares and upon any other class or series of Parity Shares shall be paid or
declared pro rata so that in all cases the amount of distributions paid or
declared per share on the Series A Preferred Shares and Parity Shares shall bear
to each other the same ratio that accumulated distributions per share, including
distributions accrued or in arrears, if any, on the Series A Preferred Shares
and Parity Shares bear to each other. Except as provided in the preceding
sentence, unless full cumulative distributions on the Series A Preferred Shares
have been paid or declared and a sum sufficient for such full payment set apart
for payment for all past Distribution Periods and the then current Distribution
Period, no distributions (other than distributions in shares of Common Shares or
in any other Junior Shares) shall be declared or paid or set apart for payment
or other distribution upon the Company's Common Shares, or, except as provided
above, on any other Junior Shares or Parity Shares, nor shall any Common Shares
or any other Junior Shares or Parity Shares be redeemed, purchased or otherwise
acquired for any consideration (or any payment made to or available for a
sinking fund for the redemption of any such shares) by the Company or any
subsidiary of the Company (except by conversion into or exchange for Junior
Shares). Holders of the Series A Preferred Shares shall not be entitled to any
distributions, whether payable in cash,



                                      -5-
<PAGE>

property or shares of beneficial interest, in excess of full accrued and
cumulative distributions as herein provided. No interest or sum of money in lieu
of interest shall be payable in respect of any distribution payment or payments
on the Series A Preferred Shares that may be in arrears.

                  Except as provided in this Statement of Designation, the
Series A Preferred Shares shall not be entitled to participate in the earnings
or assets of the Company.

                  (4) Liquidation Preference.

                           (a)      Upon the voluntary or involuntary
                                    dissolution, liquidation or winding up of
                                    the Company, the holders of the Series A
                                    Preferred Shares then outstanding shall be
                                    entitled to receive and to be paid out of
                                    the assets of the Company legally available
                                    for distribution to its shareholders, before
                                    any payment or distribution shall be made on
                                    any Junior Shares, the amount of $25.00 per
                                    Series A Preferred Share, plus an amount
                                    equal to distributions accrued and unpaid
                                    thereon to the date fixed for such
                                    dissolution, liquidation or winding up of
                                    the Company.

                           (b)      After the payment to the holders of the
                                    Series A Preferred Shares of the full
                                    preferential amounts provided for in this
                                    subparagraph (4), the holders of the Series
                                    A Preferred Shares as such shall have no
                                    right or claim to any of the remaining
                                    assets of the Company.

                           (c)      If, upon any voluntary or involuntary
                                    dissolution, liquidation, or winding up of
                                    the Company, the amounts payable with
                                    respect to the preference value of the
                                    Series A Preferred Shares and any Parity
                                    Shares are not paid in full, the holders of
                                    the Series A Preferred Shares and of such
                                    Parity Shares will share ratably in any such
                                    distribution of assets of the Company in
                                    proportion to the full respective
                                    preferential amounts provided for in this
                                    subparagraph (4) to which they are entitled.

                           (d)      Neither the sale of all or substantially all
                                    the property or business of the Company, nor
                                    the merger or consolidation of the Company
                                    into or with any other entity or the merger
                                    or consolidation of any other entity into or
                                    with the Company, shall be deemed to be a
                                    dissolution, liquidation or winding up,
                                    voluntary or involuntary, of the Company for
                                    the purposes of this subparagraph (4).


                  (5) Redemption at the Option of the Company.

                           (a)      Subject to subsections (b) and (h) of this
                                    subparagraph (5), the Series A Preferred
                                    Shares shall not be redeemable by the
                                    Company



                                      -6-
<PAGE>

                                    prior to February 18, 2003. On and after
                                    February 18, 2003, the Company, at its
                                    option, may redeem the Series A Preferred
                                    Shares, in whole or from time to time in
                                    part, as set forth herein, at a redemption
                                    price of $25.00 per Series A Preferred
                                    Share, subject to the provisions below.

                           (b)      Prior to February 18, 2003, the Series A
                                    Preferred Shares may be redeemed at the
                                    option of the Company, in whole or from time
                                    to time in part, at a redemption price of
                                    $25.00 per Series A Preferred Share, if the
                                    Board of Trust Managers determines that such
                                    a redemption is necessary or advisable to
                                    preserve the status of the Company as a REIT
                                    for federal income tax purposes, subject to
                                    the provisions below.

                           (c)      If fewer than all of the outstanding Series
                                    A Preferred Shares are to be redeemed, the
                                    shares to be redeemed will be determined pro
                                    rata or by lot as may be determined by the
                                    Board of Trust Managers or in such other
                                    manner as prescribed by the Company's Board
                                    of Trust Managers in its sole discretion to
                                    be equitable, provided that such method
                                    satisfies any applicable requirements of any
                                    securities exchange on which the Series A
                                    Preferred Shares are listed. In the event
                                    that such redemption is to be by lot, if as
                                    a result of such redemption any holder of
                                    Series A Preferred Shares would own, or be
                                    deemed to own by virtue of certain
                                    attribution provisions of the Code, as
                                    specified in the Declaration of Trust, in
                                    excess of 9.9% of the Series A Preferred
                                    Shares issued and outstanding because such
                                    holder's Series A Preferred Shares were not
                                    redeemed, or were only redeemed in part,
                                    then the Company will redeem the requisite
                                    number of Series A Preferred Shares of such
                                    shareholder such that he will not own, or be
                                    deemed to own by virtue of certain
                                    attribution provisions of the Code, as
                                    specified in the Declaration of Trust in
                                    excess of 9.9% of Series A Preferred Shares
                                    issued and outstanding subsequent to such
                                    redemption. A new certificate shall be
                                    issued representing any unredeemed Series A
                                    Preferred Shares without cost to the holder
                                    thereof.

                           (d)      Notice of redemption will be mailed, not
                                    less than 30 nor more than 60 days prior to
                                    the date fixed for redemption, to each
                                    holder of record of Series A Preferred
                                    Shares to be redeemed, notifying such holder
                                    of the Company's election to redeem such
                                    shares, stating the date fixed for
                                    redemption thereof (the "Series A Preferred
                                    Shares Redemption Date"), the redemption
                                    price, the number of shares to be redeemed
                                    (and, if fewer than all the Series A
                                    Preferred Shares are to be redeemed, the
                                    number of shares to be redeemed from such
                                    holder), the place(s) where the Series A
                                    Preferred Share



                                      -7-
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                                    certificates are to be surrendered for
                                    payment, the date on which such holder's
                                    conversion rights as to the Series A
                                    Preferred Shares shall terminate, and that
                                    distributions on the Series A Preferred
                                    Shares will cease to accrue on the specified
                                    redemption date.

                           (e)      On or after the Series A Preferred Shares
                                    Redemption Date, each holder of Series A
                                    Preferred Shares to be redeemed must present
                                    and surrender his Series A Preferred Share
                                    certificates to the Company at the place
                                    designated in such notice and thereupon the
                                    redemption price of such shares will be paid
                                    to or on the order of the Person whose name
                                    appears on such Series A Preferred Share
                                    certificates as the owner thereof and each
                                    such Series A Preferred Share certificate
                                    surrendered will be canceled. From and after
                                    the Series A Preferred Shares Redemption
                                    Date (unless the Company defaults in payment
                                    of the redemption price), all distributions
                                    on the Series A Preferred Shares designated
                                    for redemption in such notice will cease to
                                    accrue and all rights of the holders thereof
                                    (including conversion rights), except the
                                    right to receive the redemption price
                                    thereof (including all accrued and unpaid
                                    distributions up to the Series A Preferred
                                    Shares Redemption Date), will cease and
                                    terminate and such shares will not
                                    thereafter be transferred (except with the
                                    consent of the Company) on the Company's
                                    books, and such shares shall not be deemed
                                    to be outstanding for any purpose
                                    whatsoever. At its election, the Company,
                                    prior to the Series A Preferred Shares
                                    Redemption Date, may irrevocably deposit the
                                    redemption price (including accrued and
                                    unpaid distributions) of the Series A
                                    Preferred Shares so called for redemption in
                                    trust for the holders thereof with a bank or
                                    trust company, in which case such notice to
                                    holders of the Series A Preferred Shares to
                                    be redeemed will (i) state the date of such
                                    deposit, (ii) specify the office of such
                                    bank or trust company as the place of
                                    payment of the redemption price and (iii)
                                    call upon such holders to surrender the
                                    Series A Preferred Share certificates
                                    representing such shares at such place on or
                                    about the date fixed in such redemption
                                    notice (which may not be later than the
                                    Series A Preferred Shares Redemption Date)
                                    against payment of the redemption price
                                    (including all accrued and unpaid
                                    distributions up to the Series A Preferred
                                    Shares Redemption Date). Any moneys so
                                    deposited which remain unclaimed by the
                                    holders of the Series A Preferred Shares at
                                    the end of two years after the Series A
                                    Preferred Shares Redemption Date will be
                                    returned by such bank or trust company to
                                    the Company.

                           (f)      Notwithstanding the foregoing, unless full
                                    cumulative distributions on all outstanding
                                    Series A Preferred Shares for all past
                                    Distribution Periods and the then current
                                    Distribution Period have been



                                      -8-
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                                    paid, or declared and a sum sufficient for
                                    the payment thereof set apart for payment,
                                    no Series A Preferred Shares shall be
                                    redeemed unless (i) all outstanding Series A
                                    Preferred Shares are simultaneously redeemed
                                    or (ii) the Board of Trust Managers
                                    determines that such redemption is necessary
                                    or advisable to preserve the status of the
                                    Company as a REIT for federal income tax
                                    purposes; provided, however, that the
                                    foregoing shall not prevent the purchase or
                                    acquisition of Series A Preferred Shares
                                    pursuant to a purchase or exchange offer
                                    made on the same terms to holders of all
                                    outstanding Series A Preferred Shares.

                           (g)      The holders of Series A Preferred Shares at
                                    the close of business on a Distribution
                                    Record Date will be entitled to receive the
                                    distribution payable with respect to such
                                    Series A Preferred Shares on the
                                    corresponding Distribution Payment Date
                                    notwithstanding the redemption thereof
                                    between such Distribution Record Date and
                                    the corresponding Distribution Payment Date
                                    or the Company's default in the payment of
                                    the distribution due. Except as provided
                                    above, the Company will make no payment or
                                    allowance for unpaid distributions, whether
                                    or not in arrears, on Series A Preferred
                                    Shares which have been called for
                                    redemption.

                           (h)      If at any time, whether or not prior to
                                    February 18, 2003, the Company is subject to
                                    the jurisdiction of an agency or other
                                    authority of any state, county, city or
                                    other political subdivision with respect to
                                    any activities of the Company or any of its
                                    subsidiaries related to gaming (a "Gaming
                                    Authority"), and such Gaming Authority
                                    requires a record or beneficial owner to be
                                    found suitable, then notwithstanding any
                                    other provision of this Statement of
                                    Designation, the Company shall have the
                                    right, by written notice to such record or
                                    beneficial owner, (i) to require such record
                                    or beneficial owner of Series A Preferred
                                    Shares to apply, at such owner's sole cost
                                    and expense as to the application and
                                    related investigation, for a finding of
                                    suitability by such Gaming Authority and
                                    (ii) as to any record or beneficial owner
                                    that is required to be, but is not, found
                                    suitable by such Gaming Authority, (A) to
                                    require such record or beneficial owner to
                                    dispose of such owner's Series A Preferred
                                    Shares within 30 days or within the time
                                    prescribed by such Gaming Authority,
                                    whichever is earlier, and (B) if such
                                    disposition is not made in accordance with
                                    clause (A), to redeem each Series A
                                    Preferred Share of such owner at a
                                    redemption price of $25.00 per Series A
                                    Preferred Share, on the terms set forth
                                    above (other than subsection (f) of this
                                    subparagraph (5), which subsection shall not
                                    apply to any such redemption).



                                      -9-
<PAGE>

                           (i)      The Series A Preferred Shares have no stated
                                    maturity date and will not be subject to any
                                    sinking fund or mandatory redemption.

                  (6) Shares to be Retired.

                  All Series A Preferred Shares which shall have been issued and
reacquired in any manner by the Company shall be restored to the status of
authorized but unissued Preferred Shares, without designation as to series.

                  (7) Conversion.

                  Holders of Series A Preferred Shares shall have the right to
convert all or a portion of such shares into Common Shares, as follows:

                           (a)      Subject to and upon compliance with the
                                    provisions of this subparagraph (7), a
                                    holder of Series A Preferred Shares shall
                                    have the right, at his option, at any time
                                    to convert such shares into the number of
                                    fully paid and nonassessable Common Shares
                                    obtained by dividing the aggregate
                                    liquidation preference of such shares by the
                                    Conversion Price (as in effect at the time
                                    and on the date provided for in the last
                                    paragraph of subsection (b) of this
                                    subparagraph (7)) by surrendering such
                                    shares to be converted, such surrender to be
                                    made in the manner provided in subsection
                                    (b) of this subparagraph (7); provided,
                                    however, that the right to convert shares
                                    called for redemption pursuant to
                                    subparagraph (5) hereof shall terminate at
                                    the close of business on the Series A
                                    Preferred Shares Redemption Date fixed for
                                    such redemption, unless the Company shall
                                    default in making payment of any amounts
                                    payable upon such redemption under
                                    subparagraph (5).

                           (b)      In order to exercise the conversion right,
                                    the holder of each Series A Preferred Share
                                    to be converted shall surrender the
                                    certificate representing such share, duly
                                    endorsed or assigned to the Company or in
                                    blank, at the office of the Transfer Agent,
                                    accompanied by written notice to the Company
                                    that the holder thereof elects to convert
                                    such Series A Preferred Share. Unless the
                                    share issuable on conversion is to be issued
                                    in the same name as the name in which such
                                    Series A Preferred Share is registered, each
                                    share surrendered for conversion shall be
                                    accompanied by instruments of transfer, in
                                    form satisfactory to the Company, duly
                                    executed by the holder or such holder's duly
                                    authorized attorney and an amount sufficient
                                    to pay any transfer or similar tax (or
                                    evidence reasonably satisfactory to the
                                    Company demonstrating that such taxes have
                                    been paid).

                                    Holders of Series A Preferred Shares at the
                                    close of business on a distribution payment
                                    Record Date shall be entitled to receive the



                                      -10-
<PAGE>

                                    distribution payable on such shares on the
                                    corresponding Distribution Payment Date
                                    notwithstanding the conversion thereof
                                    following such distribution payment Record
                                    Date and prior to such Distribution Payment
                                    Date. However, Series A Preferred Shares
                                    surrendered for conversion during the period
                                    between the close of business on any
                                    distribution payment Record Date and the
                                    opening of business on the corresponding
                                    Distribution Payment Date (except shares
                                    converted after the issuance of notice of
                                    redemption with respect to a Series A
                                    Preferred Shares Redemption Date during such
                                    period or coinciding with such Distribution
                                    Payment Date, such Series A Preferred Shares
                                    being entitled to such distribution on the
                                    Distribution Payment Date) must be
                                    accompanied by payment of an amount equal to
                                    the distribution payable on such shares on
                                    such Distribution Payment Date. A holder of
                                    Series A Preferred Shares on a distribution
                                    payment Record Date who (or whose
                                    transferee) tenders any such shares for
                                    conversion into Common Shares on such
                                    Distribution Payment Date will receive the
                                    distribution payable by the Company on such
                                    Series A Preferred Shares on such date, and
                                    the converting holder need not include
                                    payment of the amount of such distribution
                                    upon surrender of Series A Preferred Shares
                                    for conversion. Except as provided above,
                                    the Company shall make no payment or
                                    allowance for unpaid distributions, whether
                                    or not in arrears, on converted shares or
                                    for distributions on the Common Shares
                                    issued upon such conversion.

                                    As promptly as practicable after the
                                    surrender of certificates for Series A
                                    Preferred Shares as aforesaid, the Company
                                    shall issue and shall deliver at the office
                                    of the Transfer Agent to such holder, or on
                                    his written order, a certificate or
                                    certificates for the number of full Common
                                    Shares issuable upon the conversion of such
                                    shares in accordance with the provisions of
                                    this subparagraph (7), and any fractional
                                    interest in respect of a Common Share
                                    arising upon such conversion shall be
                                    settled as provided in subsection (c) of
                                    this subparagraph (7).

                                    Each conversion shall be deemed to have been
                                    effected immediately prior to the close of
                                    business on the date on which the
                                    certificates for Series A Preferred Shares
                                    shall have been surrendered and such notice
                                    (and if applicable, payment of an amount
                                    equal to the distribution payable on such
                                    shares) received by the Company as
                                    aforesaid, and the Person or Persons in
                                    whose name or names any certificate or
                                    certificates for Common Shares shall be
                                    issuable upon such conversion shall be
                                    deemed to have become the holder or holders
                                    of record of the shares represented thereby
                                    at such time on such date, and such
                                    conversion shall be at the Conversion Price



                                      -11-
<PAGE>

                                    in effect at such time and on such date
                                    unless the share transfer books of the
                                    Company shall be closed on that 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, but such conversion
                                    shall be at the Conversion Price in effect
                                    on the date on which such shares have been
                                    surrendered and such notice received by the
                                    Company.

                           (c)      No fractional shares of scrip representing
                                    fractions of Common Shares shall be issued
                                    upon conversion of Series A Preferred
                                    Shares. Instead of any fractional interest
                                    in a Common Share that would otherwise be
                                    deliverable upon the conversion of a Series
                                    A Preferred Share, the Company shall pay to
                                    the holder of such share an amount in cash
                                    based upon the Current Market Price of
                                    Common Shares on the Trading Day immediately
                                    preceding the date of conversion. If more
                                    than one Series A Preferred Share shall be
                                    surrendered for conversion at one time by
                                    the same holder, the number of full Common
                                    Shares issuable upon conversion thereof
                                    shall be computed on the basis of the
                                    aggregate number of Series A Preferred
                                    Shares so surrendered.

                           (d)      The Conversion Price shall be adjusted from
                                    time to time as follows:

                                    (i)      If the Company shall after the
                                             Issue Date (A) pay or make a
                                             distribution on its Common Shares
                                             in Common Shares, (B) subdivide its
                                             outstanding Common Shares into a
                                             greater number of shares, (C)
                                             combine its outstanding Common
                                             Shares into a smaller number of
                                             shares or (D) issue any shares of
                                             beneficial interest by
                                             reclassification of its Common
                                             Shares, then in each such case the
                                             Conversion Price in effect at the
                                             opening of business on the day
                                             following the date fixed for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution or at the opening of
                                             business on the day following the
                                             day on which such subdivision,
                                             combination or reclassification
                                             becomes effective, as the case may
                                             be, shall be adjusted so that the
                                             holder of any Series A Preferred
                                             Shares thereafter surrendered for
                                             conversion shall be entitled to
                                             receive the number of Common Shares
                                             that such holder would have owned
                                             or have been entitled to receive
                                             after the happening of any of the
                                             events described above had such
                                             shares been converted immediately
                                             prior to the record date in the
                                             case of a distribution or the
                                             effective date in the case of a
                                             subdivision, combination or
                                             reclassification.



                                      -12-
<PAGE>

                                             An adjustment made pursuant to this
                                             subsection (i) shall become
                                             effective immediately after the
                                             opening of business on the day next
                                             following the record date (except
                                             as provided in paragraph (h) below)
                                             in the case of a distribution and
                                             shall become effective immediately
                                             after the opening of business on
                                             the day next following the
                                             effective date in the case of a
                                             subdivision, combination or
                                             reclassification. Such
                                             adjustment(s) shall be made
                                             successively whenever any of the
                                             events listed above shall occur.

                                    (ii)     If the Company shall issue after
                                             the Issue Date rights, options or
                                             warrants to all holders of Common
                                             Shares entitling them (for a period
                                             expiring within 45 days after the
                                             record date mentioned below) to
                                             subscribe for or purchase Common
                                             Shares at a price per share less
                                             than the Fair Market Value per
                                             Common Share on the record date for
                                             the determination of shareholders
                                             entitled to receive such rights,
                                             options or warrants, then the
                                             Conversion Price in effect at the
                                             opening of business on the day next
                                             following such record date shall be
                                             adjusted to equal the price
                                             determined by multiplying (I) the
                                             Conversion Price in effect
                                             immediately prior to the opening of
                                             business on the day following the
                                             date fixed for such determination
                                             by (II) a fraction, the numerator
                                             of which shall be the sum of (A)
                                             the number of Common Shares
                                             outstanding on the close of
                                             business on the date fixed for such
                                             determination and (B) the number of
                                             Common Shares that the aggregate
                                             proceeds to the Company from the
                                             exercise of such rights, options or
                                             warrants for Common Shares would
                                             purchase at such Fair Market Value,
                                             and the denominator of which shall
                                             be the sum of (A) the number of
                                             Common Shares outstanding on the
                                             close of business on the date fixed
                                             for such determination and (B) the
                                             number of additional Common Shares
                                             offered for subscription or
                                             purchase pursuant to such rights,
                                             options or warrants. Such
                                             adjustments shall be made
                                             successively whenever any such
                                             rights, options or warrants are
                                             issued, and shall become effective
                                             immediately after the opening of
                                             business on the day next following
                                             such record date (except as
                                             provided in subsection (h) below).
                                             In determining whether any rights,
                                             options or warrants entitle the
                                             holders of Common Shares to
                                             subscribe for or purchase Common
                                             Shares at less than the Fair Market
                                             Value, there shall be taken into
                                             account any consideration received
                                             by the Company upon issuance and
                                             upon exercise of such rights,
                                             options or warrants, the value of
                                             such consideration, if other



                                      -13-
<PAGE>

                                             than cash, to be determined by the
                                             Chief Executive Officer of the
                                             Company or the Board of Trust
                                             Managers.

                                    (iii)    If the Company shall distribute to
                                             all holders of its Common Shares
                                             any shares of beneficial interest
                                             of the Company (other than Common
                                             Shares) or evidence of its
                                             indebtedness or assets (excluding
                                             cash distributions paid out of the
                                             total equity applicable to Common
                                             Shares, including revaluation
                                             equity, less the amount of stated
                                             capital attributable to Common
                                             Shares, determined on the basis of
                                             the most recent annual consolidated
                                             cost basis and current value basis
                                             and quarterly consolidated balance
                                             sheets of the Company and its
                                             consolidated subsidiaries available
                                             at the time of the declaration of
                                             the distribution) or rights,
                                             options or warrants to subscribe
                                             for or purchase any of its
                                             securities (excluding those rights,
                                             options and warrants issued to all
                                             holders of Common Shares entitling
                                             them for a period expiring within
                                             45 days after the record date
                                             referred to in subsection (ii)
                                             above to subscribe for or purchase
                                             Common Shares, which rights,
                                             options and warrants are referred
                                             to in and treated under subsection
                                             (ii) above) (any of the foregoing
                                             being hereinafter in this
                                             subsection (iii) called the
                                             "Securities"), then in each case
                                             the Conversion Price shall be
                                             adjusted so that it shall equal the
                                             price determined by multiplying (I)
                                             the Conversion Price in effect
                                             immediately prior to the close of
                                             business on the date fixed for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution by (II) a fraction,
                                             the numerator of which shall be the
                                             Fair Market Value per Common Share
                                             on the record date mentioned below
                                             less the then fair market value (as
                                             determined by the Chief Executive
                                             Officer of the Company or the Board
                                             of Trust Managers, whose
                                             determination shall be conclusive)
                                             of the portion of the shares of
                                             beneficial interest or assets or
                                             evidences of indebtedness so
                                             distributed or of such rights,
                                             options or warrants applicable to
                                             one Common Share, and the
                                             denominator of which shall be the
                                             Fair Market Value per Common Share
                                             on the record date mentioned below.
                                             Such adjustment shall become
                                             effective immediately at the
                                             opening of business on the Business
                                             Day next following (except as
                                             provided in subsection (h) below)
                                             the record date for the
                                             determination of shareholders
                                             entitled to receive such
                                             distribution. For the purposes of
                                             this subsection (iii), the
                                             distribution of a Security, which
                                             is distributed not only to the
                                             holders of the Common Shares on the
                                             date fixed for the determination of
                                             shareholders entitled



                                      -14-
<PAGE>

                                             to such distribution of such
                                             Security, but also is distributed
                                             with each Common Share delivered to
                                             a Person converting a Series A
                                             Preferred Share after such
                                             determination date, shall not
                                             require an adjustment of the
                                             Conversion Price pursuant to this
                                             subsection (iii); provided that on
                                             the date, if any, on which a Person
                                             converting a Series A Preferred
                                             Share would no longer be entitled
                                             to receive such Security with a
                                             Common Share (other than as a
                                             result of the termination of all
                                             such Securities), a distribution of
                                             such Securities shall be deemed to
                                             have occurred, and the Conversion
                                             Price shall be adjusted as provided
                                             in this subsection (iii) (and such
                                             day shall be deemed to be "the date
                                             fixed for the determination of the
                                             shareholders entitled to receive
                                             such distribution" and "the record
                                             date" within the meaning of the two
                                             preceding sentences).

                                    (iv)     No adjustment in the Conversion
                                             Price shall be required unless such
                                             adjustment would require a
                                             cumulative increase or decrease of
                                             at least 1% in such price;
                                             provided, however, that any
                                             adjustments that by reason of this
                                             subsection (iv) are not required to
                                             be made shall be carried forward
                                             and taken into account in any
                                             subsequent adjustment until made;
                                             and provided, further, that any
                                             adjustment shall be required and
                                             made in accordance with the
                                             provisions of this subparagraph (7)
                                             (other than this subsection (iv))
                                             not later than such time as may be
                                             required in order to preserve the
                                             tax-free nature of a distribution
                                             to the holders of Common Shares.
                                             Notwithstanding any other
                                             provisions of this subparagraph
                                             (7), the Company shall not be
                                             required to make any adjustment of
                                             the Conversion Price for the
                                             issuance of any Common Shares
                                             pursuant to any plan providing for
                                             the reinvestment of distributions
                                             or interest payable on securities
                                             of the Company and the investment
                                             of additional optional amounts in
                                             Common Shares under such plan. All
                                             calculations under this
                                             subparagraph (7) shall be made to
                                             the nearest cent (with $.005 being
                                             rounded upward) or to the nearest
                                             one-ten-thousandth of a share (with
                                             .0005 of a share being rounded
                                             upward), as the case may be.
                                             Anything in this subsection (d) to
                                             the contrary notwithstanding, the
                                             Company shall be entitled, to the
                                             extent permitted by law, to make
                                             such reductions in the Conversion
                                             Price, in addition to those
                                             required by this subsection (d), as
                                             it in its sole discretion shall
                                             determine to be advisable in order
                                             that any share distributions,
                                             subdivision of shares,
                                             reclassification or combination of
                                             shares, distribution of rights,
                                             options



                                      -15-
<PAGE>

                                             or warrants to purchase shares or
                                             securities, or distribution of
                                             other assets (other than cash
                                             distributions) hereafter made by
                                             the Company to its shareholders
                                             shall not be taxable.

                           (e)      If the Company shall be a party to any
                                    transaction (including without limitation a
                                    merger, consolidation, statutory share
                                    exchange, self tender offer for all or
                                    substantially all of the Common Shares, sale
                                    of all or substantially all of the Company's
                                    assets or recapitalization of the Common
                                    Shares and excluding any transaction as to
                                    which subsection (d)(i) of this subparagraph
                                    (7) applied) (each of the foregoing being
                                    referred to herein as a "Transaction"), in
                                    each case as a result of which Common Shares
                                    shall be converted into the right to receive
                                    shares, stock, securities or other property
                                    (including cash or any combination thereof),
                                    each Series A Preferred Share which is not
                                    converted into the right to receive shares,
                                    stock, securities or other property in
                                    connection with such Transaction shall
                                    thereafter be convertible into the kind and
                                    amount of shares, stock, securities and
                                    other property (including cash or any
                                    combination thereof) receivable upon the
                                    consummation of such Transaction by a holder
                                    of that number of Common Shares into which
                                    one Series A Preferred Share was convertible
                                    immediately prior to such Transaction,
                                    assuming such holder of Common Shares (i) is
                                    not a Person with which the Company
                                    consolidated or into which the Company
                                    merged or which merged into the Company 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
                                    (ii) failed to exercise his rights of the
                                    election, if any, as to the kind or amount
                                    of shares, stock, securities and other
                                    property (including cash) receivable upon
                                    such Transaction (each a "Non-Electing
                                    Share") (provided that if the kind or amount
                                    of shares, stock, securities and other
                                    property (including cash) receivable upon
                                    such Transaction by each Non-Electing Share
                                    is not the same for each Non-Electing Share,
                                    then the kind and amount of shares, stock,
                                    securities and other property (including
                                    cash) receivable upon such Transaction for
                                    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 Company shall not be a party to
                                    any Transaction unless the terms of such
                                    Transaction are consistent with the
                                    provisions of this subsection (e), and it
                                    shall not consent or agree to the occurrence
                                    of any Transaction until the Company has
                                    entered into an agreement with the successor
                                    or purchasing entity, as the case may be,
                                    for the benefit of the holders of the Series
                                    A Preferred Shares that will require such
                                    successor or purchasing entity, as the case
                                    may be, to make provision in its certificate
                                    or articles of



                                      -16-
<PAGE>

                                    incorporation or other constituent documents
                                    to the end that the provisions of this
                                    subsection (e) shall thereafter
                                    correspondingly be made applicable as nearly
                                    as may reasonably be, in relation to any
                                    shares of stock or other securities or
                                    property thereafter deliverable upon
                                    conversion of the Series A Preferred Shares.
                                    The provisions of this subsection (e) shall
                                    similarly apply to successive Transactions.

                           (f)      If:

                                    (i)      the Company shall declare a
                                             distribution on the Common Shares
                                             (other than in cash out of the
                                             total equity applicable to Common
                                             Shares, including revaluation
                                             equity, less the amount of stated
                                             capital attributable to Common
                                             Shares, determined on the basis of
                                             the most recent annual consolidated
                                             cost basis and current value basis
                                             and quarterly consolidated balance
                                             sheets of the Company and its
                                             consolidated subsidiaries available
                                             at the time of the declaration of
                                             the distribution); or

                                    (ii)     the Company shall authorize the
                                             granting to all holders of the
                                             Common Shares of rights, options or
                                             warrants to subscribe for or
                                             purchase any shares of any class or
                                             any other rights, options or
                                             warrants; or

                                    (iii)    there shall be any
                                             reclassifications of the Common
                                             Shares (other than an event to
                                             which subsection (d)(i) of this
                                             subparagraph (7) applied) or any
                                             consolidation or merger to which
                                             the Company is a party and for
                                             which approval of any shareholders
                                             of the Company is required, or a
                                             statutory share exchange involving
                                             the conversion or exchange of
                                             Common Shares into securities or
                                             other property, or a self tender
                                             offer by the Company for all or
                                             substantially all of its
                                             outstanding Common Shares, or the
                                             sale or transfer of all or
                                             substantially all of the assets of
                                             the Company and for which approval
                                             of any stockholder of the Company
                                             is required; or

                                    (iv)     there shall occur the voluntary or
                                             involuntary liquidation,
                                             dissolution or winding up of the
                                             Company,

                                    then the Company shall cause to be filed
                                    with the Transfer Agent and shall cause to
                                    be mailed to the holders of the Series A
                                    Preferred Shares at their addresses as shown
                                    on the share records of the Company, as
                                    promptly as possible, but at least 15 days
                                    prior to the applicable date hereinafter
                                    specified, a notice stating (A) the



                                      -17-
<PAGE>

                                    date on which a record is to be taken for
                                    the purpose of such distribution or grant of
                                    rights, options or warrants, or, if a record
                                    is not to be taken, the date as of which the
                                    holders of Common Shares of record to be
                                    entitled to such distribution or grant of
                                    rights, options or warrants are to be
                                    determined, provided, however, that no such
                                    notification need be made in respect of a
                                    record or determination date for a
                                    distribution or grant of rights unless the
                                    corresponding adjustment in the Conversion
                                    Price would be an increase or decrease of at
                                    least 1% or (B) the date on which such
                                    reclassification, consolidation, merger,
                                    statutory share exchange, self tender offer,
                                    sale, transfer, liquidation, dissolution or
                                    winding up is expected to become effective,
                                    and the date as of which it is expected that
                                    holders of Common Shares of record shall be
                                    entitled to exchange their Common Shares for
                                    securities or other property, if any,
                                    deliverable upon such reclassification,
                                    consolidation, merger, statutory share
                                    exchange, self tender offer, sale, transfer,
                                    liquidation, dissolution or winding up.
                                    Failure to give or receive such notice or
                                    any defect therein shall not affect the
                                    legality or validity of the proceedings
                                    described in this subparagraph (7).

                           (g)      Whenever the Conversion Price is adjusted as
                                    herein provided, the Company shall promptly
                                    file with the Transfer Agent an officer's
                                    certificate setting forth the Conversion
                                    Price after such adjustment and setting
                                    forth a brief statement of the facts
                                    requiring such adjustment, which certificate
                                    shall be conclusive evidence of the
                                    correctness of such adjustment absent
                                    manifest error. Promptly after delivery of
                                    such certificate, the Company shall prepare
                                    a notice of such adjustment of the
                                    Conversion Price setting forth the adjusted
                                    Conversion Price and the effective date of
                                    such adjustment and shall mail such notice
                                    of such adjustment of the Conversion Price
                                    to the holder of each Series A Preferred
                                    Share at such holder's last address as shown
                                    on the share records of the Company.

                           (h)      In any case in which subsection (d) of this
                                    subparagraph (7) provides that an adjustment
                                    shall become effective on the date next
                                    following the record date for an event, the
                                    Company may defer until the occurrence of
                                    such event (A) issuing to the holder of any
                                    Series A Preferred Shares converted after
                                    such record date and before the occurrence
                                    of such event the additional Common Shares
                                    issuable upon such conversion by reason of
                                    the adjustment required by such event over
                                    and above the Common Shares issuable upon
                                    such conversion before giving effect to such
                                    adjustment and (B) fractionalizing any
                                    Series A Preferred Share and/or paying to
                                    such holder any amount of cash in lieu of
                                    any fraction pursuant to subsection (c) of
                                    this subparagraph (7).



                                      -18-
<PAGE>

                           (i)      There shall be no adjustment of the
                                    Conversion Price in case of the issuance of
                                    any shares of beneficial interest of the
                                    Company in a reorganization, acquisition or
                                    other similar transaction except as
                                    specifically set forth in this subparagraph
                                    (7). If any action or transaction would
                                    require adjustment of the Conversion Price
                                    pursuant to more than one subsection of this
                                    subparagraph (7), only one adjustment shall
                                    be made, and such adjustment shall be the
                                    amount of adjustment that has the highest
                                    absolute value.

                           (j)      If the Company shall take any action
                                    affecting the Common Shares, other than
                                    action described in this subparagraph (7),
                                    that in the opinion of the Board of Trust
                                    Managers would materially adversely affect
                                    the conversion rights of the holders of the
                                    Series A Preferred Shares, the Conversion
                                    Price for the Series A Preferred Shares may
                                    be adjusted, to the extent permitted by law,
                                    in such manner, if any, and at such time, as
                                    the Board of Trust Managers, in its sole
                                    discretion, may determine to be equitable in
                                    the circumstances.

                           (k)      The Company covenants that it will at all
                                    times reserve and keep available, free from
                                    preemptive rights, out of the aggregate of
                                    its authorized but unissued Common Shares,
                                    for the purpose of effecting conversion of
                                    the Series A Preferred Shares, the full
                                    number of Common Shares deliverable upon the
                                    conversion of all outstanding Series A
                                    Preferred Shares not theretofore converted.
                                    For purposes of this subsection (k), the
                                    number of Common Shares that shall be
                                    deliverable upon the conversion of all
                                    outstanding Series A Preferred Shares shall
                                    be computed as if at the time of computation
                                    all such outstanding shares were held by a
                                    single holder.

                                    The Company covenants that any Common Shares
                                    issued upon conversion of the Series A
                                    Preferred Shares shall be validly issued,
                                    fully paid and nonassessable. Before taking
                                    any action that would cause an adjustment
                                    reducing the Conversion Price below the then
                                    par value of the Common Shares deliverable
                                    upon conversion of the Series A Preferred
                                    Shares, the Company will take any action
                                    that, in the opinion of its counsel, may be
                                    necessary in order that the Company may
                                    validly and legally issue fully paid and
                                    nonassessable Common Shares at such adjusted
                                    Conversion Price.

                                    The Company shall endeavor to list the
                                    Common Shares required to be delivered upon
                                    conversion of the Series A Preferred Shares,
                                    prior to such delivery, upon each national
                                    securities exchange, if any, upon which the
                                    outstanding Common Shares are listed at the
                                    time of such delivery.



                                      -19-
<PAGE>

                                    Prior to the delivery of any securities that
                                    the Company shall be obligated to deliver
                                    upon conversion of the Series A Preferred
                                    Shares, the Company shall endeavor to comply
                                    with all federal and state laws and
                                    regulations thereunder requiring the
                                    registration of such securities, or any
                                    approval of or consent to the delivery
                                    thereof by any governmental authority.

                           (l)      The Company will pay any and all documentary
                                    stamp or similar issue or transfer taxes
                                    payable in respect of the issue or delivery
                                    of Common Shares or other securities or
                                    property on conversion of the Series A
                                    Preferred Shares pursuant hereto; provided,
                                    however, that the Company shall not be
                                    required to pay any tax that may be payable
                                    in respect of any transfer involved in the
                                    issue or delivery of Common Shares or other
                                    securities or property in a name other than
                                    that of the holder of the Series A Preferred
                                    Shares to be converted, and no such issue or
                                    delivery shall be made unless and until the
                                    Person requesting such issue or delivery has
                                    paid to the Company the amount of any such
                                    tax or has established, to the reasonable
                                    satisfaction of the Company, that such tax
                                    has been paid.

                           (m)      In addition to the foregoing adjustments,
                                    the Company will be permitted to make such
                                    reductions in the Conversion Price as it
                                    considers to be advisable in order that any
                                    event treated for federal income tax
                                    purposes as a dividend of stock or stock
                                    rights will not be taxable to the holders of
                                    the Common Shares.

                           (n)      Whenever reference is made in this
                                    subparagraph (7) to the issuance or sale of
                                    Common Shares, the term "Common Shares"
                                    shall include any shares of beneficial
                                    interest of any class of the Company other
                                    than preferred shares of any class with a
                                    fixed (absolutely or by reference to an
                                    adjustment formula) limit on dividends and a
                                    fixed amount payable in the event of any
                                    voluntary or involuntary liquidation,
                                    dissolution or winding up of the Company.

                  (8) Voting Rights. Except as required by law or as provided
below, the holders of the Series A Preferred Shares shall not be entitled to
vote at any meeting of the shareholders for election of Trust Managers or for
any other purposes or otherwise to participate in any action taken by the
Company or the shareholders thereof, or to receive notice of any meeting of
shareholders.

                           (a)      In any matter in which the Series A
                                    Preferred Shares are entitled to vote (as
                                    expressly provided herein or as may be
                                    required by law), including any action by
                                    written consent, each Series A Preferred
                                    Share shall be entitled to one vote.



                                      -20-
<PAGE>

                           (b)      Whenever distributions on any Series A
                                    Preferred Shares shall be in arrears for six
                                    or more Distribution Periods, whether or not
                                    such Distribution Periods are consecutive,
                                    the holders of the Series A Preferred
                                    Shares, voting separately as a class with
                                    all other series of Preferred Shares upon
                                    which like voting rights have been conferred
                                    and are exercisable, will be entitled to
                                    vote for the election of two additional
                                    Trust Managers of the Company at a special
                                    meeting called by the holders of record of
                                    at least ten percent (10%) of any series of
                                    Preferred Shares so in arrears (unless such
                                    request is received less than 90 days before
                                    the date fixed for the next annual or
                                    special meeting of the shareholders) or at
                                    the next annual meeting of shareholders, and
                                    all other Trust Managers of the Company
                                    shall be elected by the holders of the
                                    Company's Common Shares. In such case, the
                                    entire Board of Trust Managers of the
                                    Company will be increased by two Trust
                                    Managers. Voting rights of the holders of
                                    the Series A Preferred Shares shall continue
                                    at each subsequent annual meeting until all
                                    distributions accumulated on such Series A
                                    Preferred Shares for the past Distribution
                                    Periods and the then current Distribution
                                    Period shall have been fully paid or
                                    declared and a sum sufficient for the
                                    payment thereof set aside for payment.

                           (c)      As long as any Series A Preferred Shares
                                    remain outstanding, the Company will not,
                                    without the affirmative vote or consent of
                                    the holders of at least two-thirds of the
                                    Series A Preferred Shares outstanding at the
                                    time, given in person or by proxy, either in
                                    writing or at a meeting (such series voting
                                    separately as a class) (i) authorize or
                                    create, or increase the authorized or issued
                                    amount of, any class or series of shares of
                                    beneficial interest ranking prior to the
                                    Series A Preferred Shares with respect to
                                    the payment of distributions or the
                                    distribution of assets upon liquidation,
                                    dissolution or winding up or reclassify any
                                    authorized shares of beneficial interest of
                                    the Company into such shares, or create,
                                    authorize or issue any obligation or
                                    security convertible into or evidencing the
                                    right to purchase any such shares; or (ii)
                                    amend, alter or repeal the provisions of the
                                    Declaration of Trust or this Statement of
                                    Designation, whether by merger,
                                    consolidation or otherwise (an "Event"), so
                                    as to materially and adversely affect any
                                    right, preference, privilege or voting power
                                    of the Series A Preferred Shares or the
                                    holders thereof; provided, however, with
                                    respect to the occurrence of any of the
                                    Events set forth in (ii) above, so long as
                                    the Series A Preferred Shares (or shares
                                    into which the Series A Preferred Shares
                                    have been converted in any successor entity
                                    to the Company) remain outstanding with the
                                    terms thereof materially



                                      -21-
<PAGE>

                                    unchanged, taking into account that upon the
                                    occurrence of an Event, the Company may not
                                    be the surviving entity, the occurrence of
                                    any such Event shall not be deemed to
                                    materially and adversely affect such rights,
                                    preferences, privileges or voting power of
                                    holders of Series A Preferred Shares and
                                    provided further that (x) any increase in
                                    the amount of the authorized Preferred
                                    Shares or the creation or issuance of any
                                    other Series A Preferred Shares, or (y) any
                                    increase in the amount of authorized Series
                                    A Preferred Shares, in each case ranking on
                                    a parity with or junior to the Series A
                                    Preferred Shares with respect to payment of
                                    distributions or the distribution of assets
                                    upon liquidation, dissolution or winding up,
                                    shall not be deemed to materially and
                                    adversely affect such rights, preferences,
                                    privileges or voting power.

                                    The foregoing voting provisions will not
                                    apply if, at or prior to the time when the
                                    act with respect to which such vote would
                                    otherwise be required shall be effected, all
                                    outstanding Series A Preferred Shares shall
                                    have been redeemed or called for redemption
                                    and sufficient funds shall have been
                                    deposited in trust to effect such
                                    redemption.

         C. Exclusion of Other Rights.

                  Except as may otherwise be required by law, the Series A
Preferred Shares shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those specifically
set forth in this Statement of Designation (as such Statement of Designation may
be amended from time to time) and in the Declaration of Trust. The Series A
Preferred Shares shall have no preemptive or subscription rights.

         D. Headings of Subdivisions.

                  The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.



                                      -22-
<PAGE>

         E. Severability of Provisions.

                  If any voting powers, preferences and relative, participating,
optional and other special rights of the Series A Preferred Shares and
qualifications, limitations and restrictions thereof set forth in this Statement
of Designation (as such Statement of Designation may be amended from time to
time) is invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Series A Preferred Shares
and qualifications, limitations and restrictions thereof set forth in this
Statement of Designation (as so amended) which can be given effect without the
invalid, unlawful or unenforceable voting powers, preferences and relative,
participating, optional or other special rights of Series A Preferred Shares and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special right of Series A Preferred Shares and
qualifications, limitations and restrictions thereof unless so expressed herein.

         F. Adoption.

                  This Statement of Designation was duly adopted by the Board of
Trust Managers of the Company. Shareholder action was not required.

                                      * * *



                                      -23-
<PAGE>

         IN WITNESS WHEREOF, I hereby certify that I, John C. Goff, am the Chief
Executive Officer of Crescent Real Estates Equities Company (the "Company") and
that as such, I am authorized to execute and file with the County Clerk of
Tarrant County, Texas this Statement of Designation (the "Statement of
Designation") on behalf of the Company and I further certify on behalf of the
Company that this Statement of Designation was authorized by the Board of Trust
Managers by unanimous written consent dated as of April 22, 2002 and is still in
full force and effect as of the date hereof. I further certify that my signature
to this document is my free act and deed, that to the best of my knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects and that this statement is made under penalty of perjury.



                                       CRESCENT REAL ESTATE EQUITIES COMPANY



                                       /s/ John C. Goff
                                       -----------------------------------------
                                       Name: John C. Goff
                                       Title: Chief Executive Officer



         The undersigned, Jerry R. Crenshaw, Jr., the Senior Vice President and
Chief Financial Officer of the Company, hereby certifies that John C. Goff is
the Chief Executive Officer of the Company and that the signature set forth
above is his genuine signature.

         IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th
day of April, 2002.


                                       /s/ Jerry R. Crenshaw, Jr.
                                       -----------------------------------------
                                       Name: Jerry R. Crenshaw, Jr.
                                       Title: Senior Vice President and Chief
                                              Financial Officer



                                      -24-
<PAGE>

STATE OF TEXAS
COUNTY OF TARRANT

         This instrument was acknowledged before me on April 25, 2002, by John
C. Goff, Chief Executive Officer of Crescent Real Estate Equities Company, a
Texas real estate investment trust, on behalf of said real estate investment
trust.



                                       /s/ Elizabeth A. Hays
                                       -----------------------------------------
                                       Notary Public - State of Texas



                                       Elizabeth A. Hays
                                       -----------------------------------------
                                       Printed Name of Notary Public


My commission expires:


August 11, 2004
---------------


STATE OF TEXAS
COUNTY OF TARRANT

         This instrument was acknowledged before me on April 25, 2002, by Jerry
R. Crenshaw, Jr.



                                       /s/ Elizabeth A. Hays
                                       -----------------------------------------
                                       Notary Public - State of Texas



                                       Elizabeth A. Hays
                                       -----------------------------------------
                                       Printed Name of Notary Public


My commission expires:


August 11, 2004
---------------



                                      -25-