exv4w1



 







Exhibit 4.1




ARCHSTONE-SMITH OPERATING TRUST




ARTICLES OF RESTATEMENT




     These Articles of Restatement of Archstone-Smith Operating Trust are made as of May 19, 2006.



     First: Archstone-Smith Operating Trust, a Maryland real estate investment trust (the
“Trust”) formed under Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland (the “Act”), desires to restate its Amended and Restated Declaration of Trust as currently
in effect.



     Second: The restatement of the Amended and Restated Declaration of Trust as
hereinafter set forth was approved by the sole Trustees (the “Trustee”) of the Trust.



     Third: The Amended and Restated Declaration of Trust is not amended by these Articles
of Restatement.



     Fourth: The following sets forth all of the provisions of the Amended and Restated
Declaration of Trust as currently in effect:



Amended and Restated Declaration of Trust

of Archstone-Smith Operating Trust




          The Trustee hereby declares that it holds the duties of Trustee hereunder and holds all assets
of the Trust presently existing and hereafter to be received, and all rents, income, profits and
gains therefrom, from whatever source derived, in trust for the Unitholders (as defined herein) in
accordance with the terms and conditions hereinafter provided, including, without limitation Annex
A hereto in its entirety, which are all of the provisions of the Trust’s Amended and Restated
Declaration of Trust as currently in effect (the “Declaration of Trust”).




ARTICLE I

The Trust




Section 1. Name.




          (a) The Trust governed by this Amended and Restated Declaration of Trust (as amended,
supplemented or restated from time to time, this “Declaration of Trust”) is herein referred to as
the “Trust” and shall be known by the name “Archstone-Smith Operating Trust.” So far as may be
practicable, legal and convenient, the affairs of the Trust shall be conducted and transacted under
such name, which name shall not refer to the Trustee individually or personally or to the
beneficiaries or Unitholders of the Trust, or to any officers, employees or agents of the Trust.
Under circumstances in which the Trustee determines that the use of the name “Archstone-Smith
Operating Trust” is not practicable, legal or convenient, it may as appropriate use the Trustee’s
name with suitable reference to
its Trustee status, or some other suitable designation, or it may adopt another name under which
the Trust may hold property or operate in any jurisdiction, which name shall not, to the knowledge
of the Trustee, refer to beneficiaries or Unitholders of the Trust.




 









 








          (b) Legal title to all of the properties subject from time to time to this Declaration of
Trust shall be transferred to, vested in and held by the Trust in its own name or by the Trustee or
Trustees as trustee or trustees of the Trust, except that the Trustees shall have the power to
cause legal title to any property of the Trust to be held by and/or in the name of the Trustees, or
any other person as nominee, on such terms, in such manner and with such power as the Trustees may
determine, provided that the interest of the Trust therein is, in the judgment of the Trustees,
appropriately protected.




          (c) The Trust shall have the authority to operate under an assumed name or names in such state
or states or any political subdivision thereof where it would not be legal, practical or convenient
to operate in the name of the Trust. The Trust shall have the authority to file such assumed name
certificates or other instruments in such places as may be required by applicable law to operate
under such assumed name or names.



Section 2. Resident Agent. The name and address of the resident agent of the Trust in the
State of Maryland is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore,
Maryland 21202. The principal office of the Trust in the State of Maryland is c/o The Corporation
Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The Trust may have such
other offices or places of business within or without the State of Maryland as the Trustee may from
time to time determine.



Section 3. Nature of Trust. The Trust is a real estate investment trust under the Act.
The Trust shall elect, and is intended, to be treated as a “disregarded entity” or a “partnership”
for federal and state income tax purposes and, as such, this Declaration of Trust hereby includes
Annex A attached hereto in its entirety. Capitalized terms not otherwise defined herein have the
meanings specified in Annex A.




Section 4. Powers and Purposes.




          (a) The purpose and nature of the business to be conducted by the Trust is (i) to conduct any
business that may be lawfully conducted by a real estate investment trust organized pursuant to the
Act; provided, however, that such business shall be limited to and conducted in
such a manner as to permit the Trust at all times to be classified as a “disregarded entity” or a
“partnership” for federal income tax purposes (except as expressly authorized under Section 8.2 of
Annex A hereto) so long as the Parent REIT continues to be classified as a “real estate investment
trust” for purposes of Section 856, et. seq. of the Internal Revenue Code of 1986, as
amended (a “REIT”), (ii) to enter into any partnership, joint venture, trust, limited liability
company or other similar arrangement to engage in
any of the foregoing or the ownership of interests in any entity engaged, directly or indirectly,
in any of the foregoing and (iii) to do anything necessary or incidental to the foregoing.




          (b) The Trust is empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the Trust, including, without
limitation, the powers set forth in Section 5.1.A of Annex A




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hereto; provided,
however, that the Trust shall not take, or refrain from taking, any action which, in the
judgment of the Trustees, in their sole and absolute discretion, (i) could adversely affect the
ability of the Parent REIT to continue to qualify as a REIT for so long as the Parent REIT
continues to so qualify, (ii) could subject the Parent REIT to any taxes under Section 857 or
Section 4981 of the Code (except as expressly authorized under Section 8.2 of Annex A), (iii) could
adversely affect the ability of the Trust to continue to be classified as a “disregarded entity” or
a “partnership” for federal income tax purposes (except as expressly authorized under Section 8.2
of Annex A), or (iv) could violate any law or regulation of any governmental body or agency having
jurisdiction over the Parent REIT or its securities, unless such action (or inaction) shall have
been specifically consented to by the Trustees in writing.




ARTICLE 2

Beneficial interests in the Trust




Section 1. Units.




          (a) The Trust shall initially be authorized to issue 450,000,000 shares of beneficial interest
(par value $0.01 per share), which shall be designated as units (“Units”). Ownership of Units may
be evidenced by certificates in such form as shall be determined by the Trustees from time to time
in accordance with Maryland law. The certificates shall be negotiable and title thereto shall be
transferred by assignment or delivery in all respects as a stock certificate of a Maryland
corporation. The owners of the Units, who are the beneficiaries of the Trust, shall be designated
as “Unitholders”. The Units shall consist of such types or classes as the Trustees may create and
authorize from time to time and designate as representing a beneficial interest in the Trust.




          (b) The Trustees may amend this Declaration of Trust, without Unitholder consent, to increase
or decrease the aggregate number of Units or the number of Units of any class which the Trust has
authority to issue.




          (c) The Trustees may (by filing articles supplementary pursuant to Maryland law) classify or
reclassify any unissued Units from time to time by setting or changing the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or distributions,
qualifications or terms or conditions of redemption of the Units. The Trustees are authorized to
issue from the authorized but unissued Units of the Trust preferred Units in series and to
establish from time to time the number of preferred Units to be included in each such series and to
fix the designation and any preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends,
qualifications and terms and conditions of redemption of the Units of each series. Except for
Units so classified or reclassified and any preferred Units issued hereunder, all other Units shall
be designated as Common Units.




          All Units issued by the Trust, whether created herein or pursuant to reclassification or
pursuant to subsequent amendments to this Declaration of Trust shall be subject to the preferences,
conversion and other rights, voting powers, restrictions, limitations as to dividends and terms and
conditions of redemption as set forth in Annex A hereto, as from time

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to time amended in compliance
with Article 6 hereof and Article 12 of Annex A hereto and as made a part of this Declaration of
Trust.




     Section 2. Class A Common Units. The Trustee has classified 100,000,000 Units of the
Trust as Class A-1 Common Units (the “Class A-1 Common Units”) and 219,266,240 Units of the Trust
as Class A-2 Common Units (the “Class A-2 Common Units”, and, together with the Class A-1 Common
Units, the “Class A Common Units”). Except as expressly provided in this Declaration of Trust,
each Class A-2 Common Unit shall have the same designations, preferences, rights, powers and duties
as each Class A-1 Common Unit. The Trust may issue Class A-2 Common Units only to Trustee Related
Parties. Any Class A-1 Common Units transferred to a Trustee Related Party in accordance with the
provisions of Article 9 of Annex A hereto shall automatically convert into Class A-2 Common Units
upon any such transfer and the number of authorized Class A-2 Common Units shall automatically
increase in a corresponding amount and the Class A-1 Common Units so converted being returned to
the status of authorized but unissued Class A-1 Common Units. Any Class A-2 Common Units
transferred to any Person other than a Trustee Related Party in accordance with the provisions of
Article 9 of Annex A hereto shall automatically convert into Class A-1 Common Units upon any such
transfer in accordance with Section 2.1.B of Annex A hereto and the number of authorized Class A-1
Common Units shall automatically increase in a corresponding amount, and the Class A-2 Common Units
so converted shall be returned to the status of authorized but unissued Class A-2 Common Units.
The Class A-1 Common Units and the Class A-2 Common Units are referred to in Annex A as Class A-1
Units and Class A-2 Units, respectively, and collectively as Class A Units.


Section 3. Class B Common Units. The Trustee has classified 10,000,000 Units of the Trust
as Class B Common Units (the “Class B Common Units”). Except as otherwise provided in Sections
2.2.D. and 3.1.C. of Annex A hereto, each Class B Common Unit shall have the same designations,
preferences, rights, powers and duties as each Class A-1 Common Unit. Each Class B Common Unit
shall automatically convert into a Class A Common Unit as provided in Annex A. Upon any such
conversion, the number of authorized Class A Common Units shall automatically be increased in a
corresponding amount, and the number of Class B Common Units so converted shall be returned to the
status of authorized but unissued Class B Common Units.



Section 4. Series I Preferred Units. The Trustee has classified 500 Units of the Trust as
Series I Cumulative Redeemable Preferred Units (the “Series I Preferred Units”). A description of
the Series I Preferred Units, including the designations, preferences, rights, powers and duties,
is set forth in Exhibit F to Annex A hereto.



Section 5. Series M Preferred Units. The Trustee has classified one Unit of the Trust as a
Series M Preferred Unit (the “Series M Preferred Units”). A description of the Series M Preferred
Units, including the designations, preferences, rights, powers and duties, is set forth in Exhibit
G to Annex A hereto.



Section 6. Series N Preferred Units. The Trustee has classified 300 Units of the Trust as
Series N-1 Convertible Redeemable Preferred Units and 700 Units of the Trust as Series N-2
Convertible Redeemable Preferred Units (collectively, the “Series N Preferred Units”). A




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description of the Series N Preferred Units, including the designations, preferences, rights,
powers and duties, is set forth in Exhibit H to Annex A hereto.



Section 7. General Nature. All Units shall be personal property entitling the
Unitholders only to those rights provided in this Declaration of Trust, including Annex A hereto in
its entirety or in any articles supplementary creating any class or series of Units. The legal
ownership of the property of the Trust and the right to conduct the business of the Trust is vested
exclusively in the Trustees; the Unitholders shall have no interest therein other than the
beneficial interest in the Trust conferred by their Units and shall have no right to compel any
partition, division, dividend or distribution of the Trust or any of its property. The death or
incapacity of a Unitholder shall not terminate the Trust or give his or her legal representative
any rights against other Unitholders, the Trustees or the Trust property, except the rights
described in Article 9 of Annex A hereto.



Section 8. Transferability; Transfer Restrictions. Units in the Trust shall be
transferable only in accordance with the provisions of Article 9 of Annex A hereto. By accepting
the transfer of Units, whether of record or beneficially, all future Unitholders agree to be bound
by the provisions of Annex A hereto as fully as if such Unitholders had executed a stockholders
agreement containing all of such provisions. All certificates representing any class or series of
Units shall bear an appropriate restrictive legend with a statement to the effect that any
transferee agrees to be so bound. The Trust may condition the transfer and recordation of any
change in record ownership by the execution by any purported Unitholder of any instrument in which
the holder agrees to all of such provisions.



Section 9. Preemptive Rights. Except to the extent expressly granted in Section 2.3 of
Annex A hereto or in any articles supplementary (which shall be effective only for the class of
Units established thereby), no person shall have any preemptive, preferential or other similar
rights with respect to (i) additional Capital Contributions or loans to the Trust; or (ii) issuance
or sale of any Units or other Trust Interests.




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ARTICLE 3

Unitholders




Section 1. Meetings.




          (a) There shall be an annual meeting of Unitholders at such time and place, either within or
without the State of Maryland, as the Trustees shall prescribe, at which Trustees shall be elected
or re-elected and any other proper business may be conducted. The annual meeting of Unitholders
shall be held upon reasonable notice at a convenient location and within a reasonable period
following delivery of the annual report. Failure to hold an annual meeting does not invalidate the
Trust’s existence or affect any otherwise valid acts of the Trust. Special meetings of Unitholders
may be called by a majority of the Trustees or by the Chairman of the Board, President or Chief
Financial Officer of the Trust, and shall be called upon the written request of Unitholders holding
in the aggregate twenty-five percent (25%) or more of the outstanding Units of the Trust entitled
to vote. Written or printed notice stating the place, date and time of the Unitholders’ meeting
and, in the case of a special meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than 10 nor more than 60 days before the day of the meeting either
personally or by mail, by or at the direction of the Trustee or any officer or the person calling
the meeting, to each Unitholder of record entitled to vote at such meeting. No Unitholder not
entitled to vote at a meeting shall have any rights to notice of a meeting except as expressly
provided for in this Declaration of Trust or under law. No other business than that which is
stated in the call for a special meeting shall be considered at such meeting.




          (b) A majority of the outstanding Units entitled to vote at any meeting, taken together as a
single class, represented in person or by proxy shall constitute a quorum at such meeting.
Whenever any action is to be taken by the Unitholders, it shall, except as otherwise required by
law or this Declaration of Trust or the Bylaws, be authorized by a majority of the number of votes
entitled to be cast on the matter. Any action required or permitted to be taken by the holders of
the Class A-2 Common Units may be taken without a meeting by the unanimous written consent of the
holders of the Class A-2 Common Units. The Bylaws of the Trust may provide that any action
required or permitted to be taken by the holders of any other class or series of Units may be taken
without a meeting by the written consent of Unitholders entitled to cast a sufficient number of
votes to approve the matter as required by applicable law, the Declaration of Trust (including
Annex A) or the Bylaws.



Section 2. Voting. At each meeting of Unitholders, each Unitholder entitled to vote shall
have the right to vote, in person or by proxy, the number of Units of the Trust owned by him or her
on each matter on which the vote of the Unitholders is taken. Only Class A-2 Common Unitholders
shall have the right to vote in the election of Trustees. In any election of Trustees in which
more than one vacancy is to be filled, each Unitholder may vote the number of Class A-2 Common
Units of the Trust owned by him or her for each vacancy to be filled. There shall be no right of
cumulative voting. Exclusive voting power is vested in the Class A-1 Common Units and Class A-2
Common Units, except to the extent that the Declaration of Trust or Maryland law provides voting
rights to any other class of Units. Each outstanding Unit, regardless of class, shall be entitled
to one vote on each matter submitted to a vote at
a meeting of Unitholders, except (i) to the extent that this Declaration of Trust, including Annex
A hereto in its entirety, or any articles supplementary limit or




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deny voting rights to the holders
of the Units of any class or series or (ii) as otherwise provided by Maryland law.



Section 3. Distributions. The Trustees may from time to time authorize the Trust to pay
to Unitholders such dividends or distributions in cash, property or other assets of the Trust or in
securities of the Trust or from any other source as the Trustees in their discretion shall
determine. The Unitholders shall be entitled to receive dividends and distributions as set forth
in Article 3 of Annex A hereto, when, as and if declared by the Trustees, out of funds legally
available therefor, and to such distributions upon liquidation of the Trust as set forth in Article
13 of Annex A hereto. The Trustees shall endeavor to authorize the Trust to pay such dividends and
distributions as shall be necessary pursuant to Article 3 of Annex A hereto and as shall be
necessary for the Parent REIT to qualify as a REIT (so long as the Parent REIT determines to
qualify as a REIT); however, Unitholders shall have no right to any dividend or distribution unless
and until declared by the Trustees. The exercise of the powers and rights of the Trustees pursuant
to this Section 3 shall be subject to the provisions of any class or series of Units at the time
outstanding. The receipt by any Person in whose name any Units are registered on the records of
the Trust or by his or her duly authorized agent shall be a sufficient discharge for all dividends
or distributions payable or deliverable in respect of such Units and from all liability with
respect to the application thereof.



Section 4. Annual Report. The Trust shall prepare an annual report concerning its
operations for the preceding fiscal year in the manner and within the time prescribed by the Act.



Section 5. Inspection Rights. Each Unitholder shall have such inspection rights as set
forth in Section 6.5 of Annex A hereto.



Section 6. Limitation of Liability. Unitholders shall not be personally or individually
liable in any manner whatsoever for any debt, act, omission or obligation incurred by the Trust or
the Trustees and shall be under no obligation to the Trust or its creditors with respect to their
Units other than the obligation to pay to the Trust the full amount of the consideration for which
the Units were issued or to be issued, and except as set forth in Sections 2.2, 5.5, 8.5 and 11.3
of Annex A hereto. The Trust shall indemnify each Unitholder as set forth in Section 5.7 of Annex
A hereto.




ARTICLE 4

The Trustees




Section 1. Number, Qualification, Compensation and Term.




          (a) The number of Trustees shall be not less than one nor more than fifteen (15) Trustees.
The current number of Trustees is one (1), which may be changed from time to time by resolution of
the Trustees. Any action by the Trustees referred to in Annex A hereto shall include action
approved by a majority of the Trustees at any time there exists more than one Trustee. Trustees
may be
any persons, including individuals, corporations, business trusts, estates, trusts, partnerships,
limited partnerships, limited liability companies, associations, two or more persons having a joint
or common interest, or any other legal or commercial entity. Whenever a vacancy shall occur, until
such vacancy is filled as provided in Section 3 of this Article 4, the Trustee or

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Trustees
continuing in office, regardless of their number, shall have all of the powers granted to the
Trustees and shall discharge all of the duties imposed on the Trustees by this Declaration of
Trust.




          (b) The term of office of each Trustee shall be one year and until its successor is elected
and qualifies, subject to prior death, resignation or removal. In the event that the number of
Trustees is increased to more than one (1) the Board of Trustees shall be divided into three
classes of Trustees, designated Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of Trustees constituting the entire
Board of Trustees. The term of office of each Trustee shall be three (3) years and until his, her
or its successor is elected and qualifies, subject to prior death, resignation or removal. At each
annual meeting of Unitholders, successors to the class of Trustees whose term expires at such
annual meeting shall be elected. If the authorized number of Trustees constituting the Board of
Trustees is changed, any increase or decrease shall be apportioned among the classes so as to
maintain the number of Trustees in each class as nearly equal as possible, and any additional
Trustee of any class elected to fill a vacancy resulting from an increase in such class shall hold
office until the next annual meeting of shareholders, but in no case shall a decrease in the number
of Trustees constituting the Board of Trustees shorten the term of any incumbent Trustee. The name
of the current Trustee is as follows:




	 	 	 	 	 	 	 
	name

	 	 	 	address	 	 
	 


	 	 	 	 

	 	 
	Archstone-Smith Trust

	 	 	 	9200 E. Panorama Circle, Suite 400	 	 
	 

	 	 	 	Englewood, Colorado 80112	 	 





The records of the Trust shall be revised to reflect the names and addresses of the current
Trustees, at such times as any change has occurred.



Section 2. Resignation, Removal and Death. A Trustee may resign at any time by giving
written notice thereof in recordable form to the Trust and to the other Trustees, if any, at the
principal office of the Trust. Any such resignation of a Trustee shall become effective as
provided therein. A Trustee may be removed only upon the vote of holders of Class A-2 Common Units
in accordance with Section 5.1 of Annex A hereto. Upon the resignation or removal of any Trustee,
such Trustee shall execute and deliver such documents and render such accounting as the remaining
Trustees shall require and shall thereupon be discharged as Trustee. Upon the incapacity or death
of any Trustee, his or her status as a Trustee shall immediately terminate and his or her legal
representatives shall perform the acts set forth in the preceding sentence.



Section 3. Vacancies. The resignation, removal, incompetency or death of any or all of
the Trustees shall not terminate the Trust or affect its continuity. Whenever there shall be a
vacancy or
vacancies among the Trustees (including vacancies resulting from an increase in the number of
Trustees), such vacancy or vacancies shall be filled (i) at a special meeting of Class A-2 Common
Unitholders called for such purpose (which may be by written consent in lieu of a meeting), (ii) by
the Trustee or Trustees then in office or (iii) at the next annual meeting of Unitholders.
Trustees elected at special meetings of Class A-2 Common Unitholders to fill vacancies shall hold
office for the balance of the unexpired term of the Trustees whom they are replacing or whose
vacancy they are filling (or in the case of a vacancy created by an increase in the number of
Trustees, for the

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balance of the unexpired term of Trustees of the same class of Trustees). Any
trustee appointed by the remaining Trustee or Trustees to fill vacancies shall hold office until
the next annual meeting of Unitholders and until his or her successor is elected and qualifies.



Section 4. Successor Trustees. The right, title and interest of the Trustees in and to the
Trust property shall vest automatically in all persons who may hereafter become trustees upon their
due election and qualification without any further act, and thereupon they shall have the same
rights, privileges, powers, duties and immunities as though named as Trustees in this Declaration
of Trust. Appropriate written evidence of the election and qualification of successor Trustees
shall be filed with the records of the Trust and in such other offices or places as the Trustee may
deem necessary, appropriate or desirable. Upon the resignation, removal or death of a Trustee,
such Trustee (and upon his or her death, his or her estate) shall automatically cease to have any
right, title or interest in or to any of the Trust property, and the right, title and interest of
such Trustee in and to the Trust property shall vest automatically in the remaining Trustee or
Trustees without any further act.



Section 5. Meetings and Action Without a Meeting. The Trustees may act with or without a
meeting. Except as otherwise provided herein, any action of a majority of Trustees present at a
duly convened meeting of the Trustees shall be conclusive and binding as an action of the Trustees.
Action may be taken without a meeting in any manner and by any means permitted by Maryland law
only by unanimous consent of all of the Trustees in office and shall be evidenced by a written
certificate or instrument signed by all of the Trustees in office. Any action taken by the
Trustees in accordance with the provisions of this Section 5 and Article 5 of Annex A hereto shall
be conclusive and binding on the Trust, the Trustees and the Unitholders, as an action of all of
the Trustees, collectively, and of the Trust. Any deed, mortgage, evidence of indebtedness or
other instrument, agreement or document of any character, whether similar or dissimilar, executed
by one or more of the Trustees, when authorized at a meeting or by written authorization without a
meeting in accordance with the provisions of this Section 5, shall be valid and binding on the
Trustees, the Trust and the Unitholders.



Section 6. Authority. The Trustees may hold the legal title to all property belonging to
the Trust. The Trustees shall have absolute and exclusive control, management and disposition
thereof, and absolute and exclusive control over the management and conduct of the business affairs
of the Trust, free from any power or control on the part of the Unitholders, in the same manner as
if the Trustees were the absolute owners thereof, subject only to the express limitations in this
Declaration of Trust.



Section 7. Powers. The Trustees shall have all of the powers necessary, convenient or
appropriate to effectuate the purposes of the Trust and may take any action which they deem
necessary or desirable and proper to carry out such purposes. Any determination of the purposes of
the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration of Trust, the presumption shall be in favor of the grant of powers to the
Trustees. Without limiting the generality of the foregoing, the powers of the Trustees on behalf
of the Trust shall include those set forth in Section 5.1 of Annex A hereto, subject to the
limitations set forth in Annex A hereto.




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Section 8. Right to Own Units. A Trustee may acquire, hold and dispose of Units in the
Trust for its individual account and may exercise all rights of a Unitholder to the same extent and
in the same manner as if it were not a Trustee.



Section 9. Limitation of Liability. To the maximum extent that Maryland law in effect
from time to time permits limitation of the liability of trustees of a real estate investment
trust, no Trustee of the Trust shall be liable to the Trust or to any Unitholder for money damages,
except to the extent set forth in Section 5.8 or other Sections of Annex A hereto.



Section 10. Indemnification. The Trust shall indemnify each Trustee, to the fullest
extent permitted by Maryland law, as amended from time to time, subject to and in accordance with
the provisions of Section 5.7 of Annex A hereto.



Section 11. Persons Dealing with Trustees. No corporation, persons, transfer agent or
other party shall be required to examine or investigate the terms or conditions contained in this
Declaration of Trust or otherwise applicable to the Trust, and every such corporation, person,
transfer agent or other party may deal with trust property and assets as if the Trustees were the
sole and exclusive owners thereof free of all trusts; and no such corporation, person, transfer
agent or other party dealing with the Trustees or with the Trust or Trust property and assets shall
be required to see to the application of any money or property paid or delivered to any Trustee, or
nominee, agent or representative of the Trust or the Trustees. A certificate executed by or on
behalf of the Trustees or by any other duly authorized representative of the Trust delivered to any
person or party dealing with the Trust or Trust property and assets, or, if relating to real
property, recorded in the deed records for the county or district in which such real property lies,
certifying as to the identity and authority of the Trustees, agents or representatives of the Trust
for the time being, or as to any action of the Trustees or of the Trust, or of the Unitholders, or
as to any other fact affecting or relating to the Trust or this Declaration of Trust, may be
treated as conclusive evidence thereof by all persons dealing with the Trust. No provision of this
Declaration of Trust shall diminish or affect the obligation of the Trustees and every other
representative or agent of the Trust to deal fairly and act in good faith with respect to the Trust
and the Unitholders insofar as the relationship and accounting among the parties to the Trust is
concerned; but no third party dealing with the Trust or with any Trustee, agent or representative
of the Trust shall be obliged or required to inquire into, investigate or be responsible for the
discharge and performance of such obligation.



Section 12. Administrative Powers. The Trustees shall have the power to pay the expenses
of administration of the Trust, including all legal and other expenses in connection with the
preparation and carrying out of the acquisition of properties and the issuance of Units; and to
employ such officers, experts, counsel, managers, salesmen, agents, workmen, clerks and other
persons as they deem appropriate. The Trustees shall also enjoy the full benefit of the provisions
of Section 5.9 of Annex A hereto.




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Section 13. Election of Officers. The Trustees shall annually elect a President and a
Secretary of the Trust. The Trustees may also annually elect one or more Vice Presidents, a
Treasurer, Assistant Secretaries, Assistant Treasurers and such other officers as the Trustees
shall deem proper. Except as required by law, the officers of the Trust need not be Trustees. All
officers and agents of the Trust shall have such authority and perform such duties in the
management of the Trust as may be provided in the Bylaws or as may be determined by the Trustees
not inconsistent with the Bylaws. Any officer or agent elected or appointed by the Trustees may be
removed by the Trustees whenever in its judgment the best interest of the Trust will be served
thereby, but such removal shall be without prejudice to the contract rights, if any, of the person
so removed. Election or appointment of any officer or agent shall not of itself create contract
rights. The Trustees shall fix the compensation of all officers.



Section 14. Committees and Delegation of Powers and Duties. The Trustees may, in their
discretion, by resolution passed by a majority of the Trustees, designate from among the Trustees
one or more committees which shall consist of one or more Trustees. The Trustees may designate one
or more Trustees as alternate members of any such committee, who may replace any absent or
disqualified member at any meeting of the committee. Such committees shall have and may exercise
such powers as shall be conferred or authorized by the resolution appointing them (including, but
not limited to, the determination of the type and amount of consideration at which Units are to be
issued). A majority of any such committee may determine its action and fix the time and place of
its meetings, unless the Trustees shall otherwise provide. The Trustees, by resolution passed by a
majority of the Trustees, may at any time change the membership of any committee, fill vacancies on
it or dissolve it. The Bylaws, or a majority of the Trustees, may authorize any one or more of the
Trustees, or any one or more of the officers or employees or agents of the Trust, on behalf of the
Trust, to exercise and perform any and all powers granted to the Trustees, and to discharge any and
all duties imposed on the Trustees, and to do any acts and to execute any instruments deemed by
such person or persons to be necessary or appropriate to exercise such power or to discharge such
duties, and to exercise his or her own judgment in so doing.




ARTICLE 5

Termination and Duration



Section 1. Termination. The Trust may be terminated only in accordance with the
provisions of Article 11 of Annex A hereto, subject to the provisions of any class or series of
Units at the time outstanding. Upon termination of the Trust and distribution to the Unitholders
as provided in Article 11 of Annex A hereto, a majority of the Trustees shall execute and place
among the records of the Trust an instrument in writing setting forth the fact of such termination,
and the Trustees shall thereupon be discharged from all further liabilities and duties hereunder,
and the right, title and interest of all Unitholders shall cease and be canceled and discharged.



Section 2. Merger, Consolidation or Sale. The Trust shall have the power to (i) merge
with or into another entity, or (ii) sell or otherwise dispose of all or substantially all of the
assets of the Trust; provided that such action shall have been approved by the Trustees and by the
Unitholders in accordance with the provisions of Annex A hereto.




11









 







Section 3. Duration. Subject to possible earlier termination in accordance with the
provisions of this Article V and Article 11 of Annex A hereto, or as required by law, the duration
of the Trust shall be perpetual.




ARTICLE 6

Amendments



Section 1. Amendments. Except as otherwise provided in Section 1(b) of Article 2, Section
2 of this Article 6, Article 12 of Annex A hereto and Section 10 of Exhibit D to Annex A hereto,
this Declaration of Trust may be amended only after a majority of the Trustees has declared such
amendment advisable and such amendment has been approved at a meeting by the affirmative vote or
written consent of the holders of at least a majority of the Units then outstanding and entitled to
vote thereon.



Section 2. Amendment by Trustees. The Trustees by a two-thirds vote may amend, without
the approval of the Unitholders, provisions of this Declaration of Trust from time to time to
enable the Trust to qualify as a REIT for so long as it determines to so qualify.



Section 3. Requirements of Maryland Law. Except as provided in Article 2, Section 1(b) or
in this Article 6 or in Article 12 of Annex A hereto, this Declaration of Trust may only be amended
in accordance with Section 8-501 of the Act.




ARTICLE 7

Miscellaneous



Section 1. Construction. This Declaration of Trust, including Annex A hereto in its
entirety, shall be construed in such a manner as to give effect to the intent and purposes of the
Trust and this Declaration of Trust, including, without limitation, the intent for the Trust to be
treated as a “disregarded entity” or a “partnership” for federal income tax purposes. Subject to
the foregoing, if any provisions
hereof appear to be in conflict, more specific provisions shall control over general provisions.
This Declaration of Trust, including Annex A hereto in its entirety, shall govern all of the
relationships among the Trustees and the Unitholders of the Trust; and each provision hereof shall
be effective for all purposes and to all persons dealing with the Trust to the fullest extent
possible under applicable law in each jurisdiction in which the Trust shall engage in business. In
defining or interpreting the powers and duties of the Trust and the Trustees and officers of the
Trust, reference may be made, to the extent appropriate and not inconsistent with the Code, the Act
and this Declaration of Trust, to Title 1 through Title 3 of the Corporations and Associations
Article of the Annotated Code of Maryland.



Section 2. Headings for Reference Only. Headings preceding the text of articles, sections
and subsections hereof have been inserted solely for convenience and reference, and shall not be
construed to effect the meaning, construction or effect of this Declaration of Trust.



Section 3. Applicable Law. This Declaration of Trust has been executed with reference to,
and its construction and interpretation shall be governed by, Maryland law, and the rights of all




12









 







parties and the construction and effect of every provision hereof shall be subject to and construed
according to Maryland law.



Section 4. Certifications. Any certificates signed by a person who, according to the
records of the State Department of Assessments and Taxation of Maryland, appears to be a Trustee
hereunder, shall be conclusive evidence as to the matters so certified in favor of any person
dealing with the Trust or the Trustees or any one or more of them, and the successors or assigns of
such persons, which certificate may certify to any matter relating to the affairs of the Trust,
including, but not limited to, any of the following: a vacancy among the Trustees; the number and
identity of Trustees; this Declaration of Trust and any amendments or supplements thereto, or any
restated declaration of trust and any amendments or supplements thereto, or that there are no
amendments to this Declaration of Trust or any restated declaration of trust; a copy of the Bylaws
or any amendment thereto; the due authorization of the execution of any instrument or writing; the
vote at any meeting of the Trustees or a committee thereof or Unitholders; the fact that the number
of Trustees present at any meeting or executing any written instrument satisfied the requirements
of this Declaration of Trust; a copy of any Bylaw adopted by the Unitholders or the identity of any
officer elected by the Trustees; or the existence or nonexistence of any fact or facts which in any
manner relate to the affairs of the Trust. If this Declaration of Trust or any restated
declaration of trust is filed or recorded in any recording office other than the State Department
of Assessments and Taxation of Maryland, any one dealing with real estate so located that
instruments affecting the same should be filed or recorded in such recording office may rely
conclusively on any certificate of the kind described above which is signed by a person who
according to the records of such recording office appears to be a Trustee hereunder. In addition,
the Secretary or any Assistant Secretary of the Trust or any other officer of the Trust designated
by the Bylaws or by action of the Trustees may sign any certificate of the kind described in this
Section 4, and such certificate shall be conclusive evidence as to the matters so certified in
favor of any person dealing with the Trust, and the successors and assigns of such person.



Section 5. Severability. If any provision of this Declaration of Trust, including any
provision of Annex A hereto, shall be invalid or unenforceable, such invalidity or unenforceability
shall attach only to such provision and shall not in any manner affect or render invalid or
unenforceable any other provision of this Declaration of Trust and this Declaration of Trust shall
be carried out, if possible, as if such invalid or unenforceable provision were not contained
herein.



Section 6. Bylaws. The Trustees shall have the exclusive power to adopt, alter or repeal
any provisions of the Bylaws.



Section 7. Filing and Recording. This Declaration of Trust, including Annex A attached
hereto in its entirety, shall be filed in the manner prescribed for real estate investment trusts
under Maryland law and may also be filed or recorded in such other places as the Trustees deem
appropriate, but failure to file for record this Declaration of Trust, including Annex A hereto in
its entirety, or any amendment hereto, in any office other than in the State Department of
Assessments and Taxation of Maryland shall not affect or impair the validity or effectiveness of
this Declaration of Trust, Annex A hereto, or any amendment or supplement hereto.





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ARTICLE 8

Limitation of Liability and Indemnification of Officers and Employees



Section 1. Limitation of Liability of Officers and Employees. To the maximum extent that
Maryland law in effect from time to time permits limitation of the liability of officers, employees
or agents of a real estate investment trust, no officer, employee or agent of the Trust shall be
liable to the Trust or to any Unitholder for money damages.



Section 2. Indemnification of Officers and Employees. The Trust shall indemnify each
officer, employee and agent, to the fullest extent permitted by Maryland law, as amended from time
to time, subject to and in accordance with the provisions of Section 5.7 of Annex A hereto.



Section 3. Insurance. Notwithstanding any other provisions of this Declaration of Trust,
the Trust, for purposes of providing indemnification for its Trustees, officers, employees and
agents, shall have the authority, without specific Unitholder approval, to enter into insurance or
other arrangements, with persons or entities which are regularly engaged in the business of
providing insurance coverage, to indemnify all Trustees, officers, employees and agents of the
Trust against any and all liabilities and expenses incurred by them by reason of their being
Trustees, officers, employees or agents of the Trust, whether or not the Trust would otherwise have
the power under this Declaration of Trust or under Maryland law to indemnify such persons against
such liability. Without limiting the power of the Trust to procure or maintain any kind of
insurance or other arrangement, the Trust may, for the benefit of persons indemnified by it, (i)
create a trust fund, (ii) establish any form of self-insurance, (iii) secure its indemnity
obligation by grant of any security interest or other lien on the assets of the Trust or (iv)
establish a letter of credit, guaranty or surety arrangement. Any such insurance or other
arrangement may be procured, maintained or established within the Trust or with any insurer or
other person deemed
appropriate by the trustees regardless of whether all or part of the stock or other securities
thereof are owned in whole or in part by the Trust. In the absence of fraud, the judgment of the
Trustees as to the terms and conditions of insurance or other arrangement and the identity of the
insurer or other arrangement shall not be subject to voidability, nor subject the Trustees
approving such insurance or other arrangement to liability, on any ground, regardless of whether
Trustees participating in and approving such insurance or other arrangement shall be beneficiaries
thereof.




* * * * *




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          IN WITNESS WHEREOF, the Trust has caused these Articles of Restatement to be signed in its
name and on its behalf as of the date first written above, by its undersigned Executive Vice
President and attested by its Assistant Secretary. The undersigned Executive Vice President
acknowledges these Articles of Restatement to be the trust act of the Trust and as to all matters
and facts required to be verified under oath that to the best of her knowledge, information and
belief, the matters and facts set forth herein are true in all material respects and that this
statement is made under the penalties for perjury.



	 	 	 	 	 
	 	ARCHSTONE-SMITH OPERATING TRUST

 	 
	 	By:  	 /s/
Caroline Brower	 
	 	 	Name:  	Caroline Brower 	 
	 	 	Title:  	Executive Vice President 	 
	 



ATTEST:




/s/
Thomas S. Reif                                                           

Thomas S. Reif,

Assistant Secretary





15









 








ANNEX A





     This Annex A constitutes not only an integral part of the Declaration of Trust but
also a separate agreement among all of the holders of Units (as defined herein) of the Trust, each
of whom is identified on the books and records of the Trust. Each holder of Units on the Effective
Date (as defined herein) shall become a party to this agreement without further action required on
the part of any such holder.



     Effective as of the day prior to the Effective Date, the Trust elected pursuant to Treasury
Regulation § 301.7701-3(c) to be treated for federal income tax purposes as a disregarded entity
not separate from its owner (and not as an “association taxable as a corporation”). On the
Effective Date, this election has caused the Trust to become treated as a “partnership” for federal
income tax purposes. The provisions in this Annex A relating to Capital Accounts (as
defined herein) and allocations of Net Income and Net Loss (each as defined herein) (and items of
income, gain, loss, and deduction) for federal income tax purposes are intended to be consistent
with the provisions of the Code (as defined herein) and the Treasury Regulations (as defined
herein) applicable to entities that are characterized as “partnerships” for federal income tax
purposes.



ARTICLE 1




DEFINED TERMS




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




          “Act” means Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland, as it may be amended from time to time, and any successor to such statute.




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




          “Adjusted Capital Account Deficit” means, with respect to any Unitholder, the deficit
balance, if any, in such Unitholder’s Adjusted Capital Account as of the end of the relevant Fiscal
Year.




          “Adjusted Property” means any property the Carrying Value of which has been adjusted
pursuant to Exhibit A hereof.




 









 








          “Affiliate” means, with respect to any Person, (i) any Person directly or indirectly
controlling, controlled by or under common control with such Person, (ii) any Person owning or
controlling ten percent (10%) or more of the outstanding voting interests of such Person, (iii) any
Person
of which such Person owns or controls ten Percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or of any Person referred to
in clauses (i), (ii), and (iii) above. For the purposes of this definition, “control” when used
with respect to any Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.




          “Aggregate Protected Amount” means the aggregate balances of the Protected Amounts, if
any, of all Protected Unitholders, as determined on the date in question.




          “Agreed Value” means (i) in the case of any Contributed Property, the 704(c) Value of
such property as of the time of its contribution to the Trust, reduced by any liabilities either
assumed by the Trust upon such contribution or to which such property is subject when contributed,
as the same is reflected in the books and records of the Trust; and (ii) in the case of any
property distributed to a Unitholder by the Trust, the Trust’s Carrying Value of such property at
the time such property is distributed, reduced by any indebtedness either assumed by such Trust
upon such distribution or to which such property is subject at the time of distribution as
determined under Section 752 of the Code and the Regulations thereunder.




          “Agreement” means this Annex A to the Declaration of Trust.




          “Available Cash” means, with respect to any period for which such calculation is being
made:




          (a) all cash revenues and funds received by the Trust from whatever source (excluding the
proceeds of any Capital Contribution to the extent determined by the Trustee) plus the amount of
any reduction (including, without limitation, a reduction resulting because the Trustee determines
such amounts are no longer necessary) in reserves of the Trust, which reserves are referred to in
clause (b)(iv) below;




          (b) less the sum of the following (except to the extent made with the proceeds of any Capital
Contribution):




               (i) all interest, principal and other debt payments made during such period by the Trust,



               (ii) all cash expenditures (including capital expenditures) made by the Trust during such
period,



               (iii) investments in any entity (including loans made thereto) to the extent that such
investments are permitted under this Agreement and are not otherwise described in clauses (b)(i) or
(ii), and



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               (iv) the amount of any increase in reserves established during such period which the Trustee
determines is necessary or appropriate in its sole and absolute discretion.



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




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




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




          “Capital Account” means the Capital Account maintained for a Unitholder pursuant to
Exhibit A hereof.




          “Capital Contribution” means, with respect to any Unitholder, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Unitholder contributes or is
deemed to contribute to the Trust pursuant to Section 2.1 or 2.2 hereof.




          “Carrying Value” means (i) with respect to a Contributed Property or Adjusted
Property, the 704(c) Value of such property, reduced (but not below zero) by all Depreciation with
respect to such Contributed Property or Adjusted Property, as the case may be, charged to the
Unitholders’ Capital Accounts following the contribution of or adjustment with respect to such
Property, and (ii) with respect to any other Trust property, the adjusted basis of such property
for federal income tax purposes, all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with Exhibit A hereof, and to
reflect changes, additions (including capital improvements thereto) or other adjustments to the
Carrying Value for dispositions and acquisitions of Trust properties, as deemed appropriate by the
Trustee.




          “Cash Amount” means an amount of cash per Unit equal to the Value on the Valuation
Date of the Shares Amount.




          “Class A Cash Portion” has the meaning set forth in Section 3.1.C.




          “Class A Unit” means any Unit that is not specifically designated by the Trustee as
being of another specified class of Units.




          “Class A Unitholders” means the Unitholders who are holders of Class A Units.




3









 








          “Class A-1 Unit” means any Class A Unit that is not a Class A-2 Unit.




          “Class A-2 Unit” means any Class A Unit held by any Trustee Related Party.




          “Class B Cash Portion” has the meaning set forth in Section 3.1.C.




          “Class B Unit” means a Unit with such designations, preferences, rights, powers and
duties as are described in or pursuant to Section 2.2.C.




          “Class B Unitholders” means the Unitholders who are holders of Class B Units.




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




          “Common Unit” means a Unit that is not a Preferred Unit. The Class A-1 Units, Class
A-2 Units and Class B Units are Common Units.




          “Common Unit Available Cash” has the meaning set forth in Section 3.1.C.




          “Contributed Property” means each property or other asset contributed to the Trust, in
such form as may be permitted by the Act, but excluding cash contributed or deemed contributed to
the Trust. Once the Carrying Value of a Contributed Property is adjusted pursuant to Exhibit
A hereof, such property shall no longer constitute a Contributed Property for purposes of
Exhibit A hereof, but shall be deemed an Adjusted Property for such purposes.




          “Conversion Factor” means 1.0; provided that, if the Parent REIT (i) declares
or pays a dividend on its outstanding Shares in Shares or makes a distribution to all holders of
its outstanding Shares in Shares, (ii) subdivides its outstanding Shares or (iii) combines its
outstanding Shares into a smaller number of Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of
Shares issued and outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which shall be the actual number
of Shares (determined without the above assumption) issued and outstanding on the record date for
such dividend, distribution, subdivision or combination; and provided further that
if an entity shall cease to be the Parent REIT (the “Predecessor Entity”) and another entity shall
become the Parent REIT (the “Successor Entity”), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which is the Value of one Share
of the Predecessor Entity, determined as of the date when the Successor Entity becomes the Parent
REIT, and the denominator of which is the Value of one Share of the Successor Entity, determined as
of that same date. (For purposes of the second proviso in the preceding sentence, if any
shareholders of the Predecessor Entity will receive consideration in connection with the
transaction in which the Successor Entity becomes the Parent REIT, the numerator in the fraction
described above for determining the adjustment to the Conversion Factor (that is, the Value of one
Share of the Predecessor Entity) shall be the sum of the greatest amount of cash

4









 








and the fair
market value (as determined in good
faith by the Trustee) of any securities and other consideration that the holder of one Share
in the Predecessor Entity could have received in such transaction (determined without regard to any
provisions governing fractional shares).) Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of the event retroactive to the record date, if any,
for the event giving rise thereto, it being intended that (x) adjustments to the Conversion Factor
are to be made to avoid unintended dilution or anti-dilution as a result of transactions in which
Shares are issued, redeemed or exchanged without a corresponding issuance, redemption or exchange
of Units and (y) if a Specified Redemption Date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion Factor applicable to
such redemption shall be adjusted to take into account such event.




          “Convertible Funding Debt” has the meaning set forth in Section 5.5.E.




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




          “Declaration of Trust” means the Amended and Restated Declaration of Trust of the
Trust, of which this Annex A is part, filed in the State of Maryland on October 29, 2001, as
amended or restated from time to time.




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




          “Distribution Period” means any calendar quarter or shorter period with respect to
which a distribution of Available Cash is to be made to the Unitholders by the Trust.




          “Effective Date” means the date of closing of the merger of Charles E. Smith
Residential Realty L.P. with and into the Trust pursuant to the Merger Agreement.

5









 









          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.




          “ERISA Plan Investor” means (i) a Plan, (ii) a trust which was established pursuant to
a Plan, or a nominee for such trust or Plan, or (iii) an entity whose underlying assets include
assets of a Plan by reason of such Plan’s investment in such entity.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          “Exercise Percentage” has the meaning set forth in Section 2.3.




          “Fiscal Year” means the fiscal year of the Trust, which shall be the calendar year.




          “Funding Debt” means the incurrence of any Debt by or on behalf of the Parent REIT for
the purpose of providing funds to the Trust.




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




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





6









 








          “Indemnitee” means (i) any Person made a party to a proceeding by reason of its status
as (A) the Trustee and (B) a director or officer of the Trust or the Trustee and (ii) such other
Persons
(including, without limitation, other Unitholders and Affiliates of the Trustee, a Unitholder
or the Trust) as the Trustee may designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.




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




          “Liquidating Event” has the meaning set forth in Section 11.1.




          “Liquidator” has the meaning set forth in Section 11.2.A.




          “Merger Agreement” means that certain amended and restated agreement and plan of
merger among the Trust, Archstone-Smith Trust (formerly New Garden Residential Trust), Charles E.
Smith Residential Realty, Inc. and Charles E. Smith Residential Realty L.P., dated as of May 3,
2001.




          “Net Income” means, for any taxable period, the excess, if any, of the Trust’s items
of income and gain for such taxable period over the Trust’s items of loss and deduction for such
taxable period. The items included in the calculation of Net Income shall be determined in
accordance with federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit A. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special allocation rules in
Exhibit B, Net Income or the resulting Net Loss, whichever the case may be, shall be
recomputed without regard to such item.




          “Net Loss” means, for any taxable period, the excess, if any, of the Trust’s items of
loss and deduction for such taxable period over the Trust’s items of income and gain for such
taxable period. The items included in the calculation of Net Loss shall be determined in
accordance with federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit A. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special allocation rules in
Exhibit B, Net Loss or the resulting Net Income, whichever the case may be, shall be
recomputed without regard to such item.




          “New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase Shares, excluding grants
under any Share Option Plan, or (ii) any Debt issued by the Parent REIT that provides any of the
rights described in clause (i).




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





7









 








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




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




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




          “Parent REIT” means the Trustee; provided, however, that if (i) the
common shares of beneficial interest (or other comparable equity interests) of the Trustee are at
any time not Publicly Traded and (ii) the common shares of beneficial interest (or other comparable
equity interests) of an entity that owns, directly or indirectly, more than fifty percent (50%) of
the common shares of beneficial interest (or other comparable equity interests) of the Trustee are
Publicly Traded, the term “Parent REIT” shall refer to such entity whose common shares of
beneficial interest (or other comparable equity securities) are Publicly Traded.




          “Percentage Interest” means, as to a Unitholder holding Units of a class of Trust
Interests, such Unitholder’s interest in such class, determined by dividing the Units of such class
owned by such Unitholder by the total number of Units of such class then outstanding as specified
in the Trust’s books and records, multiplied by the aggregate Percentage Interest allocable to such
class of Trust Interests.




          “Person” means a natural person, partnership (whether general or limited), trust,
including a trust qualified under Sections 401(a) or 501(c) 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, estate, association, private foundation within the meaning of 509(a) of the Code,
corporation, limited liability company, unincorporated organization, joint stock company,
custodian, nominee or any other individual or entity in its own or any representative capacity.




          “Plan” means (i) an employee benefit plan subject to Title I of ERISA or (ii) a plan
as defined in Section 4975(e) of the Code.




          “Predecessor Entity” has the meaning set forth in the definition of “Conversion
Factor” herein.




          “Preferred Unit” means any Unit issued from time to time pursuant to Section 2.2
hereof that is specifically designated by the Trustee at the time of its issuance as a Preferred
Unit. Each class or series of Preferred Units shall have such designations, preferences, and
relative, participating, optional, or other special rights, powers, and duties, including rights,
powers, and duties senior to the Common Units, all as determined by the Trustee, subject to
compliance with the requirements of Section 2.2 hereof.




          “Protected Amount” means the amount specified on Exhibit C with respect to any
Protected Unitholder, as such Exhibit may be amended from time to time.





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          “Protected Unitholder” means a Unitholder designated as a Protected Unitholder on
Exhibit C, as such exhibit may be amended from time to time, which Protected Unitholder is
obligated to make certain contributions, not in excess of such Protected Unitholder’s Protected
Amount, to the
Trust with respect to any deficit balance in such Unitholder’s Capital Account upon the
occurrence of certain events. A Protected Unitholder who is obligated to make any such
contribution only upon liquidation of the Trust shall be designated on Exhibit C as a “Part
I Protected Unitholder” and a Protected Unitholder who is obligated to make any such contribution
to the Trust either upon liquidation of the Trust or upon liquidation of such Protected
Unitholder’s Trust Interest shall be designated on Exhibit C as a “Part II Protected
Unitholder.”




          “Publicly Traded” means listed or admitted to trading on the New York Stock Exchange,
the American Stock Exchange or another national securities exchange or designated for quotation on
the Nasdaq National Market, or any successor to any of the foregoing.




          “Qualified Assets” means any of the following assets: (i) Trust Interests, rights,
options, warrants or convertible or exchangeable securities of the Trust; (ii) Debt issued by the
Trust or any Subsidiary thereof in connection with the incurrence of Funding Debt; (iii) equity
interests in Qualified REIT Subsidiaries and limited liability companies whose assets consist
solely of Qualified Assets; (iv) up to one percent (1%) equity interest in any partnership or
limited liability company at least ninety-nine percent (99%) of the equity of which is owned,
directly or indirectly, by the Trust; (iv) equity interests in any Person held by Archstone
Communities Trust on the date hereof that are de minimis in relation to the net assets of the Trust
and its Subsidiaries and transfer of which would require the consent of third parties that has not
been obtained; (vi) cash held for payment of administrative expenses or pending distribution to
securityholders of the Trustee or any wholly owned Subsidiary thereof or pending contribution to
the Trust; (vii) the proceeds of any relinquished property held in a qualified escrow account
pursuant to Section 1031 of the Code, as of the Effective Date, provided Parent REIT is obligated
to contribute the replacement property and any remaining proceeds therein upon acquisition or the
proceeds or the qualified escrow account upon termination of the account to the Trust; and (viii)
any other tangible and intangible assets that, taken as a whole, are de minimis in relation to the
net assets of the Trust and its Subsidiaries.




          “Qualified REIT Subsidiary” means any Subsidiary of the Trustee that is a “qualified
REIT subsidiary” within the meaning of Section 856(i) of the Code.




          “Recapture Income” means any gain recognized by the Trust (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Trust, which gain is characterized either as ordinary income or as
“unrecaptured Section 1250 gain” (as defined in Section 1(h)(7) of the Code) because it represents
the recapture of deductions previously taken with respect to such property or asset.




          “Recourse Liabilities” means the amount of liabilities owed by the Trust (other than
Nonrecourse Liabilities and liabilities to which Unitholder Nonrecourse Deductions are attributable
in accordance with Section 1.704-(2)(i) of the Regulations).





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          “Redeeming Unitholder” has the meaning set forth in Section 6.6.A hereof.




          “Redemption Amount” means either the Cash Amount or the Shares Amount, as determined
by the Trustee, in its sole and absolute discretion subject to the provisions of Section 6.6;
provided that if the Shares are not Publicly Traded at the time a Redeeming Unitholder
exercises its Redemption Right, the Redemption Amount shall be paid only in the form of the Cash
Amount unless the Redeeming Unitholder, in its sole and absolute discretion, consents to payment of
the Redemption Amount in the form of the Shares Amount. A Redeeming Unitholder shall have no
right, without the Trustee’s consent, in its sole and absolute discretion, to receive the
Redemption Amount in the form of the Shares Amount.




          “Redemption Right” shall have the meaning set forth in 6.6.A hereof.




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




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




          “REIT Requirements” has the meaning set forth in Section 3.1.A.




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




          “Safe Harbors” has the meaning set forth in Section 9.6.F.




          “Securities Act” means the Securities Act of 1933, as amended.




          “Series I Preferred Units” means the series of Units designated as the Series I
Preferred Units with the designations, preferences and other rights set forth in Exhibit F
hereto.




          “Series M Preferred Units” means the series of Units designated as the Series M
Preferred Units with the designations, preferences and other rights set forth in Exhibit G
hereto.




          “Series N Preferred Units” means the series of Units designated as the Series N-1
Convertible Redeemable Preferred Units and the Series N-2 Convertible Redeemable Preferred Units
with the designations, preferences and other rights set forth in Exhibit H hereto.




          “704(c) Value” of any Contributed Property means the value of such property at the
time of contribution as determined by the Trustee using such reasonable method of valuation as it
may adopt, provided, however, subject to Exhibit A hereof, the Trustee
shall, in its sole and absolute discretion, use such method as it deems reasonable and appropriate
to allocate the aggregate of the 704(c) Values of Contributed Properties in a single or integrated
transaction among the separate properties on a basis proportional to their respective fair market
values.




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          “Share” means a share of beneficial interest (or other comparable equity interest) of
the Parent REIT. Shares may be issued in one or more classes or series in accordance with the
terms of the Declaration of Trust of the Trust (or, if the Trustee is not the Parent REIT, the
organizational documents of the Parent REIT). If there is more than one class or series of Shares,
the term “Shares” shall, as the context requires, be deemed to refer to the class or series of
Shares that corresponds to the class or series of Trust Interests for which the reference to Shares
is made. When used with reference to Class A Units or Class B Units, the term “Shares” refers to
common shares of beneficial interest (or other comparable equity interest) of the Parent REIT.
References in this Agreement to a “class” of Shares shall also mean a “series” of Shares unless the
context requires otherwise.




          “Shares Amount” means a number of Shares equal to the product of the number of Units
offered for redemption by a Redeeming Unitholder times the Conversion Factor; provided
that, if the Parent REIT issues to all holders of Shares rights, options, warrants or
convertible or exchangeable securities entitling such holders to subscribe for or purchase Shares
or any other securities or property (collectively, the “rights”), which rights shall not have
expired by their terms, then the Shares Amount shall also include such rights that a holder of that
number of Shares would be entitled to receive.




          “Share Option Plan” means any equity incentive plan of the Trustee, the Parent REIT,
the Trust and/or any Affiliate of the Trust.




          “Specified Redemption Date” means the tenth Business Day after receipt by the Trustee
of a Notice of Redemption; provided that, if the Shares are not Publicly Traded,
the Specified Redemption Date means the thirtieth Business Day after receipt by the Trustee of a
Notice of Redemption.




          “Subsidiary” means, with respect to any Person, any corporation, limited liability
company, trust, partnership or joint venture, or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding equity interests is owned, directly
or indirectly, by such Person.




          “Successor Entity” has the meaning set forth in the definition of “Conversion Factor”
herein.




          “Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Trust for cash or a related series of transactions that,
taken together, result in the sale or other disposition of all or substantially all of the assets
of the Trust for cash.




          “Termination Transaction” has the meaning set forth in Section 9.2.B.




          “Trust” means the Maryland real estate investment trust formed under the Act and
continued pursuant to this Agreement and any successor thereto.




          “Trust Interest” means an interest in the Trust and includes any and all benefits to
which the holder of such a Trust Interest may be entitled as provided in this Agreement, together




11









 







with all
obligations of such Person to comply with the terms and provisions of this Agreement. A Trust
Interest may be expressed as a number of Units.




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




          “Trust Record Date” means the record date established by the Trustee either (i) for
the distribution of Available Cash pursuant to Section 3.1 hereof, which record date shall be the
same as the record date established by the Parent REIT for a distribution to holders of the
corresponding class (if any) of Shares of some or all of its portion of such distribution, or (ii)
if applicable, for determining the Unitholders entitled to vote on or consent to any proposed
action for which the consent or approval of the Unitholders is sought.




          “Trustee” means Archstone-Smith Trust or its successors as trustee(s) of the Trust.




          “Trustee Declaration of Trust” means the Amended and Restated Declaration of Trust of
the Trustee filed in the State of Maryland on October 26, 2001, as amended or restated from time to
time.




          “Trustee Payment” has the meaning set forth in Section 13.13.




          “Trustee Related Party” means (i) the Trustee or the Parent REIT, (ii) any Person of
which the Trustee or the Parent REIT owns or controls more than fifty percent (50%) of the voting
interests, (iii) any Person directly or indirectly owning or controlling more than fifty percent
(50%) of the outstanding voting interests of the Trustee or the Parent REIT, and (iv) any Person of
which a Person described in clause (iii) directly or indirectly owns or controls more than fifty
percent (50%) of the voting interest.




          “Unit” means a “Share” as defined in Section 8-101 of the Act, a transferable unit of
beneficial interest in the Trust issued pursuant to Sections 2.1 and 2.2, and includes Class A-1
Units, Class A-2 Units, Class B Units, Series I Preferred Units, Series M Preferred Units and
Series N Preferred Units and any other classes or series of Units established after the date
hereof. The number of Units outstanding and the Percentage Interests in the Trust represented by
such Units are set forth in the Trust’s books and records. The ownership of each class of Units
may be evidenced by a certificate in a form approved by the Trustee.




          “Unitholder” means any Person named as a Unitholder in the Trust’s books and records,
in such Person’s capacity as a Unitholder of the Trust.




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




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          “Unitholder Nonrecourse Debt” has the meaning of “Partner Nonrecourse Debt” set forth
Regulations Section 1.704-2(b)(4).




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




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




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




          “Valuation Date” means the date of receipt by the Trustee of a Notice of Redemption
or, if such date is not a Business Day, the first Business Day thereafter.




          “Value” means, with respect to any outstanding Shares of the Parent REIT that are
Publicly Traded, the average of the daily market price for the ten consecutive trading days
immediately preceding the date with respect to which value must be determined. The market price
for each such trading day shall be the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such day. If the
outstanding Shares of the Parent REIT are Publicly Traded and the Shares Amount includes rights
that a holder of Shares would be entitled to receive, then the Value of such rights shall be
determined by the Trustee acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. If the Shares of the Parent
REIT are not Publicly Traded, the Value of the Shares Amount per Unit offered for redemption means
the amount that a holder of one Unit would receive if each of the assets of the Trust were to be
sold for its fair market value on the last day of the preceding calendar year, the Trust were to
pay all of its outstanding liabilities on such last day of the preceding calendar year, and the
remaining proceeds were to be distributed to the Unitholders in accordance with the terms of this
Agreement. Such Value shall be determined by the Trustee, acting in good faith and based upon a
commercially reasonable estimate of the amount that would be realized by the Trust if each asset of
the Trust (and each asset of each partnership, limited liability company, trust, joint venture or
other entity in which the Trust owns a direct or indirect interest) were sold to an unrelated
purchaser in an arms’ length transaction where neither the purchaser nor the seller were under
economic compulsion to enter into the transaction (without regard to any discount in value as a
result of the Trust’s minority interest in any property or any illiquidity of the Trust’s interest
in any property).




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ARTICLE 2




CAPITAL CONTRIBUTIONS




     Section 2.1 Capital Contributions of the Unitholders



          A. Contribution and the Effective Date. As of the Effective Date, the Unitholders
have made the Capital Contributions as set forth in the Trust’s books and records. The Unitholders
own Units in the amounts set forth in the Trust’s books and records and have Percentage Interests
in the Trust as set forth in the Trust’s books and records, which number of Units and Percentage
Interest shall be adjusted in such books and records from time to time by the Trustee to the extent
necessary to reflect accurately and in accordance with the terms of this Agreement redemptions,
Capital Contributions, the issuance of additional Units or similar events having an effect on a
Unitholder’s Percentage Interest occurring after the date hereof in accordance with the terms of
this Agreement.




          B. Class A-2 Units Interest of the Trustee Related Parties in the Trust. All Class A
Units held by any of the Trustee Related Parties shall be denominated as Class A-2 Units. In the
event that any Trustee Related Party shall at any time acquire any Class A-1 Units (whether
pursuant to Section 8.6 otherwise), such Class A-1 Units shall automatically without the
requirement for any action by the Trust or the Trustee, be converted into a corresponding number of
Class A-2 Units upon consummation of such transaction. Upon any bona fide Transfer (other than a
pledge) of Class A-2 Units by any Trustee Related Party to a Person that is not a Trustee Related
Party, such Class A-2 Units shall automatically, without the requirement for any action by the
Trust or the Trustee, be converted into a corresponding number of Class A-1 Units upon consummation
of such transaction.




          C. Additional Capital Contributions. Except as provided in Sections 2.2, 5.5, 8.5,
and 11.3 hereof, the Unitholders shall have no obligation to make any additional Capital
Contributions or provide any additional funding to the Trust (whether in the form of loans,
repayments of loans or otherwise). Except as otherwise set forth in Section 11.3 hereof, no
Unitholder shall have any obligation to restore any deficit that may exist in its Capital Account,
either upon a liquidation of the Trust or otherwise.




     Section 2.2 Issuances of Additional Trust Interests



          A. General. The Trustee shall not, on behalf of the Trust, issue Units or other Trust
Interests to the Parent REIT unless either (a) the Trust Interests are issued in connection with
the grant, award or issuance of Shares or other equity interests in the Parent REIT having
designations, preferences and other rights such that the economic interests attributable to such
Shares or other equity interests are substantially similar to the designations, preferences and
other rights (except voting rights) of the Trust Interests issued to the Trustee in accordance with
this Section 2.2.A or (b) the additional Trust Interests are issued to all Unitholders holding
Trust Interests in the same class in proportion to their respective Percentage Interests in such
class (considering the Class A-1 Units, the Class A-2 Units and the Class B Units as one class for
such purposes). References in this Agreement to a “class” of
Trust Interests or Units shall include a “series” of Trust Interests or Units, unless the
context requires otherwise.





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          B. Restrictions on Issuances of Shares by Trustee. After the Effective Date, the
Trustee shall not grant, award, or issue any additional Shares (other than Shares issued pursuant
to Section 6.6), or rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase Shares (collectively “New Securities”), other than
to all holders of Shares unless (i) the Trustee shall cause the Trust to issue to the Trustee Trust
Interests or rights, options, warrants or convertible or exchangeable securities of the Trust
having designations, preferences and other rights, all such that the economic interests are
substantially the same as those of the New Securities, and (ii) the Trustee contributes the net
proceeds from the grant, award or issuance of such New Securities and from the exercise of rights
contained in such New Securities to the Trust. Without limiting the foregoing, the Trustee is
expressly authorized to issue New Securities for less than fair market value, and to cause the
Trust to issue to the Trustee corresponding Trust Interests, so long as (x) the Trustee concludes
in good faith that such issuance is in the interests of the Trustee and the Trust (for example, and
not by way of limitation, the issuance of Shares and corresponding Units pursuant to an employee
share purchase plan providing for employee purchases of Shares at a discount from fair market value
or employee share options that have an exercise price that is less than the fair market value of
the Shares, either at the time of issuance or at the time of exercise), and (y) the Trustee
contributes all proceeds from such issuance and exercise to the Trust.




          C. Class A-1 and Class B Units. Except as otherwise provided below and in Section
3.1.C, each Class B Unit shall have the same designations, rights, preferences, powers and duties
as each Class A-1 Unit:





	 	(1)	 	The amount of Available Cash distributable with respect to
Class B Units shall be determined in accordance with Section 3.1.C hereof.
	 
	 	(2)	 	Each Class B Unit shall be converted automatically into a Class
A-1 Unit on the day immediately following the Trust Record Date for the
Distribution Period in which the Class B Unit was issued, without the
requirement for any action by either the Trust or the Unitholder holding the
Class B Unit.
	 
	 	(3)	 	A holder of Class B Units will not have the Redemption Right
under Section 6.6 with respect to its Class B Units.
	 
	 	(4)	 	The Trustee shall cause Class B Units to be issued by the Trust
only pursuant to an amendment to this Agreement pursuant to Section 12.2.B
hereof, which amendment shall designate that the newly issued Units are Class B
Units. The Trustee shall have the right, in its sole and absolute discretion,
subject to Section 2.2.A and Section 3.1.E hereof, to determine whether the
Trust should issue Class A-1 Units, Class B Units (or one or more series
thereof), or another class of Trust Interests in connection with a contribution
of property, or other assets or other consideration, to the Trust.





          D. Certain Restrictions on Issuances of Units or Other Trust Interests.
Notwithstanding the foregoing, in no event may the Trustee cause the Trust to issue to




15









 







Unitholders
(including the Trustee and its Affiliates) or other Persons any Units or other Trust Interests if
such issuance would, in the opinion of counsel to the Trust, cause any portion of the assets of the
Trust to constitute assets of any ERISA Plan Investor pursuant to 29 C.F.R. § 2510.3-101, or any
successor regulation thereto.




     Section 2.3 Preemptive Rights



          If the Trustee acquires any Class A-2 Units using the proceeds from any exercise of any rights
(as defined in the definition of “Shares Amount”) issued under a shareholder rights plan (or other
arrangement having the same objective and substantially the same effect), then (a) the holders of
Common Units at such time (other than the Trustee) as a group shall have the right to acquire, at
the same price per Class A-2 Unit paid by the Trustee, a total number of additional Class A-1 Units
equal to the product of (i) the total number of Common Units held by such holders, multiplied by
(ii) a fraction, the numerator of which is the number of Class A-2 Units issued to the Trustee as a
result of the exercise of such rights and the denominator of which is the total number of Class A-2
Units held by the Trustee immediately prior to such issuance (which fraction is referred to as the
“Exercise Percentage”), and (b) each holder of a Class A-1 Unit or Class B Unit at such time shall
have the right to acquire, at the same price per Class A-2 Unit paid by the Trustee, a number of
Class A-1 Units equal to the product of (iii) the aggregate number of Common Units that such holder
holds at such time, multiplied by (iv) the Exercise Percentage. (Thus, for example, if the Trustee
were to acquire 2,000,000 Class A-2 Units at $5 per Unit from the proceeds of the exercise of
outstanding rights issued under a stockholder rights plan at a time when the Trustee already owned
8,000,000 Class A-2 Units out of a total of 12,000,000 outstanding Common Units (which would
represent a 25% increase in the number of Class A-2 Units held by the Trustee), then the other
holders of Common Units as a group would have the right to purchase a total of 1,000,000 Class A-1
Units at $5 per Class A-1 Unit, and each holder of a Class A-1 Unit or Class B Unit would be
entitled to purchase his proportionate share of such Class A-1 Units, or .25 Class A-1 Units for
each Class A Unit or Class B Unit then held by such holder.) In the event Units or Trust Interests
other than Class A-2 Units are issued to the Trustee using proceeds of any exercise of rights
issued under a stockholder rights plan (or other arrangement), the holders of Common Units shall be
granted the right to acquire such other Units or Trust Interests at the same price as paid by the
Trustee and in such amounts as would be comparable to their rights had Class A-1 Units been issued
instead. The Trustee shall provide prompt written notice to the holders of Common Units of its
acquisition of Class A-2 Units (or other Units or Trust Interests) using such proceeds and shall
establish in good faith such procedures as it deems appropriate (including, without limitation,
procedures to eliminate the issuance of fractional Units if the Trustee deems appropriate) to
effectuate the rights of the holders of Common Units under the preceding provisions of this Section
2.3. Except to the extent expressly granted by the Trust pursuant to this Section 2.3 or another
agreement, no person shall have any preemptive, preferential or other similar right with respect to
(i) additional Capital Contributions or loans to the Trust; or (ii) issuance or sale of any Units
or other Trust Interests.





16









 








     Section 2.4 Other Contribution Provisions



          A. If any Person becomes a Unitholder and is given a Capital Account in exchange for services
rendered to the Trust, such transaction shall be treated by the Trust and the affected Unitholder
as if the Trust had compensated such Unitholder in cash, and the Unitholder had contributed such
cash to the capital of the Trust.




          B. To the extent the Trust acquires any property (or an indirect interest therein) by the
merger of any other Person into the Trust or with or into a Subsidiary of the Trust in a triangular
merger, Persons who receive Trust Interests in exchange for their interests in the Person merging
into the Trust or with or into a Subsidiary of the Trust shall become Unitholders and shall be
deemed to have made Capital Contributions as provided in the applicable merger agreement (or, if
not so provided, as determined by the Trustee in its sole discretion), and as set forth in the
Trust’s books and records.




ARTICLE 3




DISTRIBUTIONS




     Section 3.1 Requirement and Characterization of Distributions



          A. General. The Unitholders shall be entitled to receive distributions when, as and
if declared by the Trustee, out of funds legally available therefor. Subject to Section 3.1.F, the
Trustee shall cause the Trust to distribute at least quarterly an amount equal to one hundred
percent (100%) of Available Cash of the Trust during such quarter or shorter period to the Persons
who are holders of Units on the respective Trust Record Dates established for distribution to the
applicable classes with respect to such quarter or shorter period. The Trustee shall endeavor to
cause distributions to be made in the manner provided in Sections 3.1.B, 3.1.C and 3.1.D and in
accordance with the respective terms established for each other class of Trust Interests hereafter
created. Notwithstanding anything to the contrary contained herein, in no event may a Unitholder
receive a distribution of Available Cash with respect to a Unit for a quarter or shorter period if
such Unitholder is entitled to receive a distribution with respect to a Share for which such Unit
has been redeemed or exchanged. Unless otherwise expressly provided for herein, in Exhibits
F hereto, with respect to Series I Preferred Units, or in the terms established at the time a
new class or series of Trust Interests is created in accordance with Article 2 hereof, no Trust
Interest shall be entitled to a distribution in preference to any other Trust Interest. The
Trustee shall make such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the qualification of the Parent REIT as a REIT, to distribute Available Cash
(a) to the Unitholders other than the Trustee so as to preclude any such distribution or portion
thereof from being treated as part of a sale of property to the Trust by such Unitholder under
Section 707 of the Code or the Regulations thereunder; provided that, the Trustee
and the Trust shall not have liability to the Unitholder under any circumstances as a result of any
distribution to such Unitholder being so treated, and (b) to the Parent REIT in an amount
sufficient to enable the Parent REIT to make distributions to its shareholders that will enable the
Parent REIT to pay shareholder dividends that will (1) satisfy the requirements for qualification
as a REIT under the Code and the Regulations (the “REIT Requirements”) and (2) avoid any federal
income or excise tax liability for the Parent REIT.




17









 








          B. Priority of Distributions. (i) Distributions to Unitholders holding a class of
Trust Interests that is entitled to any preference in distribution (including, without limitation,
the preferences in distribution set forth in Exhibits F hereto with respect to Series I
Preferred Units) shall be made in accordance with the rights of such class of Trust Interests to
holders of such Units on the respective Trust Record Date established for the distribution to such
class of Trust Interests (and, within such class, pro rata in proportion to the respective
Percentage Interests in such class on such Trust Record Date).




               (ii) Distributions to holders of Class A-1 Units, Class A-2 Units, Class B Units and Units of
any other class of Trust Interests that are not entitled to any preference in distribution shall be
made quarterly (or more frequently in the sole and absolute discretion of the Trustee), to the
extent there is Available Cash remaining after the payment of distributions in respect of any
classes of Trust Interests entitled to a preference in distribution in accordance with the
foregoing clause (i), in accordance with the terms of such class as set forth in this Agreement or
otherwise established by the Trustee pursuant to Section 2.2 to holders of such Units on the
respective Trust Record Date established for the distribution to each such class of Trust Interests
(and, within each such class, pro rata in proportion to the respective Percentage Interests in such
class on such Trust Record Date).



          C. Distribution When Class B Units Are Outstanding. If for any quarter or shorter
period with respect to which a distribution is to be made (a “Distribution Period”) Class B Units
are outstanding on the Trust Record Date for such Distribution Period, the Trustee shall allocate
the Available Cash with respect to such Distribution Period available for distribution with respect
to the Class A-1 Units, Class A-2 Units and Class B Units collectively (“Common Unit Available
Cash”) between the Unitholders who are holders of Class A-1 Units or Class A-2 Units (“Class A”)
and the Unitholders who are holders of Class B Units (“Class B”) as follows:





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





         A
x Y        



(A x Y)+(B x X)





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






         B x X
      



(A x Y)+(B x X)





	 	(3)	 	For purposes of the foregoing formulas, (i) “A” equals the
number of Class A-1 Units and Class A-2 Units outstanding on the Trust Record
Date for such Distribution Period; (ii) “B” equals the number of Class B Units
outstanding on the Trust Record Date for such Distribution Period; (iii) “Y”
equals the number
of days in the Distribution Period; and





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	 	 	 	(iv) “X” equals the number of days
in the Distribution Period for which the Class B Units were issued and
outstanding.





          The Class A Cash Portion shall be distributed among Unitholders holding Class A-1 Units or
Class A-2 Units on the Trust Record Date for the Distribution Period in accordance with the number
of Class A-1 Units or Class A-2 Units held by each Unitholder on such Trust Record Date; provided
that in no event may a Unitholder receive a distribution of Available Cash with respect to a Class
A-1 Unit or Class A-2 Units if a Unitholder is entitled to receive a distribution out of such
Available Cash with respect to a Share for which such Class A-1 Unit has been redeemed or
exchanged. The Class B Cash Portion shall be distributed among the Unitholders holding Class B
Units on the Trust Record Date for the Distribution Period in accordance with the number of Class B
Units held by each Unitholder on such Trust Record Date. In no event shall any Class B Units be
entitled to receive any distribution of Available Cash for any Distribution Period ending prior to
the date on which such Class B Units are issued.




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





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





B1 x X1



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





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





B2 x X2



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





	 	(3)	 	For purposes of the foregoing formulas the definitions set
forth in Section 3.1.C.3 remain the same except that (i) “B1” equals the number
of Common Units in Series B1 outstanding on the Trust Record Date for such
Distribution Period; (ii) “B2” equals the number of Common Units in Series B2
outstanding on the Trust Record Date for such Distribution





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	 	 	 	Period; (iii)
“X1” equals the number of days in the Distribution Period for which the
Units in Series B1 were issued and outstanding; and (iv) “X2” equals the
number of days in the Distribution Period for which the Common Units in
Series B2 were issued and outstanding.






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





          E. Special Rule if Parent REIT Not Publicly Traded. In addition (and without regard
to the amount of Available Cash), if the Shares of the Parent REIT are not Publicly Traded, the
Trustee shall make cash distributions with respect to the Class A-1 Units and Class A-2 Units at
least annually for each taxable year of the Trust beginning prior to the twentieth (20th)
anniversary of the Effective Date in an aggregate amount with respect to each such taxable year at
least equal to 90% of the Trust’s taxable income for such year allocable to the Class A-1 Units and
Class A-2 Units, with such distributions to be made not later than 60 days after the end of such
year. Notwithstanding any limitations set forth in Section 2.2, the holders of Class A-2 Units
shall have the right to elect, within five (5) Business Days after the distribution of Available
Cash, to reinvest any cash distributed to the holders of Class A-2 Units pursuant to this Section
3.1.E. in exchange for additional Class A-2 Units, with the purchase price payable by such holders
for each such Class A-2 Unit being an amount equal to the Value of a Class A-2 Unit at the time
such cash is reinvested and with such purchase price being paid in full in cash.




          F. The Trustee shall have the authority to defer the distribution referred to in Section 3.1E
(the “Mandatory Distribution”) if, but only if, it shall determine in good faith after diligent
exploration of all commercially reasonably available alternatives that after giving effect to the
Mandatory Distribution (x) the Trust shall be unable to pay its indebtedness as it becomes due in
the usual course of business, or (y) the Trust’s assets will be less than the sum of its total
liabilities and the amount that would be needed to satisfy all preferential rights of the holders
of Preferred Units upon liquidation of the Trust. In making such determination, the Trustee shall
consider the Trust’s most recently available financial statements, prepared on the basis of
generally accepted accounting principles and on fair value principles, and in the event of
conflict, base its determination on the methodology that would yield the more favorable result to
the Unitholders. If the Trustee determines to defer the Mandatory Distribution, it shall
reconsider the authorization of the distribution at least monthly until made and shall use its
commercially reasonable best efforts to restructure the Trust assets, operations and indebtedness
in a manner that will facilitate the payment of accrued but unpaid distributions under this Section
3.1.F as promptly as practicable and the distribution of amounts reasonably expected to accrue
hereunder in subsequent periods.




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     Section 3.2 Amounts Withheld



          All amounts withheld pursuant to the Code or any provisions of any state or local tax law and
Section 8.5 hereof with respect to any allocation, payment or distribution to the Trustee or the
Unitholders other than the Trustee shall be treated as amounts distributed to the Trustee or
Unitholders other than the Trustee, as the case may be, pursuant to Section 3.1 for all purposes
under this Agreement.




     Section 3.3 Distributions Upon Liquidation



          Proceeds from a Terminating Capital Transaction and any other cash received or reductions in
reserves made after commencement of the liquidation of the Trust, shall be distributed to the
Unitholders in accordance with Section 11.2.




ARTICLE 4




ALLOCATIONS




     Section 4.1 Allocations For Capital Account Purposes



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




          A. Net Income. After giving effect to the special allocations set forth in Section 1
of Exhibit B hereof, Net Income shall be allocated:





	 	(1)	 	first, to the Trustee to the extent that cumulative Net
Losses previously allocated the Trustee pursuant to 4.1.B(6) exceed cumulative
Net Income previously allocated to the Trustee pursuant to this clause (1);






	 	(2)	 	second, to each Protected Unitholder until the
cumulative Net Income allocated such Protected Unitholder under this clause (2)
equals the cumulative Net Losses allocated such Protected Unitholder under
Section 4.1.B(5) (and, within the class of Protected Unitholders, pro rata in
proportion to their respective percentages of the cumulative Net Losses
allocated all Protected Unitholders pursuant to Section 4.1.B(5) hereof);
	 
	 	(3)	 	third, to the Trustee until the cumulative Net Income
allocated under this clause (3) equals the cumulative Net Losses allocated the
Trustee under Section 4.1.B(4);
	 
	 	(4)	 	fourth, to the holders of any Trust Interests that are
entitled to any preference upon liquidation until the cumulative Net Income
allocated under this clause (4)
equals the cumulative Net Losses allocated to such Unitholders under Section
4.1.B(3);




21









 












	 	(5)	 	fifth, to the holders of any Trust Interests that are
entitled to any preference in distribution in accordance with the rights of any
such class of Trust Interests until each such Trust Interests have been
allocated, on a cumulative basis pursuant to this clause (5), Net Income equal
to the aggregate amount of distributions such holders have been entitled to
receive (whether or not such holders have actually received such amounts) which
are attributable to the preference of such class of Trust Interests (and,
within such class, pro rata in proportion to the respective Percentage
Interests as of the last day of the period for which such allocation is being
made); and






	 	(6)	 	finally, with respect to Trust Interests that are not
entitled to any preference in the allocation of Net Income, pro rata to each
such class in accordance with the terms of such class (and, within such class,
pro rata in proportion to the respective Percentage Interests as of the last
day of the period for which such allocation is being made).





          B. Net Losses. After giving effect to the special allocations set forth in Section 1
of Exhibit B, Net Losses shall be allocated:





	 	(1)	 	first, to the holders of Trust Interests, in proportion
to their share of the Net Income previously allocated pursuant to Section
4.1.A(6), to the extent that any prior allocations of Net Income to such
Unitholders pursuant to Section 4.1.A(6) exceed, on a cumulative basis,
distributions with respect to such Trust Interests pursuant to clause (ii) of
Section 3.1.B;
	 
	 	(2)	 	second, with respect to classes of Trust Interests that
are not entitled to any preference in distribution upon liquidation, pro rata
to each such class in accordance with the terms of such class (and, within such
class, pro rata in proportion to the respective Percentage Interests as of the
last day of the period for which such allocation is being made);
provided that Net Losses shall not be allocated to any Unitholder
pursuant to this Section 4.1.B(2) to the extent that such allocation would
cause such Unitholder to have an Adjusted Capital Account Deficit (or increase
any existing Adjusted Capital Account Deficit) (determined in each case (i) by
not including in the Unitholders’ Adjusted Capital Accounts any amount that a
Unitholder is obligated to contribute to the Trust with respect to any deficit
in its Capital Account pursuant to Section 11.3 and (ii) in the case of a
Unitholder who also holds classes of Trust Interests that are entitled to any
preferences in distribution upon liquidation, by subtracting from such
Unitholders’ Adjusted Capital Account the amount of such preferred distribution
to be made upon liquidation) at the end of such taxable year (or portion
thereof);






	 	(3)	 	third, with respect to classes of Trust Interests that
are entitled to any preference in distribution upon liquidation, in reverse
order of the priorities of each such class (and within each such class, pro
rata in





22









 





	 	 	 	proportion to their respective Percentage Interests as of the last day
of the period for which such allocation is being made; provided
that Net Losses shall not be allocated to any Unitholder pursuant to
this Section 4.1.B(3) to the extent that such allocation would cause such
Unitholder to have an Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) (determined in each case by not
including in the Unitholders’ Adjusted Capital Accounts any amount that a
Unitholder is obligated to contribute to the Trust with respect to any deficit
in its Capital Account pursuant to Section 11.3) at the end of such taxable
year (or portion thereof);
	 
	 	(4)	 	fourth, to the Trustee in an amount equal to the excess
of (a) the amount of the Trust Recourse Liabilities over (b) the Aggregate
Protected Amount;
	 
	 	(5)	 	fifth, to and among the Protected Unitholders, in
proportion to their respective Protected Amounts, until such time as the
Protected Unitholders as a group have been allocated cumulative Net Losses
pursuant to this clause (5) equal to the Aggregate Protected Amount; and
	 
	 	(6)	 	thereafter, to the Trustee.





          C. Allocation of Nonrecourse Debt. For purposes of Regulation Section 1.752-3(a), the
Unitholders agree that Nonrecourse Liabilities of the Trust in excess of the sum of (i) the amount
of Trust Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated by
the Trustee by taking into account facts and circumstances relating to each Unitholder’s respective
interest in the profits of the Trust. For this purpose, the Trustee will have discretion in any
fiscal year to allocate such excess Nonrecourse Liabilities among the Unitholders in any manner
permitted under Code Section 752 and the Regulations thereunder.




          D. Recapture Income. Any gain allocated to the Unitholders upon the sale or other
taxable disposition of any Trust asset shall, to the extent possible after taking into account
other required allocations of gain pursuant to Exhibit B, be characterized as Recapture
Income in the same proportions and to the same extent as such Unitholders have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.




ARTICLE 5




MANAGEMENT AND OPERATIONS OF BUSINESS




     Section 5.1 Management



          A. General. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Trust are and shall be exclusively vested in the
Trustee, and no Unitholder (in its capacity as such) other than the holders of Class A-2 Units
shall have any right to participate in or exercise control or management power over the business
and affairs of the Trust. The Trustee may not be removed by the Unitholders other than the holders
of Class A-2 Units with or without cause. In addition to the powers now or hereafter




23









 







granted a
trustee of a trust under applicable law or which are granted to the Trustee under any other
provision of this Agreement, the Trustee, subject to Section 5.3 hereof, shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the business of the
Trust, to exercise all powers set forth in Article I, Section 4 of the Declaration of Trust hereof
and to effectuate the purposes set forth in Article I, Section 4 of the Declaration of Trust,
including, without limitation:





	 	(1)	 	the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and borrowing
money to permit the Trust to make distributions to its Unitholders in such
amounts as are required under Section 3.1.E or will permit the Trustee (so long
as the Trustee qualifies as a REIT) to avoid the payment of any federal income
tax (including, for this purpose, any excise tax pursuant to Section 4981 of
the Code) and to make distributions to its shareholders sufficient to permit
the Trustee to maintain REIT status (so long as the Trustee qualifies as a
REIT), the assumption or guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidences of indebtedness (including the
securing of same by deed to secure debt, mortgage, deed of trust or other lien
or encumbrance on the Trust’s assets) and the incurring of any obligations the
Trustee deems necessary for the conduct of the activities of the Trust;
	 
	 	(2)	 	the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Trust;
	 
	 	(3)	 	the acquisition, disposition, sale, conveyance, contribution,
mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the
assets of the Trust (including the exercise or grant of any conversion, option,
privilege, or subscription right or other right available in connection with
any assets at any time held by the Trust) or the merger or other combination of
the Trust with or into another entity (all of the foregoing subject to any
prior approval only to the extent required by Section 5.3 hereof);
	 
	 	(4)	 	the use of the assets of the Trust (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the Trustee, the Trust or any of
the Trust’s Subsidiaries, the lending of funds to other Persons (including,
without limitation, the Trustee, its Subsidiaries and the Trust’s Subsidiaries)
and the repayment of obligations of
the Trust and its Subsidiaries and any other Person in which the Trust, the
Trustee or any of the Trust’s Subsidiaries has an equity investment and the
making of capital contributions to their respective Subsidiaries;




24









 












	 	(5)	 	the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owned by the Trust or any Subsidiary of the Trust or any Person in which the
Trust has made a direct or indirect equity investment;
	 
	 	(6)	 	the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the Trustee considers useful or necessary
to the conduct of the Trust’s operations or the implementation of the Trustee’s
powers under this Agreement, including contracting with contractors,
developers, consultants, accountants, legal counsel, other professional
advisors and other agents and the payment of their expenses and compensation
out of the Trust’s assets;
	 
	 	(7)	 	the mortgage, pledge, encumbrance or hypothecation of any
assets of the Trust, and the use of the assets of the Trust (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct or the operations of the Trustee or the Trust, the
lending of funds to other Persons (including, without limitation, any
Subsidiaries of the Trust) and the repayment of obligations of the Trust, any
of its Subsidiaries and any other Person in which it has an equity investment;
	 
	 	(8)	 	the distribution of Trust cash or other Trust assets in
accordance with this Agreement;
	 
	 	(9)	 	the holding, managing, investing and reinvesting of cash and
other assets of the Trust;
	 
	 	(10)	 	the collection and receipt of revenues and income of the Trust;
	 
	 	(11)	 	the establishment of one or more divisions of the Trust, the
selection, designation of powers, authorities, and duties and the dismissal of
employees of the Trust, any division of the Trust, or the Trustee (including,
without limitation, employees having titles such as “president,” “vice
president,” “secretary” and “treasurer” of the Trust, any division of the
Trust, or the Trustee), and agents, outside attorneys, accountants, consultants
and contractors of the Trustee, the Trust or any division of the Trust and the
determination of their compensation and other terms of employment or hiring;
	 
	 	(12)	 	the maintenance of such insurance for the benefit of the Trust
and the Unitholders as it deems necessary or appropriate;
	 
	 	(13)	 	the formation of, or acquisition of an interest (including
non-voting interests in entities controlled by Affiliates of the Trust or third
parties) in, and the contribution of property to, any further limited or
general partnerships, joint ventures, limited liability companies or other





25









 





	 	 	 	relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of funds or property to, or
making of loans to, its Subsidiaries and any other Person in which it has an
equity investment from time to time, or the incurrence of indebtedness on
behalf of such Persons or the guarantee of the obligations of such Persons);
provided that, as long as the Trustee has determined to continue to
qualify as a REIT, the Trust may not engage in any such formation, acquisition
or contribution that would cause the Trustee to fail to qualify as a REIT;






	 	(14)	 	the undertaking of any action in connection with the Trust’s
direct or indirect investment in its Subsidiaries or any other Person
(including, without limitation, the contribution or loan of funds by the Trust
to such Person);
	 
	 	(15)	 	the control of any matters affecting the rights and obligations
of the Trust, including the settlement, compromise, submission to arbitration
or any other form of dispute resolution or abandonment of any claim, cause of
action, liability, debt or damages due or owing to or from the Trust, the
commencement or defense of suits, legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
representation of the Trust in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the incurring
of legal expense and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
	 
	 	(16)	 	the determination of the fair market value of any Trust
property distributed in kind, using such reasonable method of valuation as the
Trustee may adopt;
	 
	 	(17)	 	the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any assets or investment
held by the Trust;
	 
	 	(18)	 	the exercise of any of the powers of the Trustee enumerated in
this Agreement on behalf of or in connection with any Subsidiary of the Trust
or any other Person in which the Trust has a direct or indirect interest,
individually or jointly with any such Subsidiary or other Person;
	 
	 	(19)	 	the exercise of any of the powers of the Trustee enumerated in
this Agreement on behalf of any Person in which the Trust does not have any
interest pursuant to contractual or other arrangements with such Person;
	 
	 	(20)	 	the making, executing and delivering of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or other legal instruments or agreements in writing necessary
or





26









 





	 	 	 	appropriate in the judgment of the Trustee for the accomplishment of any of
the powers of the Trustee enumerated in this Agreement;






	 	(21)	 	the distribution of cash to acquire Units held by a Unitholder
other than the Trustee in connection with such Unitholder’s exercise of its
Redemption Right under Section 6.6; and
	 
	 	(22)	 	the acquisition of Units in exchange for cash, debt
instruments, or other property.





          B. No Approval By Unitholders other than the Trustee. Each of the Unitholders agrees
that the Trustee is authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Trust without any further act, approval or vote of the Unitholders,
notwithstanding any other provision of this Agreement (except as provided in Section 5.3), the Act
or any applicable law, rule or regulation, to the fullest extent permitted under the Act or other
applicable law. The execution, delivery or performance by the Trustee or the Trust of any
agreement authorized or permitted under this Agreement shall not constitute a breach by the Trustee
of any duty that the Trustee may owe the Trust or the other Unitholders or any other Persons under
this Agreement or of any duty stated or implied by law or equity.




          C. Insurance. At all times from and after the date hereof, the Trustee may or may
not, cause the Trust to obtain and maintain (i) casualty, liability and other insurance on the
properties of the Trust, (ii) liability insurance for the Indemnitees hereunder and (iii) such
other insurance as the Trustee, in its sole and absolute discretion, determines to be necessary.




          D. Working Capital and Other Reserves. At all times from and after the date hereof,
the Trustee may cause the Trust to establish and maintain working capital reserves and other
similar cash accounts in such amounts as the Trustee, in its sole and absolute discretion, deems
appropriate and reasonable from time to time, including upon liquidation of the Trust under Article
11.




          E. No Obligation to Consider Tax Consequences of other Unitholders. In exercising its
authority under this Agreement, the Trustee may, but shall be under no obligation to, take into
account the tax consequences to any Unitholder (including the Trustee) of any action taken (or not
taken) by any of them. Except as set forth in Exhibit D to this Agreement, the Trustee and
the Trust shall not have liability to a Unitholder for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Unitholder in connection with such
decisions, provided that the Trustee has acted in good faith and pursuant to its authority
under this Agreement.




     Section 5.2 Declaration of Trust



          The Trustee has previously filed the Declaration of Trust with the State Department of
Assessments and Taxation of Maryland. To the extent that such action is determined by the Trustee
to be reasonable, necessary or appropriate, the Trustee shall file amendments to and restatements
of the Declaration of Trust and do all the things to maintain the





27










 






Trust as a trust under the laws
of the State of Maryland and each other state, the District of Columbia or other jurisdiction in
which the Trust may elect to do business or own property. The Trustee shall not be required,
before or after filing, to deliver or mail a copy of the Declaration of Trust or any amendment
thereto to any Unitholder. The Trustee shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a trust in the State of Maryland and any
other state, the District of Columbia or other jurisdiction in which the Trust may elect to do
business or own property.




     Section 5.3 Restrictions on Trustee’s Authority



          A. Amendment Required. The Trustee may not take any action in contravention of any
express prohibition or limitation of this Agreement without an amendment of such provision adopted
in accordance with Article 12 hereof and the Act.




          B. Sale or Transfer of All Assets of the Trust. The Trustee may not, directly or
indirectly, cause the Trust to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Trust’s assets in a single transaction or a series of related transactions
(including by way of merger (including a triangular merger), or other combination with any other
Persons) except as follows: (i) if the transaction is pursuant to a dissolution and liquidation of
the Trust in accordance with Article 11; (ii) if such merger, sale or other transaction is in
connection with a Termination Transaction permitted under Section 9.2.B hereof and is approved by
the Unitholders holding at least a majority of the then outstanding Units entitled to vote thereon
(including any Class A-2 Units held by the Trustee), or (iii) otherwise, if such merger, sale or
other transaction is approved by the Unitholders holding at least a majority of the then
outstanding Class A-1 Units.




          C. Termination of Election to Be Treated as a Partnership. Prior to January 1, 2043,
revocation of (or any action that would have the effect of revoking or terminating) the election by
the Trust pursuant to Regulation Section 301.7701-3(c) to be treated as a “partnership” for federal
income tax purposes shall be treated as a liquidation of the Trust and shall be permitted only if
the requisite vote, notice and absence of objection provided for in either Section 11.1(i) or
Section 11.1(ii), as applicable, have been satisfied.




     Section 5.4 Reimbursement of the Trustee



          A. No Compensation. Except as provided in this Section 5.4 and elsewhere in this
Agreement (including the provisions of Articles 3 and 4 regarding distributions, payments, and
allocations to which it may be entitled), the Trustee shall not be compensated for its services as
trustee of the Trust.




          B. Responsibility for Trust and Trustee Expenses. The Trust shall be responsible for
and shall pay all expenses relating to the Trust’s organization, the ownership of its assets and
its operations (including, without limitation, all expenses related to or incurred in connection
with the Merger Agreement). The Trustee shall be reimbursed on a monthly basis, or such other
basis as the Trustee may determine in its sole and absolute discretion, for all expenses it incurs
relating to the ownership and operation of, or for the benefit of, the Trust (including,




28









 







without limitation, expenses related to or resulting from the operations of the Trustee and to the
management and administration of any Subsidiaries of the Trustee or the Trust or Affiliates of the
Trust, such as auditing expenses and filing fees); provided that (i) the amount of
any such reimbursement shall be reduced by (x) any interest earned by the Trustee with respect to
bank accounts or other instruments or accounts held by it on behalf of the Trust as permitted in
Section 5.5.A (which interest is considered to belong to the Trust and shall be paid over to the
Trust to the extent not applied to reimburse the Trustee for expenses hereunder); and (y) any
amount derived by the Trustee from any investments permitted in Section 5.5.A, (ii) the Trust shall
not be responsible for any taxes that the Trustee would not have been required to pay if it
qualified as a REIT for federal income tax purposes or any taxes imposed on the Trustee by reason
of its failure to distribute to its shareholders an amount equal to its taxable income; (iii) the
Trust shall not be responsible for expenses or liabilities incurred by the Trustee in connection
with any business or assets of the Trustee other than its ownership of Trust Interests or operation
of the business of the Trust or ownership of interests in Qualified REIT Subsidiaries or limited
liability companies to the extent permitted in Section 5.5.A; and (iv) the Trust shall not be
responsible for any expenses or liabilities of the Trustee that are excluded from the scope of the
indemnification provisions of Section 5.7.A by reason of the provisions of clause (i), (ii) or
(iii) thereof. The Trustee shall determine in good faith the amount of expenses incurred by it
related to the ownership of Trust Interests and operation of, or for the benefit of, the Trust. If
certain expenses are incurred that are related both to the ownership of Trust Interests or
operation of, or for the benefit of, the Trust and to the ownership of other assets (other than
Qualified REIT Subsidiaries or limited liability companies as permitted under Section 5.7.A) or the
operation of other businesses, such expenses will be allocated to the Trust and such other entities
(including the Trustee) owning such other assets or businesses in such a manner as the Trustee in
its sole and absolute discretion deems fair and reasonable. Such reimbursements shall be in
addition to any reimbursement to the Trustee pursuant to Section 8.3.C and as a result of
indemnification pursuant to Section 5.7. All payments and reimbursements hereunder shall be
characterized for federal income tax purposes as expenses of the Trust incurred on its behalf, and
not as expenses of the Trustee.




          C. Trust Interest Issuance Expenses. The Trustee shall also be reimbursed for all
expenses it incurs relating to any issuance of Trust Interests, Shares, Debt of the Trust or
Funding Debt or rights, options, warrants or convertible or exchangeable securities pursuant to
Article 2 (including, without limitation, all costs, expenses, damages and other payments resulting
from or arising in connection with litigation related to any of the foregoing), all of which
expenses are considered by the Unitholders to constitute expenses of, and for the benefit of, the
Trust.




          D. Purchases of Shares by the Trustee. If the Parent REIT exercises its rights under
the Trustee Declaration of Trust to purchase Shares or otherwise elects to purchase from its
shareholders Shares in connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment or
equity purchase program adopted by the Parent REIT, any employee equity purchase plan adopted
by the Parent REIT or any similar obligation or arrangement undertaken by the Parent REIT in the
future, the purchase price paid by the Parent REIT for those Shares and any other expenses incurred
by the Parent REIT in connection with such purchase shall be considered




29









 







expenses of the Trust and
shall be reimbursable to the Parent REIT, subject to the conditions that: (i) if those Shares
subsequently are to be sold by the Parent REIT, the Parent REIT shall pay to the Trust any proceeds
received by the Parent REIT for those Shares (provided that a transfer of Shares for Units
pursuant to Section 6.6 would not be considered a sale for such purposes); and (ii) if such Shares
are not retransferred by the Parent REIT within thirty (30) days after the purchase thereof, the
Parent REIT shall cause the Trust to cancel a number of Units (rounded to the nearest whole Unit)
held by the Parent REIT equal to (x) in the case of Common Shares, the product attained by
multiplying the number of those Shares by a fraction, the numerator of which is one and the
denominator of which is the Conversion Factor, and (y) in the case of any other Shares, the number
of such Shares, which Units shall be treated as having been redeemed by the Trust for the payment
made by the Trust to the Parent REIT with respect to the corresponding Shares.




          E. Reimbursement Not a Distribution. If and to the extent any reimbursement made
pursuant to this Section 5.4 is determined for federal income tax purposes not to constitute a
payment of expenses of the Trust, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Trust and all Unitholders and shall not be treated as a distribution
for purposes of computing the Unitholders’ Capital Accounts.




          F. Funding Acquisitions. In the event that the Trustee shall undertake to acquire
(whether by merger, purchase, or otherwise) the assets or equity interests of another Person and
such acquisition shall require the payment of cash by the Trustee (whether to such Person or to any
other selling party or parties in such transaction or to one or more creditors, if any, of such
Person or such selling party or parties), (i) the Trust shall advance to the Trustee the cash
required to consummate such acquisition if, and to the extent that, such cash is not to be obtained
by the Trustee through an issuance of Shares described in Section 2.2, (ii) the Trustee shall
immediately, upon consummation of such acquisition, transfer to the Trust (or cause to be
transferred to the Trust), in full and complete satisfaction of such advance and as required by
Section 5.5, the assets or equity interests of such Person acquired by the Trustee in such
acquisition, and (iii) pursuant to and in accordance with Section 2.2, the Trust shall issue to the
Trustee Trust Interests and/or rights, options, warrants or convertible or exchangeable securities
of the Trust having designations, preferences and other rights that are substantially the same as
those of any additional Shares, other equity securities, New Securities and/or Convertible Funding
Debt, as the case may be, issued by the Trustee in connection with such acquisition (whether issued
directly to participants in the acquisition transaction or to third parties in order to obtain cash
to complete the acquisition). In addition to, and without limiting the foregoing, in the event
that the Trustee engages in a transaction in which (x) the Trustee (or a wholly owned direct or
indirect Subsidiary of the Trustee) merges with another entity (referred to as the “Parent Entity”)
that is organized in the “UPREIT format” (i.e., where the Parent Entity holds substantially all of
its assets and conducts substantially all of its operations through a partnership, limited
liability company or other entity (referred to as an “Operating Entity”)) and the Trustee survives
such
merger, (y) such Operating Entity merges with or is otherwise acquired by the Trust in
exchange in whole or in part for Trust Interests, and (z) the Trustee is required or elects to pay
part of the consideration in connection with such merger involving the Parent Entity in the form of
cash and part of the consideration in the form of Shares, the Trust shall distribute




30









 







to the Trustee
with respect to its existing Trust Interest an amount of cash sufficient to complete such
transaction and the Trustee shall cause the Trust to cancel a number of Units (rounded to the
nearest whole number) held by the Trust equal to the product attained by multiplying the number of
additional Shares of the Trust that the Trust would have issued to the Parent Entity or the owners
of the Parent Entity in such transaction if the entire consideration therefor were to have been
paid in Shares by a fraction, the numerator of which is one and the denominator of which is the
Conversion Factor.




     Section 5.5 Outside Activities of the Trustee



          A. General. Without the approval of the holders of at least a majority of the Class
A-1 Units outstanding and entitled to vote thereon, the Trustee shall not, directly or indirectly,
enter into or conduct any business other than in connection with the ownership, acquisition and
disposition of Trust Interests as Trustee or Unitholder and the management of the business of the
Trust and such activities as are incidental thereto. Without the approval of the holders of at
least a majority of the Class A-1 Units outstanding and entitled to vote thereon, the assets of the
Parent REIT shall be limited to Trust Interests and permitted debt obligations of the Trust (as
contemplated by Section 5.5.E), so that Shares and Units are completely fungible except as
otherwise specifically provided herein; provided that the Trustee shall be
permitted to hold such bank accounts or similar instruments or accounts in its name as it deems
necessary to carry out its responsibilities and purposes as contemplated under this Agreement and
its organizational documents (provided that accounts held on behalf of the Trust to
permit the Trustee to carry out its responsibilities under this Agreement shall be considered to
belong to the Trust and the interest earned thereon shall, subject to Section 5.4.B, be applied for
the benefit of the Trust); and, provided further that, the Parent REIT shall be
permitted to acquire, directly or through one or more Qualified REIT Subsidiaries or limited
liability companies, Qualified Assets. The Parent REIT and any of its Affiliates may acquire Trust
Interests and shall be entitled to exercise all rights of a Unitholder relating to such Trust
Interests.




          B. Forfeiture of Shares. If the Trust or the Parent REIT acquires Shares as a result
of the forfeiture of such Shares under a restricted share, share bonus or other similar share plan,
then the Trustee shall cause the Trust to cancel that number of Units equal to the number of Shares
so acquired, and, if the Trust acquired such Shares, it shall transfer such Shares to the Trustee
for cancellation.




          C. Issuances of Shares and Other Securities. After the Effective Date, the Trustee or
Parent REIT shall not grant, award, or issue any additional Shares (other than Shares issued
pursuant to Section 6.6 hereof, pursuant to a dividend or distribution (including any share split)
of Shares to all of its shareholders), or in connection with any acquisition permitted by Section
5.5.A hereof of Qualified Assets, other equity securities of the Trustee, New Securities or
Convertible Funding Debt unless (i) the Trustee shall cause, pursuant to Section 2.2.A hereof, the
Trust to issue to the Trustee Trust Interests or rights, options, warrants or convertible or
exchangeable securities of the Trust having designations, preferences and other rights, all
such that the economic interests are substantially the same as those of such additional Shares,
other equity securities, New Securities or Convertible Funding Debt, as the case may be, and (ii)
the Trustee transfers to the Trust, as an additional Capital Contribution, the proceeds from the
grant,




31









 







award, or issuance of such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, or from the exercise of rights contained in such
additional Shares, other equity securities, New Securities or Convertible Funding Debt, as the case
may be. Without limiting the foregoing, the Parent REIT is expressly authorized to issue
additional Shares, other equity securities, New Securities or Convertible Funding Debt, as the case
may be, for less than fair market value, and the Trustee is expressly authorized, pursuant to
Section 2.2.A hereof, to cause the Trust to issue to the Trustee corresponding Trust Interests, as
long as (a) the Trustee concludes in good faith that such issuance is in the interests of the
Trustee and the Trust (for example, and not by way of limitation, the issuance of Shares and
corresponding Units pursuant to a share purchase plan providing for purchases of Shares, either by
employees or shareholders, at a discount from fair market value or pursuant to employee share
options that have an exercise price that is less than the fair market value of the Shares, either
at the time of issuance or at the time of exercise) and (b) the Trustee transfers all proceeds from
any such issuance or exercise to the Trust as an additional Capital Contribution.




          D. Share Option Plan. If at any time or from time to time, the Trustee sells Shares
pursuant to any Share Option Plan, the Trustee shall transfer the net proceeds of the sale of such
Shares to the Trust as an additional Capital Contribution in exchange for an amount of additional
Units equal to the number of Shares so sold divided by the Conversion Factor.




          E. Funding Debt. The Trustee or the Parent REIT may incur a Funding Debt, including,
without limitation, a Funding Debt that is convertible into Shares or otherwise constitutes a class
of New Securities (“Convertible Funding Debt”), subject to the condition that the Trustee or the
Parent REIT, as the case may be, lend to the Trust the net proceeds of such Funding Debt; provided
that Convertible Funding Debt shall be issued pursuant to Section 5.5.C above; and,
provided further that, the Trustee or the Parent REIT shall not be obligated to lend the net
proceeds of any Funding Debt to the Trust in a manner that would be inconsistent with the Parent
REIT’s ability to remain qualified as a REIT as long as the Parent REIT has determined to continue
to qualify as a REIT. If the Trustee or the Parent REIT enters into any Funding Debt, the loan to
the Trust shall be on comparable terms and conditions, including interest rate, repayment schedule
and costs and expenses, as are applicable with respect to or incurred in connection with such
Funding Debt.




     Section 5.6 Transactions with Affiliates



          A. Transaction with Certain Affiliates. Except as expressly permitted by this
Agreement, the Trust shall not, directly or indirectly, sell, transfer or convey any property to,
or purchase any property from, or borrow funds from, or lend funds to, any Unitholder (other than
the Trustee) or any Affiliate of the Trust or the Trustee that is not also a Subsidiary of the
Trust, except pursuant to transactions that are determined by the Trustee in good faith, which
determination shall be conclusive, to be on terms that are fair and reasonable and no less
favorable
to the Trust than would be obtained from an unaffiliated third party or that comply with the
provisions of Section 2-419 of the Maryland General Corporation Law.




          B. Conflict Avoidance. The Trustee is expressly authorized to enter into, in the name
and on behalf of the Trust, a noncompetition arrangement, right of first opportunity




32









 







arrangement
and/or other conflict avoidance agreements with various Affiliates of the Trust and Trustee on such
terms as the Trustee, in its sole and absolute discretion, believes are advisable.




          C. Benefit Plans. The Trustee in its sole and absolute discretion and without the
approval of the other Unitholders, may propose and adopt on behalf of the Trust employee benefit
plans funded by the Trust for the benefit of employees of the Trustee, the Trust, or Subsidiaries
of the Trust.




     Section 5.7 Indemnification



          A. General. The Trust shall indemnify each Indemnitee to the fullest extent provided
by the Act from and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and expenses),
judgments, fines, settlements and other amounts arising from or in connection with any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative,
incurred by the Indemnitee and relating to the Trust or the Trustee or the operation of, or the
ownership of property by, the Trust or the Trustee as set forth in this Agreement in which any such
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is
established by a final determination of a court of competent jurisdiction that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the proceeding and either was
committed in bad faith or was the result of active and deliberate dishonesty, (ii) the Indemnitee
actually received an improper personal benefit in money, property or services or (iii) in the case
of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission
was unlawful. The termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 5.7.A. The termination of any proceeding by conviction or upon a plea of nolo contendere
or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in this Section 5.7.A
with respect to the subject matter of such proceeding. Any indemnification pursuant to this
Section 5.7 shall be made only out of the assets of the Trust, and any insurance proceeds from the
liability policy covering the Trustee and any Indemnitee, and neither the Trustee nor any other
Unitholder shall have any obligation to contribute to the capital of the Trust or otherwise provide
funds to enable the Trust to fund its obligations under this Section 5.7.




          B. Advancement of Expenses. Reasonable expenses expected to be incurred by an
Indemnitee may be paid or reimbursed by the Trust in advance of the final disposition of any and
all claims, demands, actions, suits or proceedings, civil, criminal, administrative or
investigative made or threatened against an Indemnitee upon receipt by the Trust of (i) a written
affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct
necessary for indemnification by the Trust as authorized in Section 5.7.A has been met and (ii) a
written undertaking by or on behalf of the Indemnitee to repay the amount if it shall
ultimately be determined that the standard of conduct has not been met.




          C. No Limitation of Rights. The indemnification provided by this Section 5.7 shall be
in addition to any other rights to which an Indemnitee or any other Person may be entitled under
any agreement, pursuant to any vote of the Unitholders, as a matter of law




33









 







or otherwise, and shall
continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.




          D. Insurance. The Trust may purchase and maintain insurance on behalf of the
Indemnitees and such other Persons as the Trustee shall determine against any liability that may be
asserted against or expenses that may be incurred by such Person in connection with the Trust’s
activities, regardless of whether the Trust would have the power to indemnify such Person against
such liability under the provisions of this Agreement.




          E. Benefit Plan Fiduciary. For purposes of this Section 5.7, (i) excise taxes
assessed on an Indemnitee, or for which the Indemnitee is otherwise found liable, with respect to a
Plan pursuant to applicable law shall constitute fines within the meaning of this Section 5.7, and
(ii) actions taken or omitted by the Indemnitee with respect to a Plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the participants and
beneficiaries of such Plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Trust.




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




          G. Interested Transactions. An Indemnitee shall not be denied indemnification in
whole or in part under this Section 5.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.




          H. Benefit. The provisions of this Section 5.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create
any rights for the benefit of any other Persons. Any amendment, modification or repeal of this
Section 5.7, or any provision hereof, shall be prospective only and shall not in any way affect the
limitation on the Trust’s liability to any Indemnitee under this Section 5.7 as in effect
immediately prior to such amendment, modification or repeal with respect to claims arising from or
related to matters occurring, in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.




          I. Indemnification Payments Not Distribution. If and to the extent any payments to
the Trustee pursuant to this Section 5.7 constitute gross income to the Trustee (as opposed to the
repayment of advances made on behalf of the Trust), such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Trust and all Unitholders, and shall not be treated as
distributions for purposes of computing the Unitholders’ Capital Accounts.




          J. Exception to Indemnification. Notwithstanding anything to the contrary in this
Agreement, the Trustee shall not be entitled to indemnification hereunder for any loss, claim,
damage, liability or expense for which the Trustee is obligated to indemnify the Trust under any
other agreement between the Trustee and the Trust.





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     Section 5.8 Liability of the Trustee



          A. General. To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of trustees of a real estate investment trust, the Trustee
shall not be liable to the Trust or to any Unitholder for money damages. Neither the amendment nor
repeal of this Section 5.8.A, nor the adoption or amendment of any other provision of the
Declaration of Trust inconsistent with this Section 5.8.A, shall apply to or affect in any respect
the applicability of the preceding sentence with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption. In the absence of any Maryland statute
limiting the liability of trustees of a Maryland real estate investment trust for money damages in
a suit by or on behalf of the Trust or by any Unitholder, the Trustee shall not be liable to the
Trust or to any Unitholder for money damages except to the extent that (i) the Trustee actually
received an improper benefit or profit in money, property or services, for the amount of the
benefit or profit in money, property or services actually received; or (ii) a judgment or other
final adjudication adverse to the Trustee is entered in a proceeding based on a finding in the
proceeding that the Trustee’s action or failure to act was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the proceeding.




          B. No Obligation to Consider Separate Interests of other Unitholders. The Unitholders
(including the Trustee to the extent that its Trust Interest is not in its capacity as Trustee)
expressly acknowledge that the Trustee is acting on behalf of the Trust and the Trustee’s
shareholders collectively, that the Trustee is under no obligation to consider the separate
interests of the other Unitholders (including, without limitation, the tax consequences to the
other Unitholders) in deciding whether to cause the Trust to take (or decline to take) any actions,
and that the Trustee shall not be liable for monetary damages for losses sustained, liabilities
incurred or benefits not derived by Unitholders in connection with such decisions except as set
forth in Exhibit D, unless the Trustee acted in bad faith and the act or omission was
material to the matter giving rise to the loss, liability or benefit not derived.




          C. Actions of Agents. Subject to its obligations and duties as Trustee set forth in
Section 5.1.A, the Trustee may exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either directly or by or through its agents.
The Trustee shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the Trustee in good faith.




          D. Effects of Amendment. Notwithstanding any other provision contained herein, any
amendment, modification or repeal of this Section 5.8 or any provision hereof shall be prospective
only and shall not in any way affect the limitations on the Trustee’s liability to the
Trust and the other Unitholders under this Section 5.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.




     Section 5.9 Other Matters Concerning the Trustee



          A. Reliance on Documents. The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument, opinion,




35









 







report,
notice, request, consent, order, bond, debenture, or other paper or document believed by it in good
faith to be genuine and to have been signed or presented by the proper party or parties.




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




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




          D. Actions to Maintain REIT Status or Avoid Taxation of Parent REIT. Notwithstanding
any other provisions of this Agreement or the Act, any action of the Trustee on behalf of the Trust
or any decision of the Trustee to refrain from acting on behalf of the Trust, undertaken in the
good faith belief that such action or omission is necessary or advisable in order (i) to protect
the ability of the Parent REIT to continue to qualify as a REIT so long as the Parent REIT has
determined to continue to qualify as a REIT or (ii) to allow the Parent REIT to avoid incurring
liability for any taxes under Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement, and is deemed approved by all of the Unitholders other than the Trustee.




     Section 5.10 Title to Trust Assets



          Title to Trust assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Trust as an entity, and no other Unitholder, individually or
collectively, shall have any ownership interest in such Trust assets or any portion thereof. Title
to any or all of the Trust assets may be held in the name of the Trust, the Trustee or one or more
nominees, as the Trustee may determine, including Affiliates of the Trustee. The Trustee hereby
declares and warrants that any Trust assets for which legal title is held in the name of the
Trustee or any nominee or Affiliate of the Trustee shall be held by such Person for the use and
benefit of the Trust in accordance with the provisions of this Agreement. All Trust assets
shall be recorded as the property of the Trust in its books and records, irrespective of the
name in which legal title to such Trust assets is held.




     Section 5.11 Reliance by Third Parties



          Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Trust
shall be entitled to assume that the Trustee has full power and authority, without consent or
approval of any other Unitholder or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Trust and to enter into any contracts on behalf of the Trust, and take any
and all actions on behalf of the Trust and such Person shall be entitled to deal with the





36









 







Trustee
as if the Trustee were the Trust’s sole party in interest, both legally and beneficially. Each
Unitholder hereby waives any and all defenses or other remedies which may be available against such
Person to contest, negate or disaffirm any action of the Trustee in connection with any such
dealing. In no event shall any Person dealing with the Trustee or its representatives be obligated
to ascertain that the terms of this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the Trustee or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Trust by the Trustee or its
representatives shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of such certificate,
document or instrument, this Agreement was in full force and effect, (ii) the Person executing and
delivering such certificate, document or instrument was duly authorized and empowered to do so for
and on behalf of the Trust and (iii) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and is binding upon the
Trust.




ARTICLE 6



RIGHTS AND OBLIGATIONS OF UNITHOLDERS




     Section 6.1 Limitation of Liability



          The Unitholders other than the Trustee in its capacity as Trustee shall have no liability
under this Agreement except as expressly provided in this Agreement, including Section 8.5 and
Section 11.3, or under the Act.




     Section 6.2 Management of Business



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




     Section 6.3 Outside Activities of Unitholders



          Subject to Section 5.5 hereof, and subject to any agreements entered into pursuant to Section
5.6.B hereof and any other agreements entered into by a Unitholder other than the Trustee or its
Affiliates with the Trust or a Subsidiary, any Unitholder other than the Trustee and any officer,
director, employee, agent, trustee, Affiliate or shareholder of any Unitholder other than the
Trustee shall be entitled to and may have business interests and engage in business activities in
addition to those relating to the Trust, including business interests and activities that are in
direct competition with the Trust or that are enhanced by the activities of the Trust. Neither the
Trust nor any Unitholders shall have any rights by virtue of this Agreement in any




37









 







business
ventures of any other Unitholder. None of the Unitholders (other than the Trustee) nor any other
Person shall have any rights by virtue of this Agreement or the Trust relationship established
hereby in any business ventures of any other Person (other than the Trustee to the extent expressly
provided herein), and such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Trust, any Unitholder or any such other Person, even
if such opportunity is of a character which, if presented to the Trust, any Unitholder or such
other Person, could be taken by such Person.




     Section 6.4 Return of Capital



          Except pursuant to the right of redemption set forth in Section 6.6, and except in accordance
with the terms of any Preferred Units, no Unitholder shall be entitled to the withdrawal or return
of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement
or upon termination of the Trust as provided herein. No Unitholder shall have priority over any
other Unitholder either as to the return of Capital Contributions (except as permitted by Article 2
of the Declaration of Trust) or, as to profits, losses, distributions or credits (except to the
extent provided by Article IV or Exhibit B or as otherwise expressly provided in this
Agreement).




     Section 6.5 Rights of Unitholders Relating to the Trust



          A. General. In addition to other rights provided by this Agreement or by the Act, and
except as limited by Section 6.5.E, each Unitholder shall have the right, upon written demand:





	 	(1)	 	to obtain a copy of the Trust’s federal, state and local income
tax returns for each fiscal year;
	 
	 	(2)	 	to obtain a copy of the Trust’s bylaws, minutes of proceedings
of the holders of the Trust’s shares of beneficial interest, an annual report
of operations prepared in general conformity with Section 8-401 of the Act, and
any voting trust agreement on file at the Trust’s principal office; and
	 
	 	(3)	 	to obtain a copy of the Declaration of Trust and all amendments
thereto.





          In addition, any Unitholder that is a holder of 5% or more of the outstanding Class A-1 Units
shall have the right, upon written demand, to obtain a current list of the name and last
known business, residence or mailing address of each Unitholder and to obtain such financial
and other information to which 5% stockholders of a Maryland corporation are entitled under Section
2-513 of the Maryland General Corporation Law.




          B. Notice of Conversion Factor. The Trust shall notify each Unitholder, upon request,
of the then current Conversion Factor and any changes that have been made thereto.




          C. Notice of Extraordinary Transactions of the Parent REIT. The Parent REIT shall not
make any extraordinary distributions of cash or property to its shareholders or




38









 








effect a merger
(including, without limitation, a triangular merger), or other combination with or into another
Person, a sale of all or substantially all of its assets or any other similar extraordinary
transaction without notifying the Unitholders of its intention to make such distribution or effect
such merger, sale or other extraordinary transaction at least twenty (20) Business Days prior to
the record date to determine shareholders eligible to receive such distribution or to vote upon the
approval of such merger, sale or other extraordinary transaction (or, if no such record date is
applicable, at least twenty (20) business days before consummation of such merger, sale or other
extraordinary transaction); provided, however, that the Trustee, in its sole
discretion, may shorten the required notice period of not less than twenty (20) business days prior
to the record date to determine the shareholders eligible to vote upon a merger transaction (but
not any of the other transactions covered by this Section 6.5.C.) to a period of not less than ten
(10) Business Days (thereby continuing to afford the holders of Units the opportunity to redeem
Units under Section 6.6 on or prior to the record date for the shareholder vote on the merger
transaction) so long as (i) the Parent REIT will be the surviving entity in such merger
transaction, (ii) immediately following the merger transaction, Persons who held voting securities
of the Parent REIT immediately prior to such merger transaction will hold, solely by reason of the
ownership of voting securities of the Parent REIT immediately prior to the merger transaction,
voting securities of the Parent REIT representing not less than fifty one percent (51%) of the
total combined voting power of all outstanding voting securities of the Parent REIT after such
merger, and (iii) in the event that in connection with such merger transaction the Trust will merge
with another entity, the Trust will be the surviving entity in such merger. This provision for
such notice shall not be deemed (i) to permit any transaction that otherwise is prohibited by this
Agreement or requires the approval by the holders of at least a majority of the Class A-1 Units or
(ii) to require the approval on the part of any one or more of the Unitholders to a transaction
that does not otherwise require such approval under this Agreement. Parent REIT shall not be
required to provide notice pursuant hereto in advance of public disclosure of the transaction
giving rise to the requirement therefor, but Parent REIT shall not establish a record date related
thereto (or if no record date is applicable, a date for consummation of such merger, sale or other
extraordinary transaction) until at least twenty (20) Business Days after the date of notice
pursuant hereto unless the proviso in the first sentence is applicable, in which case ten (10)
Business Days shall be substituted therefor. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described in this Section 6.5.




          D. Agreement Among Unitholders. The Unitholders agree that the provisions of this
Annex A are intended to operate both as provisions of the Declaration of Trust and in the nature of
a shareholders agreement among each of the Unitholders, and that if one or more provisions is
declared not to be an enforceable provision within a declaration of trust under the
Act, the provisions shall nonetheless be fully binding on all Unitholders pursuant to the
agreement among unitholders.




          E. Confidentiality. Notwithstanding any other provision of this Section 6.5, the
Trustee may keep confidential from the Unitholder, for such period of time as the Trustee
determines in its sole and absolute discretion to be reasonable, any information that (i) the
Trustee reasonably believes to be in the nature of trade secrets or other information the
disclosure of which the Trustee in good faith believes is not in the best interests of the Trust or




39









 







could damage the Trust or its business or (ii) the Trust is required by law or by agreements with
unaffiliated third parties to keep confidential.




     Section 6.6 Redemption Right



          A. General. (i) Subject to Section 6.6.C, at any time on or after the first
anniversary date of the issuance of a Common Unit to a Unitholder pursuant to the Declaration of
Trust (which one-year period shall commence upon the issuance of such Unit regardless of whether
such Unit is designated upon issuance as a Class A-1 Unit or a Class B Unit and shall include the
period of time from the date such Unit is issued to such Unitholder as a Class B Unit until the
date such Unit is converted automatically to a Class A-1 Unit pursuant to Section 2.2.C hereof), or
on or after such date prior to the expiration of such one-year period as the Trustee, in its sole
and absolute discretion, designates with respect to any or all Class A-1 Units then outstanding,
the holder of a Class A-1 Unit (if other than any Trustee Related Party) shall have the right (the
“Redemption Right”) to require the Trust to redeem such Class A Unit, from funds legally
available therefor, with such redemption to occur on the Specified Redemption Date and at a
redemption price equal to and in the form of the Cash Amount to be paid by the Trust (subject to
the Trustee’s right to pay such redemption price in Shares pursuant to Section 6.6.B). Any such
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Trust (with
a copy to the Trustee) by the Unitholder who is exercising the Redemption Right (the “Redeeming
Unitholder”). A Unitholder other than the Trustee may exercise the Redemption Right from time
to time, without limitation as to frequency, with respect to part or all of the Class A-1 Units
that it owns, as selected by such Unitholder, provided that a Unitholder may not exercise
the Redemption Right for less than one thousand (1,000) Class A-1 Units unless such Redeeming
Unitholder then holds less than one thousand (1,000) Class A-1 Units, in which event such Redeeming
Unitholder must exercise the Redemption Right for all of the Class A-1 Units held by such Redeeming
Unitholder, and provided further that, with respect to a Unitholder which is an entity,
such Unitholder may exercise the Redemption Right for less than one thousand (1,000) Class A-1
Units without regard to whether or not such Unitholder is exercising the Redemption Right for all
of the Class A-1 Units held by such Unitholder as long as such Unitholder is exercising the
Redemption Right on behalf of one or more of its equity owners in respect of one hundred percent
(100%) of such equity owners’ interests in such Unitholder. Notwithstanding any limitation in the
first sentence hereof, the Redemption Right with respect to all Class A-1 Units issued in
connection with the merger of Charles E. Smith Residential Realty L.P. into the Trust shall be
exercisable immediately on the issuance of such Class A-1 Units without limitation.




          (ii) The Redeeming Unitholder shall have no right with respect to any Class A-1 Units so
redeemed to receive any distributions paid after the Specified Redemption Date with respect to such
Class A-1 Units.




          (iii) If the Parent REIT provides notice to the Unitholders (excluding the Trustee), pursuant
to Section 6.5.C hereof, the Redemption Right shall be exercisable, without regard to whether the
Units have been outstanding for any specified period, during the period commencing on the date on
which the Parent REIT provides such notice and ending on the record date to determine shareholders
eligible to receive such distribution or to vote upon the


40









 







approval of such merger, sale or other
extraordinary transaction (or, if no such record date is applicable, at least twenty (20) business
days before the consummation of such merger, sale or other extraordinary transaction). If this
subparagraph (iii) applies, the Specified Redemption Date is the date on which the Trust and the
Trustee receive notice of exercise of the Redemption Right, rather than ten (10) Business Days
after receipt of the notice of redemption.




          B. Trustee Assumption of Right. (i) If a Unitholder other than the Trustee has
delivered a Notice of Redemption, the Trustee may, in its sole and absolute discretion (subject to
the limitations on ownership and transfer of Shares set forth in the Trustee Declaration of Trust),
elect to assume directly and satisfy a Redemption Right by paying to the Redeeming Unitholder
either the Cash Amount or the Shares Amount, as the Trustee determines in its sole and absolute
discretion (provided that payment of the Redemption Amount in the form of Shares shall be
in Shares registered for resale under Section 12 of the Exchange Act and listed for trading on the
exchange or national market on which the Shares are Publicly Traded and the issuance of Shares upon
redemption shall be registered under the Securities Act or, at the election of the Trustee, resale
of the Common Shares issued upon redemption shall be registered (so long as the Redeeming
Unitholder provides all information required for such registration) and, provided
further that, if the Shares are not Publicly Traded at the time a Redeeming Unitholder
exercises its Redemption Right, the Redemption Amount shall be paid only in the form of the Cash
Amount unless the Redeeming Unitholder, in its sole and absolute discretion, consents to payment of
the Redemption Amount in the form of the Shares Amount, on the Specified Redemption Date, whereupon
the Trustee shall acquire the Units offered for redemption by the Redeeming Unitholder and shall be
treated for all purposes of this Agreement as the owner of such Units. Unless the Trustee, in its
sole and absolute discretion, shall exercise its right to assume directly and satisfy the
Redemption Right, the Trustee shall not have any obligation to the Redeeming Unitholder or to the
Trust with respect to the Redeeming Unitholder’s exercise of the Redemption Right. If the Trustee
shall exercise its right to satisfy the Redemption Right in the manner described in the first
sentence of this Section 6.6.B and shall fully perform its obligations in connection therewith, the
Trust shall have no right or obligation to pay any amount to the Redeeming Unitholder with respect
to such Redeeming Unitholder’s exercise of the Redemption Right, and each of the Redeeming
Unitholder, the Trust and the Trustee shall, for federal income tax purposes, treat the transaction
between the Trustee and the Redeeming Unitholder as a sale of the Redeeming Unitholder’s Units to
the Trustee. Nothing contained in this Section 6.6.B shall imply any right of the Trustee to
require any Unitholder to exercise the Redemption Right afforded to such Unitholder pursuant to
Section 6.6.A.




               (ii) If the Trustee determines to pay the Redeeming Unitholder the Redemption Amount in the
form of Shares, the total number of Shares to be paid to the Redeeming Unitholder in exchange for
the Redeeming Unitholder’s Class A Units shall be the applicable Shares Amount. If this amount is
not a whole number of Shares, the Redeeming Unitholder shall be paid (i) that number of Shares
which equals the nearest whole number less than such amount plus (ii) an amount of cash which the
Trustee determines, in its reasonable discretion, to represent the fair value of the remaining
fractional Share which would otherwise be payable to the Redeeming Unitholder.



41









 





               (iii) Each Redeeming Unitholder agrees to execute such documents as the Trustee may reasonably
require in connection with the issuance of Shares upon exercise of the Redemption Right.



               (iv) Any Shares issued in accordance with this Section 6.6.B will be duly and validly
authorized and will be validly issued, fully paid and nonassessable and will not be subject to any
preemptive rights.



          C. Exception to Exercise of the Redemption Right. Notwithstanding the provisions of
Sections 6.6.A and 6.6.B, a Unitholder shall not be entitled to exercise the Redemption Right
pursuant to Section 6.6.A if (but only as long as) the delivery of Shares to such Unitholder on the
Specified Redemption Date (i) would be prohibited under those portions of the Trustee Declaration
of Trust relating to restrictions on ownership and transfer of Shares or (ii) would be prohibited
under applicable federal or state securities laws or regulations (in each case regardless of
whether the Trustee would in fact assume and satisfy the Redemption Right).




          D. No Liens on Units Delivered for Redemption. Each Unitholder covenants and agrees
with the Trustee that all Class A Units delivered for redemption shall be delivered to the Trust or
the Trustee, as the case may be, free and clear of all liens, claims and encumbrances; and,
notwithstanding anything contained herein to the contrary, neither the Trustee nor the Trust shall
be under any obligation to acquire Class A Units which are or may be subject to any liens, claims
or encumbrances. Each Unitholder further agrees that, if any state or local property transfer tax
is payable as a result of the transfer of its Class A Units to the Trust or the Trustee, such
Unitholder shall assume and pay such transfer tax.




          E. Additional Trust Interests; Modification of Holding Period. If the Trust issues
Trust Interests to any Unitholder pursuant to Article 2, the Trustee may provide for any
restrictions on the exercise of the Redemption Right with respect to such Trust Interests as it
deems appropriate, in its sole and absolute discretion, provided that no such restrictions
shall materially adversely affect the rights of any other Unitholder to exercise its Redemption
Rights without that Unitholder’s prior written consent. In addition, the Trustee may, with respect
to any holder or holders of Units, at any time and from time to time, as it shall determine in its
sole discretion, reduce or waive the length of the period prior to which such holder or holders may
not exercise the Redemption Right.




ARTICLE 7



BOOKS, RECORDS, ACCOUNTING AND REPORTS




     Section 7.1 Records and Accounting



          The Trustee shall keep or cause to be kept at the principal office of the Trust those records
and documents required to be maintained by the Act and other books and records deemed by the
Trustee to be appropriate with respect to the Trust’s business, including, without limitation, all
books and records necessary to provide to the Unitholders any information, lists and copies of
documents required to be provided pursuant to Section 7.3 hereof. Any records maintained by or on
behalf of the Trust in the regular course of its business may be kept on, or be




42









 







in the form of,
punch cards, magnetic tape, photographs, micrographics or any other information storage device,
provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Trust shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or other such basis as the Trustee determines to be necessary or
appropriate.




     Section 7.2 Fiscal Year



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




     Section 7.3 Reports



          A. Annual Reports. As soon as practicable, but in no event later than the date on
which the Parent REIT mails its annual report to its shareholders, the Parent REIT shall cause to
be mailed to each Unitholder an annual report, as of the close of the most recently ended Fiscal
Year, containing financial statements of the Trust, or of the Parent REIT if such statements are
prepared solely on a consolidated basis with the Trust, for such Fiscal Year, presented in
accordance with generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the Parent REIT.




          B. Quarterly Reports. If and to the extent that the Parent REIT mails quarterly
reports to its shareholders, as soon as practicable, but in no event later than the date on which
such reports are mailed, the Parent REIT shall cause to be mailed to each Unitholder a report
containing unaudited financial statements, as of the last day of such calendar quarter, of the
Trust, or of the Parent REIT if such statements are prepared solely on a consolidated basis with
the Trust, and such other information as may be required by applicable law or regulation, or as the
Trustee determines to be appropriate.




          C. Parent REIT Communications to Equity Holders. The Trustee shall use commercially
reasonable efforts to cause to be mailed to each Unitholder a copy of each written report, proxy
statement or other communication sent to holders of Shares. Such materials will be sent to each
Unitholder on the same date on which they are first sent to holders of Shares.




ARTICLE 8



TAX MATTERS




     Section 8.1 Preparation of Tax Returns



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





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     Section 8.2 Tax Elections



          Except as otherwise provided herein, the Trustee shall, in its sole and absolute discretion,
determine whether to make any available election pursuant to the Code; provided,
however, that the Trustee shall make the election under Section 754 of the Code in
accordance with applicable regulations thereunder and the Trustee shall have the right to seek to
revoke any such election (including, without limitation, the election under Section 754 of the
Code) upon the Trustee’s determination in its sole and absolute discretion that such revocation is
in the best interests of the Unitholders; provided, however, that the Trust shall not
affirmatively revoke its election to be treated as a “partnership” for federal income tax prior to
January 1, 2044 except as permitted under Section 5.3.C.




     Section 8.3 Tax Matters Partner



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




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





	 	(1)	 	to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Trust items
required to be taken into account by a Unitholder for income tax purposes (such
administrative proceedings being referred to as a “tax audit” and such judicial
proceedings being referred to as “judicial review”), and in the settlement
agreement the tax matters partner may expressly state that such agreement shall
bind all Unitholders, except that such settlement agreement shall not bind any
Unitholder (i) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Unitholder or (ii) who is a “notice
partner” (as defined in Section 6231(a)(8) of the Code) or a member of a
“notice group” (as defined in Section 6223(b)(2) of the Code);
	 
	 	(2)	 	in the event that a notice of a final administrative adjustment
at the Trust level of any item required to be taken into account by a
Unitholder for tax purposes (a “final adjustment”) is mailed to the tax matters
partner, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court or the filing of a complaint
for refund with the United States Claims Court or the District Court of the
United States for the district in which the Trust’s principal place of business
is located;




44









 












	 	(3)	 	to intervene in any action brought by any other Unitholder for
judicial review of a final adjustment;
	 
	 	(4)	 	to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by the IRS, to file
an appropriate pleading (petition or complaint) for judicial review with
respect to such request;
	 
	 	(5)	 	to enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item required to be taken
into account by a Unitholder for tax purposes, or an item affected by such
item; and
	 
	 	(6)	 	to take any other action on behalf of the Unitholders of the
Trust in connection with any tax audit or judicial review proceeding to the
extent permitted by applicable law or regulations.





          The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in the sole
and absolute discretion of the tax matters partner and the provisions relating to indemnification
of the Trustee set forth in Section 5.7 of this Agreement shall be fully applicable to the tax
matters partner in its capacity as such.




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




     Section 8.4 Organizational Expenses



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




     Section 8.5 Withholding



          Each Unitholder hereby authorizes the Trust to withhold from or pay on behalf of or with
respect to such Unitholder any amount of federal, state, local, or foreign taxes that the Trustee
determines that the Trust is required to withhold or pay with respect to any amount distributable
or allocable to such Unitholder pursuant to this Agreement, including, without limitation, any
taxes required to be withheld or paid by the Trust pursuant to Sections 1441, 1442, 1445, or 1446
of the Code. Any amount paid on behalf of or with respect to a Unitholder shall constitute a loan
by the Trust to such Unitholder, which loan shall be repaid by such Unitholder within fifteen (15)
days after notice from the Trustee that such payment must be made unless (i) the Trust withholds
such payment from a distribution which would otherwise be made to the Unitholder or (ii) the
Trustee determines, in its sole and absolute discretion, that such payment may be satisfied out of
the available funds of the Trust which would, but for such




45









 







payment, be distributed to the
Unitholder. Any amounts withheld pursuant to the foregoing clause (i) or (ii) shall be treated as
having been distributed to such Unitholder. Each Unitholder hereby unconditionally and irrevocably
grants to the Trust a security interest in such Unitholder’s Trust Interest to secure such
Unitholder’s obligation to pay to the Trust any amounts required to be paid pursuant to this
Section 8.5. In the event that a Unitholder fails to pay any amounts owed to the Trust pursuant to
this Section 8.5 when due, the Trustee may, in its sole and absolute discretion, elect to make the
payment to the Trust on behalf of such defaulting Unitholder, and in such event shall be deemed to
have loaned such amount to such defaulting Unitholder and shall succeed to all rights and remedies
of the Trust as against such defaulting Unitholder. Without limitation, in such event the Trustee
shall have the right to receive distributions that would otherwise be distributable to such
defaulting Unitholder until such time as such loan, together with all interest thereon, has been
paid in full, and any such distributions so received by the Trustee shall be treated as having been
distributed to the defaulting Unitholder and immediately paid by the defaulting Unitholder to the
Trustee in repayment of such loan. Any amounts payable by a Unitholder hereunder shall bear
interest at the lesser of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal, plus four (4)
percentage points, or (B) the maximum lawful rate of interest on such obligation, such interest to
accrue from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is
paid in full. Each Unitholder shall take such actions as the Trust or the Trustee shall request in
order to perfect or enforce the security interest created hereunder.




ARTICLE 9



TRANSFERS AND WITHDRAWALS




     Section 9.1 Transfer



          A. Definition. The term “transfer,” when used in this Article 9 with respect to a
Trust Interest or Unit, shall be deemed to refer to a transaction by which the Trustee purports to
assign all or any part of its Trust Interest to another Person or by which a Unitholder purports to
assign all or any part of its Trust Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or
otherwise. The term “transfer” when used in this Article 9 does not include any redemption of
Units by a Unitholder or acquisition of Units from a Unitholder by the Trustee pursuant to Section
6.6 or otherwise. No part of the interest of a Unitholder shall be subject to the claims of
any creditor, any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in
this Agreement or as required by law.




          B. General. No Trust Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article 9. Any transfer or purported
transfer of a Trust Interest not made in accordance with this Article 9 shall be null and void.





46









 








     Section 9.2 Transfer of Trustee’s Trust Interest



          A. General. Except for transfers of Units to the Trust as provided in Section 5.5 or
Section 6.6, the Trustee may not transfer any of its Trust Interest except in connection with a
transaction described in Section 9.2.B or as otherwise expressly permitted under this Agreement,
nor shall the Trustee withdraw as the Trustee except in connection with a transaction described in
Section 9.2.B.




          B. Specific Transaction Prohibited. The Parent REIT shall not engage in any merger
(including a triangular merger), consolidation or other combination with or into another person,
sale of all or substantially all of its assets or any reclassification, recapitalization or change
of outstanding Shares (other than a change in par value, or from par value to no par value, or as a
result of a subdivision or combination as described in the definition of “Conversion Factor”)
(“Termination Transaction”), unless (i) the Termination Transaction has been approved by
the Unitholders holding at least a majority of the then outstanding Units (including any Units held
by the Trustee), (ii) following such merger or other consolidation, substantially all of the assets
of the surviving entity consist of Units, and (iii) in connection with such termination transaction
all Unitholders either will receive, or will have the right to elect to receive, for each Unit an
amount of cash, securities, or other property equal to the product of the Conversion Factor
multiplied by the greatest amount of cash, securities or other property paid to a holder of Shares
corresponding to such Unit in consideration of one such Share at any time during the period from
and after the date on which the Termination Transaction is consummated; provided that if,
in connection with the Termination Transaction, a purchase, tender or exchange offer shall have
been made to and accepted by the holders of more than fifty percent (50%) of the outstanding common
shares of beneficial interest (or other comparable equity interest) of the Parent REIT, each holder
of Units shall receive, or shall have the right to elect to receive without any right of approval
set forth above in this subsection B, the greatest amount of cash, securities, or other property
which such holder would have received had it exercised the Redemption Right and received Shares in
exchange for its Units immediately prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer. The Trustee shall not
enter into an agreement or other arrangement providing for or facilitating the creation of a Parent
REIT other than the Trustee, unless the successor Parent REIT executes and delivers a counterpart
to this Agreement in which such Parent REIT successor agrees to be fully bound by all of the terms
and conditions contained herein that are applicable to a Parent REIT.




     Section 9.3 Unitholders’ Rights to Transfer



          A. General. Except to the extent expressly permitted in Sections 9.3.B and 9.3.C or
in connection with the exercise of a Redemption Right pursuant to Section 6.6, a Unitholder may not
transfer all or any portion of its Trust Interest, or any of such Unitholder’s rights as a
Unitholder, without the prior written consent of the Trustee, which consent may be withheld in the
Trustee’s sole and absolute discretion. Any transfer otherwise permitted under Sections 9.3.B and
9.3.C shall be subject to the conditions set forth in Section 9.3.D, 9.3.E and 9.3.F, and all
permitted transfers shall be subject to Section 9.4.




          B. Incapacitated Unitholders. If a Unitholder is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such




47









 







Unitholder’s estate
shall have all the rights of a Unitholder, but not more rights than those enjoyed by other
Unitholders, for the purpose of settling or managing the estate and such power as the Incapacitated
Unitholder possessed to transfer all or any part of its interest in the Trust. The Incapacity of a
Unitholder, in and of itself, shall not dissolve or terminate the Trust.




          C. Permitted Transfers. A Unitholder may transfer, with or without the consent of the
Trustee, all or a portion of its Trust Interest (i) in the case of a Unitholder who is an
individual, to a member of his Immediate Family, any trust formed for the benefit of himself and/or
members of his Immediate Family, or any partnership, limited liability company, joint venture,
corporation or other business entity comprised only of himself and/or members of his Immediate
Family and entities the ownership interests in which are owned by or for the benefit of himself
and/or members of his Immediate Family, (ii) in the case of a Unitholder which is a trust, to the
beneficiaries of such trust, (iii) in the case of a Unitholder which is a partnership, limited
liability company, joint venture, corporation or other business entity to which Units were
transferred pursuant to clause (i) above, to its partners, owners or stockholders, as the case may
be, who are members of the Immediate Family of or are actually the Person(s) who transferred Units
to it pursuant to clause (i) above, (iv) in the case of a Unitholder which acquired Units as of the
date hereof and which is a partnership, limited liability company, joint venture, corporation or
other business entity, to its partners, owners, stockholders or Affiliates thereof, as the case may
be, or the Persons owning the beneficial interests in any of its partners, owners or stockholders
or Affiliates thereof (it being understood that this clause (iv) will apply to all of each Person’s
Trust Interests whether the Units relating thereto were acquired on the date hereof or hereafter),
(v) in the case of a Unitholder which is a partnership, limited liability company, joint venture,
corporation or other business entity other than any of the foregoing described in clause (iii) or
(iv), in accordance with the terms of any agreement between such Unitholder and the Trust pursuant
to which such Trust Interest was issued, (vi) pursuant to a gift or other transfer without
consideration, (vii) pursuant to applicable laws of descent or distribution, (viii) to another
Unitholder and (ix) pursuant to a grant of security interest or other encumbrance effectuated in a
bona fide transaction or as a result of the exercise of remedies related thereto,
subject to the provisions of Section 9.3.F hereof. A trust or other entity will be considered
formed “for the benefit” of a Unitholder’s Immediate Family even though some other Person has a
remainder interest under or with respect to such trust or other entity.




          D. No Transfers Violating Securities Laws. The Trustee may prohibit any transfer of
Units by a Unitholder unless it receives a written opinion of legal counsel (which opinion and
counsel shall be reasonably satisfactory to the Trust) to such Unitholder to the effect
that such transfer would not require filing of a registration statement under the Securities
Act or would not otherwise violate any federal or state securities laws or regulations applicable
to the Trust or the transfer of such Units or, at the option of the Trust, an opinion of legal
counsel to the Trust to the same effect.




          E. No Transfers Affecting Tax Status of Trust. No transfer of Units by a Unitholder
(including a redemption or exchange pursuant to Section 6.6) may be made to any Person if (i) in
the opinion of legal counsel for the Trust, it would result in the Trust being treated as an
association taxable as a corporation for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Units held by all Unitholders other than




48









 







the Trustee or
the Parent REIT or any Subsidiary of either the Trustee or the Parent REIT or pursuant to a
transaction expressly permitted under Section 5.3.B or Section 9.2), (ii) in the opinion of legal
counsel for the Trust, it could reasonably be expected to cause the Parent REIT to no longer
qualify as a REIT or would subject the Parent REIT to any additional taxes under Section 857 or
Section 4981 of the Code or (iii) such transfer is effectuated through an “established securities
market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of
Section 7704 of the Code.




          F. No Transfers to Holders of Nonrecourse Liabilities. No Pledge or transfer of any
Units may be made to a lender to the Trust or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Trust whose loan constitutes a
Nonrecourse Liability unless (i) the Trustee is provided notice thereof, and (ii) the lender enters
into an arrangement with the Trust and the Trustee to exchange or redeem for the Redemption Amount
any Units in which a security interest is held simultaneously with the time at which such lender
would be deemed to be a Unitholder in the Trust for purposes of allocating liabilities to such
lender under Section 752 of the Code.




     Section 9.4 General Provisions



          A. Timing of Transfers. Transfers pursuant to this Article 9 may only be made on the
first day of a fiscal quarter of the Trust, unless the Trustee otherwise agrees.




          B. Allocations. If any Trust Interest is transferred or assigned in compliance with
the provisions of this Article 9 or redeemed or transferred pursuant to Section 6.6, on any day
other than the first day of a Fiscal Year, then Net Income, Net Losses, each item thereof and all
other items attributable to such interest for such Fiscal Year shall be divided and allocated
between the transferor Unitholder and the transferee Unitholder by taking into account their
varying interests during the Fiscal Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method (unless the Trustee, in its sole and absolute discretion,
elects to adopt a daily, weekly or monthly proration method, in which event Net Income, Net Losses
and each item thereof for such Fiscal Year shall be prorated based upon the applicable period
selected by the Trustee). Solely for purposes of making such allocations, each of such items for
the calendar month in which the transfer or assignment occurs shall be allocated to the transferee
Unitholder, and none of such items for the calendar month in which a redemption occurs shall be
allocated to the Redeeming Unitholder. All distributions of Available Cash attributable to such
Unit with respect to which the Trust Record Date is before the date of such transfer, assignment
or redemption shall be made to the transferor Unitholder or the Redeeming Unitholder, as the
case may be, and, in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Unit shall be made to the
transferee Unitholder.




          C. Additional Restrictions. In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article 9 and Article 5, in no event
may any transfer or assignment of a Trust Interest by any Unitholder (including pursuant to Section
6.6) be made without the express consent of the Trustee, in its sole and absolute discretion, (i)
to any person or entity who lacks the legal right, power or capacity to own a Trust Interest; (ii)
in violation of applicable law; (iii) of any component portion of a Trust Interest,




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such as the
Capital Account, or rights to distributions, separate and apart from all other components of a
Trust Interest; (iv) if in the opinion of legal counsel to the Trust such transfer would cause a
termination of the Trust for federal or state income tax purposes (except as a result of the
redemption or exchange for Shares of all Units held by all Unitholders other than the Trustee, the
Parent REIT, or any Subsidiary of either, or pursuant to a transaction expressly permitted under
Section 5.3.B or Section 9.2); (v) if such transfer would, in the opinion of counsel to the Trust,
cause any portion of the assets of the Trust to constitute assets of any ERISA Plan Investor
pursuant to 29 C.F.R. § 2510.3-101, or any successor regulation thereto; (vi) if such transfer
subjects the Trust or the activities of the Trust to regulation under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or ERISA, each as amended; or (vii) if such transfer
could reasonably be expected to cause the Parent REIT to fail to remain qualified as a REIT so long
as Parent REIT has determined to continue to qualify as a REIT.




          D. Avoidance of “Publicly Traded Partnership” Status. The Trustee shall monitor the
transfers of interests in the Trust to determine (i) if such interests are being traded on an
“established securities market” or a “secondary market (or the substantial equivalent thereof)”
within the meaning of Section 7704 of the Code and (ii) whether additional transfers of interests
would result in the Trust being unable to qualify for at least one of the “safe harbors” set forth
in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting
forth safe harbors under which interests will not be treated as “readily tradable on a secondary
market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code)
(the “Safe Harbors”). The Trustee shall take all steps reasonably necessary or appropriate
to prevent any trading of interests or any recognition by the Trust of transfers made on such
markets and, except as otherwise provided herein, to insure that at least one of the Safe Harbors
is met; provided, however, that the foregoing shall not authorize the Trustee to limit or restrict
in any manner the right of any Unitholder to exercise the Redemption Right in accordance with the
terms of Section 6.6 unless, and only to the extent that, outside tax counsel provides to the
Trustee an opinion to the effect that, in the absence of such limitation or restriction, there is a
significant risk that the Trust will be treated as a “publicly traded partnership” and, by reason
thereof, will be taxable as a corporation.




ARTICLE 10



ADDITIONAL UNITHOLDERS




     Section 10.1 Additional Unitholders



          A. General. A Person who makes a Capital Contribution to the Trust in accordance with
this Agreement or who exercises an option to receive Units shall become a Unitholder only with the
consent of the Trustee and only upon furnishing to the Trustee (i) evidence of acceptance in form
satisfactory to the Trustee of all of the terms and conditions of this Agreement, and (ii) such
other documents or instruments as may be required in the discretion of the Trustee for such Person
to become a Unitholder. Any such Person shall become a Unitholder effective on the date upon which
the name of such Person is recorded on the books and records of the Trust, following the consent of
the Trustee.





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          B. Allocations to Additional Unitholders. If any Person becomes a Unitholder on any
day other than the first day of a Fiscal Year, then Net Income, Net Losses, each item thereof and
all other items allocable among Unitholders for such Fiscal Year shall be allocated among such
Unitholder and all other Unitholders by taking into account their varying interests during the
Fiscal Year in accordance with Section 706(d) of the Code, using the interim closing of the books
method (unless the Trustee, in its sole and absolute discretion, elects to adopt a daily, weekly or
monthly proration method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the Trustee). Solely for purposes of making
such allocations, each of such items for the calendar month in which a Person becomes a Unitholder
shall be allocated among all the Unitholders, including such new Unitholder. All distributions of
Available Cash with respect to which the Trust Record Date is before the date of such admission
shall be made solely to Unitholders other than the new Unitholder, and all distributions of
Available Cash thereafter shall be made to all the Unitholders, including such new Unitholder.




ARTICLE 11



DISSOLUTION, LIQUIDATION AND TERMINATION




     Section 11.1 Dissolution



          The Trust shall dissolve, and its affairs shall be wound up, upon the first to occur of any of
the following (“Liquidating Events”):




               (i) from and after the Effective Date through December 31, 2013, an election to dissolve the
Trust upon the approval of the Trustee and the holders of at least a majority of the outstanding
Class A-2 Units, unless any holder of Class A Units who is a “Smith Original Limited Partner”
objects in writing to such dissolution within thirty (30) days of receiving written notice of such
election from the Trustee (as used herein the term “Smith Original Limited Partner” refers
to each holder of Class A Units (including the Parent REIT, as the successor by merger to Charles
E. Smith Residential Realty, Inc.) who received one or more units of limited partnership interest
on the formation of Charles E. Smith Residential Realty L.P. on June 30, 1994 (“Smith
Units”), and who received, with respect to such Smith Units, one or more Class A Units upon the
merger of Charles E. Smith Residential Realty L.P. into the Trust on the Effective Date);



               (ii) from and after January 1, 2014 through December 31, 2043, an election to dissolve the
Trust upon the approval of the Trustee and the holders of at least a
majority of the outstanding Class A-2 Units, unless any holders of Class A Units who are
“Smith Original Limited Partners” and who collectively hold such number of Class A Units (issued on
the Effective Date in exchange for such Smith Units) that represents five percent (5%) or more of
the total Smith Units originally issued to Smith Original Limited Partners on June 30, 1994 object
in writing to such dissolution within thirty (30) days of receiving written notice of such election
from the Trustee;



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               (iii) after December 31, 2043, an election to dissolve the Trust upon the approval of the
Trustee and the holders of at least a majority of the outstanding Class A-2 Units; or



               (iv) the sale of all or substantially all of the assets and properties of the Trust for cash
or for marketable securities pursuant to a transaction permitted under clause (ii) or clause (iii),
as applicable, of Section 5.3.B.



     Section 11.2 Winding Up



          A. General. Upon the occurrence of a Liquidating Event, the Trust shall
continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its
assets, and satisfying the claims of its creditors and Unitholders. No Unitholder shall take any
action that is inconsistent with, or not necessary to or appropriate for, the winding up of the
Trust’s business and affairs. The Trustee (or, if there is no remaining Trustee, any Person
elected by a majority in interest of the Unitholders (the “Liquidator”)) shall be
responsible for overseeing the winding up and dissolution of the Trust and shall take full account
of the Trust’s liabilities and property and the Trust property shall be liquidated as promptly as
is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the Trustee, include equity or other securities of the Trustee or any other
entity) shall be applied and distributed in the following order:





	 	(1)	 	First, to the payment and discharge of all of the Trust’s debts
and liabilities to creditors other than the Unitholders;
	 
	 	(2)	 	Second, to the payment and discharge of all of the Trust’s
debts and liabilities to the Trustee;
	 
	 	(3)	 	Third, to the payment and discharge of all of the Trust’s debts
and liabilities to the Unitholders;
	 
	 	(4)	 	Fourth, to the holders of Trust Interests that are entitled to
any preference in distribution upon liquidation in accordance with the rights
of any such class or series of Trust Interests, including without limitation,
Series I Preferred Units, (and, within each such class or series, to each
holder thereof pro rata based on the proportion of the total number of
outstanding units of such class or series represented by such holder’s units of
such series or class); and
	 
	 	(5)	 	The balance, if any, to the Unitholders in accordance with
their Capital Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.





          The Trustee shall not receive any additional compensation for any services performed pursuant
to this Article 11.





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          B. Deferred Liquidation. Notwithstanding the provisions of Section 11.2.A which
require liquidation of the assets of the Trust, but subject to the order of priorities set forth
therein, if prior to or upon dissolution of the Trust the Liquidator determines that an immediate
sale of part or all of the Trust’s assets would be impractical or would cause undue loss to the
Unitholders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time
the liquidation of any assets except those necessary to satisfy liabilities of the Trust (including
to those Unitholders as creditors) or distribute to the Unitholders, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 11.2.A, undivided interests in such Trust
assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall
be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Unitholders, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable and equitable and
to any agreements governing the operation of such properties at such time. The Liquidator shall
determine the fair market value of any property distributed in kind using such reasonable method of
valuation as it may adopt.




     Section 11.3 Compliance with Timing Requirements of Regulations; Restoration of Deficit
Capital Accounts



          A. Timing of Distributions. If the Trust is “liquidated” within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made under this Article 11 to the
Trustee and Unitholders who have positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). In the discretion of the Trustee, a pro rata portion of the distributions
that would otherwise be made to the Trustee and Unitholders pursuant to this Article 11 may be:
(A) distributed to a trust established for the benefit of the Trustee and Unitholders for the
purposes of liquidating Trust assets, collecting amounts owed to the Trust and paying any
contingent or unforeseen liabilities or obligations of the Trust or of the Trustee arising out of
or in connection with the Trust (in which case the assets of any such trust shall be distributed to
the Trustee and Unitholders from time to time, in the reasonable discretion of the Trustee, in the
same proportions as the amount distributed to such trust by the Trust would otherwise have been
distributed to the Trustee and Unitholders pursuant to this Agreement); or (B) withheld to provide
a reasonable reserve for Trust liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Trust; provided that such withheld
amounts shall be distributed to the Trustee and Unitholders as soon as practicable.




          B. Restoration of Deficit Capital Accounts Upon Liquidation of the Trust. If any
Unitholder has a deficit balance in its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during which such
liquidation occurs), such Unitholder shall have no obligation to make any contribution to the
capital of the
Trust with respect to such deficit, and such deficit shall not be considered a debt owed to
the Trust or to any other Person for any purpose whatsoever, except as otherwise set forth in this
Section 11.3.B, or as otherwise expressly agreed in writing by the affected Unitholder and the
Trust after the date hereof. Notwithstanding the foregoing, (i) if the Trustee has a deficit
balance in its Capital Account (after giving effect to all contributions, distributions, and
allocations for all Fiscal Years or portions thereof, including the year during which such
liquidation occurs), the Trustee shall contribute to the capital of the Trust the amount necessary





53









 







to restore such deficit balance to zero in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(3); (ii) if a Protected Unitholder has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions, and allocations for all Fiscal
Years or portions thereof, including the year during which such liquidation occurs), such Protected
Unitholder shall be obligated to make a contribution to the Trust with respect to any such deficit
balance in such Protected Unitholder’s Capital Account upon a liquidation of the Trust in an amount
equal to the lesser of such deficit balance or such Protected Unitholder’s Protected Amount; and
(iii) the first sentence of this Section 11.3.B shall not apply with respect to any other
Unitholder to the extent, but only to such extent, that such Unitholder previously has agreed in
writing, with the consent of the Trustee, to undertake an express obligation to restore all or any
portion of a deficit that may exist in its Capital Account upon a liquidation of the Trust. No
Unitholder shall have any right to become a Protected Unitholder, to increase its Protected Amount,
or otherwise agree to restore any portion of any deficit that may exist in its Capital Account,
without the express written consent of the Trustee, in its sole and absolute discretion, except as
provided for in Exhibit D. Any contribution required of a Unitholder under this Section
11.3.B. shall be made on or before the later of (i) the end of the Fiscal Year in which the
interest is liquidated or (ii) the ninetieth (90th) day following the date of such
liquidation. The proceeds of any contribution to the Trust made by a Protected Unitholder with
respect to a deficit in such Protected Unitholder’s Capital Account balance shall be treated as a
Capital Contribution by such Protected Unitholder and the proceeds thereof shall be treated as
assets of the Trust to be applied as set forth in Section 11.2.A.




          C. Restoration of Deficit Capital Accounts Upon a Liquidation of a Unitholder’s Interest
by Transfer. If a Protected Unitholder’s interest in the Trust is “liquidated” within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (other than in connection with a liquidation of
the Trust) which term shall include a redemption by the Trust of such Protected Unitholder’s
interest upon exercise of the Redemption Right, and such Protected Unitholder is designated on
Exhibit C as a Part II Protected Unitholder, such Protected Unitholder shall be required to
contribute cash to the Trust equal to the lesser of (i) the amount required to increase its Capital
Account balance as of such date to zero, or (ii) such Protected Unitholder’s Protected Amount. For
this purpose, (i) the Protected Unitholder’s deficit Capital Account balance shall be determined by
taking into account all contributions, distributions, and allocations for the portion of the Fiscal
Year ending on the date of the liquidation or redemption, and (ii) solely for purposes of
determining such Protected Unitholder’s Capital Account balance, the Trustee shall redetermine the
Carrying Value of the Trust’s assets on such date based upon the principles set forth in Sections
1.D.(3) and (4) of Exhibit A hereto, and shall take into account the Protected Unitholder’s
allocable share of any Unrealized Gain or Unrealized Loss resulting from such redetermination in
determining the balance of its Capital Account. The amount of any payment
required hereunder shall be due and payable within the time period specified in the second to
last sentence of Section 11.3.B.




          D. Effect of the Death of a Protected Unitholder. After the death of a Protected
Unitholder who is an individual, the executor of the estate of such Protected Unitholder may elect
to reduce (or eliminate) the Protected Amount of such Protected Unitholder. Such elections may be
made by such executor by delivering to the Trustee within two hundred and seventy (270) days of the
death of such Unitholder, a written notice setting




54









 







forth the maximum deficit balance in its Capital
Account that such executor agrees to restore under this Section 11.3, if any. If such executor
does not make a timely election pursuant to this Section 11.3 (whether or not the balance in the
applicable Capital Account is negative at such time), then the Protected Unitholder’s estate (and
the beneficiaries thereof who receive distributions of Trust Interests therefrom) shall be deemed a
Protected Unitholder with a Protected Amount in the same amount as the deceased Protected
Unitholder. Any Protected Unitholder which is a partnership may likewise elect, after the date of
its partner’s death to reduce (or eliminate) its Protected Amount by delivering a similar notice to
the Trustee within the time period specified above, and in the absence of any such notice the
Protected Amount of such Protected Unitholder shall not be reduced to reflect the death of any of
its partners.




     Section 11.4 Rights of Unitholders



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




     Section 11.5 Notice of Dissolution



          If a Liquidating Event occurs or an event occurs that would, but for provisions of an election
or objection by one or more Unitholders pursuant to Section 11.1, result in a dissolution of the
Trust, the Trustee shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Unitholders.




     Section 11.6 Reasonable Time for Winding-Up



          A reasonable time shall be allowed for the orderly winding-up of the business and affairs of
the Trust and the liquidation of its assets pursuant to Section 11.2 hereof, in order to minimize
any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Unitholders during the period of liquidation.




     Section 11.7 Waiver of Partition



          Each Unitholder hereby waives any right to partition of the Trust property.




     Section 11.8 Liability of the Liquidator



          The Liquidator shall be indemnified and held harmless by the Trust in the same manner and to
the same degree as an Indemnitee may be indemnified pursuant to Section 5.7.





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ARTICLE 12



AMENDMENT OF AGREEMENT




     Section 12.1 General



          Except as provided in Section 12.2, 12.3 or 12.4, a proposed amendment shall be adopted and be
effective as an amendment hereto if it is approved by the Trustee and it receives the approval of
Unitholders holding a majority of the Units then outstanding and entitled to vote thereon.




     Section 12.2 Amendments Requiring Approval of Class A-2 Unitholders



          Notwithstanding Section 12.1 or 12.3, this Agreement may be amended, after the Trustee has
declared such amendment advisable, by the holders of at least a majority of the Class A-2 Units
then outstanding and entitled to vote thereon, as may be required to facilitate or implement any of
the following purposes:




          A. to add to the obligations of the Trustee or surrender any right or power granted to the
Trustee or any Affiliate of the Trustee for the benefit of the Unitholders;




          B. to reflect any changes in the status of Unitholders in accordance with this Agreement.




          C. to set forth the designations, rights, powers, duties, and preferences of the holders of
any additional Trust Interests issued pursuant to Article 2;




          D. to reflect a change that does not adversely affect the Unitholders in any material respect,
or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent
with law or with other provisions of this Agreement, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with law or with the provisions of this
Agreement; and




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




          The Trustee shall notify the Unitholders when any action under this Section 12.2 is taken in
the next regular communication to the Unitholders; provided, however, that no
notice need be given of any amendment of this Agreement to reflect any change in the status of
Unitholders in accordance with this Agreement that does not alter the contract rights of the
Unitholder’s Units. For purposes of the immediately preceding sentence, notwithstanding any other
means by which the Trustee may provide any such notice to the Unitholders, such notice requirement
shall be deemed to have been satisfied upon the filing with the Securities and
Exchange Commission by the Trust or the Trustee of any amendment to this Agreement permitted
under this Section 12.2(B) as an exhibit to (i) a registration statement filed by the Trust or the
Trustee under the Securities Act or (ii) any report or other document filed by the Trust or the
Trustee under the Exchange Act.




     Section 12.3 Amendments Requiring Approval of Class A-1 Unitholders



          Notwithstanding anything in this Article 12 to the contrary, Sections 2.2.A, Section 3.1.E,
Section 5.3.B, Section 5.5, Section 5.6, Section 5.8, Section 6.5, Section 9.2,




56









 







Section 11.1 (other
than Section 11.1(i)-(iii), which may be amended as set forth in Section 12.4) and this Section
12.3 of this Agreement may only be amended with the approval of the holders of at least a majority
of the Class A-1 Units outstanding and entitled to vote thereon.




     Section 12.4 Other Amendments Requiring Certain Unitholder Approval



          Notwithstanding anything in this Article 12 to the contrary, this Agreement shall not be
amended with respect to any Unitholder adversely affected thereby without the approval of such
Unitholder, if such amendment would (i) convert a Unitholder’s interest in the Trust into a
trustee’s interest, (ii) modify the limited liability of a Unitholder or require the Unitholder to
make additional Capital Contributions, (iii) amend Section 5.3.A, (iv) amend Article 3 or Article 4
(except as permitted pursuant to Sections 2.2, 3.1.E and 12.2(C)), (v) amend Section 6.6 or any
defined terms set forth in Article 1 that relate to the Redemption Right (except as permitted in
Section 6.6.E), (vi) amend Sections 9.3 or 9.4, or add any additional restrictions to those
provided in Section 9.6.E, (vii) amend Section 11.1(i)-(iii) to cause a termination of the Trust
prior to the time set forth therein or amend Section 5.3.C to permit a termination of the Trust’s
status as a “partnership” for federal income tax purposes prior to the time set forth therein (as
to which matters only original holders of Class A-1 Shares who are “Original Smith Limited
Partners” (as defined in Section 11.1(i)) have a right of approval), (viii) amend this Section
12.4, or (ix) amend Section 13.1. This Section 12.4 does not require unanimous approval of all
Unitholders adversely affected unless the amendment is to be effective against all Unitholders
adversely affected.




ARTICLE 13



GENERAL PROVISIONS




     Section 13.1 Addresses and Notice



          Any notice, demand, request or report required or permitted to be given or made to a
Unitholder under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other means of written
communication to the Unitholder at the address set forth in the Trust’s books and records or such
other address as the Unitholders shall notify the Trustee in writing.




     Section 13.2 Titles and Captions



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





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     Section 13.3 Pronouns and Plurals



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




     Section 13.4 Further Action



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




     Section 13.5 Binding Effect



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




     Section 13.6 Creditors



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




     Section 13.7 Waiver



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




     Section 13.8 Counterparts



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




     Section 13.9 Applicable Law



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




     Section 13.10 Invalidity of Provisions



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





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     Section 13.11 Entire Agreement



          This Agreement constitutes not only an integral part of the Declaration of Trust but also
constitutes a separate agreement among all of the holders of Units of the Trust, each of whom is
identified on in the Trust’s books and records. Such holders agree to be treated as Unitholders as
defined herein and be bound by the terms and to comply with the provisions of this Agreement with
respect to the Units and the rights, powers and duties in connection therewith. This Agreement
contains the entire understanding and agreement among the Unitholders with respect to the subject
matter hereof and supersedes any other prior written or oral understandings or agreements among
them with respect thereto.




     Section 13.12 No Rights as Shareholders



          Nothing contained in this Agreement shall be construed as conferring upon the holders of the
Units any rights whatsoever as shareholders of the Parent REIT, including without limitation any
right to receive dividends or other distributions made to shareholders of the Parent REIT or to
vote or to consent or to receive notice as shareholders in respect of any meeting of shareholders
for the election of directors of the Parent REIT or any other matter.





59










 







EXHIBIT A




CAPITAL ACCOUNT MAINTENANCE




1. Capital Accounts of the Unitholders




     A. The Trust shall maintain for each Unitholder a separate Capital Account in accordance with
the rules of Regulations Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i)
the amount of all Capital Contributions and any other deemed contributions made by such Unitholder
to the Trust pursuant to this Agreement and (ii) all items of Trust income and gain (including
income and gain exempt from tax) computed in accordance with Section 1.B hereof and allocated to
such Unitholder pursuant to Section 4.1.A of the Agreement and Exhibit B thereof, and
decreased by (x) the amount of cash or Agreed Value of all actual and deemed distributions of cash
or property made to such Unitholder pursuant to this Agreement and (y) all items of Trust deduction
and loss computed in accordance with Section 1.B hereof and allocated to such Unitholder pursuant
to Section 4.1.B of the Agreement and Exhibit B hereof.



     B. For purposes of computing the amount of any item of income, gain, deduction or loss to be
reflected in the Unitholders’ Capital Accounts, unless otherwise specified in this Agreement, the
determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be
included in taxable income or loss), with the following adjustments:




	 	(1)	 	Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Trust, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Trust made pursuant to
Section 734 of the Code as a result of the distribution of property by the
Trust to a Unitholder (to the extent that such adjustments have not previously
been reflected in the Unitholders’ Capital Accounts) shall be reflected in the
Capital Accounts of the Unitholders in the manner and subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).
	 
	 	(2)	 	The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
	 
	 	(3)	 	Any income, gain or loss attributable to the taxable
disposition of any Trust property shall be determined as if the adjusted basis
of such property 




 









 






	 	 	 	as of such date of disposition were equal in amount to the
Trust’s Carrying Value with respect to such property as of such date.






	 	(4)	 	In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
	 
	 	(5)	 	In the event the Carrying Value of any Trust Asset is adjusted
pursuant to Section 1.D hereof, the amount of any such adjustment shall be
taken into account as gain or loss from the disposition of such asset.
	 
	 	(6)	 	Any items specially allocated under Section 2 of Exhibit
B to the Agreement hereof shall not be taken into account.





     C. A transferee of a Unit shall succeed to a pro rata portion of the Capital Account of the
transferor.



     D. (1) Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), and as
provided in Section 1.D (2), the Carrying Values of all Trust assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Trust property, as
of the times of the adjustments provided in Section 1.D (2) hereof, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each such property and allocated pursuant
to Section 4.1 of the Agreement.




	 	(2)	 	Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the Trust by
any new or existing Unitholder in exchange for more than a de minimis Capital
Contribution; (b) immediately prior to the distribution by the Trust to a
Unitholder of more than a de minimis amount of property as consideration for an
interest in the Trust; and (c) immediately prior to the liquidation of the
Trust within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
provided however that adjustments pursuant to clauses (a) and
(b) above shall be made only if the Trustee determines that such adjustments
are necessary or appropriate to reflect the relative economic interests of the
Unitholders of the Trust.
	 
	 	(3)	 	In accordance with Regulations Section 1.704-1(b)(2)(iv)(e),
the Carrying Value of Trust assets distributed in kind shall be adjusted upward
or downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Trust property, as of the time any such asset is distributed.
	 
	 	(4)	 	In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit A, the aggregate cash amount and fair market value of
all Trust assets (including cash or cash equivalents) shall be determined by
the Trustee using such reasonable method of valuation as it may adopt, or in
the case of a liquidating distribution pursuant to Article 11 of the Agreement,
shall be determined and allocated by the Liquidator using 




A- 2









 






	 	 	 	such reasonable
methods of valuation as it may adopt. The Trustee, or the Liquidator, as the
case may be, shall allocate such aggregate fair market
value among the assets of the Trust (in such manner as it determines in its
sole and absolute discretion to arrive at a fair market value for individual
properties).





     E. The provisions of the Agreement (including this Exhibit A and the other Exhibits to
the Agreement) relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Trustee shall determine that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities which are secured by contributed or distributed property
or which are assumed by the Trust, the Trustee, or the Unitholders) are computed in order to comply
with such Regulations, the Trustee may make such modification without regard to Article 12 of the
Agreement, provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 11 of the Agreement upon the dissolution of the
Trust. The Trustee also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Unitholders and the amount of Trust capital
reflected on the Trust’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with Regulations Section
l.704-1(b).



2. No Interest




     No interest shall be paid by the Trust on Capital Contributions or on balances in Unitholders’
Capital Accounts.



3. No Withdrawal




     No Unitholder shall be entitled to withdraw any part of its Capital Contribution or his
Capital Account or to receive any distribution from the Trust, except as provided in Articles 2, 3
and 11 of the Agreement.



A- 3









 





EXHIBIT B




SPECIAL ALLOCATION RULES




1. Special Allocation Rules.




     Notwithstanding any other provision of the Agreement or this Exhibit B, the following
special allocations shall be made in the following order:



     A. Minimum Gain Chargeback. Notwithstanding the provisions of Section 4.1 of the
Agreement or any other provisions of this Exhibit B, if there is a net decrease in Trust
Minimum Gain during any Fiscal Year, each Unitholder shall be specially allocated items of Trust
income and gain for such year (and, if necessary, subsequent years) in an amount equal to such
Unitholder’s share of the net decrease in Trust Minimum Gain, as determined under Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Unitholder pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Section 1.704-2(f) (6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements in Regulations
Section 1.704-2(f) and for purposes of this Section 1.A only, each Unitholder’s Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to Section 4.1 of this
Agreement with respect to such Fiscal Year and without regard to any decrease in Unitholder Minimum
Gain during such Fiscal Year.



     B. Unitholder Minimum Gain Chargeback. Notwithstanding any other provision of Section
4.1 of this Agreement or any other provisions of this Exhibit B (except Section 1.A
hereof), if there is a net decrease in Unitholder Minimum Gain attributable to a Unitholder
Nonrecourse Debt during any Fiscal Year, each Unitholder who has a share of the Unitholder Minimum
Gain attributable to such Unitholder Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i) (5), shall be specially allocated items of Trust income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Unitholder’s share of the net
decrease in Unitholder Minimum Gain attributable to such Unitholder Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i) (5). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated to each Trustee and
other Unitholder pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i) (4). This Section 1.B is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be interpreted
consistently therewith. Solely for purposes of this Section 1.B, each Unitholder’s Adjusted
Capital Account Deficit shall be determined prior to any other allocations pursuant to Section 4.1
of the Agreement or this Exhibit with respect to such Fiscal Year, other than allocations pursuant
to Section 1.A hereof.



     C. Qualified Income Offset. In the event any Unitholder unexpectedly receives any
adjustments, allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving
effect to the allocations required under Sections 1.A and 1.B hereof with respect to such Fiscal
Year hereof, such Unitholder has an Adjusted Capital Account Deficit, items of Trust income and
gain (consisting of
a pro rata portion of each item of Trust income, including gross income and gain



 









 







for the
Fiscal Year) shall be specifically allocated to such Unitholder in an amount and manner sufficient
to eliminate, to the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as possible. This Section 1.C
is intended to constitute a “qualified income offset” under Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.



     D. Gross Income Allocation. In the event that any Unitholder has an Adjusted Capital
Account Deficit at the end of any Fiscal Year (after taking into account allocations to be made
under the preceding paragraphs hereof with respect to such Fiscal Year), each such Unitholder shall
be specially allocated items of Trust income and gain (consisting of a pro rata portion of each
item of Trust income, including gross income and gain for the Fiscal Year) in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted Capital Account
Deficit.



     E. Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be
allocated to the Unitholders in accordance with their respective Percentage Interests. If the
Trustee determines in its good faith discretion that the Trust’s Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the Trustee is authorized, upon notice to the other
Unitholders, to revise the prescribed ratio for such Fiscal Year to the numerically closest ratio
which would satisfy such requirements.



     F. Unitholder Nonrecourse Deductions. Any Unitholder Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Unitholder who bears the economic risk of loss with
respect to the Unitholder Nonrecourse Debt to which such Unitholder Nonrecourse Deductions are
attributable in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).



     G. Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Trust asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and
such item of gain or loss shall be specially allocated to the Unitholders in a manner consistent
with Exhibit B and the manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Regulations.



2. Allocations for Tax Purposes




     A. Except as otherwise provided in this Section 2, for federal income tax purposes, each item
of income, gain, loss and deduction shall be allocated among the Unitholders in the same manner as
its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 4.1
of the Agreement and Section 1 of this Exhibit B.



     B. In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, and deduction shall be allocated for federal income
tax purposes among the Unitholders as follows:



B- 2









 






	 	(1)	 	(a) the case of a Contributed Property, such items
attributable thereto shall be allocated among the Unitholders consistent with
the principles of Section 704(c) of the Code to take into account the variation
between the 704(c) Value of such property and its adjusted basis at the time of
contribution (taking into account Section 2.C of this Exhibit B; and






	 	(b)	 	any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the
Unitholders in the same manner as its correlative item of “book” gain
or loss is allocated pursuant to Section 4.1 of the Agreement and
Section 1 of this Exhibit B.






	 	(2)	 	(a) the case of an Adjusted Property, such items shall






(1) first, be allocated among the Unitholders in a manner consistent
with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to such
property and the allocations thereof pursuant to Exhibit
A, and




(2) second, in the event such property was originally a Contributed
Property, be allocated among the Unitholders in a manner consistent
with Section 2.B(1) of this Exhibit B; and




	 	(b)	 	any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the
Unitholders in the same manner as its correlative item of “book” gain
or loss is allocated pursuant to Section 4.1 of the Agreement and
Section 1 of this Exhibit B.






	 	(3)	 	all other items of income, gain, loss and deduction shall be
allocated among the Unitholders in the same manner as their correlative item of
“book” gain or loss is allocated pursuant to Section 4.1 of the Agreement and
Section 1 of this Exhibit B.





     C. To the extent Treasury Regulations promulgated pursuant to Section 704(c) of the Code
permit a partnership to utilize alternative methods to eliminate the disparities between the
Carrying Value of property and its adjusted basis, the Trustee shall, subject to the following,
have the authority to elect the method to be used by the Trust and such election shall be binding
on all Unitholders provided that, to the extent that the Trustee has
agreed to use a particular method with respect to a Contributed Property, the Trustee shall be
bound by such agreement (including, without limitation, the agreements set forth in Exhibit
C hereto) pursuant to the terms thereof.



B- 3









 





EXHIBIT C




PROTECTED UNITHOLDERS AND PROTECTED AMOUNTS




	 	 	 
	PART I PROTECTED UNITHOLDERS
	 	PROTECTED AMOUNT

	None

	 	None
	 
	 	 





	 	 	 
	PART II PROTECTED UNITHOLDERS
	 	 
	None
	 	 






 









 






EXHIBIT D




TAX PROTECTION AGREEMENT




 









 







Exhibit D

to

Annex A

to

Archstone-Smith Operating Trust

Articles of Amendment and Restatement

Amended and Restated Declaration of Trust (“Declaration of Trust”)




          Background




          In connection with the closing of the merger of Charles E. Smith Residential Realty, L.P.
(“SRW Partnership”), with and into the Trust pursuant to the Agreement and Plan of Merger, dated as
of May 3, 2001, by and among the Trustee, the Trust, Charles E. Smith Residential Realty, Inc.
(“SRW”) and SRW Partnership (the “Merger Agreement”) (the “SRW Merger”), the Trust is making
certain undertakings to the former limited partners of SRW Partnership who became Unitholders of
the Trust as a result of the SRW Merger (the “Former SRW Limited Partners”). The specific
agreements between the Trust and SRW Partnership with respect to these various matters are
described below.




          Specific Agreements




          1. Definitions. All capitalized terms used and not otherwise defined in this Exhibit D shall
have the meaning set forth in the Declaration of Trust. As used herein, the following terms have the
following meanings:




          704(c) Value: Means the fair market value of each of the Protected Properties as
described in Section 6(b).




          Curative Allocation: Means, for each Fiscal Year through 2028, an amount of income per
Protected Unit equal to $5,11 (which amount per protected Unit shall be pro rated (i) for the
Fiscal Year in which the SRW Merger occurs based upon the number of days in such Fiscal Year
following the SRW Merger divided by 365 and (ii) with respect to a Protected Unit that ceases to be
a Protected Unit in any Fiscal Year, based upon the number of days in such Fiscal Year prior to the
day on which such Protected Unit ceased to be a Protected Unit divided by 365).




          Existing Nonrecourse Debt: Means all of the outstanding indebtedness of the SRW
Partnership at the time of the Closing of the Merger that is treated as either Partner Nonrecourse
Debt or a Nonrecourse Liability and that is secured by any of the Protected Properties (or is
treated for purposes of Treasury Regulation § 1.752-3(a)(2) as secured by any of the Protected
Properties, determined taking into account the IRS Private Letter Ruling). The Existing Nonrecourse
Debt that is a Partner Nonrecourse Debt or a Nonrecourse Liability, the Protected Properties
secured (or deemed secured) thereby, and


D-1









 







in the case of Partner Nonrecourse Debt, the SRW Partners with financial liability therefor is set
forth on Schedules 4-1 and 4-2 to this Exhibit D).




          IRS Private Letter Ruling: The ruling received by the SRW Partnership from the
Internal Revenue Service dated November 6, 1997.




          Protected Units: Means only those Units issued to the SRW Partners in connection with the SRW
Merger, or any Units thereafter issued by the Trust to the SRW Partners in exchange for such
Protected Units or with respect to such Protected Units. The term Protected Units shall not include
any other Units hereafter acquired by an SRW Partner, whether from the Trust or otherwise.




          Protected Properties: Means, except as otherwise specifically provided in this Exhibit
D, only those properties and assets set forth on Schedule 2 to this Exhibit D and any other
properties or assets hereafter acquired by the Trust received as “substituted basis property” as
defined in Section 7701(a)(42) of the Code with respect to such Protected Properties.




          Protected Period: Means the period ending at 12:01 A.M. on January 1, 2022.




          SRW Partners: Means the Former SRW Limited Partners, other than SRW and the
Trustee as a successor to SRW, and any Person who holds Protected Units who acquires such Protected
Units from an SRW Partner in a transaction in which gain or loss is not recognized in whole for
federal income tax purposes and in which such transferee’s adjusted basis, as determined for
federal income tax purposes, is determined in whole or in part by reference to the adjusted basis
of the SRW Partner in such Protected Units.  A tentative list of such partners is set forth on
Schedule 1 to this Exhibit D and shall be updated by the Trustee prior to the closing of the SRW
Merger to accurately reflect the names of the Persons who acquire Protected Units in the SRW
Merger.




          Subsidiary: Means any partnership, limited  liability company, trust or other
entity whose disposition of a Protected Property or any direct or indirect interest therein would
result in the allocation of taxable gain to one or more SRW Partners pursuant to Section 704(c) of
the Code and the Treasury Regulations thereunder.




          2. Restrictions on Dispositions of Protected Properties.




          (a) The Trust agrees for the benefit of each SRW Partner, for the term of the Protected
Period, not to directly or indirectly sell, exchange, transfer, or otherwise dispose of any
Protected Property or any interest therein (without regard to whether such disposition is voluntary
or involuntary) to the extent that such disposition would cause an SRW Partner to recognize part or
all of the gain that would have been recognized for federal income tax purposes upon a fully
taxable disposition of one or more Protected Properties at the time of the SRW Merger. Without
limiting the foregoing, the term “sale, exchange, transfer or disposition” by the Trust shall be
deemed to include, and the prohibition shall extend to, (i) any disposition by any Subsidiary of
the Trust of any Protected Property or any interest therein, and (ii) any direct or indirect
disposition by the




D-2









 







Trust or any Subsidiary of the Trust of all or any portion of its interest in any entity that was a
subsidiary of the SRW Partnership (which shall include, without limitation, any transaction
involving a distribution or deemed distribution by a Subsidiary to the Trust under Section 731 of
the Code) to the extent that such disposition would cause an SRW Partner to recognize part or all
of the gain that would have been recognized for federal income tax purposes upon a fully taxable
disposition of one or more Protected Properties at the time of the SRW Merger. Notwithstanding the
foregoing, a disposition by a Subsidiary of a Protected Property will not violate this Section 2(a)
if (but only if) immediately prior to the closing of the SRW Merger, an owner of an interest in
such Subsidiary that is not an Affiliate of SRW Partnership or SRW had (or would have had in the
future) the ability to cause such Subsidiary to effect such disposition of such Protected Property
notwithstanding the objection of, or without the consent of, the SRW Partnership, provided
that such ability will not be considered to exist if under the applicable operative legal
documents relating to the organization and operation of the Subsidiary or any other agreement or
arrangement between the parties, the SRW Partnership or one of its Subsidiaries would have been
able to take an action that would have been effective to prevent the recognition of gain with
respect to the Protected Property, including, without limitation, a “right of first refusal” or
“first offer” as to either the Protected Property or the outside investor’s interest in the
Subsidiary, or a “buy-sell” or similar arrangement as to either the Protected Property or the
outside investor’s interest in the Subsidiary. Without limiting the foregoing, a disposition shall
include any transfer, voluntary or involuntary, in a foreclosure proceeding, pursuant to a deed in
lieu of foreclosure, or in a bankruptcy proceeding.




          (b) Notwithstanding the restriction set forth in Section 2(a), the Trust (or any Subsidiary)
may dispose of a Protected Property if such disposition qualifies as a like-kind exchange under
Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other
transaction (including, but not limited to, a contribution of property to any entity that qualifies
for the nonrecognition of gain under Section 721 or Section 351 of the Code, or a merger or
consolidation of the Trust with or into another entity that qualifies for taxation as a
“partnership” for federal income tax purposes (a “Successor Partnership”)) that does not result in
the recognition of any taxable income or gain to an SRW Partner with respect to any of the
Protected Units; provided, however, that: (1) in the event of a disposition under
Section 1031 or Section 1033 of the Code, any property that is acquired in exchange for or as a
replacement for a Protected Property shall thereafter be considered a Protected Property for
purposes of this Section 2; (2) in the case of a Section 1031 like-kind exchange, if such exchange
is with a “related party” within the meaning of
Section 1031(f)(3) of the Code, any direct or
indirect disposition by such related party of the Protected Property or any other transaction prior
to the expiration of the two (2) year period following such exchange that would cause Section
1031(f)(1) to apply with respect to the Protected Property (including
by reason of the application of
Section 1031(f)(4)) shall be considered a violation of Section 2(a) by the Trust; (3) if the
Protected Property is transferred to another entity in a transaction in which gain or loss is not
recognized, the interest of the Trust in such entity shall thereafter be considered a Protected
Property for purposes of this Section 2, and if the acquiring entity’s disposition of the Protected
Property would cause an SRW Partner to recognize gain or loss as a result thereof, the transferred
Protected Property still shall be considered a Protected Property for purposes of this Section 2
and the transferee shall have agreed to be jointly and severally liable for any payments required
under Section 2(c) hereof; and (4) in the event of a merger


D-3









 








or consolidation involving the Trust and a Successor Partnership, the Successor Partnership shall
have agreed in writing for the benefit of the SRW Partners that all of the restrictions of this
Section 2 shall apply with respect to the Protected Properties.




          (c) Any merger or consolidation involving the Trust or any Subsidiary of the Trust, whether or
not the Trust is the surviving entity in such merger or consolidation, that results in an SRW
Partner being required to recognize part or all of the gain that would have been recognized for
federal income tax purposes upon a fully taxable disposition of one or more Protected Properties at
the time of the SRW Merger shall be deemed to be a disposition of the Protected Properties for
purposes of Section 2(a).




          3. Prohibition on Repayment or Prepayment of Existing Nonrecourse Debt.




          (a) Except as otherwise expressly permitted in this Section, during the term of the Protected
Period, the Trust shall not, directly or indirectly, cause or permit the Trust or any Subsidiary to
repay or prepay any of the Existing Nonrecourse Debt.




          (b) (i) Without limiting Section 3(a), the Trust shall cause each Existing Nonrecourse Debt
that is identified on Schedule 4-1 to this Exhibit D as qualifying as a Nonrecourse
Liability allocable to one or more specified Protected Properties immediately prior to the time of
the Merger to qualify throughout the term of the Protected Period as (i) a “nonrecourse liability”
(as defined in Treasury Regulation § 1.752-1(a)(2)) (a “Nonrecourse Liability”) that is allocable
to those specified Protected Properties for purposes of Treasury Regulation § 1.752-3(a) and (ii)
“qualified nonrecourse financing” (as defined in Section 465(b)(6)(B) of the Code) (“Qualified
Nonrecourse Financing”) allocable to the applicable Protected Properties, except to the extent that
the failure to so qualify is a result of any action taken by any SRW Partner or any affiliate of an
SRW Partner, unless such action requires the consent or assistance of the Trust or Trustee and the
Trust or Trustee granted such consent or provided such assistance, including without limitation,
any such SRW Partner or any of their affiliates being or becoming the lender or otherwise
considered to “bear the economic risk of loss” (within the meaning of Treasury Regulation §
1.752-2) with respect to such Existing Nonrecourse Debt or any Replacement Debt. In determining
whether the requirements of this Section 3(b)(i) are met as to an Existing Nonrecourse Debt, the
Trust shall be entitled to assume that immediately following the SRW Merger such Existing
Nonrecourse Debt is considered to be a Nonrecourse Liability and Qualified Nonrecourse Financing
allocable to those specified Protected Properties in the amounts set forth on Schedule 4-1
to this Exhibit D at the time of the Merger, and the Trust shall be entitled to rely on the IRS
Private Letter Ruling.




          (ii) Without
limiting Section 3(a), the Trust shall cause each Existing Nonrecourse Debt that
is identified on Schedule 4-2 to this Exhibit D as qualifying as a Partner Nonrecourse Debt
allocable to one or more specified SRW Partners immediately prior to the time of the Merger to
qualify throughout the term of the Protected Period as (i) a “partner nonrecourse debt” as defined
in Treasury Regulation § 1.704-2(b)(4) (a “Partner Nonrecourse Debt”) that is allocable to those
specified SRW Partners for purposes of Treasury Regulation § 1.752-2(a) and (ii) a debt for which
those specified SRW Partners are considered “at risk” for purposes of Section 465(b) of the Code
(“At Risk Indebtedness”),

D-4









 







except to the extent that the failure to so qualify is a result of any action taken by any SRW
Partner or any affiliate of an SRW Partner, unless such action requires the consent or assistance
of the Trust or Trustee and the Trust or Trustee granted such consent or provided such assistance,
including without limitation, any such SRW Partner or any of their affiliates being or becoming the
lender or otherwise considered to “bear the economic risk of loss” (within the meaning of Treasury
Regulation § 1.752-2) with respect to such Existing Nonrecourse Debt or any Replacement Debt. In
determining whether the requirements of this Section 3(b)(ii) are met as to an Existing Nonrecourse
Debt, the Trust shall be entitled to assume that immediately following the SRW Merger such Existing
Nonrecourse Debt is considered a Partner Nonrecourse Debt and At Risk Indebtedness at the time of
the Merger allocable to the specified SRW Partners in the amounts set forth on Schedule 4-2
to this Exhibit D.




          (c) The requirements in Section 3(a) and Section 3(b) above shall not apply in the case of:




               (i) a payment or repayment that consists solely of a required principal amortization payment
made with respect to an Existing Nonrecourse Debt or Replacement Debt (as defined in clause (ii)
below) in accordance with the principal amortization schedules in effect at the effective time of
the SRW Merger with respect to such Existing Nonrecourse Debt (or in the case of Replacement Debt,
a principal amortization schedule that meets the conditions set forth in subclause (z) of clause
(ii) below; provided that a required payment of principal at the scheduled maturity
of any indebtedness shall not be considered within the scope of this clause (i) (and, accordingly,
the Trust shall be required to refinance such maturing indebtedness with debt that would be
considered qualifying Replacement Debt under clause (ii) below); or



               (ii) a payment of principal made from proceeds of new indebtedness incurred to refinance Existing
Nonrecourse Debt (such new indebtedness incurred pursuant to the refinancing that meets the
conditions set forth below in this clause (ii) is referred to in this Agreement as “Replacement
Debt”), provided that (x) such refinancing is made on a basis that the Replacement Debt would meet
the requirements of Section 3(b)(i) or Section 3(b)(ii), as applicable (assuming in the case of
Existing Nonrecourse Debt or Replacement Debt subject to Section 3(b)(ii) that the affected SRW
Partners execute guarantees of such Replacement Debt in such form as may be requested by the Trust
and/or the applicable lender, subject to the condition that such debt have collateral that has a
value (as determined in good faith by the Trustee) that is not less than the value (as determined
in good faith by the Trustee) of the collateral for the Existing Nonrecourse Debt or Replacement
Debt being refinanced and that the guarantee arrangement meets the criteria set forth in Section
3(g) for an “acceptable guarantee”; (y) that the principal amount of the Replacement Debt is at
least equal to the principal amount of the Existing Nonrecourse Debt on the date of such
refinancing; and (z) (I) with respect to the refinancing of an Existing Nonrecourse Debt, provides
either for “interest-only” payments or for level payments of principal and interest that would not
result in amortization of the remaining principal balance over a period shorter than twenty-five
years (plus, if the Existing Nonrecourse Debt to be refinanced is being refinanced prior to
maturity, the number of years remaining to its maturity); and (II) with respect to the refinancing
of Replacement Debt previously incurred to refinance an Existing Nonrecourse



D-5









 





Debt, provides either for “interest-only” payments or for level payments of principal and interest
that would not result in amortization of the remaining principal balance of the new Replacement
Debt over a period shorter than twenty-five years (plus the number of years referred to in the
preceding parenthetical for the Replacement Debt being refinanced, less the number of years of
permitted principal amortization that have occurred with respect to the Replacement Debt being
refinanced).




          (d) For the purposes of this Section 3, any transaction or other event, including, without
limitation, any modification of indebtedness, in which any Unitholder or any affiliate of any
such Unitholder would become personally liable for, or would bear or incur, directly or indirectly,
the “risk of loss” with respect to any Existing Nonrecourse Debt or any Replacement Debt that
either (i) would cause such Debt not to be considered a Nonrecourse Liability or Qualified
Nonrecourse Financing (except to the extent such Existing Nonrecourse Debt and any Replacement Debt
with respect thereto is described in Section 3(b)(ii)) or (ii) if such Existing Nonrecourse Debt is
described in Section 3(b)(ii), would cause the amount of such Debt that is considered Partner
Recourse Debt or At Risk Indebtedness with respect to any SRW Partner to be reduced, shall be
considered a refinancing of such Debt and shall be subject to the requirements set forth in this
Section 3, except to the extent that the failure to so qualify is a result of any action taken by
any SRW Partner or any affiliate of an SRW Partner, unless such action requires the consent or
assistance of the Trust or Trustee and the Trust or Trustee granted such consent or provided such
assistance, including without limitation, any such SRW Partner or any of their affiliates being or
becoming the lender or otherwise considered to “bear the economic risk of loss” (within the meaning
of Treasury Regulation § 1.752-2) with respect to such Existing Nonrecourse Debt or any
Replacement Debt.




          (e) For the purposes of this Section 3, any sale, exchange or other disposition (including an
exchange to which Section 1031 or 1033 of the Code applies) of a property that is subject to an
Existing Nonrecourse Debt or Replacement Debt shall be considered a repayment of such Debt and
shall be subject to the provisions of this Section 3, unless in connection with such sale, exchange
or other disposition, (i) the Trust incurs Replacement Debt that would meet the requirements of
Section 3(b)(i) or (b)(ii), as applicable, in an amount equal to the amount of Debt that is
considered to be a refinancing under this Section 3(e) and (ii) the SRW Partners who were pursuant
to the Treasury Regulations under Section 752 of the Code allocated a share of the Existing
Nonrecourse Debt or Replacement Debt considered repaid would be allocated at all times necessary to
avoid any deemed distribution of cash to any of the SRW Partners under Section 731 of the Code an
amount of the new Replacement Debt that is at least equal to such amount previously allocated to
them.




          (f) If an Existing Nonrecourse Debt or Replacement Debt shall mature during the term of the
Protection Period, the Trust shall, prior to the stated maturity of the Existing Nonrecourse Debt
or Replacement Debt (the “Maturing Debt”), cause the Trust to refinance the Maturing Debt with
Replacement Debt that (i) would meet the requirements of Section 3(b)(i) or Section 3(b)(ii), as
applicable (assuming in the case of Existing Nonrecourse Debt or Replacement Debt subject to
Section 3(b)(ii) that the affected SRW Partners execute guarantees of such Replacement Debt in such
form as may be requested by the Trust and/or the applicable lender, subject to the condition that
such debt have


D-6









 






collateral that has a value (as determined in good faith by the Trustee) that is not less than the
value (as determined in good faith by the Trustee) of the collateral for the Existing Nonrecourse
Debt or Replacement Debt being refinanced and that the guarantee meets the criteria set forth in
Section 3(g) for an “acceptable guarantee”, (ii) that would have a principal amount not less than
the principal amount of the Existing Nonrecourse Debt on the date of the refinancing; and (iii) (x)
with respect to the refinancing of an Existing Nonrecourse Debt, provides either for
“interest-only” payments or for level payments of principal and interest that would not result in
amortization of the remaining principal balance over a period shorter than twenty-five years (plus,
if the Existing Nonrecourse Debt to be refinanced is being refinanced prior to maturity, the number
of years remaining to its maturity); and (y) with respect to the refinancing of Replacement Debt
previously incurred to refinance an Existing Nonrecourse Debt, provides either for “interest-only”
payments or for level payments of principal and interest that would not result in amortization of
the remaining principal balance of the new Replacement Debt over a period shorter than twenty-five
years (plus the number of years referred to in the preceding parenthetical for the Replacement Debt
being refinanced, less the number of years of permitted principal amortization that have occurred
with respect to the Replacement Debt being refinanced).




          (g) For purposes of Section 3(c)(ii) and Section 3(f), a guarantee is an “acceptable
guarantee” if it meets the following criteria: (1) the guarantee agreement is substantially in the
form of the guarantee agreement that the SRW Partner had in effect with respect to the Partner
Nonrecourse Debt that is being refinanced, with such changes that may be required by the lender and
that do not have the effect of reducing the economic and legal exposure of the guarantor under the
guarantee agreement; (2) the guarantee must be given as consideration to a lender in connection
with the making of a new loan or in connection with the refinancing, extension or other material
modification favorable to the borrower of an existing loan; (3) the guarantee must be executed and
delivered to the lender, (4) the aggregate amount of guarantees, indemnities and other similar
undertakings made with respect to the applicable debt must not exceed the face amount of the debt,
and (5) as to each SRW Partner that is executing a guarantee pursuant hereto, there must be no
other Person that would be considered to “bear the economic risk of loss,” within the meaning of
Treasury Regulation § 1.752-2, or would be considered to be “at risk” for purposes of Section
465(b) with respect to that portion of such debt for which such SRW Partner is being made liable
for purposes of satisfying the Trust’s obligations to such SRW Partner under Section 3(c)(ii) and
Section 3(f).




D-7









 








               4. Remedies for Breach.



               (a) In the event that the Trust breaches its obligations set forth in
Section 2, Section 3, Section 6, Section 7 or Section 9 with respect to an SRW Partner during the
Protected Period, the SRW Partner’s sole right shall be to receive from the Trust, and the Trust
shall pay to such SRW Partner as damages, an amount equal to the aggregate federal, state and local
income taxes incurred by the SRW Partner as a result of the income or gain actually recognized by
such SRW Partner with respect to its Protected Units (after giving effect to adjustments pursuant
to Section 754 of the Code) by reason of such breach, plus an amount equal to the aggregate
federal, state, and local income taxes payable by the SRW Partner as a result of the receipt of any
payment required under this Section 4(a). For purposes of computing the amount of federal, state,
and local income taxes required to be paid by an SRW Partner, (i) any deduction allowed in
computing federal income taxes for state income taxes payable as a result thereof shall be taken
into account, and (ii) an SRW Partner’s tax liability shall be computed using the highest federal,
state and local marginal income tax rates that would be applicable to such SRW Partner’s taxable
income (taking into account the character of such income or gain) for the year with respect to
which the taxes must be paid, without regard to any deductions, losses or credits that may be
available to such SRW Partner that would reduce or offset its actual taxable income or actual tax
liability if such deductions, losses or credits could be utilized by the SRW Partner to offset
other income, gain or taxes of the SRW Partner, either in the current year, in earlier years, or in
later years). In the event that an SRW Partner shall acquire any additional Units subsequent to the
SRW Merger by reason of a contribution of additional money or property to the Trust, the income and
gain that shall be taken into account for purposes of computing the damages payable under this
Section 4(a) would not exceed the gain that such SRW Partner would have recognized by reason of the
Trust’s breach of its obligation set forth in Section 2, Section 3, Section 6, Section 7 or Section
9, as applicable, had such SRW Partner not acquired such additional Units. In addition, in the case
of a breach of Section 2, in no event shall the gain taken into account for purposes of computing
the damages payable under this Section 4(a) exceed the amount of gain that would have been
recognized by the SRW Partner with respect to the Protected Units if the Trust had sold the
Protected Property in a fully taxable transaction on the day following the closing of the SRW
Merger for a purchase price equal to the 704(c) Value of such Protected Property.



               (b) Notwithstanding any provision of this Exhibit D, the sole and exclusive rights and
remedies of any SRW Partner for a breach or violation of the covenants set forth in Section 2 or
Section 3 shall be a claim for damages against the Trust, computed as set forth in Section 4(a),
and no SRW Partner shall be entitled to pursue a claim for specific performance of the covenant set
forth in Section 2 or Section 3 or bring a claim against any Person that acquires a Protected
Property from the Trust in violation of Section 2 (other than a Successor Partnership that has
agreed in writing to be bound by the terms of this Exhibit D or that has otherwise succeeded to all
of the assets and all of the liabilities of the Trust, but then only for damages computed as set
forth in Section 4(a)). If the Trust has breached or violated any of the covenants set forth in
Section 2, Section 3, Section 6, Section 7 or Section 9 (or an SRW Partner asserts that the Trust
has breached or violated any of the covenants set forth in Section 2, Section 3, Section 6, Section
7 or Section 9, the Trust and the SRW Partner agree to negotiate in good faith to resolve any



D-8









 




disagreements regarding arty such breach or violation and the amount of damages, if any, payable to
such SRW Partner under Section 4(a). If any such disagreement cannot be resolved by the Trust and
such SRW Partner within sixty (60) days after the receipt of notice from the Trust of such breach
and the amount of income to be recognized by reason thereof, the Trust and the SRW Partner shall
jointly retain a nationally recognized independent public accounting firm (“an Accounting Firm”) to
act as an arbitrator to resolve as expeditiously as possible all points of any such disagreement
(including, without limitation, whether a breach of any of the covenants set forth Section 2,
Section 3, Section 6, Section 7 or Section 9 has occurred and, if so, the amount of damages to
which the SRW Partner is entitled as a result thereof, determined as set forth in Section 4(a)).
All determinations made by the Accounting Firm with respect to the resolution of any breach or
violation of any of the covenants set forth in Section 2, Section 3, Section 6, Section 7 or
Section 9 and the amount of damages payable to the SRW Partner under Section 4 (a) shall be final,
conclusive and binding on the Trust and the SRW Partner. The fees and expenses of any Accounting
Firm incurred in connection with any such determination shall be shared equally by Trust and the
SRW Partner, provided that if the amount determined by the Accounting Firm to be owed by
the Trust to the SRW Partner is not less than ninety percent (90%) of the amount asserted by the
SRW Partner to be owed, then all of the fees and expenses of any Accounting Firm incurred in
connection with any such determination shall be paid by the Trust. (The exception in the
proviso in the preceding sentence shall not apply to Robert H. Smith, Robert P. Kogod,
members of their respective Immediate Families, and entities that are Affiliates of Robert H Smith,
Robert P. Kogod, and/or members of their respective Immediate Families.)




               (c) For purposes of this Section 4, if any SRW Partner is, for federal income tax purposes, a
partnership, an S corporation, “real estate investment trust” or a trust, then all computations of
amounts of taxes required to be paid by the SRW Partner and the payments due from the Trust as a
result thereof shall be made by computing the taxes required to be paid by the partners,
shareholders or beneficiaries of such partnership, S corporation, “real estate investment trust” or
trust (or to the extent that any partner, shareholder or beneficiary of such partnership S
corporation or trust is itself a partnership, S corporation or trust, the same principles shall
apply in determining the taxes required to be paid by such partner, shareholder or beneficiary).



               (d) In the event that there has been a breach of Section 2,
Section 3, Section 6, or Section 7, the Trustee shall provide to the SRW Partner notice of the
transaction or event giving rise to such breach not later than at such time as the Trustee provides
to the SRW Partners the Schedule K-l’s to the Trust’s federal income tax return as required in
accordance with Section 8.1 of Annex A of the Declaration of Trust. All payments required under
this Section 4 to any SRW Partner shall be made to such SRW Partner not later than seven (7) days
after receipt by the Trust of a written claim from such SRW Partner therefor, unless the Trust
disagrees with the computation of the amount required to be paid in respect of such breach, in
which event the procedures in Section 4(b) shall apply and the payment shall be due within seven
(7) days after the earlier of a determination by the Accounting Firm or an agreement between the
Trust and the SRW Partner as to the amount required to be paid, with interest accruing on the
aggregate amount required to be paid from the date that is seven (7) days after receipt by the
Trust of a claim from such SRW Partner to the date of actual payment at a rate equal to the “prime



D-9









 




rate” of interest, as published in the Wall Street Journal (or if no longer published there, as
announced by Citibank) effective as of the date the payment is required to be made.




          5. Opportunity for SRW Partners to Enter into Deficit Restoration Obligations. Without
limiting any of the obligations of the Trust under this Agreement, the Trust shall consider in good
faith a request by an SRW Partner to enter into an agreement with the Trust to bear the economic
risk of loss as to a portion of the Trust’s recourse indebtedness by undertaking an obligation to
restore a portion of its negative capital account balance upon liquidation of such SRW Partner’s
interest in the Trust, if such SRW Partner shall provide information from its professional tax
advisor satisfactory to the Trust showing that, in the absence of such agreement, such SRW Partner
likely would not be allocated from the Trust sufficient indebtedness under Section 752 of the Code
and the at- risk provisions under Section 465 of the Code to avoid the recognition of gain (other
than gain required to be recognized by reason of actual cash distributions from the Trust). The
Trust and its professional tax advisors shall cooperate in good faith with such SRW Partner and its
professional tax advisors to provide such information regarding the allocation of the Trust
liabilities and the nature of such liabilities as is reasonably necessary in order to determine the
SRW Partner’s adjusted tax basis in its Units and at-risk amount. In deciding whether or not to
grant such a request, the Trust shall be entitled to take into account all factors related to the
Trust, including, without limitation, the existing and anticipated debt structure of the Trust, the
tax situations of all other Unitholders, including the Trustee (individually and as a group), and
the effect that granting such a request might have on their tax situation, and the anticipated
long-term business needs of the Trust. The Trust’s only obligation with respect to any such request
from an SRW Partner pursuant to this Section 5 shall be to act in good faith. In the event the
Trust fails to act in good faith with respect to any such request,
the exclusive remedy of the SRW
Partner who made such request shall be an action for specific performance, with no entitlement to
monetary damages.




          6. Section 708 Termination; Section 704(c) Method.




              (a) The Trust shall treat the merger of SRW into the Trustee as a
transfer of a greater than fifty percent (50%) interest in the capital and profits of SRW
Partnership that resulted in a termination of SRW Partnership
pursuant to Section 708(b)(1)(B) of
the Code at the effective time of the merger of SRW into the Trustee.



                    (b) Notwithstanding Paragraph 2.C of Exhibit C to Annex A
of the Declaration of Trust, the Trust shall use the “traditional method” under Regulations §
1.704-3(b) for purposes of making allocations under Section 704(c) of the Code (with no “curative
allocations” to offset the effect of a “Ceiling Rule Disparity” as described in Section 6(c) below,
except as set forth in Section 6(d) below) with respect to (i) each of the assets acquired by the
Trust from the SRW Partnership in the SRW Merger (including, without limitation, all assets owned
by any direct or indirect Subsidiaries of the SRW Partnership that are treated either as a
partnership or as a disregarded entity for federal income tax purposes), except to the extent that
the Trust expressly would be required to use a different method under a SRW Tax Protection
Agreement assumed by the Trust pursuant to the Merger Agreement and the affected SRW Partner has
not executed an agreement to waive its right to such different method
following the SRW Merger, and
(ii) with respect to each of



D-10









 




the other assets acquired by the Trust or deemed acquired by the Trust from the Trustee or its
Affiliates in connection with the SRW Merger. The 704(c) Values of the Protected Properties shall
be as determined by the Trustee in good faith for purposes of preparing the financial statements of
the Trust and the Trustee reflecting the results of the SRW Merger provided that Robert H. Smith
and Robert P. Kogod, as representatives for the Protected Partners, shall have the opportunity to
review and comment on the 704(c) Values. The Trustee shall consider in good faith such revisions as
are reasonably requested by Messrs. Smith and Kogod; provided that, after considering in good faith
any such reasonable requests, the Trustee shall have the sole and absolute discretion to determine
in good faith the 704(c) Values. Notwithstanding the foregoing, the 704(c) Values of the stock and
securities of (including debt outstanding to) Consolidated Engineering Services, Inc. that are
being acquired by Trust shall not exceed $106 million and the value of the stock and securities of
(including debt outstanding to) Smith Management Construction, Inc. that are being acquired by
Trust shall not exceed $10 million. The Trust shall, for purposes of Treasury Regulations §§
1.704-3 and 1.704-1(b)(2)(iv)(g)(3), elect to use a 27 1⁄2 year useful life with respect to any
property constituting “residential real property” within the meaning of Section 168(c) of the Code
that is part of the Protected Properties, except where such a useful life is not permitted under
the Code.




               (c) For purposes of Section 6(b) and Section 6(d), the term “Ceiling
Rule Disparity” shall mean the excess, if any, of (i) the aggregate amount of Depreciation with
respect to any asset allocated to the “non-contributing partners” (that is, the holders of Units
who are not subject to Section 704(c) of the Code and Treasury Regulations § 1.704-3 with respect
to such asset), over (ii) the aggregate amount of depreciation deductions with respect to such
asset allocated to the “non-contributing partners” for federal income tax purposes from the
Effective Date to the date of the disposition of such asset.



               (d) In order to offset the effect of Ceiling Rule Disparities, the
Trust shall make the Curative Allocation with respect to each Protected Unit each Fiscal Year,
which Curative Allocation shall be considered to offset first any Ceiling Rule Disparities that
exist with respect to a Protected Unit that are attributable to appreciation in the Protected
Properties and depreciation claimed with respect to the Protected Properties that is attributable
to periods after the Protected Properties were acquired by SRW Partnership, and only after all such
Ceiling Rule Disparities have been eliminated with respect to a particular SRW Partner would such
allocation be considered to offset any Ceiling Rule Disparities that exist with respect to a
Protected Unit that are attributable to appreciation in the Protected Properties and depreciation
claimed with respect to the Protected Properties that is attributable to periods before the
Protected Properties (or the applicable predecessor properties) were acquired by SRW Partnership.
To the extent that the Curative Allocation is not sufficient to eliminate the effect of all Ceiling
Rule Disparities with respect to a particular Protected Property, the Trust shall make a “curative
allocation” upon a disposition of that particular Protected Property to offset the remaining
balance, if any, of the Ceiling Rule Disparity with respect to that particular Protected Property.



          7. Allocations of Liabilities Pursuant to Regulations Under Section 752. All tax returns
prepared by the Trust during the Protected Period shall allocate liabilities of

D-11









 








the Trust for purposes of Section 752 and the Treasury Regulations thereunder taking into account
the following:




          (i) for purposes of allocating any Existing Nonrecourse Debt or Replacement Debt that is
identified on Schedule 4-1 as a Nonrecourse Liability, the Trust, for purposes of Treasury
Regulations §§ 752-3(a)(2) and 1.752-3(a)(3), shall treat such Existing Nonrecourse Debt (or any
Replacement Debt therefor) as allocable to those specified Protected Properties in amounts not less
than the amounts set forth on Schedule 4-1 to this Exhibit D at the time of the SRW Merger
(subject to reduction as and to the extent permitted under Section 3), and, absent a change to the
Code or the Treasury Regulations, the Trust shall follow the methodology set forth in the IRS
Private Letter Ruling;




          (ii) the Trust shall allocate any Existing Nonrecourse Debt or Replacement Debt that
constitutes “excess nonrecourse liabilities” of the Trust to the SRW Partners in the manner set
forth in sentence five of Treasury Regulations § 1.752-3(a)(3)
following the SRW Merger;




          (iii) the Trust shall allocate to each SRW Partner who is shown on Schedule 4-2 to
this Exhibit D as having liability for a specified dollar amount of an Existing Nonrecourse Debt
that is a Partner Nonrecourse Debt a dollar amount of such Partner Nonrecourse Debt equal to the
amount shown on Schedule 4-2 with respect to such SRW Partner (subject to reduction as and
to the extent permitted under Section 3); and




          (iv) in making allocations of debt under Treasury Regulation § 1.752-3(a)(2) with respect to
a specific Protected Property, the Trust shall make an allocation (I) first to the SRW Partners in
an amount equal to the lesser of (x) the “Section 704(c) minimum gain” that such SRW Partner would
have been allocated by SRW Partnership under Treasury Regulation § 1.752-3(a)(2) immediately prior
to the SRW Merger or (y) the “Section 704(c) minimum gain” that such SRW Partner would have been
allocated by SRW Partnership under Treasury Regulation § l.752-3(a)(2) immediately after such SRW
Partner acquired an interest in SRW Partnership by reason of the contribution of an interest in the
Protected Property (or a predecessor asset) to SRW Partnership in exchange for an interest in SRW
Partnership, and (II) thereafter pro rata among the SRW Partners based upon the number of Protected
Units that they hold and their proportionate shares of the “Section 704(c) minimum gain” existing
immediately after the SRW Merger in excess of the amounts described in (y).



In addition, the Trust shall not make available after the date of the SRW Merger, whether pursuant
to an agreement entered into after such date or otherwise, to any other Unitholder a method of
allocating “excess nonrecourse liabilities” of the Trust that is more favorable than that made
available to such SRW Partners without making such method available to the SRW Partners on a pro
rata basis with such other Unitholders.




          Notwithstanding the provision of this Exhibit D, the Trust shall not be required to make
allocations of Nonrecourse Liabilities or Partner Nonrecourse Debt to the SRW Partners as set forth
in this Exhibit D if and to the extent that, as a result of a change

D-12









 








in Section 752 of the Code or the Treasury Regulations occurring after the date hereof, the Trust
obtains an opinion of Mayer Brown & Platt or KPMG Peat Marwick (or another comparable firm of
attorneys or accountants) to the effect that, as a result of such change, there no longer is
“substantial authority” (within the meaning of Section 6662(d)(2)(B)(i)) of the Code for such
allocation; provided that the Trust shall provide to Mr. Robert H. Smith and Mr. Robert P.
Kogod (or in the event of their death or disability, their executor, guardian or custodian, as
applicable), notice of such determination, together with a copy of such opinion, and if, within
forty five (45) days after the receipt thereof, the Trust is provided an opinion of Hogan & Hartson
LLP or Arthur Andersen LLP (or another comparable firm of attorneys or accountants) to the effect
that, notwithstanding such change, there continues to be “substantial authority” (within the
meaning of Section 6662(d)(2)(B)(i) of the Code) for such allocations, the Trust shall continue to
make allocations of Nonrecourse Liabilities or Partner Nonrecourse Debt to the SRW Partners as set
forth in this Exhibit D.




          If a change in the Trust’s allocations of Nonrecourse Liabilities or Partner Nonrecourse Debt
to the SRW Partners is required by reason of circumstances described in the preceding sentence, the
Trust and its professional tax advisors shall cooperate in good faith with Messrs. Robert H. Smith
and Robert P. Kogod (or in the event of their death or disability, their executor, guardian or
custodian, as applicable) and their professional tax advisors to develop alternative allocation
arrangements and/or other mechanisms that protect the federal income tax positions of the SRW
Partners in the manner contemplated by the allocations of Nonrecourse Liabilities or Partner
Nonrecourse Debt to the SRW Partners as set forth in this Exhibit D.




          8. Other Agreements With SRW Partners. Pursuant to the Merger Agreement, the Trustee, the
Trust, SRW, and SRW Partnership will enter into an Assignment and Assumption Agreement, dated as of
October 31, 2001, pursuant to which the Trust will assume certain obligations of SRW Partnership
made pursuant to certain tax protection agreements (the “SRW Tax Protection Agreements”). A list of
those SRW Tax Protection Agreements is set forth on Schedule 5 to this Exhibit D.




          9. Requirement for Delivery of Evidence of Filing of Form 8832. Within 30 days following the
SRW Merger, the Trustee shall provide to Messrs. Smith and Kogod, as representatives of the SRW
Partners, evidence, in the form of a certified mail return receipt, that the Trust filed with the
Internal Revenue Service Form 8832 electing pursuant to Treasury Regulation § 301.7701-3(c)(1)(i)
to be treated either as a domestic eligible entity with a single owner electing to be disregarded
as a separate entity or a partnership, as applicable, not later than one day prior to the closing
of the SRW Merger.




          10. Amendment of this Agreement. This Agreement may not be amended, directly or indirectly
(including by reason of a merger between the Trust and another entity) except by a written
instrument signed by the Trustee and approved by the SRW Partners holding seventy-six percent (76%)
of the then outstanding Protected Units; provided, however, that any amendment that would permit a
sale of a Protected Property in violation of Section 2 or the refinancing of debt in violation of
Section 3, shall not be permitted without the written approval of holders of seventy-six percent
(76%) of the then

D-13









 








outstanding Protected Units held by SRW Partners that would be adversely affected by such actions.




          11. Modification of Section 5.8 of Annex A With Respect to Holders of Protected
Units. For purposes of applying Section 5.8.B. of Annex A to the Declaration of Trust with respect
to all SRW Partners who hold Protected Units, that Section shall be applied by substituting the
phrase “provided that the Trustee has acted in good faith and pursuant to its authority
under this Agreement” for the phrase “unless the Trustee has acted in bad faith and the act or
omission was material to the matter giving rise to the loss, liability or benefit pursuant to its
authority under the Agreement.” For purposes of applying Section 5.8.A. of Annex A to the
Declaration of Trust with respect to all SRW Partners who hold Protected Units, that Section shall
be applied by substituting the following therefor:





The Trustee shall not be liable for monetary damages to the Trust or any Unitholder for losses
sustained or incurred as a result of errors in judgment or of any act or omission if the Trustee
acted in good faith.



D-14









 





Schedule 1 to Exhibit D




SRW Partners




LEONARD I. ABEL

HELEN S. ABEL

JACK W. ABEL

JOY S. ABEL

SUSAN M. ABEL

ETHEL ABRAMSON

ALEXANDER ABRAMSON

JULES E. ABRAMSON

SAMUEL ABRAMSON

SUSIE SPENCER ABRAMSON

MIRIAN ECKER ADES

AHP SCOTT STREET ASSOC. LP

HAZEL AIKIN

G V ALLEN JR

PAULA ALLOY

CECILE ALPERT

THE CLEMENT C. ALPERT

LILLIAN T. ALPERT REV. TRUST

MILTON ALPERT REVOCABLE TRUST

SANDRA ALPERT

SEYMOUR ALPERT

MAXINE D. ALTMAN

STEPHEN B. ALTMAN

I. ALTMAN, TRUSTEE UNDER

P.D. ALTMAN, TRUSTEE, UNDER

LEE ANTONELLI

JOHN V. & CYNTHIA G. ARBAN, JR

JOHN H. ARIAIL, JR AND

THE THURMAN W. ARNOLD JR.

DREW ARNOLD

JOSEPH ARNOLD

PETER ARNOLD

MIRIAM Z. ASHERY

COOKIE I. AVISSAR

AVSI CORP.

ROBERT J. BAKER

S ROBERT BALDINGER AND

RISUARY TRUST HENRY BARBEE JR

LAWRENCE D. BARKMAN

GERALDINE M. BARKMAN

KAREN J KAY MATTHEWS

SARAH A. BAWCOMBE




D-15









 





MIRIAM B KNOX

ED TRUST UAD DATED 12/3/93

JAMES A. BAZELON

JACKIE TRUST UAD DEC 3, 1993

R L BAZELON & D K JOSEPH

R L BAZELON & D K JOSEPH #2

R L BAZELON & D K JOSEPH #3

DAVID L. BAZELON MARITAL TRUST

DAVID BAZELON MARITAL TRUST

LEE A. BEAUDOIN

BEHA REALTY CORPORATION

DIANE S. BENN

PAUL S. BERGER

CONRAD L. BERMAN

MARILYN R. BERMAN

STANFORD W. BERMAN

J. BERMAN, R. GOLD, OR

RONIT. GOLD, JEFFRE A. BERMAN,

MARCY E. SCHAAF

SCOTT M. BERMAN

BRIAN J. BERMAN

JANET C. BERTMAN

RUTH H. BINN

ARTHUR BIRNEY

BRYON B. AND MARY K. BLACK,

MITCHELL BLANKSTEIN, TRUSTEE

DOROTHY BLOCK

C W BLOMQUIST

HARRIETT K. BOBB

MEYER BOBROW

MARY FRANCES BOCKOVER

ROBERT E & CAROL J BOLEN

JANET P. BONNER

JAMES M. BONNER

JAMES M. BONNER, CUSTODIAN

JAMES M. BONNER, CUSTODIAN #2

JEAN BOSSER

J J BOYLE

A BRATMAN, TRUSTEE

MYRA SOLOMON BRILL REVOC TRUST

THE EDWARD R. BROIDA TRUST

D A BROWN

D A BROWN #2

BROWN FAMILY PARTNERSHIP

ROBERT BROWNSTEIN

ROBERT AND LAURA BROWNSTEIN




D-16









 





PETER BROWNSTEIN

JASON BROWNSTEIN

LINCOLN F. & NANCY M. BROYHILL

ART BUCHWALD

ZELDA BULMAN

LEONARD Z. BULMAN

JOSEPH D. BULMAN LIVING TRUST DATED 10/9/87

GERALD E. BURG

MAURICE B. BURG & RUTH C. BURG

BETTY JOAN BURR

MRS. ROCK DYER GONELLA

T N NELSON TRUST FBO J W JEFF

GEORGE L. DYER. TRUSTEE U/A A.

A. DYER & FVB, TRSTE U/A GEORGE

A. DYER & FVB, TRSTE U/A GEORGE #2

A. DYER & FVB, TRSTE U/A GEORGE #3

THE LENORA G ABRAMS

LYDIA C. HEIZMAN LIVING TRUST

ARNOLD J. AUERBACH TRUST

SCOTT GERBER

GREGORY GERBER

GARY GERBER

CLIFFORD GERBER

SHERRY L. HOLLADAY

PEARL KASSIN REVOCABLE TRUST

RICHARD B. KASSIN

SAMUEL ROBERTS TRUST

TESTAMENTARY TRUST OF BM SMITH

THE DYER REVOCABLE LIVING TRUST #2

ABRAMSON LIMITED PARTNERSHIP

SHIRLEY S JACOBS REV. TRUST

JOSEPH BURSTEIN

JANET SVIRSKY

LEE FORMAN

MINNIE JONTIFF

TUNLAW PARTNERS IRREVOCABLE TRUST

GREENBERG FAMILY TRUST U/W/O

ST LUKE LUTHERAN’S CHURCH

JOHN D. BENN, JR. FAMILY TRUST

WILLIAM SILVERMAN 

NINA J. OTTENSTEIN REVOCABLE INTERVIVOS TRUST

MOLLIE D. BLOCK TRUST UNDER AGREEMENT FBO VICTOR B

MOLLIE D. BLOCK TRUST UNDER AGREEMENT FBO MARILYN M

HERBERT LEVINSON AND ANITA LEVINSON

NEWTON OSHINSKY AND RITA OSHINSKY

MAC LEAN LIVING TRUST DATED MARCH 17, 1998




D-17









 





GEOFFREY BURG

THE BOULDER COMPANY

ROY S. MCDOWELL JR.

BRIAN G. HOWLAND AND DENA R. HOWLAND, JOINT TENANT

ALAN L. POTTER AND LOUISE B. POTTER, TRUSTEES OF T

LOUISE B. POTTER AND ALAN L. POTTER, TRUSTEES OF T

SHAUNA M. WERTHEIM AND RAYMOND A. WERTHEIM TENANTS

STUART H. MILLER AND CATHRYN R. MILLER, TENANTS BY

JAMES DAVID CORTASSA

CHRISTINA MARIE SHANNON

CONSTANCE GRACE DOYLE

PAUL LOUIS CORTASSA, JR.

JOHN & PATRICIA CARLETON

EPSTEIN FAMILY PARTNERSHIP #3

CLARENCE J. GAMBLE 1932 TRUST F/B/O SARAH G. EPSTE

CECILE GRAY BAZELON TRUST UNDER AGREEMENT DATED 8/

ALLAN S & DIANE K KULLEN, JTWROS

FRANCINE BAZELON REVOCABLE LIVING TRUST

HOPE S ALPER

LEO M FURIE

JOSEPH MASLOV

NORA DON LIVING TRUST DATED 09/10/90

EDITH STENDER REVOCABLE LIVING TRUST

SIDNEY FRIEFELD LIVING TRUST

PETER GIANNOPULOS

NICK D KLADIS

MARVIN ANTMAN

JOEL COHEN

BURTON I STENDER TRUST

MARSHALL MARCOVITZ

SOPHIA D MARCOVITZ DECLARATION OF TRUST

BARBARA CHUBIN LIVING TRUST, BARBARA CHUBIN, TTE

DAVID AND AMY STENDER

DIANA SIMON

ROBERT HOHMANN

REVOCABLE INTER VIVOS TRUST OF ELEANOR MASLOV

JUNE HATTON

INFINITY CLARK STREET OPERATING LLC

FURIE PARKWEST LLC

MASLOV PARKWEST LCC

SIMON PARKWEST HOLDING LLC

ROBERT SIMON

STENDER PARKWEST HOLDING LLC

JOEL ELKES, MD, TRUSTEE UTA DATED 04/10/95

MARVIN KOGOD REVOCABLE TRUST

MURIEL KOGOD REVOCABLE TRUST




D-18









 





ROLF A KOEHLER TRUST DATED 10/23/97

COMMONWEALTH ATLANTIC PROPERTIES, INC

JOSEPH H TONAHILL

JEROME L RAPPAPORT

THEODORE J SHOOLMAN

SEAN P BONAN

JANET R BONAN

SANDRA SOMMER

THE MARTIN W & CAROL S WHITE TRUST

ROBERT UNGER & BEVERLY UNGER, JOINT TENANTS

JANICE GERTON

LINDA P MYERS

WILLIAM POORVU

BARBARA FRIEDBERG

RICHARD FRIEDBERG

GEORGE W HOEFLER & ETHEL BE HOEFLER, TENNANTS IN C

THE ELLIOT B SCHOOLMAN CHARITABLE REMAINDER TRUST

JAMES W RAPPAPORT

JEROME L RAPPAPORT JR

MARTHA R ROBERTSON

JUDY RAPPAPORT MALONEY

NANCY RAPPAPORT

ELIZABETH JACKSON RAPPAPORT

CAROL O WALTER

JOAN DUPONT

WENDY OSSERMAN

AMELIA RAPPAPORT ARAMBULA

DR PETER C ROSS

MIZELLE FAMILY TRUST

CHARLES S BONAN

ELIZABETH JANET BONAN

DAVID SCHOOLMAN

PHYLLIS RAPPAPORT

VIRGINIA B ADELSON

HERMAN BOXER

RUTH HINERFIELD

MARVIN A GORDON

JILL RAPPAPORT GLIST

JONATHAN RAPPAPORT

A FERDINAND BONAN

PATRICIA C BONAN

PHYLLIS RAPPAPORT, TRUSTEE FOR JUAQUIN ARAMBULA

PHYLLIS RAPPAPORT, TRUSTEE FOR DIEGO ARAMBULA

PHYLLIS RAPPAPORT, TRUSTEE FOR CARMEN ARAMBULA

PHYLLIS RAPPAPORT, TRUSTEE FOR MIGUEL ARAMBULA

JAMES W RAPPAPORT, TRUSTEE FOR JAMES W RAPPAPORT J




D-19









 





JAMES W RAPPAPORT, TRUSTEE FOR JESSICA RAPPAPORT

MARTHA R ROBERTSON, TRUSTEE FOR COLBY ROBERTSON

JEROME L RAPPAPORT JR, TRUSTEE FOR JENNIFER RAPPAP

JEROME L RAPPAPORT JR, TRUSTEE FOR ELIZABETH RAPPA

NANCY RAPPAPORT, TRUSTEE FOR FOR LYLA FLAVIN

JAMES W RAPPAPORT, TRUSTEE FOR JOSHUA RYAN RAPPAPO

NANCY RAPPAPORT, TRUSTEE FOR FOR CORY FLAVIN

NANCY RAPPAPORT, TRUSTEE FOR FOR ZOE FLAVIN

SARA SCOTT RAPPAPORT

ANDREW E ADELSON

HARRIET P BUBES TRUST

EDITH LIPITZ & LOUIS LIPETZ, JTWROS

LILLIE NESOR

MARLYNE L KLAWANS REVOCABLE TRUST

KEITH M POORE TRUST DATED 08/28/98

ESTHER B DREZNER

THE ROBIN K BLUM TRUST

RONA C. MANDEL

THE SILVERMAN TRUST

EARL ABRAMSON

STUART S BEDERMAN MD

WILLARD E BRANSKY

RICHARD J CONVISER

THE GLEN E COURTWRIGHT TRUST

JOSEPH M FAGAN

MICHAEL R EPTON

BERNARD FILIPOWICZ

IRA J KAUFMAN REVOCABLE TRUST

HOWARD KLAPMAN

JAMES KLAPMAN

WILLIAM G LITTLE

EDWARD MINOR REVOCABLE TRUST

ARNOLD J MORTON

C MICHAEL REESE

GERALD B RIVLIN TRUST

THEODORE H ROWE

ANDREW SCHATZ & BARBARA WOLF

KLAUS SCHMIDT & MARLIS SCHMIDT

FRANCES SPEIGEL MARITAL TRUST

LEE E TENZER

MARSHALL WITZEL

ROSALYN BLANKSTEIN

SAMY NADLER

JACK P KATZ AS TRUSTEE OF DECLARATION OF TRUST

STEVEN A STENDER & VICTORIA STENDER

BURTON I STENDER




D-20









 





HELEN RUBEL

SIDNEY FRIEFELD

SANDRA P STENDER TRUST

FURIE COUNTRYSIDE LLC

JUNE AMADO REVOCABLE TRUST

HAROLD R BLANKSTEIN

OSCAR J BRESLOW REVOCABLE TRUST

MICHAEL E CRANE

HERBERT DAITCHMAN

THE HYLAND B ERICKSON LIVING TRUST

DR SEYMOUR HERSHMAN & SHIRLEY HERSHMAN

FRANKLIN E HORWICH LIVING TRUST

MARTIN L JESSER FAMILY TRUST

JOHN D NORCROSS

VIRGINIA PAQUET

A. MARTIN RANDALL

HAROLD L SILVER LIVING TRUST DATED 06/04/93

DAVID A STENDER

JOEL STENDER & DONNA STENDER

ROBERT J SUNKO

MEYER TAYLOR TRUST DATED 9/9/81

ROBERT TICKMAN

MICHAEL L SUPERA

MARY SUSAN SUPERA FAMILY TRUST

STEVEN R STRAUSS

FURIE SOMERSET LLC

MASLOV SOMERSET LLC

INFINTY SOMERSET LLC

SOMERSET LIMITED PARTNERSHIP

JOHN J KIRLIN AND MARY ANN KIRLIN, JTWROS

KIRLIN FAMILY PARTNERSHIP

KIRLIN ENTERPRISES INC.

JOHN J KIRLIN

GE CAPITAL EQUITY INVESTMENTS, INC

MALCOLM M GAYNOR

ROBERT DUNN GLICK

LLOYD S KUPFERBERG

MARY C BROWN

DAVID MISSNER

IRVIN L SIEGEL CHARITABLE LEAD TRUST

JOANNA BURG

JOANNE B BARTER TRUST

DEBORAH D. CLARK

EBENEZER LUTHERAN CHURCH

MARGARET HAGEN REVOCABLE TRUST

EDWARD A POTTS & LUCILLE B POTTS TENNANTS IN COMMO




D-21









 





LEYKA OBARZANEK & MARLENE BEH LUBER, JOINT TENNA

KNOLLER TRUST DATED DECEMBER 20, 1999, MARCIA & HE

SALLY JO L’HOMMEDIEU

RONALD E. WEBB REVOCABLE INTERVIVOS TRUST

DAVID MOSES & DAPHNE MOSES CUSTODIANS FOR GRACE WH

LOUIS D TACCHETTI REVOCABLE TRUST, LOUIS D TACCHET

LOUDON COUNTY DAY SCHOOL

CHARLES E. GILLMAN AS TRUSTEE OR HIS

THE BETRAM R. ABRAMSON LIVING TRUST

SHERRY SMALL SUNDICK TRUST

MORRIS A. MARKS GST EXEMPT TRUST FBO DIANNE M. MEADER

MORRIS A. MARKS GST EXEMPT TRUST FBO ANDREW J. MARKS

MORRIS A. MARKS GST EXEMPT TRUST FBO LINDA E. MARKS

ESTATE OF RAYMOND STENDER

RITA K. ELSBERG, SUCCESSOR TRUSTEE UNDER TRUST DATED 12/31/81

PATRICIA O. ADAMS REVOCABLE TRUST

STANLEY C. REVOCABLE TRUST DATED 3/25/98

LFC PARTNERS

PAULEEN L. SARKIN

LORRAINE LEWIS

MICHAEL D. RIORDAN

DAVID W. RIORDAN

WILLIAM KAPLAN REVOCABLE TRUST, DATED MAY 17, 2000

BACK FAMILY TRUST

THE NORTHERN TRUST COMPANY A/C

SIDNEY FRIEFIELD LIVING TRUST DATED NOVEMBER 5, 1996

ANNABEL L. CHASEN

REBECCA N. FLEISCHMAN LIVING TRUST UDT MAY 23, 2000, FBO

REBECCA

BARBARA J. AUSTIN

DOROTHY C. DEEMS

STEPHANIE SUZANNE AMATO 1993 TRUST

ELLA ATWOOD TRUST

SUSAN SHAPIRO FAMILY TRUST

ELEANOR G. LOWET FAMILY TRUST

LESTER B. SEIDEL

LAURIE MCLAIN, CUSTODIAN FOR EMILY MCLAIN

BENJAMIN LISS REVOCABLE TRUST DATED 9/19/00

SUETELLE LISS REVOCABLE TRUST DATED 9/19/00

ESTATE OF ADELAIDE E. FARNY

ESTATE OF KATHRYN K. LEVENTHAL

KFP INVESTMENTS LP

BONNIE J. HOLL

MEURICE C. OCHSMAN

ELSIE DEKELBAUM, TRUSTEE UNDER REVOCABLE TRUST AGREEMENT DATED 11/16, 2000




D-22









 





RUTH LEE GREENBERG

JOEL AND ADRIENNE CANNON

CATHERINE JEAN CAPLIN

JEREMY CAPLIN

THE CAPLIN FAMILY TRUST

BARBARA CAREY

FREDRICA ISABELLE SCOTT

G CHARNOFF

BETTY CHASEN

GERALD CHASEN

GERALD AND JO ANN CHASEN

PETER CHYLKO

ANTHONY E. CIUCA

HELEN M. CLIFTON TRUST

FAYE F. COHEN

JOANNE COHEN

MELVIN S. COHEN

NEIL D. COHEN

MARK L. COHEN

SHELDON S. COHEN

ANN A. COLMAN

AMY GERSTIN COOMBS

JOAN G. COOPER

WILLIAM F COPENHAVER

JAMES & KATHRYN CORTASSA TRUST

JAMES CALGENE. CUDDY

SYLVIA DANOVITCH

RICHARD AND CAROLYN DANZANSKY

MARY G. DAVID

ROBERT W. DAVIDSON, JR

DAVID G. DECKER

JOHN G. DECKER

MARVIN DEKELBOUM

HELEN M DEY TRUST U/A 8/22/88

THE ESTATE OF WALTER DIENER

JOYCE & ROGER DITTMAN

DODSON FAMILY PARTNERSHIP

DANA T DUNN

RALPH DWECK

SAMUEL R. DWECK FOUNDATION

LEROY EAKIN III

LINDSAY M EAKIN

EG TRUST DTD 11/18/94

THE JOHN & JOYCE EARMAN

JOSEPH ANDREW EASLEY

GILBERT EISNER




D-23









 





STUART M. ELSBERG

PATRICIA B. EMBERG

MARYGERY ELSBERG

ENGLE FAMILY L.P.

F. EPSTEIN TR/H. EPSTEIN

ELOISE KANFER EURE

H FARHOUDI

SHIRLEY & KENNETH FELD

KAREN FELD TRUST

IRVIN FELDMAN

SARA FELDMAN REVOCABLE INTER VIVOS TRUST

A. SAMUEL FELDMAN REVOCABLE INTER VIVOS TRUST

TILLIE FENICHEL

BETTY FIELDS

INA FINKELSTEIN

LORRAINE H FISCHER

DANIEL MACLEOD FISTERE

MARSHALL POE FITZGERALD

BARBARA FLEISCHMAN

LAWRENCE A. FLEISCHMAN

MARTHA FLEISCHMAN

G. F. & C. J. PILZER CO TR FOR

G. F. & C. J. PILZER CO TR FOR #2

JULIUS FOGEL REVOCABLE TRUST

JULIUS I. FOX

THE RJ FRANKS TRUST NO 1

DIANE FREEDMAN

DAVID R. FROELKE

DR. EDWARD D. AND SHERRY L.

MONA L. FROLE

JAMES A. & DIANE L. FROST

MORTON FUNGER

NORMA LEE FUNGER

KEITH P. FUNGER

W. SCOTT FUNGER

ERNEST A. GERARDI, JR.

JULIAN GERSTIN

MARVIN J. GERSTIN

BERNARD S. GEWIRZ

ETHEL FORMAN GIBBS REVOCABLE TRUST U/A/D DATED 2/2

PHYLLIS R. GIBER

DAVID E. GICHNER

J B GILDENHORN

MICHAEL & BEVERLY GILMORE

THE GIRLS PARTNERSHIP

LINDA M OR STANLEY H GITELSON




D-24









 





PAUL R. & WENDY GLASSMAN, JTRS

LAURA A. GLASSMAN

PAUL R. GLASSMAN

PAUL R. & WENDY GLASSMAN, TTS.

PAUL R. & WENDY GLASSMAN, TTS. #2

PAUL R. & WENDY GLASSMAN, TTS. #3

ELEANOR & LAURA GLASSMAN,

DAVID S. GODFREY

DEBORAH J. GODFREY

PAUL W. GODFREY

PETER J. GODFREY

HENRY H. GOLDBERG

AMY GOLDSTEIN

JULIUS GOLDSTEIN

JOAN S. GOLDWASSER

BERNICE H. GORDON

STUART A. & ELIZABETH GOREWITZ

KINGDON GOULD, JR.

MARY T. GOULD

ALAN H. GRANT

EG GRAT, ROBERT J. FREDA, TTS

CHARLOTTE S. GRAVETT, TEST. TR

FAYE GREEN

HUGH GREENBERG LIVING TRUST

MARTIN & JOAN GREENBERG

RAYMOND AND MARILYN GREENBERG

ESTATE OF CELIA K. GROSSBERG #2

ESTATE OF SOLOMON GROSSBERG

GROSSBERG FAMILY TRUST

TERRY ILEEN GUINTER

F T GURGANUS

GYB INVESTMENTS

CHARLES R & MARGARET A HAGEN

M F HAMMERMAN

ANNA M. HANEY

GARNER HANEY

GARNER & LYNN HANEY

MELTON D. HANEY

MELTON D. HANEY #2

R T HANLON

LEATRICE J. HARPSTER

NANCY L HARRIS, TRUSTEE,

NANCY L HARRIS, TRUSTEE, #2

JOHN A. HARRIS

GAIL P. HARSTEIN

E. MATTHEW HAUSE




D-25









 





MANDA M HAZELETT

F. CLEVELAND HEDRICK, JR

DAVID B. HIPSMAN

FRANK HIRSCH

HAROLD HIRSH, MD

JANE R. HIRSH

JOANNE S. HIRSCH

SEMY MIMY HODAK

PAULINE F. HOFFMAN

WALLACE F HOLLADAY

WALLACE F HOLLADAY JR

TEGWYN HONEY

JAMES F. HORNER

DAVID B. HOWLAND

LOIS B. HOWLAND TRUST

SUSAN D. HUGHES

JUDI S. HUNT

INTERVIVOS IRREVOCABLE TRUST

FIRST UNION NATIONAL BANK, TRUST

R. DOUGLAS JACKSON

B R JACOBS

LEONARD A. JACOBS

A.H. AND R.R. JEFFRIES

ELLEN G. JOYCE

THE JRB TRUST

OSCAR KAMMERMAN RES TRUST

MAX M. KAMPELMAN

EDWARD KAPLAN

MARIE KARL

JOHN A KARLSON

NANCY C. KASKY

NORMA A. KASS

ADAM KAUFMANN

GREGORY KAUFMANN

BERNICE KAUFMANN TRUST

RICHARD D KAUFMANN

SANDRA HAUG KAVOURAS

CRAIG J. KAY

KAY VILLAGE INVESTORS PSHIP

KAY VILLAGE INVESTORS PSHIP #2

FORDOR INVESTORS PSHIP

FORDOR INVESTORS PSHIP #2

STEVEN KAY

WILLIAM & VICTORIA KELCH TRUST

PETER B. KENEN

LAWRENCE KIRSTEIN




D-26









 





LEE G KIRSTEIN

GARY KIRSTEIN

KEVIN M. KIRSTEIN

LAUREN KIRSTEIN ISSEMBERT

STEVEN A. KIRSTEIN

PAUL L & EMOGENE R KITE

HANNAH C. KLEIN

NORMA G KLINE

MARION R. KOEHLER

ROLF A. & MARION KOEHLER

ARLENE R. KOGOD

LESLIE SUSAN KOGOD

MARVIN KOGOD

ROBERT P. KOGOD

LAUREN SUE KOGOD

STUART A. KOGOD

NANCY LYNN SCHER KRAKOWER

MATTHEW DANIEL KRAVITZ

CARMEN M. KREEGER, ET AL

NORA A. KREGER, TRUSTEE

EUGENE KRESSIN

RICHARD KRONHEIM

MARK RAYMOND KUKOSKI

SOL KULLEN REMAINDER ANNUITY TR

KURSTIN FAMILY TRUST 10-15-91

JOHN MILNE KURTZ

R H L’HOMMEDIEU

NATHAN LANDOW

ALEXANDER M. LANKLER

CHARLES LAPINE

PAUL LARNER

NATALIE BERMAN & JACQUELINE

DIANE O LAWHORN

HERBERT K. LAWHORN

VICTOR J LAZAROW

JULIE F LEE

BERNHARDT R. LEHRMAN

SAMUEL LEHRMAN

TRUSTS U/W/O C. F. LEHR

WILBUR LEVENTER

BARBARA LEVENTER

KATHRYN K. LEVENTHAL TRUST,

S.E. LEVENTHAL 546-1230319-055

ALEC LEVIN REVOC INTER VIVOS

LEVITAN FAMILY TRUST SHARE H

BESSIE A LEVITAN REVOC TRUST




D-27









 





MARJORIE LEVITAN

SHIRLEY N.LEVITT & IRV. LEVITT

BETTY A. LEVY

THE S. LEVY TRUST

JAY D. LEWIN

LYNN B. LEWIN REVOCABLE TRUST

ROBERT J LEWIS

BARRETT M LINDE

MARGARET E. OURISMAN LINDER

FRANCES G. & JACOB C. LISH

MICHELLE L. SMITH

STACEY LISS 1983 TRUST

MICHAEL S. LISS 1985 TRUST

FULTON LISS

ELAINE H. LITSCHGI REVOC. TRUST U/D 4/20/95

ELEANOR G. LOWET

NANCY SCHEKTER LUDWIG

GERALD LUSTINE

SANDRE LUSTINE

NORBERT M. LUSTINE

HARRY G LYNN REVOCABLE TRUST

LAURIE J. & STEVEN D. MACHT,

CYNTHIA MACKLER

SCOTT MALZAHN

JOHN R MANNIX & DIANE M MANNIX

MICHAEL EDWARD MANNIX

CHARLES MARKISON

LINDA ELLEN MARKS

I. GUY MARTIN

ZELDA MASON, TRUSTEE OF ZELDA

MERCANTILE CO & E FEINBLATT

GAIL MCAULIFFE

MAUREEN MCCABE

DONALD F. MCCAULLEY TRUST

JANE B. MCCAULLEY TRUST

RICHARD B. MCCAULLEY

WILLIAM P MCKELWAY TRUST

LAURIE A MCLAIN

LAURIE MCLAIN

LYDIA F. MCCLAIN

MATTHEW BROOKS MCCORMICK

JOHN MCMAHON

KENNETH L. MCVEARRY

ROBERT MERKIN

MAURY MERKIN

GORDON FREDERICK MEUSE




D-28









 





LOUIS MILLER

MILDRED BLAND MILLER TRUST

ROBERT E. MILLER

STUART H. MILLER

JOHN F. MILLER, III

WESLEY MINAMI

HARRIET MISHNER REVOCABLE TR.

MARGARET B MITCHELL

ARNITA MONGIOVI

WALTER F. & MARY D. MOORE

DEBORAH L. MORAN

MORT TRUST U/A/D 1/8/93

FRANK A & VIRGINIA B

ELIZABETH J. MOSHER

FLORENCE MOST

FLORENCE MOST, TRUSTEE

LAURIE MOXHAM

SUKI MUNSELL

BAMBI I. MYERS

DANCY A. MYERS

WILL S MYERS

MELANIE FUNGER NICHOLS

DR. ALLEN NIMETZ

MARTIN NORWITZ

ALAN H. NORWITZ

BETTE BALDINGER NUSSBAUM

RALPH OCHSMAN

SHARON LYNN OCHSMAN

BRUCE D. OCHSMAN

JEFFREY W. OCHSMAN

MICHAEL P. OCHSMAN

WENDY A. OCHSMAN

GEORGE W ORTON AND LEE H ORTON

COOKIE D. OSTROW

FLORENZ OURISMAN

MANDELL J OURISMAN

DAVID J OURISMAN

JOHN MANDELL OURISMAN

ROBERT BENJAMIN OURISMAN

NICHOLAS G. PALEOLOGOS

PARKING MANAGEMENT INC.

ROBERT R. PARKS

DAVID D. PEETE, JR.

EDWARD COLA PEETE

SHARON PEIKIN

J. FOGEL & J. LISH




D-29









 





J. FOGEL & J.C. LISH TR FOR

HELEN FOGEL PHILLIPS

DR J. FOGEL & J. LISH TR

ALYSON F. PILZER

DR J. FOGEL AND G. PILZER

CHARLES J. PILZER

CHARLES LEO PILZER

GERALDINE F. PILZER

TRACY L. PILZER

LEIGH C. PILZER

JORGE PINEDA

S L PITTMAN

JAMES D. POLICARO

JAMES M. PORTER

GLORIA POLSTELNEK

JANET L. POTTER TRUST

KENNETH STEWART POTTER TRUST

RICHARD LEE POTTER

GLENDA S. POTTER

RICHARD LEE POTTER, CUSTODIAN

THE DULCIE H. POTTER TRUST

KENNETH S. POTTER TRUST

R L POTTER TRUST

RICHARD LEE POTTER, CUSTODIAN #2

RICHARD LEE POTTER, CUSTODIAN #3

KENNETH S. POTTER

KENNETH S & KRISTEN V

WILLIAM PRICE

STANLEY & ANITA RABINOWITZ

A. L. RABINOWITZ 1996 REV TRUST

THE STANLEY RABINOWITZ 1996 REV

KLARA K. READ, TR. U/TR.

ROBERT REED

ALFRED E. & LINDA L REEVES

THOMAS E. AND ANNE S. REEVES

REINSCH FAMILY LTD PARTNERSHIP

F TURNER REUTER MD

LEONA RICH

JOHN & ELIZABETH RICHMOND

JOHN F. RIHTARCHIK

ROBIN ENTERPRISES

CRESTAR BANK, CUST. FBO ALBERT

BARRY S. ROBINS

JOAN ROBINS

RICHARD W. ROBINS

BETH O. ROCKS




D-30









 





G R RODGERS JR

ELAINE D. ROSENSWEIG

GEORGE & JANE ROSEN

JACQUELINE ROSEN

JACQUELINE ROSEN EXEMPT SHARE T

GRACE RUBIN

THE HOWARD F. RUBY TRUST UAD

FRED RUNCO

J S RUSHTON

HOWARD AND ELIANA SACHAR, J.T.

MARIANNE SACKNOFF

JEROME SANDLER

STEVEN SANDLER

PHILIP D. AND BONNIE G. SAYERS

ARTHUR D. SCHAFFER LIVING

HUBERT M. SCHLOSBERG

RUTH SCHEKTER

GLORIA SCHERR

SUSAN SCHLOSSER

ANDREW SCHUMAN

SHIRLEY SCOVERN

ANGELA SEGAL

DEVON SEGAL

HERMINE SEGAL

NOEL SEGAL

ERIC M. SEIDEL

JILL N. SHAFFER

TIMOTHY J. SHAFFER

CATHERINE C. SHANNON

SUSAN SHAPIRO

ARNOLD F. SHAW, TRUSTEE

WALTER SHEEHAN

MICHAEL SHEHADI

SHIPPING CREEK ASSOCIATES

CARLYNN SILVERMAN

LAWRENCE SILVERMAN

THE FIRST AMY LOUISE SILVERMAN

THE FIRST LISA IVY SILVERMAN

RALPH P. & EILEEN SILVERMAN

EDWARD A SIRKIN

CHESTER ARTHUR SLATER, JR.

HASKELL B. SMALL

THE RACHEL B. SMALL TRUST

THE SARAH H. SMALL TRUST

CLARICE R. SMITH

DAVID BRUCE SMITH




D-31









 





BENJAMIN M. SMITH, JR.

A. & R. KOGOD, TRUSTEES/ D.B.

A. & R. KOGOD, TRUSTEES

HOWARD W. SMITH, JR.

ROBERT H. SMITH

CAROLYN M. SMITH

RUTH SNYDER

M. BRUCE SNYDER

LEONARD A. SOLOMON

L & R SOLOMON, JOINT TENANTS

DAVID BURTON SPITZER

JUDITH STAHL

DAVID L. STEARMAN

BERNICE R. STEARMAN

M N STEREN

SCOTT E & CATHY C STERLING

RITA STERLING

NANCY M. STEVENS

JOHN & MARY STEWARD

RUTH ST. JOHN

GERALD STOLLER

MAX STOLLER TRUST

DEBORAH CROSBY STOUT

ERIC DAVID STRACK

M STURT

ROBERT L & SHARON M SUDOL

SUZANNE D. SUGAR

STEPHEN E. SUGAR

SHERRY SMALL SUNDICK

THE AMY BETH SUNDICK TRUST,

THE SUZANNE FAYE SUNDICK TRUST

HANNAH FLYNN TAGER

JEREMY AND ANNE TAGER

FRANK R. TALBOT, III AND

DAVID W TAYLOR

BAHMAN TEIMOURIAN

KENNETH M THOMPSON II

STEPHEN THOMPSON

SUSAN ABEL THOMOFF

JEAN TOOMBS-C/O MURRAY BRADLEY

JOHN H. TRIBBLE

NANCY O. & JOHN H TRIBBLE

DENNIS S & SANDRA H TURNER

MERCANTILE CO & M FEINBLATT,

VICTOR A. VAUGHN

G DUANE VIETH




D-32









 





INGRID ELAINE HAUG

INGRID ELAINE HAUG #2

INGRID ELAINE HAUG #3

MITCHEL A. & PENELOPE WALD

WASHINGTON BRICK & TERRA COTTA

WASHINGTON FOREST ASSOCIATES

MARJORIE WEBBER

ROGER L. WEEKS

WEIHE FAMILY TRUST

JULIANA C. WEIHE LIVING TRUST

EDWIN WEIHE

KRISTIN WEIHE MIDDLETON

LISA M. WEIHE

CHARLOTTE K. WEIHE

MILDRED S WELLER, TRUSTEE

SHAUNA MILLER WERTHEIM

WARREN D WHITWORTH

JOHN J WILLIAMS, JR

DAVID LEE WILT

T/U/W OF ERNEST D. WILT

FREDERICK CHARLES WILT

HARRIET L. WILT

KATHLEEN WINSOR

DONALD M WOLF

LEON WOLFE REVOCABLE TRUST

MARLENE K WOLSKY

FREDERICK PAUL WRIEDEN

HELEN PATTON WRIGHT

ELEANOR WUNDERLICH

DIANE C. ZACK

ELAINE SCHER ZELLER CR EQ TR

ELAINE ZELLER MARITAL TRUST

ROBERT D. ZIMET

CES RESIDENTIAL REALTY, INC.

CES MGMT. CONSTRUCTION, INC.

CES MANAGEMENT, INC.




D-33









 





Schedule 2 to Exhibit D




Protected Properties



The following is a list of the Protected Properties. For entities that are listed, the Protected
Properties include all interests in that entity or joint venture and any debt outstanding to that
entity or joint venture.




1841 Columbia Road

2000 Commonwealth

2201 Wilson Boulevard

2501 Porter Street

Alban Towers

Alban Towers — Land

Alban Towers, L.L.C.

Albemarle

Arlington Overlook Central

Arlington Overlook North

Arlington Overlook South

Ballston Place

Bedford Village

Boulevard of Old Town (includes Governor Spotswood Manor)

Brandywine Apartments

Brandywine Apartments of Maryland, LLC

Broadband Residential, Inc.

Buchanan House

Calvert-Woodley

Car Barn I

Car Barn II

Car Barn III

Charles E. Smith Insurance Agency, Inc.

Charter Oak

Cleveland House

Columbia Crossing

Connecticut Heights

Corcoran House




D-34









 





Countryside

Courthouse Hill L.L.C.

Courthouse Place

Courthouse Plaza

Cronin’s Landing

Crystal House I

Crystal House II

Crystal Place

Crystal Plaza

Crystal Square

Crystal Towers

Delaware Place (fka Dearborn Place)

First Herndon Associates L. P.

Gateway Place

Harbour House

Liberty Center

Lincoln Towers

Maple Leaf

McClurg Court

Metropolitan Acquisition Finance L.P.

Miami Beach Properties L.L.C.

Mirador (fka Forte Towers) — One residential house to be converted for Mirador parking use

New River Village

Newport Village I

Newport Village II

Newport Village III

Oaks of Tysons

Ocean Crest Beach — Building III

Ocean Crest Beach — Court Building

Ocean Crest Beach — South Building

Ocean Crest Club — North Building

Ocean Crest Club — West Building

Ocean View — Building A

Ocean View — Building B

Ocean View — Building C

One East Delaware




D-35









 





One Superior Place

Parc Vista

Park Connecticut

Park Lincoln (fka Park West)

Park Millennium

Park Millennium (fka Fairmont Site)

Patriot Village I

Patriot Village II

Patriot Village III

Plaza 440

Plaza 440 Apartments

Pollard Gardens I, L.L.C.

Renaissance Apartments

Reston Landing

Sagamore Towers

Skyline Mall

Skyline Towers

Smith Employment Services L.P.

Smith Partnership

Smith Property Holdings 2000 Commonwealth L.L.C.

Smith Property Holdings 4411 Connecticut Avenue L.L.C.

Smith Property Holdings Alban Towers L.L.C.

Smith Property Holdings Alban Towers Two L.L.C.

Smith Property Holdings Aventura A L.L.C.

Smith Property Holdings Aventura B L.L.C.

Smith Property Holdings Aventura C L.L.C.

Smith Property Holdings Buchanan House L.L.C.

Smith Property Holdings Columbia Road, L.P.

Smith Property Holdings Concord L.L.C.

Smith Property Holdings Consulate L.L.C.

Smith Property Holdings Countryside L.L.C.

Smith Property Holdings Cronin’s Landing L.P.

Smith Property Holdings Crystal Houses L.L.C.

Smith Property Holdings Crystal Plaza L.L.C.

Smith Property Holdings Crystal Towers L.P.

Smith Property Holdings Dearborn Place Manager L.L.C.




D-36









 





Smith Property Holdings Delaware Place, L.P.

Smith Property Holdings Five (D.C.) L.P.

Smith Property Holdings Five L.P.

Smith Property Holdings Four L.P.

Smith Property Holdings Harbour House L.L.C.

Smith Property Holdings Illinois Center L.L.C.

Smith Property Holdings Kenmore L.P.

Smith Property Holdings Lincoln Towers L.L.C.

Smith Property Holdings McClurg Court L.L.C.

Smith Property Holdings New River L.L.C.

Smith Property Holdings One (D.C.) L.P.

Smith Property Holdings One East Delaware L.L.C.

Smith Property Holdings One L.P.

Smith Property Holdings Parc Vista L.L.C.

Smith Property Holdings Park West L.L.C.

Smith Property Holdings Plaza 440 Manager L.L.C.

Smith Property Holdings Renaissance Manager L.L.C.

Smith Property Holdings Reston Landing L.L.C.

Smith Property Holdings Sagamore Towers, L.L.C.

Smith Property Holdings Seven L.P.

Smith Property Holdings Six (D.C.) L.P.

Smith Property Holdings Six L.P.

Smith Property Holdings Skyline Mall L.L.C.

Smith Property Holdings Skyline Towers, L.L.C.

Smith Property Holdings Somerset L.L.C.

Smith Property Holdings South Beach Towers L.L.C.

Smith Property Holdings Springfield L.L.C.

Smith Property Holdings Stonebridge L.L.C.

Smith Property Holdings Sunset Pointe Court L.L.C.

Smith Property Holdings Sunset Pointe III L.L.C.

Smith Property Holdings Sunset Pointe North L.L.C.

Smith Property Holdings Sunset Pointe South L.L.C.

Smith Property Holdings Sunset Pointe West L.L.C.

Smith Property Holdings Superior Place L.L.C.

Smith Property Holdings Terrace L.L.C.

Smith Property Holdings Three (D.C.) L.P.




D-37









 





Smith Property Holdings Three L.P.

Smith Properly Holdings Two (D.C.) L.P.

Smith Property Holdings Two L.P.

Smith Property Holdings Van Ness L.P.

Smith Property Holdings Water Park Towers L.L.C.

Smith Property Holdings Wilson L.L.C.

Smith Realty Company

SPH Plaza 440 L.L.C.

SPH Renaissance, L.L.C.

SPH Springfield Station, L.L.C.

SPH University Center L.L.C.

Springfield Station

Statesman

Stonebridge at University Center

Stonegate (fka Somerset)

Terrace

The Bennington

The Consulate

The Kenmore

Tunlaw Gardens

Tunlaw Park

Van Ness South

Wabash/Hubbard Limited Partnership

Water Park Towers

Westerly





D-38










 







Schedule 3 to Exhibit D




Schedule 3 has been intentionally left blank.




D-39









 








Schedule 4-1 to Exhibit D




Existing Nonrecourse Debt

That Is a Nonrecourse Liability




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	BALANCE at	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	BALANCE	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	FREDDIE MAC (2000 COMMONWEALTH)

	 	 	7,700,000	 	 	 	7,700,000	 	 	 
	 	 	7,700,000	 	 	01/01/07
	 	Interest Only
	 	2000 COMMONWEALTH
	 	 	7,700,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (CONSULATE)

	 	 	26,950,000	 	 	 	26,950,000	 	 	 	 	 	26,950,000	 	 	04/01/12
	 	I/O thru 3/11 then Amortizing 30 Year
	 	 THE CONSULATE
	 	 	26,950,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NML

(NORTHWESTERN MUTUAL LIFE MORTAGE)

	 	 	30,000,000	 	 	 	28,887,781	 	 	 	 	 	28,887,781	 	 	07/01/04
	 	Amortizing — 25 Year
	 	CHARTER OAK
	 	 	14,443,890	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OAKS OF TYSONS
	 	 	14,443,891	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	28,887,781	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA (CRYSTAL TOWERS)

	 	 	46,500,000	 	 	 	43,357,746	 	 	 	 	 	43,357,746	 	 	01/01/06
	 	Amortizing — 30 Year
	 	CRYSTAL TOWERS
	 	 	43,357,746	 
	FREDDIE MAC (COUNTRYSIDE)

	 	 	28,000,000	 	 	 	28,000,000	 	 	 	 	 	28,000,000	 	 	07/01/06
	 	Interest Only
	 	COUNTRYSIDE
	 	 	28,000,000	 
	 
	JOHN HANCOCK (SAGAMORE)

	 	 	7,027,817	 	 	 	6,130,783	 	 	 	 	 	6,130,783	 	 	08/01/06
	 	Amortizing — 20 Year
	 	SAGAMORE TOWERS (FKA BERKELEY
— 2,513,620, DUKE — 1,885,522,
PRINCE —1,731,641)
	 	 	6,130,783	 
	FREDDIE
MAC
(1841 COLUMBIA ROAD)

	 	 	3,900,000	 	 	 	3,900,000	 	 	 	 	 	3,900,000	 	 	09/01/06
	 	Interest Only
	 	1841 COLUMBIA ROAD
	 	 	3,900,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (2000 COMMONWEALTH)

	 	 	17,100,000	 	 	 	17,100,000	 	 	 	 	 	17,100,000	 	 	01/01/07
	 	Interest Only
	 	2000 COMMONWEALTH
	 	 	17,100,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA/(GREEN PARK TERRACE)

	 	 	15,600,000	 	 	 	15,600,000	 	 	 	 	 	15,600,000	 	 	04/01/07
	 	Interest Only
	 	TERRACE
	 	 	15,600,000	 
	FNMA (CONNECTICUT HEIGHTS)

	 	 	20,000,000	 	 	 	20,000,000	 	 	 	 	 	20,000,000	 	 	04/01/08
	 	Interest Only
	 	CONNECTICUT HEIGHTS
	 	 	20,000,000	 
	 





D-40









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	 	 	BALANCE at	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	balance	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	PRUDENTIAL WATERPARK/PARC VISTA)

	 	 	53,000,000	 	 	 	53,000,000	 	 	 	 	 	 	 	53,000,000	 	 	06/05/08
	 	Interest Only
	 	PARC VISTA (FKA OXFORD)
	 	 	25,238,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	WATERPARK TOWERS (FKA

SECOND PARK RENTAL)
	 	 	27,762,000	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	53,000,000	 
	 
	NML(CRONINS LANDING)

	 	 	32,958,000	 	 	 	29,928,538	 	 	 	9,000,000	 	 	 	20,928,538	 	 	03/01/09
	 	Amortizing — 25 Year
	 	CRONIN’S LANDING
	 	 	20,928,538	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NML (NORTHWESTERN MUTUAL LIFE MORTAGE POOL)

	 	 	117,000,000	 	 	 	109,894,193	 	 	 	41,896,919	 	 	 	67,997,274	 	 	07/01/09
	 	Amortizing — 25 Year
	 	2501 PORTER STREET
	 	 	8,504,963	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	GATEWAY PLACE (FKA EADS GATEWAY)
	 	 	7,567,402	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	NEWPORT VILLAGE I & II
	 	 	14,878,456	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	COLUMBIA CROSSING (FKA SCOTT STREET)
	 	 	8,420,708	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	SKYLINE MALL (OR SEVENTH
SKYLINE)
	 	 	7,103,702	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CLEVLAND HOUSE (FKA SHOREMADE)
	 	 	4,476,264	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CALVERT-WOODLEY
	 	 	3,303,867	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	COURTHOUSE PLAZA (FKA

THIRD COURTHOUSE)
	 	 	13,741,911	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	67,997,274	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRUDENTIAL (PATRIOT VILLAGE)

	 	 	31,094,943	 	 	 	31,094,943	 	 	 	 	 	 	 	31,094,943	 	 	08/01/09
	 	Interest Only through 10/2004
	 	PATRIOT VILLAGE I
	 	 	10,175,603	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NOTE: EXCLUDES PATRIOT VILLAGE GROUND LESSOR

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Then Amortizing — 30 Year
	 	PATRIOT VILLAGE II
	 	 	38,927,493	 
	 





D-41









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	 	 	BALANCE at	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	BALANCE	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	patriot village III
	 	 	11,991,847	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	31,094,943	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	MORGAN (CRYSTAL PLAZA)

	 	 	34,000,000	 	 	 	32,497,536	 	 	 	 	 	 	 	32,497,536	 	 	12/01/27
	 	Amortizing — 30 Year
	 	CRYSTAL PLAZA
	 	 	32,497,536	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (SKYLINE TOWERS)

	 	 	49,300,000	 	 	 	49,300,000	 	 	 	 	 	 	 	49,300,000	 	 	01/01/11
	 	I/O thru 1/09 then Amortizing 30 Year
	 	SKYLINE TOWERS
	 	 	49,300,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (2ND MORTGAGE
	 	 	13,000,000	 	 	 	13,000,000	 	 	 	 	 	 	 	13,000,000	 	 	01/01/11
	 	Interest Only
	 	SKYLINE TOWERS
	 	 	13,000,000	 
	SKYLINE TOWERS)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (CRYSTAL HOUSES I
& II)

	 	 	38,250,000	 	 	 	38,250,000	 	 	 	 	 	 	 	38,250,000	 	 	01/01/11
	 	I/O thru 1/09 then Amort 30 Year
	 	CRYSTAL HOUSE I
	 	 	24,295,379	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (2ND MORTGAGE
	 	 	11,000,000	 	 	 	11,000,000	 	 	 	 	 	 	 	11,000,000	 	 	01/01/11
	 	Interest Only
	 	CRYSTAL HOUSE II
	 	 	24,954,621	 
	CRYSTAL HOUSES I & II)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL

	 	 	49,250,000	 	 	 	49,250,000	 	 	 	 	 	 	 	49,250,000	 	 	 	 	TOTAL	 	TOTAL
	 	 	49,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (BUCHANAN HOUSE)

	 	 	38,000,000	 	 	 	38,000,000	 	 	 	25,500,000	 	 	 	12,500,000	 	 	02/01/11
	 	Interest Only through 4/2009
	 	BUCHANAN HOUSE (FKA MARBURY)
	 	 	12,500,000	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Then Amortizing — 30 Year	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA/GREEN
PARK (DC PROPERTIES)

	 	 	53,494,000	 	 	 	53,494,000	 	 	 	 	 	 	 	53,494,000	 	 	07/01/12
	 	Interest Only through 6/2010
	 	OCEAN VIEW — BUILDING C (FKA
STRATFORD COLUMBIAN)
	 	 	880,001	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Then Amortizing — 20 Year
	 	CORCORAN HOUSE
	 	 	5,458,911	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ARLINGTON OVERLOOK NORTH (FKA MADISON)
	 	 	2,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	STATESMAN (FKA SAGE)
	 	 	10,681,777	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OCEAN VIEW — BUILDING B (FKA
WINDSOR TOWERS)
	 	 	7,200,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ALBEMARLE
	 	 	13,688,912	 






D-42









 










	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	BALANCE at	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	BALANCE	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	RESTON LANDING

(FKA WORLDGATE

RETAIL)
	 	 	2,523,956	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	THE KENMORE
	 	 	11,060,443	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	          TOTAL
	 	 	53,494,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (McCLURG COURT)

	 	 	61,750,000	 	 	 	61,750,000	 	 	 	 	 	61,750,000	 	 	10/01/14
	 	I/O thru 9/10 then Amortizing 30 Year
	 	McCLURG COURT
	 	 	61,750,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FREDDIE MAC (VAN NESS POOL)

	 	 	60,800,000	 	 	 	60,800,000	 	 	 	 	 	60,800,000	 	 	10//01/15
	 	I/O thru 9/10 then Amortizing 30 Year
	 	VAN NESS SOUTH
	 	 	44,700,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TUNLAW PARK
	 	 	7,350,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	TUNLAW GARDENS
	 	 	8,750.000	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	          TOTAL
	 	 	60,800.000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA
(2ND MORTGAGE ON CRYSTAL
TOWERS)

	 	 	23,350,000	 	 	 	23,350,000	 	 	 	 	 	23,350,000	 	 	01/01/06
	 	Interest Only
	 	CRYSTAL TOWERS
	 	 	23,350,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA Mortgage Pool — Draw 3

	 	 	23,000,000	 	 	 	23,000,000	 	 	 	 	 	23,000,000	 	 	06/01/07
	 	Interest Only	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA/GREEN PARK (FNMA MORTGAGE POOL -DRAW 2)

	 	 	29,507,000	 	 	 	29,507,000	 	 	 	 	 	29,507,000	 	 	06/01/07
	 	I/O thru 11/03 then Amortizing 30

Year	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA/GREEN PARK(AVENTURA)

	 	 	49,400,000	 	 	 	49,400,000	 	 	 	 	 	49,400,000	 	 	02/01/10
	 	I/O thru 12/06 then Amortizing 30 Year
	 	OCEAN VIEW-

BUILDING A (FKA FORT

CHAPLIN)
	 	 	26,880,923	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FNMA/GREEN PARK(FNMA MORTGAGE
POOL 2)

	 	 	140,000,000	 	 	 	140,000,000	 	 	 	 	 	140,000,000	 	 	11/01/13
	 	I/O thru 11/03 then Amortizing 30 Year
	 	OCEAN VIEW

-BUILDING B (FKA WINDSOR

TOWERS)
	 	 	 15,528,679	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	241,907,000	 	 	 	241,907,000	 	 	 	 	 	241,907,000	 	 	 	 	 	 	OCEAN VIEW -BUILDING C

(FKA STRATFORD

COLUMBIAN)
	 	 	15,528,679	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CRYSTAL SQUARE (FKA

FIRST BALL)
	 	 	32,335,626	 






D-43









 









	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	BALANCE at	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	BALANCE	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	BEDFORD VILLAGE

(22,760,187 OF TUDOR

INCLUDED)
	 	 	42,652,951	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CAR BARN I
	 	 	6,161,206	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ARLINGTON OVERLOOK

SOUTH (FKA

JEFFERSON)
	 	 	17,481,378	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ARLINGTON OVERLOOK

CENTRAL (FKA MONROE)
	 	 	14,052,339	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CRYSTAL PLACE (FKA

PARK RENTAL)
	 	 	17,409,757	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CAR BARN II
	 	 	3,314,304	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	NEWPORT VILLAGE III

(FKA VILLAGE)
	 	 	10,888,080	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	NEW RIVER VILLAGE

(FKA OLEANS

VILLAGE)****
	 	 	19,022,638	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2201 WILSON BOULEVARD

(FKA

OLEANS VILLAGE) ****
	 	 	20,650,440	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	241,907,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ALBAN TOWERS*****

	 	 	40,300,000	 	 	 	34,184,069	 	 	 	 	 	34,181,069	 	 	02/05/02
	 	Interest Only
	 	ALBAN TOWERS
	 	 	34,184,069	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REVOLVER

	 	 	100,000,000	 	 	 	100,000,000	 	 	 	 	 	100,000,000	 	 	02/04/04
	 	Interest Only
	 	UNALLOCATED
	 	 	94,092,606	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	PARKWEST
	 	 	5,907,394	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	100,000.000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REVOLVER

	 	 	50,000,000	 	 	 	50,000,000	 	 	 	 	 	50,000,000	 	 	02/04/04
	 	Interest Only
	 	CONCORD (BALLSTON)
	 	 	17,900,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	SOMERSET
	 	 	32,100,000	 





D-44









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CURRENT	 	 	 	 	 	 	 	PROPERTY ASSOCIATED	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	WITH DEBT	 	DEBT BY
	 	 	ORIGINAL	 	CURRENT	 	 	 	 	 	BALANCE at	 	 	 	 	 	 	 	(Bold Properties represent	 	PROPERTY
	LENDER	 	AMOUNT	 	BALANCE	 	GUARANTEE	 	10/31/01	 	MATURITY	 	COMMENTS	 	contributed assets)	 	at 10/31/01
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	50,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REVOLVER

	 	 	163,767,500	 	 	 	163,767,500	 	 	 	 	 	 	 	163,767,500	 	 	 	05/31/10	 	 	Interest Only
	 	UNALLOCATED
	 	 	163,767,500	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	REVOLVER******

	 	 	24,778,950	 	 	 	24,778,950	 	 	 	 	 	 	 	24,778,950	 	 	 	02/04/04	 	 	Interest Only
	 	UNALLOCATED
	 	 	24,778,950	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTALS

	 	 	1,440,528,210	 	 	 	1,417,623,039	 	 	76,396,919	 	 	 	 	1,341,226,120	 	 	 	 	 	 	 	 	TOTAL DEBT
	 	 	1,341,226,120	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	JOINT VENTURE DEBTS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UNIVERSITY CENTER *

	 	 	31,000,000	 	 	 	29,848,54l	 	 	 	 	 	 	 	29,848,541	 	 	 	05/10/03	 	 	Amortizing — 30 Year
	 	UNIVERSITY CENTER
	 	 	29,848,541	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SPRINGFIELD STATION **

	 	 	37,000,000	 	 	 	37,000,000	 	 	 	 	 	 	 	37,000,000	 	 	 	06/01/09	 	 	Interest Only
	 	SPRINGFIELD STATION
	 	 	37,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RENAISSANCE ***

	 	 	19,000,000	 	 	 	19,000,000	 	 	 	 	 	 	 	19,000,000	 	 	 	04/01/06	 	 	Interest Only
	 	RENAISSANCE
	 	 	19,000,000	 








 




			
	*	 	University Center Ownership
Percentage 40%
	 
	 	 	Springfield Station Ownership Percentage
48%
	 
	 	 	Renaissance Ownership Percentage 25%
	 
	 	 	The Total New River and 2201 Wilson debt
is allocated 18,992,662 to Prince and 20,680,416
to Duke.
	 
	**	 	Alban Towers LLC Ownership Percentage is 1%. The amount
outstanding at 10/31/01 does not include a pending draw request in
the amount of $1,198,179.
	 
	***	 	Includes Outstanding Letters of Credit of $5,778,950






D-45









 









Schedule 4-2 to Exhibit D




Existing Nonrecourse Debt

That Is a Partner Nonrecourse Debt




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	NML (NORTHWESTERN MUTUAL LIFE MORTGAGE)

	 	 	41,896,919	 	 	 	41,896,919	 	 	 	3010	 	 	LEONARD ABEL
	 	$	244,910	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	27030	 	 	MAXINE D. ALTMAN
	 	$	5,467	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	27080	 	 	PAULINE DORTHY

ALTMAN, TRUSTEE UNDER TRUST

AGREEMENT
	 	$	15,000	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	68010	 	 	BRYON B. AND MARY
KATE BLACK, TENANTS BY THE
ENTIRETIES
	 	$	22,383	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	75410	 	 	JAMES M. BONNER
	 	$	50,084	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	75400	 	 	JANET L, BONNER
	 	$	41,151	 	 	TOP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	102024	 	 	DEBORAH D. CLARK
	 	$	2,159	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	118010	 	 	PETER CHYLKO
	 	$	523	 	 	BOTTOM
	 

	 	 	 	 	 	 	 	 	 	 	229020	 	 	LAWRENCE A. FLEISCHMAN
	 	$	339,448	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	229030	 	 	MARTHA FLEISCHMAN
	 	$	19,000	 	 	BOTTOM
	 

	 	 	 	 	 	 	 	 	 	 	253010	 	 	DAVID R. FROELKE
	 	$	681	 	 	TOP







D-46









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	 

	 	 	 	 	 	 	265020	 	 	ERNEST A. GEEARDI, JR.
	 	$	48,000	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	315040	 	 	MELTON D. & ANNA M. HANEY
	 	$	29,844	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	376750	 	 	MARIE KARL
	 	$	700	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	398010	 	 	LAWRENCE KIRSTEIN 
C/O
RICHMARR CONSTRUCTION CO.
	 	$	665,088	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	398020	 	 	LEE G. KIRSTEIN
	 	$	59,688	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	398760	 	 	PAUL L. & EMOGENE R KITE
	 	$	287	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	101847	 	 	MARVIN KOGOD 
REVOCABLE TRUST	 	$	14,922	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	101848	 	 	MURIEL KOGOD 
REVOCABLE TRUST	 	$	14,922	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	435010	 	 	JOHN MILNE KURTZ
	 	$	822	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	442010	 	 	ALEXANDER M. LANKLER	 	$	217,650	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	460020	 	 	BESSIE LEVITAN 
FAMILY TRUST SHARE H	 	$	96,946	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	460040	 	 	MARJORIE A. LEVITAN
	 	$	23,400	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	472900	 	 	FULTON LISS
	 	$	48,000	 	 	TOP






D-47









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	 

	 	 	 	 	 	 	472600	 	 	MICHELLE S. LISS
	 	$	74,610	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	501990	 	 	JANE B. MCCAULLEY
TRUST, JANE B.
MCCAULLEYOR DONALD
F. MCCAULLEY,
TRUSTEES
	 	$	11,938	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	502510	 	 	MATTHEW BROOKS
MCCORMICK
	 	$	1,147	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	504500	 	 	KENNETH L. MCVEARRY
	 	$	24,665	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	570410	 	 	JAMES POLICARO
	 	$	616	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	577090	 	 	GLENDA S. POTTER
	 	$	50,084	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	577080	 	 	RICHARD LEE POTTER
	 	$	41,151	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	602600	 	 	RF & P PROPERTIES
	 	$	5,195,000	 	 	TOP
	 
	 

	 	 	 	 	 	 	607010	 	 	JOHN F. RIHTARGHIK
	 	$	675	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	664510	 	 	MICHAEL T. SHEHADI
	 	$	24,665	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	666010	 	 	SHIPPING CREEK
ASSOCIATES
	 	$	29,844	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	699010	 	 	SCOTT E. & CATHY C.
STERLING
	 	$	529	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	712020	 	 	DAVID W. TAYLOR
	 	$	445	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	715020	 	 	STEPHEN THOMPSON
	 	$	739	 	 	BOTTOM






D-48









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	 

	 	 	 	 	 	 	745010	 	 	WASHINGTON BRICK &
TERRA COTTA CO.
	 	$	806,248	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	765010	 	 	FREDERICK PAUL
WRIEDEN
	 	$	1,825	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	794010	 	 	ROBERT D. ZIMET
	 	$	18,079	 	 	TOP
	 
	 

	 	 	 	 	 	 	102010	 	 	BETTY JOAN BURR
	 	$	150,245	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	317070	 	 	JOHN HARRIS
	 	$	23,476	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	85030	 	 	THE E.R. BROIDA
TRUST
	 	$	1,425,000	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	102087	 	 	LFC PARTNERS
	 	$	15,000,000	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	619020	 	 	THE H.F. RUBY TRUST
	 	$	1,025,000	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	684181	 	 	ROBERT H. SMITH
	 	$	6,689,463	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	408130	 	 	ROBERTY P. KOGOD
	 	$	6,689,483	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	229010	 	 	BARBARA FLEISGHMAN
	 	$	12,500	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	263040	 	 	ALLEN GELLER
	 	$	32,002	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	334010	 	 	LOISB. HOWLAND TR,
LOIS B HOWLAND OR
PAUL D. HOWLAND
TRUSTEES
	 	$	8,953	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	36010	 	 	ALEXANDER H. AND
ROBERTA R.
JEFFRIES, TENANTS
BY THE ENTIRETIES
	 	$	22,383	 	 	TOP






D-49









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	 

	 	 	 	 	 	 	 	 	 	 	386010	 	 	MARVIN L. KAY (E24)
	 	$	909,953	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	398030	 	 	RICHARD A. KIRSTEIN 
C/O
RICHMARR CONSTRUCTION CO.
	 	$	991,593	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	464010	 	 	ALAN & BETTY LEVY
	 	$	629	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	454020	 	 	WILBUR & BARBARA LEVENTER
	 	$	84,827	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	460080	 	 	ROGER S. LEVITAN
	 	$	23,400	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	473010	 	 	ANTHONY J. LOPINTO
	 	$	12,332	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	744010	 	 	JACK LURIA
	 	$	7,997	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	521010	 	 	ALFRED H. MOSES
	 	$	56,342	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	577010	 	 	ALAN LEE POTTER
	 	$	158,156	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	577050	 	 	LOUISE B. POTTER
	 	$	158,156	 	 	TOP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	646020	 	 	RONALD SCHREIBER &
LESLIE SCHREIBER
	 	$	40,003	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	684170	 	 	MIRIAM H. SMITH
	 	$	70,952	 	 	TOP
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	41,896,919	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NML (CRONINS LANDING) *

	 	 	9,000,000	 	 	 	9,000,000	 	 	 	101858	 	 	Commonwealth Atlantic
Properties, Inc.
	 	$	9,000,000	 	 	N/A
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	9,000,000	 	 	 





D-50









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OUTSTANDING	 	 	 	 	 	 	 	 	 	 	 	TOP OR
	 	 	PRINCIPAL	 	GUARANTEED	 	PARTNER	 	PARTNER	 	AMOUNT	 	BOTTOM
	LENDER	 	AMOUNT	 	AMOUNT	 	ODS #	 	GUARANTEEING DEBT	 	GUARANTEED	 	GUARANTEE
	FREDDIE MAC (BUCHANAN HOUSE)

	 	 	25,500,000	 	 	 	25,500,000	 	 	 	101735	 	 	ROY S. MCDOWELL, JR.
	 	$	25,245,000	 	 	BOTTOM
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	101734	 	 	THE BOULDER COMPANY
	 	$	255,000	 	 	BOTTOM
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	TOTAL
	 	 	25,500,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL GUARANTEE’S

	 	 	76,396,919	 	 	 	76,396,919	 	 	 	 	 	 	TOTAL GUARANTEED DEBT
	 	 	76,396,919	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 




The 9,000,000 amount represents a Contribution Agreement

The Consulate debt was refinanced in 2001 and the guarantees were released





D-51









 







Schedule 5
to Exhibit D




SRW
Tax Protection Agreements Assumed Pursuant to the Merger Agreement





	•	 	Asset Contribution Agreement between Smith Partnership and Commonwealth Atlantic
Properties, Inc. dated as of March 3, 1999 (Crystal Square Apartments)






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and
Infinity/Terrace, L.L.C. dated as of August 19, 1998 (Terrace Apartments)






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and 2470 N. Clark
Street Venture dated as of August 19, 1998 (Park Lincoln)






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and Somerset Limited
Partnership dated as of August 19, 1998






	•	 	Real Estate Contribution Agreement by and between Smith Partnership, Countryside
Operating Partnership I and Countryside Residential Partners, Ltd. dated as of August 19,
1998






	•	 	Agreement to Acquire Partnership Interests (Dearborn Delaware Associates) by and among
Smith Partnership, Dearborn/Delaware Corporation and LFC Partners dated as of October 7,
1997






	•	 	Agreement to Acquire Partnership Interests by and between Smith Partnership, R&B
Executive Investments — Charter Oak Associates, The Edward R. Broida Trust No. 1, The R.J.
Franks Trust No. 1, The Howard F. Ruby Trust and Connecticut General Life Insurance Company
(on behalf of its Closed-End Real Estate Fund-1) dated as of February 20, 1996






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and 1841 Columbia
Road Limited Partnership dated as of December 12, 1995






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and Kenmore
Apartments Joint Venture dated as of December 26, 1996






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and Tower Associates
Limited Partnership dated as of January 30, 1997






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and Plaza Associates
Limited Partnership dated as of January 30, 1997






	•	 	Real Estate Acquisition Agreement by and between Smith Partnership and Commonwealth
Reservoir Park Limited Partnership dated as of October 10, 1997






	•	 	Real Estate Contribution Agreement by and between Smith Partnership and Janet Burstein
Svirsky, Maralyn Burstein Milgrom, Aaron Milgrom and Joseph Burstein
dated as of June 30, 1997 (Tunlaw Gardens)





 


D-52









 





	•	 	Real Estate Contribution Agreement by and between Smith Partnership and certain partners
in Tunlaw Apartments Company Limited Partnership date as of January 1, 1998 (Tunlaw Park)






	•	 	Partnership Contribution Agreement by and among Smith Partnership, Roy S. MacDowell, Jr.
and The Boulder Company, Inc. dated as of February 2, 1998 (Cronin’s Landing)






	•	 	Real Estate Contribution and Acquisition Agreement dated April 6, 1999 by an among
Charles E. Smith Residential Realty L.P., The Cambridge Company, Inc., W S Lexington
Corporation, Maple Research Park Corporation and Maple East Associates Limited Partnership,
as amended












	•	 	Contribution Agreement by and between The Renaissance Apartments Limited Partnership and
Charles E. Smith Residential Realty L.P. dated March 16, 1999






	•	 	Contribution Agreement by and between Charles E. Smith Residential Realty L.P. and the
Partners in Orleans Associates Limited Partnership dated June 1, 1999






	•	 	Real Estate Contribution Agreement by and between Charles E. Smith Residential Realty
L.P. and General Realty Ventures dated October 28, 1994






	•	 	Contribution and Exchange Agreement by and among Bush Construction Corporation and
Apollo Real Estate Investment Fund II, L.P. as Seller and Charles E. Smith Residential
Realty L.P. as Purchaser dated September 16, 1997






	•	 	Real Estate Contribution Agreement by and between Charles E. Smith Residential Realty
L.P. Davenport House Associates Limited Partnership and Davenport Land Limited Partnership
dated March 31, 1995




D-53









 





EXHIBIT E




NOTICE OF REDEMPTION




     The undersigned hereby irrevocably (i) redeems                      Units in                     
in accordance with the terms of Annex A to the Amended and Restated Declaration of Trust of
Archstone-Smith Operating Trust, as amended, and the Redemption Right referred to therein, (ii)
surrenders such Units and all right, title and interest therein and (iii) directs that the Cash
Amount or Shares Amount (as determined by the Trustee) deliverable upon exercise of the Redemption
Right be delivered to the address specified below, and if Shares are to be delivered, such Shares
be registered or placed in the name(s) and at the address(es) specified below. The undersigned
hereby represents, warrants, and certifies that the undersigned (a) has marketable and unencumbered
title to such Units, free and clear of the rights of or interests of any other person or entity,
(b) has the full right, power and authority to redeem and surrender such Units as provided herein
and (c) has obtained the consent or approval of all persons or entities, if any, having the right
to consult or approve such redemption and surrender.



	 	 	 	 	 
	Dated:

	 	 	 	 
	 

	 	 	 	 
	Name of Unitholder:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Signature of Unitholder)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Street Address)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(City)     (State)     (Zip Code)
	 
	 	 	 	 
	 

	 	 	 	Signature Guaranteed by:
	 
	 	 	 	 
	 

	 	 	 	 
	If Shares are to be issued, issue to:	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 
	 	 	 	 
	Please insert social security or identifying number:






 -i-




 









 








EXHIBIT F




DESIGNATION OF THE PREFERENCES, CONVERSION

AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS AND LIMITATIONS AS

TO SERIES I PREFERRED UNITS




     The Series I Preferred Units shall have the following designations, preferences, rights,
powers and duties:



     (1) Certain Defined Terms. The following capitalized terms used in this Exhibit
F shall have the respective meanings set forth below:



          “Distribution Date” means shall mean the 15th day (or if such day is not a Business
Day, the next Business Day thereafter) of February, May, August and November of each year,
commencing February 15, 1998.




          “Distribution Period” means the periods commencing on, and including, February 15, May
15, August 15, and November 15 of each year and ending on the date prior to the next succeeding
Distribution Date (other than the Distribution Period during which any Series I Preferred Units
shall be redeemed pursuant to Section 5, which shall end on and include the date of such
redemption).




          “Fully Junior Units” shall mean the Common Units and any other class or series of
Units now or hereafter issued and outstanding over which the Series I Preferred Units have a
preference or priority in both (i) the payment of dividends and (ii) the distribution of assets on
any liquidation, dissolution or winding up of the Trust.




          “Issue Date” shall mean the first date on which the Series I Preferred Units were
issued.




          “Junior Units” shall mean the Common Units and any other class or series of Units now
or hereafter issued and outstanding over which the Series I Preferred Units have a preference or
priority in the payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Trust.




          “Parity Units” has the meaning ascribed thereto in Section 6(B).




          “set apart for payment” shall be deemed to include, without any action other than the
following, the recording by the Trust in its accounting ledgers of any accounting or bookkeeping
entry which indicates, pursuant to a declaration of dividends or other distribution by the Trustee,
the allocation of funds to be so paid on any series or class of Units of the Trust;
provided, however, that if any funds for any class or series of Junior Units or any
class or series of Units ranking on a parity with the Series I Preferred Units as to the payment of
distributions are placed in a separate account of the Trust or delivered to a disbursing, paying or
other similar agent, then “set apart for payment” with respect to the Series I Preferred Units
shall mean placing such funds in a separate account or delivering such funds to a disbursing,
paying or other similar agent.




F- 1









 








     (2) Distributions.



          (A) The Trustee, in its capacity as the holder of the then outstanding Series I Preferred
Units, shall be entitled to receive, when, as and if declared by the Trustee, out of funds legally
available for the payment of distributions, cumulative preferential distributions payable in cash
in an amount per Series I Preferred Unit equal to $7,660 per Unit per annum (the “Distribution
Rate”). Distributions shall begin to accrue and shall be fully cumulative from August 15, 2001,
whether or not in any Distribution Period or Periods there shall be funds of the Trust legally
available for the payment of such distributions, and shall be payable quarterly, when, as and if
declared by the Trustee, in arrears on each Distribution Date. Accrued and unpaid distributions
for any past Distribution Periods may be declared and paid at any time and for such interim
periods, without reference to any regular Distribution Date, to the Trustee, in its capacity as the
holder of the Series I Preferred Units, on such date as may be fixed by the Trustee for payment of
the corresponding dividend on the Series I Preferred Shares. Any distribution made on the Series I
Preferred Units shall first be credited against the earliest accrued but unpaid distribution due
with respect to Series I Preferred Units which remains payable.




          (B) The amount of distributions for each full Distribution Period relating to the Series I
Preferred Units shall be equal to $1,915. The amount of distribution for any period on the Series
I Preferred Units that represents less than a full quarter of a year shall be computed on the basis
of a 360-day year of twelve 30-day months. No interest, or sum of money in lieu of interest, shall
be payable in respect of any distribution payment or payments on the Series I Preferred Units that
may be in arrears.




          (C) So long as any Series I Preferred Units are outstanding, no distributions, except as
described in the immediately following sentence, shall be declared or paid or set apart for payment
on any class or series of Parity Units for any period unless full cumulative distributions have
been or contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment on the Series I Preferred Units for all Distribution Periods
terminating on or prior to the distribution payment date for such class or series of Parity Units.
When distributions are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all distributions declared upon Series I Preferred Units and all distributions declared
upon any other class or series of Parity Units shall be declared ratably in proportion to the
respective amounts of distributions accumulated and unpaid on the Series I Preferred Units and
accumulated and unpaid on such Parity Units.




          (D) So long as any Series I Preferred Units are outstanding, no distributions (other than
distributions paid solely in Fully Junior Units or options, warrants or rights to subscribe for or
purchase Fully Junior Units) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior Units, nor shall any
Junior Units be redeemed, purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of Common Units made for purposes of an employee incentive or benefit plan of the
Trustee, the Trust or any subsidiary) for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such Junior Units) by the Trust, directly or
indirectly (except by conversion into or exchange for Fully Junior Units), unless in each case (i)
the full cumulative distributions on all outstanding Series I Preferred Units




F- 2









 







and any
other Parity Units of the Trust shall have been paid or declared and set apart for payment for
all past Distribution Periods with respect to the Series I Preferred Units and all past
distribution periods with respect to such Parity Units and (ii) sufficient funds shall have been
paid or set apart for the payment of the distribution for the current Distribution Period with
respect to the Series I Preferred Units and the current distribution period with respect to such
Parity Units.




          (F) No distributions on the Series I Preferred Units shall be declared by the Trustee or paid
or set apart for payment by the Trust at such time as the terms and provisions of any agreement of
the Trustee or the Trust, including any agreement relating to indebtedness of either of them,
prohibits such declaration, payment, or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited by law.




     (3) Liquidation Preference.



          (A) In the event of any liquidation, dissolution or winding up of the Trust, whether voluntary
or involuntary, before any payment or distribution of the assets of the Trust shall be made to or
set apart for the holders of Junior Units, the Trustee, in its capacity as holder of the Series I
Preferred Units, shall be entitled to the sum of (i) $100,000 per Series I Preferred Unit (the
“Series I Liquidation Preference”) plus (ii) an amount equal to all distributions (whether or not
earned or declared) accrued and unpaid thereon to the date of final distribution to the Trustee, in
its capacity as such holder; but the Trustee, in its capacity as the holder of Series I Preferred
Units shall not be entitled to any further payment. If, upon any such liquidation, dissolution or
winding up of the Trust, the assets of the Trust, or proceeds thereof, distributable to the
Trustee, in its capacity as the holder of Series I Preferred Units, shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other class or series of
Parity Units, then such assets, or the proceeds thereof, shall be distributed among the Trustee, in
its capacity as the holder of such Series I Preferred Units, and the holders of such other Parity
Units ratably in accordance with the respective amounts that would be payable on such Series I
Preferred Units and such other Parity Units if all amounts payable thereon were paid in full. For
the purposes of this Section 3, (x) a consolidation or merger of the Trust with one or more
partnerships, limited liability companies, corporations, real estate investment trusts or other
entities, (y) a sale, lease or conveyance of all or substantially all of the Trust’s property or
business or (z) a share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Trust.




          (B) Subject to the rights of the holders of Units of any series or class or classes of Units
ranking on a parity with or prior to the Series I Preferred Units upon any liquidation, dissolution
or winding up of the Trust, upon any liquidation, dissolution or winding up of the Trust, after
payment shall have been made in full to the Trustee, in its capacity as the holder of the Series I
Preferred Units, as provided in this Section 3, any other series or class or classes of Junior
Units shall, subject to the respective terms and provisions (if any) applying thereto, be entitled
to receive any and all assets remaining to be paid or distributed, and the Trustee, in its capacity
as the holder of the Series I Preferred Units, shall not be entitled to share therein.




F- 3









 








     (4) Redemption Right. In the event that the Trustee is required to redeem or
repurchase any shares of Series I Preferred Shares pursuant to the terms thereof, the Trust shall
redeem an equivalent number of Series I Preferred Units for consideration equal to the
consideration payable by the Trustee upon redemption of such shares of Series I Preferred Shares.



     (5) Shares to be Retired. All Series I Preferred Units which are issued and
reacquired in any manner by the Trust shall be restored to the status of authorized but unissued
Units of the Trust, without designation as to class or series.



     (6) Ranking. Any class or series of Units shall be deemed to rank:



          (A) senior to the Series I Preferred Units, in the payment of distributions or in the
distribution of assets upon liquidation, dissolution or winding up of the Trust, if the holders of
such class or series of Units shall be entitled to the receipt of distributions or of amounts
distributable upon any liquidation, dissolution or winding up of the Trust, as the case may be, in
preference or priority to the holders of Series I Preferred Units;




          (B) on a parity with the Series I Preferred Units, in the payment of distributions and in the
distribution of assets upon liquidation, dissolution or winding up of the Trust, whether or not the
distribution rates, distribution payment dates or redemption or liquidation prices per Unit be
different from those of the holders of the Series I Preferred Units, if the holders of such class
or series of Units and the holders of the Series I Preferred Units are entitled to the receipt of
distributions and of amounts distributable upon any liquidation, dissolution or winding up of the
Trust in proportion to their respective amounts of distributions accrued and unpaid per Unit or
liquidation preferences, without preference or priority to each other (“Parity Units”); the
outstanding Series H Preferred Units of the Trustee are Parity Units;




          (C) junior to the Series I Preferred Units, in the payment of distributions or in the
distribution of assets upon any liquidation, dissolution or winding up of the Trust, if such class
or series of Units is Junior Units; and




          (D) junior to the Series I Preferred Units, in the payment of distributions and in the
distribution of assets upon liquidation, dissolution or winding up of the Trust, if such class or
series of Units is Fully Junior Units.




     (7) Voting. Except as required by law, the Trustee, in its capacity as the holder of
the Series I Preferred Units, shall not be entitled to vote at any meeting of the Unitholders or
for any other purpose or otherwise to participate in any action taken by the Trust or the
Unitholders, or to receive notice of any meeting of the Unitholders.



     (8) Restriction on Ownership. The Series I Preferred Units shall be owned and held
solely by the Trustee.



F- 4









 





     (9) General. The rights of the Trustee, in its capacity as the holder of the Series I
Preferred Units, are in addition to and not in limitation on any other rights or authority of the
Trustee, in any other capacity, under the Agreement. In addition, nothing contained in this
Exhibit F shall be deemed to limit or otherwise restrict any rights or authority of the
Trustee under the Agreement, other than in its capacity as the holder of the Series I Preferred
Units.



*     *     *     *




F- 5









 








EXHIBIT G




DESIGNATION OF THE PREFERENCES, CONVERSION

AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS AND LIMITATIONS AS

TO SERIES M PREFERRED UNITS




     The Series M Preferred Units shall have the following designations, preferences, rights,
powers and duties:



     (1) Certain Defined Terms. The following capitalized terms used in this Exhibit
G shall have the respective meanings set forth below:



          “Common Shares” mean common share of beneficial interest, par value $0.01 per share,
of the Parent REIT.




          “Common Unit Value” means (1) the Value of one Common Share multiplied by (2) the
Conversion Factor.




          “Contribution Agreement” shall mean the Contribution Agreement, to be dated as of
December 13, 2004, between the Trust and Ezra Mersey.




          “Person” shall mean an individual, corporation, partnership, estate, trust (including
a trust qualified under Section 401(a) or 501(c)(17) of the Code), 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.




          “Redemption Price” shall mean the Redemption Price calculated pursuant to the
Contribution Agreement.




          “Redemption Price Determination Time” shall mean the time the Redemption Price
determined pursuant to the Contribution Agreement.




          “Underlying Common Unit Amount” shall mean (a) at all times before the Redemption
Price Determination Time, the number of Common Shares with an aggregate Common Unit Value of
$10,000 as of the close of trading on the New York Stock Exchange on December 10, 2004 (the
“Initial Unit Amount”) and (b) from and after the Redemption Price Determination Time, the sum of
(i) the Initial Unit Amount and (ii) the number of Common Units whose aggregate Common Unit Value
is equal to the Redemption Price as of the close of trading on the New York Stock Exchange on the
date of the Redemption Price Determination Time (or, if such date is not a trading day on the New
York Stock Exchange, the immediately preceding trading day) (the “Redemption Price Amount”).




     (2) Distributions.



          (A) General. The holder of the Series M Preferred Unit shall be entitled to receive a
proportionate share of any distribution in cash or in kind authorized, declared and paid




G- 1









 







by the Trust on the Common Units, when, as and if authorized and declared by the Trustee, out
of any assets legally available therefor, as though the holder of the Series M Preferred Unit were
the holders of the Underlying Common Unit Amount of Class B Common Units as of the record date
fixed for the determination of the holders of the Common Units entitled to receive such
distribution, and assuming, for purposes of determining the time that the Class B Common Units are
automatically converted into Class A-1 Units under the Declaration of Trust, (i) the Initial
Amount of Class B Common Units to be issued to the holder on December 13, 2004 and (ii) the
Redemption Price Amount of Class B Common Units were issued to the holder on the date of the
Redemption Price Determination Time.




          (B) No Further Rights. The holder of the Series M Preferred Unit shall not be
entitled to any distributions, whether payable in cash, other property or otherwise, in excess of
the distributions described in Section 2(A).




     (3) Liquidation Preference.



          (A) Distributions Upon Liquidation. Upon any liquidation, dissolution or winding up
of the Trust, whether voluntary or involuntary, after any payment or distribution of the assets of
the Trust (whether capital or surplus) is made to or set apart for the holders of any class or
series of Units of the Trust now or hereafter issued and outstanding which have a preference or
priority over the Common Units in the distribution of assets on any liquidation, dissolution or
winding up of the Trust, the holder of the Series M Preferred Unit shall be entitled to receive
out of assets of the Trust legally available for such purpose, a proportionate share of the
remaining assets of the Trust, if any, as if the holders held a number of Class B Common Units
equal to the Underlying Common Unit Amount and assuming, for purposes of determining the time that
the Class B Common Units are automatically converted into Class A-1 Units under the Declaration of
Trust, the Initial Amount of such Class B Units were issued on December 13, 2004 and the Redemption
Price Amount of such Class B Units were issued on the date of the Redemption Price Determination
Time.




          (B) Consolidation, Merger or Certain Other Transactions. The voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the Trustee to, or the
consolidation or merger or other business combination of the Trust with or into, any corporation,
trust, partnership, limited liability company or other entity (or of any corporation, trust,
partnership, limited liability company or other entity with or into the Trust) shall not be deemed
to constitute a liquidation, dissolution or winding-up of the Trust.




     (4) Redemption. From and after the Redemption Price Determination Time, the holder of
the Series M Preferred Unit shall have the right to have the Series M Preferred Unit redeemed in
whole and not in part pursuant to Section 6.6 of Annex A to the Declaration of Trust, as if such
holder held a number of Class B Common Units equal to the Underlying Common Unit Amount and
assuming, for purposes of determining the time that the Class B Common Units are automatically
converted into Class A-1 Units under the Declaration of Trust, the Initial Amount of such Class B
Common Units were issued on December 13, 2004 and the Redemption Price Amount of the Class B Common
Units were issued on the date of the



G- 2









 







Redemption Price Determination Time. Such redemption shall not be subject to the one-year
hold period described in Section 6.6A of Annex A.



     (5) Units to be Retired. If the Series M Preferred Unit is reacquired in any manner
by the Trust or redeemed as provided herein, such Series M Preferred Unit shall be restored to the
status of authorized but unissued Units of the Trust, without designation as to class or series.



     (6) Ranking. The Series M Preferred Unit shall be deemed to rank on a parity with the
Common Units in the payment of distributions or the distribution of assets on any liquidation,
dissolution or winding up of the Trust. Any other class or series of Units of the Trust shall be
deemed to rank:



          (A) senior to the Series M Preferred Unit, in the payment of distributions or in the
distribution of assets on any liquidation, dissolution or winding up of the Trust, if the holders
of such class or series are entitled to the receipt of distributions or amounts distributable on
any liquidation, dissolution or winding up of the Trust, as the case may be, in preference or
priority to the holders of Series M Preferred Unit or the Common Units; and




          (B) on a parity with the Series M Preferred Unit, in the payment of distributions and in the
distribution of assets on any liquidation, dissolution or winding up of the Trust, the holders of
such class or series and the holders of Series M Preferred Unit are entitled to the receipt of
distributions and amounts distributable on any liquidation, dissolution or winding up of the Trust
on the same basis as the Series M Preferred Unit or Common Units.




     (7) Voting. The holder of the Series M Preferred Unit will not have any voting rights
or right to consent to any matter requiring the consent or approval of the holders of Units, except
as required by law.



     (8) Transfer Restrictions. Notwithstanding Section 9.3 of Annex A to the Declaration
of Trust, the holder of the Series M Preferred Unit may not transfer all or any portion of his or
her Series M Preferred Unit without the prior written consent of the Trust or the Trustee prior to
the Redemption Price Determination Time. A transfer shall be deemed to include a pledge to a
lender to secure a loan to a holder of the Series M Preferred Unit. From and after the Redemption
Price Determination Time, the holder of the Series M Preferred Unit may transfer such unit in
accordance with Section 9.3 of Annex A to the Declaration of Trust.



     (9) No Conversion Rights. The holder of the Series M Preferred Unit shall not have
any rights to convert such shares into shares of any other class or series of shares or into any
other securities of, or interest in, the Trust.



     (10) No Preemptive Rights. The holder of the Series M Preferred Unit shall not have
any preemptive rights to purchase or subscribe for additional units of the Trust or any other
security of the Trust which it may issue or sell.



     (11) Record Holders. The Trust may deem and treat the record holder of the Series M
Preferred Unit as the true and lawful owner thereof for all purposes, and the Trust shall not be
affected by any notice to the contrary.



G- 3









 





     (12) Sinking Fund. The Series M Preferred Unit shall not be entitled to the benefit
of any retirement or sinking fund.



*     *     *     *




G- 4









 








EXHIBIT H




DESIGNATION OF THE PREFERENCES, CONVERSION

AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS AND LIMITATIONS AS

TO

SERIES N PREFERRED UNITS




     The Series N Preferred Units shall have the following designations, preferences, rights,
powers and duties:



     (1) Certain Defined Terms. The following capitalized terms used in this Exhibit
H shall have the respective meanings set forth below:



          “Approved Apartment Unit” shall have the meaning set forth in Section 8(A).




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




          “Class A-1 Common Units” shall mean Class A-1 Common Units of Beneficial Interest, par
value $0.01 per unit, of the Trust.




          “Class A-2 Common Units” shall mean Class A-2 Common Units of Beneficial Interest, par
value $0.01 per unit, of the Trust.




          “Class B Common Units” shall mean Class B Common Units of Beneficial Interest, par
value $0.01 per unit, of the Trust.




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




          “Common Share Entitlement Value” means, with respect to each Entitlement Event, the
average daily high/low price of a common share of beneficial interest, $0.01 par value per share,
of the Trustee for the thirty (30) day trading period ending on the date that is five (5) trading
days immediately preceding such Entitlement Event.




          “Common Units” shall initially mean Class B Common Units with an initial issuance date
deemed to be the date of the issuance of the Series N-1 Preferred Units and the Series N-2
Preferred Units, and following such time as Class B Common Units issued on such date would have
been automatically converted into Class A-1 Common Units under the Declaration of Trust, shall mean
Class A-1 Common Units.




          “Entitlement Event” shall have the meaning set forth in Section 8(A).




          “Fully Entitled” shall mean that all necessary governmental licenses and approvals,
including an approved site plan, have been achieved, and all applicable appeal periods have lapsed
without successful or ongoing challenge, to permit the development and construction by the
Trust, in accordance with the Trust’s approved site plan and construction




H- 1









 







plans and
specifications, of a specified number of Approved Apartment Units comprising all or a portion of
the Toluca Hills Project and such governmental approvals are in full force and effect without
default by the developer thereunder, such that the issuance of a building permit for the
construction of said number of Approved Apartment Units in the Toluca Hills Project is an
administrative act that may be accomplished solely by the payment of applicable fees without the
right of a discretionary approval by governmental authorities for the issuance thereof.




          “Notice of Conversion” means the Notice of Conversion substantially in the form of
Exhibit A to this Exhibit H.




          “Person” shall mean an individual, corporation, partnership, limited liability
company, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the
Code), 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.




          “Series N-1 Redemption Price” shall have the meaning set forth in Section 4(A)(i).




          “Series N-2 Redemption Price” shall have the meaning set forth in Section 4(A)(ii).




          “Toluca Hills Project” means the portion of the property listed in Exhibit B
attached to this Exhibit H consisting of undeveloped land.




          “Trustee” shall mean Archstone-Smith Trust, a Maryland real estate investment trust,
the sole trustee of the Trust.




          “Units” shall mean the shares of beneficial interest, par value $0.01 per share, of
the Trust, which have been designated as Units in the Declaration of Trust.




     (2) Distributions.



          (A) Series N-1 Preferred Units. The holder of the Series N-1 Preferred Units shall be
entitled to receive a proportionate share of any distribution in cash or in kind authorized,
declared and paid by the Trust on the Common Units, when, as and if authorized and declared by the
Trustee, out of any assets legally available therefor, as though each Series N-1 Preferred Unit was
11.58 Common Units as of the record date fixed for the determination of the holders of the Common
Units entitled to receive such distribution.




          (B) Series N-2 Preferred Units. The holder of the Series N-2 Preferred Units shall be
entitled to receive a proportionate share of any distribution in cash or in kind authorized,
declared and paid by the Trust on the Common Units, when, as and if authorized and declared by the
Trustee, out of any assets legally available therefor, as though each Series N-2 Preferred Unit was
4.96 Common Units as of the record date fixed for the determination of the holders of the Common
Units entitled to receive such distribution.




H- 2









 








          (C) No Further Rights. The holder of Series N-1 Preferred Units and Series N-1
Preferred Units shall not be entitled to any distributions, whether payable in cash, other property
or otherwise, in excess of distributions described in this Section 2.




     (3) Liquidation.



          (A) Distributions to the Holder of Series N-1 Preferred Units Upon Liquidation. Upon
any liquidation, dissolution or winding up of the Trust, whether voluntary or involuntary, after
any payment or distribution of the assets of the Trust (whether capital or surplus) is made to or
set apart for the holders of any class or series of Units of the Trust now or hereafter issued and
outstanding which have a preference or priority over the Common Units in the distribution of assets
on any liquidation, dissolution or winding up of the Trust, the holder of the Series N-1 Preferred
Units shall be entitled to receive out of assets of the Trust legally available for such purpose, a
proportionate share of the remaining assets of the Trust, if any, as though each Series N-1
Preferred Unit was 11.58 Common Units.




          (B) Distributions to the Holder of Series N-2 Preferred Units Upon Liquidation. Upon
any liquidation, dissolution or winding up of the Trust, whether voluntary or involuntary, after
any payment or distribution of the assets of the Trust (whether capital or surplus) is made to or
set apart for the holders of any class or series of Units of the Trust now or hereafter issued and
outstanding which have a preference or priority over the Common Units in the distribution of assets
on any liquidation, dissolution or winding up of the Trust, the holder of the Series N-2 Preferred
Units shall be entitled to receive out of assets of the Trust legally available for such purpose, a
proportionate share of the remaining assets of the Trust, if any, as though each Series N-2
Preferred Unit was 4.96 Common Units.




          (C) Consolidation, Merger or Certain Other Transactions. The voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the Trustee to, or the
consolidation or merger or other business combination of the Trust with or into, any corporation,
trust, partnership, limited liability company or other entity (or of any corporation, trust,
partnership, limited liability company or other entity with or into the Trust) shall not be deemed
to constitute a liquidation, dissolution or winding-up of the Trust.




     (4) Redemption at the Option of the Trust.



          (A) Right of Optional Redemption.





     (i) The Series N-1 Preferred Units are not redeemable by the Trust prior to July 28,
2015. On or after such date, the Trust shall have the right to redeem any Series N-1
Preferred Units which have not previously been converted in accordance with Section 8, in
whole or in part, at any time or from time to time, upon not less than ten (10) nor more
than sixty (60) days’ written notice, for cash at a redemption price of $416.67 per Series
N-1 Preferred Unit (the “Series N-1 Redemption Price”). If fewer than all of the
outstanding Series N-1 Preferred Units are to be redeemed, the Series N-1 Preferred
Units to be redeemed shall be selected pro rata (as nearly as practicable without
creating fractional units).



H- 3









 






     (ii) The Series N-2 Preferred Units are not redeemable by the Trust prior to July 28,
2015. On or after such date, the Trust shall have the right to redeem any Series N-2
Preferred Units which have not previously been converted in accordance with Section 8, in
whole or in part, at any time or from time to time, upon not less than ten (10) nor more
than sixty (60) days’ written notice, for cash at a redemption price of $178.57 per Series
N-2 Preferred Unit (the “Series N-2 Redemption Price”). If fewer than all of the
outstanding Series N-2 Preferred Units are to be redeemed, the Series N-2 Preferred Units to
be redeemed shall be selected pro rata (as nearly as practicable without creating fractional
units).



          (B) Procedures for Redemption.





     (i) Notice of redemption will be (A) faxed, and (B) mailed by the Trust, by certified
mail, postage prepaid, not less than ten (10) nor more than sixty (60) days prior to the
redemption date, addressed to the holder of record of the Series N-1 Preferred Units or
Series N-2 Preferred Units being redeemed at their respective addresses as they appear on
the records of the Trust. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series N-1 Preferred Units or Series
N-2 Preferred Units except as to the holder to whom such notice was defective or not given.
In addition to any information required by law, each such notice shall state: (1) the
redemption date, (2) the Series N-1 Redemption Price or the Series N-2 Redemption Price, as
applicable, (3) the aggregate number of Series N-1 Preferred Units and/or Series N-2
Preferred Units to be redeemed and if fewer than all of the outstanding Series N-1 Preferred
Units or Series N-2 Preferred Units are to be redeemed, the number of Series N-1 Preferred
Units and/or the Series N-2 Preferred Units to be redeemed held by such holder, which number
shall equal such holder’s pro rata share (based on the percentage of the aggregate number of
outstanding Series N-1 Preferred Units or Series N-2 Preferred Units and the total number of
Series N-1 Preferred Units or Series N-2 Preferred Units held by such holder represents,
respectively) of the aggregate number of Series N-1 Preferred Units and/or Series N-2
Preferred Units to be redeemed, (4) the place or places where such Series N-1 Preferred
Units and/or Series N-2 Preferred Units are to be surrendered for payment of the Series N-1
Redemption Price or Series N-2 Redemption Price, respectively and (5) that payment of the
Series N-1 Redemption Price and/or the Series N-2 Redemption Price will be made upon
presentation and surrender of such Series N-1 Preferred Units or Series N-2 Preferred Units,
respectively.




     (ii) If the Trust gives a notice of redemption in respect of Series N-1 Preferred Units
and/or Series N-2 Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Trust will deposit irrevocably in trust for
the benefit of the Series N-1 Preferred Units and/or the Series N-2 Preferred Units being
redeemed funds sufficient to pay the applicable Series N-1 Redemption Price or Series N-2
Redemption Price, respectively, and will give irrevocable instructions and authority to pay
such Series N-1 Redemption Price or Series N-2
Redemption Price to the holder of the Series N-1 Preferred Units and Series
N-2
Preferred Units, respectively upon surrender of the Series N-1 Preferred Units or Series



H- 4









 







N-2
Preferred Units by such holder at the place designated in the notice of redemption. If any
date fixed for redemption of Series N-1 Preferred Units or the Series N-2 Preferred Units is
not a Business Day, then payment of the Series N-1 Redemption Price or Series N-2 Redemption
Price payable on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption.



     (5) Units to be Retired. All Series N-1 Preferred Units or Series N-2 Preferred Units
which are issued and reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued Units of the Trust, without designation as to class or series.



     (6) Ranking. The Series N-1 Preferred Units and the Series N-2 Preferred Units shall
be deemed to rank on a parity with the Class A-1 Common Units, Class A-2 Common Units and the Class
B Common Units in the payment of distributions or the distribution of assets on any liquidation,
dissolution or winding up of the Trust. Any other class or series of Units of the Trust shall be
deemed to rank:



          (A) senior to the Series N-1 Preferred Units and Series N-2 Preferred Units, in the payment of
distributions or in the distribution of assets on any liquidation, dissolution or winding up of the
Trust, if the holders of such class or series are entitled to the receipt of distributions or
amounts distributable on any liquidation, dissolution or winding up of the Trust, as the case may
be, in preference or priority to the holders of Series N-Preferred Units, Series N-2 Preferred
Unit, Class A-1 Common Units, Class A-2 Common Units or Class B Common Units; and




          (B) on a parity with Series N-1 Preferred Units and Series N-2 Preferred Units, in the payment
of distributions and in the distribution of assets on any liquidation, dissolution or winding up of
the Trust, the holders of such class or series and the holders of Series N-1 Preferred Units and
Series N-2 Preferred Units are entitled to the receipt of distributions and amounts distributable
on any liquidation, dissolution or winding up of the Trust on the same basis as the Series
N-Preferred Units, Series N-2 Preferred Unit, Class A-1 Common Units, Class A-2 Common Units or
Class B Common Units.




     (7) Voting. The holder of the Series N-1 Preferred Units or the Series N-2 Preferred
Units will not have any voting rights or right to consent to any matter requiring the consent or
approval of the holders of Units, except as required by law.



     (8) Conversion.



          (A) Entitlement Events. Upon all or any portion of the Toluca Hills Project’s
becoming Fully Entitled (an “Entitlement Event”), the Trust shall provide the holder of the
Series N-1 Preferred Units and the Series N-2 Preferred Units with written notice that an
Entitlement
Event has occurred and specifying the number of apartment units which have become Fully
Entitled in connection with such Entitlement Event (each such apartment unit, an “Approved
Apartment Unit”). Upon each such Entitlement Event, a corresponding number of




H- 5









 







the Series N-1
Preferred Units and/or the Series N-2 Preferred Units shall become convertible in accordance with
this Section 8.




          (B) Upon each Entitlement Event that occurs at such time as there are Series N-1 Preferred
Units outstanding, the holder of the Series N-1 Preferred Units may convert a number of Series N-1
Preferred Units equal to the lesser of (i) the number of Approved Apartment Units having become
Fully Entitled in connection with such Entitlement Event and (ii) the number of Series N-1
Preferred Units outstanding. Upon conversion, each Series N-1 Preferred Unit shall be converted
into a number of Class A-1 Common Units equal to quotient of (x) $70,000 divided (y) the Common
Share Entitlement Value with respect to such Entitlement Event.




          (C) Upon each Entitlement Event that occurs at such time as the number of Series N-1 Preferred
Units outstanding is less than the number of Approved Apartment Units approved as part of such
Entitlement Event, the holder of the Series N-2 Preferred Units may convert a number of Series N-2
Preferred Units equal to the lesser of (i) the number of Approved Apartment Units having become
Fully Entitled in connection with such Entitlement Event in excess of the number of Series N-1
Preferred Units outstanding and (ii) the number of Series N-2 Preferred Units outstanding. Upon
conversion, each Series N-2 Preferred Unit shall be converted into a number of Class A-1 Common
Units equal to quotient of (x) $30,000 divided (y) the Common Share Entitlement Value with respect
to such Entitlement Event.




          (D) Upon each Entitlement Event that occurs at such time as there are no Series N-1 Preferred
Units outstanding and there are Series N-2 Preferred Units outstanding, the holder of the Series
N-2 Preferred Units may convert a number of Series N-2 Preferred Units equal to the lesser of (i)
the number of Approved Apartment Units having become Fully Entitled in connection with such
Entitlement Event and (ii) the number of Series N-2 Preferred Units outstanding. Upon conversion,
each Series N-2 Preferred Unit shall be converted into a number of Class A-1 Common Units equal to
quotient of (x) $30,000 divided (y) the Common Share Entitlement Value with respect to such
Entitlement Event.




          (E) In order to exercise the conversion right, the holder of each Series N-1 Preferred Unit or
Series N-2 Preferred Unit to be converted shall deliver a Notice of Conversion, at the office of
the Trust, providing that the holder thereof irrevocably elects to convert such Series N-1
Preferred Units or Series N-2 Preferred Units. Unless the Class A-1 Common Units to be issued on
conversion are to be issued in the same name as the name in which such Series N-1 Preferred Units
or Series N-2 Preferred Units are registered, each Series N-1 Preferred Unit or Series N-2
Preferred Unit surrendered for conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Trust, 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 Trust demonstrating that such taxes have been paid or are not required to be paid). As
promptly as practicable after the delivery of a Notice of Conversion for the Series N-1 Preferred
Units or the Series N-2 Preferred Units as provided in this Section 8(E)
(but in any event not later than the Business Day following such Notice of Conversion), the
Trust shall issue in book entry form to such holder, or on his, her or its written order, the
number of full Class A-1 Common Units issuable upon the conversion of the Series N-1 Preferred
Units




H- 6









 







or the Series N-2 Preferred Units in accordance with provisions of this Section 8, and any
cash in lieu of fractional interests in respect of a Class A-1 Common Unit arising upon such
conversion shall be settled as provided in Section 8(G).




          (F) Each conversion shall be deemed to have been effected immediately prior to the close of
business on the date on which a Notice of Conversion shall have been delivered and received by the
Trust as provided in Section 8(E), and the Person or Persons in whose name or names the Class A-1
Common Units shall be issuable upon such conversion shall be deemed to have become the holder of
record of the Class A-1 Common Units, and reflected in book entry form, at such time on such date.




          (G) No fractional Units or scrip representing fractions of Class A-1 Common Units shall be
issued upon conversion of any Series N-1 Preferred Unit or Series N-2 Preferred Unit. Instead of
any fractional interest in a Class A-1 Common Unit that would otherwise be deliverable upon the
conversion of Series N-1 Preferred Unit or Series N-2 Preferred Unit, the Trust shall pay to the
holder of such Series N-1 Preferred Unit or Series N-2 Preferred Unit an amount in cash based upon
the Common Share Entitlement Value applicable to such conversion. If more than one Series N-1
Preferred Unit and/or Series N-2 Preferred Unit shall be surrendered for conversion at one time by
the same holder, the number of full Class A-1 Common Units issuable upon conversion thereof shall
be computed on the basis of the aggregate number of Series N-1 Preferred Units and/or Series N-2
Preferred Units so surrendered.




     (9) Transfer Restrictions. Notwithstanding Section 9.3 of Annex A to the Declaration
of Trust, the holder of the Series N-1 Preferred Units and the Series N-2 Preferred Units may not
transfer all or any portion of the Series N-1 Preferred Units or Series N-1 Preferred Units,
respectively, without the prior written consent of the Trust or the Trustee, except that the party
to whom the Series N-1 Preferred Units and Series N-2 Preferred Units are initially issued by the
Trust may transfer some or all of such units to a liquidating trust established for the benefit of
the members or partners of such holder. A transfer shall be deemed to include a pledge to a lender
to secure a loan to a holder of the Series N-1 Preferred Units or Series N-2 Preferred Units.



     (10) No Preemptive Rights. No holder of the Series N-1 Preferred Units or the Series
N-2 Preferred Units shall, as such holder, have any preemptive rights to purchase or subscribe for
additional units of the Trust or any other security of the Trust which it may issue or sell.



     (11) Record Holders. The Trust may deem and treat the record holder of any Series N-1
Preferred Units or Series N-2 Preferred Units as the true and lawful owner thereof for all
purposes, and the Trust shall not be affected by any notice to the contrary.



     (12) Sinking Fund. Neither the Series N-1 Preferred Units nor the Series N-2
Preferred Units shall not be entitled to the benefit of any retirement or sinking fund.



*     *     *     *




H- 7









 








Exhibit A

to this Exhibit H




NOTICE OF CONVERSION




     The undersigned hereby irrevocably (i) converts                      Series N-1 Preferred Units and/or
                     Series N-2 Preferred Units in accordance with the terms of the Articles
Supplementary designation the Series N-1 Preferred Units and the Series N-2 Preferred Units to the
Amended and Restated Declaration of Trust of Archstone-Smith Operating Trust, as amended, and the
provisions of Section 9 thereof, (ii) surrenders such Series N-1 Preferred Units and/or Series N-2
Preferred Units and all right, title and interest therein and (iii) directs that the number of
Class A-1 Common Units deliverable upon such conversion as determined in accordance with Section 9
of the Articles Supplementary be delivered to the address specified below and be registered or
placed in the name(s) and at the address(es) specified below. The undersigned hereby represents,
warrants, and certifies that the undersigned (a) has marketable and unencumbered title to such
Series N-1 Preferred Units and/or Series N-2 Preferred Units, free and clear of the rights of or
interests of any other person or entity, (b) has the full right, power and authority to redeem and
surrender such Series N-1 Preferred Units and/or Series N-2 Preferred Units as provided herein and
(c) has obtained the consent or approval of all persons or entities, if any, having the right to
consult or approve such redemption and surrender.



	 	 	 	 	 
	Dated:

	 	 	 	 
	 

	 	 	 	 
	Name of Unitholder:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Signature of Unitholder)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Street Address)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(City)     (State)     (Zip Code)
	 
	 	 	 	 
	 

	 	 	 	Signature Guaranteed by:
	 
	 	 	 	 
	 

	 	 	 	 





H- 8









 






Exhibit B

to this Exhibit H




TOLUCA HILLS PROJECT



The land is situated in the State of California, County of Los Angeles and is described as follows:



LOT 1, OF TRACT 21097, IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS
PER MAP RECORDED IN BOOK 805 PAGES 26 THROUGH 28 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTRY
RECORDER OF SAID COUNTY.




(See plat attached)





H- 9