DECLARATION OF TRUST

                             WRP CONVERTIBLE TRUST I

                             DATED AS OF MAY 5, 2000

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I    INTERPRETATION AND DEFINITIONS....................................1
             SECTION 1.1.  Definitions.........................................1

ARTICLE II   TRUST INDENTURE ACT...............................................9
             SECTION 2.1.  Trust Indenture Act: Application....................9
             SECTION 2.2.  Lists of Holders of Securities......................9
             SECTION 2.3.  Reports by the Institutional Trustee...............10
             SECTION 2.4.  Periodic Reports to Institutional Trustee..........10
             SECTION 2.5.  Evidence of Compliance with Conditions Precedent...10
             SECTION 2.6.  Events of Default; Waiver..........................10
             SECTION 2.7.  Event of Default; Notice...........................12

ARTICLE III  ORGANIZATION.....................................................13
             SECTION 3.1.  Name...............................................13
             SECTION 3.2.  Office.............................................13
             SECTION 3.3.  Purpose............................................13
             SECTION 3.4.  Authority..........................................14
             SECTION 3.5.  Title to Property of the Trust.....................14
             SECTION 3.6.  Powers and Duties of the Regular Trustees..........14
             SECTION 3.7.  Prohibition of Actions by the Trust and
                           the Trustees ......................................17
             SECTION 3.8.  Powers and Duties of the Institutional Trustee.....18
             SECTION 3.9.  Certain Duties and Responsibilities of the
                           Institutional Trustee .............................21
             SECTION 3.10. Certain Rights of Institutional Trustee............23
             SECTION 3.11. Delaware Trustee...................................25
             SECTION 3.12. Execution of Documents.............................26
             SECTION 3.13. Not Responsible for Recitals or Issuance
                           of Securities .....................................26
             SECTION 3.14. Duration of Trust..................................26
             SECTION 3.15. Mergers............................................26

ARTICLE IV   SPONSOR .........................................................28
             SECTION 4.1   Sponsor's Purchase of Common Securities............28
             SECTION 4.2.  Responsibilities of the Sponsor....................28

ARTICLE V    TRUSTEES.........................................................28
             SECTION 5.1.  Number of Trustees.................................28
             SECTION 5.2.  Delaware Trustee...................................29
             SECTION 5.3.  Institutional Trustee; Eligibility.................29

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             SECTION 5.4.  Certain Qualifications of Regular Trustees and
                           Delaware Trustee Generally.........................30
             SECTION 5.5.  Regular Trustees...................................30
             SECTION 5.6.  Appointment, Removal and Resignation of Trustees...30
             SECTION 5.7.  Vacancies Among Trustees...........................32
             SECTION 5.8.  Effect of Vacancies................................32
             SECTION 5.9.  Meetings...........................................32
             SECTION 5.10. Delegation of Power................................33
             SECTION 5.11. Merger, Conversion, Consolidation or Succession
                           to Business .......................................33

ARTICLE VI   DISTRIBUTIONS....................................................33
             SECTION 6.1.  Distributions......................................33

ARTICLE VII  ISSUANCE OF SECURITIES...........................................34
             SECTION 7.1.  General Provisions Regarding Securities............34
             SECTION 7.2.  Execution and Authentication.......................34
             SECTION 7.3.  Form and Dating....................................35
             SECTION 7.4.  Paying Agent.......................................35

ARTICLE VIII TERMINATION OF TRUST.............................................36
             SECTION 8.1.  Termination of Trust...............................36

ARTICLE IX   TRANSFER OF INTERESTS............................................38
             SECTION 9.1.  Transfer of Securities.............................38
             SECTION 9.2.  Transfer of Certificates...........................42
             SECTION 9.3.  Deemed Security Holders............................42

ARTICLE X    LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,TRUSTEES
             OR OTHERS .......................................................43
             SECTION 10.1. Liability..........................................43
             SECTION 10.2. Exculpation........................................43
             SECTION 10.3. Fiduciary Duty.....................................44
             SECTION 10.4. Indemnification....................................45
             SECTION 10.5. Outside Business...................................48

ARTICLE XI   ACCOUNTING.......................................................49
             SECTION 11.1. Fiscal Year........................................49
             SECTION 11.2. Certain Accounting Matters.........................49
             SECTION 11.3. Banking............................................50
             SECTION 11.4. Withholding........................................50

ARTICLE XII  AMENDMENTS AND MEETINGS..........................................51

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             SECTION 12.1. Amendments.........................................51
             SECTION 12.2. Meetings of the Holders of Securities; Action
                           by Written Consent ................................54

ARTICLE XIII REPRESENTATIONS OF SPONSOR, INSTITUTIONAL TRUSTEE AND
             DELAWARE TRUSTEE ................................................55
             SECTION 13.1. Representations and Warranties of Institutional
                           Trustee............................................55
             SECTION 13.2. Representations and Warranties of Delaware Trustee.56
             SECTION 13.3. Representations and Warranties of Sponsor..........57

ARTICLE XIV  MISCELLANEOUS....................................................57
             SECTION 14.1. Notices............................................57
             SECTION 14.2. Governing Law......................................58
             SECTION 14.3. Intention of the Parties...........................59
             SECTION 14.4. Headings...........................................59
             SECTION 14.5. Successors and Assign..............................59
             SECTION 14.6. Partial Enforceability.............................59
             SECTION 14.7. Counterparts.......................................59
             SECTION 14.8. Signature Guarantee................................59
             SECTION 14.9. Acceptable Counsel.................................59

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                              DECLARATION OF TRUST

                                       OF

                             WRP CONVERTIBLE TRUST I

                                   May 5, 2000

     DECLARATION OF TRUST ("Declaration") dated and effective as of May 5, 2000,
by the Trustees (as defined herein),  the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the Trust to be
issued pursuant to this Declaration;

     WHEREAS,  the Trustees and the Sponsor  established WRP Convertible Trust I
(the  "Trust"),  a trust  under  the  Business  Trust Act (as  defined  herein),
pursuant  to a  Certificate  of Trust filed with the  Secretary  of State of the
State of  Delaware on May 5, 2000,  for the sole  purpose of issuing and selling
certain securities  representing undivided beneficial interests in the assets of
the Trust and investing the proceeds  thereof in certain  Debentures (as defined
herein) of the Debenture Issuer (as defined herein);

     WHEREAS, as of the date hereof, no interests in the Trust have been issued;
and

     WHEREAS,  all  of the  Trustees  and  the  Sponsor  desire  to  adopt  this
Declaration;

     NOW,  THEREFORE,  it being the intention of the parties  hereto to continue
the  Trust as a  business  trust  under  the  Business  Trust  Act and that this
Declaration  constitutes the governing  instrument of such business  trust,  the
Trustees declare that all assets  contributed to the Trust will be held in trust
for  the  benefit  of  the  holders,  from  time  to  time,  of  the  securities
representing  undivided  beneficial  interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.

                                    ARTICLE I

                         INTERPRETATION AND DEFINITIONS

     SECTION 1.1. Definitions.

     Unless the context otherwise requires:

     (1)  Capitalized  terms  used in this  Declaration  but not  defined in the
preamble  above have the  respective  meanings  assigned to them in this Section
1.1;

     (2) a term  defined  anywhere  in this  Declaration  has the  same  meaning
throughout;

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     (3) all references to "the  Declaration" or "this  Declaration" are to this
Declaration as modified, supplemented or amended from time to time; (1)

     (4) all references in this Declaration to Articles and Sections and Annexes
and  Exhibits  are to Articles and Sections of and Annexes and Exhibits of or to
this Declaration unless otherwise specified;

     (5) a term  defined in the Trust  Indenture  Act has the same  meaning when
used in this Declaration  unless otherwise defined in this Declaration or unless
the context otherwise requires; and

     (6) a reference to the singular includes the plural and vice versa.

     "Administrative Action" has the meaning specified in Annex I.

     "Affiliate"  has the same  meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.

     "Agent" means any Paying Agent or Conversion Agent.

     "Authorized  Officer" of a Person  means any Person that is  authorized  to
bind such Person.

     "Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in New York, New York or Wilmington,  Delaware are
permitted or required by any applicable law to close.

     "Business  Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del.  Codess.3801  et seq.,  as it may be  amended  from  time to  time,  or any
successor legislation.

     "Capital  Stock"  means,  with  respect to any Person,  any and all shares,
interests,  units  representing  interests,  participations,  rights in or other
equivalents (however designated) of such Person's capital stock, including, with
respect to  partnerships,  limited  liability  companies  and  business  trusts,
partnership  interests  (whether  general  or  limited),  membership  interests,
beneficial interests and any other interest or participation that confers upon a
Person  the  right  to  receive  a  share  of the  profits  and  losses  of,  or
distributions  of assets of,  such  partnership,  limited  liability  company or
business  trust,  and any rights (other than debt  securities  convertible  into
capital stock),  warrants or options  exchangeable  for or convertible into such
capital stock.

     "Certificate"  means  a  Common  Security   Certificate  or  a  Convertible
Preferred Security Certificate.

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     "Closing Date" means May 5, 2000.

     "Closing Price" has the meaning specified in Annex I.

     "Code"  means the Internal  Revenue  Code of 1986,  as amended from time to
time, or any successor legislation.

     "Commission" means the Securities and Exchange Commission,  as from time to
time constituted,  created under the Exchange Act, as amended, or if at any time
after the  execution  and  delivery of this  Indenture  such  Commission  is not
existing and performing the duties now assigned to it under the Trust  Indenture
Act, then the body performing such duties on such date.

     "Common  Securities   Guarantee"  means  the  Common  Securities  Guarantee
Agreement  to be dated as of May 5, 2000 of the Sponsor in respect of the Common
Securities.

     "Common Securities" has the meaning specified in Section 7.1.

     "Common  Security  Certificate"  means a  definitive  certificate  in fully
registered  form  representing a Common  Security  substantially  in the form of
Exhibit A-2.

     "Common  Shares"  means the  shares of common  stock,  $.01 par  value,  of
Wellsford Real Properties, Inc., a Maryland corporation, and any other shares of
common stock as may constitute "Common Shares" under the Indenture.

     "Company  Indemnified  Person"  means  (a)  any  Regular  Trustee;  (b) any
Affiliate of any Regular  Trustee;  (c) any officers,  directors,  shareholders,
members, partners, employees,  representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.

     "Conversion Agent" has the meaning specified in Section 7.4.

     "Convertible  Preferred  Securities"  has the meaning  specified in Section
7.1.

     "Convertible Preferred Securities Guarantee" means the Preferred Securities
Guarantee  Agreement to be dated as of May 5, 2000, of the Sponsor in respect of
the Convertible Preferred Securities.

     "Convertible   Preferred   Security   Certificate"   means  a   certificate
representing  a  Convertible  Preferred  Security  substantially  in the form of
Exhibit A-1.

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     "Corporate  Trust  Office"  means  the  principal  corporate  office of the
Institutional Trustee at which the corporate trust business of the Institutional
Trustee shall, at any particular time, be principally administered, which office
at the date of  execution  of this  Declaration  is located at 1100 North Market
Street, 9th Floor, Wilmington, Delaware 19890-00001,  Attention: Corporate Trust
Administration.

     "Coupon Rate" has the meaning specified in Annex I.

     "Covered Person" means: (a) any officer,  trustee,  director,  shareholder,
partner, member, representative,  employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.

     "Debenture  Issuer"  means  Wellsford  Real  Properties,  Inc.,  a Maryland
corporation, in its capacity as issuer of the Debentures under the Indenture.

     "Debenture  Trustee" means Wilmington  Trust Company,  as trustee under the
Indenture until a successor is appointed  thereunder,  and thereafter means such
successor trustee.

     "Debentures"  means the series of  debentures  in the  aggregate  principal
amount of  $25,775,000  plus any  additional  debentures  issuable  pursuant  to
Section 2.5(c) of the Indenture and any additional debentures issued pursuant to
the  Securities  Guarantees,  to be issued  by the  Debenture  Issuer  under the
Indenture to be held by the Institutional  Trustee,  a specimen  certificate for
such series of debentures being Exhibit B.

     "Delaware Trustee" has the meaning set forth in Section 5.1.

     "Direct Action" has the meaning set forth in Section 3.8.

     "Distribution"  means a  distribution  payable to Holders of  Securities in
accordance with Section 6.1.

     "EQR" means Equity Residential Properties Trust.

     "ERPOLP" means ERP Operating Limited Partnership.

     "Event of Default" in respect of the  Securities  means an Event of Default
(as defined in the  Indenture)  has occurred and is continuing in respect of the
Debentures.

     "Exchange Act" means the  Securities  Exchange Act of 1934, as amended from
time to time, or any successor legislation.

     "Fiduciary  Indemnified  Person"  has the  meaning  set  forth  in  Section
10.4(b).

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     "Fiscal Year" has the meaning set forth in Section 11.1.

     "Holder"  means a Person in whose name a Certificate  is  registered,  such
Person being a beneficial owner within the meaning of the Business Trust Act.

     "Indemnified  Person"  means  each  Company  Indemnified  Person  and  each
Fiduciary Indemnified Person.

     "Indenture"  means  the  Indenture  dated  as of May 5,  2000  between  the
Debenture Issuer and the Debenture Trustee.

     "Institutional   Trustee"  means  the  Trustee   meeting  the   eligibility
requirements set forth in Section 5.3.

     "Institutional  Trustee  Account"  has the  meaning  set  forth in  Section
3.8(c).

     "Investment  Company"  means  an  investment  company  as  defined  in  the
Investment Company Act.

     "Investment  Company  Act" means the  Investment  Company  Act of 1940,  as
amended from time to time, or any successor legislation.

     "Investment Company Event" has the meaning set forth in Annex I hereto.

     "Legal Action" has the meaning set forth in Section 3.6(g).

     "Liquidation" has the meaning specified in Annex I.

     "Liquidation Distribution" has the meaning specified in Annex I.

     "List of Holders" has the meaning set forth in Section 2.2.

     "Majority  in  liquidation  amount  of the  Securities"  means,  except  as
provided in the terms of the  Convertible  Preferred  Securities or by the Trust
Indenture Act,  Holder(s) of outstanding  Securities voting together as a single
class or,  as the  context  may  require,  Holders  of  outstanding  Convertible
Preferred   Securities  or  Holders  of  outstanding  Common  Securities  voting
separately  as a  class,  who are the  record  owners  of more  than  50% of the
aggregate  liquidation amount (including the stated amount that would be paid on
redemption,  liquidation or otherwise,  plus accrued and unpaid Distributions to
the date upon which the voting  percentages  are  determined) of all outstanding
Securities of the relevant class.

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     "Ministerial  Action"  has  the  meaning  set  forth  in the  terms  of the
Securities as set forth in Annex I.

     "90-Day Period" has the meaning specified in Annex I.

     "No Recognition Period" has the meaning specified in Annex I.

     "Offeror" has the meaning set forth in Section 9.1(e).

     "Officers'  Certificate"  means,  with respect to any Person, a certificate
signed by two  Authorized  Officers of such Person.  Any  Officers'  Certificate
delivered with respect to compliance  with a condition or covenant  provided for
in this Declaration shall include:

     (a) a statement  that each  officer  signing the  Certificate  has read the
covenant or condition and the definitions relating thereto;

     (b) a brief  statement  of the  nature  and  scope  of the  examination  or
investigation undertaken by each officer in rendering the Certificate;

     (c) a  statement  that  each such  officer  has made  such  examination  or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed  opinion as to whether or not such  covenant or condition
has been complied with; and

     (d) a statement as to whether,  in the opinion of each such  officer,  such
condition or covenant has been complied with.

     "Paying Agent" has the meaning specified in Section 3.8(h).

     "Payment Amount" has the meaning set forth in Section 6.1.

     "Person" means any  individual,  corporation,  estate,  partnership,  joint
venture,  association,  joint stock company,  limited liability company,  trust,
unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.

     "Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.

     "Redemption Price" has the meaning specified in Annex I.

     "Regular Trustee" has the meaning set forth in Section 5.1.

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     "Regulation S" means Regulation S under the Securities Act or any successor
provision.

     "Related Party" means, with respect to the Sponsor,  any direct or indirect
partially or wholly-owned subsidiary of the Sponsor.

     "Responsible Officer" means, with respect to the Institutional Trustee, any
officer  within  the  Corporate  Trust  Office  of  the  Institutional  Trustee,
including  any vice  president,  any  assistant  vice  president,  any assistant
secretary,  the  treasurer,  any  assistant  treasurer  or other  officer of the
Corporate  Trust  Office of the  Institutional  Trustee  customarily  performing
functions similar to those performed by any of the above-designated officers and
also means,  with  respect to a particular  corporate  trust  matter,  any other
officer to whom such matter is referred  because of that officer's  knowledge of
and familiarity with the particular subject.

     "Restricted Security" has the meaning specified in Section 9.1(d).

     "Rule 144A" means Rule 144A as promulgated under the Securities Act, or any
successor rule.

     "Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act, or
any successor rule.

     "Sales Notice" has the meaning set forth in Section 9.1(e).

     "Securities"  means the Common  Securities  and the  Convertible  Preferred
Securities.

     "Securities  Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.

     "Securities  Guarantees"  means the  Common  Securities  Guarantee  and the
Convertible Preferred Securities Guarantee.

     "Securities  Purchase  Agreement" means the Preferred  Securities  Purchase
Agreement,  dated as of May 5,  2000,  by and among the  Sponsor,  the Trust and
ERPOLP.

     "Special Event" has the meaning set forth in Annex I hereto.

     "Sponsor" means Wellsford Real Properties, Inc., a Maryland corporation, or
any successor entity in a merger or consolidation, in its capacity as sponsor of
the Trust.

     "Successor Delaware Trustee" has the meaning set forth in Section 5.6(b).

<PAGE>

     "Successor Entity" has the meaning set forth in Section 3.15(b)(i).

     "Successor Securities" has the meaning set forth in Section 3.15(b)(i)(B).

     "Super Majority" has the meaning set forth in Section 2.6(a)(ii).

     "Tax Event" has the meaning set forth in Annex I hereto.

     "Transfer Restriction Termination Date" means the earlier of the first date
on which (i) the  Securities  and any Common  Shares issued or issuable upon the
conversion or exchange thereof (other than (A) Securities  acquired by the Trust
or any Affiliate  thereof and (B) Common  Shares  issued upon the  conversion or
exchange of any Security  described in clause (A) above) may be sold pursuant to
Rule 144(k) and (ii) all the Securities  have been sold pursuant to an effective
registration statement.

     "Treasury   Regulations"  means  the  income  tax  regulations,   including
temporary  and proposed  regulations,  promulgated  under the Code by the United
States Treasury.

     "Trustee" or "Trustees"  means each Person who has signed this  Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the  terms  hereof,  and all  other  Persons  who may from  time to time be duly
appointed,  qualified and serving as Trustees in accordance  with the provisions
hereof,  and references  herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.

     "Trust  Indenture  Act" means the Trust  Indenture  Act of 1939, as amended
from time to time, or any successor legislation.

     "Trust Property" means (i) the Debentures,  (ii) any cash on deposit in, or
owing to, the Institutional Trustee Account and (iii) all proceeds and rights in
respect of the foregoing to be held by the Institutional Trustee pursuant to the
terms of this Declaration for the benefit of the Holders of Securities.

     "25% in liquidation amount of the Securities" means,  except as provided in
the terms of the Convertible Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require,  Holders of outstanding Convertible Preferred Securities or
Holders of outstanding  Common  Securities voting separately as a class, who are
the record owners of 25% or more of the aggregate  liquidation amount (including
the stated amount that would be paid on  redemption,  liquidation  or otherwise,
plus  accrued  and  unpaid  Distributions  to the date  upon  which  the  voting
percentages are determined) of all outstanding Securities of the relevant class.

<PAGE>

                                   ARTICLE II

                               TRUST INDENTURE ACT

     SECTION 1.2. Trust Indenture Act: Application.

     (1) This  Declaration  shall not be subject to the  provisions of the Trust
Indenture  Act  unless  and until  either:  (i) the  Securities  are  registered
pursuant to a registration  statement  filed with and declared  effective by the
Commission or (ii) the Indenture is otherwise required to be qualified under the
Trust  Indenture  Act.  Thereafter,  this  Declaration  shall be  subject to the
provisions  of the  Trust  Indenture  Act that are  required  to be part of this
Declaration and shall, to the extent applicable, be governed by such provisions.
Notwithstanding  the foregoing,  the obligations under Sections 2.1(b),  (c) and
(d); 2.2(b); 2.3; 2.6(a), (b) and (c); 3.8 (h); 3.9(v); and 5.3(c) and (d) shall
at all times be governed by the Trust  Indenture Act as if the  Securities  have
been issued pursuant to an effective registration statement or the Indenture has
been qualified under the Trust Indenture Act.

     (2) The Institutional  Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.

     (3) Subject to the provisions of Section  2.1(a),  if any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss. 310
to 317,  inclusive,  of the Trust  Indenture  Act, such duties imposed under the
Trust Indenture Act shall control.

     (4) The  application of the Trust Indenture Act to this  Declaration  shall
not  affect  the  nature of the  Securities  as equity  securities  representing
undivided beneficial interests in the assets of the Trust.

     SECTION 1.3. Lists of Holders of Securities.

     (1) Each of the  Sponsor  and the  Regular  Trustees on behalf of the Trust
shall  provide  the  Institutional  Trustee (i) within 14 days after each record
date for  payment  of  Distributions,  a list in such form as the  Institutional
Trustee may reasonably  require of the names and addresses of the Holders of the
Securities  ("List of Holders") as of such record date,  provided that,  neither
the Sponsor nor the Regular  Trustees on behalf of the Trust shall be  obligated
to provide  such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the  Institutional  Trustee by the
Sponsor and the Regular  Trustees on behalf of the Trust,  and (ii) at any other
time,  within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days  before  such List of Holders is given
to the Institutional  Trustee. The Institutional  Trustee shall preserve,  in as
current a form as is reasonably  practicable,  all information  contained in the
Lists of Holders  given to it or

<PAGE>

which it receives in the capacity as Paying Agent (if acting in such  capacity),
provided  that,  the  Institutional  Trustee  may  destroy  any List of  Holders
previously given to it on receipt of a new List of Holders.

     (2) The  Institutional  Trustee  shall  comply with its  obligations  under
ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.

     SECTION 1.4. Reports by the Institutional Trustee.

     Within 60 days after  December 31 of each year, the  Institutional  Trustee
shall  provide  to the  Holders of the  Convertible  Preferred  Securities  such
reports as are  required  by ss.313 of the Trust  Indenture  Act, if any, in the
form and in the  manner  provided  by  ss.313 of the Trust  Indenture  Act.  The
Institutional  Trustee shall also comply with the  requirements  of ss.313(d) of
the Trust Indenture Act.

     SECTION 1.5. Periodic Reports to Institutional Trustee.

     Each of the Sponsor  and the Regular  Trustees on behalf of the Trust shall
provide to the Institutional Trustee such documents,  reports and information as
required by ss.314 (if any) and the compliance certificate required by ss.314 of
the Trust  Indenture Act in the form, in the manner and at the times required by
ss.314 of the Trust Indenture Act.

     Delivery of such reports,  information  and documents to the  Institutional
Trustee  is for  informational  purposes  only and the  Institutional  Trustee's
receipt  of such shall not  constitute  constructive  notice of any  information
contained therein or determinable from information contained therein,  including
the Sponsor's  compliance  with any of its covenants  hereunder (as to which the
Institutional   Trustee  is   entitled   to  rely   exclusively   on   Officers'
Certificates).

     SECTION 1.6. Evidence of Compliance with Conditions Precedent.

     Each of the Sponsor  and the Regular  Trustees on behalf of the Trust shall
provide to the  Institutional  Trustee  such  evidence  of  compliance  with any
conditions  precedent,  if any,  provided for in this Declaration that relate to
any of the  matters  set forth in  ss.314(c)  of the Trust  Indenture  Act.  Any
certificate  or  opinion  required  to  be  given  by  an  officer  pursuant  to
ss.314(c)(1) may be given in the form of an Officers' Certificate.

     SECTION 1.7. Events of Default; Waiver.

     (1) The  Holders of a Majority  in  liquidation  amount of the  Convertible
Preferred  Securities  may  by  vote  on  behalf  of the  Holders  of all of the
Convertible Preferred Securities,  waive any past Event of Default in respect of
the Convertible Preferred Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:

<PAGE>

          (1)  is not waivable under the  Indenture,  the Event of Default under
               this Declaration shall also not be waivable; or

          (2)  requires  the  consent  or vote of  greater  than a  majority  in
               principal  amount  of the  holders  of the  Debentures  (a "Super
               Majority") to be waived under the Indenture, the Event of Default
               under  this  Declaration  may only be  waived  by the vote of the
               Holders of at least the proportion in  liquidation  amount of the
               Convertible Preferred Securities that the relevant Super Majority
               represents of the aggregate  principal  amount of the  Debentures
               outstanding.

     The  foregoing  provisions  of  this  Section  2.6(a)  shall  be in lieu of
ss.316(a)(1)(B) of the Trust Indenture Act and such ss.316(a)(1)(B) of the Trust
Indenture  Act is  hereby  expressly  excluded  from  this  Declaration  and the
Securities,  as permitted by the Trust Indenture Act. Upon such waiver, any such
default  shall  cease to exist,  and any Event of  Default  with  respect to the
Convertible  Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any  subsequent  or other  default  or an Event of Default  with  respect to the
Convertible  Preferred  Securities or impair any right consequent  thereon.  Any
waiver by the Holders of the  Convertible  Preferred  Securities  of an Event of
Default  with  respect to the  Convertible  Preferred  Securities  shall also be
deemed to  constitute  a waiver by the Holders of the Common  Securities  of any
such Event of Default with respect to the Common  Securities for all purposes of
this Declaration without any further act, vote, or consent of the Holders of the
Common Securities.

     (2)  The  Holders  of a  Majority  in  liquidation  amount  of  the  Common
Securities  may,  by  vote,  on  behalf  of the  Holders  of  all of the  Common
Securities,  waive  any  past  Event  of  Default  with  respect  to the  Common
Securities  and its  consequences,  provided  that, if the  underlying  Event of
Default under the Indenture:

          (1)  is not waivable under the Indenture,  except where the Holders of
               the Common  Securities  are deemed to have  waived  such Event of
               Default under this  Declaration as provided below in this Section
               2.6(b),  the Event of Default under this  Declaration  shall also
               not be waivable; or

          (2)  requires  the  consent or vote of a Super  Majority to be waived,
               except where the Holders of the Common  Securities  are deemed to
               have  waived  such Event of Default  under  this  Declaration  as
               provided below in this Section 2.6(b), the Event of Default under
               this Declaration may only be waived by the vote of the Holders of
               at least the  proportion  in  liquidation  amount  of the  Common
               Securities

<PAGE>

               that the relevant  Super  Majority  represents  of the  aggregate
               principal amount of the Debentures outstanding; provided further,
               that  each  Holder of  Common  Securities  will be deemed to have
               waived any such Event of Default  and all Events of Default  with
               respect to the Common  Securities and its consequences  until all
               Events of  Default  with  respect  to the  Convertible  Preferred
               Securities have been cured, waived or otherwise  eliminated,  and
               until  such  Events of  Default  have  been so  cured,  waived or
               otherwise eliminated,  the Institutional Trustee shall act solely
               on behalf of the Holders of the Convertible  Preferred Securities
               and only the Holders of the Convertible Preferred Securities will
               have the  right to direct  the  Institutional  Trustee  to act in
               accordance  with  the  terms  of the  Securities.  The  foregoing
               provisions   of   this   Section   2.6(b)   shall   be  in   lieu
               ofss.ss.316(a)(1)(A)  and 316(a)(1)(B) of the Trust Indenture Act
               and   suchss.ss.316(a)(1)(A)   and   316(a)(1)(B)  of  the  Trust
               Indenture Act are hereby expressly excluded from this Declaration
               and the  Securities,  as  permitted by the Trust  Indenture  Act.
               Subject to the foregoing  provisions of this Section 2.6(b), upon
               such waiver,  any such default shall cease to exist and any Event
               of  Default  with  respect  to  the  Common  Securities   arising
               therefrom shall be deemed to have been cured for every purpose of
               this  Declaration,  but  no  such  waiver  shall  extend  to  any
               subsequent  or other  default or Event of Default with respect to
               the Common Securities or impair any right consequent thereon.

     (3)  A  waiver  of  an  Event  of  Default   under  the  Indenture  by  the
Institutional  Trustee  at the  direction  of  the  Holders  of the  Convertible
Preferred Securities, constitutes a waiver of the corresponding Event of Default
under this Declaration. The foregoing provisions of this Section 2.6(c) shall be
in lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such  ss.316(a)(1)(B)
of the Trust Indenture Act is hereby  expressly  excluded from this  Declaration
and the Securities, as permitted by the Trust Indenture Act.

     SECTION 1.8. Event of Default; Notice.

     (1) The Institutional Trustee shall, within 30 days after the occurrence of
an Event of Default actually known to a Responsible Officer of the Institutional
Trustee,  transmit by mail, first class postage  prepaid,  to the Holders of the
Securities,  notices of all such defaults with respect to the Securities  unless
such  defaults  have been  cured  before  the  giving of such  notice  (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided  for  therein  and  irrespective  of the giving of any notice  provided
therein); provided that, except for a default in

<PAGE>

the  payment of  principal  of (or  premium,  if any) or  interest on any of the
Debentures or in the payment of any sinking fund installment established for the
Debentures,  the  Institutional  Trustee shall be protected in withholding  such
notice if and so long as a Responsible  Officer of the Institutional  Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders of the  Securities.  Any such notice given  pursuant to this Section
2.7(a) shall state that an Event of Default under the Indenture also constitutes
an Event of Default under this Declaration.

     (2) The Institutional  Trustee shall not be deemed to have knowledge of any
default except:

          (1)  a  default  under  Sections  5.1(a),  5.1(b)  and  5.1(f)  of the
               Indenture; or

          (2)  any  default  as to which the  Institutional  Trustee  shall have
               received written notice or of which a Responsible  Officer of the
               Institutional  Trustee  charged  with the  administration  of the
               Declaration shall have actual knowledge.

                                   ARTICLE III

                                  ORGANIZATION

     SECTION 1.9. Name.

     The Trust is named "WRP  Convertible  Trust I" as such name may be modified
from  time to time by the  Regular  Trustees  following  written  notice  to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.

     SECTION 1.10. Office.

     The  address of the  principal  office of the Trust is c/o  Wellsford  Real
Properties,  Inc., 535 Madison  Avenue,  26th Floor,  New York, NY 10022.  On at
least ten Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.

     SECTION 1.11. Purpose.

     The exclusive purposes and functions of the Trust are (a) to issue and sell
the  Securities  and use the proceeds from such sale to acquire the  Debentures,
and (b) except as

<PAGE>

otherwise limited herein, to engage in only those other activities  necessary or
incidental  thereto.  The Trust shall not borrow  money,  issue debt or reinvest
proceeds  derived  from  investments,  pledge any of its  assets,  or  otherwise
undertake (or permit to be  undertaken)  any activity that would cause the Trust
not to be classified  for United States federal income tax purposes as a grantor
trust.

     SECTION 1.12. Authority.

     (1)  Subject to the  limitations  provided in this  Declaration  and to the
specific duties of the  Institutional  Trustee,  the Regular Trustees shall have
exclusive  and complete  authority  to carry out the  purposes of the Trust.  An
action  taken by the Regular  Trustees in  accordance  with their  powers  shall
constitute  the act of and serve to bind the  Trust  and an action  taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust.  In dealing with the Trustees
acting on behalf of the Trust,  no person  shall be required to inquire into the
authority of the Trustees to bind the Trust.  Persons dealing with the Trust are
entitled to rely  conclusively on the power and authority of the Trustees as set
forth in this Declaration.

     (2)  Except as  expressly  set forth in this  Declaration  and  except if a
meeting of the Regular  Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.

     (3) Unless  otherwise  determined  by the Regular  Trustees,  and except as
otherwise  required by the  Business  Trust Act or  applicable  law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents  which the
Regular  Trustees  have the power and  authority  to cause the Trust to  execute
pursuant to Section 3.6; and

     (4) A Regular Trustee may, by power of attorney  consistent with applicable
law,  delegate to any other  natural  person over the age of 21 his or her power
for the purposes of executing  any  documents  which the Regular  Trustees  have
power and authority to cause the Trust to execute pursuant to Section 3.6.

     SECTION 1.13. Title to Property of the Trust.

     Except as provided in Section 3.8 with  respect to the  Debentures  and the
Institutional  Trustee  Account or as  otherwise  provided in this  Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
of Securities shall not have legal title to any part of the assets of the Trust,
but shall have an undivided beneficial interest in the assets of the Trust.

     SECTION 1.14. Powers and Duties of the Regular Trustees.

<PAGE>

     The Regular Trustees shall have the exclusive power,  duty and authority to
cause the Trust to engage in the following activities:

     (1) to issue and sell the Securities in accordance  with this  Declaration;
provided,  however,  that the  Trust  may  issue  no more  than  one  series  of
Convertible  Preferred  Securities  and  no  more  than  one  series  of  Common
Securities,  and provided further, that there shall be no interests in the Trust
other than the Securities,  and the issuance of Securities shall be limited to a
simultaneous  issuance  of both  Convertible  Preferred  Securities  and  Common
Securities  on the  Closing  Date and the  issuance  of  additional  Convertible
Preferred  Securities and Common Securities  pursuant to Section 2(f) of Annex I
hereof;

     (2) in connection with the issue and sale of the Securities:

          (1)  to execute and enter into the Securities Purchase Agreement,  and
               other   related   agreements   providing  for  the  sale  of  the
               Securities; and

          (2)  to take all actions and perform such duties as may be required of
               the Regular Trustees to open checking, deposit or similar banking
               accounts as may be necessary in connection  with the issuance and
               sale of the Securities;

     (3) to  acquire  the  Debentures  with  the  proceeds  of the  sale  of the
Convertible Preferred Securities and the Common Securities;  provided,  however,
that the Regular  Trustees  shall cause legal title to the Debentures to be held
of  record  in the name of the  Institutional  Trustee  for the  benefit  of the
Holders  of the  Convertible  Preferred  Securities  and the  Holders  of Common
Securities;

     (4) to give the Sponsor and the Institutional Trustee prompt written notice
of the occurrence of a Special Event;  provided that the Regular  Trustees shall
consult  with  the  Sponsor  and the  Institutional  Trustee  before  taking  or
refraining from taking any Ministerial Action in relation to a Special Event;

     (5) to  establish  a record  date with  respect to all  actions to be taken
hereunder that require a record date be established,  including and with respect
to, for the purposes of ss. 316(c) of the Trust  Indenture  Act,  Distributions,
voting rights,  redemptions and exchanges,  and to issue relevant notices to the
Holders of Convertible  Preferred Securities and Holders of Common Securities as
to such actions and applicable record dates;

     (6) to take all actions  and perform  such duties as may be required of the
Regular Trustees pursuant to the terms of the Securities;

<PAGE>

     (7) to bring or defend,  pay,  collect,  compromise,  arbitrate,  resort to
legal  action,  or  otherwise  adjust  claims or demands of or against the Trust
("Legal Action"),  unless pursuant to Section 3.8(e), the Institutional  Trustee
has the exclusive power to bring such Legal Action;

     (8) to  employ  or  otherwise  engage  employees  and  agents  (who  may be
designated  as officers  with titles) and  managers,  contractors,  advisors and
consultants  in  furtherance  of  the  Trust's  purposes,   and  pay  reasonable
compensation for such services;

     (9) to cause the  Trust to comply  with the  Trust's  obligations,  if any,
under the Trust Indenture Act;

     (10)  to  give  the  certificate  required  byss.  314(a)(4)  of the  Trust
Indenture Act to the Institutional Trustee, which certificate may be executed by
any Regular Trustee;

     (11) to incur expenses that are necessary or incidental to carry out any of
the purposes of the Trust;

     (12) to act as, or appoint  another Person to act as,  registrar,  transfer
agent, Paying Agent and Conversion Agent for the Securities;

     (13) to give prompt  written notice to the Holders of the Securities of any
notice  received from the Debenture  Issuer of its election to defer payments of
interest on the  Debentures by extending the interest  payment  period under the
Indenture;

     (14) to  execute  all  documents  or  instruments,  perform  all duties and
powers,  and do all  things  for  and on  behalf  of the  Trust  in all  matters
necessary or incidental to the foregoing;

     (15) to take  all  action  that may be  necessary  or  appropriate  for the
preservation  and the  continuation  of the  Trust's  valid  existence,  rights,
franchises  and  privileges as a statutory  business trust under the laws of the
State of Delaware  and of each other  jurisdiction  in which such  existence  is
necessary  to protect the limited  liability  of the Holders of the  Convertible
Preferred Securities or to enable the Trust to effect the purposes for which the
Trust was created;

     (16) to take any action,  not  inconsistent  with this  Declaration or with
applicable law, that the Regular  Trustees  determine in their  discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:

          (1)  causing  the Trust not to be deemed to be an  Investment  Company
               required to be registered under the Investment Company Act;

<PAGE>

          (2)  causing  the Trust to be  classified  for United  States  federal
               income tax purposes as a grantor trust; and

          (3)  cooperating   with  the  Debenture  Issuer  to  ensure  that  the
               Debentures  will be  treated  as  indebtedness  of the  Debenture
               Issuer for United States federal income tax purposes;

provided that such action does not adversely  affect the interests of Holders or
vary the terms of the Convertible Preferred Securities;

     (17) to take all action  necessary to cause all  applicable tax returns and
tax information  reports that are required to be filed with respect to the Trust
to be duly prepared and timely filed by the Regular  Trustees,  on behalf of the
Trust,  and file all applicable tax returns and applicable  information  reports
required  to be filed in order for the Trust to qualify for any  exemption  from
any federal, state or local withholding taxes;

     (18) to take all actions and perform  such duties as may be required of the
Regular Trustees pursuant to Section 11.2 herein; and

     (19) to the extent provided in this Declaration,  to wind up the affairs of
and  liquidate  the Trust and to prepare,  execute and file the  Certificate  of
Cancellation with the Secretary of State of the State of Delaware.

     The Regular Trustees must exercise the powers set forth in this Section 3.6
in a manner that is consistent  with the purposes and functions of the Trust set
out in Section 3.3, and the Regular  Trustees  shall not take any action that is
inconsistent  with the purposes and  functions of the Trust set forth in Section
3.3.

     Subject to this Section 3.6,  the Regular  Trustees  shall have none of the
powers or the authority of the Institutional Trustee set forth in Section 3.8.

     Any expenses  incurred by the Regular Trustees on behalf of the Trust or in
their  capacities  as Regular  Trustees  pursuant  to this  Section 3.6 shall be
reimbursed by the Sponsor.

     The Trust initially  appoints the  Institutional  Trustee as transfer agent
and registrar for the Convertible Preferred Securities.

     SECTION 1.15. Prohibition of Actions by the Trust and the Trustees.

     (1) The Trust shall not,  and the  Trustees  (including  the  Institutional
Trustee)  shall  cause the Trust not to,  engage in any  activity  other than as
required or authorized by this

Declaration.  In particular the Trust shall not and the Trustees  (including the
Institutional Trustee) shall cause the Trust not to:

          (1)  invest  any  proceeds  received  by the Trust  from  holding  the
               Debentures,  but shall distribute all such proceeds to Holders of
               Securities  pursuant to the terms of this  Declaration and of the
               Securities;

          (2)  acquire any assets other than as expressly provided herein;

          (3)  possess property for other than a Trust purpose;

          (4)  make  any  loans or  incur  any  indebtedness  other  than  loans
               represented by the Debentures;

          (5)  possess any power or  otherwise  act in such a way as to vary the
               Trust assets or the terms of the Securities in any way whatsoever
               except as permitted by the terms of this Declaration;

          (6)  issue any securities or other  evidences of beneficial  ownership
               of,  or  beneficial   interest  in,  the  Trust  other  than  the
               Securities; or

          (7)  other than as provided in this Declaration or Annex I hereto, (A)
               direct  the time,  method  and place of  exercising  any trust or
               power  conferred  upon the Debenture  Trustee with respect to the
               Debentures, (B) waive any past default that is not waivable under
               the  Indenture,  (C)  exercise  any right to rescind or annul any
               declaration that the principal of all the Debentures shall be due
               and payable,  or (D) consent to any  amendment,  modification  or
               termination of the Indenture or the Debentures where such consent
               shall be  required  unless (I) the Trust  shall have  received an
               opinion of counsel to the effect that such  modification will not
               cause more than an insubstantial  risk that (y) the Trust will be
               deemed an Investment  Company required to be registered under the
               Investment Company Act or (z) the Trust will not be classified as
               a grantor  trust for United States  federal  income tax purposes,
               and (II) if such consent relates to any amendment or modification
               which would have a material  adverse effect on the Holders of the
               Convertible  Preferred  Securities,  the  consent of Holders of a
               majority  in  liquidation  amount  of the  Convertible  Preferred
               Securities is obtained.

<PAGE>

     SECTION 1.16. Powers and Duties of the Institutional Trustee.

     (1) The legal title to the Debentures  shall be owned by and held of record
in the name of the  Institutional  Trustee in trust for the benefit of the Trust
and the  Holders  of the  Securities.  The  right,  title  and  interest  of the
Institutional  Trustee to the Debentures shall vest automatically in each Person
who may  hereafter be  appointed as  Institutional  Trustee in  accordance  with
Section 5.6. Such vesting and  cessation of title shall be effective  whether or
not conveyancing  documents with regard to the Debentures have been executed and
delivered.

     (2) The  Institutional  Trustee  shall not  transfer  its right,  title and
interest in the  Debentures to the Regular  Trustees or to the Delaware  Trustee
(if the Institutional Trustee does not also act as Delaware Trustee).

     (3) The Institutional Trustee shall:

          (1)  establish  and maintain a segregated  non-interest  bearing trust
               account (the "Institutional  Trustee Account") in the name of and
               under the  exclusive  control  of the  Institutional  Trustee  on
               behalf of the Holders of the Securities  and, upon the receipt of
               payments of funds made in respect of the  Debentures  held by the
               Institutional Trustee,  deposit such funds into the Institutional
               Trustee   Account  and  make  payments  to  the  Holders  of  the
               Convertible  Preferred  Securities  and  Holders  of  the  Common
               Securities from the  Institutional  Trustee Account in accordance
               with  Section 6.1.  Funds in the  Institutional  Trustee  Account
               shall be held uninvested  until disbursed in accordance with this
               Declaration.  The  Institutional  Trustee  Account  shall  be  an
               account that is maintained with a banking  institution the rating
               on whose long-term  unsecured  indebtedness  is rated  investment
               grade   by   a   "nationally    recognized   statistical   rating
               organization,"  as that  term is  defined  for  purposes  of Rule
               436(g)(2) under the Securities Act;

          (2)  engage in such  ministerial  activities  as shall be necessary or
               appropriate to effect the redemption of the Convertible Preferred
               Securities and the Common Securities to the extent the Debentures
               are redeemed or mature;

          (3)  engage in such  ministerial  activities  as shall be necessary or
               appropriate to effect the  distribution  of the Trust Property in
               accordance with the terms of this Declaration; and

<PAGE>

          (4)  to  the  extent  provided  for in  this  Declaration,  take  such
               ministerial  actions  necessary in connection with the winding up
               of  the  affairs  of  and   liquidation  of  the  Trust  and  the
               preparation,   execution  and  filing  of  the   Certificate   of
               Cancellation  with  the  Secretary  of  State  of  the  State  of
               Delaware.

     (4) The  Institutional  Trustee  shall take all actions  and  perform  such
duties as may be specifically  required of the Institutional Trustee pursuant to
the terms of the Securities.

     (5) The Institutional  Trustee shall take any Legal Action which arises out
of, or in connection with, an Event of Default of which a Responsible Officer of
the Institutional Trustee has actual knowledge,  or the Institutional  Trustee's
duties  and  obligations  under this  Declaration  or the Trust  Indenture  Act;
provided however, that if an Event of Default has occurred and is continuing and
such  event is  attributable  to the  failure  of the  Debenture  Issuer  to pay
interest or principal on the  Debentures  on the date such interest or principal
is otherwise  payable (or in the case of redemption,  on the  redemption  date),
then a Holder of  Convertible  Preferred  Securities  may  directly  institute a
proceeding  for  enforcement  of payment to such Holder of the  principal  of or
interest on the  Debentures  having a principal  amount  equal to the  aggregate
liquidation  amount of the  Convertible  Preferred  Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the Debentures
and provided,  further,  that if the Institutional  Trustee fails to enforce its
rights under the Debentures,  any Holder of Convertible Preferred Securities may
institute a legal  proceeding  against  any person to enforce the  Institutional
Trustee's  rights under the  Debentures.  In connection with such Direct Action,
the rights of the Holders of the Common  Securities  will be  subrogated  to the
rights of such Holder of Convertible  Preferred  Securities to the extent of any
payment made by the  Debenture  Issuer to such Holder of  Convertible  Preferred
Securities in such Direct Action. Except as provided in the preceding sentences,
the Holders of  Convertible  Preferred  Securities  will not be able to exercise
directly any other remedy available to the holders of the Debentures.

     (6) The  Institutional  Trustee shall  continue to serve as a Trustee until
either:

          (1)  the Trust has been completely  liquidated and the proceeds of the
               liquidation  distributed to the Holders of Securities pursuant to
               the terms of the Securities; or

          (2)  a  Successor  Institutional  Trustee has been  appointed  and has
               accepted that appointment in accordance with Section 5.6.

     (7) The Institutional Trustee shall have the legal power to exercise all of
the rights,  powers and privileges of a holder of Debentures under the Indenture
and,  if an Event of  Default  actually  known to a  Responsible  Officer of the
Institutional Trustee occurs and is continuing, the Institutional Trustee shall,
for the benefit of Holders of the Securities, enforce its

<PAGE>

rights as holder of the Debentures subject to the rights of the Holders pursuant
to the terms of such Securities.

     (8) The  Institutional  Trustee may authorize one or more Persons  (each, a
"Paying  Agent")  to  pay  Distributions,  redemption  payments  or  Liquidation
Distributions  (as  defined  below) on behalf of the Trust  with  respect to all
Securities  and any such Paying Agent shall comply with ss.  317(b) of the Trust
Indenture Act. Any Paying Agent may be removed by the  Institutional  Trustee at
any  time and a  successor  Paying  Agent or  additional  Paying  Agents  may be
appointed at any time by the Institutional Trustee.

     (9) Subject to this Section 3.8, the Institutional  Trustee shall have none
of the duties, liabilities,  powers or the authority of the Regular Trustees set
forth in Section 3.6.

     The  Institutional  Trustee  must  exercise  the  powers  set forth in this
Section 3.8 in a manner that is  consistent  with the purposes and  functions of
the Trust set out in Section 3.3, and the  Institutional  Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.

     SECTION 1.17.  Certain  Duties and  Responsibilities  of the  Institutional
Trustee.

     (1) The  Institutional  Trustee,  before  the  occurrence  of any  Event of
Default  and after the curing of all Events of Default  that may have  occurred,
shall  undertake  to perform only such duties as are  specifically  set forth in
this  Declaration and no implied  covenants shall be read into this  Declaration
against the  Institutional  Trustee.  In case an Event of Default  has  occurred
(that  has not  been  cured  or  waived  pursuant  to  Section  2.6) of  which a
Responsible  Officer of the  Institutional  Trustee  has actual  knowledge,  the
Institutional  Trustee shall exercise such of the rights and powers vested in it
by this  Declaration,  and use the  same  degree  of care  and  skill  in  their
exercise,  as a prudent person would exercise or use under the  circumstances in
the conduct of his or her own affairs.

     (2) No  provision  of this  Declaration  shall be  construed to relieve the
Institutional  Trustee from  liability  for its own  negligent  action,  its own
negligent failure to act, or its own willful misconduct, except that:

          (1)  prior to the  occurrence  of an Event of  Default  and  after the
               curing or  waiving of all such  Events of  Default  that may have
               occurred:

                         (1) the duties  and  obligations  of the  Institutional
                    Trustee shall be determined solely by the express provisions
                    of this Declaration and the Institutional  Trustee shall not
                    be liable  except  for the  performance  of such  duties and
                    obligations   as  are   specifically   set   forth  in  this
                    Declaration, and no implied covenants

<PAGE>

                    or obligations  shall be read into this Declaration  against
                    the Institutional Trustee; and

                         (2) in the  absence  of bad  faith  on the  part of the
                    Institutional   Trustee,   the  Institutional   Trustee  may
                    conclusively rely, as to the truth of the statements and the
                    correctness  of the  opinions  expressed  therein,  upon any
                    certificates  or  opinions  furnished  to the  Institutional
                    Trustee  and   conforming  to  the   requirements   of  this
                    Declaration;  but in the  case of any such  certificates  or
                    opinions  that  by any  provision  hereof  are  specifically
                    required to be furnished to the Institutional  Trustee,  the
                    Institutional  Trustee  shall be under a duty to examine the
                    same  to  determine  whether  or  not  they  conform  to the
                    requirements of this Declaration;

          (2)  the  Institutional  Trustee  shall not be liable for any error of
               judgment  made in good  faith  by a  Responsible  Officer  of the
               Institutional  Trustee,  unless  it  shall  be  proved  that  the
               Institutional Trustee was negligent in ascertaining the pertinent
               facts;

          (3)  the Institutional Trustee shall not be liable with respect to any
               action  taken  or  omitted  to be  taken  by it in good  faith in
               accordance  with the  direction of the Holders of not less than a
               Majority in liquidation amount of the Securities  relating to the
               time,  method  and place of  conducting  any  proceeding  for any
               remedy available to the Institutional  Trustee, or exercising any
               trust or power  conferred  upon the  Institutional  Trustee under
               this Declaration;

          (4)  no provision of this Declaration  shall require the Institutional
               Trustee  to  expend  or risk  its own  funds or  otherwise  incur
               personal  financial  liability in the  performance  of any of its
               duties or in the  exercise of any of its rights or powers,  if it
               shall have reasonable grounds for believing that the repayment of
               such funds or liability is not reasonably assured to it under the
               terms of this Declaration or indemnity reasonably satisfactory to
               the  Institutional  Trustee against such risk or liability is not
               reasonably assured to it;

          (5)  the  Institutional  Trustee's  sole  duty  with  respect  to  the
               custody, safe keeping and physical preservation of the Debentures
               and the Institutional  Trustee Account shall be to deal with such
               property in a similar manner as the  Institutional  Trustee deals
               with  similar

<PAGE>

               property  for its own  account,  subject to the  protections  and
               limitations on liability  afforded to the  Institutional  Trustee
               under this Declaration and the Trust Indenture Act;

          (6)  the Institutional  Trustee shall have no duty or liability for or
               with respect to the value, genuineness,  existence or sufficiency
               of the  Debentures  or the  payment  of any taxes or  assessments
               levied thereon or in connection therewith;

          (7)  the Institutional Trustee shall not be liable for any interest on
               any money  received  by it except  as it may  otherwise  agree in
               writing with the Sponsor. Money held by the Institutional Trustee
               need not be  segregated  from  other  funds  held by it except in
               relation to the Institutional  Trustee Account  maintained by the
               Institutional Trustee pursuant to Section 3.8(c)(i) and except to
               the extent otherwise required by law; and

          (8)  the Institutional Trustee shall not be responsible for monitoring
               the compliance by the Regular  Trustees or the Sponsor with their
               respective   duties  under  this   Declaration,   nor  shall  the
               Institutional  Trustee be liable for any default or misconduct of
               the Regular Trustees or the Sponsor.

     SECTION 1.18. Certain Rights of Institutional Trustee.

     (1) Subject to the provisions of Section 3.9:

          (1)  the  Institutional  Trustee  may  conclusively  rely and shall be
               fully  protected  in acting or  refraining  from  acting upon any
               resolution,  certificate, statement, instrument, opinion, report,
               notice,  request,  direction,  consent,  order, bond,  debenture,
               note,  other evidence of  indebtedness or other paper or document
               believed  by it to be genuine  and to have been  signed,  sent or
               presented by the proper party or parties;

          (2)  any  direction  or act of the  Sponsor  or the  Regular  Trustees
               contemplated by this Declaration shall be sufficiently  evidenced
               by an Officers' Certificate;

          (3)  whenever  in  the   administration  of  this   Declaration,   the
               Institutional  Trustee  shall deem it desirable  that a matter be
               proved or established  before  taking,  suffering or omitting any
               action  hereunder,   the  Institutional   Trustee  (unless  other
               evidence is herein

<PAGE>

               specifically  prescribed) may, in the absence of bad faith on its
               part, request and conclusively rely upon an Officers' Certificate
               which, upon receipt of such request,  shall be promptly delivered
               by the Sponsor or the Regular Trustees;

          (4)  the  Institutional  Trustee  shall  have  no  duty  to see to any
               recording,  filing or registration  of any instrument  (including
               any financing or  continuation  statement or any filing under tax
               or securities laws) or any rerecording,  refiling or registration
               thereof;

          (5)  the  Institutional  Trustee  may  consult  with  counsel  of  its
               selection  or other  experts  and the  advice or  opinion of such
               counsel  and  experts  with  respect  to legal  matters or advice
               within the scope of such experts' area of expertise shall be full
               and  complete  authorization  and  protection  in  respect of any
               action  taken,  suffered or omitted by it hereunder in good faith
               and in accordance  with such advice or opinion.  Such counsel may
               be  counsel  to the  Sponsor  or any of its  Affiliates,  and may
               include any of its  employees.  The  Institutional  Trustee shall
               have the right at any time to seek  instructions  concerning  the
               administration  of this  Declaration  from any court of competent
               jurisdiction;

          (6)  the  Institutional  Trustee  shall  be  under  no  obligation  to
               exercise  any  of the  rights  or  powers  vested  in it by  this
               Declaration  at the request or  direction  of any Holder,  unless
               such  Holder  shall have  provided to the  Institutional  Trustee
               security   and   indemnity,   reasonably   satisfactory   to  the
               Institutional  Trustee,  against the costs,  expenses  (including
               attorneys'   fees  and   expenses   and  the   expenses   of  the
               Institutional  Trustee's  agents,  nominees  or  custodians)  and
               liabilities  that might be incurred by it in complying  with such
               request or direction,  including such reasonable  advances as may
               be requested by the Institutional Trustee provided, that, nothing
               contained  in this  Section  3.10(a)(vi)  shall  be  taken to (a)
               require the Holders of Convertible  Preferred Securities to offer
               such indemnity in the event such Holders direct the Institutional
               Trustee  to take any  action it is  empowered  to take under this
               Declaration  following  an Event of  Default or (b)  relieve  the
               Institutional  Trustee,  upon  the  occurrence  of  an  Event  of
               Default,  of its  obligation  to  exercise  the rights and powers
               vested in it by this Declaration;

<PAGE>

          (7)  the  Institutional  Trustee  shall  not  be  bound  to  make  any
               investigation into the facts or matters stated in any resolution,
               certificate,  statement,  instrument,  opinion,  report,  notice,
               request, direction,  consent, order, bond, debenture, note, other
               evidence  of  indebtedness  or other paper or  document,  but the
               Institutional  Trustee, in its discretion,  may make such further
               inquiry or investigation into such facts or matters as it may see
               fit;

          (8)  the Institutional Trustee may execute any of the trusts or powers
               hereunder or perform any duties  hereunder  either directly or by
               or through  agents,  custodians,  nominees or  attorneys  and the
               Institutional Trustee shall not be responsible for any misconduct
               or negligence on the part of any agent or attorney appointed with
               due care by it hereunder;

          (9)  any  action  taken by the  Institutional  Trustee  or its  agents
               hereunder shall bind the Trust and the Holders of the Securities,
               and the  signature  of the  Institutional  Trustee  or its agents
               alone  shall be  sufficient  and  effective  to perform  any such
               action and no third  party shall be required to inquire as to the
               authority  of the  Institutional  Trustee  to so act or as to its
               compliance   with  any  of  the  terms  and  provisions  of  this
               Declaration, both of which shall be conclusively evidenced by the
               Institutional Trustee's or its agent's taking such action; (1)

          (10) whenever  in  the   administration   of  this   Declaration   the
               Institutional  Trustee shall deem it desirable to receive written
               instructions  with  respect to  enforcing  any remedy or right or
               taking any other action hereunder,  the Institutional Trustee (i)
               may  request  written   instructions  from  the  Holders  of  the
               Securities which instructions may only be given by the Holders of
               the same  proportion in  liquidation  amount of the Securities as
               would be entitled to direct the  Institutional  Trustee under the
               terms of the  Securities  in  respect  of such  remedy,  right or
               action,  (ii) may refrain from  enforcing such remedy or right or
               taking such other action until such  instructions  are  received,
               and (iii) shall be protected in conclusively relying on or acting
               in accordance with such instructions;

          (11) except as otherwise  expressly provided by this Declaration,  the
               Institutional  Trustee shall not be under any  obligation to take
               any

<PAGE>

               action  that  is  discretionary  under  the  provisions  of  this
               Declaration; and

          (12) the  Institutional  Trustee  shall not be liable  for any  action
               taken,  suffered,  or omitted to be taken by it in good faith and
               reasonably  believed  by  it  to  be  authorized  or  within  the
               discretion  or  rights  or  powers  conferred  upon  it  by  this
               Declaration.

     (2) No provision of this Declaration  shall be deemed to impose any duty or
obligation on the  Institutional  Trustee to perform any act or acts or exercise
any  right,  power,  duty or  obligation  conferred  or  imposed  on it,  in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent  under  applicable  law, to perform any such
act or acts,  or to  exercise  any such right,  power,  duty or  obligation.  No
permissive power or authority  available to the  Institutional  Trustee shall be
construed to be a duty.

     SECTION 1.19. Delaware Trustee.

     Notwithstanding  any other provision of this Declaration other than Section
5.2, the  Delaware  Trustee  shall not be entitled to exercise  any powers,  nor
shall the Delaware  Trustee have any of the duties and  responsibilities  of the
Regular Trustees, the Institutional Trustee or the Trustees generally (except as
may be required  under the Business  Trust Act)  described in this  Declaration.
Except as set forth in Section 5.2, the Delaware  Trustee shall be a Trustee for
the sole and limited  purpose of fulfilling the  requirements of ss. 3807 of the
Business Trust Act.

     SECTION 1.20. Execution of Documents.

     Except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized  to execute on behalf of the Trust any documents  that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6.

     SECTION 1.21. Not Responsible for Recitals or Issuance of Securities.

     The recitals  contained in this  Declaration  and the  Securities  shall be
taken as the  statements  of the  Sponsor,  and the  Trustees  do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or  condition of the  property of the Trust or any part  thereof.  The
Trustees  make no  representations  as to the  validity or  sufficiency  of this
Declaration or the Securities.

     SECTION 1.22. Duration of Trust.

<PAGE>

     The Trust,  unless  terminated  pursuant to the  provisions of Article VIII
hereof,  shall have existence for twenty-two (22) years from May 5, 2000 through
May 5, 2022.

     SECTION 1.23. Mergers.

     (1) The Trust may not  consolidate,  amalgamate,  merge with or into, or be
replaced  by, or  convey,  transfer  or lease its  properties  and  assets as an
entirety  or  substantially  as an entirety  to any  corporation  or other body,
except as described in Section 3.15(b) and (c).

     (2) The Trust may,  with the consent of the Regular  Trustees  or, if there
are more than two, a majority of the Regular Trustees and without the consent of
the  Holders  of the  Securities,  the  Delaware  Trustee  or the  Institutional
Trustee, consolidate, merge with or into, or be replaced by a trust organized as
such under the laws of any State; provided that

          (1)  such successor entity (the "Successor Entity") either:

                    (1) expressly  assumes all of the  obligations  of the Trust
               under the Securities; or

                    (2)  substitutes for the  Convertible  Preferred  Securities
               other  securities  having  substantially  the  same  terms as the
               Convertible Preferred Securities (the "Successor  Securities") so
               long as the Successor Securities rank the same as the Convertible
               Preferred  Securities  rank with  respect  to  Distributions  and
               payments upon liquidation, redemption and otherwise;

          (2)  the  Debenture  Issuer  expressly  acknowledges  a trustee of the
               Successor Entity that possesses the same powers and duties as the
               Institutional Trustee as the Holder of the Debentures;

          (3)  such merger,  consolidation,  or  replacement  does not adversely
               affect the rights,  preferences  and privileges of the Holders of
               the  Securities  (including  any  Successor  Securities)  in  any
               material  respect (other than with respect to any dilution of the
               Holders' interest in the Successor Entity);

          (4)  such  Successor  Entity  has a purpose  identical  to that of the
               Trust;

          (5)  such Successor Entity has assets identical to that of the Trust;

<PAGE>

          (6)  prior to such merger, consolidation, replacement, the Sponsor has
               received an opinion of nationally recognized  independent counsel
               to the Trust experienced in such matters to the effect that:

                    (1) such  merger,  consolidation,  or  replacement  does not
               adversely  affect the rights,  preferences  and privileges of the
               Holders of the Securities (including any Successor Securities) in
               any material  respect (other than with respect to any dilution of
               the Holders' interest in the Successor Entity);

                    (2) following such merger,  consolidation,  or  replacement,
               neither  the Trust nor the  Successor  Entity will be required to
               register as an Investment Company; and

                    (3) following such merger,  consolidation,  or  replacement,
               the  Trust  (or  such  Successor  Entity)  will  continue  to  be
               classified as a grantor trust for United  States  federal  income
               tax purposes; and

          (7)  the Sponsor  guarantees the  obligations of the Successor  Entity
               under the Successor Securities at least to the extent provided by
               the Securities Guarantees.

     (3) Notwithstanding  Section 3.15(b),  the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
merge  with or into,  or be  replaced  by any other  entity or permit  any other
entity to consolidate, merge with or into, or replace it, if such consolidation,
merger  or  replacement  would  cause the  Trust or the  Successor  Entity to be
classified as other than a grantor trust for United  States  federal  income tax
purposes.

                                   ARTICLE IV

                                     SPONSOR

     SECTION 1.24. Sponsor's Purchase of Common Securities.

     On the Closing Date, the Sponsor will purchase all of the Common Securities
issued by the  Trust,  in an amount at least  equal to 3% of the  capital of the
Trust, at the same time as the Convertible Preferred Securities are sold.

     SECTION 1.25. Responsibilities of the Sponsor.

<PAGE>

     In  connection  with  the  issue  and  sale  of the  Convertible  Preferred
Securities,  the Sponsor shall have the exclusive  right and  responsibility  to
engage in the following activities:

     (1) to determine the States in which to take appropriate  action to qualify
or register for sale all or part of the Convertible  Preferred Securities and to
do any and all such acts,  other than actions  which must be taken by the Trust,
and advise the Trust of actions it must take,  and  prepare  for  execution  and
filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the  applicable  laws of any such
States; and

     (2) to negotiate the terms of the Preferred  Securities  Purchase Agreement
providing for the purchase of the Convertible Preferred Securities.

                                    ARTICLE V

                                    TRUSTEES

     SECTION 1.26. Number of Trustees.

     The number of Trustees  shall be four (4).  One  Trustee,  in the case of a
natural person,  shall be a person who is a resident of the State of Delaware or
that, if not a natural  person,  is an entity which has its  principal  place of
business in the State of Delaware (the "Delaware  Trustee");  two Trustees shall
be  employees  or  officers  of,  or  affiliated  with  the  Sponsor   ("Regular
Trustees"); and one Trustee shall be the Institutional Trustee, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.

     SECTION 1.27. Delaware Trustee.

     If required by the Business Trust Act, one Trustee shall be:

     (1) a natural person who is a resident of the State of Delaware; or

     (2) if not a natural  person,  an entity which has its  principal  place of
business in the State of  Delaware,  and  otherwise  meets the  requirements  of
applicable law;  provided that, if the  Institutional  Trustee has its principal
place of business in the State of Delaware and otherwise meets the  requirements
of  applicable  law, then the  Institutional  Trustee shall also be the Delaware
Trustee and Section 3.11 shall have no application.

     The Initial Delaware Trustee shall be Wilmington Trust Company.

     SECTION 1.28. Institutional Trustee; Eligibility.

<PAGE>

     (1)  There  shall  at  all  times  be  one  Trustee   which  shall  act  as
Institutional Trustee which shall:

          (1)  not be an Affiliate of the Sponsor; and

          (2)  be a corporation  organized and doing  business under the laws of
               the United States of America or any State or Territory thereof or
               of the District of Columbia, or a corporation or Person permitted
               by the  Commission to act as an  institutional  trustee under the
               Trust  Indenture  Act,  authorized  under  such laws to  exercise
               corporate trust powers,  having a combined capital and surplus of
               at least 50 million U.S.  dollars  ($50,000,000),  and subject to
               supervision  or  examination  by federal,  state,  territorial or
               District of Columbia  authority.  If such  corporation  publishes
               reports of condition at least annually, pursuant to law or to the
               requirements of the supervising or examining  authority  referred
               to above, then for the purposes of this Section  5.3(a)(ii),  the
               combined capital and surplus of such corporation  shall be deemed
               to be its  combined  capital and surplus as set forth in its most
               recent report of condition so published.

     (2) If at any time the Institutional  Trustee shall cease to be eligible to
so act under Section 5.3(a), the Institutional  Trustee shall immediately resign
in the manner and with the effect set forth in Section 5.6(c).

     (3) If the  Institutional  Trustee has or shall  acquire  any  "conflicting
interest"  within the  meaning of ss.  310(b) of the Trust  Indenture  Act,  the
Institutional Trustee and the Holder of the Common Securities (as if it were the
obligor  referred  to in ss.  310(b) of the Trust  Indenture  Act)  shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.

     (4) The Convertible  Preferred  Securities  Guarantee shall be deemed to be
specifically  described  in this  Declaration  for purposes of clause (i) of the
first provision contained in ss. 310(b) of the Trust Indenture Act.

     (5) The initial Institutional Trustee shall be Wilmington Trust Company.

     SECTION  1.29.  Certain  Qualifications  of Regular  Trustees  and Delaware
Trustee Generally.

<PAGE>

     Each Regular  Trustee and the Delaware  Trustee  (unless the  Institutional
Trustee also acts as Delaware  Trustee)  shall be either a natural person who is
at least 21 years of age or a legal  entity  that shall act  through one or more
Authorized Officers.

     SECTION 1.30. Regular Trustees.

     The initial Regular Trustees shall be:

          Rodney F. Du Bois
          James J. Burns

     Except as expressly set forth in this  Declaration  and except if a meeting
of the  Regular  Trustees  is called  with  respect to any matter over which the
Regular  Trustees  have power to act,  any power of the Regular  Trustees may be
exercised  by, or with the  consent  of, any one such  Regular  Trustee.  Unless
otherwise  determined by the Regular Trustees,  and except as otherwise required
by the Business Trust Act or applicable  law, any Regular  Trustee is authorized
to execute on behalf of the Trust any documents which the Regular  Trustees have
the power and authority to cause the Trust to execute pursuant to Section 3.6.

     SECTION 1.31. Appointment, Removal and Resignation of Trustees.

     (1) Subject to Section 5.6(b), Trustees may be appointed or removed without
cause at any time:

          (1)  until the  issuance  of any  Securities,  by  written  instrument
               executed by the Sponsor; and

          (2)  after the issuance of any Securities, by vote of the Holders of a
               Majority in liquidation amount of the Common Securities voting as
               a class at a meeting of the Holders of the Common Securities.

     (2) (10 The Trustee that acts as Institutional Trustee shall not be removed
in accordance  with Section 5.6(a) until a Successor  Institutional  Trustee has
been appointed and has accepted such appointment by written instrument  executed
by such Successor  Institutional  Trustee and delivered to the Regular  Trustees
and the Sponsor; and

          (1)  the Trustee that acts as Delaware Trustee shall not be removed in
               accordance   with  Section  5.6(a)  until  a  successor   Trustee
               possessing the  qualifications  to act as Delaware  Trustee under
               Sections 5.2 and 5.4 (a  "Successor  Delaware  Trustee") has been
               appointed and has accepted such appointment by written instrument
               executed

<PAGE>

               by such Successor  Delaware  Trustee and delivered to the Regular
               Trustees and the Sponsor.

     (3) A Trustee  appointed to office  shall hold office  until his  successor
shall have been  appointed  or until his  death,  removal  or  resignation.  Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument  in writing  signed by the Trustee and delivered to the Sponsor
and the Trust,  which  resignation  shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:

          (1)  No such resignation of the Trustee that acts as the Institutional
               Trustee shall be effective:

                    (1)  until  a  Successor   Institutional  Trustee  has  been
               appointed  and  has  accepted  such   appointment  by  instrument
               executed by such Successor Institutional Trustee and delivered to
               the Trust, the Sponsor and the resigning  Institutional  Trustee;
               or

                    (2) until  the  assets  of the  Trust  have been  completely
               liquidated and the proceeds thereof distributed to the holders of
               the Securities; and

          (2)  no such  resignation  of the  Trustee  that acts as the  Delaware
               Trustee shall be effective until a Successor Delaware Trustee has
               been  appointed and has accepted such  appointment  by instrument
               executed by such Successor  Delaware Trustee and delivered to the
               Trust, the Sponsor and the resigning Delaware Trustee.

     (4) the Holders of the Common  Securities  shall use their best  efforts to
promptly appoint a Successor Delaware Trustee or Successor Institutional Trustee
as the case may be if the Institutional Trustee or the Delaware Trustee delivers
an instrument of resignation in accordance with this Section 5.6.

     (5) If no Successor  Institutional  Trustee or Successor  Delaware  Trustee
shall have been  appointed and accepted  appointment as provided in this Section
5.6  within  60  days  after  delivery  of an  instrument  of  resignation,  the
Institutional  Trustee or Delaware Trustee resigning,  may petition any court of
competent  jurisdiction for appointment of a Successor  Institutional Trustee or
Successor  Delaware  Trustee.  Such court may thereupon,  after prescribing such
notice,  if any,  as it may deem  proper  and  prescribe,  appoint  a  Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.

<PAGE>

     (6) No  Institutional  Trustee or Delaware  Trustee shall be liable for the
acts or omissions  to act of any  Successor  Institutional  Trustee or Successor
Delaware Trustee, as the case may be.

     SECTION 1.32. Vacancies Among Trustees.

     If a  Trustee  ceases  to hold  office  for any  reason  and the  number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased  pursuant  to  Section  5.1,  a  vacancy  shall  occur.  A  resolution
certifying  the  existence of such vacancy by the Regular  Trustees or, if there
are more than two,  a  majority  of the  Regular  Trustees  shall be  conclusive
evidence of the  existence of such  vacancy.  The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.

     SECTION 1.33. Effect of Vacancies.

     The  death,  resignation,  retirement,  removal,  bankruptcy,  dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not  operate  to annul the  Trust.  Whenever  a vacancy in the number of Regular
Trustees  shall  occur,  until such  vacancy is filled by the  appointment  of a
Regular Trustee in accordance with Section 5.6, the Regular  Trustees in office,
regardless  of their  number,  shall have all the powers  granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.

     SECTION 1.34. Meetings.

     If there is more than one Regular trustee, meetings of the Regular Trustees
shall be held from time to time upon the call of any  Regular  Trustee.  Regular
meetings  of the  Regular  Trustees  may be held at a time  and  place  fixed by
resolution  of the Regular  Trustees.  Notice of any  in-person  meetings of the
Regular  Trustees  shall be  hand-delivered  or  otherwise  delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours  before such  meeting.  Notice of any  telephonic  meetings of the Regular
Trustees or any committee thereof shall be hand-delivered or otherwise delivered
in writing  (including by facsimile,  with a hard copy by overnight courier) not
less than 24 hours before a meeting.  Notices shall contain a brief statement of
the time, place and anticipated  purposes of the meeting.  The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall  constitute a
waiver of notice  of such  meeting  except  where a  Regular  Trustee  attends a
meeting for the express  purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened.  Unless
provided  otherwise in this Declaration,  any action of the Regular Trustees may
be taken at a meeting  by vote of a majority  of the  Regular  Trustees  present
(whether in person or by  telephone)  and  eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written

<PAGE>

consent of the Regular Trustees. In the event there is only one Regular Trustee,
any and all  action of such  Regular  Trustee  shall be  evidenced  by a written
consent of such Regular Trustee.

     SECTION 1.35. Delegation of Power.

     A Regular Trustee may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 his or her power for the
purposes of executing any documents contemplated in Section 3.6.

     The Regular Trustees shall have power to delegate from time to time to such
of their  number or to  officers  of the Trust the doing of such  things and the
execution  of such  instruments  either in the name of the Trust or the names of
the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to
the extent such  delegation is not  prohibited by applicable  law or contrary to
the provisions of the Trust, as set forth herein.

     SECTION 1.36. Merger, Conversion, Consolidation or Succession to Business.

     Any  corporation  into  which the  Institutional  Trustee  or the  Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be  consolidated,  or any corporation  resulting from any merger,  conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case  may  be,  shall  be a  party,  or  any  corporation  succeeding  to all or
substantially all the corporate trust business of the  Institutional  Trustee or
the  Delaware  Trustee,  as the  case  may be,  shall  be the  successor  of the
Institutional  Trustee or the Delaware  Trustee,  as the case may be, hereunder,
provided such corporation  shall be otherwise  qualified and eligible under this
Article,  without the execution or filing of any paper or any further act on the
part of any of the parties hereto.

                                   ARTICLE VI

                                  DISTRIBUTIONS

     SECTION 1.37. Distributions.

     Holders of Securities  shall receive  Distributions  (as defined herein) in
accordance  with the  applicable  terms  of the  relevant  Holder's  Securities.
Distributions  shall be made on the  Convertible  Preferred  Securities  and the
Common  Securities  in  accordance  with  the  preferences  set  forth  in their
respective terms. If and to the extent that the Debenture Issuer makes a payment
of interest,  including Additional Sums (as defined in the Indenture),  premium,
if any,  and/or  principal on the Debentures held by the  Institutional  Trustee
(the amount of any such payment  being a "Payment  Amount"),  the  Institutional
Trustee shall and is directed, to the extent funds

<PAGE>

are available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders.

                                   ARTICLE VII

                             ISSUANCE OF SECURITIES

     SECTION 1.38. General Provisions Regarding Securities.

     (1) The  Regular  Trustees  shall on behalf of the Trust issue one class of
convertible preferred securities  representing undivided beneficial interests in
the  assets  of the  Trust  having  such  terms as are set forth in Annex I (the
"Convertible   Preferred  Securities")  and  one  class  of  convertible  common
securities  representing  undivided  beneficial  interests  in the assets of the
Trust having such terms as are set forth in Annex I (the  "Common  Securities").
The Trust  shall issue no  securities  or other  interests  in the assets of the
Trust other than the Convertible Preferred Securities and the Common Securities.

     (2)  The  consideration  received  by the  Trust  for the  issuance  of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

     (3) Upon issuance of the  Securities as provided in this  Declaration,  the
Securities  so issued  shall be  deemed to be  validly  issued,  fully  paid and
non-assessable.

     (4) Every Person,  by virtue of having  become a Holder in accordance  with
the terms of this  Declaration,  shall be deemed to have expressly  assented and
agreed to the terms of and shall be bound by this Declaration.

     SECTION 1.39. Execution and Authentication.

     (1) The  Certificates  shall be  signed on behalf of the Trust by a Regular
Trustee.  In case any Regular  Trustee of the Trust who shall have signed any of
the Securities shall cease to be such Regular Trustee before the Certificates so
signed shall be delivered by the Trust,  such  Certificates  nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Regular  Trustee;  and any Certificate may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Security,  shall be
the Regular  Trustees of the Trust,  although at the date of the  execution  and
delivery of the Declaration any such person was not such a Regular Trustee.

<PAGE>

     (2) One Regular Trustee shall sign the Convertible Preferred Securities for
the Trust by manual or facsimile  signature.  Unless otherwise determined by the
Trust,  such  signature  shall,  in the case of Common  Securities,  be a manual
signature.

     A Convertible  Preferred Security shall not be valid until authenticated by
the manual signature of an authorized  signatory of the  Institutional  Trustee.
The  signature  shall be  conclusive  evidence  that the  Convertible  Preferred
Security has been authenticated under this Declaration.

     Upon a  written  order of the  Trust  signed by one  Regular  Trustee,  the
Institutional  Trustee shall authenticate the Convertible  Preferred  Securities
for original issue.

     The Institutional Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate  Convertible Preferred  Securities.  An authenticating
agent  may   authenticate   Convertible   Preferred   Securities   whenever  the
Institutional  Trustee  may  do  so.  Each  reference  in  this  Declaration  to
authentication  by the  Institutional  Trustee includes  authentication  by such
agent. An authenticating agent has the same rights as the Institutional  Trustee
to deal with the Company or an Affiliate.

     SECTION 1.40. Form and Dating.

     The  Convertible  Preferred  Securities  and  the  Institutional  Trustee's
certificate of authentication  shall be substantially in the form of Exhibit A-1
and the Common  Securities  shall be  substantially  in the form of Exhibit A-2,
each of  which  is  hereby  incorporated  in and  expressly  made a part of this
Declaration.  Certificates  may be printed,  lithographed  or engraved or may be
produced  in any  other  manner  as is  reasonably  acceptable  to  the  Regular
Trustees,  as evidenced by their  execution  thereof.  The  Securities  may have
letters,  numbers,  notations,  other marks of  identification or designation or
other changes or additions thereto or deletions  therefrom as may be required by
ordinary usage, custom or practice and such legends or endorsements  required by
law, stock  exchange rule and  agreements to which the Trust is subject,  if any
(provided that any such notation,  legend or endorsement is in a form acceptable
to the Trust).  The Trust at the direction of the Sponsor shall furnish any such
legend not  contained  in Exhibit A-1 to the  Institutional  Trustee in writing.
Each Convertible  Preferred Security  Certificate shall be dated the date of its
authentication.  The terms and provisions of the Securities set forth in Annex I
and the forms of  Securities  set forth in Exhibits  A-1 and A-2 are part of the
terms of this  Declaration  and,  to the extent  applicable,  the  Institutional
Trustee and the Sponsor,  by their  execution and delivery of this  Declaration,
expressly agree to such terms and provisions and to be bound thereby.

     SECTION 1.41. Paying Agent.

<PAGE>

     The Trust shall  maintain in the  Borough of  Manhattan,  City of New York,
State of New York, an office or agency where  Convertible  Preferred  Securities
may be presented for payment ("Paying Agent"). The Trust shall act as, or retain
others to act as,  conversion agent to effectuate a conversion of the Securities
("Conversion  Agent"). The Trust may appoint the Paying Agent and the Conversion
Agent and may  appoint  one or more  additional  paying  agents  and one or more
additional conversion agents in such other locations as it shall determine.  The
term  "Paying  Agent"  includes  any  additional   paying  agent  and  the  term
"Conversion  Agent"  includes any  additional  conversion  agent.  The Trust may
change any Paying Agent or Conversion  Agent without prior notice to any Holder.
The Trust  shall  notify  the  Institutional  Trustee in writing of the name and
address  of any Agent  not a party to this  Declaration.  If the Trust  fails to
appoint or maintain  another  entity as Paying Agent or  Conversion  Agent,  the
Institutional  Trustee shall act as such. The Trust or any of its Affiliates may
act as Paying Agent or Conversion Agent. The Trust shall act as Paying Agent and
Conversion Agent for the Common Securities.

     The Trust initially appoints Wilmington Trust Company,  c/o Corporate Trust
Administration,  1100 North Market Street,  Wilmington,  Delaware 19890-0001, as
Paying Agent and Conversion Agent for the Convertible Preferred Securities.

                                  ARTICLE VIII

                              TERMINATION OF TRUST

     SECTION 1.42. Termination of Trust.

     (1) The Trust shall terminate:

          (1)  upon the  bankruptcy  of the  Sponsor or the Holder of the Common
               Securities;

          (2)  upon the filing of a certificate of dissolution or its equivalent
               with  respect  to  the  Sponsor  or  the  Holder  of  the  Common
               Securities;  the filing of a  certificate  of  cancellation  with
               respect to the Trust  after  having  obtained  the  consent of at
               least a Majority in liquidation  amount of the Securities  voting
               together  as  a  single  class  to  file  such   certificate   of
               cancellation;  or the revocation of the Sponsor's  charter or the
               charter of the Holder of the Common Securities and the expiration
               of 90 days after the date of revocation  without a  reinstatement
               thereof;

<PAGE>

          (3)  upon  the  entry  of a  decree  of  judicial  dissolution  of the
               Sponsor, the Trust or the Holder of the Common Securities;

          (4)  when all of the Securities  shall have been called for redemption
               and the amounts necessary for redemption  thereof shall have been
               paid  to  the  Holders  in  accordance  with  the  terms  of  the
               Securities;

          (5)  upon the occurrence and  continuation of a Special Event pursuant
               to which the Trust shall have been  dissolved in accordance  with
               the terms of the Securities and all of the Debentures held by the
               Institutional  Trustee shall have been distributed to the Holders
               of Securities in exchange for all of the Securities;

          (6)  upon the written direction to the Institutional  Trustee from the
               Sponsor  at  any  time  to   terminate   the  Trust  and,   after
               satisfaction of liabilities to creditors of the Trust as provided
               by applicable  law, the  distribution of Debentures to Holders in
               exchange  for the  Securities,  subject to the Regular  Trustees'
               receipt  of  an  opinion  of  nationally  recognized  independent
               counsel  experienced  in such  matters  to the  effect  that  the
               holders  of  the  Convertible   Preferred   Securities  will  not
               recognize  any  income,  gain or loss for United  States  federal
               income tax purposes as a result of the  dissolution  of the Trust
               and such distribution to Holders;

          (7)  upon the  distribution of Sponsor's  Common Shares to all Holders
               of  Convertible  Preferred  Securities  upon  conversion  of  all
               outstanding Convertible Preferred Securities;

          (8)  the expiration of the term of the Trust on May 4, 2022; or

          (9)  before the issuance of any Securities, with the consent of all of
               the Regular Trustees and the Sponsor.

     (2) As soon as is practicable  after the occurrence of an event referred to
in Section 8.1(a),  the Trustees shall file a certificate of  cancellation  with
the Secretary of State of the State of Delaware.

     (3) The provisions of Sections 3.9 and 3.10 and Article X shall survive the
termination of the Trust.

<PAGE>

                                   ARTICLE IX

                              TRANSFER OF INTERESTS

     SECTION 1.43. Transfer of Securities.

     (1) Securities may only be transferred,  in whole or in part, in accordance
with the terms and conditions set forth in this  Declaration and in the terms of
the Securities.  Any transfer or purported  transfer of any Security not made in
accordance with this Declaration shall be null and void.

     (2) Subject to this Article IX, Convertible  Preferred  Securities shall be
transferable.

     (3) Subject to this Article IX, the Sponsor and any Related  Party may only
transfer  Common  Securities  to the Sponsor or a Related  Party of the Sponsor;
provided, that, any such transfer is subject to the condition precedent that the
transferor  obtain the  written  opinion of  nationally  recognized  independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:

          (1)  the Trust  would not be  classified  for  United  States  federal
               income tax purposes as a grantor trust; and

          (2)  the Trust  would be an  Investment  Company  required to register
               under the Investment  Company Act or the transferee  would become
               an Investment  Company  required to register under the Investment
               Company Act.

     (4) Each Security that bears or is required to bear the legend set forth in
this  Section  9.1(d)  (a  "Restricted   Security")  shall  be  subject  to  the
restrictions  on  transfer  provided  in the  legend  set forth in this  Section
9.1(d),  unless such  restrictions  on  transfer  shall be waived by the written
consent of the Regular Trustees,  and the Holder of each Restricted Security, by
such  security  holder's  acceptance  thereof,   agrees  to  be  bound  by  such
restrictions on transfer.  As used in this Section 9.1(d) and in Section 9.1(e),
the term "transfer" encompasses any sale, pledge,  transfer or other disposition
of any Restricted Security.

     Prior  to  the  Transfer  Restriction  Termination  Date,  any  certificate
evidencing a Security shall bear a legend in  substantially  the following form,
unless  otherwise agreed by the Regular Trustees (with written notice thereof to
the Institutional Trustee):

<PAGE>

     THE  SECURITY  EVIDENCED  HEREBY  HAS NOT BEEN  REGISTERED  UNDER  THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD  WITHIN  THE UNITED  STATES OR TO, OR FOR THE  ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING  SENTENCE.  BY ITS
ACQUISITION  HEREOF,  THE  HOLDER  (1)  REPRESENTS  THAT (A) IT IS A  "QUALIFIED
INSTITUTIONAL  BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES  ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT)  ("INSTITUTIONAL  ACCREDITED  INVESTOR") OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE
TRANSFER  THE  SECURITY  EVIDENCED  HEREBY OR THE COMMON  SHARES  ISSUABLE  UPON
CONVERSION OR EXCHANGE OF THIS SECURITY EXCEPT (A) TO WELLSFORD REAL PROPERTIES,
INC. (THE  "COMPANY") OR ANY  SUBSIDIARY  THEREOF,  (B) PURSUANT TO AN EFFECTIVE
REGISTRATION   STATEMENT   UNDER  THE   SECURITIES   ACT,  (C)  TO  A  QUALIFIED
INSTITUTIONAL  BUYER IN COMPLIANCE  WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,  FURNISHES
TO THE REGULAR  TRUSTEES (OR, IF THIS CERTIFICATE  EVIDENCES COMMON SHARES,  THE
TRANSFER  AGENT FOR THE  COMMON  SHARES),  A SIGNED  LETTER  CONTAINING  CERTAIN
REPRESENTATIONS  AND AGREEMENTS  RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITY  EVIDENCED  HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED  FROM SUCH
TRUSTEE OR TRANSFER  AGENT),  (E) OUTSIDE THE UNITED STATES IN  COMPLIANCE  WITH
RULE  904  UNDER  THE  SECURITIES  ACT OR (F)  PURSUANT  TO THE  EXEMPTION  FROM
REGISTRATION  PROVIDED BY RULE 144 UNDER THE  SECURITIES  ACT (IF AVAILABLE) AND
(3) AGREES THAT IT WILL  DELIVER TO EACH PERSON TO WHOM THE  SECURITY  EVIDENCED
HEREBY IS TRANSFERRED A NOTICE  SUBSTANTIALLY  TO THE EFFECT OF THIS LEGEND.  IN
CONNECTION  WITH ANY  TRANSFER OF THE  SECURITY  EVIDENCED  HEREBY  PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR  PROVISION),
THE  HOLDER  MUST  CHECK THE  APPROPRIATE  BOX SET FORTH ON THE  REVERSE  HEREOF
RELATING  TO THE MANNER OF SUCH  TRANSFER  AND SUBMIT  THIS  CERTIFICATE  TO THE
REGULAR TRUSTEES (OR, IF THIS CERTIFICATE  EVIDENCES COMMON SHARES,  SUCH HOLDER
MUST FURNISH TO THE TRANSFER AGENT SUCH CERTIFICATIONS,  LEGAL OPINIONS OR OTHER
INFORMATION  AS THE  COMPANY  OR WRP  CONVERTIBLE  TRUST  I  ("THE  TRUST")  MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING

<PAGE>

MADE  PURSUANT TO AN EXEMPTION  FROM,  OR IN A  TRANSACTION  NOT SUBJECT TO, THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES  ACT). IF THIS CERTIFICATE DOES NOT
EVIDENCE  COMMON  SHARES  AND IF THE  PROPOSED  TRANSFEREE  IS AN  INSTITUTIONAL
ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A U.S.  PERSON,  THE HOLDER MUST,
PRIOR TO SUCH  TRANSFER,  FURNISH TO THE REGULAR  TRUSTEES SUCH  CERTIFICATIONS,
LEGAL  OPINIONS OR OTHER  INFORMATION AS THE COMPANY OR THE TRUST MAY REASONABLY
REQUIRE TO CONFIRM  THAT SUCH  TRANSFER IS BEING MADE  PURSUANT TO AN  EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE
SECURITIES  ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING
PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED  HEREBY UNDER RULE 144(K)
UNDER THE  SECURITIES  ACT. AS USED HEREIN,  THE TERMS  "OFFSHORE  TRANSACTION,"
"UNITED STATES" AND "U.S.  PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT. THIS SECURITY IS ALSO SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN THE DECLARATION.

     Following  the  Transfer  Restriction  Termination  Date,  any  Security or
security issued in exchange or substitution  therefor (other than (i) Securities
acquired by the Sponsor or any  Affiliate  thereof and (ii) Common Shares issued
upon the  conversion or exchange of any Security  described in clause (i) above)
may upon  surrender  of such  Security  for  exchange to any Regular  Trustee on
behalf of the  Trust in  accordance  with the  provisions  of  Section  9.2,  be
exchanged  for a new  Security  or  Securities,  of  like  tenor  and  aggregate
liquidation amount, which shall not bear the restrictive legend required by this
Section 9.1(d).

     Any  Convertible  Preferred  Security  or  Common  Shares  issued  upon the
conversion or exchange of a Convertible  Preferred  Security that,  prior to the
Transfer  Restriction  Termination Date, is purchased or owned by the Sponsor or
any Affiliate  thereof may not be resold by the Sponsor or such Affiliate unless
registered  under the Securities Act or resold pursuant to an exemption from the
registration  requirements of the Securities Act in a transaction  which results
in such Convertible  Preferred  Securities or Common Shares, as the case may be,
no longer being "restricted securities" (as defined under Rule 144).

     (5)  Each   Convertible   Preferred   Security  shall  be  subject  to  the
restrictions on transfer provided in this Section 9.1(e).

          (1)  If a Holder of Convertible  Preferred  Securities (the "Offeror")
               desires to sell, assign, transfer, encumber, or otherwise dispose
               of  any of  his  Convertible  Preferred  Securities,  other  than
               pursuant to the exercise of such Holder's conversion rights under
               the  Convertible   Preferred   Securities  or  the  sale  of  any
               securities

<PAGE>

               received upon such  conversion,  he shall give written  notice to
               the Sponsor of his desire to do so and of the price per  security
               and  other  terms  under  which he  proposes  to  dispose  of his
               Convertible  Preferred  Securities  (the "Sales  Notice"),  which
               Sales Notice shall constitute an offer on the part of the Offeror
               to sell to the Sponsor any such Convertible  Preferred Securities
               upon the terms and conditions set forth in such notice.

          (2)  Unless, within ten (10) days after the giving of the Sales Notice
               by the  Offeror  pursuant  to  subparagraph  (i) of this  Section
               9.1(e), the Sponsor shall give written notice to the Offeror that
               the  Sponsor  irrevocably  commits to  purchase  the  Convertible
               Preferred Securities which are the subject of the Sales Notice at
               the price and under the terms specified in the Sales Notice given
               by the Offeror,  the Sponsor shall be deemed to have rejected the
               offer of the Offeror to sell the Convertible Preferred Securities
               which are the subject of the Sales  Notice and the Offeror  shall
               be free without restriction under this Section 9.1(e) to sell the
               Convertible  Preferred  Securities  which are the  subject of the
               Sales Notice to any other Person,  provided however, if the price
               per  security  is less than the price or the other terms are more
               favorable than those,  contained in the Sales Notice, the Offeror
               shall again offer to sell the Convertible Preferred Securities in
               accordance  with  the  provisions  of  subparagraph  (i) of  this
               Section  9.1(e) before it may complete any such sale and provided
               further,  that the Convertible Preferred Securities which are the
               subject  of the  Sales  Notice  shall  again  be  subject  to the
               provisions of  subparagraph  (i) of this Section 9.1(e) if within
               ninety  (90) days  after the  giving  of the  Sales  Notice,  the
               Offeror  shall  not  have  completed  the   disposition  of  such
               Convertible Preferred Securities.

          (3)  If the Sponsor  irrevocably  commits to purchase the  Convertible
               Preferred Securities as contemplated by subparagraph (ii) of this
               Section 9.1(e),  the closing of such purchase shall take place at
               the principal place of business of the Sponsor at 10:00 A.M. (New
               York City time) on the third (3rd) day following  the  expiration
               of the ten (10) day period referred to subparagraph  (ii) of this
               Section  9.1(e),  or if such day is not a Business  Day, then the
               next day that is a Business Day.

     The  provisions  of this  Section  9.1(e)  shall  not  apply to one or more
transfers  of  Convertible  Preferred  Securities  among ERPOLP and an Affiliate
thereof, or, to any entity in

<PAGE>

which ERPOLP or EQR holds directly or indirectly an economic interest of greater
than 50%, including,  without limitation, any taxable REIT subsidiary of EQR, as
defined in Code ss. 856(l).

     SECTION 1.44. Transfer of Certificates.

     The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates,  which will be effected  without charge,  but only
upon  payment  in  respect of any tax or other  government  charges  that may be
imposed in relation to it. Upon  surrender for  registration  of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued  in  the  name  of  the  designated  transferee  or  transferees.   Every
Certificate  surrendered for  registration of transfer shall be accompanied by a
written  instrument of transfer in form  satisfactory  to the Regular  Trustees,
duly  executed  by the  Holder or such  Holder's  attorney  duly  authorized  in
writing.  Each  Certificate  surrendered  for  registration of transfer shall be
canceled  by the  Regular  Trustees.  A  transferee  of a  Certificate  shall be
entitled to the rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Certificate. By acceptance of a Certificate,
each transferee shall be deemed to have agreed to be bound by this Declaration.

     SECTION 1.45. Deemed Security Holders.

     The  Trustees may treat the Person in whose name any  Certificate  shall be
registered  on the books  and  records  of the Trust as the sole  holder of such
Certificate and of the Securities  represented by such  Certificate for purposes
of  receiving   Distributions  and  for  all  other  purposes   whatsoever  and,
accordingly,  shall not be bound to recognize any equitable or other claim to or
interest  in  such  Certificate  or  in  the  Securities   represented  by  such
Certificate  on the part of any  Person,  whether  or not the Trust  shall  have
actual or other notice thereof.

     SECTION 1.46. Mutilated, Destroyed, Lost or Stolen Certificates.

     If:

     (1)  any  mutilated  Certificates  should  be  surrendered  to the  Regular
Trustees,   or  if  the  Regular   Trustees  shall  receive  evidence  to  their
satisfaction of the destruction, loss or theft of any Certificate; and

     (2) there shall be  delivered to the  Institutional  Trustee or the Regular
Trustees  such  security or indemnity as may be required by them to keep each of
them harmless;

     then:

     in the absence of notice that such Certificate  shall have been acquired by
a bona fide  purchaser,  the  Institutional  Trustee or any  Regular  Trustee on
behalf of the Trust shall execute

<PAGE>

and deliver, in exchange for, or in lieu of, any such mutilated, destroyed, lost
or stolen  Certificate,  a new Certificate of like  denomination.  In connection
with  the  issuance  of  any  new  Certificate   under  this  Section  9.4,  the
Institutional  Trustee or the Regular  Trustees may require the payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
connection therewith.  Any duplicate Certificate issued pursuant to this Section
shall constitute  conclusive  evidence of an ownership  interest in the relevant
Securities,  as if  originally  issued,  whether  or not  the  lost,  stolen  or
destroyed Certificate shall be found at any time.

                                    ARTICLE X

                LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
                               TRUSTEES OR OTHERS

     SECTION 1.47. Liability.

     (1)  Except as  expressly  set forth in this  Declaration,  the  Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:

          (1)  personally  liable for the return of any  portion of the  capital
               contributions  (or any  return  thereon)  of the  Holders  of the
               Securities  which  shall be made solely from assets of the Trust;
               or

          (2)  required to pay to the Trust or to any Holder of  Securities  any
               deficit upon dissolution of the Trust or otherwise.

     (2) The  Holder of the  Common  Securities  shall be liable  for all of the
debts and  obligations  of the Trust (other than  amounts due on the  Securities
subject to the  Preferred  Guarantee)  to the extent  not  satisfied  out of the
Trust's assets.

     (3) Pursuant to ss.  3803(a) of the Business  Trust Act, the Holders of the
Convertible  Preferred  Securities  shall be entitled to the same  limitation of
personal liability  extended to stockholders of private  corporations for profit
organized under the General Corporation Law of the State of Delaware.

     SECTION 1.48. Exculpation.

     (1) No  Indemnified  Person shall be liable,  responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss,  damage or
claim  incurred  by reason of any act or omission  performed  or omitted by such
Indemnified  Person in good  faith on  behalf of the Trust and in a manner  such
Indemnified  Person reasonably  believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law,

<PAGE>

except that an Indemnified  Person shall be liable for any such loss,  damage or
claim  incurred  by reason of such  Indemnified  Person's  gross  negligence  or
willful misconduct with respect to such acts or omissions.

     (2) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such  information,  opinions,  reports or
statements  presented  to the Trust by any Person as to matters the  Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust,  including information,  opinions,  reports or statements as to the value
and amount of the  assets,  liabilities,  profits,  losses,  or any other  facts
pertinent  to the  existence  and amount of assets from which  Distributions  to
Holders of Securities might properly be paid.

     SECTION 1.49. Fiduciary Duty.

     (1) To the extent  that,  at law or in equity,  an  Indemnified  Person has
duties  (including  fiduciary  duties) and liabilities  relating  thereto to the
Trust or to any other Covered  Person,  an Indemnified  Person acting under this
Declaration  shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an  Indemnified  Person  otherwise  existing at law or in equity (other than the
duties imposed on the Institutional  Trustee under the Trust Indenture Act), are
agreed by the parties  hereto to replace  such other duties and  liabilities  of
such Indemnified Person.

     (2) Unless otherwise expressly provided herein:

          (1)  whenever a conflict  of  interest  exists or arises  between  any
               Covered Persons; or

          (2)  whenever this  Declaration  or any other  agreement  contemplated
               herein or therein  provides that an Indemnified  Person shall act
               in a  manner  that is,  or  provides  terms  that  are,  fair and
               reasonable  to  the  Trust  or  any  Holder  of  Securities,  the
               Indemnified Person shall resolve such conflict of interest,  take
               such action or provide such terms,  considering  in each case the
               relative  interest of each party  (including its own interest) to
               such  conflict,  agreement,  transaction  or  situation  and  the
               benefits and burdens relating to such interests, any customary or
               accepted  industry  practices,   and  any  applicable   generally
               accepted  accounting  practices or principles.  In the absence of
               bad faith by the Indemnified  Person,  the resolution,  action or
               term so made,  taken or provided by the Indemnified  Person shall
               not  constitute  a  breach  of  this  Declaration  or  any  other

<PAGE>

               agreement contemplated herein or of any duty or obligation of the
               Indemnified Person at law or in equity or otherwise.

     (3)  Whenever in this  Declaration  an  Indemnified  Person is permitted or
required to make a decision:

          (1)  in its  "discretion" or under a grant of similar  authority,  the
               Indemnified  Person shall be entitled to consider such  interests
               and factors as it desires, including its own interests, and shall
               have no duty or  obligation  to  give  any  consideration  to any
               interest of or factors  affecting  the Trust or any other Person;
               or

          (2)  in its  "good  faith"  or under  another  express  standard,  the
               Indemnified  Person  shall act under such  express  standard  and
               shall not be subject to any other or different  standard  imposed
               by this Declaration or by applicable law.

     SECTION 1.50. Indemnification.

     (1)  (1)  The  Debenture  Issuer  shall  indemnify,   to  the  full  extent
               permitted by law, any Company  Indemnified Person who was or is a
               party  or is  threatened  to be made a party  to any  threatened,
               pending or completed action,  suit or proceeding,  whether civil,
               criminal,  administrative or investigative  (other than an action
               by or in the right of the Trust) by reason of the fact that he is
               or was a Company  Indemnified Person against expenses  (including
               attorneys' fees), judgments, fines and amounts paid in settlement
               actually and reasonably  incurred by him in connection  with such
               action,  suit or  proceeding  if he acted in good  faith and in a
               manner he reasonably believed to be in or not opposed to the best
               interests of the Trust,  and, with respect to any criminal action
               or proceeding, had no reasonable cause to believe his conduct was
               unlawful.  The  termination of any action,  suit or proceeding by
               judgment,  order, settlement,  conviction, or upon a plea of nolo
               contendere  or its  equivalent,  shall not,  of itself,  create a
               presumption  that the Company  Indemnified  Person did not act in
               good faith and in a manner which he reasonably  believed to be in
               or not  opposed to the best  interests  of the Trust,  and,  with
               respect to any criminal  action or proceeding,  had no reasonable
               cause to believe that his conduct was unlawful.

          (1)  The  Debenture  Issuer  shall  indemnify,   to  the  full  extent
               permitted by law, any Company  Indemnified Person who was or is a
               party or


               is  threatened to be made a party to any  threatened,  pending or
               completed  action  or suit by or in the  right  of the  Trust  to
               procure a judgment  in its favor by reason of the fact that he is
               or was a Company  Indemnified Person against expenses  (including
               attorneys'  fees)  actually  and  reasonably  incurred  by him in
               connection  with the defense or settlement of such action or suit
               if he acted in good faith and in a manner he reasonably  believed
               to be in or not  opposed to the best  interests  of the Trust and
               except that no such  indemnification  shall be made in respect of
               any claim,  issue or matter as to which such Company  Indemnified
               Person shall have been  adjudged to be liable to the Trust unless
               and only to the extent  that the Court of Chancery of Delaware or
               the  court  in  which  such  action  or suit  was  brought  shall
               determine upon  application  that,  despite the  adjudication  of
               liability but in view of all the  circumstances of the case, such
               person is fairly and  reasonably  entitled to indemnity  for such
               expenses  which such Court of  Chancery or such other court shall
               deem proper.

          (2)  To  the  extent  that  a  Company  Indemnified  Person  shall  be
               successful on the merits or otherwise  (including dismissal of an
               action  without  prejudice or the settlement of an action without
               admission  of  liability)  in  defense  of any  action,  suit  or
               proceeding referred to in paragraphs (i) and (ii) of this Section
               10.4(a),  or in defense of any claim, issue or matter therein, he
               shall  be  indemnified,  to the  full  extent  permitted  by law,
               against  expenses   (including   attorneys'  fees)  actually  and
               reasonably incurred by him in connection therewith.

          (3)  Any indemnification under paragraphs (i) and (ii) of this Section
               10.4(a)  (unless  ordered  by a  court)  shall  be  made  by  the
               Debenture  Issuer only as  authorized in the specific case upon a
               determination  that  indemnification  of the Company  Indemnified
               Person  is  proper in the  circumstances  because  he has met the
               applicable  standard  of conduct set forth in  paragraphs  (i) or
               (ii).  Such  determination  shall  be  made  (1) by  the  Regular
               Trustees  by a  majority  vote  of a  quorum  consisting  of such
               Regular  Trustees  who were not parties to such  action,  suit or
               proceeding,  (2) if such a quorum is not obtainable,  or, even if
               obtainable,  if a quorum of  disinterested  Regular  Trustees  so
               directs,  by independent  legal counsel in a written opinion,  or
               (3) by the Common Security Holder of the Trust.

<PAGE>

          (4)  Expenses  (including  attorneys'  fees)  incurred  by  a  Company
               Indemnified Person in defending a civil, criminal, administrative
               or  investigative  action,  suit  or  proceeding  referred  to in
               paragraphs (i) and (ii) of this Section  10.4(a) shall be paid by
               the Debenture Issuer in advance of the final  disposition of such
               action,  suit or proceeding  upon receipt of an undertaking by or
               on behalf of such Company Indemnified Person to repay such amount
               if it shall  ultimately be determined  that he is not entitled to
               be  indemnified  by the  Debenture  Issuer as  authorized in this
               Section 10.4(a).  Notwithstanding the foregoing, no advance shall
               be made by the Debenture  Issuer if a determination is reasonably
               and promptly made (i) by the Regular  Trustees by a majority vote
               of a quorum of  disinterested  Regular  Trustees,  (ii) if such a
               quorum is not obtainable,  or, even if obtainable, if a quorum of
               disinterested  Regular Trustees so directs,  by independent legal
               counsel  in a written  opinion  or (iii) by the  Common  Security
               Holder of the  Trust,  that,  based  upon the facts  known to the
               Regular  Trustees,  counsel or the Common  Security Holder at the
               time such determination is made, such Company  Indemnified Person
               acted in bad  faith  or in a  manner  that  such  person  did not
               believe  to be in or not  opposed  to the best  interests  of the
               Trust,  or, with  respect to any criminal  proceeding,  that such
               Company  Indemnified  Person believed or had reasonable  cause to
               believe his conduct was  unlawful.  In no event shall any advance
               be made in  instances  where the  Regular  Trustees,  independent
               legal counsel or Common Security Holder reasonably determine that
               such person  deliberately  breached  his duty to the Trust or its
               Common or Convertible Preferred Security Holders.

          (5)  The  indemnification  and advancement of expenses provided by, or
               granted pursuant to, the other paragraphs of this Section 10.4(a)
               shall not be deemed  exclusive of any other rights to which those
               seeking  indemnification  and  advancement  of  expenses  may  be
               entitled   under  any   agreement,   vote  of   stockholders   or
               disinterested  directors of the Debenture  Issuer or  Convertible
               Preferred Security Holders of the Trust or otherwise,  both as to
               action in his  official  capacity  and as to  action  in  another
               capacity while holding such office. All rights to indemnification
               under this  Section  10.4(a)  shall be deemed to be provided by a
               contract   between  the   Debenture   Issuer  and  each   Company
               Indemnified  Person who serves in such capacity at any time while
               this Section 10.4(a)

<PAGE>

               is in effect.  Any repeal or modification of this Section 10.4(a)
               shall not affect any rights or obligations then existing.

          (6)  The  Debenture  Issuer  or the Trust may  purchase  and  maintain
               insurance  on  behalf  of any  person  who  is or  was a  Company
               Indemnified Person against any liability asserted against him and
               incurred  by him in any  such  capacity,  or  arising  out of his
               status as such,  whether or not the  Debenture  Issuer would have
               the power to  indemnify  him  against  such  liability  under the
               provisions of this Section 10.4(a)

          (7)  For purposes of this Section  10.4(a),  references to "the Trust"
               shall include,  in addition to the resulting or surviving entity,
               any   constituent   entity   (including  any   constituent  of  a
               constituent)  absorbed in a consolidation or merger,  so that any
               person who is or was a director,  trustee, officer or employee of
               such constituent  entity,  or is or was serving at the request of
               such constituent entity as a director, trustee, officer, employee
               or agent of  another  entity,  shall  stand in the same  position
               under the provisions of this Section  10.4(a) with respect to the
               resulting  or  surviving  entity as he would have with respect to
               such constituent entity if its separate existence had continued.

          (8)  The  indemnification  and advancement of expenses provided by, or
               granted pursuant to, this Section 10.4(a) shall, unless otherwise
               provided when authorized or ratified, continue as to a person who
               has ceased to be a Company  Indemnified Person and shall inure to
               the benefit of the heirs,  executors and administrators of such a
               person.

     (2) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee,
(ii) the Delaware Trustee,  (iii) any Affiliate of the Institutional Trustee and
the Delaware Trustee, and (iv) any officers, directors,  shareholders,  members,
partners,  employees,  representatives,  custodians,  nominees  or agents of the
Institutional  Trustee  and the  Delaware  Trustee  (each of the  Persons in (i)
through (iv) being referred to as a "Fiduciary  Indemnified Person") for, and to
hold each Fiduciary  Indemnified Person harmless against, any loss, liability or
expense incurred without  negligence or bad faith on its part, arising out of or
in  connection  with the  acceptance  or  administration  or the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection  with the  exercise  or  performance  of any of its  powers or duties
hereunder. The provisions of this Section 10.4(b) shall survive the satisfaction
and  discharge  of  this  Declaration  or  the  resignation  or  removal  of the
Institutional Trustee or the Delaware Trustee, as the case may be.

<PAGE>

     SECTION 1.51. Outside Business.

     Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee may engage in or possess an interest in other  business  ventures of any
nature or description,  independently  or with others,  similar or dissimilar to
the  business of the Trust,  and the Trust and the Holders of  Securities  shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper.  No Covered  Person,  the Sponsor,  the  Delaware  Trustee,  or the
Institutional Trustee shall be obligated to present any particular investment or
other  opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust,  could be taken by the Trust, and any Covered Person,
shall have the right to take for its own account  (individually  or as a partner
or fiduciary) or to recommend to others any such particular  investment or other
opportunity.  Any Covered  Person,  the Delaware  Trustee and the  Institutional
Trustee may engage or be interested in any financial or other  transaction  with
the Sponsor or any  Affiliate  of the  Sponsor,  or may act as  depositary  for,
trustee or agent for, or act on any committee or body of holders of,  securities
or other obligations of the Sponsor or its Affiliates.

                                   ARTICLE XI

                                   ACCOUNTING

     SECTION 1.52. Fiscal Year.

     The  fiscal  year  ("Fiscal  Year") of the  Trust  shall be the same as the
fiscal year of the Sponsor.

     SECTION 1.53. Certain Accounting Matters.

     (1) At all times during the  existence of the Trust,  the Regular  Trustees
shall keep, or cause to be kept, full books,  records and supporting  documents,
which  shall  reflect in detail  each  transaction  of the  Trust.  The books of
account shall be  maintained  on the accrual  method of accounting in compliance
with generally accepted accounting  principles,  consistently applied. The Trust
shall use the accrual  method of accounting for United States federal income tax
purposes.  The annual financial  statements of the Trust shall be audited or the
Trust shall be included in the consolidated  financial statements of the Sponsor
which shall be audited.

     (2) The Sponsor  shall cause to be prepared  and  delivered  to each of the
Holders of  Securities,  (1) within 90 days after the end of each Fiscal Year of
the Sponsor, annual consolidated financial statements of the Sponsor,  including
a  consolidated  balance sheet of the

<PAGE>

Sponsor  as of the  end of  such  Fiscal  Year,  and  the  related  consolidated
statements of income or loss and (2) within 45 days after the end of each fiscal
quarter  of  Sponsor  copies of the  quarterly  financial  reports  filed by the
Sponsor with the Commission.

     (3) The Regular  Trustees  shall cause to be duly prepared and delivered to
each of the Holders of  Securities,  any annual United States federal income tax
information  statement  required by the Code,  containing such  information with
regard to the Securities  held by each Holder as is required by the Code and the
Treasury  Regulations.  Notwithstanding  any right under the Code to deliver any
such statement at a later date, the Regular  Trustees shall use reasonable  best
efforts  to  deliver  all such  statements  within 90 days after the end of each
Fiscal Year of the Trust.

     (4) The Regular  Trustees  shall cause to be duly prepared and timely filed
with the appropriate taxing authority an annual United States federal income tax
return,  on a Form 1041 or such other form  required  by United  States  federal
income tax law, and any other annual income tax returns  required to be filed by
the  Regular  Trustees  on behalf of the  Trust  with any state or local  taxing
authority.

     (5) Within 90 days after  each  December  31, and within 45 days after each
March 31, June 30 and  September  30,  beginning  with the June 30 following the
date of this  Declaration,  the Regular Trustees will provide the Holders of the
Securities with written certification, signed by either of them, stating whether
there have been any changes in the assets or  liabilities of the Trust in excess
of  $100,000  since the date hereof in the case of the first  certification,  or
since the most recent certification, in the case of each certification after the
first certification, and if so, setting forth each such change.

     SECTION 1.54. Banking.

     The Trust shall  maintain one or more bank accounts in the name and for the
sole  benefit of the Trust;  provided,  however,  that all  payments of funds in
respect  of the  Debentures  held by the  Institutional  Trustee  shall  be made
directly to the  Institutional  Trustee  Account and no other funds of the Trust
shall be deposited in the  Institutional  Trustee Account.  The sole signatories
for such  accounts  shall  be  designated  by the  Regular  Trustees;  provided,
however,  that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.

     SECTION 1.55. Withholding.

     The  Trust and the  Regular  Trustees  shall  comply  with all  withholding
requirements  under United States federal,  state and local law. The Trust shall
request,  and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder,  and any  representations  and forms as shall reasonably be requested by
the Trust to assist it in  determining  the extent of,  and in  fulfilling,  its

<PAGE>

withholding  obligations.  The Regular  Trustees  shall file required forms with
applicable  jurisdictions  and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to  applicable  jurisdictions.  To the  extent  that the  Trust is  required  to
withhold and pay over any amounts to any authority with respect to distributions
or  allocations  to any  Holder,  the  amount  withheld  shall be deemed to be a
distribution  in the  amount of the  withholding  to the  Holder.  If the amount
required to be withheld was not withheld  from actual  Distributions  made,  the
Trust may reduce  subsequent  Distributions  by the amount of such  withholding.
Furthermore,   if  withholding  is  imposed  on  payments  of  interest  on  the
Debentures,  to the extent such  withholding is  attributable  to ownership by a
specific  Holder,  the amount  withheld  shall be deemed a  distribution  in the
amount of the withholding to such specific Holder.

                                   ARTICLE XII

                             AMENDMENTS AND MEETINGS

     SECTION 1.56. Amendments.


     Except as otherwise provided in this Declaration or by any applicable terms
of the Securities,

     (1) this Declaration may only be amended by a written  instrument  approved
and  executed  by the Regular  Trustees  (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees) and:

          (1)  if the amendment affects the rights, powers, duties,  obligations
               or  immunities  of  the  Institutional   Trustee,   also  by  the
               Institutional Trustee; and

          (2)  if the amendment affects the rights, powers, duties,  obligations
               or  immunities  of the  Delaware  Trustee,  also by the  Delaware
               Trustee;

     (2) no amendment  shall be made, and any such purported  amendment shall be
void and ineffective:

          (1)  unless, in the case of any proposed amendment,  the Institutional
               Trustee shall have first received an Officers'  Certificate  from
               each  of the  Trust  and  the  Sponsor  that  such  amendment  is
               permitted  by, and  conforms  to,  the terms of this  Declaration
               (including the terms of the Securities);

<PAGE>

          (2)  unless,  in the case of any proposed  amendment which affects the
               rights,  powers,   duties,   obligations  or  immunities  of  the
               Institutional Trustee, the Institutional Trustee shall have first
               received:

                    (1) an Officers'  Certificate from each of the Trust and the
               Sponsor that such amendment is permitted by, and conforms to, the
               terms  of  this   Declaration   (including   the   terms  of  the
               Securities); and

                    (2) an opinion of counsel (who may be counsel to the Sponsor
               or the Trust) that such  amendment is permitted  by, and conforms
               to,  the terms of this  Declaration  (including  the terms of the
               Securities); and

          (3)  to the extent the result of such amendment would be to:

                    (1) cause the Trust to fail to continue to be classified for
               purposes of United States  federal  income  taxation as a grantor
               trust;

                    (2) reduce or otherwise  adversely  affect the powers of the
               Institutional Trustee; or

                    (3) cause the Trust to be deemed to be an Investment Company
               required to be registered under the Investment Company Act;

     (3) at such time and after the Trust has issued any securities  that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences  of  any  Holder  of  Securities  may be  effected  only  with  such
additional requirements as may be set forth in the terms of such Securities;

     (4) Section  9.1(c) and this Section 12.1 shall not be amended  without the
consent of all of the Holders of the Securities;

     (5) Article IV shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities;

     (6) the rights of the holders of the Common  Securities  under Article V to
appoint  and remove  Trustees  shall not be amended  without  the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and

<PAGE>

     (7) notwithstanding  Section 12.1(c),  this Declaration may be amended from
time to time by the  Holders of a Majority in  liquidation  amount of the Common
Securities and the Institutional Trustee,  without the consent of the Holders of
the Convertible Preferred Securities to:

          (1)  cure any  ambiguity,  correct or supplement any provision in this
               Declaration that may be inconsistent with any other provision, or
               to make any other provisions with respect to matters or questions
               arising under this  Declaration,  which shall not be inconsistent
               with the other provisions of this Declaration; or

          (2)  to modify, eliminate or add to any provisions of this Declaration
               to such  extent as shall be  necessary  to ensure  that the Trust
               will be classified  for United States federal income tax purposes
               as  a  grantor  trust  at  all  times  that  any  Securities  are
               outstanding  or to ensure  that the Trust will not be required to
               register as an investment  company under the  Investment  Company
               Act;

provided,  however,  such  action  shall not  adversely  affect in any  material
respect the interests of any Holder of Securities;

     (8) this  Declaration  may be  amended  by the  Holders  of a  Majority  in
liquidation amount of the Common Securities and the Institutional Trustee if:

          (1)  the  Holders  of   two-thirds  in   liquidation   amount  of  the
               Convertible Preferred Securities consent to such amendment, which
               right  to  vote  they  shall  only  have  in  connection  with an
               amendment,  alteration or repeal of the Declaration or any of the
               terms  of  the  Convertible   Preferred  Securities  which  would
               materially and adversely affect any right, preference,  privilege
               or voting power of the  Convertible  Preferred  Securities or the
               Holders  thereof,   including  without   limitation  any  changes
               whatsoever to the  provisions set forth in Section 7.1 or Annex I
               to the Declaration, and

          (2)  the  Regular  Trustees  have  received  an opinion of  nationally
               recognized independent counsel experienced in such matters to the
               effect that such  amendment or the exercise of any power  granted
               to the Regular  Trustees in accordance  with such  amendment will
               not  affect  the  Trust's  status as a grantor  trust for  United
               States federal income tax purposes or the Trust's  exemption from
               status as an "investment  company"  under the Investment  Company
               Act,

<PAGE>

provided,  that  without  the  consent  of  each  Holder  of  Securities,   this
Declaration may not be amended to:

          (1)  change the amount or timing of any distribution on the Securities
               or  otherwise  adversely  affect the  amount of any  distribution
               required  to  be  made  in  respect  of  the  Securities  as of a
               specified date;

          (2)  restrict the right of a Holder of  Securities  to institute  suit
               for the enforcement of any such payment on or after such date; or

          (3)  change or add a provision that shall result in the realization of
               unrelated business income for the Holders of Securities.

     (9) Any amendments of this  Declaration  shall become effective when notice
thereof is given to Holders of Securities.

     SECTION  1.57.  Meetings  of the Holders of  Securities;  Action by Written
Consent.

     (1) Meetings of the Holders of any class of Securities may be called at any
time by the Regular  Trustees (or as provided in the terms of the Securities) to
consider and act on any matter on which Holders of such class of Securities  are
entitled to act under the terms of this Declaration, the terms of the Securities
or the rules of any stock exchange on which the Convertible Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 25% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular  Trustees one or more calls in a writing  stating that
the signing  Holders of  Securities  wish to call a meeting and  indicating  the
general or specific  purpose for which the meeting is to be called.  Any Holders
of  Securities   calling  a  meeting  shall  specify  in  writing  the  Security
Certificates  held by the Holders of Securities  exercising  the right to call a
meeting and only those  Securities  specified  shall be counted for  purposes of
determining  whether the required percentage set forth in the second sentence of
this paragraph has been met.

     (2) Except to the extent otherwise provided in the terms of the Securities,
the following provisions shall apply to meetings of Holders of Securities:

          (1)  notice of any such  meeting  shall be given to all the Holders of
               Securities having a right to vote thereat at least 7 days and not
               more than 60 days  before  the date of such  meeting.  Whenever a
               vote,  consent  or  approval  of the  Holders  of  Securities  is
               permitted

<PAGE>

               or  required  under  this  Declaration  or the rules of any stock
               exchange on which the Convertible Preferred Securities are listed
               or admitted  for trading,  such vote,  consent or approval may be
               given at a meeting of the Holders of Securities.  Any action that
               may be taken at a meeting  of the  Holders of  Securities  may be
               taken without a meeting if a consent in writing setting forth the
               action so taken is signed by the Holders of Securities owning not
               less than the minimum amount of Securities in liquidation  amount
               that would be  necessary  to  authorize  or take such action at a
               meeting at which all Holders of Securities having a right to vote
               thereon were present and voting.  Prompt  notice of the taking of
               action  without  a  meeting  shall  be given  to the  Holders  of
               Securities  entitled to vote who have not  consented  in writing.
               The  Regular   Trustees  may  specify  that  any  written  ballot
               submitted  to  Security  Holders  for the  purpose  of taking any
               action  without a meeting  shall be returned to the Trust  within
               the time specified by the Regular Trustees; (1)

          (2)  each Holder of a Security may  authorize any Person to act for it
               by  proxy on all  matters  in which a  Holder  of  Securities  is
               entitled to participate, including waiving notice of any meeting,
               or voting or participating at a meeting.  No proxy shall be valid
               after the  expiration  of 11 months from the date thereof  unless
               otherwise  provided in the proxy.  Every proxy shall be revocable
               at the pleasure of the Holder of Securities  executing it. Except
               as otherwise provided herein, all matters relating to the giving,
               voting or  validity  of proxies  shall be governed by the General
               Corporation Law of the State of Delaware relating to proxies, and
               judicial  interpretations  thereunder,  as if  the  Trust  were a
               Delaware  corporation  and the  Holders  of the  Securities  were
               stockholders of a Delaware corporation;

          (3)  each meeting of the Holders of the Securities  shall be conducted
               by the Regular  Trustees or by such other Person that the Regular
               Trustees may designate; and

          (4)  unless the Business Trust Act, this Declaration, the terms of the
               Securities,  the Trust  Indenture Act or the listing rules of any
               stock exchange on which the Convertible  Preferred Securities are
               then listed or trading otherwise provides,  the Regular Trustees,
               in their sole  discretion,  shall establish all other  provisions
               relating to meetings of Holders of Securities,  including  notice
               of the time,  place or purpose of any meeting at which any matter
               is to be voted

<PAGE>

               on by any  Holders  of  Securities,  waiver  of any such  notice,
               action by  consent  without a  meeting,  the  establishment  of a
               record date, quorum requirements, voting in person or by proxy or
               any other  matter with  respect to the exercise of any such right
               to vote.


                                  ARTICLE XIII

              REPRESENTATIONS OF SPONSOR, INSTITUTIONAL TRUSTEE AND
                                DELAWARE TRUSTEE

     SECTION 1.58. Representations and Warranties of Institutional Trustee.

     The  Trustee  that acts as initial  Institutional  Trustee  represents  and
warrants  to the Trust and to the Sponsor at the date of this  Declaration,  and
each Successor Institutional Trustee represents and warrants, as applicable,  to
the Trust and the Sponsor at the time of the Successor  Institutional  Trustee's
acceptance of its appointment as Institutional Trustee that:

     (1) the Institutional  Trustee is a national banking association with trust
powers, duly organized,  validly existing and in good standing, with trust power
and  authority  to  execute  and  deliver,  and to  carry  out and  perform  its
obligations under the terms of, the Declaration;

     (2) the execution, delivery and performance by the Institutional Trustee of
the Declaration has been duly  authorized by all necessary  corporate  action on
the part of the  Institutional  Trustee.  The Declaration has been duly executed
and delivered by the  Institutional  Trustee and constitutes a legal,  valid and
binding  obligation  of the  Institutional  Trustee,  enforceable  against it in
accordance  with its terms,  subject to applicable  bankruptcy,  reorganization,
moratorium,  insolvency,  and other  similar laws  affecting  creditors'  rights
generally and to general  principles  of equity and the  discretion of the court
(regardless  of whether the  enforcement  of such  remedies is  considered  in a
proceeding in equity or at law);

     (3) the  execution,  delivery and  performance  of the  Declaration  by the
Institutional  Trustee  does not  conflict  with or  constitute  a breach of the
charter or by-laws of the Institutional Trustee; and

     (4) no  consent,  approval or  authorization  of, or  registration  with or
notice to, any state or federal banking authority is required for the execution,
delivery or performance by the Institutional Trustee of the Declaration.

     SECTION 1.59. Representations and Warranties of Delaware Trustee.

<PAGE>

     The Trustee that acts as initial Delaware  Trustee  represents and warrants
to the  Trust  and to the  Sponsor  at the  date of this  Declaration,  and each
Successor  Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:

     (1) the Delaware Trustee is a Delaware corporation, duly organized, validly
existing and in good standing, with corporate power and authority to execute and
deliver,  and to carry out and perform its  obligations  under the terms of, the
Declaration;

     (2) the Delaware  Trustee has been  authorized  to perform its  obligations
under  the  Certificate  of Trust and the  Declaration.  The  Declaration  under
Delaware law constitutes a legal,  valid and binding  obligation of the Delaware
Trustee,  enforceable  against  it in  accordance  with its  terms,  subject  to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting  creditors' rights generally and to general  principles of equity
and the discretion of the court  (regardless of whether the  enforcement of such
remedies is considered in a proceeding in equity or at law);

     (3) no  consent,  approval or  authorization  of, or  registration  with or
notice to, any  Delaware  or  federal  banking  authority  is  required  for the
execution,  delivery or performance by the Delaware  Trustee of the Declaration;
and

     (4) the Delaware Trustee is a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal place
of business in the State of Delaware.

     SECTION 1.60. Representations and Warranties of Sponsor.

     The Sponsor represents and Warrants to the Trustees that:

     (1) the Sponsor  has been duly  incorporated  and is validly  existing as a
corporation  under the laws of the State of  Maryland,  with the trust  power to
execute and  deliver,  and to carry out and perform  its  obligations  under the
terms of, the Declaration; and

     (2)  the  execution,  delivery  and  performance  by  the  Sponsor  of  the
Declaration  has been duly  authorized by all necessary trust action on the part
of the Sponsor.  The  Declaration  has been duly  executed and  delivered by the
Sponsor,  and it  constitutes  a legal,  valid  and  binding  obligation  of the
Sponsor,  enforceable  against  it in  accordance  with its  terms,  subject  to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting  creditors' rights generally and to general  principles of equity
and the discretion of the court  (regardless of whether the  enforcement of such
remedies is considered in a proceeding in equity or at law).

                                   ARTICLE XIV

<PAGE>

                                  MISCELLANEOUS

     SECTION 1.61. Notices.

     All notices  provided  for in this  Declaration  shall be in writing,  duly
signed by the party giving such notice,  and shall be  delivered,  telecopied or
mailed by first class mail, as follows:

     (1) if given to the Trust,  in care of the Regular  Trustees at the Trust's
mailing  address  set forth  below (or such other  address as the Trust may give
notice of to the Holders of the Securities):

          WRP Convertible Trust I
          c/o Wellsford Real Properties, Inc.
          535 Madison Avenue, 26th Floor
          New York, NY 10022
          Attention:  Jeffrey H. Lynford

     (2) if given to the  Delaware  Trustee,  at the  mailing  address set forth
below (or such  other  address as  Delaware  Trustee  may give  notice of to the
Holders of the Securities):

          Wilmington Trust Company
          1100 North Market Street
          9th Floor
          Wilmington, Delaware  19890-0001
          Attention: Corporate Trust Administration

     (3) if given to the Institutional  Trustee, at its Corporate Trust Office's
mailing  address  set forth  below (or such other  address as the  Institutional
Trustee may give notice of to the Holders of the Securities):

          Wilmington Trust Company
          1100 North Market Street
          9th Floor
          Wilmington, Delaware  19890-0001
          Attention: Corporate Trust Administration

     (4) if given to the Holder of the Common Securities, at the mailing address
of the  Sponsor  set forth  below (or such  other  address  as the Holder of the
Common Securities may give notice to the Trust):

<PAGE>

          Wellsford Real Properties, Inc.
          535 Madison Avenue, 26th Floor
          New York, NY 10022
          Attention: Jeffrey H. Lynford

     (5) if given to any other Holder, at the address set forth on the books and
records of the Trust.

     All such  notices  shall be deemed  to have been  given  when  received  in
person,  telecopied  with  receipt  confirmed,  or mailed by first  class  mail,
postage  prepaid,  except that if a notice or other document is refused delivery
or cannot be  delivered  because  of a changed  address  of which no notice  was
given,  such notice or other  document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

     SECTION 1.62. Governing Law.

     This Declaration and the rights of the parties  hereunder shall be governed
by and  interpreted in accordance with the laws of the State of Delaware and all
rights and remedies  shall be governed by such laws without regard to principles
of conflict of laws.

     SECTION 1.63. Intention of the Parties.

     It is the intention of the parties  hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust.  The provisions of
this Declaration shall be interpreted to further this intention of the parties.

     SECTION 1.64. Headings.

     Headings  contained in this  Declaration  are inserted for  convenience  of
reference only and do not affect the  interpretation  of this Declaration or any
provision hereof.

     SECTION 1.65. Successors and Assign.

     Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective  successors and assigns,
whether so expressed.

     SECTION 1.66. Partial Enforceability.

     If any provision of this Declaration,  or the application of such provision
to any Person or  circumstance,  shall be held  invalid,  the  remainder of this
Declaration, or the

<PAGE>

application  of such provision to persons or  circumstances  other than those to
which it is held invalid, shall not be affected thereby.

     SECTION 1.67. Counterparts.

     This Declaration may be executed in one or more  counterparts with the same
effect as if the  parties  executing  the  counterparts  had each  executed  one
instrument as of the day and year first above written.

     SECTION XIV.8.  Signature Guarantee.  Notwithstanding the provisions of any
of the Annexes or Exhibits hereto,  the signature of ERPOLP and any taxable REIT
subsidiary as defined in Code Section  856(l) of EQR which becomes the holder of
Preferred Securities need not be guaranteed.

     SECTION 1.68. Acceptable Counsel. In each instance herein which states that
legal counsel  needs to be  acceptable  to a party (or similar  language to that
effect),  the law firm of Robinson  Silverman Pearce Aronsohn & Berman LLP shall
be deemed to be acceptable legal counsel.

<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  has  caused  these  presents  to be
executed as of the day and year first above written.

          /s/ Rodney F. Du Bois
          -------------------------------------
          Rodney F. Du Bois, as Regular Trustee
          Solely as trustee and not in his individual capacity

          /s/ James J. Burns
          -------------------------------------
          James J. Burns, as Regular Trustee
          Solely as trustee and not in his individual capacity


          WILMINGTON TRUST COMPANY, as
          Delaware Trustee

                 By: /s/ Jennifer Matz
                    -------------------------------------
                 Name: Jennifer Matz
                 Title: Assistant Vice President


          WILMINGTON TRUST COMPANY,
          as Institutional Trustee

                 By: /s/ Jennifer Matz
                    -------------------------------------
                 Name: Jennifer Matz
                 Title: Assistant Vice President


          WELLSFORD REAL PROPERTIES, INC., as Sponsor

                 By: /s/ Edward Lowenthal
                    -------------------------------------
                 Name: Edward Lowenthal
                 Title: President

<PAGE>


                                     ANNEX I

                                    TERMS OF
                  8.25% CONVERTIBLE TRUST PREFERRED SECURITIES
                    8.25% CONVERTIBLE TRUST COMMON SECURITIES

     Pursuant to Section  7.1 of the  Declaration  of Trust,  dated as of May 5,
2000 (as amended from time to time, the "Declaration"), of WRP Convertible Trust
I, the  designation,  rights,  privileges,  restrictions,  preferences and other
terms and  provisions of the  Convertible  Preferred  Securities  and the Common
Securities are set out below (each  capitalized term used but not defined herein
has the meaning set forth in the Declaration):

     1. Designation and Number.

     (1)  Convertible  Preferred  Securities.  1,000,000  Convertible  Preferred
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of Twenty Five Fifty Million Dollars  ($25,000,000) plus any
additional  Convertible  Preferred  Securities issuable pursuant to Section 2(f)
hereof,  and a  liquidation  amount  with  respect  to the  assets  of  $25  per
convertible  preferred  security,  are hereby  designated  for the  purposes  of
identification  only as "8.25%  Convertible  Trust  Preferred  Securities"  (the
"Convertible   Preferred   Securities").   The  Convertible  Preferred  Security
Certificates   evidencing  the  Convertible   Preferred   Securities   shall  be
substantially in the form of Exhibit A-1 to the Declaration,  with such letters,
numbers,  notations,  other  means of  identification  or  designation  or other
changes or  additions  thereto or  deletions  therefrom  as may be  required  by
ordinary usage, custom or practice and such legends or endorsements  required by
law, stock  exchange rule and  agreements to which the Trust is subject,  if any
(provided that any such notation,  legend or endorsement is in a form acceptable
to the Trust).

     (2)  Common  Securities.  31,000  Common  Securities  of the Trust  with an
aggregate liquidation amount with respect to the assets of the Trust of $775,000
plus any additional Common Securities  issuable pursuant to Section 2(f) hereof,
and a  liquidation  amount  with  respect  to the assets of the Trust of $25 per
common security,  are hereby designated for the purposes of identification  only
as "8.25%  Convertible Trust Common Securities" (the "Common  Securities").  The
Common Securities  Certificates evidencing the Common Securities shall be in the
form of Exhibit A-2 to the Declaration,  with such letters, numbers,  notations,
other means of  identification  or  designation  or other  changes or  additions
thereto or deletions  therefrom as may be required by ordinary usage,  custom or
practice and such legends or  endorsements  required by law, stock exchange rule
and  agreements to which the Trust is subject,  if any  (provided  that any such
notation, legend or endorsement is in a form acceptable to the Trust).

     2. Distributions.

<PAGE>

     (1)  Distributions  payable  on each  Security  will be fixed at a rate per
annum of 8.25%  ($2.0625  per annum or  $0.515625  per  quarter)  of the  stated
liquidation  amount  of $25 per  Security  from and  including  May 5, 2000 (the
"Issuance  Date") to and  including  May 4, 2022 (such rate  referred  to as the
"Coupon  Rate"),  and such  rate  being  the  rate of  interest  payable  on the
Debentures to be held by the Institutional  Trustee. The term "Distributions" as
used  herein  includes  such  interest  payable  unless   otherwise   stated.  A
Distribution  is payable only to the extent that payments are made in respect of
the  Debentures  held  by  the  Institutional  Trustee  and to  the  extent  the
Institutional Trustee has funds available therefor.  The amount of Distributions
payable for the initial  Dividend Period (as defined in subparagraph  (b) below)
and for any  Dividend  Period  shorter  than a full  Dividend  Period  shall  be
prorated and be computed on the basis of a 360-day year of twelve 30-day months.

     (2)  Distributions  on the Securities will be cumulative,  will accrue from
May 5, 2000 and will be payable in quarterly  payments of $0.515625 per Security
in arrears,  on the  fifteenth day of January,  April,  July and October in each
year or if such date is not a  Business  Day the next  succeeding  Business  Day
(each a  "Distribution  Payment Date"),  commencing on July 17, 2000,  except as
otherwise  described  below.  Each  quarterly  period  ending on a  Distribution
Payment Date is hereinafter referred to as a "Dividend Period".

     (3)  Distributions on the Securities will be payable to the Holders thereof
as they  appear on the books and  records  of the Trust on the  relevant  record
dates,  which shall be fifteen days prior to the relevant  payment dates,  which
dates correspond to the record and interest payment dates on the Debentures. The
relevant record dates for the Common  Securities  shall be the same record dates
as for  the  Convertible  Preferred  Securities.  Distributions  payable  on any
Securities that are not punctually paid on any  Distribution  Payment Date, as a
result  of the  Debenture  Issuer  having  failed  to make a  payment  under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other  specified date  determined in accordance  with
the Indenture.  If any date on which Distributions are payable on the Securities
is not a Business  Day, then payment of the  Distributions  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 is in the next succeeding calendar year, such payment shall be made
on the immediately  preceding Business Day, in each case with the same force and
effect as if made on such date.

     (4) In the event of an  election  by the Holder to convert  its  Securities
through the  Conversion  Agent into Common  Shares  pursuant to the terms of the
Securities  as set  forth  in  this  Annex  I to the  Declaration,  no  payment,
allowance or  adjustment  shall be made with respect to  accumulated  and unpaid
Distributions on such Securities, or be required to be made; provided,  however,
that Holders of  Securities  at the close of business on any record date for the
payment of Distributions  will be entitled to receive the Distributions  payable
on such Securities on the

<PAGE>

corresponding  payment date  notwithstanding  the conversion of such  Securities
into Common Shares  following  such record date;  provided,  further that if the
date of any redemption of related  Debentures falls between such record date and
such  corresponding  payment date, the amount of such Distribution shall include
accumulated  and  unpaid  Distributions  accrued to but  excluding  such date of
redemption and such payment shall be made to the converting holder.

     (5) In the event that there is any money or other  property  held by or for
the  Trust  that  is  not  accounted  for  hereunder,  such  property  shall  be
distributed Pro Rata (as defined herein) among the Holders of the Securities.

     (6)  The  Sponsor  may  satisfy  its  obligation  to  pay  interest  on the
Debentures by issuing  additional  Debentures even if it has available cash with
which  to pay  such  interest.  In the  event  that the  Sponsor  satisfies  its
obligation to pay interest on the Debentures by issuing  additional  Debentures,
then  the  Trust  shall  satisfy  its  obligation  to pay  distributions  on the
Convertible  Preferred  Securities by issuing an equivalent amount of additional
Convertible  Preferred  Securities  on a Pro Rata  basis and shall  satisfy  the
obligation  to  pay  distributions  on  the  Common  Securities  by  issuing  an
equivalent  amount  of  additional  Common  Securities  on  a  pro  rata  basis.
Notwithstanding  any other provision  hereof, no fractional amount of Securities
shall be  issued in  connection  with the  payment  of any  distribution  on the
Securities  in  additional  Securities.   Instead,  any  holder  of  outstanding
Securities  who would  otherwise  be entitled to receive a  fractional  interest
arising upon the payment of a distribution in additional  Convertible  Preferred
Securities  shall be paid an amount in cash equal to the $25 liquidation  amount
of each  Security  times the  fraction of a Security to which such holder  would
otherwise be entitled.

     3. Liquidation Distribution Upon Dissolution.

     In accordance with the provisions of Section 8.1(a) of the Declaration, the
Debenture  Issuer  will  have the  right at any  time to cause  the  Trust to be
dissolved with the result that,  after  satisfaction  of creditors of the Trust,
Debentures  having an aggregate  principal  amount equal to the aggregate stated
liquidation  amount  of the  Convertible  Preferred  Securities,  including  any
Convertible  Preferred Securities issued pursuant to Section 2(f) above, and the
Common  Securities will be distributed on a Pro Rata basis to the Holders of the
Convertible  Preferred  Securities  and the Common  Securities in liquidation of
such Holders'  interests in the Trust,  within 90 days following notice given to
the  Holders of the  Convertible  Preferred  Securities,  subject to the Regular
Trustees'  receipt of an opinion of nationally  recognized  independent  counsel
experienced  in such matters in a form  reasonably  acceptable to the Holders to
the effect  that the Holders  will not  recognize  any income,  gain or loss for
United States federal income tax purposes as a result of the  dissolution of the
Trust and such distribution to Holders of Convertible Preferred Securities.

     In the event of any  voluntary  or  involuntary  liquidation,  dissolution,
winding-up or  termination of the Trust (each a  "Liquidation"),  the Holders of
the Securities on the date of the

<PAGE>

Liquidation will be entitled to receive out of the assets of the Trust available
for distribution to Holders of Securities  after  satisfaction of liabilities of
creditors an amount equal to the aggregate of the stated  liquidation  amount of
$25.00 per Security plus accrued and unpaid Distributions thereon to the date of
payment  (such  amount  being  the  "Liquidation   Distribution"),   unless,  in
connection with such  Liquidation,  Debentures in an aggregate  stated principal
amount equal to the  aggregate  stated  liquidation  amount of such  Securities,
including  the  aggregate  stated  principal  amount  of any  Securities  issued
pursuant to Section 2(f) above,  with an interest  rate equal to the Coupon Rate
of, and bearing  accrued and unpaid  interest in an amount  equal to the accrued
and unpaid  Distributions on, such Securities,  shall have been distributed on a
Pro Rata basis to the Holders of the Securities in exchange for such Securities.

     If, upon any such  Liquidation,  the Liquidation  Distribution  can be paid
only in part because the Trust has insufficient  assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.

     4. Redemption and Distribution.

     (1) The Debentures will mature on May 4, 2022 and may be redeemed, in whole
or in part, by the Debenture  Issuer, at its option, at any time on or after May
30,  2002,  or, at its  option,  at any time in certain  circumstances  upon the
occurrence  of a Tax Event (as defined  below) or otherwise in  accordance  with
Sections  10.2(e)(1) or 10.2(e)(3) of the  Indenture.  Upon the repayment of the
Debentures in whole or in part, whether at maturity,  upon redemption (either at
the  option of the  Debenture  Issuer or  pursuant  to  Sections  10.2(e)(1)  or
10.2(e)(3) of the Indenture or a Tax Event as described below) or otherwise,  in
accordance with the terms of the Indenture,  the proceeds from such repayment or
payment  shall be  simultaneously  applied to redeem  Securities,  including the
aggregate stated  principal amount of any Securities  issued pursuant to Section
2(f)  above,  having an  aggregate  liquidation  amount  equal to the  aggregate
principal amount of the Debentures so repaid or redeemed,  at a redemption price
per Security  equal to the  redemption  price of the  Debentures,  together with
accrued  and unpaid  Distributions  thereon to, but  excluding,  the date of the
redemption,  payable in cash (the "Redemption Price"). Holders will be given not
less than 30 nor more than 60 days' notice of such redemption.

     (2) If fewer than all the outstanding Securities are to be so redeemed, the
Common Securities and the Convertible  Preferred Securities will be redeemed Pro
Rata  and  the  Convertible  Preferred  Securities  to be  redeemed  will  be as
described in Section 4(f) below.

     (3) If, at any time, a Tax Event or an Investment  Company Event (each,  as
defined  below, a "Special  Event") shall occur and be  continuing,  the Regular
Trustees may at their option,  with the consent of the Debenture Issuer,  except
in certain  limited  circumstances  in relation to a Tax Event described in this
Section 4(c),  dissolve the Trust and, after  satisfaction  of creditors,  cause
Debentures  held by the  Institutional  Trustee,  having an aggregate  principal

<PAGE>

amount equal to the aggregate stated liquidation amount, including the aggregate
stated principal amount of any Securities issued pursuant to Section 2(f) above,
of,  with an  interest  rate  identical  to the Coupon  Rate of, and accrued and
unpaid  interest  equal to accrued and unpaid  Distributions  on, and having the
same record date for payment as the Securities, to be distributed to the Holders
of the Securities in  liquidation  of such Holders'  interests in the Trust on a
Pro Rata basis,  within 90 days  following the  occurrence of such Special Event
(the "90 Day Period"); provided, however, that such dissolution and distribution
shall be  conditioned  on (i) the  Regular  Trustees'  receipt  of an opinion of
nationally  recognized  independent tax counsel experienced in such matters in a
form reasonably  acceptable to the Holders (a "No Recognition  Opinion"),  which
opinion may rely on published  revenue rulings of the Internal  Revenue Service,
to the effect that the Holders of the Securities  will not recognize any gain or
loss  for  United  States  federal  income  tax  purposes  as a  result  of  the
dissolution of the Trust and the distribution of Debentures, (ii) in the case of
a Tax Event, the Debenture Issuer or the Trust being unable to avoid, within the
90 Day Period, the Tax Event by taking some ministerial action, such as filing a
form or making an election,  or pursuing some other similar  reasonable  measure
that has no adverse effect on the Trust,  the Debenture  Issuer,  the Sponsor or
the Holders of the Securities  ("Ministerial  Action"),  and (iii) the Debenture
Issuer's prior written consent to such dissolution and distribution.

     Furthermore,  if (i) after receipt of a Dissolution Tax Opinion (as defined
hereinafter)  by the Regular  Trustees,  the  Debenture  Issuer has  received an
opinion of nationally  recognized  independent  tax counsel  experienced in such
matters in a form  reasonably  acceptable  to the Holders that, as a result of a
Tax Event,  there is more than an  insubstantial  risk that the Debenture Issuer
would be precluded  from  deducting  the interest on the  Debentures  for United
States federal income tax purposes even after the Debentures were distributed to
the Holders of Securities in liquidation of such Holders' interests in the Trust
as described in this Section 4(c), or (ii) the Regular  Trustees shall have been
informed by such tax counsel that it cannot deliver a No Recognition  Opinion to
the Trust,  the Debenture  Issuer shall have the right, at its option,  upon not
less than 30 nor more than 60 days' notice,  to redeem the Debentures,  in whole
or in part, at a redemption price equal to 100% of the principal amount thereof,
including  the  aggregate  stated  principal  amount  of any  Debentures  issued
pursuant to Section 2(f) above,  plus accrued and unpaid interest  thereon,  for
cash within 90 days following the  occurrence of such Tax Event.  Following such
redemption,  Securities  with  an  aggregate  liquidation  amount  equal  to the
aggregate  principal  amount of the  Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis; provided,  however, that,
if at the time  there is  available  to the  Debenture  Issuer  or the Trust the
opportunity  to  eliminate,  within such 90 day period,  the Tax Event by taking
some  Ministerial  Action,  the Trust or the  Debenture  Issuer will pursue such
Ministerial Action in lieu of redemption.

     "Tax Event" means that the Regular  Trustees shall have received an opinion
of nationally recognized  independent tax counsel experienced in such matters in
a form reasonably acceptable to the Holders (a "Dissolution Tax Opinion") to the
effect that on or after May 5,
<PAGE>


2000,  as a  result  of (a)  any  amendment  to,  clarification  of,  or  change
(including  any announced  prospective  change) in the laws (or any  regulations
thereunder)  of  the  United  States  or any  political  subdivision  or  taxing
authority  thereof or therein  affecting  taxation,  (b) any judicial  decision,
official administrative  pronouncement,  ruling, regulatory procedure, notice or
announcement,  including  any  notice or  announcement  of intent to adopt  such
procedures or regulations (an "Administrative  Action") or (c) any amendment to,
clarification  of, or change in the official  position or the  interpretation of
such   Administrative   Action  or  judicial  decision  that  differs  from  the
theretofore  generally accepted position, in each case, by any legislative body,
court,  governmental authority or regulatory body, irrespective of the manner in
which such amendment,  clarification,  change or  Administrative  Action is made
known,  which  amendment,  clarification,  change  or  Administrative  Action is
effective or such  pronouncement  or decision is announced,  in each case, on or
after,  May 5, 2000,  there is the  creation by such  amendment,  clarification,
change or Administrative  Action of more than an insubstantial risk that (i) the
Trust  is,  or will be within  90 days of the date  thereof,  subject  to United
States  federal  income tax with  respect to income  accrued or  received on the
Debentures,  (ii) the Trust  is, or will be within 90 days of the date  thereof,
subject  to more than a de  minimis  amount  of taxes  (other  than  withholding
taxes),  duties or other governmental charges, or (iii) interest paid in cash by
the Debenture Issuer to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible,  in whole or in part, by the Debenture
Issuer for  United  States  federal  income tax  purposes.  Notwithstanding  the
foregoing, a Tax Event shall not include any change in tax law that requires the
Debenture Issuer for United States federal income tax purposes to defer taking a
deduction for any original issue  discount  ("OID") that accrues with respect to
the  Debentures  until the interest  payment  related to such OID is paid by the
Debenture Issuer in cash; provided,  that such change in tax law does not create
more than an insubstantial risk that the Debenture Issuer will be prevented from
taking a deduction  for OID accruing  with respect to the  Debentures  at a date
that is no  later  than the date the  interest  payment  related  to such OID is
actually paid by the Debenture Issuer in cash.

     "Investment  Company  Event"  means that the  Regular  Trustees  shall have
received an opinion of nationally recognized  independent counsel experienced in
such matters in a form reasonably  acceptable to the Holders to the effect that,
as a result  of the  occurrence  of a change in law or  regulation  or a written
change in  interpretation or application of law or regulation by any legislative
body,  court,  governmental  agency or  regulatory  authority on or after May 5,
2000,  there is more  than an  insubstantial  risk  that the Trust is or will be
considered an "investment  company" that is required to be registered  under the
Investment Company Act of 1940, as amended.

     After  the date  fixed by the  Regular  Trustees  for any  distribution  of
Debentures upon  dissolution of the Trust:  (i) the Securities will no longer be
deemed to be outstanding and (ii) certificates  representing  Securities held in
definitive  form will be  deemed to  represent  Debentures  having an  aggregate
principal  amount equal to the aggregate stated  liquidation  amount of, with an
interest rate  identical to the Coupon Rate of, and accrued and unpaid  interest

<PAGE>

equal to  accrued  and  unpaid  Distributions  on,  such  Securities  until such
certificates  are presented to the Debenture Issuer or its agent for transfer or
reissue.

     (4) The Trust may not  redeem  fewer  than all the  outstanding  Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all  quarterly  Distribution  periods  terminating  on or  prior  to the date of
redemption.

     (5) Notice of any redemption of, or notice of distribution of Debentures in
exchange for, the Securities (a "Redemption/Distribution  Notice") will be given
by the Trust by mail to each Holder of  Securities  to be redeemed or  exchanged
not fewer than 30 nor more than 90 days before the date fixed for  redemption or
exchange thereof which, in the case of a redemption,  will be the date fixed for
redemption of the  Debentures.  For purposes of the  calculation  of the date of
redemption or exchange and the dates on which notices are given pursuant to this
Section  4(e), a  Redemption/Distribution  Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid,  or by
such other means suitable to assure delivery of such written notice,  to Holders
of  Securities.  Each  Redemption/Distribution  Notice shall be addressed to the
Holders of Securities at the address of each such Holder  appearing in the books
and records of the Trust. No defect in the Redemption/Distribution  Notice or in
the mailing of either  thereof  with respect to any Holder of  Securities  shall
affect the validity of the  redemption or exchange  proceedings  with respect to
any other Holder of Securities.

     (6) (i) In the event that fewer than all the outstanding  Securities are to
be  redeemed,  the  Convertible  Preferred  Securities  to be redeemed  shall be
redeemed  pro  rata  from  each  Holder  of  Convertible  Preferred  Securities;
provided,  however,  that no partial  redemption  of the  Convertible  Preferred
Securities  may be  effected  if  after  giving  effect  thereto  the  aggregate
liquidation amount of the Convertible  Preferred Securities  outstanding is less
than  $10,000,000.  The Redemption  Price for Convertible  Preferred  Securities
under this  Section 4 shall be paid in cash;  provided,  however,  that if (I) a
Holder  of  Convertible  Preferred  Securities  desires  to  convert  any of its
Convertible  Preferred  Securities  called for  redemption  into  Common  Shares
(effectively  by  converting  such  Holder's  share of the  related  Convertible
Debentures  into Common Shares in accordance with the terms of the Indenture and
this  Declaration) but such conversion would cause any direct or indirect holder
of  Convertible  Preferred  Securities  which  is  classified  as a real  estate
investment  trust (a "REIT") under Section 856 of the Code to: (A) own more than
5% of the total outstanding voting securities of the Sponsor,  (B) own more than
5% of the value of the total outstanding  securities of the Sponsor, (C) violate
Code Section  856(c)(4)(B),  or (D) otherwise to lose its status as a REIT under
the Code (such  Convertible  Preferred  Securities  which upon  conversion  into
Common Shares would result in a REIT owning Common Shares in a manner  described
in any of  subclauses  (A),  (B),  (C) or (D) of  this  Section  4(f)(i)(I)  are
referred  to  herein  as the  "Unconvertible  Shares"),  and (II)  such REIT has
delivered to the Sponsor, prior to the date on which the Sponsor would otherwise
have redeemed the Convertible  Preferred  Securities (the "Redemption  Date"), a
written notice signed by each Holder

<PAGE>

who desires to convert any of such  Holder's  Convertible  Preferred  Securities
into  Common  Shares  in  accordance  with the  terms of the  Indenture  and the
Declaration  which  written  notice  sets forth  both the number of  Convertible
Preferred  Securities that each such Holder desires to convert and the number of
such   Convertible   Preferred   Securities  of  such  Holder  which  constitute
Unconvertible  Shares; then the Trust shall: (X) cause the Convertible Preferred
Securities which the Holders thereof desire to convert (other than such Holder's
Unconvertible  Shares) to be converted into Common Shares in accordance with the
terms of the Indenture and the  Declaration,  (Y) pay each Holder of Convertible
Preferred  Securities  so converted in  subsection  (X) above and each Holder of
Unconvertible  Shares  an  amount  of  cash  equal  to the  accrued  and  unpaid
Distributions on such Holder's Convertible Preferred Securities so converted and
such  Holder's  Unconvertible  Shares and (Z) pay each  Holder of  Unconvertible
Shares an amount of cash  equal to the  product  of (m) the  Closing  Price of a
Common  Share on the  trading  date  immediately  prior to the  Redemption  Date
multiplied  by  (n)  the  maximum   number  of  Common  Shares  into  which  the
Unconvertible Shares held by such Holder could have been converted in accordance
with the  terms  of the  Indenture  and this  Declaration  on the  trading  date
immediately  prior to the  Redemption  Date.  For purposes of clause (I) of this
Section  4(f)(i),  a REIT  shall  be  considered  to own  directly  each  of the
securities  of the Sponsor that are owned by such REIT  directly or  indirectly.
The Sponsor shall  reasonably and timely cooperate in furnishing the information
necessary  to apply  the  provisions  of this  Section  4(f)(i)  to a Holder  of
Convertible Preferred Securities who requests such information in writing.

     (ii) If mutually  agreed on or after  January 1, 2001, by the Company and a
Holder of Convertible Preferred Securities otherwise subject to Section 4(f)(i),
a conversion of the Convertible  Debentures  having a principal  amount equal to
the  liquidation  amount of the  Convertible  Preferred  Securities held by such
Holder (and such Holder's  related  Convertible  Preferred  Securities) into WRP
Common Shares shall occur without regard to Section 4(f)(i) provided the Sponsor
(or any successor  thereto)  receives an opinion of counsel in a form reasonably
acceptable to the Holders that the Sponsor (or any successor  thereto) qualifies
either as a REIT under Code Section 856(a) or as a taxable REIT subsidiary under
Section 856(l) of the Code.

     (iii)  Provisions  similar to those in Sections (f)(i) and (ii) above shall
also apply to Holders of the Common Securities.

     (7)  If   Securities   are  to  be   redeemed   and  the   Trust   gives  a
Redemption/Distribution Notice, which notice may only be issued for a redemption
if the Debentures  are redeemed as set out in Article X of the Indenture  (which
notice will be irrevocable),  then,  provided that the Debenture Issuer has paid
the  Institutional  Trustee a sufficient  amount of cash in connection  with the
related  redemption of the Debentures,  the  Institutional  Trustee will pay the
relevant  Redemption  Price to the Holders of such Securities by check mailed to
the address of the  relevant  Holder  appearing  on the books and records of the
Trust on the  redemption  date. If a  Redemption/Distribution  Notice shall have
been given in

<PAGE>

connection  with a redemption  and funds  deposited  as required,  then from and
after the required date of such deposit,  distributions  will cease to accrue on
the  Securities so called for  redemption  and all rights of the Holders of such
Securities so called for redemption will cease,  except the right of the Holders
of such Securities to receive the Redemption  Price but without interest on such
Redemption  Price.  If any date  fixed for  redemption  of  Securities  is not a
Business Day, then payment of the Redemption  Price payable on such date will be
made on the next  succeeding  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.  If payment of the Redemption Price in respect of any
Securities  is  improperly  withheld  or  refused  and not  paid  either  by the
Institutional  Trustee or by the Sponsor as  guarantor  pursuant to the relevant
Securities  Guarantee,  Distributions on such Securities will continue to accrue
from the original  redemption date to the actual date of payment,  in which case
the actual  payment date will be considered  the date fixed for  redemption  for
purposes of calculating the Redemption Price.

     Neither the  Regular  Trustees  nor the Trust shall be required  (i) in the
event of any redemption in part, to issue,  register the transfer of or exchange
any  Securities  during a period  beginning  at the  opening of business 15 days
before any  selection for  redemption  of Securities  and ending at the close of
business  on the  earliest  date in which the  relevant  Redemption/Distribution
Notice is  deemed  to have been  given to all  holders  of  Securities  to be so
redeemed or (ii) to register the transfer of or exchange any Securities selected
for redemption,  in whole or in part,  except for the unredeemed  portion of any
Securities being redeemed in part.

     (8)  Redemption/Distribution  Notices shall be sent by the Regular Trustees
on behalf of the Trust to (i) in respect of Convertible Preferred Securities, to
the  Holders  thereof,  and (ii) in  respect of the  Common  Securities,  to the
Holders thereof.

     (9)  Subject  to the  foregoing  and  applicable  law  (including,  without
limitation,  United States federal  securities  laws), the Sponsor or any of its
subsidiaries  may at any  time  and  from  time  to  time  purchase  outstanding
Convertible Securities by tender, in the open market or otherwise.

     (10) Required  Redemption.  Upon the occurrence of an Event of Default,  as
hereinafter  defined,  or on and after May 30, 2012,  whichever comes first, the
Holder of any  Securities  may, at its option,  upon written notice to the Trust
cause  the  Trust  to  redeem  at any  time  all of  the  Securities,  including
Securities  issued  pursuant to Section 2(f) hereof,  held by such Holder at the
Redemption  Price,  payable  in cash,  together  with  all  accrued  and  unpaid
dividends to and  including  the  Redemption  Date.  Solely for purposes of this
Section  4(j),  an "Event of  Default"  shall  mean (a) the  non-payment  of any
dividend either in cash or by the issuance of additional  Convertible  Preferred
Securities  pursuant to Section  2(f) hereof on the  Distribution  Payment  Date
applicable to such dividend for three (3) Dividend Periods which

<PAGE>

need not be  consecutive;  or (b) the failure to comply with any material  term,
condition or obligation or failure to provide any material right under the terms
of the  Securities.  Notwithstanding  the  provisions  of this  subsection  (j),
provided an Event of Default has not occurred,  the Regular  Trustees shall have
the right to extend the date during which a required redemption is not permitted
under this  subsection (j) for two separate  additional five (5) year periods if
the  Coupon  Rate on the  Securities  is  changed  to the  then  market  rate of
preferred stock comparable to the Convertible  Preferred Securities (the "Market
Rate")  on the first day of each such  additional  five year  period;  provided,
however, in no event shall the Coupon Rate be reduced.  The Market Rate shall be
determined ten (10) days prior to the first Business Day of each such additional
five (5) year  period  by mutual  agreement  of the  Holders  of a  Majority  in
liquidation amount of the Securities and the Regular Trustees.  In the event the
Holders of a Majority in  liquidation  amount of the  Securities and the Regular
Trustees cannot agree on such  determination  prior to the first Business Day of
such additional five (5) year period,  the Market Rate shall be determined as of
the first Business Day of each such  additional five (5) year period as follows:
(i) Holders of a Majority in liquidation amount of the Preferred Securities then
outstanding  shall choose an investment  banking firm of  nationally  recognized
status and the Regular  Trustees  shall  choose an  investment  banking  firm of
nationally  recognized  status;  (ii) the investment banking firms chosen by the
Holders of a Majority in liquidation  amount of the Securities then  outstanding
and the Regular Trustees shall mutually choose a third  investment  banking firm
of nationally recognized status (the "Independent Investment Banker"); (iii) the
Independent Investment Banker shall then determine, in its sole discretion,  the
Market Rate and shall advise the Holders of a Majority in liquidation  amount of
the Securities and the Regular Trustees of its determination;  and (iv) the fees
of the  Independent  Investment  Banker for making such  determination  shall be
borne fifty percent  (50%) by the Holders of Securities  and fifty percent (50%)
by the Trust.

     (11) Procedures for Required Redemption

     (i) Notice of any required  redemption shall be mailed by the Holder of the
Securities  requesting  redemption,  postage prepaid,  not less than 30 nor more
than 90 days prior to the Redemption Date,  addressed to the Trust.  Such notice
shall state the Redemption Date and the number of the Securities to be redeemed.
The Regular  Trustees  shall promptly  deliver a copy of any  redemption  notice
received from Holders of Securities to the Sponsor.

     (ii) Upon surrender,  in accordance with said notice,  of the  certificates
for any Securities so redeemed,  such Securities  shall be redeemed by the Trust
at the Redemption Price.

     (iii) If the Redemption  Date is after a Record Date and before the related
quarterly  Distribution Payment Date, the distribution payable on such quarterly
Distribution  Payment  Date  shall  be paid to the  holder  in  whose  name  the
Securities to be redeemed are registered at the close of business on such record
date notwithstanding the

<PAGE>

redemption  thereof between such relevant record date and the related  quarterly
Distribution  Payment  Date  or  the  Trust's  default  in  the  payment  of the
distribution due.

     (12) The Securities redeemed,  pursuant to the provisions of this Section 6
or surrendered to the Trust upon  conversion  shall thereupon be retired and may
not be reissued as Securities but shall thereafter have the status of authorized
but unissued Securities of the Trust.

     (13)  Notwithstanding  anything in this Annex I to the  Declaration  to the
contrary:

     (i) If (A) the Sponsor enters into an agreement for a business  combination
with  another  entity,  whether  by  merger  or  other  reorganization,  and the
resulting  or  surviving  entity (the  "Survivor")  wants to either (i) revoke a
prior election to be a taxable REIT  subsidiary  ("TRS") under Section 856(1) of
the Code,  or (ii) desires to not become a TRS or a REIT in the future,  and (B)
following such business combination, on an as converted pro forma basis (without
duplication),   the  aggregate  outstanding  Convertible  Preferred  Securities,
Debentures held in exchange for  Convertible  Preferred  Securities,  and Common
Shares held by reason of converting  any of the foregoing  held by any REIT have
an  aggregate  vote or value in excess of 5% of the total  voting power or total
value of the outstanding securities of the Survivor, then the Sponsor shall give
written  notice of the  foregoing (at least 45 days prior to  consummating  such
business  combination) to each Holder of Convertible  Preferred  Securities.  If
within thirty (30) days after  receipt of such notice,  such Holder fails to (i)
notify  the  Sponsor  in  writing  of its  desire  to not have  the  Convertible
Preferred Securities  redeemed,  (ii) furnish to the Sponsor its written consent
and  election to revoke any prior TRS  election  jointly made by the Sponsor (or
any successor) and any direct or indirect Holder that is a REIT, and (iii) waive
in writing any future  obligation of the Sponsor (or any  successor) to become a
TRS  or  a  REIT,  then,  immediately  prior  to  and  in  connection  with  the
consummation  of the  business  combination  described in  subsection  (m)(i)(A)
above, the Company shall redeem all of the  Unconvertible  Shares (as determined
by such  Holder  pursuant to Section  4(f)(i)(II)  above) held by such direct or
indirect  Holder that is a REIT and its Affiliates  (including  prior to May 30,
2002) in the manner and in the amounts provided in Sections  4(f)(i)(II)(Y)  and
(Z) of this  Annex I to the  Declaration;  provided  however,  if the  amount of
payment calculated in accordance with Section  4(f)(i)(II)(Z) above with respect
to the  Unconvertible  Shares is less than the Redemption Price (for purposes of
this calculation  only, less accrued and unpaid  Distributions)  with respect to
the Unconvertible Shares, in lieu of paying such amount calculated in accordance
with Section  4(f)(i)(II(Z),  the Sponsor  shall pay the  Redemption  Price (for
purposes of this calculation only, less accrued and unpaid  Distributions)  with
respect to the Unconvertible Shares. Upon consummation of the foregoing, any and
all obligations of the Sponsor to become or remain a TRS or a REIT or to deliver
opinions to that effect shall be  terminated.  All other  Convertible  Preferred
Securities  shall  remain  outstanding  unless  the  liquidation  amount of such
outstanding Convertible Preferred Securities is less than $10,000,000,  in which
event  the  Company  shall  redeem  for cash all of such  Convertible  Preferred
Securities in accordance  with Section 4(a) above.  For purposes of  calculating
the 5%  limitation  described  above,  the Sponsor shall  reasonably  and timely
cooperate

<PAGE>

in  furnishing  relevant  information  to a Preferred  Holder that requests such
information  in writing.  For purposes of this Section 4(m) a direct or indirect
holder of Convertible Preferred Securities that is a REIT shall be considered to
hold directly all securities it owns directly and indirectly.

     (ii) If the events described in subsection (m)(i) above have occurred,  the
Sponsor gives written  notice  thereof to each Holder of  Convertible  Preferred
Securities,  and the pro forma  computation  described in  subsection  (m)(i)(B)
results in a Holder  otherwise  subject to Section  4(f)(i)  and its  Affiliates
owing 5% or less of both the total voting  power (on an as  converted  basis) or
total value of the outstanding  securities of the Sponsor,  then the Convertible
Debentures  need not be redeemed and any and all  obligations  of the Sponsor to
become or remain a TRS or a REIT or to deliver  opinions  to that  effect  shall
terminated.

     (iii) If the  Sponsor  desires to take any action  that would  violate  the
terms of Section 5.1(h), (i) or (j) of the Indenture,  then the Sponsor can take
such action  provided the Sponsor  redeems all  outstanding  Common  Securities,
Debentures,  Convertible  Preferred Securities and any Common Shares acquired in
conversion  thereof,  by paying to the  respective  holders  thereof  in cash an
amount equal to (i) the Closing Price on the trading date  immediately  prior to
the  Redemption  Date of each such Common Share  acquired in the  aforementioned
conversion,  and (ii) with respect to outstanding Debentures,  Common Securities
and Convertible Preferred Securities the greater of, without duplication (x) the
Optional  Redemption  Price (as defined in the  Indenture)  for all  outstanding
Debentures (together with any required interest payment under Section 10.2(a) of
the  Indenture)  plus  the  Redemption  Price  for  the  Common  Securities  and
Convertible  Preferred Securities and (y) the Closing Price of the Common Shares
into  which  such  Debentures,   Common  Securities  and  Convertible  Preferred
Securities, without duplication, are convertible on the trading date immediately
prior to the Redemption Date.

     5. Conversion Rights.

     The  Holders of  Securities  shall have the right at any time  through  the
close of  business  on the last  Business  Day  prior to the  Maturity  Date (as
defined in the Indenture) (or, in the case of Securities  called for redemption,
prior to the close of  business  on the  Business  Day  prior to the  Redemption
Date), at their option, to cause the Conversion Agent to convert Securities,  on
behalf of the  converting  Holders,  into Common Shares in the manner  described
herein on and subject to the following terms and conditions:

     (1) The  Securities  will be  convertible  at the office of the  Conversion
Agent into fully paid and  nonassessable  Common Shares pursuant to the Holder's
direction to the Conversion  Agent to exchange such  Securities for a portion of
the  Debentures  theretofore  held by the Trust on the basis of one Security per
$25.00  principal amount of Debentures,  and immediately  convert such amount of
Debentures into fully paid and nonassessable Common Shares at an initial rate of
2.2474  Common  Shares  per  $25.00  principal  amount of  Debentures  (which is
equivalent to a conversion price of $11.124 per Common Share, subject to certain

<PAGE>

adjustments set forth in Article XI of the Indenture.  The Institutional Trustee
shall send to each  Holder of a Security a copy of any notice sent to Holders of
Convertible  Debentures  which it  receives  on behalf of the Trust  pursuant to
Section 11.3 of the Indenture.

     (2) In order to convert  Securities  into Common  Shares,  the Holder shall
submit to the Conversion  Agent at its office an irrevocable  request to convert
Securities on behalf of such Holder (the  "Conversion  Request"),  together with
the certificates representing such Securities.  The Conversion Request shall (i)
set forth the number of  Securities  to be converted  and the name or names,  if
other  than the  Holder,  in which the Common  Shares  should be issued and (ii)
direct the Conversion Agent (a) to exchange such Securities for a portion of the
Debentures held by the Trust (at the rate of exchange specified in the preceding
paragraph)  and (b) to  immediately  convert such  Debentures  on behalf of such
Holder,  into Common Shares (at the  conversion  rate specified in the preceding
paragraph). The Conversion Agent shall notify the Trust of the Holder's election
to exchange Securities for a portion of the Debentures held by the Trust and the
Trust shall,  upon receipt of such notice,  deliver to the Conversion  Agent the
appropriate  principal amount of Debentures for exchange in accordance with this
Section. The Conversion Agent shall thereupon notify the Sponsor of the Holder's
election to convert such Debentures into Common Shares. Holders of Securities at
the close of business on a Distribution  record date will be entitled to receive
the Distribution  payable on such securities on the  corresponding  Distribution
Payment Date  notwithstanding  the conversion of such Securities  following such
record date but prior to such Distribution Payment Date; provided, however, that
if the date of any  redemption  of the related  Debentures  falls  between  such
record  date and the  related  Distribution  Payment  Date,  the  amount of such
Distribution shall include accumulated and unpaid  Distributions  accrued to but
excluding  such  date of  redemption,  and  such  payment  shall  be made to the
converting Holder.  Except as provided above,  neither the Trust nor the Sponsor
will make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accrued on the
Securities  (including any Additional  Amounts accrued thereon)  surrendered for
conversion,  or on account of any accumulated and unpaid dividends on the Common
Shares  issued upon such  conversion,  except to the extent that such shares are
held of record on the record date for any such  distributions.  Securities shall
be deemed to have been converted  immediately  prior to the close of business on
the day on which a Notice of Conversion  relating to such Securities is received
by the Trust in accordance with the foregoing provision (the "Conversion Date").
The Person or Persons entitled to receive Common Shares issuable upon conversion
of the  Debentures  shall be treated for all  purposes  as the record  holder or
holders of such Common  Shares at such time.  As promptly as  practicable  on or
after the Conversion  Date, the Sponsor shall issue and deliver at the office of
the Conversion Agent a certificate or certificates for the number of full Common
Shares issuable upon such conversion, together with the cash payment, if any, in
lieu of any  fraction of any share to the Person or Persons  entitled to receive
the same,  unless  otherwise  directed by the Holder in the notice of conversion
and the Conversion  Agent shall  distribute such  certificate or certificates to
such Person or Persons.

<PAGE>

     (3) Each Holder of a Security by his acceptance thereof appoints Wilmington
Trust Company as "Conversion  Agent" for the purpose of effecting the conversion
of Securities in accordance  with this Section.  In effecting the conversion and
transactions  described in this Section, the Conversion Agent shall be acting as
agent of the  Holders  of  Securities  directing  it to effect  such  conversion
transactions.  The  Conversion  Agent  is  hereby  authorized  (i)  to  exchange
Securities from time to time for Debentures held by the Trust in connection with
the  conversion of such  Securities in accordance  with this Section and (ii) to
convert all or a portion of the  Debentures  into Common Shares and thereupon to
deliver such Common Shares in accordance with the provisions of this Section and
to  deliver  to the  Trust a new  Debenture  or  Debentures  for  any  resulting
unconverted principal amount.

     (4) No fractional Common Shares will be issued as a result of conversion of
Securities, but in lieu thereof such fractional interest will be paid in cash by
Sponsor,  in an amount  based on the Closing  Price of the Common  Shares on the
date such Securities are surrendered  for conversion,  to the Conversion  Agent,
which in turn will make such payment to the Holder or Holders of  Securities  so
converted.

     (5)  Sponsor  shall at all  times  reserve  and keep  available  out of its
authorized and unissued  Common Shares,  solely for issuance upon the conversion
of the Debentures, free from any preemptive or other similar rights, such number
of Common Shares as shall from time to time be issuable  upon the  conversion of
all the Debentures  then  outstanding.  Notwithstanding  the foregoing,  Sponsor
shall be  entitled to deliver  upon  conversion  of  Debentures,  Common  Shares
reacquired  and held in the  treasury  of Sponsor  (in lieu of the  issuance  of
authorized and unissued Common Shares),  so long as any such treasury shares are
free and clear of all liens,  charges,  security interests or encumbrances.  Any
Common Shares issued upon conversion of the Debentures shall be duly authorized,
validly  issued and fully paid and  nonassessable.  The Trust shall  deliver the
Common Shares  received  upon  conversion  of the  Debentures to the  converting
Holder  free  and  clear  of  all  liens,   charges,   security   interests  and
encumbrances,  except for United States  withholding  taxes. Each of Sponsor and
the Trust  shall  prepare  and shall use its best  efforts to obtain and keep in
force such governmental or regulatory permits or other  authorizations as may be
required  by law,  and  shall  comply  with all  applicable  requirements  as to
registration  or  qualification  of Common Shares (and all  requirements to list
Common  Shares  issuable  upon  conversion  of  Debentures  that are at the time
applicable),  in order to enable  Sponsor to lawfully issue Common Shares to the
Trust upon conversion of the Debentures and the Trust to lawfully deliver Common
Shares to each Holder upon conversion of the Securities.

     (6) Sponsor will pay any and all taxes  (other than income  taxes) that may
be payable in respect of the issue or delivery of Common Shares on conversion of
Debentures and the delivery of the Common Shares by the Trust upon conversion of
the Securities. Sponsor shall not, however, be required to pay any tax which may
be payable in respect of any  transfer  involved  in the issue and  delivery  of
Common  Shares in a name other than that in which the  Securities  so  converted
were registered, and no such issue or delivery shall be made unless and

<PAGE>

until the person  requesting  such issue has paid to the Trust the amount of any
such tax, or has established to the  satisfaction of the Trust that such tax has
been paid.

     (7) Nothing in the preceding  Paragraph (f) shall limit the  requirement of
the Trust to withhold  taxes  pursuant to the terms of the  Securities or as set
forth  in this  Annex  I to the  Declaration  or to the  Declaration  itself  or
otherwise require the  Institutional  Trustee or the Trust to pay any amounts on
account of such withholdings.

     (8) The term "Closing  Price" with respect to any security on any day means
the last  reported  sale price,  regular  way on such day,  or, if no sale takes
place on such day, the average of the  reported  closing bid and asked prices on
such day,  regular  way,  in  either  case as  reported  on the  American  Stock
Exchange,  or, if such  security  is not  listed or  admitted  to trading on the
American Stock Exchange,  on the principal national securities exchange on which
such  security is listed or admitted  to  trading,  or, if such  security is not
listed or admitted to trading on a national securities exchange, on the National
Market System of the National  Association of Securities  Dealers,  Inc., or, if
such security is not quoted or admitted to trading on such quotation  system, on
the principal  quotation  system on which such security is listed or admitted to
trading or quoted,  or, if not  listed or  admitted  to trading or quoted on any
national securities exchange or quotation system, the average of the closing bid
and asked prices of such security in the  over-the-counter  market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any American Stock Exchange  member firm selected from time to time
by the Board of Directors  (or any  committee  duly  authorized  by the Board of
Directors) of the  Debenture  Issuer for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the Board of Directors (or
any  committee  duly  authorized  by the Board of  Directors)  of the  Debenture
Issuer.

     6. Voting and Other Rights - Convertible Preferred Securities.

     (1) Except as  provided  under  Sections  6(b) and 8 of this Annex I to the
Declaration and as otherwise required by law and the Declaration, the Holders of
the  Convertible  Preferred  Securities  will not have voting  rights,  provided
however,  that  notwithstanding  Section  6(b)  and 8 of  this  Annex  I to  the
Declaration,  the Holders of Convertible Preferred Securities shall not have any
voting  rights to the extent such  rights  will cause any holder of  Convertible
Preferred  Securities to own more than 9.9% of the  outstanding  voting stock of
the Trust or  otherwise  cause  any  direct or  indirect  holder of  Convertible
Preferred  Securities that is classified as a real estate investment trust under
Section 856 of the Internal Revenue Code of 1986, as amended, to lose its status
as a real estate investment trust under said Code.  Wherever in the Declaration,
including,  this  Annex  I  thereto,  or  the  Indenture  Debentures  Securities
Guarantees  or  Securities  Purchase  Agreement  the  vote  of  the  Holders  of
Convertible  Preferred Securities is required and as a result of the application
of this Section 6(a) of all of such Convertible  Preferred  Securities shall not
be able to vote, then notwithstanding  anything to the contrary set forth in the

<PAGE>

foregoing   documents  the  applicable   percentage  of  Convertible   Preferred
Securities  whose vote is needed  shall be the  applicable  percentage  of those
Convertible  Preferred  Securities  which shall have the right to vote after any
reduction in voting rights pursuant to Section 6(a).

     (2) Subject to the requirements set forth in this paragraph, the Holders of
a Majority in liquidation  amount of the  Securities  then  outstanding,  voting
separately as a class, may direct the time,  method, and place of conducting any
proceeding for any remedy available to the Institutional  Trustee, or may direct
the  exercise of any trust or power  conferred  upon the  Institutional  Trustee
under the Declaration,  including the right to direct the Institutional Trustee,
as holder of the  Debentures,  to (i) exercise the remedies  available under the
Indenture  with respect to the  Debentures,  (ii) waive any past default and its
consequences  that is  waivable  under  Section 5.9 of the  Indenture,  or (iii)
exercise any right to rescind or annul a  declaration  that the principal of all
the Debentures shall be due and payable, provided,  however, that if an Event of
Default under the  Indenture has occurred and is continuing  then the holders of
25% of the aggregate  liquidation amount of the Convertible Preferred Securities
then outstanding may direct the  Institutional  Trustee to declare the principal
of and interest on the  Debentures  immediately  due and payable;  and provided,
further,  that, where a consent under the Indenture would require the consent or
act of the Holders of greater than a majority of the Holders in principal amount
of Debentures  then  outstanding  (a "Super  Majority")  affected  thereby,  the
Institutional  Trustee  may only give such  consent  or take such  action at the
written  direction  of the  Holders of at least the  proportion  in  liquidation
amount of the Convertible Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures then outstanding.
The Institutional  Trustee shall not revoke any action previously  authorized or
approved by a vote of the Holders of the Convertible Preferred Securities. Other
than with  respect to directing  the time,  method and place of  conducting  any
remedy  available  to  the  Institutional   Trustee  as  set  forth  above,  the
Institutional  Trustee  shall  not  take  any  action  in  accordance  with  the
directions  of the Holders of the  Securities  under this  paragraph  unless the
Institutional   Trustee  has  obtained  an  opinion  of  nationally   recognized
independent  tax counsel  experienced in such matters to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other  than a grantor  trust as a result of such  action.  If the  Institutional
Trustee  fails to  enforce  its  rights  under  the  Debentures,  any  Holder of
Securities  may institute a legal  proceeding  against any person to enforce the
Institutional  Trustee's  rights  under the  Debentures.  If an Event of Default
under  the  Declaration  has  occurred  and is  continuing  and  such  event  is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the  Debentures on the date such  interest or principal is otherwise  payable
(or in the  case of  redemption,  on the  Redemption  Date),  then a  Holder  of
Convertible  Preferred  Securities  may  directly  institute  a  proceeding  for
enforcement  of payment to such  Holder of the  principal  of or interest on the
Debentures having a principal amount equal to the aggregate  liquidation  amount
of the Convertible Preferred Securities of such Holder (a "Direct Action") on or
after the respective due date specified in the  Debentures.  In connection  with
such  Direct  Action,  the rights of the  Holders of Common  Securities  will be
subrogated to the rights of such Holder of Convertible  Preferred  Securities to
the  extent of any  payment  made by the  Issuer to such  Holder of  Convertible
Preferred Securities

<PAGE>

in such  Direct  Action.  Except as  provided in the  preceding  sentences,  the
Holders  of  Convertible  Preferred  Securities  will  not be able  to  exercise
directly any other remedy available to the holders of the Debentures.

     Any approval or direction of Holders of  Convertible  Preferred  Securities
may  be  given  at a  separate  meeting  of  Holders  of  Convertible  Preferred
Securities  convened  for such  purpose,  at a meeting of all of the  Holders of
Securities  in the Trust or pursuant to written  consent.  The Regular  Trustees
will cause a notice of any  meeting at which  Holders of  Convertible  Preferred
Securities  are entitled to vote,  or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of record of
Convertible  Preferred  Securities.  Each such notice  will  include a statement
setting  forth (i) the date of such  meeting or the date by which such action is
to be taken, (ii) a description of any resolution  proposed for adoption at such
meeting on which such  Holders are entitled to vote or of such matter upon which
written consent is sought and (iii)  instructions for the delivery of proxies or
consents.

     No vote or consent of the Holders of the Convertible  Preferred  Securities
will be  required  for the  Trust to redeem  and  cancel  Convertible  Preferred
Securities or to distribute  the Debentures in accordance  with the  Declaration
and the terms of the Securities.

     Notwithstanding  that  Holders  of  Convertible  Preferred  Securities  are
entitled to vote or consent under any of the circumstances  described above, any
of the  Convertible  Preferred  Securities  that are owned by the Sponsor or any
Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.

     7. Voting Rights - Common Securities.

     (1) Except as provided under  Sections 7(b),  7(c) and 8 of this Annex I of
the  Declaration  and as  otherwise  required  by law and the  Declaration,  the
Holders of the Common Securities will not have voting rights.

     (2) The Holders of the Common  Securities are entitled,  in accordance with
Article V of the Declaration,  to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.

     (3) Subject to Section 2.6 of the  Declaration  and only after any Event of
Default with respect to the  Convertible  Preferred  Securities  has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common  Securities,  voting  separately as a class,  may direct the time,
method,  and place of conducting any proceeding for any remedy  available to the
Institutional  Trustee,  or  exercising  any trust or power  conferred  upon the

<PAGE>

Institutional  Trustee under the Declaration,  including (i) directing the time,
method,  place of  conducting  any  proceeding  for any remedy  available to the
Debenture  Trustee,  or exercising any trust or power conferred on the Debenture
Trustee  with  respect to the  Debentures,  (ii) waive any past  default and its
consequences  that is  waivable  under  Section 5.9 of the  Indenture,  or (iii)
exercise any right to rescind or annul a  declaration  that the principal of all
the  Debentures  shall be due and  payable,  provided  that,  where a consent or
action  under the  Indenture  would  require the consent or act of the  relevant
Super  Majority,  the  Institutional  Trustee may only give such consent or take
such action at the written  direction of the Holders of at least the  proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.  The
Institutional  Trustee  shall not  revoke any action  previously  authorized  or
approved by a vote of the Holders of the Convertible Preferred Securities. Other
than with  respect to directing  the time,  method and place of  conducting  any
remedy available to the  Institutional  Trustee or the Debenture  Trustee as set
forth above, the  Institutional  Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under this paragraph
unless  the  Institutional   Trustee  has  obtained  an  opinion  of  nationally
recognized  independent  tax counsel  experienced  in such matters to the effect
that for the purposes of United States  federal income tax the Trust will not be
classified  as other  than a grantor  trust on account  of such  action.  If the
Institutional  Trustee  fails to enforce its rights under the  Declaration,  any
Holder of Common  Securities may institute a legal  proceeding  directly against
any Person to enforce the Institutional  Trustee's rights under the Declaration,
without first instituting a legal proceeding  against the Institutional  Trustee
or any other Person.

     Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of  Securities in the Trust or pursuant to written
consent.  The  Regular  Trustees  will  cause a notice of any  meeting  at which
Holders of Common  Securities  are entitled to vote, or of any matter upon which
action by written  consent of such Holders is to be taken,  to be mailed to each
Holder of record of Common Securities. Each such notice will include a statement
setting  forth (i) the date of such  meeting or the date by which such action is
to be taken, (ii) a description of any resolution  proposed for adoption at such
meeting on which such  Holders are entitled to vote or of such matter upon which
written consent is sought and (iii)  instructions for the delivery of proxies or
consents.

     No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem  and  cancel  Common  Securities  or to  distribute  the
Debentures in accordance with the Declaration and the terms of the Securities.

     8. Amendments to Declaration and Indenture.

     (1) In addition to any requirements  under Section 12.1 of the Declaration,
if any  proposed  amendment  to the  Declaration  provides  for,  or the Regular
Trustees otherwise propose

<PAGE>

to effect,  (i) any action that would  materially  adversely  affect the powers,
preferences or special rights of the Securities,  including, without limitation,
increasing  the number of  authorized  and  outstanding  Securities  (other than
pursuant  to Section  2(f) above or as a result of the  issuance  of  additional
Securities  pursuant  to the terms of the  Securities  Guarantees)  or  creating
additional  classes of securities  of the Trust,  whether by way of amendment to
the Declaration or otherwise, or (ii) the dissolution, winding-up or termination
of the Trust,  other than as described in Section 8.1 of the  Declaration,  then
the Holders of outstanding Securities voting together as a single class, will be
entitled to vote on such  amendment or proposal (but not on any other  amendment
or proposal) and such amendment or proposal  shall not be effective  except with
the approval of the Holders of at least a Majority in liquidation  amount of the
Securities  then  outstanding  affected  thereby;  provided,   however,  if  any
amendment  or proposal  referred to in clause (i) above would  adversely  affect
only the Convertible  Preferred  Securities or only the Common Securities,  then
only the affected  class will be entitled to vote on such  amendment or proposal
and such amendment or proposal  shall not be effective  except with the approval
of  a  Majority  in  liquidation   amount  of  such  class  of  Securities  then
outstanding.

     (2) In the event the consent of the Institutional  Trustee as the holder of
the  Debentures is required  under the Indenture  with respect to any amendment,
modification   or   termination  of  the  Indenture  or  the   Debentures,   the
Institutional  Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment,  modification or termination as directed by
a Majority in liquidation  amount of the  Securities  then  outstanding,  voting
together as a single class;  provided,  however,  that where a consent under the
Indenture  would  require  the  consent  of the  relevant  Super  Majority,  the
Institutional Trustee may only give such consent at the direction of the Holders
of at  least  the  proportion  in  liquidation  amount  of the  Securities  then
outstanding  which the  relevant  Super  Majority  represents  of the  aggregate
principal amount of the Debentures then outstanding; provided, further, that the
Institutional  Trustee  shall  not  take  any  action  in  accordance  with  the
directions of the Holders of the  Securities  under this Section 8(b) unless the
Institutional   Trustee  has  obtained  an  opinion  of  nationally   recognized
independent  tax counsel  experienced in such matters to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust as a result of such action.

     9. Pro Rata.

     A reference in the terms of the Securities to any distribution or treatment
as being "Pro Rata" shall mean pro rata to each Holder of  Securities  according
to the  aggregate  liquidation  amount of the  Securities  held by the  relevant
Holder  in  relation  to the  aggregate  liquidation  amount  of all  Securities
outstanding  unless,  in  relation to a payment,  an Event of Default  under the
Declaration has occurred and is continuing, in which case any funds available to
make such payment shall be paid first in cash to each Holder of the  Convertible
Preferred  Securities pro rata according to the aggregate  liquidation amount of
Convertible  Preferred  Securities  held by the relevant  Holder relative to the
aggregate   liquidation   amount  of  all   Convertible   Preferred   Securities
outstanding,  and only after  satisfaction of all amounts owed to the Holders of
the Convertible  Preferred  Securities,  to each Holder of Common Securities pro
rata according to the aggregate  liquidation amount of Common Securities held by
the

<PAGE>

relevant  Holder  relative  to the  aggregate  liquidation  amount of all Common
Securities outstanding.

     10. Ranking.

     The  Convertible  Preferred  Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event of
Default under the Declaration occurs and is continuing, the rights of Holders of
the Common  Securities to payment in respect of Distributions  and payments upon
liquidation,  redemption and otherwise are subordinated to the rights to payment
of the Holders of the Convertible Preferred Securities.

     11. Acceptance of Securities Guarantee and Indenture.

     Each Holder of Convertible  Preferred Securities and Common Securities,  by
the acceptance  thereof,  agrees to the provisions of the Convertible  Preferred
Securities  Guarantee  and  the  Common  Securities   Guarantee,   respectively,
including  the  subordination  provisions  therein and to the  provisions of the
Indenture.

     12. No Preemptive Rights.

     The Holders of the Securities shall have no preemptive  rights to subscribe
for any additional securities.

     13. Miscellaneous.

     These terms constitute a part of the Declaration.  The Sponsor will provide
a copy of the Declaration, the Convertible Preferred Securities Guarantee or the
Common  Securities  Guarantee  (as may be  appropriate),  and the Indenture to a
Holder without charge on written  request to the Sponsor at its principal  place
of business.

     14. Acceptable Counsel.

     In each  instance  herein  which  states  that  legal  counsel  needs to be
acceptable  to a party (or  similar  language to that  effect),  the law firm of
Robinson Silverman Pearce Aronsohn & Berman LLP shall be deemed to be acceptable
legal counsel.

<PAGE>

                                   EXHIBIT A-1

               FORM OF CONVERTIBLE PREFERRED SECURITY CERTIFICATE

CERTIFICATE NUMBER: P-1

NUMBER OF PREFERRED SECURITIES: 1,000,000

ISIN NO.:  USU126651020 - - ONLY IF REGULATION S

<PAGE>

             Certificate Evidencing Convertible Preferred Securities
                                       of

                             WRP CONVERTIBLE TRUST I

     PRIOR  TO  THE  TRANSFER  RESTRICTION  TERMINATION  DATE,  ANY  CERTIFICATE
EVIDENCING A CONVERTIBLE PREFERRED SECURITY SHALL BEAR A LEGEND IN SUBSTANTIALLY
THE  FOLLOWING  FORM,  UNLESS  OTHERWISE  AGREED BY THE REGULAR  TRUSTEES  (WITH
WRITTEN NOTICE TO THE INSTITUTIONAL  TRUSTEE): THE SECURITY EVIDENCED HEREBY HAS
NOT BEEN  REGISTERED  UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
"SECURITIES  ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  WITHIN THE
UNITED  STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.  PERSONS  EXCEPT AS
SET FORTH IN THE FOLLOWING  SENTENCE.  BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED  INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A  UNDER  THE  SECURITIES  ACT)  OR  (B) IT IS AN  INSTITUTIONAL  "ACCREDITED
INVESTOR" (AS DEFINED IN RULE  501(A)(1),  (2), (3) OR (7) UNDER THE  SECURITIES
ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE  TRANSACTION,  (2) AGREES
THAT IT WILL NOT PRIOR TO THE  EXPIRATION  OF THE HOLDING  PERIOD  APPLICABLE TO
SALES OF THE SECURITY  EVIDENCED  HEREBY UNDER RULE 144(K) UNDER THE  SECURITIES
ACT (OR ANY  SUCCESSOR  PROVISION)  RESELL OR  OTHERWISE  TRANSFER  THE SECURITY
EVIDENCED  HEREBY OR, IF THIS  SECURITY IS  CONVERTIBLE  INTO COMMON  SHARES THE
COMMON SHARES  ISSUABLE UPON  CONVERSION OR EXCHANGE OF THIS SECURITY EXCEPT (A)
TO WELLSFORD REAL  PROPERTIES,  INC. (THE "COMPANY") OR ANY SUBSIDIARY  THEREOF,
(B) PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE SECURITIES ACT,
(C) TO A QUALIFIED  INSTITUTIONAL  BUYER IN COMPLIANCE  WITH RULE 144A UNDER THE
SECURITIES ACT, (D) TO AN INSTITUTIONAL  ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER,  FURNISHES TO THE REGULAR  TRUSTEES UNDER THE DECLARATION (OR, IF THIS
CERTIFICATE  EVIDENCES COMMON SHARES, THE TRANSFER AGENT FOR THE COMMON SHARES),
A SIGNED LETTER CONTAINING CERTAIN  REPRESENTATIONS  AND AGREEMENTS  RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED  FROM SUCH  TRUSTEE OR TRANSFER  AGENT),  (E) OUTSIDE THE
UNITED  STATES IN  COMPLIANCE  WITH RULE 904  UNDER  THE  SECURITIES  ACT OR (F)
PURSUANT  TO THE  EXEMPTION  FROM  REGISTRATION  PROVIDED  BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THE SECURITY  EVIDENCED HEREBY IS TRANSFERRED A NOTICE  SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY

<PAGE>

TRANSFER OF THE SECURITY  EVIDENCED  HEREBY PRIOR TO  EXPIRATION  OF THE HOLDING
PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED  HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF  RELATING TO THE MANNER OF SUCH
TRANSFER  AND  SUBMIT  THIS  CERTIFICATE  TO  THE  REGULAR  TRUSTEES  UNDER  THE
DECLARATION (OR, IF THIS CERTIFICATE  EVIDENCES COMMON SHARES,  SUCH HOLDER MUST
FURNISH TO THE  TRANSFER  AGENT SUCH  CERTIFICATIONS,  LEGAL  OPINIONS  OR OTHER
INFORMATION  AS THE  COMPANY  OR WRP  CONVERTIBLE  TRUST  I  (THE  "TRUST")  MAY
REASONABLY  REQUIRE TO CONFIRM THAT SUCH  TRANSFER IS BEING MADE  PURSUANT TO AN
EXEMPTION  FROM,  OR  IN  A  TRANSACTION   NOT  SUBJECT  TO,  THE   REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT).  IF THIS  CERTIFICATE  DOES NOT EVIDENCE
COMMON  SHARES AND IF THE PROPOSED  TRANSFEREE  IS AN  INSTITUTIONAL  ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER,  FURNISH TO THE TRUSTEE UNDER THE  DECLARATION,  SUCH  CERTIFICATIONS,
LEGAL  OPINIONS OR OTHER  INFORMATION AS THE COMPANY OR THE TRUST MAY REASONABLY
REQUIRE TO CONFIRM  THAT SUCH  TRANSFER IS BEING MADE  PURSUANT TO AN  EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE
SECURITIES  ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING
PERIOD  APPLICABLE TO SALES OF THE SECURITY  EVIDENCED  HEREBY UNDER RULE 144(K)
UNDER THE  SECURITIES  ACT. AS USED HEREIN,  THE TERMS  "OFFSHORE  TRANSACTION,"
"UNITED STATES" AND "U.S.  PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.

THIS SECURITY IS ALSO SUBJECT TO THE  RESTRICTIONS  ON TRANSFER SET FORTH IN THE
DECLARATION.

                     8.25% Convertible Preferred Securities
           (liquidation amount $25 per Convertible Preferred Security)

     WRP Convertible  Trust I, a statutory  business trust formed under the laws
of the State of Delaware  (the  "Trust"),  hereby  certifies  that ERP Operating
Limited  Partnership  (the  "Holder")  is the  registered  owner of  convertible
preferred securities of the Trust,  representing  undivided beneficial interests
in the  assets  of the  Trust,  designated  as the 8.25%  Convertible  Preferred
Securities  (liquidation  amount $25 per  Convertible  Preferred  Security) (the
"Convertible  Preferred  Securities").  The Convertible Preferred Securities are
transferable  on the  books and  records  of the  Trust,  in person or by a duly
authorized  attorney,  upon surrender of this  certificate  duly endorsed and in
proper form for transfer.

<PAGE>

     The designation,  rights, privileges,  restrictions,  preferences and other
terms and provisions of the Convertible Preferred Securities  represented hereby
are  issued  and shall in all  respects  be  subject  to the  provisions  of the
Declaration  of Trust of the Trust  dated as of May 5, 2000,  as the same may be
amended from time to time (the "Declaration"),  including the designation of the
terms of the  Convertible  Preferred  Securities  as set forth in Annex I to the
Declaration.

     Capitalized terms used herein but not defined shall have the meanings given
them  in  the  Declaration.  The  Holder  is  entitled  to the  benefits  of the
Convertible  Preferred  Securities Guarantee to the extent provided therein. The
Sponsor  will  provide  a copy of the  Declaration,  the  Convertible  Preferred
Securities Guarantee and the Indenture to the Holder without charge upon written
request to the Trust at its principal place of business.

     Upon receipt of this  certificate,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat, for United States federal income
tax purposes,  the  Debentures as  indebtedness  and the  Convertible  Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.

     Unless the Institutional Trustee's Certificate of Authentication hereon has
been properly  executed,  these  Convertible  Preferred  Securities shall not be
entitled to any benefit under the  Declaration or be valid or obligatory for any
purpose.

<PAGE>

     IN WITNESS WHEREOF, the Trust has executed this certificate this 5th day of
May, 2000.

                      WRP Convertible Trust I

                      By: /s/ James J. Burns
                          --------------------
                          Name: James J. Burns
                          Title: Regular Trustee
                          Solely as trustee and not in his individual capacity

<PAGE>

                      FORM OF CERTIFICATE OF AUTHENTICATION

INSTITUTIONAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION

     This is one of the  Convertible  Preferred  Securities  referred  to in the
within-mentioned Declaration.

Dated:  May 5, 2000



Wilmington Trust Company,
as Institutional Trustee                         or as Authentication Agent

By:                                              By:
    --------------------                           --------------------
    Authorized Signatory                           Authorized Signatory

<PAGE>


                           FORM OF REVERSE OF SECURITY

     Distributions  payable on each Convertible Preferred Security will be fixed
at a rate per annum of 8.25%  ($2.0625 per annum,  $0.515625 per quarter) of the
stated  liquidation  amount of $25 per Preferred Security from and including May
5, 2000  (the  "Issuance  Date") to and  including  May 4,  2022  (such  rate is
hereinafter  referred  to as the  "Coupon  Rate"),  such rate  being the rate of
interest payable on the Debentures to be held by the Institutional  Trustee. The
term  "Distributions"  as used herein includes such cash  distributions  and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent  that  payments  are made in respect  of the  Debentures  held by the
Institutional  Trustee  and to the extent the  Institutional  Trustee  has funds
available therefor. The amount of Distributions payable for the initial dividend
period (as defined in the  Declaration) and for any Dividend Period shorter than
a full dividend  period shall be prorated and will be computed on the basis of a
360-day year of twelve 30-day months.  Under  circumstances set forth in Annex I
to the  Declaration,  distributions  may  be  paid  by  issuance  of  additional
Convertible Preferred Securities

     Distributions on the Convertible  Preferred  Securities will be cumulative,
will  accrue  from May 5, 2000 and will be  payable  in  quarterly  payments  of
$0.515625 per Convertible Preferred Security in arrears, on the fifteenth day of
January,  April,  July and October in each year,  commencing  on July 17,  2000,
which  payment  dates shall  correspond  to the  interest  payment  dates on the
Debentures,  to Holders of record at the close of business on the regular record
date for such Distribution which shall be the close of business 15 days prior to
such Distribution Payment Date unless otherwise provided in the Declaration.

     The Convertible Preferred Securities shall be redeemable as provided in the
Declaration.

     The  Convertible  Preferred  Securities  shall be  convertible  into Common
Shares,  through (i) the  exchange of  Convertible  Preferred  Securities  for a
portion of the Debentures and (ii) the immediate  conversion of such  Debentures
into Debenture  Issuer Common  Shares,  in the manner and according to the terms
set forth in the Declaration.

<PAGE>

                               CONVERSION REQUEST

To: Wilmington Trust Company,
    as Institutional Trustee of WRP Convertible Trust I

     The undersigned  owner of these  Convertible  Preferred  Securities  hereby
irrevocably   exercises  the  option  to  convert  these  Convertible  Preferred
Securities,  or the portion  below  designated,  into Common Shares of Wellsford
Real Properties,  Inc. (the "Common Shares") in accordance with the terms of the
Declaration of Trust (the "Declaration"),  dated as of May 5, 2000, by Rodney F.
Du Bois and James J. Burns, as Regular  Trustees,  Wilmington Trust Company,  as
Delaware Trustee, Wilmington Trust Company, as Institutional Trustee, Wellsford,
as Sponsor,  and by the Holders,  from time to time,  of  individual  beneficial
interests in the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned  exercise of the option to convert  these  Convertible  Preferred
Securities, the undersigned hereby directs the Conversion Agent (as that term is
defined  in  the  Declaration)  to  (i)  exchange  such  Convertible   Preferred
Securities  for a portion  of the  Debentures  (as that term is  defined  in the
Declaration)  held by the Trust (at the rate of exchange  specified in the terms
of the Convertible Preferred Securities set forth as Annex I to the Declaration)
and (ii) immediately convert such Debentures on behalf of the undersigned,  into
Common Shares (at the conversion  rate specified in the terms of the Convertible
Preferred Securities set forth as Annex I to the Declaration).

     The  undersigned  does also  hereby  direct the  Conversion  Agent that the
shares  issuable and  deliverable  upon  conversion,  together with any check in
payment for  fractional  shares,  be issued in the name of and  delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person  other than the  undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.

Date: _______________, ____

                                               in  whole  _____  ______  in part
                                               _____   Number   of   Convertible
                                               Preferred    Securities   to   be
                                               converted:   ____________________
                                               If a name or names other than the
                                               undersigned,  please  indicate in
                                               the  spaces  below  the  name  or
                                               names in which the Common  Shares
                                               are to be issued,  along with the
                                               address  or   addresses  of  such
                                               person or persons.

                                               ---------------------------------
                                               ---------------------------------
                                               ---------------------------------

<PAGE>

   Signature (for conversion only)
   Please Print or Typewrite Name and Address,
   Including Zip Code, and Social Security or Other Identifying Number


<PAGE>


                  FORM OF ASSIGNMENT FOR DEFINITIVE CONVERTIBLE

                               PREFERRED SECURITY

For value received  ________________  _________  hereby  sell(s),  assign(s) and
transfer(s)                                                                 unto
__________________________________________________________________       (Please
insert social security or other taxpayer identification number of assignee.) the
within security and hereby  irrevocably  constitutes  and appoints  ____________
attorney to transfer the said  security on the books of the  Company,  with full
power of substitution in the premises.

In connection  with any transfer of the within  security  occurring prior to the
Transfer  Restriction  Termination  Date,  the  undersigned  confirms  that such
security is being transferred:

     / / To Wellsford Real Properties, Inc. or a subsidiary thereof; or

     / / Pursuant to and in compliance  with Rule 144A under the  Securities Act
of 1933, as amended; or

     / / To an Institutional  Accredited  Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or

     / / Pursuant to and in compliance  with  Regulation S under the  Securities
Act of 1933, as amended; or

     / / Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended;

     / / Pursuant to an effective registration statement; or

     / / To a taxable REIT subsidiary,  as defined in Code ss. 856(l), of Equity
Residential Properties Trust or any successor thereto.

and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

     / / The transferee is an Affiliate of the Company.

Dated: ___________________________

Signature(s)

<PAGE>

NOTICE:  The above  signatures of the holder(s)  hereof must correspond with the
name as  written  upon the face of this  Security  in every  particular  without
alteration or enlargement or any change whatever.

                                   EXHIBIT A-2

                       FORM OF COMMON SECURITY CERTIFICATE

CERTIFICATE NUMBER: C-1

NUMBER OF COMMON SECURITIES: 31,000

                    Certificate Evidencing Common Securities
                                       of

                             WRP CONVERTIBLE TRUST I

                       8.25% Convertible Common Securities
                 (liquidation amount $25.00 per Common Security)

     THE  SECURITY  EVIDENCED  HEREBY  HAS NOT BEEN  REGISTERED  UNDER  THE U.S.
     SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE   "SECURITIES   ACT"),   AND,
     ACCORDINGLY,  MAY NOT BE  OFFERED  OR SOLD  UNLESS  SUCH OFFER AND SALE ARE
     REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION  UNDER THE SECURITIES ACT.
     THE  TRANSFER  OF THE  SECURITY  EVIDENCED  HEREBY IS ALSO  SUBJECT  TO THE
     RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.

     WRP Convertible  Trust I, a statutory  business trust formed under the laws
of the State of Delaware (the  "Trust"),  hereby  certifies  that Wellsford Real
Properties,  Inc. (the "Holder") is the registered owner of common securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated  the 8.25% Common  Securities  (liquidation  amount $25.00 per Common
Security) (the "Common  Securities").  The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized  attorney,
upon  surrender  of this  certificate  duly  endorsed  and in  proper  form  for
transfer.

     The designation,  rights, privileges,  restrictions,  preferences and other
terms and provisions of the Common Securities  represented hereby are issued and
shall in all respects be

<PAGE>

subject to the  provisions of the  Declaration of Trust of the Trust dated as of
May 5, 2000,  as the same may be amended from time to time (the  "Declaration"),
including the designation of the terms of the Common  Securities as set forth in
Annex I to the Declaration.

     Capitalized terms used herein but not defined shall have the meanings given
them in the  Declaration.  The Holder is entitled to the  benefits of the Common
Securities  Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration,  the Common Securities Guarantee and the Indenture to a
Holder without charge upon written  request to the Trust at its principal  place
of business.

     Upon receipt of this  certificate,  the Holder is bound by the  Declaration
and is entitled to the benefits thereunder.

     By acceptance, the Holder agrees to treat, for United States federal income
tax  purposes,  the  Debentures  as  indebtedness  and the Common  Securities as
evidence of indirect beneficial ownership in the Debentures.

     IN WITNESS WHEREOF, the Trust has executed this certificate this 5th day of
May, 2000.

                      WRP Convertible Trust I

                           By: /s/ James J. Burns
                               --------------------
                               Name: James J. Burns
                               Title: Regular Trustee
                               Solely as trustee and not in his
                                    individual capacity

<PAGE>

                           FORM OF REVERSE OF SECURITY

     Distributions  payable on each Common  Security will be fixed at a rate per
annum,  of 8.25%  ($2.0625  per  annum,  $0.515625  per  quarter)  of the stated
liquidation amount of $25 per Common Security, from and including May 5, 2000 to
but excluding May 4, 2022 (such rate is  hereinafter  referred to as the "Coupon
Rate") such rate being the rate of interest payable on the Debentures to be held
by the Institutional  Trustee.  The term "Distributions" as used herein includes
such cash distributions and any such interest payable unless otherwise stated. A
Distribution  is payable only to the extent that payments are made in respect of
the  Debentures  held  by  the  Institutional  Trustee  and to  the  extent  the
Institutional Trustee has funds available therefor.  The amount of Distributions
payable for the initial  dividend period (as defined in the Declaration) and for
any Dividend  Period  shorter  than a ful dividend  period shall be prorated and
will be computed on the basis of a 360-day year of twelve 30-day  months.  Under
circumstances set forth in Annex I to the Declaration,  distribution may be paid
by issuance of additional Common Securities.

     Distributions on the Common Securities will be cumulative, will accrue from
May 5, 2000 and will be payable in quarterly  payments of  $0.515625  per Common
Security in arrears, on the fifteenth day of January, April, July and October in
each year,  commencing on July 17, 2000, which payment dates shall correspond to
the interest payment dates on the Debentures,  to Holders of record at the close
of business on the regular record date for such Distribution  which shall be the
close  of  business  15 days  prior to such  Distribution  Payment  Date  unless
otherwise provided in the Declaration.

     The Common Securities shall be redeemable as provided in the Declaration.

     The Common Securities shall be convertible into Common Shares,  through (i)
the exchange of Common  Securities  for a portion of the Debentures and (ii) the
immediate  conversion of such Debentures into Debenture Issuer Common Shares, in
the manner and according to the terms set forth in the Declaration.

<PAGE>

                               CONVERSION REQUEST

To:  Wilmington Trust Company,
     as Institutional Trustee of WRP Convertible Trust I

     The  undersigned  owner  of  these  Common  Securities  hereby  irrevocably
exercises  the option to convert these Common  Securities,  or the portion below
designated,  into Common Shares of Wellsford Real Properties,  Inc. (the "Common
Shares")  in  accordance  with  the  terms  of the  Declaration  of  Trust  (the
"Declaration"), dated as of May 5, 2000 by Rodney F. Du Bois and James J. Burns,
as Regular Trustees,  Wilmington Trust Company, as Delaware Trustee,  Wilmington
Trust Company,  as Institutional  Trustee,  Wellsford Real Properties,  Inc., as
Sponsor,  and by the  Holders,  from  time to  time,  of  individual  beneficial
interests in the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned  exercise of the option to convert these Common  Securities,  the
undersigned  hereby directs the Conversion Agent (as that term is defined in the
Declaration)  to (i)  exchange  such  Common  Securities  for a  portion  of the
Debentures  (as that term is defined in the  Declaration)  held by the Trust (at
the rate of exchange  specified in the terms of the Common  Securities set forth
as Annex I to the Declaration)  and (ii) immediately  convert such Debentures on
behalf of the undersigned,  into Common Shares (at the conversion rate specified
in the terms of the Common Securities set forth as Annex I to the Declaration).

     The  undersigned  does also  hereby  direct the  Conversion  Agent that the
shares  issuable and  deliverable  upon  conversion,  together with any check in
payment for  fractional  shares,  be issued in the name of and  delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person  other than the  undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.

Date: _______________, ____

                                               in  whole  _____  ______  in part
                                               _____   Number   of   Convertible
                                               Preferred    Securities   to   be
                                               converted:   ____________________
                                               If a name or names other than the
                                               undersigned,  please  indicate in
                                               the  spaces  below  the  name  or
                                               names in which the Common  Shares
                                               are to be issued,  along with the
                                               address  or   addresses  of  such
                                               person or persons.

                                               ---------------------------------
                                               ---------------------------------
                                               ---------------------------------
                                                 Signature (for conversion only)

<PAGE>

             Please Print or Typewrite Name and Address,
             Including Zip Code, and Social Security or Other Identifying Number

                                               ---------------------------------
                                               ---------------------------------

<PAGE>

                       FORM OF ASSIGNMENT FOR SECURITY OR
                 COMMON SHARES ISSUABLE UPON CONVERSION THEREOF

For  value  received   ________________________________________hereby   sell(s),
assign(s)                 and                  transfer(s)                  unto
______________________________________________________(Please    insert   social
security  or other  taxpayer  identification  number of  assignee.)  the  within
security and hereby irrevocably  constitutes and appoints  ____________ attorney
to transfer the said  security on the books of the  Company,  with full power of
substitution in the premises.

In connection  with any transfer of the within  security  occurring prior to the
Transfer  Restriction  Termination  Date,  the  undersigned  confirms  that such
security is being transferred:

     / / To Wellsford Real Properties, Inc. or a subsidiary thereof; or

     / / Pursuant to and in compliance  with Rule 144A under the  Securities Act
of 1933, as amended; or

     / / To an Institutional  Accredited  Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or

     / / Pursuant to and in compliance  with  Regulation S under the  Securities
Act of 1933, as amended; or

     / / Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended; or

     / / Pursuant to an effective registration statement.

and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):

     / / The transferee is an Affiliate of the Company.

Dated: ____________________________

Signature(s)

<PAGE>

NOTICE:  The above  signatures of the holder(s)  hereof must correspond with the
name as  written  upon the face of this  Security  in every  particular  without
alteration or enlargement or any change whatever.

<PAGE>

                                    EXHIBIT B

                              SPECIMEN OF DEBENTURE

<PAGE>