Document:

Archstone-Smith Trust

 

EXHIBIT 10.1

ARCHSTONE-SMITH OPERATING TRUST

SERIES E CUMULATIVE REDEEMABLE PREFERRED

UNITS OF BENEFICIAL INTEREST

Articles Supplementary Reclassifying

and Designating a Series of Preferred Units as

Series E Cumulative Redeemable Preferred Units of Beneficial Interest

and Fixing Distribution and Other Preferences and Rights of Such Series

                  Archstone-Smith Operating Trust, a Maryland real estate investment trust
(the “Trust”), hereby certifies to the State Department of Assessments and
Taxation of Maryland pursuant to section 8-203(b) of the Corporations and
Associations Article of the Annotated Code of Maryland that:

                  FIRST: Pursuant to the authority granted and vested in the sole trustee
of the Trust (the “Trustee”) by Article 2, Section 1(c) of the Declaration of
Trust of the Trust, (the “Declaration of Trust”), the Trustee has reclassified
1,600,000 unissued Series E Cumulative Convertible Redeemable Preferred Units
of Beneficial Interest of the Trust as Series E Cumulative Redeemable Preferred
Units of Beneficial Interest, $0.01 par value per share (the “Series E
Preferred Units”).

                  SECOND: The following is a description of the Series E Preferred Units,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption thereof, which, upon any
restatement of the Declaration of Trust, shall be deemed to be a part of
Article 2 of the Declaration of Trust, with any necessary or appropriate
changes to the enumeration or lettering of any section or subsection thereof:

                  Section 1. Number of Units and Designation. This class of preferred Units
shall be designated as Series E Cumulative Redeemable Preferred Units of
Beneficial Interest (“Series E Preferred Units”) and the number of shares which
shall constitute such series shall be 1,600,000 Units, par value $0.01 per
unit.

                  Section 2. Definitions. For purposes of the Series E Preferred Units, the
following terms shall have the meanings indicated:

		
	 	         “Beneficial Ownership” shall mean, except as provided below in the
following sentence, ownership of shares of beneficial interest of the Trustee
by a Person (whether or not treated as an individual for purposes of Section
544 of the Code) who is or would be treated as an owner of such shares of
beneficial interest of the Trustee either directly or constructively through
the application of 544 of the Code, as modified by Section 658(h)(1)(B) of the
Code. “Beneficial Ownership” shall also mean beneficial ownership as defined
under Rule 13(d) under the Exchange Act and, with respect to such meaning,
Beneficial Ownership by any Person shall include Beneficial Ownership by other
Persons who are part of the same group as the original Person for purposes of
such Rule 13(d). The term Beneficially Own shall have correlative meanings.

		
	 	         “Business Day” shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York City, New York are not required to be open.
	 
	 	         “Call Date” shall mean the date specified in the notice to holders
required under Section 5 below as the Call Date.
	 
	 	         “Capital Account” shall have the meaning set forth in Annex A to the
Declaration of Trust.
	 
	 	         “Ceiling Period” shall have the meaning set forth in Section 16.
	 
	 	         “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time.

 

 

		
	 	         “Common Units” shall mean the Class A-1 Common Units, par value
$0.01 per unit, the Class A-2 Common Units, par value $0.01 per unit, and
the Class B Common Units, par value $0.01 per unit, of the Trust.
	 
	 	         “Distribution Payment Date” shall mean (i) the last calendar day of
March, June, September and December in each year, commencing with
September 30, 2002 and (ii) in the event of (A) an exchange of Series E
Preferred Units into Series E Preferred Shares, or (B) a redemption of
Series E Preferred Units, on the exchange date or redemption date, as
applicable.

		
	 	         “Distribution Periods” shall mean quarterly distribution periods
commencing on the 1st calendar day of January, April, July and October of
each year and ending on and including the day preceding the first day of
the next succeeding Distribution Period.
	 
	 	         “Distribution Record Date” shall have the meaning set forth in
Section 3.
	 
	 	         “Edgewater” shall mean Edgewater Equity Partners, L.P., a Delaware
limited partnership.
	 
	 	         “Emerging Growth” shall mean DLJ Emerging Growth Partners, L.P., a
Delaware limited partnership.
	 
	 	         “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
	 
	 	         “Fully Junior Units” shall mean the Common Units and any other class
or series of Units of the Trust now or hereafter issued and outstanding
to which the Series E Preferred Units have preference or priority in
both (i) the payment of distributions and (ii) the distribution of assets
on any liquidation, dissolution or winding up of the Trust.
	 
	 	         “GAAP” shall mean generally accepted accounting principles applied
on a consistent basis.
	 
	 	         “Indebtedness” shall mean, with respect to any Person: (i) all
obligations for borrowed money, (ii) all obligations evidenced by bonds,
notes, debentures or similar instruments, (iii) indebtedness secured by
any mortgage, pledge, lien, charge, encumbrance or any security interest
existing on property owned by such Person, (iv) the reimbursement
obligations of such Person, contingent or otherwise, in connection with
any letters of credit actually issued or amounts representing the balance
deferred and unpaid of the purchase price of any property or services,
except any such balance that constitutes an accrued expense or trade
payable, or all conditional sale obligations or obligations under any
title retention agreement, (v) the principal amount of all obligations of
such Person with respect to redemption, repayment or other repurchase of
any disqualified stock or (vi) any leas of property by such Person as
lessee which is reflected on the consolidation balance sheet of such
Person as a capitalized lease in accordance with GAAP to the extent, in
case of items of indebtedness under (i) through (iv) above, that any such
items (other than letters of credit) would appear as a liability on the
consolidated balance sheets of such Person in accordance with GAAP, and
also includes, to the extent not otherwise included, any obligations by
such Person to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course
of business), indebtedness of another Person.
	 
	 	         “Junior Units” shall mean the Common Units and any other class or
series of Units of the Trust now or hereafter issued and outstanding to
which the Series E Preferred Units have preference or priority in either
(i) the payment of distributions or (ii) the distribution of assets on
any liquidation, dissolution or winding up of the Trust and, unless the
context clearly indicates otherwise, shall include Fully Junior Units.
	 
	 	         “Net Asset Value” means, with respect to the Trust, (a) the Net
Operating Income divided by 0.085, less (B) all Indebtedness of the
Trust.
	 
	 	         “Net Income” shall have the meaning set forth in Annex A to the
Declaration of Trust.
	 
	 	         “Net Operating Income” means with respect to the Trust, (a) any cash
rentals, proceeds and other income received by the Trust (but excluding
security or other deposits, late fees, early lease termination or other
penalties, or other income of a non-recurring nature), less (b) all cash
costs and expenses (excluding interest expense and any expenditures that
are capitalized in accordance with GAAP) incurred as a result of,

 

 

		
	 	or in connection with, or properly allocated to, the operation of
the Trust, in each case with respect to the twelve (12) most recently
concluded calendar months prior to the date of determination.
	 
	 	         “Ownership Limit” shall initially mean 9.8% in number of Shares or
value, of the outstanding Shares, and, after any adjustment provided for
in the Amended and Restated Declaration of Trust of the Trustee, shall
mean such lesser or greater percentage of the outstanding Shares as so
adjusted. The number and value of the outstanding Shares shall be
determined by the board of trustees of the Trustee in good faith, which
determination shall be conclusive for all purposes thereof.
	 
	 	         “Parity Units” shall have the meaning set forth in Section 7.
	 
	 	         “Parity Shares” shall mean Shares on parity with the Series E
Preferred Shares, in the payment of distributions and in the distribution
of assets on any liquidation, dissolution or winding up of the Trustee,
whether or not the distribution rates, distribution payment dates or
redemption or liquidation prices per share thereof are different from
those of the Series E Preferred Shares.
	 
	 	         “Person” shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity.
	 
	 	         “PTP” shall mean a “publicly traded partnership” within the meaning
of Section 7704 of the Code.
	 
	 	         “Securities Act” shall mean the Securities Act of 1933, as amended
from time to time.
	 
	 	         “Series E Preferred Shares” shall mean Series E Cumulative
Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per
share, of the Trustee.
	 
	 	         “set apart for payment” shall be deemed to include, without any
action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to authorization or declaration of distributions or
other distribution by the Trustee, the allocation of funds to be so paid
on any class or series of Units of the Trust; provided, however, that if
any funds for any Junior Units or any Parity Units are placed in a
separate account of the Trust or delivered to a disbursing, paying or
other similar agent, then “set apart for payment” with respect to the
Series E Preferred Units shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar
agent.
	 
	 	         “Shares” shall mean shares of beneficial interest of the Trustee.
	 
	 	         “Trustee” shall mean Archstone-Smith Trust, a Maryland real estate
investment trust, the sole trustee of the Trust.
	 
	 	         “Units” shall mean the shares of beneficial interest, par value
$0.01 per share, of the Trust, which have been designated as Units in the
Declaration of Trust.

                  Section 3. Distributions.

                  (a) General. The holders of Series E Preferred Units shall be entitled to
receive, when, as and if authorized or declared by the Trustee, out of funds
legally available for such purpose, cash distributions in an amount per share
equal to 8.375% of the liquidation preference per annum (equivalent to $2.09375
per share). Such distributions shall be cumulative, shall accrue from the
original date of issuance and will be payable on each Distribution Payment
Date. The amount of the distribution payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and for any period
shorter than a full quarterly period for which distributions are computed, the
amount of the distribution payable will be computed on the basis of the actual
number of days elapsed in such period. If any Distribution Payment Date is not
a Business Day, then payment of the distribution to be made 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. Distributions on the Series E
Preferred Units will be made to the holders of record of the Series E

 

 

Preferred Units on the relevant record dates to be fixed by the Trustee,
which record dates shall in no event exceed fifteen (15) Business Days prior to
the relevant Distribution Payment Date.

                  (b) Cumulative Distributions. Distributions on the Series E Preferred
Units will accrue whether or not the terms and provisions of any agreement of
the Trust, including any agreement relating to its indebtedness, at any time
prohibit the current payment of distributions, whether or not the Trust has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized.
Accrued but unpaid dividends on the Series E Preferred Units will accumulate as
of the Distribution Payment Date on which they first become payable.
Distributions on account of arrears for any past distribution periods may be
declared and paid at any time, without reference to a regular Distribution
Payment Date to holders of record of the Series E Preferred Units on the record
date fixed by the Trustee which date shall not exceed fifteen (15) Business
Days prior to the Distribution Payment Date. Accumulated and unpaid
distributions will not bear interest nor shall there be any accrual accounts
maintained for the Series E Preferred Shares.

                  (c) Priority as to Distributions. (i) So long as any Series E Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Junior Units of the Trust, nor shall any cash or other
property be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series E Preferred Units, any Parity Units
or any Junior Units, unless, in each case, all distributions accumulated on all
Series E Preferred Units and all classes and series of outstanding Parity Units
have been paid in full. The foregoing sentence will not prohibit (a)
distributions payable solely in Junior Units, (b) the conversion of Junior
Units or Parity Units into Units of the Trust ranking junior to the Series E
Preferred Units as to distributions, or (c) the redemption of Units
corresponding to any Series E Preferred Shares, Shares raking on parity with
the Series E Preferred Shares with respect to distributions or Shares ranking
junior to the Series E Preferred Shares to be purchased by the Trustee pursuant
to Sections 18 and 18A of Article II of the Declaration of Trust of the Trustee
to preserve the Trustee’s status as a real estate investment trust, provided
that such redemption shall be upon the same terms as the corresponding purchase
pursuant to said Section 18 and 18A of Article II of the Declaration of Trust
of the Trustee.

                  (ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series E Preferred Units, all distributions authorized and
declared on the Series E Preferred Units and all classes or series of
outstanding Parity Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series E Preferred Unit and such
other classes or series of Parity Units shall in all cases bear to each other
the same ratio that accrued distributions per Series E Preferred Unit and such
other classes or series of Parity Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Units do not have cumulative distribution
rights) bear to each other.

                  (d) No Further Rights. Holders of Series E Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                  Section 4. Liquidation Preference.

                  (a) Distributions upon Liquidation. Upon any liquidation, dissolution or
winding up of the Trust, whether voluntary or involuntary, before any payment
or distribution of the assets of the Trust (whether capital or surplus) is made
to or set apart for the holders of the Common Units or any other class or
series of Units of the Trust now or hereafter issued and outstanding to which
the Series E Preferred Units have preference or priority in the distribution of
assets on any liquidation, dissolution or winding up of the Trust, the holders
of Series E Preferred Units shall be entitled to receive out of assets of the
Trust legally available for such purpose, liquidating distributions in the
amount of $25.00 per Series E Preferred Unit, plus an amount equal to all
distributions (whether or not earned or authorized or declared) accrued and
unpaid thereon to the date of final distribution to such holders, if any; but
such holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Trust, the assets of the Trust,
or the proceeds thereof, distributable among the holders of Series E Preferred
Units are insufficient to pay in full such preferential amount with respect to
the Series E Preferred Units and the corresponding amounts with respect to all
Parity Units, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series E Preferred Units and all such Parity Units in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.

                  (b) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Trust, stating the payment date
or dates when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than

 

 

thirty (30) and not more than sixty (60) days prior to the payment date
stated therein, to each record holder of Series E Preferred Units at the
respective addresses of such holders as the same shall appear on the transfer
records of the Trust.

                  (c) No Further Rights. Subject to the rights of the holders of shares of
any class or series of Units ranking on a parity with or senior to the Series E
Preferred Units in the distribution of assets on any liquidation, dissolution
or winding up of the Trust, upon any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, after payment has been made in
full to the holders of Series E Preferred Units, as provided herein, the
holders of any Junior Units shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of Series E Preferred
Units shall not be entitled to share therein.

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

                  Section 5. Redemption at the Option of the Trust.

                  (a) Right of Optional Redemption. Series E Preferred Units are not
redeemable by the Trust prior to August 13, 2004. On or after such date, the
Trust shall have the right to redeem the Series E Preferred Units, in whole or
in part, at any time or from time to time, upon not less than thirty (30) nor
more than sixty (60) days’ written notice, for cash at a redemption price of
$25.00 per Series E Preferred Unit plus the amount indicated in subsection (b)
below (the “Redemption Price”). If fewer than all of the outstanding Series E
Preferred Units are to be redeemed, the Series E Preferred Units to be redeemed
shall be selected pro rata (as nearly as practicable without creating
fractional units).

                  (b) Payment of Accrued and Unpaid Distributions. Upon any redemption of
Series E Preferred Units pursuant to this Section 5, the Trust shall pay all
distributions accrued and unpaid thereon, if any, in arrears for any
Distribution Period ending on or prior to the Call Date. If the Call Date
falls after a Distribution Record Date and prior to the corresponding
Distribution Payment Date, then each holder of such Series E Preferred Units at
the close of business on such Distribution Record Date shall be entitled to
receive the distribution payable on such Series E Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption of such
Series E Preferred Units before such Distribution Payment Date. Except as
provided above, the Trust shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series E Preferred Units called
for redemption.

                  (c) Limitation on Redemption. The Trust may not redeem fewer than all of
the outstanding Series E Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series E Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                  (d) Procedures for Redemption.

		
	 	         (i) Notice of redemption will be (A) faxed, and (B) mailed by the
Trust, by certified mail, postage prepaid, not less than thirty (30) nor
more than sixty (60) days prior to the redemption date, addressed to the
respective holders of record of the Series E Preferred Units at their
respective addresses as they appear on the records of the Trust. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series E Preferred Units except as
to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall
state: (1) the redemption date, (2) the Redemption Price, (3) the
aggregate number of Series E Preferred Units to be redeemed and if fewer
than all of the outstanding Series E Preferred Units are to be redeemed,
the number of Series E Preferred Units to be redeemed held by such
holder, which number shall equal such holder’s pro rata share (based on
the percentage of the aggregate number of outstanding Series E Preferred
Units the total number of Series E Preferred Units held by such holder
represents) of the aggregate number of Series E Preferred Units to be
redeemed, (4) the place or places where such Series E Preferred Units are
to be surrendered for payment of the Redemption Price, (5) that
distributions on the Series E Preferred Units to be redeemed will cease
to accumulate on such redemption date and (6) that payment of the
Redemption Price will be made upon presentation and surrender of such
Series E Preferred Units.

 

 

		
	 	         (ii) If the Trust gives a notice of redemption in respect of Series
E Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Trust will deposit
irrevocably in trust for the benefit of the Series E Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price
and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Series E Preferred Units upon
surrender of the Series E Preferred Units by such holders at the place
designated in the notice of redemption. If the Series E Preferred Units
are evidenced by a certificate and if fewer than all Series E Preferred
Units evidenced by any certificate are being redeemed, a new certificate
shall be issued upon surrender of the certificate evidencing all Series E
Preferred Units, evidencing the unredeemed Series E Preferred Units
without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series E Preferred Units or
portions thereof called for redemption, unless the Trust defaults in the
payment thereof. If any date fixed for redemption of Series E Preferred
Units is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price is improperly
withheld or refused and not paid by the Trust, distributions on such
Series E Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the applicable Redemption Price.

                  Section 6. Units to Be Retired. All Series E Preferred Units which are
issued and reacquired in any manner by the Trust (other than the exchange of
Series E Preferred Units for Series E Preferred Shares pursuant to Section 9
hereof whereby the Trustee shall hold all of such Series E Preferred Units so
exchanged) shall be restored to the status of authorized but unissued Units of
the Trust, without designation as to class or series.

                  Section 7. Ranking. Any class or series of Units of the Trust shall be
deemed to rank:

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

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

		
	 	         (iii) junior to the Series E Preferred Units, in the payment of
distributions or in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, if such class or series is Junior
Units; and
	 
	 	         (iv) junior to the Series E Preferred Units, in the payment of
distributions and in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, if such class or series is Fully
Junior Units.

                  Section 8. Voting.

                  (a) General. Holders of the Series E Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the holders of Units, except as set forth in Sections 5.3 and 12.4
of Annex A to the Declaration of Trust and except as set forth below.

                  (b) Certain Voting Rights. So long as any Series E Preferred Units remain
outstanding, the Trust shall not, without the affirmative vote of the holders
of at least two-thirds of the Series E Preferred Units outstanding at the time
(i) authorize or create, or increase the authorized or issued amount of, any
class or series of Units senior to the Series E Preferred Units with respect to
payment of distributions or rights upon liquidation, dissolution or winding-up
or reclassify any Units of the Trust into any such senior Units, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such senior Units, (ii) authorize or create, or
increase

 

 

the authorized or issued amount of any Parity Units or reclassify any
Units into any such Units or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such Units
but only to the extent such Parity Units are issued to an affiliate of the
Trust, other than the Trustee to the extent the issuance of such
interests was to allow the Trustee to issue corresponding preferred shares
to persons who are not affiliates of the Trustee or (iii) either (A)
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or (B) amend,
alter or repeal the provisions of the Declaration of Trust, whether by merger,
consolidation or otherwise, that would materially and adversely affect the
powers, special rights, preferences, privileges or voting power of the Series E
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of a merger, consolidation or a sale or lease of all of the
Trust’s assets as an entirety, so long as (1) the Trust is the surviving entity
and the Series E Preferred Units remain outstanding with the terms thereof
unchanged, or (2) the resulting, surviving or transferee entity is a
partnership, limited liability company or other pass-through entity organized
under the laws of any state and substitutes the Series E Preferred Units for
other interests in such entity having substantially the same terms and rights
as the Series E Preferred Units, including with respect to distributions,
voting rights and rights upon liquidation, dissolution or winding-up, then the
occurrence of any such event shall not be deemed to materially and adversely
affect such rights, privileges or voting powers of the holders of the Series E
Preferred Units; and provided further that any increase in the amount of Units
or the creation or issuance of any other class or series of Units, in each case
ranking (y) junior to the Series E Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or
winding-up, or (z) on a parity with the Series E Preferred Units with respect
to payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up, to the extent such Units are issued to the Trustee
and the issuance of such Units was to allow the Trustee to issue corresponding
preferred shares to persons who are not affiliates of the Trust, shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.

                  Section 9. Exchange Right.

		
	 	         (a) Right to Exchange. (i) Series E Preferred Units will be
exchangeable in whole or in part at anytime on or after August 13, 2009
at the option of either the holders thereof or the Trustee, for
authorized but previously unissued Series E Preferred Shares at an
exchange rate of one Series E Preferred Share for one Series E Preferred
Unit, subject to adjustment as described below (the “Exchange
Price”);
provided, the Series E Preferred Units will become exchangeable at any
time, in whole or in part, at the option of the holders of Series E
Preferred Units for Series E Preferred Shares if (x) at any time full
distributions shall not have been timely made on any Series E Preferred
Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in
respect of Series E Preferred Units shall be considered timely made if
made within two (2) Business Days after the applicable Distribution
Payment Date if at the time of such late payment there shall not be any
prior quarterly distribution periods in respect of which full
distributions were not timely made, (y) upon receipt by a holder or
holders of Series E Preferred Units of (1) notice from the Trustee that
the Trustee or a subsidiary of the Trustee has taken the position that
the Trust is, or upon the occurrence of a defined event which is likely
to occur in the immediate future will be, a PTP and (2) an opinion
rendered by an outside nationally recognized independent counsel familiar
with such matters addressed to a holder or holders of Series E Preferred
Units, that the Trust is or likely is, or upon the occurrence of a
defined event which is likely to occur in the immediate future will be or
likely will be, a PTP or (z) the Net Asset Value of the Trust in any
fiscal quarter of the Trust is less than $50,000,000. In addition, the
Series E Preferred Units may be exchanged for Series E Preferred Shares,
in whole or in part, at the option of any holder prior to August 13, 2009
if such holder of a Series E Preferred Unit shall deliver to the Trustee
either (i) a private letter ruling addressed to such holder of Series E
Preferred Units or (ii) an opinion of independent counsel reasonably
acceptable to the Trustee based on the enactment of a statute, temporary
or final Treasury Regulations or the publication of a Revenue Ruling or
other Internal Revenue Service release, in either case to the effect that
an exchange of the Series E Preferred Shares at such earlier time would
not cause the Series E Preferred Units to be considered “stock or
securities” within the meaning of section 351(e) of the Code for purposes
of determining whether the holder of such Series E Preferred Units is an
“investment company” under section 721(b) of the Code if an exchange is
permitted at such earlier date. Furthermore, the Series E Preferred
Units may be exchanged for Series E Preferred Shares in whole but not in
part by any holder thereof which is a real estate investment trust within
the meaning of Sections 856 through 859 of the Code (but only if the
exchange in whole may be accomplished consistently with the ownership
limitations set forth under Sections 18 and 18A of Article II of the
Declaration of Trust of the Trustee (taking into account exceptions
thereto)) if at any time, (i) the Trust reasonably determines that the
assets and income of the Trust for a taxable year after 1999 would not
satisfy the income and assets tests of Section 856 of the Code for such
taxable ye
ar if the Trust were a real estate investment trust within the
meaning of the Code or (ii) any such holder of Series E Preferred Units
shall deliver to the Trust and the Trustee an opinion of independent
counsel reasonably acceptable to the Trustee to the effect that, based on

 

 

		
	 	the assets and income of the Trust for a taxable year after 1999, the
Trust would not satisfy the income and assets tests of Section 856 of the
Code for such taxable year if the Trust were a real estate investment
trust within the meaning of the Code and that such failure would create a
meaningful risk that a holder of Series E Preferred Units would fail to maintain qualification as a real
estate investment trust. Furthermore, the Series E Preferred Units held
by or through either Edgewater or Emerging Growth may be exchanged in
whole or in part for Series E Preferred Shares at any time after the date
hereof, if (1) the cumulative amount of cash distributions not made to
any such holder of Series E Preferred Units as a result of Section 16
hereof exceeds five percent (5%) of the amount otherwise due for a
twelve-month period and such shortfall is not, based on a determination
made by the certified public accounting firm that audits the financial
statements of such holder of Series E Preferred Units (at such holder’s
expense), reasonably expected to be eliminated within eighteen (18)
months following the date of such determination or (2) if both (a)
Edgewater or Emerging Growth concludes based on results or projected
results that there exists (in the reasonable judgment of such holder) an
imminent and substantial risk that the holder’s interest in the Trust
will represent more than 19.9% of the total profits for a period after
the Ceiling Period or capital interests in the Trust (determined in
accordance with Treasury regulations Section 1.731-2(e)(4)) for a taxable
year, and (b) Edgewater or Emerging Growth delivers to the Trustee an
opinion of nationally recognized independent counsel to the effect that
there is an imminent and substantial risk that the holder’s interest in
the Trust will represent more than 19.9% of the total profits for a
period after the Ceiling Period or capital interests in the Trust
(determined in accordance with Treasury regulations Section
1.731-2(e)(4)) for a taxable year (or portion thereof in which the
relative interests of the holders of Units may vary from their relative
interests for an immediately preceding and/or immediately succeeding
portion thereof). In order to enable Edgewater or Emerging Growth, as
appropriate, (or either of their relevant advisors) to make the
determinations required in (1) and (2) in the immediately preceding
sentence, the Trustee covenants to notify Edgewater or Emerging Growth,
as appropriate, promptly in the event it reasonably anticipates or
realizes that (i) either Edgewater or Emerging Growth, as appropriate,
may be allocated or otherwise entitled (without regard to the provisions
of Section 16 hereof) to more than 19.9% of the Net Income allocated to
the Capital Accounts of the holders of Units in accordance with Section
704(b) of the Code for any taxable year (or portion thereof in which the
relative interests of the holder of Units may vary from their relative
interests for an immediately preceding and/or immediately succeeding
portion thereof) or (ii) such holder’s Capital Account balance may
represent more than 19.9% of the total equity capital of the Trust
(determined on a fair market value basis) for any taxable year (or any
such portion thereof) from February 4, 2000.

		
	 	         (ii) Notwithstanding anything to the contrary set forth in Section
9(a)(i) hereof, if an Exchange Notice (as defined herein) has been
delivered to the Trustee, then the Trustee may, at its option, elect to
redeem or cause the Trust to redeem all or a portion of the outstanding
Series E Preferred Units for cash in an amount equal to the Redemption
Price that would be payable as of the date of such redemption in
accordance with the procedures set forth in Section 5(d) hereof. The
Trustee may exercise its option to redeem the Series E Preferred Units
for cash pursuant to this Section 9(a)(ii) hereof by giving each holder
of record of Series E Preferred Units notice of its election to redeem
for cash, within thirty (30) Business Days after receipt of the Exchange
Notice, by (x) fax, and (y) registered mail, postage paid, at the address
of each holder as it may appear on the records of the Trust stating (A)
the redemption date, which shall be no later than sixty (60) days
following the receipt of the Exchange Notice, (B) the redemption price,
(C) the place or places where the Series E Preferred Units are to be
surrendered for payment of the redemption price, (D) that distributions
on the Series E Preferred Units will cease to accrue on such redemption
date, (E) that payment of the redemption price will be made upon
presentation and surrender of the Series E Preferred Units and (F) the
aggregate number of Series E Preferred Units to be redeemed, and if fewer
than all of the outstanding Series E Preferred Units are to be redeemed,
the number of Series E Preferred Units to be redeemed held by such
holder, which number shall equal such holder’s pro rata share (based on
the percentage of the aggregate number of outstanding Series E Preferred
Units the total number of Series E Preferred Units held by such holder
represents) of the aggregate number of Series E Preferred Units being
redeemed.

		
	 	         (iii) In the event an exchange of all or a portion of Series E
Preferred Units pursuant to Section 9(a)(i) hereof would violate the
provisions on ownership limitation of the Trustee set forth in the
Declaration of Trust of the Trustee, the Trustee shall give written
notice thereof to each holder of record of Series E Preferred Units,
within thirty (30) Business Days following receipt of the Exchange
Notice, by (x) fax, and (y) registered mail, postage prepaid, at the
address of each such holder set forth in the records of the Trust. In
such event, each holder of Series E Preferred Units shall be entitled to
exchange, pursuant to the provision of Section 9(b) a number of Series E
Preferred Units which would comply with the provisions on the ownership
limitation of the Trustee set forth in the Declaration of Trust and any
Series E Preferred Units not so exchanged (the “Excess
Units”) shall be
redeemed by the Trust for cash in an amount equal to $25.00, plus 

 

 

		
	 	any
accrued and unpaid distributions thereon, whether or not declared, to the
date of redemption. The written notice of the Trustee shall state (A)
the number of Excess Units held by such holder, (B) the redemption price
of the Excess Units, (C) the date on which such Excess Units shall be
redeemed, which date shall be no later
than sixty (60) days following the receipt of the Exchange Notice,
(D) the place or places where such Excess Units are to be surrendered for
payment of the redemption price, (E) that distributions on the Excess
Units will cease to accrue on such redemption date, and (F) that payment
of the redemption price will be made upon presentation and surrender of
such Excess Units. In the event an exchange would result in Excess
Units, as a condition to such exchange, each holder of such units agrees
to provide representations and covenants reasonably requested by the
Trustee relating to (1) the widely held nature of the interests in such
holder, sufficient to assure the Trustee that the holder’s ownership of
shares of the Trustee (without regard to the limits described above) will
not cause any individual to Beneficially Own in excess of the Ownership
Limit; and (2) to the extent such holder can so represent and covenant
without obtaining information from its owners, the holder’s ownership of
tenants of the Trust and its affiliates.

		
	 	         (b) Procedure for Exchange. (i) Any exchange pursuant to the terms
herein (including Section 9(a)(i)) shall be exercised pursuant to a
notice of exchange (the “Exchange Notice”) delivered to the Trustee by
the holder who is exercising such exchange right, by (A) fax and (B) by
certified mail postage prepaid. The exchange of Series E Preferred
Units, or a specified portion thereof, may be effected after the fifth
(5th) Business Day following receipt by the Trustee of the Exchange
Notice by delivering certificates, if any, representing such Series E
Preferred Units to be exchanged together with, if applicable, written
notice of exchange and a proper assignment of such Series E Preferred
Units to the office of the Trustee maintained for such purpose.
Currently, such office is 9200 E. Panorama, Suite 400, Englewood,
Colorado 80112, Attention: Chief Financial Officer. Each exchange will
be deemed to have been effected immediately prior to the close of
business on the date on which such Series E Preferred Units to be
exchanged (together with all required documentation) shall have been
surrendered and notice shall have been received by the Trustee as
aforesaid and the Exchange Price shall have been paid. Any Series E
Preferred Shares issued by the Trustee in accordance with this Section 9
shall be delivered as shares which are duly authorized, validly issued,
fully paid and nonassessable, free of pledge, lien, encumbrance or
restriction other than those provided in the Amended and Restated
Declaration of Trust and the Bylaws of the Trustee, the Securities Act
and relevant state securities or blue sky laws.

		
	 	         (ii) In the event of an exchange of Series E Preferred Units for
Series E Preferred Shares, an amount equal to the accrued and unpaid
distributions, whether or not declared, to the date of exchange on any
Series E Preferred Units tendered for exchange shall (A) accrue on the
shares of the Series E Preferred Shares into which such Series E
Preferred Units are exchanged, and (B) continue to accrue on such Series
E Preferred Units, which shall remain outstanding following such
exchange, with the Trustee as the holder of such Series E Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no
event shall a holder of a Series E Preferred Unit that was validly
exchanged into Series E Preferred Shares pursuant to this Section 9
(other than the Trustee now holding such Series E Preferred Unit),
receive a cash distribution out of Available Cash of the Trust, if such
holder, after exchange, is entitled to receive a distribution out of
Available Cash with respect to the Series E Preferred Share for which
such Series E Preferred Unit was exchanged or redeemed.

		
	 	         (iii) Fractional Series E Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the Trustee will pay a cash adjustment
based upon the fair market value of the Series E Preferred Shares on the
day prior to the exchange date as determined in good faith by the Board
of Trustees of the Trustee.

		
	 	         (c) Adjustment of Exchange Price. (i) The Exchange Price is
subject to adjustment upon certain events, including, (A) subdivisions,
combinations and reclassification of the Series E Preferred Shares, and
(B) distributions to all holders of Series E Preferred Shares of evidence
of indebtedness of the Trustee or assets (including securities, but
excluding dividends and distributions paid in cash out of equity
applicable to Series E Preferred Shares).

		
	 	         (ii) In case the Trustee shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the Trustee’s
shares of beneficial interest or sale of all or substantially all of the
Trustee’s assets), in each case as a result of which the Series E
Preferred Shares will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series E Preferred Unit will thereafter be
exchangeable into the kind and amount of shares of capital stock and
other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction 

 

 

		
	 	by a
holder of that number of Series E Preferred Shares or fraction thereof
into which one Series E Preferred Unit was exchangeable immediately prior
to such transaction. The Trustee may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
In addition, so long as any Series
E Preferred Units are outstanding, the Trustee shall not, without
the affirmative vote of the holders of at least two-thirds of the Series
E Preferred Units outstanding at the time: (a) designate or create, or
increase the authorized or issued amount of, any class or series of
shares ranking prior to the Series E Preferred Shares with respect to the
payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any authorized shares of the Trustee into any
such shares, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such shares; (b)
designate or create, or increase the authorized or issued amount of, any
Parity Shares or reclassify any authorized shares of the Trustee into any
such shares, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such shares, but
only to the extent that such Parity Shares are issued to an Affiliate of
the Trustee; (c) amend, alter or repeal the provisions of the Amended and
Restated Declaration of Trust or Bylaws of the Trustee, whether by
merger, consolidation or otherwise, that would materially and adversely
affect the powers, special rights, preferences, privileges or voting
power of the Series E Preferred Shares or the holders of the Series E
Preferred Shares or the Series E Preferred Units; provided, however, that
any increase in the amount of authorized preferred shares of beneficial
interest of the Trustee (“Preferred Shares”) or the creation or issuance
of any other series or class of Preferred Shares, or any increase in the
amount of authorized shares of each class or series, in each case ranking
either (1) junior to the Series E Preferred Shares with respect to the
payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up, or (2) on a parity with the Series E Preferred
Shares with respect to the payment of distributions or the distribution
of assets upon liquidation, dissolution or winding-up to the extent such
Series E Preferred Shares are not issued to an affiliate of the Trustee,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.

                  (d) Restriction on Ownership. Following the exchange of all or any
portion of the Series E Preferred Units for Series E Preferred Shares in
accordance with to this Section 9, such Series E Preferred Units shall be owned
and held solely by the Trustee.

                  Section 10. Transfer Restrictions.

                  (a) Declaration of Trust. The provisions of Section 9.3 of Annex A to the
Declaration of Trust shall not be applicable to the Series E Preferred Units.

                  (b) General. Subject to the remaining provisions of this Section 10, a
holder of Series E Preferred Units may transfer all or any portion of his or
her Series E Preferred Units without the prior written consent of the Trust or
the Trustee, including a pledge to a lender to secure a loan to a holder of
Series E Preferred Units. In order to effect such transfer, the holder must
deliver to the Trustee a duly executed copy of the instrument making such
transfer and such instrument must evidence the written acceptance by the
assignee of all of the terms and conditions of the Declaration of Trust, as
supplemented hereby, and represent that such assignment was made in accordance
with all applicable laws and regulations. Such holder of Series E Preferred
Shares shall provide the Trustee twenty days prior written notice of a proposed
transfer that provides information sufficient to enable the Trustee to make the
determinations described under Section 10 (d) and (e).

                  (c) Incapacitated Limited Partners. If a holder of Series E Preferred
Units is subject to Incapacity (as defined in the Declaration of Trust), the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such holder’s estate shall have all the rights of a holder of Series E
Preferred Units, but not more rights than those enjoyed by other holders of
Series E Preferred Units for the purpose of settling or managing the estate and
such power as the Incapacitated holder possessed to transfer all or any part of
his or its interest in the Series E Preferred Units.

                  (d) Transfers Contrary to Securities Laws. The Trustee may prohibit any
transfer otherwise permitted under this Section 10 by a holder of Series E
Preferred Units if, in the opinion of legal counsel to the Trust, such transfer
would require the filing of a registration statement under the Securities Act,
or would otherwise violate any Federal, state or foreign securities laws or
regulations applicable to the Trust or the Series E Preferred Units.

                  (e) Transfers Resulting in Corporation Status; Transfers Through
Established Securities or Secondary Markets. No transfer by a holder of Series
E Preferred Units may be made to any Person if (i) it would result in the Trust
being treated as a publicly traded partnership within the meaning of Section
7704 of the Code or as an association taxable as a corporation, or (ii) such
transfer is effectuated through an “established securities
market” or 

 

 

a
“secondary market (or the substantial equivalent thereof)” within the meaning
of Section 7704 of the Code. Notwithstanding anything to the contrary in the
Declaration of Trust, as supplemented hereby, (x) no interests in the Trust
shall be issued in a transaction that is (or transactions that are) registered
or required to be registered under the
Securities Act, and to the extent such interests were not required to be
registered under the Securities Act by reason of Regulation S (17 CFR 230.901
through 230.904) or any successor thereto, such issuances would not have been
required to be registered under the Securities Act if the interests so offered
or sold had been offered and sold within the United States, (y) any transfer or
assignment (or purported transfer or assignment) of any Series E Preferred
Units (or any interest or right or attribute therein), whether to another
holder of Units or to a third party, shall not be effective, and any such
transfer or assignment (or purported transfer or assignment) shall be void ab
initio, and no Person shall otherwise become a holder of Units in the Trust if
at the time of such transfer or assignment (or purported transfer or
assignment) any Units in the Trust are traded on an established securities
market or readily tradeable on a secondary market or the substantial equivalent
thereof. For purposes of the preceding sentence and clause (ii) above, an
established securities market is a national securities exchange that is either
registered under Section 6 of the Exchange Act or exempt from registration
because of the limited volume of transactions, a foreign securities exchange
that, under the law of the jurisdiction where it is organized, satisfies
regulatory requirements that are analogous to the regulatory requirements of
the Exchange Act, a regional or local exchange, or an interdealer quotation
system that regularly disseminates firm buy or sell quotations by identified
brokers or dealers by electronic means or otherwise. For purposes of the
preceding sentence and such clause (ii) above, Units in the Trust (or interests
therein) are readily tradeable on a secondary market or the substantial
equivalent thereof if (i) Units in the Trust (or interests therein) are
regularly quoted by any person, such as a broker or dealer, making a market in
the interests; (ii) any person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to Units
in the Trust (or interests therein) and stands ready to effect buy or sell
transactions at the quoted prices for itself or on behalf of others; (iii) the
holder of Units in the Trust has a readily available, regular, and ongoing
opportunity to sell or exchange such interest (or interests therein) through a
public means of obtaining or providing information of offers to buy, sell, or
exchange such interests; or (iv) prospective buyers and sellers otherwise have
the opportunity to buy, sell, or exchange Units in the Trust (or interests
therein) in a time frame and with the regularity and continuity that is
comparable to that described in clauses (i), (ii) and (iii) of this sentence.

                  (f) Transfers to Holders of Nonrecourse Liabilities. No transfer or
pledge of any Series E Preferred Units may be made to a lender to the Trust or
any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Trust whose loan constitutes a Nonrecourse
Liability without the prior written consent of the Trustee, in its sole and
absolute discretion, provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Trust and the Trustee to
exchange or redeem for the Redemption Price any Series E Preferred Units in
which a security interest is held simultaneously with the time at which such
lender would be deemed to be a holders of Units in the Trust for purposes of
allocating liabilities to such lender under Section 752 of the Code.

                  Section 11. No Conversion Rights. Notwithstanding the provisions of
Section 9 hereof, the holders of the Series E Preferred Units shall not have
any rights to convert such shares into shares of any other class or series of
shares or into any other securities of, or interest in, the Trust.

                  Section 12. No Preemptive Rights. No holder of the Series E Preferred
Units shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of the Trust or any other security of the
Trust which it may issue or sell.

                  Section 13. Record Holders. The Trust may deem and treat the record
holder of any Series E Preferred Units as the true and lawful owner thereof for
all purposes, and the Trust shall not be affected by any notice to the
contrary.

                  Section 14. Sinking Fund. The Series E Preferred Units shall not be
entitled to the benefit of any retirement or sinking fund.

                  Section 15. Dissolution. Without the affirmative vote of all of the
Series E Preferred Units issued and outstanding, the Trustee shall not have the
right to, nor shall the Trustee, make the election set forth in Section
11.1(iii) of Annex A to the Declaration of Trust.

                  Section 16. Ceiling Participation.

                  (a) Notwithstanding any other provision of the Declaration of Trust, as
supplemented hereby, from date hereof until December 31, 2002
(the “Ceiling
Period”), neither Edgewater nor Emerging Growth shall be

 

 

allocated or otherwise
entitled to more than 19.9% of the total Net Income allocated to the Capital
Accounts of the holders of Units in accordance with Section 704(b) of the Code
for any taxable year (or any portion thereof in which the relative interests of
the holders of Units have varied from their relative interests for an
immediately preceding
and/or immediately succeeding portion thereof). If, by application of
this paragraph, either Edgewater or Emerging Growth is allocated less Net
Income for any period than the amount to which it would otherwise be entitled,
then (1) Net Income equal to such shortfall shall instead be allocated to the
holder of Class A-2 Units and (2) Net Income equal to such shortfall shall be
allocated to Edgewater or Emerging Growth, as applicable, in lieu of the holder
of Class A-2 Units as soon as possible in subsequent periods to the extent that
doing so would not violate the limitations provided for in this paragraph. If
the Trustee reasonably anticipates or realizes that a distribution to Edgewater
or Emerging Growth on any Distribution Payment Date might cause such holder to
be distributed cash in respect of more than 19.9% of the total Net Income
allocated to the Capital Account of either such holder in accordance with
Section 704(b) of the Code for any taxable year (or any portion thereof in
which the relative interests of the partners have varied from the relative
interests for an immediately preceding and/or immediately succeeding portion
thereof), the Trustee may withhold all or a portion of such distribution to the
extent appropriate to satisfy the provisions of this Section 16(a).

                  (b) Notwithstanding any other provision of the Declaration of Trust, as
supplemented hereby, if the ceiling provisions set forth in Section 16(a)
hereof causes income which would otherwise be allocated to Edgewater or
Emerging Growth to be allocated to the holder of Class A-2 Units, the cash
otherwise distributable to Edgewater or Emerging Growth in respect of such
reallocated income shall be reduced by a amount equal to such reallocated
income. If, by application of this Section 16, either Edgewater or Emerging
Growth is distributed less cash for any period than the amount to which it
would otherwise be entitled, an amount equal to such shortfall shall be made up
by distributing cash to such holder, on the first Distribution Payment Date
following each period for which income is allocated to such holder pursuant to
the penultimate sentence of the immediately preceding subsection, in an amount
equal to the income so allocated. Solely for purposes of this Section 16(b),
income shall be deemed to be allocated immediately prior to each Distribution
Payment Date.

                  THIRD: The Series E Preferred Units have been reclassified by the Trustee
under the authority contained in Article 2, Section 1(c), of the Declaration of
Trust.

                  FOURTH: These Articles Supplementary have been approved by the Trustee in
the manner and by the vote required by law.

                  FIFTH: The undersigned Vice President acknowledges these Articles
Supplementary to be the act of the Trust and further, as to all matters or
facts required to be verified under oath, the undersigned Vice President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and this statement is made
under the penalties of perjury.

 

 

                  IN WITNESS WHEREOF, the Trust has caused these Articles Supplementary to
be signed in its name and on its behalf by its Vice President and attested to
by its Assistant Secretary on this 30th day of August, 2002.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	/s/ Thomas S. Reif
	 	 	 	 	

	 	 	 	 	Thomas S. Reif

Vice President
	
	
	
	

	 	 	 	 	 
	
	
	
	

	ATTEST:	 	 	 	 
	
	
	
	

	 	 	 	 	 
	/s/ Erin McMahon

Erin McMahon

Assistant SecretaryArchstone-Smith Trust

 

EXHIBIT 10.2

ARCHSTONE-SMITH OPERATING TRUST

SERIES F CUMULATIVE REDEEMABLE PREFERRED

UNITS OF BENEFICIAL INTEREST

Articles Supplementary Reclassifying

and Designating a Series of Preferred Units as

Series F Cumulative Redeemable Preferred Units of Beneficial Interest

and Fixing Distribution and Other Preferences and Rights of Such Series

                  Archstone-Smith Operating Trust, a Maryland real estate investment trust
(the “Trust”), hereby certifies to the State Department of Assessments and
Taxation of Maryland pursuant to section 8-203(b) of the Corporations and
Associations Article of the Annotated Code of Maryland that:

                  FIRST: Pursuant to the authority granted and vested in the sole trustee
of the Trust (the “Trustee”) by Article 2, Section 1(c) of the Declaration of
Trust of the Trust, (the “Declaration of Trust”), the Trustee has reclassified
800,000 unissued Series F Cumulative Convertible Redeemable Preferred Units of
Beneficial Interest of the Trust as Series F Cumulative Redeemable Preferred
Units of Beneficial Interest, $0.01 par value per share (the “Series F
Preferred Units”).

                  SECOND: The following is a description of the Series F Preferred Units,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption thereof, which, upon any
restatement of the Declaration of Trust, shall be deemed to be a part of
Article 2 of the Declaration of Trust, with any necessary or appropriate
changes to the enumeration or lettering of any section or subsection thereof:

                  Section 1. Number of Units and Designation. This class of preferred Units
shall be designated as Series F Cumulative Redeemable Preferred Units of
Beneficial Interest (“Series F Preferred Units”) and the number of shares which
shall constitute such series shall be 800,000 Units, par value $0.01 per unit.

                  Section 2. Definitions. For purposes of the Series F Preferred Units, the
following terms shall have the meanings indicated:

		
	 	         “Beneficial
Ownership” shall mean, except as provided below in the
following sentence, ownership of shares of beneficial interest of the Trustee
by a Person (whether or not treated as an individual for purposes of Section
544 of the Code) who is or would be treated as an owner of such shares of
beneficial interest of the Trustee either directly or constructively through
the application of 544 of the Code, as modified by Section 658(h)(1)(B) of the
Code. “Beneficial Ownership” shall also mean beneficial ownership as defined
under Rule 13(d) under the Exchange Act and, with respect to such meaning,
Beneficial Ownership by any Person shall include Beneficial Ownership by other
Persons who are part of the same group as the original Person for purposes of
such Rule 13(d). The term Beneficially Own shall have correlative meanings.

		
	 	         “Business
Day” shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New
York City, New York are not required to be open.
	 
	 	         “Call
Date” shall mean the date specified in the notice to holders
required under Section 5 below as the Call Date.
	 
	 	         “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time.
	 
	 	         “Common
Units” shall mean the Class A-1 Common Units, par value
$0.01 per unit, the Class A-2 Common Units, par value $0.01 per unit, and
the Class B Common Units, par value $0.01 per unit, of the Trust.

 

 

		
	 	         “Distribution
Payment Date” shall mean (i) the 25th day of March,
June, September and December in each year, commencing with September 25,
2002 and (ii) in the event of (A) an exchange of Series F Preferred Units
into Series F Preferred Shares, or (B) a redemption of Series F Preferred
Units, on the exchange date or redemption date, as applicable.
	 
	 	         “Distribution
Periods” shall mean quarterly distribution periods
commencing on the 26th day of March, June, September and December of each
year and ending on and including the day preceding the first day of the
next succeeding Distribution Period.
	 
	 	         “Distribution
Record Date” shall have the meaning set forth in
Section 3.
	 
	 	         “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
	 
	 	         “Fully
Junior Units” shall mean the Common Units and any other class
or series of Units of the Trust now or hereafter issued and outstanding
to which the Series F Preferred Units have preference or priority in
both (i) the payment of distributions and (ii) the distribution of assets
on any liquidation, dissolution or winding up of the Trust.
	 
	 	         “Junior
Units” shall mean the Common Units and any other class or
series of Units of the Trust now or hereafter issued and outstanding to
which the Series F Preferred Units have preference or priority in either
(i) the payment of distributions or (ii) the distribution of assets on
any liquidation, dissolution or winding up of the Trust and, unless the
context clearly indicates otherwise, shall include Fully Junior Units.
	 
	 	         “Ownership
Limit” shall initially mean 9.8% in number of Shares or
value, of the outstanding Shares, and, after any adjustment provided for
in the Amended and Restated Declaration of Trust of the Trustee, shall
mean such lesser or greater percentage of the outstanding Shares as so
adjusted. The number and value of the outstanding Shares shall be
determined by the board of trustees of the Trustee in good faith, which
determination shall be conclusive for all purposes thereof.
	 
	 	         “Parity
Units” shall have the meaning set forth in Section 7.
	 
	 	         “Parity
Shares” shall mean Shares on parity with the Series F
Preferred Shares, in the payment of distributions and in the distribution
of assets on any liquidation, dissolution or winding up of the Trustee,
whether or not the distribution rates, distribution payment dates or
redemption or liquidation prices per share thereof are different from
those of the Series F Preferred Shares.
	 
	 	         “Person” shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity.
	 
	 	         “PTP” shall mean a “publicly traded partnership” within the meaning
of Section 7704 of the Code.
	 
	 	         “Securities
Act” shall mean the Securities Act of 1933, as amended
from time to time.
	 
	 	         “Series F
Preferred Shares” shall mean Series F Cumulative
Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per
share, of the Trustee.
	 
	 	         “set
apart for payment” shall be deemed to include, without any
action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to authorization or declaration of distributions or
other distribution by the Trustee, the allocation of funds to be so paid
on any class or series of Units of the Trust; provided, however, that if
any funds for any Junior Units or any Parity Units are placed in a
separate account of the Trust or delivered to a disbursing, paying or
other similar agent, then “set apart for payment” with respect to the
Series F Preferred Units shall mean placing such funds in a separate
account or delivering such funds to a disbursing, paying or other similar
agent.
	 
	 	         “Shares” shall mean shares of beneficial interest of the Trustee.

 

 

		
	 	         “Trustee” shall mean Archstone-Smith Trust, a Maryland real estate
investment trust, the sole trustee of the Trust.
	 
	 	         “Units” shall mean the shares of beneficial interest, par value
$0.01 per share, of the Trust, which have been designated as Units in the
Declaration of Trust.

                  Section 3. Distributions.

                  (a) General. The holders of Series F Preferred Units shall be entitled to
receive, when, as and if authorized or declared by the Trustee, out of funds
legally available for such purpose, cash distributions in an amount per share
equal to 8.125% of the liquidation preference per annum (equivalent to $2.03125
per share). Such distributions shall be cumulative, shall accrue from the
original date of issuance and will be payable on each Distribution Payment
Date. The amount of the distribution payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and for any period
shorter than a full quarterly period for which distributions are computed, the
amount of the distribution payable will be computed on the basis of the actual
number of days elapsed in such period. If any Distribution Payment Date is not
a Business Day, then payment of the distribution to be made 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. Distributions on the Series F
Preferred Units will be made to the holders of record of the Series F Preferred
Units on the relevant record dates to be fixed by the Trustee, which record
dates shall in no event exceed fifteen (15) Business Days prior to the relevant
Distribution Payment Date.

                  (b) Cumulative Distributions. Distributions on the Series F Preferred
Units will accrue whether or not the terms and provisions of any agreement of
the Trust, including any agreement relating to its indebtedness, at any time
prohibit the current payment of distributions, whether or not the Trust has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized.
Accrued but unpaid dividends on the Series F Preferred Units will accumulate as
of the Distribution Payment Date on which they first become payable.
Distributions on account of arrears for any past distribution periods may be
declared and paid at any time, without reference to a regular Distribution
Payment Date to holders of record of the Series F Preferred Units on the record
date fixed by the Trustee which date shall not exceed fifteen (15) Business
Days prior to the Distribution Payment Date. Accumulated and unpaid
distributions will not bear interest nor shall there be any accrual accounts
maintained for the Series F Preferred Shares.

                  (c) Priority as to Distributions. (i) So long as any Series F Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Junior Units of the Trust, nor shall any cash or other
property be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series F Preferred Units, any Parity Units
or any Junior Units, unless, in each case, all distributions accumulated on all
Series F Preferred Units and all classes and series of outstanding Parity Units
have been paid in full. The foregoing sentence will not prohibit (a)
distributions payable solely in Junior Units, (b) the conversion of Junior
Units or Parity Units into Units of the Trust ranking junior to the Series F
Preferred Units as to distributions, or (c) the redemption of Units
corresponding to any Series F Preferred Shares, Shares raking on parity with
the Series F Preferred Shares with respect to distributions or Shares ranking
junior to the Series F Preferred Shares to be purchased by the Trustee pursuant
to Sections 18 and 18A of Article II of the Declaration of Trust of the Trustee
to preserve the Trustee’s status as a real estate investment trust, provided
that such redemption shall be upon the same terms as the corresponding purchase
pursuant to said Section 18 and 18A of Article II of the Declaration of Trust
of the Trustee.

                  (ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series F Preferred Units, all distributions authorized and
declared on the Series F Preferred Units and all classes or series of
outstanding Parity Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series F Preferred Unit and such
other classes or series of Parity Units shall in all cases bear to each other
the same ratio that accrued distributions per Series F Preferred Unit and such
other classes or series of Parity Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Units do not have cumulative distribution
rights) bear to each other.

                  (d) No Further Rights. Holders of Series F Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

 

 

                  Section 4. Liquidation Preference.

                  (a) Distributions upon Liquidation. Upon any liquidation, dissolution or
winding up of the Trust, whether voluntary or involuntary, before any payment
or distribution of the assets of the Trust (whether capital or surplus) is made
to or set apart for the holders of the Common Units or any other class or
series of Units of the Trust now or hereafter issued and outstanding to which
the Series F Preferred Units have preference or priority in the distribution of
assets on any liquidation, dissolution or winding up of the Trust, the holders
of Series F Preferred Units shall be entitled to receive out of assets of the
Trust legally available for such purpose, liquidating distributions in the
amount of $25.00 per Series F Preferred Unit, plus an amount equal to all
distributions (whether or not earned or authorized or declared) accrued and
unpaid thereon to the date of final distribution to such holders, if any; but
such holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Trust, the assets of the Trust,
or the proceeds thereof, distributable among the holders of Series F Preferred
Units are insufficient to pay in full such preferential amount with respect to
the Series F Preferred Units and the corresponding amounts with respect to all
Parity Units, then such assets, or the proceeds thereof, shall be distributed
among the holders of Series F Preferred Units and all such Parity Units in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.

                  (b) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Trust, stating the payment date
or dates when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than ten (10) and not more than sixty
(60) days prior to the payment date stated therein, to each record holder of
Series F Preferred Units at the respective addresses of such holders as the
same shall appear on the transfer records of the Trust.

                  (c) No Further Rights. Subject to the rights of the holders of shares of
any class or series of Units ranking on a parity with or senior to the Series F
Preferred Units in the distribution of assets on any liquidation, dissolution
or winding up of the Trust, upon any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, after payment has been made in
full to the holders of Series F Preferred Units, as provided herein, the
holders of any Junior Units shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of Series F Preferred
Units shall not be entitled to share therein.

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

                  Section 5. Redemption at the Option of the Trust.

                  (a) Right of Optional Redemption. Series F Preferred Units are not
redeemable by the Trust prior to September 27, 2004. On or after such date,
the Trust shall have the right to redeem the Series F Preferred Units, in whole
or in part, at any time or from time to time, upon not less than ten (10) nor
more than sixty (60) days’ written notice, for cash at a redemption price of
$25.00 per Series F Preferred Unit plus the amount indicated in subsection (b)
below (the “Redemption Price”). If fewer than all of the outstanding Series F
Preferred Units are to be redeemed, the Series F Preferred Units to be redeemed
shall be selected pro rata (as nearly as practicable without creating
fractional units).

                  (b) Payment of Accrued and Unpaid Distributions. Upon any redemption of
Series F Preferred Units pursuant to this Section 5, the Trust shall pay all
distributions accrued and unpaid thereon, if any, in arrears for any
Distribution Period ending on or prior to the Call Date. If the Call Date
falls after a Distribution Record Date and prior to the corresponding
Distribution Payment Date, then each holder of such Series F Preferred Units at
the close of business on such Distribution Record Date shall be entitled to
receive the distribution payable on such Series F Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption of such
Series F Preferred Units before such Distribution Payment Date. Except as
provided above, the Trust shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on Series F Preferred Units called
for redemption.

                  (c) Limitation on Redemption. The Trust may not redeem fewer than all of
the outstanding Series F Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series F Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

 

 

                  (d) Procedures for Redemption.

		
	 	         (i) Notice of redemption will be (A) faxed, and (B) mailed by the
Trust, by certified mail, postage prepaid, not less than ten (10) nor
more than sixty (60) days prior to the redemption date, addressed to the
respective holders of record of the Series F Preferred Units at their
respective addresses as they appear on the records of the Trust. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series F Preferred Units except as
to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall
state: (1) the redemption date, (2) the Redemption Price, (3) the
aggregate number of Series F Preferred Units to be redeemed and if fewer
than all of the outstanding Series F Preferred Units are to be redeemed,
the number of Series F Preferred Units to be redeemed held by such
holder, which number shall equal such holder’s pro rata share (based on
the percentage of the aggregate number of outstanding Series F Preferred
Units the total number of Series F Preferred Units held by such holder
represents) of the aggregate number of Series F Preferred Units to be
redeemed, (4) the place or places where such Series F Preferred Units are
to be surrendered for payment of the Redemption Price, (5) that
distributions on the Series F Preferred Units to be redeemed will cease
to accumulate on such redemption date and (6) that payment of the
Redemption Price will be made upon presentation and surrender of such
Series F Preferred Units.
	 
	 	         (ii) If the Trust gives a notice of redemption in respect of Series
F Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Trust will deposit
irrevocably in trust for the benefit of the Series F Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price
and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Series F Preferred Units upon
surrender of the Series F Preferred Units by such holders at the place
designated in the notice of redemption. If the Series F Preferred Units
are evidenced by a certificate and if fewer than all Series F Preferred
Units evidenced by any certificate are being redeemed, a new certificate
shall be issued upon surrender of the certificate evidencing all Series F
Preferred Units, evidencing the unredeemed Series F Preferred Units
without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series F Preferred Units or
portions thereof called for redemption, unless the Trust defaults in the
payment thereof. If any date fixed for redemption of Series F Preferred
Units is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price is improperly
withheld or refused and not paid by the Trust, distributions on such
Series F Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the applicable Redemption Price.

                  Section 6. Units to Be Retired. All Series F Preferred Units which are
issued and reacquired in any manner by the Trust (other than the exchange of
Series F Preferred Units for Series F Preferred Shares pursuant to Section 9
hereof whereby the Trustee shall hold all of such Series F Preferred Units so
exchanged) shall be restored to the status of authorized but unissued Units of
the Trust, without designation as to class or series.

                  Section 7. Ranking. Any class or series of Units of the Trust shall be
deemed to rank:

		
	 	         (i) senior to the Series F Preferred Units, in the payment of
distributions or in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, if the holders of such class or
series are entitled to the receipt of distributions or amounts
distributable on any liquidation, dissolution or winding up of the Trust,
as the case may be, in preference or priority to the holders of Series F
Preferred Units;
	 
	 	         (ii) on a parity with the Series F Preferred Units, in the payment
of distributions and in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, whether or not the distribution
rates, distribution payment dates or redemption or liquidation prices per
share thereof are different from those of the Series F Preferred Units,
if the holders of such class or series and the holders of Series F
Preferred Units are entitled to the receipt of distributions and amounts
distributable on any liquidation, dissolution or winding up of the Trust
in proportion to their respective amounts of distributions accrued and
unpaid per share or liquidation preferences, without preference or
priority to each other (“Parity Units”);

 

 

		
	 	         (iii) junior to the Series F Preferred Units, in the payment of
distributions or in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, if such class or series is Junior
Units; and
	 
	 	         (iv) junior to the Series F Preferred Units, in the payment of
distributions and in the distribution of assets on any liquidation,
dissolution or winding up of the Trust, if such class or series is Fully
Junior Units.

                  Section 8. Voting.

                  (a) General. Holders of the Series F Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the holders of Units, except as set forth in Sections 5.3 and 12.4
of Annex A to the Declaration of Trust and except as set forth below.

                  (b) Certain Voting Rights. So long as any Series F Preferred Units remain
outstanding, the Trust shall not, without the affirmative vote of the holders
of at least two-thirds of the Series F Preferred Units outstanding at the time
(i) authorize or create, or increase the authorized or issued amount of, any
class or series of Units senior to the Series F Preferred Units with respect to
payment of distributions or rights upon liquidation, dissolution or winding-up
or reclassify any Units of the Trust into any such senior Units, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such senior Units, (ii) authorize or create, or
increase the authorized or issued amount of any Parity Units or reclassify any
Units into any such Units or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such Units
but only to the extent such Parity Units are issued to an affiliate of the
Trust, other than the Trustee to the extent the issuance of such interests was
to allow the Trustee to issue corresponding preferred shares to persons who are
not affiliates of the Trustee or (iii) either (A) consolidate, merge into or
with, or convey, transfer or lease its assets substantially as an entirety to,
any corporation or other entity or (B) amend, alter or repeal the provisions of
the Declaration of Trust, whether by merger, consolidation or otherwise, that
would materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series F Preferred Units or the holders
thereof; provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Trust’s assets as an entirety,
so long as (1) the Trust is the surviving entity and the Series F Preferred
Units remain outstanding with the terms thereof unchanged, or (2) the
resulting, surviving or transferee entity is a partnership, limited liability
company or other pass-through entity organized under the laws of any state and
substitutes the Series F Preferred Units for other interests in such entity
having substantially the same terms and rights as the Series F Preferred Units,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series F Preferred Units; and provided
further that any increase in the amount of Units or the creation or issuance of
any other class or series of Units, in each case ranking (y) junior to the
Series F Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, or (z) on a
parity with the Series F Preferred Units with respect to payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up, to the extent such Units are issued to the Trustee and the issuance
of such Units was to allow the Trustee to issue corresponding preferred shares
to persons who are not affiliates of the Trust, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.

                  Section 9. Exchange Right.

		
	 	         (a) Right to Exchange. (i) Series F Preferred Units will be
exchangeable in whole or in part at anytime on or after September 27,
2009 at the option of either the holders thereof or the Trustee, for
authorized but previously unissued Series F Preferred Shares at an
exchange rate of one Series F Preferred Share for one Series F Preferred
Unit, subject to adjustment as described below (the “Exchange
Price”);
provided, the Series F Preferred Units will become exchangeable at any
time, in whole or in part, at the option of the holders of Series F
Preferred Units for Series F Preferred Shares if (x) at any time full
distributions shall not have been timely made on any Series F Preferred
Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in
respect of Series F Preferred Units shall be considered timely made if
made within two (2) Business Days after the applicable Distribution
Payment Date if at the time of such late payment there shall not be any
prior quarterly distribution periods in respect of which full
distributions were not timely made, or (y) upon receipt by a holder or
holders of Series F Preferred Units of (1) notice from the Trustee that
the Trustee or a subsidiary of the Trustee has taken the position that
the Trust is, or upon the occurrence of a defined event which is likely
to occur in the immediate future will be, a PTP and (2) an opinion
rendered by an outside nationally recognized independent counsel familiar
with such matters addressed to a holder or holders of Series F Preferred
Units, that the Trust is or likely is, or upon the occurrence of a
defined event which is likely to occur in the immediate future will be or
likely will be, a PTP. In addition, the Series F Preferred Units may

 

 

		
	 	be exchanged for Series F Preferred Shares, in whole or in part, at
the option of any holder prior to September 27, 2009 and after September
27, 2002 if such holder of a Series F Preferred Unit shall deliver to the
Trustee either (i) a private letter ruling addressed to such holder of
Series F Preferred Units or (ii) an opinion of independent counsel
reasonably acceptable to the Trustee based on the enactment of a statute,
temporary or final Treasury Regulations or the publication of a Revenue
Ruling or other Internal Revenue Service release, in either case to the
effect that an exchange of the Series F Preferred Shares at such earlier
time would not cause the Series F Preferred Units to be considered “stock
or securities” within the meaning of section 351(e) of the Code for
purposes of determining whether the holder of such Series F Preferred
Units is an “investment company” under section 721(b) of the Code if an
exchange is permitted at such earlier date.
	 
	 	         (ii) Notwithstanding anything to the contrary set forth in Section
9(a)(i) hereof, if an Exchange Notice (as defined herein) has been
delivered to the Trustee, then the Trustee may, at its option, elect to
redeem or cause the Trust to redeem all or a portion of the outstanding
Series F Preferred Units for cash in an amount equal to the Redemption
Price that would be payable as of the date of such redemption in
accordance with the procedures set forth in Section 5(d) hereof. The
Trustee may exercise its option to redeem the Series F Preferred Units
for cash pursuant to this Section 9(a)(ii) hereof by giving each holder
of record of Series F Preferred Units notice of its election to redeem
for cash, within ten (10) Business Days after receipt of the Exchange
Notice, by (x) fax, and (y) registered mail, postage paid, at the address
of each holder as it may appear on the records of the Trust stating (A)
the redemption date, which shall be no later than sixty (60) days
following the receipt of the Exchange Notice, (B) the redemption price,
(C) the place or places where the Series F Preferred Units are to be
surrendered for payment of the redemption price, (D) that distributions
on the Series F Preferred Units will cease to accrue on such redemption
date, (E) that payment of the redemption price will be made upon
presentation and surrender of the Series F Preferred Units and (F) the
aggregate number of Series F Preferred Units to be redeemed, and if fewer
than all of the outstanding Series F Preferred Units are to be redeemed,
the number of Series F Preferred Units to be redeemed held by such
holder, which number shall equal such holder’s pro rata share (based on
the percentage of the aggregate number of outstanding Series F Preferred
Units the total number of Series F Preferred Units held by such holder
represents) of the aggregate number of Series F Preferred Units being
redeemed.
	 
	 	         (iii) In the event an exchange of all or a portion of Series F
Preferred Units pursuant to Section 9(a)(i) hereof would violate the
provisions on ownership limitation of the Trustee set forth in the
Declaration of Trust of the Trustee, the Trustee shall give written
notice thereof to each holder of record of Series F Preferred Units,
within ten (10) Business Days following receipt of the Exchange Notice,
by (x) fax, and (y) registered mail, postage prepaid, at the address of
each such holder set forth in the records of the Trust. In such event,
each holder of Series F Preferred Units shall be entitled to exchange,
pursuant to the provision of Section 9(b) a number of Series F Preferred
Units which would comply with the provisions on the ownership limitation
of the Trustee set forth in the Declaration of Trust and any Series F
Preferred Units not so exchanged (the “Excess Units”) shall be redeemed
by the Trust for cash in an amount equal to $25.00, plus any accrued and
unpaid distributions thereon, whether or not declared, to the date of
redemption. The written notice of the Trustee shall state (A) the number
of Excess Units held by such holder, (B) the redemption price of the
Excess Units, (C) the date on which such Excess Units shall be redeemed,
which date shall be no later than sixty (60) days following the receipt
of the Exchange Notice, (D) the place or places where such Excess Units
are to be surrendered for payment of the redemption price, (E) that
distributions on the Excess Units will cease to accrue on such redemption
date, and (F) that payment of the redemption price will be made upon
presentation and surrender of such Excess Units. In the event an
exchange would result in Excess Units, as a condition to such exchange,
each holder of such units agrees to provide representations and covenants
reasonably requested by the Trustee relating to (1) the widely held
nature of the interests in such holder, sufficient to assure the Trustee
that the holder’s ownership of shares of the Trustee (without regard to
the limits described above) will not cause any individual to Beneficially
Own in excess of the Ownership Limit; and (2) to the extent such holder
can so represent and covenant without obtaining information from its
owners, the holder’s ownership of tenants of the Trust and its
affiliates.
	 
	 	         (b) Procedure for Exchange. (i) Any exchange pursuant to the terms
herein (including Section 9(a)(i)) shall be exercised pursuant to a
notice of exchange (the “Exchange Notice”) delivered to the Trustee by
the holder who is exercising such exchange right, by (A) fax and (B) by
certified mail postage prepaid. The exchange of Series F Preferred
Units, or a specified portion thereof, may be effected after the fifth
(5th) Business Day following receipt by the Trustee of the Exchange
Notice by delivering certificates, if any, representing such Series F
Preferred Units to be exchanged together with, if applicable, written
notice of exchange and a proper assignment of such Series F Preferred
Units to the office of the Trustee maintained for such purpose.
Currently, such office is 9200 E. Panorama, Suite 400, Englewood,
Colorado 80112,

 

 

		
	 	Attention: Chief Financial Officer. Each exchange will be deemed to
have been effected immediately prior to the close of business on the date
on which such Series F Preferred Units to be exchanged (together with all
required documentation) shall have been surrendered and notice shall have
been received by the Trustee as aforesaid and the Exchange Price shall
have been paid. Any Series F Preferred Shares issued by the Trustee in
accordance with this Section 9 shall be delivered as shares which are
duly authorized, validly issued, fully paid and nonassessable, free of
pledge, lien, encumbrance or restriction other than those provided in the
Amended and Restated Declaration of Trust and the Bylaws of the Trustee,
the Securities Act and relevant state securities or blue sky laws.
	 
	 	         (ii) In the event of an exchange of Series F Preferred Units for
Series F Preferred Shares, an amount equal to the accrued and unpaid
distributions, whether or not declared, to the date of exchange on any
Series F Preferred Units tendered for exchange shall (A) accrue on the
shares of the Series F Preferred Shares into which such Series F
Preferred Units are exchanged, and (B) continue to accrue on such Series
F Preferred Units, which shall remain outstanding following such
exchange, with the Trustee as the holder of such Series F Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no
event shall a holder of a Series F Preferred Unit that was validly
exchanged into Series F Preferred Shares pursuant to this Section 9
(other than the Trustee now holding such Series F Preferred Unit),
receive a cash distribution out of Available Cash of the Trust, if such
holder, after exchange, is entitled to receive a distribution out of
Available Cash with respect to the Series F Preferred Share for which
such Series F Preferred Unit was exchanged or redeemed.
	 
	 	         (iii) Fractional Series F Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the Trustee will pay a cash adjustment
based upon the fair market value of the Series F Preferred Shares on the
day prior to the exchange date as determined in good faith by the Board
of Trustees of the Trustee.
	 
	 	         (c) Adjustment of Exchange Price. (i) The Exchange Price is
subject to adjustment upon certain events, including, (A) subdivisions,
combinations and reclassification of the Series F Preferred Shares, and
(B) distributions to all holders of Series F Preferred Shares of evidence
of indebtedness of the Trustee or assets (including securities, but
excluding dividends and distributions paid in cash out of equity
applicable to Series F Preferred Shares). In the event of a subdivision
or combination of the Series F Preferred Shares, the Exchange Price in
effect immediately prior to the subdivision or combination shall be
proportionately increased or decreased. In the event of a
reclassification, the Exchange Price shall be adjusted so that a Series F
Preferred Unit will be exchangeable for a proportionate interest in the
security into which a Series F Preferred Share was reclassified. In the
event of a distribution of evidences of indebtedness of the Trustee or
assets, the Exchange Price shall be increased or decreased so that the
same shall equal the price determined by multiplying the Exchange Price
immediately prior to the distribution by a fraction of which the
numerator shall be the fair market value (as determined by the Trustee)
of a Series F Preferred Share at the close of business on the date
immediately prior to the distribution and the denominator shall be the
fair market value (as determined by the Trustee) of a Series F Preferred
Share at the close of business on the day of the distribution less the
fair market value (as determined by the Trustee) of the distribution.
	 
	 	         (ii) In case the Trustee shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the Trustee’s
shares of beneficial interest or sale of all or substantially all of the
Trustee’s assets), in each case as a result of which the Series F
Preferred Shares will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series F Preferred Unit will thereafter be
exchangeable into the kind and amount of shares of capital stock and
other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction by a
holder of that number of Series F Preferred Shares or fraction thereof
into which one Series F Preferred Unit was exchangeable immediately prior
to such transaction. The Trustee may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
In addition, so long as any Series F Preferred Units are outstanding, the
Trustee shall not, without the affirmative vote of the holders of at
least two-thirds of the Series F Preferred Units outstanding at the time:
(a) designate or create, or increase the authorized or issued amount of,
any class or series of shares ranking prior to the Series F Preferred
Shares with respect to the payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any authorized
shares of the Trustee into any such shares, or create, authorize or issue
any obligations or security convertible into or evidencing the right to
purchase any such shares; (b) designate or create, or increase the
authorized or issued amount of, any Parity Shares or reclassify any
authorized shares of the Trustee into any such shares, or create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, but only to the extent
that such Parity Shares are issued to

 

 

		
	 	an Affiliate of the Trustee; (c) amend, alter or repeal the
provisions of the Amended and Restated Declaration of Trust or Bylaws of
the Trustee, whether by merger, consolidation or otherwise, that would
materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series F Preferred Shares or the
holders of the Series F Preferred Shares or the Series F Preferred Units;
provided, however, that any increase in the amount of authorized
preferred shares of beneficial interest of the Trustee (“Preferred
Shares”) or the creation or issuance of any other series or class of
Preferred Shares, or any increase in the amount of authorized shares of
each class or series, in each case ranking either (1) junior to the
Series F Preferred Shares with respect to the payment of distributions
and the distribution of assets upon liquidation, dissolution or
winding-up, or (2) on a parity with the Series F Preferred Shares with
respect to the payment of distributions or the distribution of assets
upon liquidation, dissolution or winding-up to the extent such Series F
Preferred Shares are not issued to an affiliate of the Trustee, shall not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.

                  (d) Restriction on Ownership. Following the exchange of all or any
portion of the Series F Preferred Units for Series F Preferred Shares in
accordance with to this Section 9, such Series F Preferred Units shall be owned
and held solely by the Trustee.

                  Section 10. Transfer Restrictions.

                  (a) Declaration of Trust. The provisions of Section 9.3 of Annex A to the
Declaration of Trust shall not be applicable to the Series F Preferred Units.

                  (b) General. Subject to the remaining provisions of this Section 10, a
holder of Series F Preferred Units may transfer all or any portion of his or
her Series F Preferred Units without the prior written consent of the Trust or
the Trustee, including a pledge to a lender to secure a loan to a holder of
Series F Preferred Units. In order to effect such transfer, the holder must
deliver to the Trustee a duly executed copy of the instrument making such
transfer and such instrument must evidence the written acceptance by the
assignee of all of the terms and conditions of the Declaration of Trust, as
supplemented hereby, and represent that such assignment was made in accordance
with all applicable laws and regulations. Such holder of Series F Preferred
Shares shall provide the Trustee twenty days prior written notice of a proposed
transfer that provides information sufficient to enable the Trustee to make the
determinations described under Section 10 (d) and (e).

                  (c) Incapacitated Limited Partners. If a holder of Series F Preferred
Units is subject to Incapacity (as defined in the Declaration of Trust), the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such holder’s estate shall have all the rights of a holder of Series F
Preferred Units, but not more rights than those enjoyed by other holders of
Series F Preferred Units for the purpose of settling or managing the estate and
such power as the Incapacitated holder possessed to transfer all or any part of
his or its interest in the Series F Preferred Units.

                  (d) Transfers Contrary to Securities Laws. The Trustee may prohibit any
transfer otherwise permitted under this Section 10 by a holder of Series F
Preferred Units if, in the opinion of legal counsel to the Trust, such transfer
would require the filing of a registration statement under the Securities Act,
or would otherwise violate any Federal, state or foreign securities laws or
regulations applicable to the Trust or the Series F Preferred Units.

                  (e) Transfers Resulting in Corporation Status; Transfers Through
Established Securities or Secondary Markets. No transfer by a holder of Series
F Preferred Units may be made to any Person if (i) it would result in the Trust
being treated as a publicly traded partnership within the meaning of Section
7704 of the Code or as an association taxable as a corporation, or (ii) such
transfer is effectuated through an “established securities market” or a
“secondary market (or the substantial equivalent thereof)” within the meaning
of Section 7704 of the Code. Notwithstanding anything to the contrary in the
Declaration of Trust, as supplemented hereby, (x) no interests in the Trust
shall be issued in a transaction that is (or transactions that are) registered
or required to be registered under the Securities Act, and to the extent such
interests were not required to be registered under the Securities Act by reason
of Regulation S (17 CFR 230.901 through 230.904) or any successor thereto, such
issuances would not have been required to be registered under the Securities
Act if the interests so offered or sold had been offered and sold within the
United States, (y) any transfer or assignment (or purported transfer or
assignment) of any Series F Preferred Units (or any interest or right or
attribute therein), whether to another holder of Units or to a third party,
shall not be effective, and any such transfer or assignment (or purported
transfer or assignment) shall be void ab initio, and no Person shall otherwise
become a holder of Units in the Trust if at the time of such transfer or
assignment (or purported transfer or assignment) any Units in the Trust are
traded on an established securities market or readily tradeable on a secondary
market or the substantial equivalent thereof. For purposes of the preceding
sentence and clause (ii) above,

 

 

an established securities market is a national securities exchange that is
either registered under Section 6 of the Exchange Act or exempt from
registration because of the limited volume of transactions, a foreign
securities exchange that, under the law of the jurisdiction where it is
organized, satisfies regulatory requirements that are analogous to the
regulatory requirements of the Exchange Act, a regional or local exchange, or
an interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise.
For purposes of the preceding sentence and such clause (ii) above, Units in the
Trust (or interests therein) are readily tradeable on a secondary market or the
substantial equivalent thereof if (i) Units in the Trust (or interests therein)
are regularly quoted by any person, such as a broker or dealer, making a market
in the interests; (ii) any person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to Units
in the Trust (or interests therein) and stands ready to effect buy or sell
transactions at the quoted prices for itself or on behalf of others; (iii) the
holder of Units in the Trust has a readily available, regular, and ongoing
opportunity to sell or exchange such interest (or interests therein) through a
public means of obtaining or providing information of offers to buy, sell, or
exchange such interests; or (iv) prospective buyers and sellers otherwise have
the opportunity to buy, sell, or exchange Units in the Trust (or interests
therein) in a time frame and with the regularity and continuity that is
comparable to that described in clauses (i), (ii) and (iii) of this sentence.

                  (f) Transfers to Holders of Nonrecourse Liabilities. No transfer or
pledge of any Series F Preferred Units may be made to a lender to the Trust or
any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Trust whose loan constitutes a Nonrecourse
Liability without the prior written consent of the Trustee, in its sole and
absolute discretion, provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Trust and the Trustee to
exchange or redeem for the Redemption Price any Series F Preferred Units in
which a security interest is held simultaneously with the time at which such
lender would be deemed to be a holders of Units in the Trust for purposes of
allocating liabilities to such lender under Section 752 of the Code.

                  Section 11. No Conversion Rights. Notwithstanding the provisions of
Section 9 hereof, the holders of the Series F Preferred Units shall not have
any rights to convert such shares into shares of any other class or series of
shares or into any other securities of, or interest in, the Trust.

                  Section 12. No Preemptive Rights. No holder of the Series F Preferred
Units shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of the Trust or any other security of the
Trust which it may issue or sell.

                  Section 13. Record Holders. The Trust may deem and treat the record
holder of any Series F Preferred Units as the true and lawful owner thereof for
all purposes, and the Trust shall not be affected by any notice to the
contrary.

                  Section 14. Sinking Fund. The Series F Preferred Units shall not be
entitled to the benefit of any retirement or sinking fund.

                  Section 15. Dissolution. Without the affirmative vote of all of the
Series F Preferred Units issued and outstanding, the Trustee shall not have the
right to, nor shall the Trustee, make the election set forth in Section
11.1(iii) of Annex A to the Declaration of Trust.

                  THIRD: The Series F Preferred Units have been reclassified by the Trustee
under the authority contained in Article 2, Section 1(c), of the Declaration of
Trust.

                  FOURTH: These Articles Supplementary have been approved by the Trustee in
the manner and by the vote required by law.

                  FIFTH: The undersigned Vice President acknowledges these Articles
Supplementary to be the act of the Trust and further, as to all matters or
facts required to be verified under oath, the undersigned Vice President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and this statement is made
under the penalties of perjury.

 

 

                  IN WITNESS WHEREOF, the Trust has caused these Articles Supplementary to
be signed in its name and on its behalf by its Vice President and attested to
by its Assistant Secretary on this 30th day of August, 2002.

	 	 	 	 	 
	 	 	ARCHSTONE-SMITH OPERATING TRUST
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	/s/ Thomas S. Reif

Thomas S. Reif

Vice President
	
	
	
	

	 	 	 	 	 
	
	
	
	

	ATTEST:	 	 	 	 
	
	
	
	

	 	 	 	 	 
	
	
	
	

	/s/ Erin McMahon

Erin McMahon

Assistant Secretary

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