Document:

exhibitalgamend

SECOND AMENDED & RESTATED

AMENDMENT AND WAIVER AGREEMENT

     THIS SECOND AMENDED & RESTATED AMENDMENT
AND WAIVER AGREEMENT, dated as of July 16, 2001 (this "Agreement"), is among
ALLEGIANCE FUNDING I, LLC (the "Depositor"), MANUFACTURERS AND TRADERS TRUST
COMPANY (the "Trustee"), POINT WEST CAPITAL CORPORATION (the
"Servicer") and as consented to by the Certificateholders named on the signature
pages hereto. 

RECITALS

     WHEREAS, (i) the Depositor, the Trustee and
the Servicer are parties to that certain Trust Agreement, dated as of August 1, 1998 (as
amended from time to time, and including all supplements thereto, the "Trust
Agreement"), and (ii) the Depositor, the Trustee and the Servicer are parties to that
certain Third Amended and Restated Supplement to Trust Agreement for Revolving Series
1998-1, dated as of April 14, 2000 (the "Series 1998-1 Revolving Supplement"),
pursuant to which the Depositor issued the Allegiance Capital Trust I Revolving
Certificates, Series 1998-1 (the "98-1 Revolving Certificates").

     WHEREAS, the Loan to Peavy & Brooks
International, Inc. (the "PBI Loan") held by the Depositor and the Loan to
Southern Acquisitions, Inc. (the "Southern Loan") held by the Depositor have
become Defaulted Loans and have caused the Depositor to be in violation of certain
provisions of the Trust Agreement.

     WHEREAS, the parties previously agreed to
amend a provision of the Series 1998-1 Revolving Supplement and to amend and waive certain
provisions of the Trust Agreement on the terms and conditions set forth in the Amendment
and Waiver Agreement dated as of December 15, 2000 (the "Initial Waiver"), as
modified by the Amendment & Restated Amendment and Waiver Agreement, dated as of April
15, 2001 (together with the Initial Waiver, the "Existing Waiver").

     WHEREAS, the Scheduled Maturity of the 98-1
Revolving Certificates, as amended under the Existing Waiver, is May 15, 2001.

     WHEREAS, pursuant to Section 9.02 of the Trust
Agreement, the Depositor, the Servicer and the Trustee may amend, modify or waive the
provisions thereof with the prior written consent of the Holders of each Outstanding
Certificate and may amend, modify or waive the provisions of the Series 1998-1 Revolving
Supplement with the prior written consent of the Holders of the 98-1 Revolving
Certificates.

     WHEREAS, the parties have agreed to further
amend a provision of the Series 1998-1 Revolving Supplement and to amend and waive certain
provisions of the Trust Agreement on the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, the parties hereto agree as
follows:

     1.   Definitions. Each
capitalized term used and not otherwise defined herein, including those used in the
Recitals, has the meaning set forth in the Trust Agreement. 

     2.   Amendments to Series 1998-1
Revolving Supplement. The definition of "Scheduled Maturity" in the Series
1998-1 Revolving Supplement is hereby amended by deleting the date "December 15,
2000" therein and substituting in its place the date "September 17, 2001".
Notwithstanding the foregoing, the increase in interest rate that became effective on
February 15, 2001 under Section 5 of the 1998-1 Revolving Supplement (as amended by the
Initial Waiver) shall remain in effect.

     3.    Amendments to Trust
Agreement. Solely with respect to the PBI Loan and the Southern Loan, each of the
Depositor, the Servicer, the Trustee and the Certificateholders agree to amend the
following provisions of the Trust Agreement on the following terms:

  
    (a) Clause (b) of the definition of "Adjustment Amount".
    The words "within sixty (60) days from the date the Loan became a Defaulted
    Loan" in clause (b) of the definition of "Adjustment Amount" are hereby
    deleted and replaced with the words "on or before November 15, 2001";

    (b) Clause (c) of the definition of "Adjustment Amount".
    The words "within one hundred twenty (120) days from the date of receipt of such
    letter of intent" in clause (c) of the definition of "Adjustment Amount"
    are hereby deleted and replaced with the words "on or before January 15, 2002";

    (c) Section 1.03(b). Section 1.03(b) is hereby amended to
    provide that Recoveries in respect of the PBI Loan or the Southern Loan shall be applied
    first to reimburse the Reserve Account for any Recovery Expenses allocable to such PBI
    Loan or Southern Loan and previously withdrawn from the Reserve Account.

    (d) Section 5.03(d). Section 5.03(d) is hereby amended to allow
    disbursement of funds from the Reserve Account on each Distribution Date to reimburse the
    Servicer or the Special Servicer, as applicable, for Recovery Expenses allocable to the
    PBI Loan and/or Southern Loan if (i) the Certificateholder Agent has provided to the
    Depositor, the Servicer and the Special Servicer written consent to such disbursement and
    (ii) the remaining balance in the Reserve Account after such disbursement would equal or
    exceed the Reserve Account Floor Amount. The Depositor, the Servicer or the Special
    Servicer, as applicable, shall provide a written request for such disbursement to the
    Certificateholder Agent by the 3rd day of the calendar month in which such disbursement is
    to be made (or the next Business Day if such day is not a Business Day) and the
    Certificateholder Agent shall provide written consent or refusal to consent no later than
    the 10th day of such calendar month (or the next Business Day if such day is not a
    Business Day) and, assuming such request is timely delivered, the Certificateholder
    Agent's approval shall not be unreasonably withheld. The Certificateholder Agent's written
    consent shall be deemed to be direction to the Trustee to make such disbursement pursuant
    to Schedule 9 of the Servicing Report.

    (e) Section 6.01. Section 6.01 is hereby amended to delete the
    period at the end of subparagraph (j) thereof and replace it with a semi-colon and to add
    the following new clause at the end thereof:

    (k) the failure of the Special Servicer to provide to the
    Certificateholders and the Certificateholder Agent weekly reports as to the status of the
    PBI Loan and the Southern Loan, including a comparison of actual results to the projected
    timeline for completion of the workout of each such Defaulted Loans indicated on Exhibit A
    hereto, so long as such 

    2

    Loans are included in the Trust Estate and have not been re-classified
    as performing Loans or Liquidated Loans.

  

     4.   Waivers. The Trustee and
the Certificateholders hereby waive through but not beyond November 15, 2001, any Default
by the Depositor under Section 6.01(f) of the Trust Agreement, provided, however, that a
Depositor Event of Default under Section 6.01(f) shall be deemed to exist on and after
November 16, 2001 if the 98-1 Revolving Certificates that are Rated Certificates have not
been paid in full on or before November 15, 2001. 

     5.  Expenses. The Trust shall
reimburse from funds on deposit in the Reserve Account all reasonable fees, costs and
expenses incurred by the Certificateholder Agent and the Holders of the Rated Certificates
in connection with their review of this Agreement, including without limitation the
reasonable fees of their special counsel (namely, Day, Berry & Howard LLP). In each
applicable monthly Servicer Report the Servicer shall from time to time instruct the
Trustee to effect any such reimbursements.

     6.  Governing Law. This Agreement
shall be governed by and construed in accordance with the internal laws of the State of
New York. 

     7.  General. This Agreement and
all the provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement may be
executed in one or more counterparts, all of which taken together shall constitute one
instrument. Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be as effective as delivery of a manually executed counterpart of this
Agreement. 

     8.   Ratification. Except as
expressly modified and superseded by this Agreement, each of the Trust Agreement and the
Series 1998-1 Revolving Supplement is ratified and confirmed in all respects and shall
continue in full force and effect. 

 

3

 

     IN WITNESS WHEREOF, the parties hereto have
executed this Second Amended & Restated Amendment and Waiver Agreement as of the day
and year first above written.

 

  
    
      
        
          ALLEGIANCE FUNDING I, LLC, as Depositor 

          
        

        
          	/s/Michael W. McDermitt
	

              
	VP & Secretary

          

        

        
          
            
              
                
                  
                    
                       

                    

                  

                

              

            

          

          MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee

        

        
           

          	/s/Russell T. Whitley

            
            	

              

            
            	Asst. Vice President

            
          
          

        

        
          
            
              
                
                  
                    
                       

                    

                  

                

              

            

          

          POINT WEST CAPITAL CORPORATION, as Servicer

          
            
              
                
                  
                    
                       

                    

                  

                

              

            

          

        

        
           

          	/s/John W Rotter

            
            	

              

            
            	CEO

            
          
          

        

      

    

  

Consented and Agreed

Each of the Certificateholders authorizes and directs the Trustee to
execute the foregoing Second Amended & Restated Amendment and Waiver Agreement.

TICE & CO., as registered owner of the Class A-R
Certificates

	/s/Brian D. Hunt
	

    
	Partner

 

TICE & CO., as registered owner of the Class B-R
Certificates

 

	/s/Brian D. Hunt
	

    
	Partner

 

TICE & CO., as registered owner of the Class C-R
Certificates

 

	/s/Brian D. Hunt
	

    
	Partner

________

 

ALLEGIANCE FUNDING I, LLC, as registered owner of the Class D-R
Certificates

 

	/s/Michael W. McDermitt
	

    
	VP & Secretary

 

PACIFIC LIFE INSURANCE COMPANY 

	/s/Cathy Schwartz
	

    
	Asst. Vice President

	/s/Peter S. Fisk
	

    
	Asst.  Secretary

UNITED OF OMAHA LIFE INSURANCE COMPANY

 

	/s/Rodney P. Walker
	

    
	Sr. Vice President

NATIONWIDE LIFE INSURANCE COMPANY

 

	/s/Mark W. Poeppelman
	

    
	Associate Vice President

LIBERTY LIFE INSURANCE COMPANY (Certificates held in the nominee
name HARE & CO.)

 

	/s/Adam Emerson
	

    
	Authorized Officer

 

TICE & CO., registered owner of the Class C Certificates

 

	/s/Brian D. Hunt
	

    
	Partner

 

TICE & CO., registered owner of the Class D Certificates

	/s/Brian D. Hunt
	

    
	Partner

TICE & CO., registered owner of the Class E Certificates

 

	/s/Brian D. Hunt
	

    
	Partner

                                                                                                                                                    EXHIBIT
A

Nichols Family Services, LLC

Timeline for Disposition

	April
    - May - June, 2001

    

  	Complete business renewal activities;

      
	Get bookkeeping established;

      
	Account for pre-need assets & liabilities;

      
	Establish budget and free cash flow expectations;

      
	Decide whether to hire a broker for sale process;

      
	Collect info for sales prospectus;

      
	Prepare sales prospectus;

      
	Begin identifying possible buyers 

      
	Business begins generating free cash flow

      

	June
    – July, 2001

    

  	Marketing Process

    
	Business continues generating free cash flow

    

  

	August,
    2001

    

  	Complete marketing process

      
	Select buyer

      
	Negotiate and Enter into LOI

      
	Business continues generating free cash flow

      

	September
    - October, 2001

    

  	Complete sale process

      
	Possible foreclosure and/or negotiation with
      Specialized Commercial Lending (junior mortgage holder) and/or the Nichols (former owners/
             unsecured creditors), also Brown-Service (landlord in
      main funeral home) 

      
	September 30 October 30: close sale 

      

  
     

  

 

  Southern Family Funeral Care, LLC

  Timeline for Disposition

  

	April
    – May – June – July, 2001

    

  	Get bookkeeping established;

      
	Accounting for pre-need assets & liabilities;

      
	Establish budget and free cash flow expectations;

      
	Decide whether to hire broker;

      
	Collect info for sales prospectus;

      
	Prepare sales prospectus;

      
	Begin identifying possible buyers

      

	July
    – August – September – October, 2001

    

  	Marketing process

      
	Business generating free cash flow

      

	October
    – November – December, 2001

    

  	Complete marketing process;

      
	Select buyer, negotiate and enter into LOI

      

	December
    – January – February, 2002

    

  	Complete sale process;

      
	Possible foreclosure and/or negotiation with junior
      creditors (Kents in respect of Kent FHs/ Morrows in respect of 

      Pineview Memory Gardens). 

    

	   January 30: close saleEXHIBIT 10.1

                            HQ GLOBAL HOLDINGS, INC.

                                     AMENDED
                           CERTIFICATE OF DESIGNATIONS

                     ESTABLISHING AND FIXING THE RIGHTS AND
              PREFERENCES OF A SERIES OF SHARES OF PREFERRED STOCK

                            Under Section 151 of the
                        Delaware General Corporation Law

     HQ Global Holdings, Inc., a Delaware corporation (the "Corporation"),
certifies that:

First: Pursuant to the authority expressly vested in the Board of Directors of
the Corporation by Section 4.1(b) of its Certificate of Incorporation, as
heretofore amended (which, as hereafter restated or amended from time to time,
are together with this Amended Certificate of Designations herein called the
"Certificate of Incorporation"), the Board of Directors has, by resolution, duly
designated and classified 5,395,857.654 shares of the preferred stock of the
Corporation into a series designated Series A Convertible Cumulative Preferred
Stock and has provided for the issuance of such series.

Second: This Amended Certificate of Designations amends and restates the
Certificate of Designations in respect of the Series A Convertible Cumulative
Preferred Stock filed by the Corporation with the Secretary of State of the
State of Delaware on June 1, 2000 in its entirety.

Third: The preferences, rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption or conversion of the
shares of such series of preferred stock, which upon any restatement of the
Certificate of Incorporation shall be included as part of Section 4.1(b) of the
Certificate of Incorporation, are as follows:

                 SERIES A CONVERTIBLE CUMULATIVE PREFERRED STOCK

(1)      Designation and Number.
         ----------------------

         A series of preferred stock of the Corporation ("Preferred Stock"),
designated the "Series A Convertible Cumulative Preferred Stock" (the "Series A
Preferred"), is hereby established. The number of shares of the Series A
Preferred shall be, and shall not exceed, 5,395,857.654.

(2)      Rank.
         ----

         The Series A Preferred will, with respect to dividend rights and rights
upon liquidation, dissolution or winding up of the Corporation, rank: (a) senior
to all classes or series of the common stock of the Corporation (the "Common
Stock"), and to all equity securities issued by the Corporation the terms of
which provide that such equity securities shall rank junior to such

<PAGE>

Series A Preferred; (b) on a parity with all equity securities issued by the
Corporation in accordance with Section 6(c) other than those referred to in
clauses (a) and (c) of this Section 2; and (c) junior to all equity securities
issued by the Corporation in accordance with Section 6(c)(v) that rank senior to
the Series A Preferred. The term "equity securities" shall not include
convertible or exchangeable debt securities but shall include any equity
securities into which such debt securities have been converted or for which such
debt securities have been exchanged.

(3)      Dividends.
         ---------

         (a) Holders of the shares of Series A Preferred shall be entitled to
receive dividends, when, as and if authorized by the Board of Directors, equal
to the Dividend Rate multiplied by the Liquidation Amount per share of Series A
Preferred. The "Dividend Rate" shall mean 13.5% per annum initially and shall
increase by an amount equal to 0.50% per annum on May 31, 2001 and on each
annual anniversary date thereafter until November 30, 2007 or earlier
redemption, conversion or Liquidation, as applicable; provided, however, that
the "Dividend Rate" shall equal the Default Dividend Rate during any period (1)
commencing on the 90th day following any Dividend Payment Date on which the
Corporation has failed to pay the dividend on such Dividend Payment Date,
assuming the Corporation still has not paid such dividend by such 90th day
following such Dividend Payment Date, and ending on the date on which such
dividend is paid, and (2) commencing on the 90th day following January 1, 2001
if the Consent Securities Ratio is in excess of 6 to 1 on such 90th day
following January 1, 2001 and ending on the earlier of (A) the date on which
consent by the holders of the Series A Preferred is provided to such then
existing Consent Securities Ratio in a manner consistent with the provisions of
Section 6(c)(vi) or (B) the reduction of such Consent Securities Ratio to 6 to 1
or lower. Payment in respect of all dividends so declared shall occur upon each
Dividend Payment Date by increasing the Liquidation Amount for each share of the
Series A Preferred on such Dividend Payment Date by an amount equal to the
dollar amount of the dividends declared with respect to such share. Other than
with respect to dividends payable pursuant to Section 3(e), holders of the
Series A Preferred shall not be entitled to cash dividends in respect of
dividend payments.

         (b) Dividends on the Series A Preferred shall be cumulative from May
31, 2000 and shall be payable semiannually in arrears on May 31 and November 30
of each year or, if not a Business Day, the next succeeding Business Day,
commencing November 30, 2000 (each, a "Dividend Payment Date"). Any dividend
payable on the Series A Preferred for a partial dividend period will be computed
on the basis of a 360-day year consisting of twelve 30-day months.

         (c) No dividends on the Series A Preferred shall be authorized by the
Board of Directors of the Corporation or be paid by the Corporation at such time
as the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such authorization or payment
or provides that such authorization or payment would constitute a breach thereof
or a default thereunder, or if such authorization or payment shall be restricted
or prohibited by law.

         (d) Dividends on the Series A Preferred will accumulate daily at the
Dividend Rate until the date of redemption or conversion of the Series A
Preferred or a Liquidation, whether or not the Corporation has earnings and
whether or not such dividends are authorized or declared. Unpaid dividends shall
compound semiannually from the applicable Dividend Payment Date on which such
dividends were payable until full payment or date of earlier redemption,
conversion or Liquidation, as the case may be.

                                       2

<PAGE>

         (e) If any cash or other dividends, other than dividends which are
payable solely in shares of the same class as the shares of equity securities on
which such dividends are declared, are declared by the Board of Directors to be
paid on the Common Stock or other equity securities of the Corporation ranking
junior, as to dividends, to the Series A Preferred, then holders of the shares
of Series A Preferred as of the close of business on the record date referred to
below shall be entitled to receive an additional dividend (the "Additional
Dividend") in an amount equal to the Special Dividend Amount for each
outstanding share of Series A Preferred. The "Special Dividend Amount" shall
mean the value of the dividends paid in respect of one share of the Common Stock
or other equity securities multiplied by the As Converted Factor. The Additional
Dividend shall be paid in whatever form the dividends are paid to the holders of
Common Stock or other equity securities and the Additional Dividend shall be
paid on the same date as such dividends are paid to the holders of the Common
Stock or such other equity securities. The record date for the payment of the
Additional Dividend to holders of shares of the Series A Preferred shall be
determined by the Board of Directors and shall not be less than five days prior
to the payment date in respect of such Additional Dividend.

         (f) The Corporation shall not authorize, declare or pay any dividend on
any equity securities of the Corporation ranking, as to the payment of dividends
or distribution of assets upon a Liquidation, on a parity with or junior to the
Series A Preferred for any period nor shall any shares of any such equity
securities be purchased, redeemed or otherwise acquired for consideration by the
Corporation, directly or indirectly, unless full dividends have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof is set apart for such payment, in each case as contemplated
in Section 3(a), on the Series A Preferred for all past dividend periods and the
then current dividend period.

(4)      Liquidation Preference.
         ----------------------

         (a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation (referred to herein as a
"Liquidation"), the holders of the Series A Preferred will be entitled to be
paid out of the assets of the Corporation legally available for distribution to
its stockholders liquidating distributions, in cash, in an amount equal to the
Liquidation Preference per share to the date of Liquidation, before any
distribution or payment is made to holders of Common Stock or any other equity
securities of the Corporation ranking junior to the Series A Preferred as to the
distribution of assets upon a Liquidation. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of Series
A Preferred will have no right or claim to any of the remaining assets of the
Corporation. Notwithstanding the foregoing, if an amount (a "Common Liquidation
Preference") equal to the product of (i) the Liquidation Preference per share of
Series A Preferred to the date of Liquidation divided by the Per Share Price,
multiplied by (ii) the per share liquidating distribution to which a holder of
one share of Common Stock would be entitled upon a Liquidation exceeds the
Liquidation Preference per share of Series A Preferred, then, upon a
Liquidation, the holders of the Series A Preferred shall be entitled to receive
the Common Liquidation Preference in respect of each share of Series A Preferred
in lieu of the Liquidation Preference in respect of each share of Series A
Preferred.

                                       3
<PAGE>

         (b) In the event that, upon any Liquidation of the Corporation, the
available assets of the Corporation are insufficient to pay the amount of the
liquidating distributions on all outstanding shares of Series A Preferred and
the corresponding amounts payable on all other equity securities of the
Corporation ranking on a parity with Series A Preferred in the distribution of
assets upon such Liquidation, then the holders of Series A Preferred and all
other such equity securities shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.

(5)      Mandatory Redemption; Redemption at Option of Corporation.
         ---------------------------------------------------------

         (a) Shares of Series A Preferred will not be subject to optional
redemption by the Corporation prior to May 31, 2004. On or after May 31, 2004,
the Corporation may redeem shares of the Series A Preferred, in whole or in
part, from time to time, at a redemption price per share which shall equal the
product of (i) the Optional Redemption Percentage multiplied by (ii) the
Liquidation Preference per share of the Series A Preferred to be redeemed to the
date of redemption. The "Optional Redemption Percentage" shall initially equal
105% and shall decline ratably on each anniversary of May 31, 2004 until May 31,
2007 (in any case to an amount not less than 100%). The redemption price shall
be payable in cash, upon not less than 30 nor more than 60 days' prior written
notice to the holders of the Series A Preferred.

         (b) All of the outstanding shares of Series A Preferred shall be
redeemed by the Corporation on November 30, 2007 (the "Mandatory Redemption
Date") at a redemption price equal to 100% of the Liquidation Preference per
share to the date of redemption, payable in cash, upon not less than 30 nor more
than 60 days' prior written notice to the holders of the Series A Preferred.

         (c) If fewer than all of the outstanding shares of Series A Preferred
are to be redeemed pursuant to Section 5(a), the shares to be redeemed shall be
determined pro rata based on the number of shares of Series A Preferred held by
each holder thereof.

         (d) Notice of optional redemption will be mailed by the Corporation,
postage prepaid, not less than 30 nor more than 60 days prior to the date fixed
for redemption (the " Optional Redemption Date"), addressed to the respective
holders of record of the Series A Preferred to be redeemed at their respective
addresses as they appear on the stock transfer records of the Corporation. Each
notice of redemption shall state: (i) the Optional Redemption Date; (ii) the
number of shares of Series A Preferred to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates representing such shares of
Series A Preferred are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accumulate on the
Optional Redemption Date (unless the Corporation defaults in the payment of the
redemption price); and (vi) the date upon which the conversion rights with
respect to the Series A Preferred shall terminate. If fewer than all the shares
of Series A Preferred are to be redeemed, the notice mailed to each such holder
thereof shall also specify the number of shares of Series A Preferred to be
redeemed from each such holder.

                                       4
<PAGE>

         (e) At its election, the Corporation, prior to the Optional Redemption
Date or the Mandatory Redemption Date, as applicable, may irrevocably deposit
the cash redemption price (including accumulated and unpaid dividends) of the
Series A Preferred so called for redemption in trust for the holders thereof
with a bank or trust company, in which case the Corporation shall notify the
holders of the Series A Preferred to be redeemed of (i) the date of such
deposit, (ii) the office of such bank or trust company serving as the place of
payment of the redemption price and (iii) the requirement that in order to
receive payment on the Optional Redemption Date or the Mandatory Redemption
Date, as the case may be, such holders surrender the certificates representing
such Series A Preferred at such place on or prior to the Optional Redemption
Date or the Mandatory Redemption Date, as applicable, against payment of the
redemption price (including all accumulated and unpaid dividends). Any moneys so
deposited which remain unclaimed by the holders of Series A Preferred at the end
of two years after the Optional Redemption Date or the Mandatory Redemption
Date, as applicable, will be returned by such bank or trust company to the
Corporation and the holders of the Series A Preferred shall thereafter look to
the Corporation for the payment of the redemption price.

         (f) No failure to give notice of redemption or any defect thereto or in
the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of Series A Preferred except as to the holder to whom
notice was defective or not given.

         (g) Holders of the Series A Preferred will be entitled to receive
payment of the redemption price of their shares to be redeemed on or after the
Optional Redemption Date or the Mandatory Redemption Date, as applicable, by
presenting and surrendering the certificates representing such Series A
Preferred at the designated place and thereupon the redemption price of such
shares will be paid to or on the order of the person whose name appears on such
certificates as the owner thereof and each surrendered certificate will be
canceled; it being understood, however, that the Corporation shall not be
obligated to pay the redemption price applicable to any Series A Preferred to be
redeemed unless either (i) the certificates evidencing the shares of Series A
Preferred to be redeemed are delivered to the designated place as provided above
or (ii) the holder thereof notifies the Corporation that such certificates have
been lost, stolen or destroyed and executes an agreement reasonably satisfactory
to the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. In the event that fewer than all the
outstanding shares of Series A Preferred are to be redeemed, a new certificate
will be issued representing the unredeemed shares.

         (h) From and after the Optional Redemption Date or the Mandatory
Redemption Date (unless the Corporation defaults in payment of the redemption
price), all dividends on the Series A Preferred called for redemption will cease
to accumulate and all rights of the holders thereof, except the right to receive
the redemption price thereof (including all accumulated and unpaid dividends),
will cease and terminate and such shares will not thereafter be transferred
(except with the consent of the Corporation) on the Corporation's records, and
such shares shall not be deemed to be outstanding for any purpose whatsoever.

         (i) Any shares of Series A Preferred that have been redeemed shall,
after such redemption, have the status of authorized but unissued Preferred
Stock, without designation as to series, until such shares are once more
designated by the Board of Directors of the Corporation as part of a series of
Preferred Stock other than Series A Preferred.

                                       5
<PAGE>

         (j) Until May 31, 2004, the Corporation shall not purchase or otherwise
acquire, directly or indirectly, any shares of Series A Preferred (except by
conversion into Common Stock).

(6)      Voting Rights; Protective Provisions.
         ------------------------------------

         (a) Except as otherwise provided herein or as otherwise required by
law, holders of the Series A Preferred shall vote together with the holders of
Common Stock as a single class. In any matter in which the holders of the Series
A Preferred and Common Stock vote as a single class, each share of Series A
Preferred shall entitle its holder to a number of votes per share of Series A
Preferred equal to the As Converted Factor. In any matter in which the Series A
Preferred is entitled to vote as a separate class, each share of Series A
Preferred shall be entitled to one vote. Shares of the Series A Preferred shall
not entitle the holders thereof to any votes in connection with the election of
directors.

         (b) If at any time prior to the date that the Corporation constitutes a
TRS of EOPT and FUR, a transaction or event occurs which would cause EOPT or FUR
to own any Preferred Pre-TRS Excess Stock (as defined below), then the portion
of the stock of the Corporation owned by EOPT or FUR, as the case may be, which
constitutes Preferred Pre-TRS Excess Stock shall automatically constitute
non-voting stock of the Corporation on the date immediately prior to such
transaction or event and shall remain non-voting stock of the Corporation until
such time as EOPT or FUR, as the case may be, delivers notice to the Corporation
that (i) such stock no longer constitutes Preferred Pre-TRS Excess Stock, or
(ii) the Corporation constitutes a taxable REIT subsidiary (a "TRS") (as such
term is defined in Section 856(l) of the Internal Revenue Code of 1986, as
amended (the "Code")) of EOPT. The term "Preferred Pre-TRS Excess Stock" shall
mean any portion of the Series A Preferred owned by EOPT or FUR, as the case may
be, which, when combined with any shares of Common Stock owned by EOPT or FUR,
as the case may be, exceeds 9.5% of the total outstanding voting securities of
the Corporation, as determined under Code Section 856(c)(4)(B); provided,
however, that for periods after December 31, 2000, the term "Preferred Pre-TRS
Excess Stock" shall mean any portion of the Series A Preferred owned by EOPT or
FUR, as the case may be, which, when combined with any shares of Common Stock
owned by EOPT or FUR, as the case may be, exceeds 9.5% of the total voting power
of the outstanding securities of the Corporation, as determined under Code
Section 856(c)(4)(B)(iii)(II). For purposes of determining whether any of the
Series A Preferred constitutes Preferred Pre-TRS Excess Stock, any warrants
exercisable for Common Stock owned by EOPT or FUR, as the case may be, shall be
treated as having been exercised. For purposes of this Section 6(b), EOPT and
FUR shall be considered to own directly any stock, warrants or other securities
the ownership of which would be attributable to EOPT or FUR, as the case may be,
for purposes of applying the provisions of Section 856(c)(4)(B) of the Code. All
references to the Corporation in this Section 6(b) shall include references to
any successor-in-interest to the Corporation. If requested in writing by EOPT or
FUR, the Corporation shall, in a timely manner, provide EOPT or FUR, as the case
may be, with any information reasonably necessary for EOPT or FUR, as the case
may be, to determine whether any of the Series A Preferred EOPT owns constitutes
Preferred Pre-TRS Excess Stock. The Corporation further agrees to notify EOPT or
FUR, as the case may be, as soon as practicable, in writing, of any event or
transaction of which it has knowledge that it believes results in EOPT's or
FUR's ownership of Preferred Pre-TRS Excess Stock, as the case may be. The
Corporation further agrees that if any event or transaction results in EOPT's or
FUR's ownership of any Preferred Pre-TRS Excess Stock, the Corporation shall
notify EOPT or FUR, as the case may be, as soon as practicable, in writing, in
the event that it believes such stock no longer constitutes Preferred Pre-TRS
Excess Stock.

                                       6
<PAGE>

         (c) Until the occurrence of a Qualified Initial Public Offering or a
Qualified Merger, consent of the holders of at least 66.67% (or, in the case of
clause (iv) and (ix) below only, 80%) of the outstanding shares of Series A
Preferred not held by FrontLine Capital Group ("FCG") or its Affiliates will be
required for:

                (i)    any sale or acquisition (in each case, by way of stock
                       sale, merger with an entity the common stock or other
                       equity interests of which are privately held, asset sale,
                       recapitalization or similar transaction) by or of the
                       Corporation or any subsidiary of the Corporation of
                       shares, assets or a business representing 25% of LTM
                       EBITDA of the Corporation and its subsidiaries on a
                       consolidated basis;

                (ii)   any merger, other than a Qualified Merger, of the
                       Corporation or any Material Subsidiary with another
                       entity the common stock or other equity interests of
                       which are publicly held;

                (iii)  any liquidation, dissolution or winding up of the affairs
                       of the Corporation or any Material Subsidiary;

                (iv)   any amendment to the Corporation's Certificate of
                       Incorporation or by-laws in a manner adverse to holders
                       of the Series A Preferred;

                (v)    the issuance of any equity security by the Corporation
                       (upon conversion or otherwise) other than (A) Common
                       Stock, (B) preferred stock that is subordinated to the
                       Series A Preferred as to liquidation but otherwise has
                       the characteristics of Consent Securities, or (C) Consent
                       Securities not requiring consent under subsection (vi)
                       below, or the issuance of any debt security by the
                       Corporation which may, at the option of the holder or the
                       Corporation, be converted prior to the redemption or
                       conversion of the Series A Preferred, into any equity
                       security of the Corporation other than an equity security
                       permitted pursuant to the requirements of clause (A) or
                       (B) of this subsection (v);

                (vi)   the incurrence of Indebtedness or issuance of Consent
                       Securities resulting in a Consent Securities Ratio in
                       excess of 6 to 1 (or, through December 31, 2000, the
                       incurrence of Indebtedness or the issuance of Consent
                       Securities resulting in an aggregate amount of
                       Indebtedness and Consent Securities in excess of $450
                       million);

                (vii)  any increase in the number of shares of Common Stock
                       issuable pursuant to the Stock Option Plan in excess of
                       the Option Limiting Percentage;

                (viii) any material change in the business plan of the
                       Corporation as reflected in the Corporation's Business
                       Plan dated January 2000; or

                                       7
<PAGE>

                (ix)   the purchase, redemption or other acquisition of any
                       equity security by the Corporation ranking junior to, or
                       pari passu with, the Series A Preferred.

Notwithstanding the foregoing,

                (A)    if EOP sells (1) more than 919,748.461 shares of Series A
                       Preferred to one or more entities other than its
                       Affiliates or (2) Series A Preferred to four or more
                       entities other than its Affiliates, only the consent of
                       the holders of a majority of the outstanding shares of
                       Series A Preferred not held by FCG or its Affiliates will
                       be required in connection with any of the matters
                       specified in clauses (i) through (iii) and (v) through
                       (ix) above;

                (B)    if EOP is determined to have an EOP Conflict (excluding
                       any conflicts resulting solely from the ownership of
                       shares of Series A Preferred) in evaluating any proposed
                       transaction falling within the scope of clauses (i) or
                       (ii) above, EOP shall have the right to vote on the
                       matter but only the consent of a majority of the
                       outstanding shares of Series A Preferred not held by FCG
                       or its Affiliates will be required; and

                (C)    in the case of an acquisition meeting the criteria of
                       clause (i) above, or in the case of matters covered by
                       clauses (vii) and (viii) above, if the Corporation is not
                       a TRS, EOP shall not have the right to vote on the matter
                       in question and the shares held by EOP shall not be
                       considered outstanding for purposes of determining
                       whether holders of the Series A Preferred have consented
                       to the matter in question.

         (d) Until a Qualified Initial Public Offering or Qualified Merger, the
consent of the Board of Directors of the Corporation, which consent shall
include that of at least one director designated by a holder of the Series A
Preferred (other than FCG or any Affiliate thereof), shall be required for any
transaction or agreement (other than with respect to the Operating Agreement of
HQ Global Workplaces Equity Joint Venture, LLC between the Corporation and EOP
and the transactions contemplated thereby) between the Corporation and FCG or
any Investor or any of their respective Affiliates having a transaction value or
contemplated transaction value equal to or exceeding

                (i)    2% of the Corporation's annual budgeted revenues, or

                (ii)   3% of the Corporation's annual budgeted expenses,

each determined as reasonably projected over any four successive quarterly
periods during the period beginning on the date such transaction or agreement
shall commence and ending on the later of (A) the three year anniversary of such
commencement date or (B) the termination date of such transaction or agreement.
In addition, the Corporation shall inform its Board of Directors in advance of
all such transactions or agreements having a transaction value or contemplated
transaction value equal to or exceeding $250,000, even if consent is not
required in accordance with the preceding sentence. Notwithstanding the
foregoing, if the Corporation is not a TRS of EOPT on the date the consent of a
director designated by a holder of the Series A Preferred is required, the
consent of a director designated by EOPT shall not be required in order for the
Corporation to take the actions described in this Section 6(d).

                                       8
<PAGE>

         (e) Notwithstanding any provision herein to the contrary, until the
occurrence of a Qualified Initial Public Offering or a Qualified Merger, consent
of the holders of all the outstanding shares of Series A Preferred not held by
FCG or its Affiliates will be required for the Corporation to issue any equity
security (including Consent Securities) that

                (i)    ranks senior to the Series A Preferred with respect to
                       the payment of dividends; or

                (ii)   entitles the holders thereof to cash dividends,

provided, however, that if the Corporation is not a TRS of EOPT on the date such
consent is required, then the consent of EOPT shall not be required in order for
the Corporation to take the actions described in Section 6(e)(ii).

         (f) Notwithstanding any provision herein to the contrary, the
Corporation shall not consummate any merger approved by the holders of the
Series A Preferred in accordance with Section 6(c)(i) or (ii), as applicable, in
the event that the aggregate value of the consideration to be received by the
holders of the Common Stock upon consummation of such merger is more than 17.5%
below the value of the aggregate consideration to be received as calculated on
the date of the execution of the merger agreement relating to such merger,
unless the holders of the Series A Preferred reapprove such merger pursuant to
Section 6(c)(i) or 6(ii), as applicable.

(7)      Conversion.
         ----------

         (a) In the event of a merger of, or an initial public offering of
Common Stock by, the Corporation that does not constitute a Qualified Merger or
Qualified Initial Public Offering, respectively (a "Conversion Option Event"),
each holder of the Series A Preferred shall have the option to convert its
shares of Series A Preferred, in whole or in part, into shares of Common Stock
at the Conversion Rate on the date of the consummation of such merger or initial
public offering, as the case may be; provided, however, that no holder of Series
A Preferred shall have the option to convert any shares of Series A Preferred in
respect of which a Redemption Election has been made and not withdrawn in
accordance with Section 8(b) by the close of business on the Business Day prior
to the Redemption Election Payment Date; and provided, further, that the
foregoing right to convert shares of Series A Preferred to be redeemed pursuant
to Section 5 hereof will terminate at the close of business on the Business Day
immediately preceding the Optional Redemption Date or the Mandatory Redemption
Date, as applicable.

         The Corporation shall provide each holder of Series A Preferred with a
summary of the material terms of a proposed merger not less than 45 days prior
to the consummation thereof and shall notify each holder of the Series A
Preferred of its intention to file a registration statement relating to an
initial public offering with the SEC not less than 45 days prior to the filing
date thereof. Each holder of Series A Preferred shall notify the Corporation in
writing of such holder's election not more than 30 days after its receipt of
such summary or notice, as the case may be, from the Corporation and such
holder's election shall be irrevocable for 150 days after its receipt of such
summary or notice, as the case may be, from the Corporation; provided,

                                       9
<PAGE>

however, that any holder shall have the right to rescind its election and either
continue to hold its Series A Preferred or make a Redemption Election if there
is any material change in the Corporation's business or financial condition or
in the Conversion Price occurring prior to the consummation of the proposed
merger or initial public offering, as the case may be, or if the proposed merger
or initial public offering is not consummated within 150 days after its receipt
of such summary or notice, as the case may be, from the Corporation.

         (b) Following the consummation of the transaction resulting in a
Conversion Option Event, holders of shares of Series A Preferred which remain
outstanding shall have the option at any time prior to the occurrence of a
Qualified Initial Public Offering or Qualified Merger to convert all or a
portion of such shares into shares of Common Stock at the Conversion Rate;
provided, however, that the right to convert shares of Series A Preferred to be
redeemed pursuant to Section 5 shall terminate at the close of business on the
Business Day immediately preceding the Optional Redemption Date or the Mandatory
Redemption Date, as applicable.

         In case the Corporation shall pay or make any dividend or any other
distribution on any class of capital stock of the Corporation payable in shares
of Common Stock after a Conversion Option Event but prior to a conversion
pursuant to this Section 7(b), the Conversion Rate in effect at the time of such
conversion shall be increased by dividing the Conversion Rate by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding at
the close of business on the date before such dividend or distribution and the
denominator of which shall be the sum of such number of outstanding shares of
Common Stock and the total number of shares constituting all such dividends or
other distributions.

         In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, and such subdivision becomes effective
after a Conversion Option Event but prior to the issuance of shares of Common
Stock upon a conversion pursuant to this Section 7(b), the Conversion Rate in
effect at the time of such conversion shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock and such combination becomes
effective after a Conversion Option Event but prior to such conversion, the
Conversion Rate in effect at the time of such conversion shall be
proportionately reduced.

         If, after a Conversion Option Event but prior to the issuance of shares
of Common Stock upon a conversion pursuant to this Section 7(b), the Corporation
shall sell shares of its Common Stock at a price per share less than the current
market price per share of Common Stock on the date of sale (other than shares of
Common Stock issued (i) pursuant to the Stock Option Plan, (ii) upon exercise of
any warrants to purchase Common Stock of the Corporation, including any warrants
issued to holders of the Corporation's high yield, mezzanine or bridge debt in
accordance with Section 5.1 of the Stockholders Agreement, or (iii) upon
conversion of the Series A Preferred), the Conversion Price in effect at the
time of such conversion shall be adjusted to equal the price determined by
multiplying the Conversion Price in effect immediately prior to such sale by a
fraction, the numerator of which shall be the sum of (x) the number of shares of
Common Stock outstanding immediately prior to such sale and (y) the number of
shares of Common Stock which the aggregate consideration received by the
Corporation from such sale would purchase at such current market price and the
denominator of which shall be the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such sale and (2) the number of shares of
Common Stock so sold.

                                       10
<PAGE>

         If, after a Conversion Option Event but prior to the issuance of shares
of Common Stock upon a conversion pursuant to this Section 7(b), the Corporation
shall distribute rights, options or warrants (any such rights, options or
warrants are referred to herein as "Options") or any stock or securities
convertible into or exercisable or exchangeable for Common Stock (other than a
dividend subject to the provisions of the second paragraph of Section 7(b) or
any warrants issued to holders of the Corporation's mezzanine or bridge debt in
accordance with Section 5.1 of the Stockholders Agreement ) (any such stock or
securities are referred to herein as "Convertible Securities") to the holders of
all or at least 75% of the outstanding shares of its Common Stock entitling them
to subscribe for, purchase, convert into or exchange for shares of Common Stock
at a price per share less than the current market price per share of Common
Stock as of the record date for such distribution, the Conversion Price used in
the determination of the Conversion Rate for a conversion pursuant to this
Section 7(b) shall be adjusted to equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the sum of (x) the number of shares of Common
Stock outstanding on such record date and (y) the number of shares of Common
Stock which the aggregate consideration receivable by the Corporation from the
exercise of such Options or from the conversion, exercise or exchange of such
Convertible Securities would purchase at such current market price and the
denominator of which shall be the sum of (1) the number of shares of Common
Stock outstanding on such date and (2) the number of shares of Common Stock so
offered for subscription, purchase, conversion, exercise or exchange. Options or
Convertible Securities distributed by the Corporation to all holders of its
Common Stock entitling the holders thereof to subscribe for, purchase, convert
into or exchange for shares of Common Stock, which Options or Convertible
Securities (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 7(b) not be deemed distributed until the occurrence of the
earliest Trigger Event. An adjustment made pursuant to this Section 7(b) shall
be effective immediately after the record date for such distribution.

         (c) Upon the consummation of a Qualified Initial Public Offering or
Qualified Merger, each share of Series A Preferred shall automatically be
converted into shares of Common Stock at the Conversion Rate. The Corporation
shall provide each holder of Series A Preferred with a summary of the material
terms of a proposed Qualified Initial Public Offering or Qualified Merger not
less than 30 days prior to the consummation thereof. However, the automatic
conversion of the Series A Preferred shall not be contingent upon the
Corporation's delivery of the summary referred to in the preceding sentence.

         (d) In the event that none of a Qualified Merger, Qualified Initial
Public Offering or a Conversion Option Event has occurred prior to the close of
business on the last Business Day immediately preceding the Mandatory Redemption
Date, holders of the Series A Preferred shall have the right to convert their
shares into shares of Common Stock on the Mandatory Redemption Date at the
Conversion Rate.

                                       11
<PAGE>

         Each holder of Series A Preferred electing to convert its shares on the
Mandatory Redemption Date shall notify the Corporation in writing of such
holder's election not less than 45 nor more than 90 days prior to the Mandatory
Redemption Date, whereupon the Corporation shall notify each such holder of the
Conversion Price applicable to such conversion in accordance with clause (iv) of
the definition of Conversion Price not less than 30 days prior to the Mandatory
Redemption Date. Any holder shall have the right to rescind any previous
election to convert upon notice to the Corporation no less than 10 Business Days
prior to the Mandatory Redemption Date.

         (e) Upon the consummation of a sale pursuant to a Tag-Along Right by a
holder of the Series A Preferred electing to include all or a portion of its
Series A Preferred as part of the Tag-Along Right, each transferee to whom such
shares of Series A Preferred shall have been transferred shall have the option
to convert such shares of Series A Preferred into Common Stock at the Conversion
Rate on or prior to the 60th day following the sale pursuant to such Tag-Along
Right (the "Tag-Along Conversion Date"). Each such transferee holding Series A
Preferred electing to convert its shares on the Tag-Along Conversion Date shall
notify the Corporation in writing of such holder's election not less than 45
days prior to the Tag-Along Conversion Date.

         (f) No fractional shares of Common Stock shall be issued upon
conversion of Series A Preferred. In lieu of any fractional shares to which the
holder would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then fair market value of such fractional shares as
determined by the Board of Directors of the Corporation in its good faith
judgment. If more than one share of Series A Preferred is surrendered for
conversion by the same holder, the number of full shares of Common Stock
issuable upon conversion shall be computed on the basis of the aggregate number
of shares of Series A Preferred so surrendered.

         (g) The Corporation and each holder of Series A Preferred shall, as
promptly as practicable, but in no event later than the Mandatory HSR Filing
Date, file (i) with the FTC and the DOJ the notification and report form, if
any, required in connection with the issuance of Common Stock upon conversion of
the Series A Preferred and any supplemental information requested in connection
therewith pursuant to the HSR Act, and (ii) any report or document required to
be filed with any other Governmental Entity resulting from such issuance of the
Common Stock. Any such notification and report form and supplemental information
shall be in substantial compliance with the requirements of the HSR Act. Each
holder of Series A Preferred shall furnish to the Corporation, and the
Corporation shall furnish to each such holder of Series A Preferred, such
necessary information and reasonable assistance as may be requested in
connection with the preparation of any filing or submission which is necessary
under the HSR Act. The Corporation shall keep each holder of Series A Preferred
informed, and each holder of Series A Preferred shall keep the Corporation
informed, of the status of any communications with, and any inquiries or
requests for additional information from, the FTC and the DOJ in respect of the
issuance of Common Stock to such holder upon conversion of the Series A
Preferred and shall comply promptly with any such inquiry or request.

         Any conversion of the Series A Preferred and the related issuance of
Common Stock shall be subject to the conditions that such conversion and
issuance not violate any statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent

                                       12
<PAGE>

injunction or other order enacted, entered, promulgated, enforced or issued by
any Governmental Entity and that no action, claim, proceeding or investigation
shall be pending or threatened by any Governmental Entity (other than a court
acting in response to an action, claim or proceeding brought by a
non-Governmental Entity) that, if successful, would result in any of the
foregoing effects.

         (h) Before any holder of Series A Preferred shall be entitled to
convert the same into full shares of Common Stock, and to receive certificates
therefor, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the principal office of the Transfer Agent, and shall give
written notice to the Corporation at such office that it elects to convert the
same; provided, however, that in the event of an automatic conversion pursuant
to either of Section 7(c) or (e) above, the outstanding shares of Series A
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Transfer Agent. The Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable
upon conversion to any holder of Series A Preferred, whether such conversion is
automatic or at the option of such holder, unless either (i) the certificates
evidencing the shares of Series A Preferred are delivered to the Transfer Agent
as provided above or (ii) the holder notifies the Transfer Agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates.

         The Corporation shall, as soon as practicable after such delivery, or
after such agreement and indemnification, issue and deliver at such office of
the Transfer Agent to such holder of Series A Preferred, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid and a check payable to the holder in the amount of any
cash payable as the result of a conversion into fractional shares of Common
Stock.

         Any such conversion shall be deemed to have been made upon

              (i)  satisfaction of the conditions specified in Section 7(g) and

              (ii) either

                   (A)  in the case of a conversion pursuant to either Section
                        7(a), (b) or (d), satisfaction of the conditions set
                        forth in such Section and in this Section 7(h), or

                   (B)  a Qualified Initial Public Offering, Qualified Merger or
                        consummation of the sale pursuant to a Tag-Along Right,
                        as the case may be,

and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock when the applicable conditions
specified in clauses (i) and (ii) above are satisfied.

                                       13
<PAGE>

         (i) Except as otherwise provided herein with respect to the calculation
of the Liquidation Preference, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on Series A Preferred
converted into Common Stock.

         (j) If any recapitalization, reclassification or reorganization of the
capital stock of the Corporation, or any consolidation or merger of the
Corporation with another corporation, or the sale of all or substantially all of
its assets, shall be effected (an "Organic Change"), and in connection with such
Organic Change the Common Stock shall be converted into common stock of another
entity or another security of the Corporation (a "New Security"), then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
by the Corporation whereby (i) if the conversion occurs in connection with such
Organic Change, the holders of the Series A Preferred shall receive (in lieu of
the shares of the Common Stock immediately theretofore receivable upon the
conversion rights contained herein) such shares of New Securities or property as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock which such holders would have received immediately following
such Organic Change had such holders converted their shares of Series A
Preferred into shares of Common Stock immediately prior to the effective date of
such Organic Change at the Conversion Rate at the time of conversion, and (ii)
if the conversion occurs subsequent to such Organic Change, the Corporation
shall make appropriate provision with respect to the rights and interests of the
holders of the Series A Preferred so that the conversion provisions hereof (and
the definition of Conversion Rate) shall thereafter be applicable to a
conversion of the Series A Preferred into said New Securities. The Corporation
will not effect any such consolidation, merger or sale unless, prior to the
consummation thereof, the surviving entity (if other than the Corporation)
resulting from such consolidation or merger or the entity purchasing such assets
shall assume by written instrument the obligation to deliver to holders of
shares of the Series A Preferred such shares of common stock or other securities
or property as, in accordance with the foregoing provisions, such holders may be
entitled to receive upon conversion.

         (k) In the event that at any time, as a result of an adjustment made
pursuant to Section 7(j) above, the holder of any shares of Series A Preferred
becomes entitled to receive any shares of capital stock other than Common Stock
of the Corporation, the number and kind of such other shares so receivable shall
thereafter be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions concerning the Common
Stock contained in Section 7(b) and the provisions of this Section 7 shall apply
on like terms to any such other shares.

         (l) If any event occurs as to which the provisions of the second
through fifth paragraphs, inclusive, of Section 7(b) or of Sections 7(j) and (k)
are not strictly applicable or, if strictly applicable, would not, in the good
faith judgment of the Board of Directors of the Corporation, fairly protect the
conversion rights of the holders of the Series A Preferred in accordance with
the essential intent and principles of such provisions, then such Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith judgment of such Board, to protect the conversion rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the Conversion Price or otherwise adversely affecting the holders of
the Series A Preferred.

                                       14
<PAGE>

         (m) The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Series A Preferred, the full number
of shares of Common Stock then issuable upon the conversion of the Series A
Preferred.

         (n) Except as provided in the next sentence, the Corporation will pay
any and all documentary, stamp or similar issue and transfer taxes and duties
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of the Series A Preferred. The Corporation shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that of the holder of the Series A Preferred or its Affiliates,
and no such issue or delivery shall be made unless and until the person
requesting such issue and delivery has paid to the Corporation the amount of any
such tax or duty, or has established to the satisfaction of the Corporation that
such tax or duty has been paid.

         (o) The Corporation agrees that all shares of Common Stock which may be
delivered upon conversion of the Series A Preferred, upon such delivery, will
have been duly authorized and validly issued, will be fully paid and
nonassessable, will be free and clear of all liens, other than transfer
restrictions relating to federal securities laws, and will not be subject to any
preemptive or similar rights under any provision of applicable law, the
certificate of incorporation or by-laws of the Corporation or any agreement,
contract or instrument to which the Corporation is a party or by which it or any
of its properties or assets are bound (and shall be issued out of the
Corporation's authorized but unissued Common Stock).

         (p) Any shares of Series A Preferred that have been converted shall,
after such conversion, have the status of authorized but unissued Preferred
Stock, without designation as to series, until such shares are once more
designated by the Board of Directors as part of a series of Preferred Stock
other than Series A Preferred.

(8)      Redemption at Option of Holders.
         -------------------------------

         (a) Notwithstanding the provisions of Section 7(a), upon the occurrence
of a Conversion Option Event and subject to the consent, if required pursuant to
the terms thereof, of the holders of any indebtedness of the Corporation for
borrowed money or any indebtedness for borrowed money guaranteed by the
Corporation (which the Corporation agrees to use commercially reasonable
efforts, other than the payment of any fee or other consideration, to obtain),
each holder of Series A Preferred shall have the right to require the
Corporation to redeem for cash (a "Redemption Election") all or a portion of
shares of Series A Preferred owned by such holder on the date of the
consummation of the Conversion Option Event (the "Redemption Election Payment
Date"), at a redemption price per share equal to 100% of the Liquidation
Preference per share to the Redemption Election Payment Date.

         (b) In order for a holder to have its Series A Preferred redeemed on
the Redemption Election Payment Date, such holder shall deliver to the
Corporation (i) notice of such holder's election in writing, not less than 30
days prior to the Redemption Election Payment Date and (ii) on or prior to 5:00
p.m., New York City time, on the last Business Day prior to the Redemption
Election Payment Date, at the office of the Transfer Agent, the shares of Series
A Preferred to be

                                       15
<PAGE>

redeemed with the form entitled "Option to Elect Redemption" on the reverse
thereof or otherwise accompanying such shares of Series A Preferred duly
completed. Any Redemption Election shall be irrevocable; provided, however, that
any holder shall have the right to rescind its Redemption Election and either
continue to hold its Series A Preferred or make an election to convert its
Series A Preferred pursuant to Section 7(a) if there is any material change in
the Corporation's business or financial condition or in the Conversion Price
occurring prior to the consummation of the Conversion Option Event or if the
Conversion Option Event is not consummated within 150 days after its receipt of
the summary thereof from the Corporation.

         (c) At its election, the Corporation, prior to the Redemption Election
Payment Date, may irrevocably deposit the cash redemption price (including
accumulated and unpaid dividends) of the Series A Preferred to be redeemed in
trust for the applicable holders thereof with a bank or trust company, in which
case the Corporation shall notify the holders of the Series A Preferred to be
redeemed of (i) the date of such deposit, (ii) the office of such bank or trust
company serving as the place of payment of the redemption price and (iii) the
requirement (subject to the right of a holder of Series A Preferred to rescind
its Redemption Election) that such holders surrender the certificates
representing such Series A Preferred at such place on or prior to the Redemption
Election Payment Date against payment of the redemption price (including all
accumulated and unpaid dividends). Any moneys so deposited which remain
unclaimed by the holders of Series A Preferred at the end of two years after the
Redemption Election Payment Date will be returned by such bank or trust company
to the Corporation and the holders thereafter shall look to the Corporation for
payment of the redemption price.

         (d) Subsequent to the satisfaction of the conditions specified in
clause (b), on the Redemption Election Payment Date, the redemption price of the
Series A Preferred to be redeemed will be paid to or on the order of the person
whose name appears on such certificates as the owner thereof and each
surrendered certificate will be canceled; it being understood, however, that the
Corporation shall not be obligated to pay the redemption price applicable to any
Series A Preferred to be so redeemed unless either (i) the certificates
evidencing the shares of Series A Preferred to be so redeemed are delivered as
provided above or (ii) the holder thereof notifies the Corporation that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. In the event that fewer
than all the outstanding shares of Series A Preferred are to be redeemed, a new
certificate will be issued representing the unredeemed shares.

         (e) From and after the Redemption Election Payment Date (unless the
Corporation defaults in payment of the redemption price), all dividends on the
Series A Preferred actually redeemed will cease to accumulate and all rights of
the holders thereof, except the right to receive the redemption price thereof
(including all accumulated and unpaid dividends), will cease and terminate and
such shares actually redeemed will not thereafter be transferred (except with
the consent of the Corporation) on the Corporation's records, and such shares
actually redeemed shall not be deemed to be outstanding for any purpose
whatsoever.

                                       16
<PAGE>

(9)      Special Provisions Relating to a Default.
         ----------------------------------------

         For so long as the Corporation remains in default with respect to all
or any portion of the redemption price payable in connection with the redemption
of the Series A Preferred on the Mandatory Redemption Date or earlier Redemption
Election Payment Date ("Redemption Default"), in addition to any other remedies
that may be available to holders of shares of Series A Preferred:

             (i)     dividends on the Series A Preferred with respect to which
                     the Redemption Default has occurred shall be payable at the
                     Default Dividend Rate multiplied by the Liquidation
                     Preference on such redemption date; and

             (ii)    no later than 60 days after the end of each fiscal quarter
                     of the Corporation, commencing with the first full fiscal
                     quarter following the quarter in which the Redemption
                     Default occurs, the Corporation shall be required to pay to
                     the holders of the Series A Preferred with respect to which
                     the Redemption Default has occurred an amount equal to the
                     lesser of (A) 100% of Excess Cash Flow for the quarter then
                     ended, and (B) that portion of the redemption price which
                     remains unpaid.

(10)     Definitions.
         -----------

         "Additional Dividend" shall have the meaning set forth in Section 3(e).

         "Adjusted EBITDAR" shall mean EBITDA plus Rent, Losses to Break Even on
Development Properties and non-recurring items involving the Corporation or any
of its consolidated subsidiaries, each as determined in accordance with
generally accepted accounting principles.

         "Affiliate" shall mean, with respect to any Person, (i) any Person
directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with such Person, or (ii) any officer,
director, general partner, managing member or trustee of such Person or any
Person referred to in clause (i) above. For purposes of this definition, (i)
"control," when used with respect to any Person, means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing, (ii) with respect to EOP or its successors, any
non-controlled subsidiary of EOP or any successor thereto or EOPT or any
successor thereto shall be considered an Affiliate, and (iii) for voting
purposes only, based on the facts in existence on May 31, 2000, FUR shall not be
considered an Affiliate of FCG.

         "Aggregate Rent Obligation" shall mean all Rent payable by the
Corporation within the next twelve months from the relevant date.

         "As Converted Factor" shall mean the number determined by dividing the
Liquidation Preference per share of Series A Preferred as of the relevant date
by the Per Share Price, provided, however, that

         (A)  in the case of Section 3(e) relating to equity securities of the
              Corporation other than Common Stock, the "As Converted Factor"
              shall mean the number determined by dividing the Liquidation
              Preference per share of Series A Preferred by the liquidation
              preference of such other equity security;

                                       17
<PAGE>

         (B)  if the Corporation shall sell shares of Common Stock pursuant to
              an offering which is not a Qualified Initial Public Offering, then

              (i)     if the price per share in such sale is less than the Per
                      Share Price, or

              (ii)    if (A) the price per share in such sale is greater than
                      the Per Share Price, (B) the gross proceeds to the
                      Corporation from such sale are not less than $100 million,
                      and (C) at least 50% of the shares of Common Stock in such
                      sale is purchased by investors that are not Affiliates of
                      the Corporation or FCG (provided that for purposes of this
                      clause (C), an investor purchasing shares of Common Stock
                      in such sale who is not otherwise an Affiliate of the
                      Corporation or FCG shall not be deemed to be an Affiliate
                      of the Corporation or FCG solely by reason of having the
                      right to nominate a member of the Corporation's Board of
                      Directors as part of the sale consideration),

              the As Converted Factor shall be determined by dividing the
              Liquidation Preference per share by the price per share of
              Common Stock so sold;

         (C)  subsequent to a merger of the Corporation which is not a Qualified
              Merger but prior to any conversion pursuant to Section 7(b), the
              As Converted Factor shall be determined by dividing the
              Liquidation Preference per share by the dollar value of the
              consideration paid in respect of each share of Common Stock as
              determined as of the date of the execution of the agreement
              relating to such merger, provided that, if the aggregate value of
              the consideration to be received upon consummation of the merger
              is more than 12.5% below the value of the aggregate consideration
              to be received as calculated on the date of the execution of the
              merger agreement, the As Converted Factor shall be determined by
              dividing the Liquidation Preference per share by the dollar value
              of the aggregate consideration to be received upon consummation of
              the merger;

         (D)  in case the Corporation shall issue additional shares of Common
              Stock of the Corporation or shall pay or make any dividend or
              other distribution on any class of capital stock of the
              Corporation payable in shares of Common Stock, the As Converted
              Factor in effect at such time as the As Converted Factor is
              determined shall be increased by dividing the As Converted Factor
              by a fraction, the numerator of which shall be the number of
              shares of Common Stock outstanding on the last date prior to such
              issuance, dividend or distribution and the denominator of which
              shall be the sum of such number of outstanding shares of Common
              Stock and the total number of shares constituting all such
              dividends, issuances and distributions;

         (E)  in case outstanding shares of Common Stock shall be subdivided
              into a greater number of shares of Common Stock, the As Converted
              Factor shall be

                                       18
<PAGE>

              proportionately increased, and, conversely, in case outstanding
              shares of Common Stock shall each be combined into a smaller
              number of shares of Common Stock and such combination becomes
              effective prior to the date of the determination of the As
              Converted Factor, the As Converted Factor shall be proportionately
              reduced;

         (F)  if the Corporation shall sell shares of its Common Stock at a
              price per share less than the then current market price per share
              of Common Stock (other than shares of Common Stock issued (i)
              pursuant to the stock option plan adopted by the Corporation in
              accordance with its certificate of incorporation, as amended, (ii)
              upon exercise of any warrants to purchase Common Stock of the
              Corporation, including any warrants issued to holders of the
              Corporation's high yield, mezzanine or bridge debt in accordance
              with Section 5.1 of the Stockholders Agreement or (iii) upon
              conversion of the Series A Preferred), the number by which the
              Liquidation Preference is divided to determine the As Converted
              Factor shall be adjusted to equal the price determined by
              multiplying such number by a fraction, the numerator of which
              shall be the sum of (x) the number of shares of Common Stock
              outstanding immediately prior to such sale and (y) the number of
              shares of Common Stock which the aggregate consideration received
              by the Corporation from such sale would purchase at such current
              market price and the denominator of which shall be the sum of (1)
              the number of shares of Common Stock outstanding immediately prior
              to such sale and (2) the number of shares of Common Stock so sold;

         (G)  if the Corporation shall distribute Options or Convertible
              Securities to the holders of all of its Common Stock entitling
              them to subscribe for, purchase, convert into or exchange for
              shares of Common Stock at a price per share less than the current
              market price per share of Common Stock as of the record date for
              such distribution, the number by which the Liquidation Preference
              is divided to determine the As Converted Factor shall be adjusted
              by multiplying such number by a fraction, the numerator of which
              shall be the sum of (x) the number of shares of Common Stock
              outstanding on such record date and (y) the number of shares of
              Common Stock which the aggregate consideration receivable by the
              Corporation from the exercise of such Options or from the
              conversion, exercise or exchange of such Convertible Securities
              would purchase at such current market price and the denominator of
              which shall be the sum of (1) the number of shares of Common Stock
              outstanding on such date and (2) the number of shares of Common
              Stock so offered for subscription, purchase, conversion, exercise
              or exchange. Options or Convertible Securities distributed by the
              Corporation to all holders of its Common Stock entitling the
              holders thereof to subscribe for, purchase, convert into or
              exchange for shares of Common Stock, which Options or Convertible
              Securities (i) are deemed to be transferred with such shares of
              Common Stock, (ii) are not exercisable and (iii) are also issued
              in respect of future issuances of Common Stock, in each case in
              clauses (i) through (iii) until the occurrence of a Trigger Event,
              shall for purposes of this clause not be deemed distributed until
              the occurrence of the earliest Trigger Event. An adjustment made
              pursuant to this clause shall be effective immediately after such
              record date;

                                       19
<PAGE>

         (H)  if any Organic Change shall be effected, and in connection with
              such Organic Change the Common Stock shall be converted into a New
              Security, then the definition of the As Converted Factor shall
              thereafter be determined in respect of said New Securities (after
              giving effect to such conversion of Common Stock into such New
              Security, assuming the conversion of the Series A Preferred into
              Common Stock immediately prior to such Organic Change);

         (I)  in the event that that at any time, as a result of an adjustment
              made pursuant to Section 7(j), the holder of any shares of Series
              A Preferred becomes entitled to receive, or with the passage of
              time or the occurrence of another event would become entitled to
              receive, a New Security, the number and kind of such other shares
              so receivable shall thereafter, for purposes of determining the As
              Converted Factor, be subject to adjustment from time to time in a
              manner and on terms as nearly equivalent as practicable to the
              provisions set forth in clauses (D) through (H) above; and

         (J)  if any event occurs as to which the foregoing provisions set forth
              in clauses (D) through (I) above are not strictly applicable or,
              if strictly applicable, would not, in the good faith judgment of
              the Board of Directors of the Corporation, fairly protect the
              rights of the holders of the Series A Preferred in accordance with
              the essential intent and principles of such provisions, then such
              Board shall make such adjustments in the application of such
              provisions, in accordance with such essential intent and
              principles, as shall be reasonably necessary, in the good faith
              judgment of such Board, to protect such rights as aforesaid, but
              in no event shall any such adjustment have the effect of
              decreasing the As Converted Factor or otherwise adversely
              affecting the holders of the Series A Preferred.

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

         "Capital Expenditures" shall mean all expenditures that should be
capitalized in accordance with generally accepted accounting principles.

         "Certificate of Incorporation" shall have the meaning set forth on page
one herein.

         "Code" shall have the meaning set forth in Section 6(b).

         "Common Stock" shall have the meaning set forth in Section 2.

         "Consent Securities" shall mean non-voting equity securities of the
Corporation having the following characteristics:

         (A)  an absence of protective covenants or consents;

         (B)  a mandatory redemption or maturity date which is later than the
              mandatory redemption date of the Series A Preferred;

                                       20
<PAGE>

         (C)  a specified liquidation preference on the date of issuance that
              does not exceed the consideration received for such securities on
              such date of issuance;

         (D)  does not entitle the holder thereof to the payment of cash
              dividends; and

         (E)  a junior ranking to the Series A Preferred except as to
              liquidation preference, on which basis such non-voting equity
              securities may rank on parity with the Series A Preferred.

         "Consent Securities Ratio" shall mean a ratio, the numerator of which
is the sum of (i) the then current principal amount of Indebtedness of the
Corporation and its consolidated subsidiaries, (ii) the liquidation preference
from Consent Securities sold, and (iii) the product of 6.5 multiplied by the
Corporation's Aggregate Rent Obligation, and the denominator of which is LTM
Adjusted EBITDAR.

         "Consolidated Net Income" of the Corporation shall mean net income of
the Corporation and its consolidated subsidiaries as determined in accordance
with generally accepted accounting principles.

         "Conversion Option Event" shall have the meaning set forth in Section
7(a).

         "Conversion Price" shall mean

              (i)    in connection with a Qualified Initial Public Offering or
                     such other initial public offering of equity securities by
                     the Corporation, the dollar amount equal to the price per
                     share at which the related equity securities were initially
                     sold to the public;

              (ii)   in connection with a Qualified Merger or such other merger
                     of the Corporation, the dollar value of the aggregate
                     consideration to be received in respect of each share of
                     Common Stock pursuant to the terms of the Qualified Merger
                     or such other merger as calculated on the date of the
                     execution of the merger agreement, provided that, if the
                     aggregate value of the consideration to be received upon
                     consummation of the merger is more than 12.5% below the
                     value of the aggregate consideration to be received as
                     calculated on the date of the execution of the merger
                     agreement, the Conversion Price shall mean the dollar value
                     of the aggregate consideration to be received upon
                     consummation of the merger;

              (iii)  in connection with a conversion pursuant to Section 7(b),
                     the greater of (A) the dollar amount calculated pursuant to
                     clause (i) or (ii) above, as the case may be, and (B) if
                     the Common Stock is then publicly traded, the average
                     closing price of the Common Stock during the three month
                     period ending on the date on which the election to convert
                     Series A Preferred into Common Stock pursuant to Section
                     7(b) is made;

              (iv)   in connection with a conversion pursuant to Section 7(d),
                     the fair market value of the Common Stock as determined no
                     later than 30 days prior to the Mandatory Redemption Date
                     by an independent "bulge bracket" investment banking firm
                     selected by the Corporation and reasonably acceptable to a
                     majority of the holders of the Series A Preferred; and

                                       21
<PAGE>

              (v)    in connection with a conversion pursuant to Section 7(e),
                     the dollar price per share at which the Common Stock is
                     being sold pursuant to a Tag-Along Right.

         "Conversion Rate" shall mean the number of shares of Common Stock
issuable upon conversion of one share of Series A Preferred determined by
dividing the Liquidation Preference per share by the Conversion Price.

         "Convertible Securities" shall have the meaning set forth in Section
7(b).

         "Corporation" shall have the meaning set forth on page one herein.

         "Default Dividend Rate" shall mean, at any time, the sum of the
Dividend Rate then in effect plus 3 percentage points.

         "Dividend Payment Date" shall have the meaning set forth in Section
3(b).

         "Dividend Rate" shall have the meaning set forth in Section 3(a).

         "DOJ" shall mean the United States Department of Justice.

         "EBITDA" shall mean earnings of the Corporation and its consolidated
subsidiaries before interest, taxes, depreciation and amortization, each as
determined in accordance with generally accepted accounting principles.

         "EOP" shall mean EOP Operating Limited Partnership.

         "EOPT" shall mean Equity Office Properties Trust.

         "EOP Conflict" shall exist in respect of a proposed transaction which
falls within the scope of clauses (i) or (ii) of Section 6(c) if it shall be
determined by a committee of Independent Directors that

              (i)    such proposed transaction could reasonably be expected to
                     materially diminish the value of any line of business of
                     EOP; or

              (ii)   such transaction involves an entity in which EOP has
                     invested over $25 million and the transaction would
                     materially diminish the value of EOP's investment in such
                     entity.

         "Excess Cash Flow" shall mean, for any fiscal quarter of the
Corporation, the excess of

                     (a) the sum, without duplication, of (i) EBITDA for such
                  quarter, (ii) extraordinary gains or gains from sales of
                  assets, if any, of the Corporation or any of its consolidated
                  subsidiaries during such quarter and not included in
                  Consolidated Net Income; and (iii) reductions to non-cash
                  working capital of the Corporation and its consolidated
                  subsidiaries for such quarter, over

                                       22
<PAGE>

                     (b) the sum, without duplication, to the extent funded from
                  internally generated funds, of (i) the amount of any cash
                  income taxes payable by the Corporation and its consolidated
                  subsidiaries with respect to such quarter; (ii) cash interest
                  paid by the Corporation and its consolidated subsidiaries
                  during such quarter; (iii) Capital Expenditures made in cash
                  during such fiscal quarter; (iv) payments of Indebtedness at
                  maturity made by the Corporation and its consolidated
                  subsidiaries during such quarter; (v) optional and mandatory
                  prepayments of the principal of Indebtedness (including any
                  mandatory cash flow sweeps) made by the Corporation and its
                  consolidated subsidiaries during such quarter; (vi)
                  extraordinary cash losses from sales of assets, if any, of the
                  Corporation or any of its consolidated subsidiaries during
                  such quarter and not included in Consolidated Net Income; and
                  (vii) additions to noncash working capital made by the
                  Corporation and its consolidated subsidiaries during such
                  quarter.

         "FCG" shall have the meaning set forth in Section 6(c).

         "FTC" shall mean the United States Federal Trade Commission.

         "FUR" shall mean First Union Real Estate and Mortgage Investments.

         "Fully-Diluted Basis" shall mean a basis which gives effect to the
issuance of Common Stock issuable upon conversion of the Series A Preferred or
upon exercise or conversion of any warrants, options or convertible securities
of the Corporation outstanding on August 11, 2000.

         "Governmental Entity" shall mean any federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, or any national securities or commodities exchange or other regulatory
or self-regulatory body or association.

         "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.

         "Independent Directors" shall mean all members of the Board of
Directors of the Corporation other than

         (A) those members representing FCG or EOP;

         (B) officers, directors, employees, consultants or partners of the
             Corporation or any of their respective Affiliates;

         (C) officers, directors, employees, consultants, partners or material
             stockholders of FCG or any of their respective Affiliates; or

         (D) spouses, parents or lineal descendants of any such person or entity
             referred to in the immediately preceding clauses (A) through (C).

                                       23
<PAGE>

         "Indebtedness" of the Corporation and its consolidated subsidiaries
means (i) any indebtedness, whether or not contingent, in respect of borrowed
money evidenced by bonds, notes, debentures or similar instruments, (ii)
indebtedness secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on the property of the Corporation or any of its
consolidated subsidiaries, (iii) any lease of property as lessee which would be
reflected on the Corporation's consolidated balance sheet as a capitalized lease
in accordance with generally accepted accounting principles, (iv) obligations,
contingent or otherwise, in connection with any letters of credit or similar
facilities actually issued, or amounts representing the balance deferred and
unpaid of the purchase price of any property in which the Corporation or any of
its consolidated subsidiaries has a firm, non-contingent purchase obligation,
except any such balance that constitutes an accrued expense or trade payable,
(v) all obligations of the Corporation and its consolidated subsidiaries in
respect of Swaps in the case of items of Indebtedness under (i) through (iv)
above to the extent that any such items (other than letters of credit) would
appear as a liability on the Corporation's consolidated balance sheet in
accordance with generally accepted accounting principles, and (v) any obligation
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.

         "Investor" shall mean each of EOP Operating Limited Partnership,
Fortress HQ LLC, Stichting Pensioenfonds ABP, First Union Real Estate Equity and
Mortgage Investments, CIBC WMC Inc., CIBC Employee Private Equity Fund Partners,
AEW Targeted Securities Fund, L.P., AEW Targeted Securities Fund II, L.P.,
Blackacre Capital Partners L.P. and Paribas North America, Inc.

         "Liquidation" shall have the meaning set forth in Section 4(a).

         "Liquidation Amount" shall mean $40.772017 per share of Series A
Preferred and shall increase by the amount of the per share dividend declared
and paid on any Dividend Payment Date pursuant to Section 3(a).

         "Liquidation Preference" shall mean the amount equal to the Liquidation
Amount as of the relevant date, plus an amount equal to all unpaid dividends
accumulated to such relevant date, whether upon Liquidation, redemption or
conversion, as applicable.

         "Losses to Break Even on Development Properties" shall mean the amount
by which expenses exceed revenues during the period commencing with completion
of a development property and ending on the earlier of (i) the date on which
such property attains a 70% lease rate or (ii) 15 months from the completion
date of such property.

         "LTM Adjusted EBITDAR" shall mean the Adjusted EBITDAR of the
Corporation and its consolidated subsidiaries during the twelve-month period
ending on the first day of the month in which the Corporation agrees to issue
Consent Securities pursuant to Section 6(c)(vi).

         "LTM EBITDA" shall mean EBITDA of the Corporation and its consolidated
subsidiaries during the twelve-month period ending on the first day of the month
in which the Corporation or any subsidiary agrees to sell or acquire shares,
assets or a business pursuant to Section 6(c)(i).

                                       24
<PAGE>

         "Mandatory HSR Filing Date" shall mean (i) in the case of a conversion
pursuant to either Sections 7(a), (b), (d) or (e), five (5) Business Days
following the date on which the Corporation shall receive notice from a holder
of Series A Preferred regarding its election to convert its Series A Preferred,
and (ii) in the case of an automatic conversion pursuant to Section 7(c),
fifteen (15) Business Days following the execution of the merger agreement or
the initial filing of the registration statement with the SEC relating to the
Qualified Merger or Qualified Initial Public Offering, as the case may be.

         "Mandatory Redemption Date" shall have the meaning set forth in Section
5(b).

         "Material Subsidiary" shall mean any subsidiary of the Corporation
representing 25% or more of the LTM EBITDA of the Corporation and its
consolidated subsidiaries.

         "Mid-Point Price" shall mean a dollar amount equal to the average of
the minimum and maximum offering prices established by the underwriters for the
offering of the Common Stock as set forth in the final preliminary prospectus
relating to the Qualified Initial Public Offering or such other initial public
offering of equity securities by the Corporation to be filed with the SEC.

         "New Security" shall have the meaning set forth in Section 7(j).

         "Options" shall have the meaning set forth in Section 7(b).

         "Option Limiting Percentage" shall mean 10.5% of the Corporation's
equity capitalization on a Fully-Diluted Basis less the percentage of such
equity capitalization that is attributable to warrants issued to the holders of
the Corporation's mezzanine or bridge debt (it being understood that in no case
shall the number of shares issued to employees pursuant to the Stock Option Plan
exceed 7.5% of the Corporation's equity capitalization on a Fully-Diluted
Basis).

         "Optional Redemption Date" shall have the meaning set forth in Section
5(d).

         "Optional Redemption Percentage" shall have the meaning set forth in
Section 5(a).

         "Organic Change" shall have the meaning set forth in Section 7(j).

         "Per Share Price" shall mean $40.772017.

         "Person" shall mean any natural person, corporation, partnership,
proprietorship, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or any government or state
(or any subdivision thereof) of or in the United States or any foreign nation,
or any agency, authority, bureau, commission, department or similar body or
instrumentality thereof, or any governmental court or tribunal..

         "Preferred Stock" shall have the meaning set forth on page one herein.

                                       25
<PAGE>

         "Qualified Initial Public Offering" shall mean an initial public
offering of shares of equity securities of the Corporation where

              (i)    the Mid-Point Price is not less than a percentage of the
                     Per Share Price which shall initially equal 110% and which
                     shall increase by 5 percentage points on each anniversary
                     date of May 31, 2000 until May 31, 2004, in any case not to
                     exceed 130%; and

              (ii)   gross proceeds to the Corporation are equal to or greater
                     than $100 million.

         "Qualified Merger" shall mean any merger of the Corporation with
another entity the common stock or other equity interests of which are publicly
held, where

              (i)    the common stock or other equity interests of the surviving
                     entity are publicly held,

              (ii)   holders of the Common Stock have a right to receive
                     consideration for their shares in such merger and the
                     dollar value of the aggregate consideration per share
                     received in such merger by holders of the Common Stock,
                     calculated at the time of the consummation of such merger,
                     equals or exceeds a percentage of the Per Share Price which
                     shall initially equal 110% and which shall increase by 5
                     percentage points on each anniversary date of May 31, 2000
                     until May 31, 2004, in any case not to exceed 130%, and

              (iii)  the market capitalization of the surviving entity is at
                     least $100 million greater than the market capitalization
                     of the Corporation and its subsidiaries immediately prior
                     to such merger.

         "Redemption Default" shall have the meaning set forth in Section 9.

         "Redemption Election" shall have the meaning set forth in Section 8(a).

         "Redemption Election Payment Date" shall have the meaning set forth in
Section 8(a).

         "Rent" shall mean base rent, minimum rent, additional rent and any
other sums payable by the Corporation to lessors with respect to leases of real
property by the Corporation as lessee.

         "SEC" shall mean the United States Securities and Exchange Commission.

         "Series A Preferred" shall have the meaning set forth on page one
herein.

         "Special Dividend Amount" shall have the meaning set forth in Section
3(e).

         "Stock Option Plan" shall mean the Stock Option Plan adopted by the
Corporation during the fiscal year ended December 2000.

         "Swaps" shall mean payment obligations of the Corporation with respect
to interest rate swaps, currency swaps or similar obligations which are due upon
the termination thereof; provided, however, that if any agreement relating to a
Swap provides for the netting of amounts payable by and to the Corporation
thereunder or if any agreement provides for the simultaneous payment of amounts
by and to the Corporation, then in each case, the amount of such obligation
shall be the net amount determined to be due.

                                       26
<PAGE>

         "Tag-Along Conversion Date" shall have the meaning set forth in Section
7(e).

         "Tag-Along Right" shall have the meaning set forth in the Stockholders
Agreement, dated as of May 31, 2000, by and among FCG, the Corporation and the
Investors.

         "Transfer Agent" means American Stock Transfer & Trust Corporation, or
such other agent or agents of the Corporation as may be designated by the Board
of Directors of the Corporation or its designee as the transfer agent for the
Series A Preferred.

         "Trigger Event" shall have the meaning set forth in Section 7(b).

         "TRS" shall have the meaning set forth in Section 6(b).

(11)     Determinations by the Board of Directors Conclusive.
         ---------------------------------------------------

         Any determination by the Board of Directors pursuant to the terms of
the Series A Preferred shall be final and binding upon the holders thereof and
shall be conclusive for all purposes.

FOURTH: The Series A Preferred has been classified and designated by the Board
of Directors under the authority contained in this Amended Certificate of
Designations.

FIFTH: This Amended Certificate of Designations has been approved by the Board
of Directors in the manner and by the vote required by law.

SIXTH: This Amended Certificate of Designations shall be effective upon filing
with the Secretary of State.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

        IN WITNESS WHEREOF, HQ GLOBAL HOLDINGS, INC. has caused these presents
to be signed in its name and on its behalf by its President and Chief Operating
Officer and its corporate seal to be hereunto affixed and attested by its Vice
President, General Counsel and Secretary, and the said officers of the
Corporation further acknowledge said instrument to be the corporate act of the
Corporation, and state under the penalties of perjury that, to the best of their
knowledge, information and belief, the matters and facts therein set forth with
respect to approval are true in all material respects.

Dated:  August 11, 2000

                               HQ GLOBAL HOLDINGS, INC.

                               By:  /s/ David Rupert
                                    ---------------------------------------
                                    Name:  David Rupert
                                    Title: President and Chief Operating Officer

         [SEAL]

         ATTEST:

         /s/ Jill Louis
         ------------------------------
         Name:  Jill Louis
         Title: Vice President, General Counsel and Secretary

                                       28

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