8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934

Date of Report (Date of earliest event reported): September 12, 2005 (September 12, 2005)

Cole Credit Property Trust II, Inc.

(Exact Name of Registrant as Specified in Its Charter)

	333-121094
Maryland (State or other jurisdiction of incorporation or organization)	(1933 Act) (Commission File Number)	20-1676382 (I.R.S. Employer Identification No.)

2555 East Camelback Road, Suite 400, Phoenix, Arizona
85016
(Address of principal executive offices)
(Zip Code)

(602) 778-8700
(Registrant’s telephone number, including area code)

None
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

     Cole Credit Property Trust II, Inc. (the “Company”) amended and restated its articles of incorporation (the “Amended and Restated Articles”) on September 12, 2005. A copy of the Amended and Restated Articles (the “Articles”) is attached hereto as Exhibit 3.1 and is incorporated herein by reference. The Company amended the Articles by amending Section 13.2 thereto to clarify the Company’s indemnification obligations to, and exculpation rights of, its affiliates, including officers and affiliated directors. The amendment is effective as of September 12, 2005.

Item 9.01 Financial Statements and Exhibits

3.1 Fifth Articles of Amendment and Restatement

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COLE CREDIT PROPERTY TRUST II, INC.
Dated: September 16, 2005	By:	/s/ Blair D. Koblenz
		Blair D. Koblenz
		Chief Financial Officer and Executive Vice President

EX-3.1

                                                                     EXHIBIT 3.1

                  FIFTH ARTICLES OF AMENDMENT AND RESTATEMENT

                       COLE CREDIT PROPERTY TRUST II, INC.

FIRST: Cole Credit Property Trust II, Inc., a Maryland corporation, desires to
amend and restate its Charter as currently in effect and as hereinafter amended.

SECOND: The following provisions are all the provisions of the Charter currently
in effect and as hereinafter amended:

                                    ARTICLE I

                                  INCORPORATOR

            The undersigned, Christopher H. Cole, whose address is 2555 E.
Camelback Road, Suite 400, Phoenix, Arizona 86016, being at least 18 years of
age, does hereby form a corporation under the general laws of the State of
Maryland.

                                   ARTICLE II

                                      NAME

            The name of the corporation (which is hereinafter called the
"Corporation") is:

                       Cole Credit Property Trust II, Inc.

                                   ARTICLE III

                               PURPOSES AND POWERS

            The purposes for which the Corporation is formed are to engage in
any lawful act or activity (including, without limitation or obligation,
engaging in business as a real estate investment trust under the Internal
Revenue Code of 1986, as amended, or any successor statute (the "Code")) for
which corporations may be organized under the general laws of the State of
Maryland as now or hereafter in force. For purposes of these Articles, "REIT"
means a real estate investment trust under Sections 856 through 860 of the Code.

                                   ARTICLE IV

                  PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

            The address of the principal office of the Corporation in the State
of Maryland is c/o The National Registered Agents of MD, Inc., 11 E. Chase
Street, Baltimore, Maryland 21202. The name and address of the resident agent of
the Corporation are The National Registered Agents of MD, Inc., 11 E. Chase
Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation.
The Corporation may have such other offices and place of business within or
outside the State of Maryland as the Board may from time to time determine.

                                    ARTICLE V

                                   DEFINITIONS

            As used in the Charter, the following terms shall have the following
meanings unless the context otherwise requires:



            Acquisition Expenses. Any and all expenses incurred by the
Corporation, the Advisor, or any Affiliate of either in connection with the
selection, acquisition or development of any Asset, whether or not acquired,
including, without limitation, legal fees and expenses, travel and
communications expenses, costs of appraisals, nonrefundable option payments on
property not acquired, accounting fees and expenses, and title insurance
premiums.

            Acquisition Fees. Any and all fees and commissions, exclusive of
Acquisition Expenses, paid by any Person to any other Person (including any fees
or commissions paid by or to any Affiliate of the Corporation or the Advisor) in
connection with making or investing in Mortgages or the purchase, development or
construction of a Property, including, without limitation, real estate
commissions, selection fees, Development Fees, Construction Fees, non-recurring
management fees, loan fees, points or any other fees of a similar nature.
Excluded shall be Development Fees and Construction Fees paid to any Person not
affiliated with the Sponsor in connection with the actual development and
construction of a project.

            Advisor or Advisors. The Person or Persons, if any, appointed,
employed or contracted with by the Corporation pursuant to Section 9.1 hereof
and responsible for directing or performing the day-to-day business affairs of
the Corporation, including any Person to whom the Advisor subcontracts all or
substantially all of such functions.

            Advisory Agreement. The agreement between the Corporation and the
Advisor pursuant to which the Advisor will direct or perform the day-to-day
business affairs of the Corporation.

            Affiliate or Affiliated. As to any Person, (i) any Person directly
or indirectly owning, controlling or holding, with the power to vote, ten
percent or more of the outstanding voting securities of such other Person; (ii)
any Person ten percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held, with the power to vote, by
such other Person; (iii) any Person directly or indirectly controlling,
controlled by or under common control with such other Person; (iv) any executive
officer, director, trustee or general partner of such other Person; and (v) any
legal entity for which such Person acts as an executive officer, director,
trustee or general partner.

            Aggregate Share Ownership Limit. Not more than 9.8% in value of the
aggregate of the outstanding Shares.

            Assets. Any Property, Mortgage or other direct or indirect
investments in equity interests in, or loans secured by, Real Property (other
than investments in bank accounts, money market funds or other current assets)
owned by the Corporation, directly or indirectly through one or more of its
Affiliates, by the Corporation and any other investment made, directly or
indirectly through one or more of its Affiliates.

            Average Invested Assets. For a specified period, the average of the
aggregate book value of the assets of the Corporation invested, directly or
indirectly, in equity interests in and loans secured by real estate, before
deducting depreciation, bad debts or other non-cash reserves, computed by taking
the average of such values at the end of each month during such period;
provided, however, that during such periods in which the Board is determining on
a regular basis the current value of the Corporation's net assets for purposes
of enabling fiduciaries of employee benefit plan stockholders to comply with
applicable Department of Labor reporting requirements, "Average Invested Assets"
will equal the greater of (i) the amount determined pursuant to the foregoing
and (ii) the assets aggregate valuation established by the most recent such
valuation determination without reduction for depreciation, bad debts or other
non-cash reserves.

            Beneficial Ownership. Ownership of Shares by a Person, whether the
interest in Shares is held directly or indirectly (including by a nominee), and
shall include interests that would be treated as owned through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The
terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.

            Board or Board of Directors. The Board of Directors of the
Corporation.

                                       -2-


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

            Bylaws. The Bylaws of the Corporation, as amended from time to time.

            Charitable Beneficiary. One or more beneficiaries of the Charitable
Trust as determined pursuant to Section 7.2.6, provided that each such
organization must be described in Section 501(c)(3) of the Code and
contributions to each such organization must be eligible for deduction under
each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

            Charitable Trust. Any trust provided for in Section 7.2.1.

            Charitable Trustee. The Person unaffiliated with the Corporation and
a Prohibited Owner that is appointed by the Corporation to serve as Trustee of
the Charitable Trust.

            Charter. These Fourth Articles of Amendment and Restatement and any
Articles of Amendment, Articles of Amendment and Restatement, Articles of
Supplementary or other modification or amendment thereto.

            Code. As provided in Article III herein.

            Commencement of the Initial Public Offering. The date that the
Securities and Exchange Commission declares effective the Corporation's
registration statement filed under the Securities Act for the Initial Public
Offering.

            Common Share Ownership Limit. Not more than 9.8% (in value or in
number of shares, whichever is more restrictive) of the aggregate of the
outstanding Common Shares.

            Common Shares. As provided in Section 6.1 herein.

            Competitive Real Estate Commission. A real estate or brokerage
commission paid for the purchase or sale of a Property that is reasonable,
customary and competitive in light of the size, type and location of the
Property.

            Construction Fee. A fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitations on a
Property.

            Constructive Ownership. Ownership of Shares by a Person, whether the
interest in Shares is held directly or indirectly (including by a nominee), and
shall include interests that would be treated as owned through the application
of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The
terms "Constructive Owner," "Constructively Owns" and "Constructively Owned"
shall have the correlative meanings.

            Contract Purchase Price. The amount actually paid or allocated in
respect of the purchase, development, construction or improvement of a Property
or the amount of funds advanced with respect to a Mortgage, or the amount
actually paid or allocated in respect of the purchase of other Assets, in each
case exclusive of Acquisition Fees and Acquisition Expenses.

            Corporation. As provided in Article II herein.

            Dealer Manager. Cole Capital Corporation, an Arizona corporation and
an Affiliate of the Corporation, or such other Person selected by the Board to
act as the dealer manager for an Offering.

            Development Fee. A fee for the packaging of a Property or Mortgage,
including the negotiation and approval of plans, and any assistance in obtaining
zoning and necessary variances and financing for a specific Property, either
initially or at a later date.

                                      -3-


            Director. As provided in Section 8.1 herein.

            Distributions. Any distributions of money or other property,
pursuant to Section 6.2.5 hereof, by the Corporation to owners of Shares,
including distributions that may constitute a return of capital for federal
income tax purposes.

            Excepted Holder. A stockholder of the Corporation for whom an
Excepted Holder Limit is created by Article VII or by the Board of Directors
pursuant to Section 7.1.7.

            Excepted Holder Limit. Provided that the affected Excepted Holder
agrees to comply with the requirements established by the Board of Directors
pursuant to Section 7.1.7 and subject to adjustment pursuant to Section 7.1.8,
the percentage limit established by the Board of Directors pursuant to Section
7.1.7.

            Gross Proceeds. The aggregate purchase price of all Shares sold for
the account of the Corporation through an Offering, without deduction for
Selling Commissions, volume discounts, dealer manager fees or Organization and
Offering Expenses. For the purpose of computing Gross Proceeds, the purchase
price of any Share for which reduced Selling Commissions or Dealer-Manager Fees
are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the
Corporation are not reduced) shall be deemed to be the full amount of the
Offering price per Share pursuant to the Prospectus for such Offering without
giving effect to such reduction.

            Independent Appraiser. A Person with no material current or prior
business or personal relationship with the Advisor or the Directors and who is a
qualified appraiser of Real Property of the type held by the Corporation or of
other Assets as determined by the Board of Directors. Membership in a nationally
recognized appraisal society such as the American Institute of Real Estate
Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence
of such qualification as to Real Property.

            Independent Director. A Director who is not on the date of
determination, and within the last two years from the date of determination has
not been, directly or indirectly associated with the Sponsor, the Corporation,
the Advisor or any of their Affiliates by virtue of (i) ownership of an interest
in the Sponsor, the Advisor or any of their Affiliates, other than the
Corporation, (ii) employment by the Corporation, the Sponsor, the Advisor or any
of their Affiliates, (iii) service as an officer or director of the Sponsor, the
Advisor or any of their Affiliates, other than as a Director of the Corporation
or of any other real estate investment trust organized by the Sponsor or advised
by the Advisor, (iv) performance of services, other than as a Director of the
Corporation, (v) service as a director or Director of more than three real
estate investment trusts organized by the Sponsor or advised by the Advisor, or
of any other real estate investment trust organized by the Sponsor or advised by
the Advisor, or (vi) maintenance of a material business or professional
relationship with the Sponsor, the Advisor or any of their Affiliates. A
business or professional relationship is considered "material" if the aggregate
gross revenue derived by the Director from the Sponsor, the Advisor and their
Affiliates exceeds five percent of either the Director's annual gross income
during either of the last two years or the Director's net worth on a fair market
value basis. An indirect association with the Sponsor or the Advisor shall
include circumstances in which a Director's spouse, parent, child, sibling,
mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law
is or has been associated with the Sponsor, the Advisor, any of their Affiliates
or the Corporation.

            Initial Date. The date upon which this Charter is accepted for
record by the SDAT.

            Initial Investment. That portion of the initial capitalization of
the Corporation contributed by the Sponsor or its Affiliates pursuant to Section
II.A. of the NASAA REIT Guidelines.

            Initial Public Offering. The first Offering.

            Invested Capital. The amount calculated by multiplying the total
number of Shares purchased by Stockholders by the issue price per Share, reduced
by the portion of any Distribution that is attributable to Net Sales Proceeds
and by any amounts paid by the Corporation to repurchase Shares pursuant to the
Corporation's plan for the repurchase of Shares.

                                      -4-


            Joint Ventures. Those joint venture or partnership arrangements in
which the Corporation or the Operating Partnership is a co-venturer or general
partner established to acquire or hold Assets.

            Leverage. The aggregate amount of indebtedness of the Corporation
for money borrowed (including purchase money mortgage loans) outstanding at any
time, both secured and unsecured.

            Listing. The listing of the Shares on a national securities exchange
or the quotation of the Shares on The Nasdaq National Market ("Nasdaq"). Upon
such Listing, the Shares shall be deemed Listed.

            Market Price. On any date, with respect to any class or series of
outstanding Shares, the Closing Price for such Shares on such date. The "Closing
Price" on any date shall mean the last sale price for such Shares, regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, for such Shares, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if such Shares are not
listed or admitted to trading on the NYSE, as reported on the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such Shares are listed or
admitted to trading or, if such Shares are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices on The Nasdaq National
Market or, if such system is no longer in use, the principal other automated
quotation system that may then be in use or, if such Shares are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such Shares
selected by the Board of Directors or, in the event that no trading price is
available for such Shares, the fair market value of Shares, as determined in
good faith by the Board of Directors.

            MGCL. The Maryland General Corporation Law.

            Mortgages. In connection with mortgage financing provided, invested
in, participated in or purchased by the Corporation, all of the notes, deeds of
trust, security interests or other evidences of indebtedness or obligations,
which are secured or collateralized by Real Property owed by the borrowers under
such notes, deeds of trust, security interests or other evidences of
indebtedness or obligations.

            NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate
Investment Trusts published by the North American Securities Administrators
Association.

            Net Assets. The total assets of the Corporation (other than
intangibles) at cost, before deducting depreciation, reserves for bad debts or
other non-cash reserves, less total liabilities calculated at least quarterly by
the Corporation on a basis consistently applied; provided, however, that during
such periods in which the Board is determining on a regular basis the current
value of the Corporation's net assets for purposes of enabling fiduciaries of
employee benefit plan stockholders to comply with applicable Department of Labor
reporting requirements, "Net Assets" shall mean the greater of (i) the amount
determined pursuant to the foregoing and (ii) the assets' aggregate valuation
established by the most recent such valuation without reduction for
depreciation, bad debts or other non-cash reserves.

            Net Income. For any period, the Corporation's total revenues
applicable to such period, less the total expenses applicable to such period
other than additions to reserves for depreciation, bad debts or other similar
non-cash reserves and excluding any gain from the sale of the Assets.

            Net Sales Proceeds. In the case of a transaction described in clause
(i)(A) of the definition of Sale, Net Sales Proceeds means the proceeds of any
such transaction less the amount of selling expenses incurred by or on behalf of
the Corporation, including all real estate commissions, closing costs and legal
fees and expenses. In the case of a transaction described in clause (i)(B) of
such definition, Net Sales Proceeds means the proceeds of any such transaction
less the amount of selling expenses incurred by or on behalf of the Corporation,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction. In the case of a transaction described in
clause (i)(C) of such definition, Net Sales Proceeds means the proceeds of any
such transaction actually distributed to the Corporation from the Joint Venture
less the amount of any selling expenses, including legal fees and expenses,
incurred by or on behalf of the Corporation (other than those paid by the Joint
Venture). In the case of a transaction or series of transactions described in
clause (i)(D) of the definition of Sale,

                                      -5-


Net Sales Proceeds means the proceeds of any such transaction (including the
aggregate of all payments under a Mortgage on or in satisfaction thereof other
than regularly scheduled interest payments) less the amount of selling expenses
incurred by or on behalf of the Corporation, including all commissions, closing
costs and legal fees and expenses. In the case of a transaction described in
clause (i)(E) of such definition, Net Sales Proceeds means the proceeds of any
such transaction less the amount of selling expenses incurred by or on behalf of
the Corporation, including any legal fees and expenses and other selling
expenses incurred in connection with such transaction. In the case of a
transaction described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby which are reinvested in one or more Assets within
180 days thereafter and less the amount of any real estate commissions, closing
costs, and legal fees and expenses and other selling expenses incurred by or
allocated to the Corporation in connection with such transaction or series of
transactions. Net Sales Proceeds shall also include any consideration (including
non-cash consideration such as stock, notes or other property or securities)
that the Corporation determines, in its discretion, to be economically
equivalent to proceeds of a Sale, valued in the reasonable determination of the
Company. Net Sales Proceeds shall not include any reserves established by the
Corporation in its sole discretion.

            NYSE. The New York Stock Exchange.

            Offering. Any public offering and sale of Shares pursuant to an
effective registration statement filed under the Securities Act, excluding
Shares offered under any employee benefit plan.

            Operating Partnership. Cole Operating Partnership II, LP, a Delaware
limited partnership, through which the Corporation may own Assets.

            Organization and Offering Expenses. Any and all costs and expenses
incurred by and to be paid from the assets of the Corporation in connection with
the formation, qualification and registration of the Corporation, and the
marketing and distribution of Shares, including, without limitation, total
underwriting and brokerage discounts and commissions (including fees of the
underwriters' attorneys), expenses for printing, engraving, amending,
supplementing, mailing and distributing costs, salaries of employees while
engaged in sales activity, telephone and other telecommunications costs, all
advertising and marketing expenses (including the costs of the Corporation
related to investor and broker-dealer sales meetings), charges of transfer
agents, registrars, trustees, escrow holders, depositories, experts, fees,
expenses and taxes related to the filing, registration and qualification of the
sale of the Shares under federal and state laws, including taxes and fees, and
accountants' and attorneys' fees.

            Person. An individual, corporation, business trust, partnership,
estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17)
of the Code), limited liability company, a portion of a trust permanently set
aside for or to be used exclusively for the purposes described in Section 642(c)
of the Code, association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity and also includes a
group as that term is used for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit
applies.

            Preferred Shares. As provided in Section 6.1 herein.

            Prohibited Owner. With respect to any purported Transfer, any Person
who, but for the provisions of Section 7.1.1, would Beneficially Own or
Constructively Own Shares, and if appropriate in the context, shall also mean
any Person who would have been the record owner of Shares that the Prohibited
Owner would have so owned.

            Property or Properties. As the context requires, any, or all, of the
Real Property acquired by the Corporation, either directly or indirectly through
joint venture arrangements or other partnership or investment interests.

            Prospectus. The same as that term is defined in Section 2(10) of the
Securities Act, including a preliminary prospectus, an offering circular as
described in Rule 256 of the General Rules and Regulations under the Securities
Act, or, in the case of an intrastate offering, any document by whatever name
known, utilized for the purpose of offering and selling Securities to the
public.

                                      -6-


            Real Property or Real Estate. Land, rights in land (including
leasehold interests), and any buildings, structures, improvements, furnishings,
fixtures and equipment located on or used in connection with land and rights or
interests in land.

            Reinvestment Plan. As provided in Section 6.10.

            REIT. A corporation, trust, association or other legal entity (other
than a real estate syndication) that is engaged primarily in investing in equity
interests in real estate (including fee ownership and leasehold interests) or in
loans secured by real estate or both as defined pursuant to the REIT Provisions
of the Code.

            REIT Provisions of the Code. Sections 856 through 860 of the Code
and any successor or other provisions of the Code relating to real estate
investment trusts (including provisions as to the attribution of ownership of
beneficial interests therein) and the regulations promulgated thereunder.

            Restriction Termination Date. The first day after the Initial Date
on which the Board of Directors determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT or
that compliance with the restrictions and limitations on Beneficial Ownership,
Constructive Ownership and Transfers of Shares set forth herein is no longer
required in order for the Corporation to qualify as a REIT.

            Roll-Up Entity. A partnership, real estate investment trust,
corporation, trust or similar entity that would be created or would survive
after the successful completion of a proposed Roll-Up Transaction.

            Roll-Up Transaction. A transaction involving the acquisition,
merger, conversion or consolidation either directly or indirectly of the
Corporation and the issuance of securities of a Roll-Up Entity to the
Stockholders. Such term does not include:

                  (a) a transaction involving securities of the Corporation that
have been for at least twelve months listed on a national securities exchange or
traded through Nasdaq's National Market System; or

                  (b) a transaction involving the conversion to corporate, trust
            or association form of only the Corporation, if, as a consequence of
the transaction, there will be no significant adverse change in any of the
following:

                        (i)   Stockholders' voting rights;

                        (ii)  the term of existence of the Corporation;

                        (iii) Sponsor or Advisor compensation; or

                        (iv)  the Corporation's investment objectives.

            Sale or Sales. (i) any transaction or series of transactions
whereby: (A) the Corporation or the Operating Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
transfers, conveys or relinquishes its ownership of any Property or portion
thereof, including the lease of any Property consisting of a building only, and
including any event with respect to any Property which gives rise to a
significant amount of insurance proceeds or condemnation awards; (B) the
Corporation or the Operating Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of all or substantially all of the
interest of the Corporation or the Operating Partnership in any Joint Venture in
which it is a co-venturer or partner; (C) any Joint Venture directly or
indirectly (except as described in other subsections of this definition) in
which the Corporation or the Operating Partnership as a co-venturer or partner
sells, grants, transfers, conveys or relinquishes its ownership of any Property
or portion thereof, including any event with respect to any Property which gives
rise to insurance claims or condemnation awards; or (D) the Corporation or the
Operating Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, conveys or relinquishes its
interest in any Mortgage or portion thereof (including with respect to any
Mortgage, all repayments thereunder or in satisfaction thereof other than
regularly scheduled interest payments) and any event which gives rise to a
significant amount of insurance proceeds or similar awards; or (E) the

                                      -7-


Corporation or the Operating Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of any other Asset not previously
described in this definition or any portion thereof, but (ii) not including any
transaction or series of transactions specified in clause (i) (A) through (E)
above in which the proceeds of such transaction or series of transactions are
reinvested in one or more Assets within 180 days thereafter.

            SDAT. As provided in Section 6.4 herein.

            Securities. Any of the following issued by the Corporation, as the
text requires: Shares, any other stock, shares or other evidences of equity or
beneficial or other interests, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in,
temporary or interim certificates for, receipts for, guarantees of, or warrants,
options or rights to subscribe to, purchase or acquire, any of the foregoing.

            Securities Act. The Securities Act of 1933, as amended from time to
time, or any successor statute thereto. Reference to any provision of the
Securities Act shall mean such provision as in effect from time to time, as the
same may be amended, and any successor provision thereto, as interpreted by any
applicable regulations as in effect from time to time.

            Selling Commissions. Any and all commissions payable to
underwriters, dealer managers or other broker-dealers in connection with the
sale of Shares, including, without limitation, commissions and fees payable to
the Dealer Manager.

            Shares. Shares of stock of the Corporation of any class or series,
including Common Shares or Preferred Shares.

            Soliciting Dealers. Those broker-dealers that are members of the
National Association of Securities Dealers, Inc., or that are exempt from
broker-dealer registration, and, in either case, have executed participating
broker or other agreements with the Dealer Manager to sell Shares.

            Sponsor. Any Person which (i) is directly or indirectly instrumental
in organizing, wholly or in part, the Corporation, (ii) will manage or
participate in the management of the Corporation, and any Affiliate of any such
Person, other than a Person whose only relationship with the Corporation is that
of an independent property manager and whose only compensation is as such, (iii)
takes the initiative, directly or indirectly, in founding or organizing the
Corporation, either alone or in conjunction with one or more other Persons, (iv)
receives a material participation in the Corporation in connection with the
founding or organizing of the business of the Corporation, in consideration of
services or property, or both services and property, (v) has a substantial
number of relationships and contacts with the Corporation, (vi) possesses
significant rights to control Properties, (vii) receives fees for providing
services to the Corporation which are paid on a basis that is not customary in
the industry, or (viii) provides goods or services to the Corporation on a basis
which was not negotiated at arm's-length with the Corporation.

            Stockholders. The holders of record of the Shares as maintained in
the books and records of the Corporation or its transfer agent.

            Termination Date. The date of termination of the Advisory Agreement.

            Termination of the Initial Public Offering. The earlier of (i) the
date on which the Initial Public Offering expires or is terminated by the
Corporation or (ii) the date on which all shares offered in the Initial Public
Offering are sold, excluding warrants offered thereunder and shares that may be
acquired upon exercise of such warrants and shares offered thereunder that may
be acquired pursuant to the Reinvestment Plan (as hereafter defined).

            Transfer. Any issuance, sale, transfer, gift, assignment, devise or
other disposition, as well as any other event that causes any
Person to acquire Beneficial Ownership or Constructive Ownership, or any
agreement to take any such actions or cause any such events, of Shares or the
right to vote or receive dividends on Shares,

                                      -8-


including (a) the granting or exercise of any option (or any disposition of any
option), (b) any disposition of any securities or rights convertible into or
exchangeable for Shares or any interest in Shares or any exercise of any such
conversion or exchange right and (c) Transfers of interests in other entities
that result in changes in Beneficial or Constructive Ownership of Shares; in
each case, whether voluntary or involuntary, whether owned of record,
Constructively Owned or Beneficially Owned and whether by operation of law or
otherwise. The terms "Transferring" and "Transferred" shall have the correlative
meanings.

            Total Operating Expenses. All costs and expenses paid or incurred by
the Corporation, as determined under generally accepted accounting principles,
that are in any way related to the operation of the Corporation or to corporate
business, including advisory fees, but excluding (i) the expenses of raising
capital such as Organization and Offering Expenses, legal, audit, accounting,
underwriting, brokerage, listing, registration, and other fees, printing and
other such expenses and tax incurred in connection with the issuance,
distribution, transfer, registration and Listing of the Shares, (ii) interest
payments, (iii) taxes, (iv) non-cash expenditures such as depreciation,
amortization and bad debt reserves, (v) incentive fees paid in compliance with
the NASAA REIT Guidelines, (vi) Acquisition Fees and Acquisition Expenses, (vii)
real estate commissions on the Sale of Property, and (viii) other fees and
expenses connected with the acquisition, disposition, management and ownership
of real estate interests, mortgage loans or other property (including the costs
of foreclosure, insurance premiums, legal services, maintenance, repair, and
improvement of property).

            Unimproved Real Property. Property in which the Corporation has an
equity interest that was not acquired for the purpose of producing rental or
other operating income, that has no development or construction in process and
for which no development or construction is planned, in good faith, to commence
within one year.

                                   ARTICLE VI

                                      STOCK

            Section 6.1 Authorized Shares. The Corporation has authority to
issue 100,000,000 Shares, consisting of 90,000,000 shares of Common Stock, $0.01
par value per share ("Common Shares"), and 10,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Shares"). The aggregate par value of all
authorized shares of stock having par value is $1,000,000. If shares of one
class of stock are classified or reclassified into shares of another class of
stock pursuant to this Article VI, the number of authorized shares of the former
class shall be automatically decreased and the number of shares of the latter
class shall be automatically increased, in each case by the number of shares so
classified or reclassified, so that the aggregate number of shares of stock of
all classes that the Corporation has authority to issue shall not be more than
the total number of Shares set forth in the first sentence of this paragraph.
The Board of Directors, with the approval of a majority of the entire Board and
without any action by the stockholders of the Corporation, may amend the Charter
from time to time to increase or decrease the aggregate number of Shares or the
number of shares of any class or series of stock that the Corporation has
authority to issue.

            Section 6.2 Common Shares.

                  Section 6.2.1 Common Shares Subject to Terms of Preferred
Shares. The Common Shares shall be subject to the express terms of any series of
Preferred Shares.

                  Section 6.2.2 Description. Subject to the provisions of
Article VII and except as may otherwise be specified in the terms of any class
or series of Common Shares, each Common Share shall entitle the holder thereof
to one vote per share on all matters upon which Stockholders are entitled to
vote pursuant to Section 12.2 hereof. Shares of a particular class of Common
Shares shall have equal dividend, distribution, liquidation and other rights,
and shall have no preference, cumulative, preemptive, conversion or exchange
rights. The Board may classify or reclassify any unissued Common Shares from
time to time in one or more classes or series of Shares.

                  Section 6.2.3 Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up, or any
distribution of the assets of the Corporation, the aggregate assets available
for distribution to holders of the Common Shares shall be determined in
accordance with applicable law. Each holder of Common Shares shall be entitled
to receive, ratably with each other holder of Common Shares, that

                                      -9-


portion of such aggregate assets available for distribution as the number of
outstanding Common Shares held by such holder bears to the total number of
outstanding Common Shares then outstanding.

                  Section 6.2.4 Voting Rights. Except as may be provided
otherwise in the Charter, and subject to the express terms of any series of
Preferred Shares, the holders of the Common Shares shall have the exclusive
right to vote on all matters (as to which a common stockholder shall be entitled
to vote pursuant to applicable law) at all meetings of the Stockholders.

                  Section 6.2.5. Distribution Rights. The Board from time to
time may authorize and the Company may pay to Stockholders such dividends or
other Distributions in cash or other property as the Board in its discretion
shall determine. The Board shall endeavor to authorize, and the Company may pay,
such dividends and Distributions as shall be necessary for the Company to
qualify as a REIT under the REIT Provisions of the Code unless the Board has
determined, in its sole discretion, that qualification as a REIT is not in the
best interests of the Company; provided, however, Stockholders shall have no
right to any dividend or Distribution unless and until authorized by the Board
and declared by the Company. The exercise of the powers and rights of the Board
pursuant to this section shall be subject to the provisions of any class or
series of Shares at the time outstanding. The receipt by any Person in whose
name any Shares are registered on the records of the Company or by his or her
duly authorized agent shall be a sufficient discharge for all dividends or
Distributions payable or deliverable in respect of such Shares and from all
liability to see to the application thereof. Distributions in kind shall not be
permitted, except for distributions of readily marketable securities,
distributions of beneficial interests in a liquidating trust established for the
dissolution of the Company and the liquidation of its assets in accordance with
the terms of the Charter or distributions in which (a) the Board advises each
Stockholder of the risks associated with direct ownership of the property, (b)
the Board offers each Stockholder the election of receiving such in-kind
distributions, and (c) in-kind distributions are made only to those Stockholders
that accept such offer.

            Section 6.3 Preferred Shares. The Board, including at least a
majority of the Independent Directors who do not have an interest in the
transaction, may classify any unissued Preferred Shares and reclassify any
previously classified but unissued Preferred Shares of any series from time to
time, in one or more classes or series of Shares. The voting rights of the
holders of shares of any series of Preferred Shares shall not exceed voting
rights that bear the same relationship to the voting rights of the holders of
Common Shares as the consideration paid to the Corporation for each Preferred
Share bears to the book value of each outstanding Common Share.

            Section 6.4 Classified or Reclassified Shares. Prior to issuance of
classified or reclassified Shares of any class or series, the Board by
resolution shall: (a) designate that class or series to distinguish it from all
other classes and series of Shares; (b) specify the number of Shares to be
included in the class or series; (c) set or change, subject to the provisions of
Section 6.9 and subject to the express terms of any class or series of Shares
outstanding at the time, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class or series;
and (d) cause the Corporation to file articles supplementary with the State
Department of Assessments and Taxation of Maryland ("SDAT"). Any of the terms of
any class or series of Shares set or changed pursuant to clause (c) of this
Section 6.4 may be made dependent upon facts or events ascertainable outside the
Charter (including determinations by the Board or other facts or events within
the control of the Corporation) and may vary among holders thereof, provided
that the manner in which such facts, events or variations shall operate upon the
terms of such class or series of Shares is clearly and expressly set forth in
the articles supplementary filed with the SDAT.

            Section 6.5 Dividends and Distributions. The receipt by any Person
in whose name any Shares are registered on the records of the Corporation or by
his or her duly authorized agent shall be a sufficient discharge for all
dividends or Distributions payable or deliverable in respect of such Shares and
from all liability to see to the application thereof. Distributions in kind
shall not be permitted, except for distributions of readily marketable
securities, distributions of beneficial interests in a liquidating trust
established for the dissolution of the Corporation and the liquidation of its
assets in accordance with the terms of the Charter or distributions in which (i)
the Board advises each Stockholder of the risks associated with direct ownership
of the property, (ii) the Board offers each Stockholder the election of
receiving such in-kind distributions, and (iii) in-kind distributions are made
only to those Stockholders that accept such offer.

                                      -10-


            Section 6.6 Charter and Bylaws. The rights of all Stockholders and
the terms of all Shares are subject to the provisions of the Charter and the
Bylaws.

            Section 6.7 No Issuance of Share Certificates. Until Listing, the
Corporation shall not issue stock certificates except to Stockholders who make a
written request to the Corporation. A Stockholder's investment shall be recorded
on the books of the Corporation. To transfer his or her Shares, a Stockholder
shall submit an executed form to the Corporation, which form shall be provided
by the Corporation upon request. Such transfer will also be recorded on the
books of the Corporation. Upon issuance or transfer of Shares, the Corporation
will provide the Stockholder with information concerning his or her rights with
regard to such Shares, as required by the Bylaws and the MGCL or other
applicable law.

            Section 6.8 Suitability of Stockholders. Until Listing, the
following provisions shall apply:

                  Section 6.8.1 Investor Suitability Standards. Subject to
suitability standards established by individual states, to become a Stockholder
in the Corporation, if such prospective Stockholder is an individual (including
an individual beneficiary of a purchasing Individual Retirement Account), or if
the prospective Stockholder is a fiduciary (such as a trustee of a trust or
corporate pension or profit sharing plan, or other tax-exempt organization, or a
custodian under a Uniform Gifts to Minors Act), such individual or fiduciary, as
the case may be, must represent to the Corporation, among other requirements as
the Corporation may require from time to time:

                        (a) that such individual (or, in the case of a
fiduciary, that the fiduciary account or the donor who directly or indirectly
supplies the funds to purchase the Shares) has a minimum annual gross income of
$45,000 and a net worth (excluding home, furnishings and automobiles) of not
less than $45,000; or

                        (b) that such individual (or, in the case of a
fiduciary, that the fiduciary account or the donor who directly or indirectly
supplies the funds to purchase the Shares) has a net worth (excluding home,
furnishings and automobiles) of not less than $150,000.

                  Section 6.8.2 Determination of Suitability of Sale. Until the
Shares are Listed, the Sponsor and each Person selling Shares on behalf of the
Sponsor or the Corporation shall make every reasonable effort to determine that
the purchase of Shares is a suitable and appropriate investment for each
Stockholder. In making this determination, the Sponsor or each Person selling
Shares on behalf of the Sponsor or the Corporation shall ascertain that the
prospective Stockholder: (a) meets the minimum income and net worth standards
established for the Corporation; (b) can reasonably benefit from the Corporation
based on the prospective Stockholder's overall investment objectives and
portfolio structure; (c) is able to bear the economic risk of the investment
based on the prospective Stockholder's overall financial situation; and (d) has
apparent understanding of (1) the fundamental risks of the investment; (2) the
risk that the Stockholder may lose the entire investment; (3) the lack of
liquidity of the Shares; (4) the restrictions on transferability of the Shares;
(5) the background and qualifications of the Sponsor or the Advisor; and (6) the
tax consequences of the investment.

            The Sponsor or each Person selling shares on behalf of the Sponsor
or the Corporation shall make this determination on the basis of information it
has obtained from a prospective Stockholder. Relevant information for this
purpose will include at least the age, investment objectives, investment
experiences, income, net worth, financial situation, and other investments of
the prospective Stockholder, as well as any other pertinent factors.

            The Sponsor or each Person selling Shares on behalf of the Sponsor
or the Corporation shall maintain records of the information used to determine
that an investment in Shares is suitable and appropriate for a Stockholder. The
Sponsor or each Person selling Shares on behalf of the Sponsor or the
Corporation shall maintain these records for at least six years.

                  Section 6.8.3 Minimum Investment and Transfer. Subject to
certain individual state requirements, no sale or transfer of Shares will be
permitted of less than 100 Shares, other than the initial investment in the
Corporation by a Stockholder, which will not be permitted if less than 250
Shares, and a Stockholder shall not transfer, fractionalize or subdivide such
Shares so as to retain less than such minimum number thereof.

                                      -11-


            Section 6.9 Repurchase of Shares. The Board may establish, from time
to time, a program or programs by which the Corporation voluntarily repurchases
Shares from its Stockholders; provided, however, that such repurchase does not
impair the capital or operations of the Corporation.

            Section 6.10 Distribution Reinvestment Plans. The Board may
establish, from time to time, a Distribution reinvestment plan or plans (each, a
"Reinvestment Plan"). Under any such Reinvestment Plan, (i) all material
information regarding Distributions to the Stockholders and the effect of
reinvesting such Distributions, including the tax consequences thereof, shall be
provided to the Stockholders not less often than annually, and (ii) each
Stockholder participating in such Reinvestment Plan shall have a reasonable
opportunity to withdraw from the Reinvestment Plan not less often than annually
after receipt of the information required in clause (i) above.

                                   ARTICLE VII

                 RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

            Section 7.1 Shares.

                  Section 7.1.1 Ownership Limitations. During the period
commencing on the Initial Date and prior to the Restriction Termination Date:

                        (a) Basic Restrictions.

                              (i) (1) No Person, other than an Excepted Holder,
shall Beneficially Own or Constructively Own Shares in excess of the Aggregate
Share Ownership Limit, (2) no Person, other than an Excepted Holder, shall
Beneficially Own or Constructively Own Common Shares in excess of the Common
Share Ownership Limit and (3) no Excepted Holder shall Beneficially Own or
Constructively Own Shares in excess of the Excepted Holder Limit for such
Excepted Holder.

                              (ii) No Person shall Beneficially or
Constructively Own Shares to the extent that such Beneficial or Constructive
Ownership of Shares would result in the Corporation being "closely held" within
the meaning of Section 856(h) of the Code (without regard to whether the
ownership interest is held during the last half of a taxable year), or otherwise
failing to qualify as a REIT (including, but not limited to, Beneficial or
Constructive Ownership that would result in the Corporation owning (actually or
Constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Corporation from such
tenant would cause the Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code).

                              (iii) Notwithstanding any other provisions
contained herein, any Transfer of Shares that, if effective, would result in
Shares being beneficially owned by less than 100 Persons (determined under the
principles of Section 856(a)(5) of the Code) shall be void ab initio, and the
intended transferee shall acquire no rights in such Shares.

                        (b) Transfer in Trust. If any Transfer of Shares occurs
which, if effective, would result in any Person Beneficially Owning or
Constructively Owning Shares in violation of Section 7.1.1(a)(i) or (ii),

                              (i) then that number of Shares the Beneficial or
Constructive Ownership of which otherwise would cause such Person to violate
Section 7.1.1(a)(i) or (ii) (rounded to the nearest whole share) shall be
automatically transferred to a Charitable Trust for the benefit of a Charitable
Beneficiary, as described in Section 7.2, effective as of the close of business
on the Business Day prior to the date of such Transfer, and such Person shall
acquire no rights in such Shares; or

                              (ii) if the transfer to the Charitable Trust
described in clause (i) of this sentence would not be effective for any reason
to prevent the violation of Section 7.1.1(a)(i) or (ii), then the

                                      -12-


Transfer of that number of Shares that otherwise would cause any Person to
violate Section 7.1.1(a)(i) or (ii) shall be void ab initio, and the intended
transferee shall acquire no rights in such Shares.

                  Section 7.1.2 Remedies for Breach. If the Board of Directors
or any duly authorized committee thereof shall at any time determine in good
faith that a Transfer or other event has taken place that results in a violation
of Section 7.1.1 or that a Person intends to acquire or has attempted to acquire
Beneficial or Constructive Ownership of any Shares in violation of Section 7.1.1
(whether or not such violation is intended), the Board of Directors or a
committee thereof shall take such action as it deems advisable to refuse to give
effect to or to prevent such Transfer or other event, including, without
limitation, causing the Corporation to redeem Shares, refusing to give effect to
such Transfer on the books of the Corporation or instituting proceedings to
enjoin such Transfer or other event; provided, however, that any Transfers or
attempted Transfers or other events in violation of Section 7.1.1 shall
automatically result in the transfer to the Charitable Trust described above,
and, where applicable, such Transfer (or other event) shall be void ab initio as
provided above irrespective of any action (or non-action) by the Board of
Directors or a committee thereof.

                  Section 7.1.3 Notice of Restricted Transfer. Any Person who
acquires or attempts or intends to acquire Beneficial Ownership or Constructive
Ownership of Shares that will or may violate Section 7.1.1(a), or any Person who
would have owned Shares that resulted in a transfer to the Charitable Trust
pursuant to the provisions of Section 7.1.1(b), shall immediately give written
notice to the Corporation of such event, or in the case of such a proposed or
attempted transaction, give at least 15 days prior written notice, and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer on the Corporation's
status as a REIT.

                  Section 7.1.4 Owners Required To Provide Information. From the
Initial Date and prior to the Restriction Termination Date:

                        (a) every owner of more than five percent (or such lower
percentage as required by the Code or the Treasury Regulations promulgated
thereunder) of the outstanding Shares, within 30 days after the end of each
taxable year, shall give written notice to the Corporation stating the name and
address of such owner, the number of Shares and other Shares Beneficially Owned
and a description of the manner in which such shares are held. Each such owner
shall provide to the Corporation such additional information as the Corporation
may request in order to determine the effect, if any, of such Beneficial
Ownership on the Corporation's status as a REIT and to ensure compliance with
the Aggregate Share Ownership Limit.

                        (b) each Person who is a Beneficial or Constructive
Owner of Shares and each Person (including the stockholder of record) who is
holding Shares for a Beneficial or Constructive Owner shall provide to the
Corporation such information as the Corporation may request, in good faith, in
order to determine the Corporation's status as a REIT and to comply with the
requirements of any taxing authority or governmental authority or to determine
such compliance.

                  Section 7.1.5 Remedies Not Limited. Subject to Section 8.1 of
the Charter, nothing contained in this Section 7.1 shall limit the authority of
the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its stockholders in
preserving the Corporation's status as a REIT.

                  Section 7.1.6 Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Section 7.1, Section 7.2 or any
definition contained in Article V, the Board of Directors shall have the power
to determine the application of the provisions of this Section 7.1 or Section
7.2 with respect to any situation based on the facts known to it. In the event
Section 7.1 or 7.2 requires an action by the Board of Directors and the Charter
fails to provide specific guidance with respect to such action, the Board of
Directors shall have the power to determine the action to be taken so long as
such action is not contrary to the provisions of Article V or Sections 7.1 or
7.2. Absent a decision to the contrary by the Board of Directors (which the
Board may make in its sole and absolute discretion), if a Person would have (but
for the remedies set forth in Section 7.1.2) acquired Beneficial or Constructive
Ownership of Shares in violation of Section 7.1.1, such remedies (as applicable)
shall apply first to the Shares which, but for such remedies, would have been
Beneficially Owned or Constructively

                                      -13-


Owned (but not actually owned) by such Person, pro rata among the Persons who
actually own such Shares based upon the relative number of the Shares held by
each such Person.

                  Section 7.1.7 Exceptions.

                        (a) Subject to Section 7.1.1(a)(ii), the Board of
Directors, in its sole discretion, may exempt (prospectively or retroactively) a
Person from the Aggregate Share Ownership Limit and the Common Share Ownership
Limit, as the case may be, and may establish or increase an Excepted Holder
Limit for such Person if:

                              (i) the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain that no individual's Beneficial or Constructive Ownership of such
Shares will violate Section 7.1.1(a)(ii);

                              (ii) such Person does not and represents that it
will not own, actually or Constructively, an interest in a tenant of the
Corporation (or a tenant of any entity owned or controlled by the Corporation)
that would cause the Corporation to own, actually or Constructively, more than a
9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant
and the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain this fact (for this
purpose, a tenant from whom the Corporation (or an entity owned or controlled by
the Corporation) derives (and is expected to continue to derive) a sufficiently
small amount of revenue such that, in the opinion of the Board of Directors,
rent from such tenant would not adversely affect the Corporation's ability to
qualify as a REIT, shall not be treated as a tenant of the Corporation); and

                              (iii) such Person agrees that any violation or
attempted violation of such representations or undertakings (or other action
which is contrary to the restrictions contained in Sections 7.1.1 through 7.1.6)
will result in such Shares being automatically transferred to a Charitable Trust
in accordance with Sections 7.1.1(b) and 7.2.

                        (b) Prior to granting any exception pursuant to Section
7.1.7(a), the Board of Directors may require a ruling from the Internal Revenue
Service, or an opinion of counsel, in either case in form and substance
satisfactory to the Board of Directors in its sole discretion, as it may deem
necessary or advisable in order to determine or ensure the Corporation's status
as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of
Directors may impose such conditions or restrictions as it deems appropriate in
connection with granting such exception.

                        (c) Subject to Section 7.1.1(a)(ii), an underwriter
which participates in a public offering or a private placement of Shares (or
securities convertible into or exchangeable for Shares) may Beneficially Own or
Constructively Own Shares (or securities convertible into or exchangeable for
Shares) in excess of the Aggregate Share Ownership Limit, the Common Share
Ownership Limit or both such limits, but only to the extent necessary to
facilitate such public offering or private placement.

                        (d) The Board of Directors may only reduce the Excepted
Holder Limit for an Excepted Holder: (1) with the written consent of such
Excepted Holder at any time, or (2) pursuant to the terms and conditions of the
agreements and undertakings entered into with such Excepted Holder in connection
with the establishment of the Excepted Holder Limit for that Excepted Holder. No
Excepted Holder Limit shall be reduced to a percentage that is less than the
Common Share Ownership Limit.

                  Section 7.1.8 Increase in Aggregate Share Ownership and Common
Share Ownership Limits. Subject to Section 7.1.2(a)(ii), the Board of Directors
may from time to time increase the Common Share Ownership Limit and the
Aggregate Share Ownership Limit for one or more Persons and decrease the Common
Share Ownership Limit and the Aggregate Share Ownership Limit for all other
Persons; provided, however, that the decreased Common Share Ownership Limit
and/or Aggregate Share Ownership Limit will not be effective for any Person
whose percentage ownership in Shares is in excess of such decreased Common Share
Ownership Limit and/or Aggregate Share Ownership Limit until such time as such
Person's percentage of Share equals or falls below

                                      -14-


the decreased Common Share Ownership Limit and/or Aggregate Share Ownership
Limit, but any further acquisition of Shares in excess of such percentage
ownership of Shares will be in violation of the Common Share Ownership Limit
and/or Aggregate Share Ownership Limit and, provided further, that the new
Common Share Ownership Limit and/or Aggregate Share Ownership Limit would not
allow five or fewer Persons to Beneficially Own more than 49.9% in value of the
outstanding Shares.

                  Section 7.1.9 Legend. Each certificate for Shares shall bear
substantially the following legend:

      The shares represented by this certificate are subject to restrictions on
      Beneficial and Constructive Ownership and Transfer for the purpose, among
      others, of the Corporation's maintenance of its status as a Real Estate
      Investment Trust (a "REIT") under the Internal Revenue Code of 1986, as
      amended (the "Code"). Subject to certain further restrictions and except
      as expressly provided in the Corporation's Charter, (i) no Person may
      Beneficially or Constructively Own Common Shares of the Corporation in
      excess of 9.8% (in value or number of shares) of the outstanding Common
      Shares of the Corporation unless such Person is an Excepted Holder (in
      which case the Excepted Holder Limit shall be applicable); (ii) no Person
      may Beneficially or Constructively Own Shares of the Corporation in excess
      of 9.8% of the value of the total outstanding Shares of the Corporation,
      unless such Person is an Excepted Holder (in which case the Excepted
      Holder Limit shall be applicable); (iii) no Person may Beneficially or
      Constructively Own Shares that would result in the Corporation being
      "closely held" under Section 856(h) of the Code or otherwise cause the
      Corporation to fail to qualify as a REIT; and (iv) no Person may Transfer
      Shares if such Transfer would result in Shares of the Corporation being
      owned by fewer than 100 Persons. Any Person who Beneficially or
      Constructively Owns or attempts to Beneficially or Constructively Own
      Shares which cause or will cause a Person to Beneficially or
      Constructively Own Shares in excess or in violation of the above
      limitations must immediately notify the Corporation. If any of the
      restrictions on transfer or ownership are violated, the Shares represented
      hereby will be automatically transferred to a Trustee of a Charitable
      Trust for the benefit of one or more Charitable Beneficiaries. In
      addition, the Corporation may redeem shares upon the terms and conditions
      specified by the Board of Directors in its sole discretion if the Board of
      Directors determines that ownership or a Transfer or other event may
      violate the restrictions described above. Furthermore, upon the occurrence
      of certain events, attempted Transfers in violation of the restrictions
      described above may be void ab initio. All capitalized terms in this
      legend have the meanings defined in the Corporation's Charter, as the same
      may be amended from time to time, a copy of which, including the
      restrictions on transfer and ownership, will be furnished to each holder
      of Shares of the Corporation on request and without charge. Requests for
      such a copy may be directed to the Secretary of the Corporation at its
      principal office.

                  Instead of the foregoing legend, the certificate may state
that the Corporation will furnish a full statement about certain restrictions on
transferability to a stockholder on request and without charge. In the case of
uncertificated Shares, the Corporation will send the holder of such Shares a
written statement of the information otherwise required on certificates.

            Section 7.2 Transfer of Shares in Trust.

                  Section 7.2.1 Ownership in Trust. Upon any purported Transfer
or other event described in Section 7.1.1(b) that would result in a transfer of
Shares to a Charitable Trust, such Shares shall be deemed to have been
transferred to the Charitable Trustee as Trustee of a Charitable Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Charitable Trustee shall be deemed to be effective as of the close of business
on the Business Day prior to the purported Transfer or other event that results
in the transfer to the Charitable Trust pursuant to Section 7.1.1(b). The
Charitable Trustee shall be appointed by the Corporation and shall be a Person
unaffiliated with the Corporation and any Prohibited Owner. Each Charitable
Beneficiary shall be designated by the Corporation as provided in Section 7.2.6.

                  Section 7.2.2 Status of Shares Held by the Charitable Trustee.
Shares held by the Charitable Trustee shall continue to be issued and
outstanding Shares of the Corporation. The Prohibited Owner

                                      -15-


shall have no rights in the shares held by the Charitable Trustee. The
Prohibited Owner shall not benefit economically from ownership of any shares
held in trust by the Charitable Trustee, shall have no rights to dividends or
other distributions and shall not possess any rights to vote or other rights
attributable to the shares held in the Charitable Trust.

                  Section 7.2.3 Dividend and Voting Rights. The Charitable
Trustee shall have all voting rights and rights to dividends or other
distributions with respect to Shares held in the Charitable Trust, which rights
shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or other distribution paid prior to the discovery by the Corporation
that Shares have been transferred to the Charitable Trustee shall be paid with
respect to such Shares to the Charitable Trustee upon demand and any dividend or
other distribution authorized but unpaid shall be paid when due to the
Charitable Trustee. Any dividends or distributions so paid over to the
Charitable Trustee shall be held in trust for the Charitable Beneficiary. The
Prohibited Owner shall have no voting rights with respect to shares held in the
Charitable Trust and, subject to Maryland law, effective as of the date that
Shares have been transferred to the Charitable Trustee, the Charitable Trustee
shall have the authority (at the Charitable Trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Owner prior to the discovery by
the Corporation that Shares have been transferred to the Charitable Trustee and
(ii) to recast such vote in accordance with the desires of the Charitable
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Corporation has already taken irreversible corporate action, then
the Charitable Trustee shall not have the authority to rescind and recast such
vote. Notwithstanding the provisions of this Article VII, until the Corporation
has received notification that Shares have been transferred into a Charitable
Trust, the Corporation shall be entitled to rely on its share transfer and other
stockholder records for purposes of preparing lists of stockholders entitled to
vote at meetings, determining the validity and authority of proxies and
otherwise conducting votes of stockholders.

                  Section 7.2.4 Sale of Shares by Charitable Trustee. Within 20
days of receiving notice from the Corporation that Shares have been transferred
to the Charitable Trust, the Charitable Trustee shall sell the shares held in
the Charitable Trust to a person, designated by the Charitable Trustee, whose
ownership of the shares will not violate the ownership limitations set forth in
Section 7.1.1(a). Upon such sale, the interest of the Charitable Beneficiary in
the shares sold shall terminate and the Charitable Trustee shall distribute the
net proceeds of the sale to the Prohibited Owner and to the Charitable
Beneficiary as provided in this Section 7.2.4. The Prohibited Owner shall
receive the lesser of (1) the price paid by the Prohibited Owner for the shares
or, if the Prohibited Owner did not give value for the shares in connection with
the event causing the shares to be held in the Charitable Trust (e.g., in the
case of a gift, devise or other such transaction), the Market Price of the
shares on the day of the event causing the shares to be held in the Charitable
Trust and (2) the price per share received by the Charitable Trustee (net of any
commissions and other expenses of sale) from the sale or other disposition of
the shares held in the Charitable Trust. The Charitable Trustee may reduce the
amount payable to the Prohibited Owner by the amount of dividends and
distributions which have been paid to the Prohibited Owner and are owed by the
Prohibited Owner to the Charitable Trustee pursuant to Section 7.2.3 of this
Article VII. Any net sales proceeds in excess of the amount payable to the
Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If,
prior to the discovery by the Corporation that Shares have been transferred to
the Charitable Trustee, such shares are sold by a Prohibited Owner, then (i)
such shares shall be deemed to have been sold on behalf of the Charitable Trust
and (ii) to the extent that the Prohibited Owner received an amount for such
shares that exceeds the amount that such Prohibited Owner was entitled to
receive pursuant to this Section 7.2.4, such excess shall be paid to the
Charitable Trustee upon demand.

                  Section 7.2.5 Purchase Right in Shares Transferred to the
Charitable Trustee. Shares transferred to the Charitable Trustee shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
resulted in such transfer to the Charitable Trust (or, in the case of a devise
or gift, the Market Price at the time of such devise or gift) and (ii) the
Market Price on the date the Corporation, or its designee, accepts such offer.
The Corporation may reduce the amount payable to the Prohibited Owner by the
amount of dividends and distributions which has been paid to the Prohibited
Owner and are owed by the Prohibited Owner to the Charitable Trustee pursuant to
Section 7.2.3 of this Article VII. The Corporation may pay the amount of such
reduction to the Charitable Trustee for the benefit of the Charitable
Beneficiary. The Corporation shall have the right to accept such offer until the
Charitable Trustee has sold the shares held in the Charitable Trust pursuant to
Section 7.2.4. Upon such a sale to the Corporation, the interest of the
Charitable Beneficiary in the shares sold shall terminate and the Charitable
Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

                                      -16-


                  Section 7.2.6 Designation of Charitable Beneficiaries. By
written notice to the Charitable Trustee, the Corporation shall designate one or
more nonprofit organizations to be the Charitable Beneficiary of the interest in
the Charitable Trust such that (i) Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 7.1.1(a) in the hands of such
Charitable Beneficiary and (ii) each such organization must be described in
Section 501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.

            Section 7.3 NYSE Transactions. Nothing in this Article VII shall
preclude the settlement of any transaction entered into through the facilities
of the NYSE or any other national securities exchange or automated inter-dealer
quotation system. The fact that the settlement of any transaction occurs shall
not negate the effect of any other provision of this Article VII and any
transferee in such a transaction shall be subject to all of the provisions and
limitations set forth in this Article VII.

            Section 7.4 Enforcement. The Corporation is authorized specifically
to seek equitable relief, including injunctive relief, to enforce the provisions
of this Article VII.

            Section 7.5 Non-Waiver. No delay or failure on the part of the
Corporation or the Board of Directors in exercising any right hereunder shall
operate as a waiver of any right of the Corporation or the Board of Directors,
as the case may be, except to the extent specifically waived in writing.

                                  ARTICLE VIII

                        PROVISIONS FOR DEFINING, LIMITING
                      AND REGULATING CERTAIN POWERS OF THE
                CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

            Section 8.1 Number of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. The
number of Directors of the Corporation (the "Directors") initially shall be
five, which number may be increased or decreased from time to time pursuant to
the Bylaws; provided, however, that the total number of Directors shall not be
fewer than three; provided further that there may be fewer than three directors
at any time the Corporation has only one holder of record of Common Shares. From
and after the commencement of the Corporation's initial public offering, a
majority of the Board will be Independent Directors except for a period of up to
60 days after the death, removal or resignation of an Independent Director. The
Directors may increase the number of Directors and fill any vacancy, whether
resulting from an increase in the number of Directors or otherwise, on the
Board, in the manner provided in the Bylaws. The names of the Directors who
shall serve until the first annual meeting of stockholders and until their
successors are duly elected and qualify are:

                              Christopher H. Cole
                               Marcus E. Bromley
                              Elizabeth L. Watson


            The Corporation elects, at such time as it becomes eligible to make
the election provided for under Section 3-802(b) of the MGCL, that, except as
may be provided by the Board of Directors in setting the terms of any class or
series of Shares, any and all vacancies on the Board of Directors may be filled
only by the affirmative vote of a majority of the remaining Directors in office,
even if the remaining Directors do not constitute a quorum, and any Director
elected to fill a vacancy shall serve for the remainder of the full term of the
directorship in which such vacancy occurred. Notwithstanding the foregoing
sentence, Independent Directors shall nominate replacements for vacancies among
the Independent Directors' positions.

            Section 8.2 Experience. Each Director shall have at least three
years of relevant experience demonstrating the knowledge and experience required
to successfully acquire and manage the type of assets being acquired by the
Corporation. From and after the commencement of the Corporation's initial public
offering, at least one of the Independent Directors shall have three years of
relevant real estate experience.

            Section 8.3 Committees. The Board may establish such committees as
it deems appropriate, in its discretion, provided that from and after the
commencement of the Corporation's initial public offering, the majority of the
members of each committee will be Independent Directors.

            Section 8.4 Term. Each Director shall hold office for one year,
until the next annual meeting of

                                      -17-


Stockholders and until his or her successor is duly elected and qualifies.
Directors may be elected to an unlimited number of successive terms.

            Section 8.5 Fiduciary Obligations. The Directors and the Advisor
serve in a fiduciary capacity to the Corporation and have a fiduciary duty to
the Stockholders of the Corporation, including, with respect to the Directors, a
specific fiduciary duty to supervise the relationship of the Corporation with
the Advisor.

            Section 8.6 Extraordinary Actions. Notwithstanding any provision of
law permitting or requiring any action to be taken or approved by the
affirmative vote of the holders of Shares entitled to cast a greater number of
votes, any such action shall be effective and valid if declared advisable by the
Board of Directors and taken or approved by the affirmative vote of holders of
Shares entitled to cast a majority of all the votes entitled to be cast on the
matter.

            Section 8.7 Authorization by Board of Stock Issuance. The Board of
Directors may authorize the issuance from time to time of Shares of any class or
series, whether now or hereafter authorized, or securities or rights convertible
into Shares of any class or series, whether now or hereafter authorized, for
such consideration as the Board of Directors may deem advisable (or without
consideration in the case of a stock split or stock dividend), subject to such
restrictions or limitations, if any, as may be set forth in the Charter or the
Bylaws.

            Section 8.8 Preemptive Rights and Appraisal Rights. Except as may be
provided by the Board of Directors in setting the terms of classified or
reclassified Shares pursuant to Section 6.4 or as may otherwise be provided by
contract, no holder of Shares shall, as such holder, have any preemptive right
to purchase or subscribe for any additional Shares or any other security of the
Corporation which it may issue or sell. Holders of Shares shall not be entitled
to exercise any rights of an objecting stockholder provided for under Title 3,
Subtitle 2 of the MGCL or any successor statute unless the Board of Directors,
upon the affirmative vote of a majority of the Board of Directors, shall
determine that such rights apply, with respect to all or any classes or series
of stock, to one or more transactions occurring after the date of such
determination in connection with which holders of such Shares would otherwise be
entitled to exercise such rights.

            Section 8.9 Determinations by Board. The determination as to any of
the following matters, made in good faith by or pursuant to the direction of the
Board of Directors consistent with the Charter shall be final and conclusive and
shall be binding upon the Corporation and every holder of Shares: the amount of
the net income of the Corporation for any period and the amount of assets at any
time legally available for the payment of dividends, redemption of its stock or
the payment of other distributions on its stock; the amount of paid-in surplus,
net assets, other surplus, annual or other cash flow, funds from operations, net
profit, net assets in excess of capital, undivided profits or excess of profits
over losses on sales of assets; the amount, purpose, time of creation, increase
or decrease, alteration or cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
any interpretation of the terms, preferences, conversion or other rights, voting
powers or rights, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption of any class
or series of stock of the Corporation; the fair value, or any sale, bid or asked
price to be applied in determining the fair value, of any asset owned or held by
the Corporation or any Shares; the number of Shares of any class of the
Corporation; any matter relating to the acquisition, holding and disposition of
any assets by the Corporation; or any other matter relating to the business and
affairs of the Corporation or required or permitted by applicable law, the
Charter or Bylaws, or otherwise to be determined by the Board of Directors.

            Section 8.10 REIT Qualification. If the Corporation elects to
qualify for federal income tax treatment as a REIT, the Board of Directors shall
use its reasonable best efforts to take such actions as are necessary or
appropriate to preserve the status of the Corporation as a REIT; however, if the
Board of Directors determines that it is no longer in the best interests of the
Corporation to continue to be qualified as a REIT, the Board of Directors may
revoke or otherwise terminate the Corporation's REIT election pursuant to
Section 856(g) of the Code. The Board of Directors also may determine that
compliance with any restriction or limitation on stock ownership and transfers
set forth in Article VII is no longer required for REIT qualification.

            Section 8.11 Removal of Directors. Subject to the rights of holders
of one or more classes or series of Preferred Shares to elect or remove one or
more Directors, any Director, or the entire Board of Directors,

                                      -18-


may be removed from office at any time, but only by the affirmative vote of at
least a majority of the votes entitled to be cast generally in the election of
Directors. At a meeting in which there is a quorum, the holders of a majority
of shares can elect to remove any Director, or the entire Board of Directors.

                                   ARTICLE IX

                                     ADVISOR

            Section 9.1 Appointment and Initial Investment of Advisor. The Board
is responsible for setting the general policies of the Corporation and for the
general supervision of its business conducted by officers, agents, employees,
advisors or independent contractors of the Corporation. However, the Board is
not required personally to conduct the business of the Corporation, and it may
(but need not) appoint, employ or contract with any Person (including a Person
Affiliated with any Director) as an Advisor and may grant or delegate such
authority to the Advisor as the Board may, in its sole discretion, deem
necessary or desirable. The term of retention of any Advisor shall not exceed
one year, although there is no limit to the number of times that a particular
Advisor may be retained. The Advisor or its Affiliates have made an initial
investment of $200,000 in the Corporation. The Advisor or any such Affiliate may
not sell this initial investment while the Advisor remains an Advisor, but may
transfer the initial investment to other Affiliates.

            Section 9.2 Supervision of Advisor. The Board shall evaluate the
performance of the Advisor before entering into or renewing an Advisory
Agreement, and the criteria used in such evaluation shall be reflected in the
minutes of the meetings of the Board. The Board may exercise broad discretion in
allowing the Advisor to administer and regulate the operations of the
Corporation, to act as agent for the Corporation, to execute documents on behalf
of the Corporation and to make executive decisions that conform to general
policies and principles established by the Board. The Board shall monitor the
Advisor to assure that the administrative procedures, operations and programs of
the Corporation are in the best interests of the Stockholders and are fulfilled.
The Independent Directors are responsible for reviewing the fees and expenses of
the Corporation at least annually or with sufficient frequency to determine that
the expenses incurred are reasonable in light of the investment performance of
the Corporation, its Net Assets, its Net Income and the fees and expenses of
other comparable unaffiliated REITs. Each such determination shall be reflected
in the minutes of the meetings of the Board. In addition, from time to time, but
not less often than annually, a majority of the Independent Directors and a
majority of Directors not otherwise interested in the transaction must approve
each transaction with the Advisor or its Affiliates. The Independent Directors
also will be responsible for reviewing, from time to time and at least annually,
the performance of the Advisor and determining that compensation to be paid to
the Advisor is reasonable in relation to the nature and quality of services
performed and the investment performance of the Corporation and that the
provisions of the Advisory Agreement are being carried out. Specifically, the
Independent Directors will consider factors such as (i) the amount of the fee
paid to the Advisor in relation to the size, composition and performance of the
Assets, (ii) the success of the Advisor in generating opportunities that meet
the investment objectives of the Corporation, (iii) rates charged to other REITs
and to investors other than REITs by advisors performing the same or similar
services, (iv) additional revenues realized by the Advisor and its Affiliates
through their relationship with the Corporation, including loan administration,
underwriting or broker commissions, servicing, engineering, inspection and other
fees, whether paid by the Corporation or by others with whom the Corporation
does business, (v) the quality and extent of service and advice furnished by the
Advisor, (vi) the performance of the Assets, including income, conservation or
appreciation of capital, frequency of problem investments and competence in
dealing with distress situations, and (vii) the quality of the Assets relative
to the investments generated by the Advisor for its own account. The Independent
Directors may also consider all other factors that they deem relevant, and the
findings of the Independent Directors on each of the factors considered shall be
recorded in the minutes of the Board. The Board shall determine whether any
successor Advisor possesses sufficient qualifications to perform the advisory
function for the Corporation and whether the compensation provided for in its
contract with the Corporation is justified.

            Section 9.3 Fiduciary Obligations. The Advisor shall have a
fiduciary responsibility and duty to the Corporation and to the Stockholders.

            Section 9.4 Affiliation and Functions. The Board, by resolution or
in the Bylaws, may provide guidelines, provisions or requirements concerning the
affiliation and functions of the Advisor.

                                      -19-


            Section 9.5 Termination. Either a majority of the Independent
Directors or the Advisor may terminate the Advisory Agreement on 60 days'
written notice without cause or penalty, and, in such event, the Advisor will
cooperate with the Corporation and the Board in making an orderly transition of
the advisory function.

            Section 9.6 Disposition Fee on Sale of Property. The Corporation may
pay the Advisor, or its Affiliate, a real estate disposition fee upon Sale of
one or more Properties, in an amount up to one-half of the brokerage commission
paid, but in no event greater than three percent of the sales price of such
Property or Properties. Payment of such fee may be made only if the Advisor
provides a substantial amount of services in connection with the Sale of a
Property or Properties, as determined by a majority of the Independent
Directors. In addition, the amount paid when added all other real estate
commissions paid to the Advisor, its Affiliates or unaffiliated parties in
connection with such Sale shall not exceed an amount equal to the lesser of the
Competitive Real Estate Commission or an amount equal to six percent of the
contract sales price of such Property or Properties.

            Section 9.7 Incentive Fees. The Corporation may pay the Advisor an
interest in the gain from the Sale of Assets, for which full consideration is
not paid in cash or property of equivalent value, provided the amount or
percentage of such interest is reasonable. Such an interest in gain from the
Sale of Assets shall be considered presumptively reasonable if it does not
exceed 10% of the balance of such net proceeds remaining after payment to
Stockholders, in the aggregate, of an amount equal to 100% of the Invested
Capital, plus an amount equal to eight percent of the Invested Capital per annum
cumulative, non-compounded. In the case of multiple Advisors, such Advisor and
any of their Affiliates shall be allowed such fees provided such fees are
distributed by a proportional method reasonably designed to reflect the value
added to the Corporation assets by each respective Advisor or any Affiliate.

            Section 9.8 Organization and Offering Expenses Limitation. The
Corporation shall reimburse the Advisor and its Affiliates for Organization and
Offering Expenses incurred by the Advisor or its Affiliates; provided, however,
that the total amount of all Organization and Offering Expenses shall be
reasonable and shall in no event exceed 15% of the Gross Proceeds of each
Offering, unless otherwise approved by a majority of the Independent Directors.

            Section 9.9 Acquisition Fees. The Corporation may pay the Advisor
and its Affiliates fees for the review and evaluation of potential investments
in Assets; provided, however, that the total of all Acquisition Fees and
Acquisition Expenses shall be reasonable, and shall not exceed an amount equal
to six percent of the Contract Purchase Price, or, in the case of a Mortgage,
six percent of the funds advanced; provided, however, that a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in the transaction may approve fees and expenses in excess of this
limit if they determine the transaction to be commercially competitive, fair and
reasonable to the Corporation.

            Section 9.10 Reimbursement for Total Operating Expenses. The
Corporation may reimburse the Advisor, at the end of each fiscal quarter, for
Total Operating Expenses incurred by the Advisor; provided, however that the
Corporation shall not reimburse the Advisor at the end of any fiscal quarter for
Total Operating Expenses that, in the four consecutive fiscal quarters then
ended, exceed the greater of two percent of Average Invested Assets or 25% of
Net Income (the "2%/25% Guidelines") for such year. The Independent Directors
shall have the responsibility of limiting Total Operating Expenses to amounts
that do not exceed the 2%/25% Guidelines unless they have made a finding that,
based on such unusual and non-recurring factors that they deem sufficient, a
higher level of expenses (an "Excess Amount") is justified. Within 60 days after
the end of any fiscal quarter of the Corporation for which there is an Excess
Amount which the Independent Directors conclude was justified and reimbursable
to the Advisor, there shall be sent to the Stockholders a written disclosure of
such fact, together with an explanation of the factors the Independent Directors
considered in determining that such Excess Amount was justified. Any such
finding and the reasons in support thereof shall be reflected in the minutes of
the meetings of the Board. In the event that the Independent Directors do not
determine that excess expenses are justified, the Advisor shall reimburse the
Corporation the amount by which the expenses exceeded the 2%/25% Guidelines.

            Section 9.11 Reimbursement Limitation. The Corporation shall not
reimburse the Advisor or its Affiliates for services for which the Advisor or
its Affiliates are entitled to compensation in the form of a separate fee.

                                      -20-


                                    ARTICLE X

                      INVESTMENT OBJECTIVES AND LIMITATIONS

            Section 10.1 Investment Objectives. The Board of Directors shall
establish written policies on investments and borrowing and shall monitor the
administrative procedures, investment operations and performance of the
Corporation and the Advisor to assure that such policies are carried out.

            Section 10.2 Review of Objectives. The Independent Directors shall
review the investment policies of the Corporation with sufficient frequency (not
less often than annually) to determine that the policies being followed by the
Corporation are in the best interests of its Stockholders. Each such
determination and the basis therefor shall be set forth in the minutes of the
meetings of the Board.

            Section 10.3 Certain Permitted Investments.

                  (a) The Corporation may invest in Assets, as defined in
Article IV hereof.

                  (b) The Corporation may invest in Joint Ventures with the
Sponsor, Advisor, one or more Directors or any Affiliate, only if a majority of
Directors (including a majority of Independent Directors) not otherwise
interested in the transaction, approve such investment as being fair and
reasonable to the Corporation and on substantially the same terms and conditions
as those received by the other joint venturers.

                  (c) Subject to any limitations in Section 10.4, the
Corporation may invest in equity securities only if a majority of Directors
(including a majority of Independent Directors) not otherwise interested in the
transaction approve such investment as being fair, competitive and commercially
reasonable.

            Section 10.4 Investment Limitations. In addition to other investment
restrictions imposed by the Board from time to time, consistent with the
Corporation's objective of qualifying as a REIT, the following shall apply to
the Corporation's investments:

                  (a) Not more than ten percent of the Corporation's total
assets shall be invested in Unimproved Real Property or mortgage loans on
Unimproved Real Property.

                  (b) The Corporation shall not invest in commodities or
commodity future contracts. This limitation is not intended to apply to futures
contracts, when used solely for hedging purposes in connection with the
Corporation's ordinary business of investing in real estate assets and
mortgages.

                  (c) The Corporation shall not invest in or make any Mortgage
unless an appraisal is obtained concerning the underlying property except for
those loans insured or guaranteed by a government or government agency. In cases
in which a majority of Independent Directors so determine, and in all cases in
which the transaction is with the Advisor, Sponsor, Directors, or any Affiliates
thereof, such appraisal of the underlying property must be obtained from an
Independent Appraiser. Such appraisal shall be maintained in the Corporation's
records for at least five years and shall be available for inspection and
duplication by any Stockholder. In addition to the appraisal, a mortgagee's or
owner's title insurance policy or commitment as to the priority of the mortgage
or condition of the title must be obtained.

                  (d) The Corporation shall not make or invest in any Mortgage,
including a construction loan, on any one property if the aggregate amount of
all mortgage loans outstanding on the property, including the loans of the
Corporation, would exceed an amount equal to 85% of the appraised value of the
property as determined by an appraisal unless substantial justification exists
because of the presence of other underwriting criteria. For purposes of this
subsection, the "aggregate amount of all mortgage loans outstanding on the
property, including the loans of the Corporation" shall include all interest
(excluding contingent participation in income and/or appreciation in value of
the mortgaged property), the current payment of which may be deferred pursuant
to the terms of such loans, to the extent that deferred interest on each loan
exceeds five percent per annum of the principal balance of the loan.

                                      -21-


                  (e) The Corporation shall not invest in indebtedness secured
by a mortgage on real property that is subordinate to the lien or other
indebtedness of the Advisor, any Director, the Sponsor or any Affiliate of the
Corporation.

                  (f) The Corporation shall not issue (i) equity Securities
redeemable solely at the option of the holder (except that Stockholders may
offer their Common Shares to the Corporation pursuant to any repurchase plan
adopted by the Board on terms outlined in the Prospectus relating to any
Offering, as such plan is thereafter amended in accordance with its terms); (ii)
debt Securities unless the historical debt service coverage (in the most
recently completed fiscal year) as adjusted for known changes is sufficient to
properly service that higher level of debt; (iii) equity Securities on a
deferred payment basis or under similar arrangements; or (iv) options or
warrants to the Advisor, Directors, Sponsor or any Affiliate thereof except on
the same terms as such options or warrants are sold to the general public.
Options or warrants may be issued to persons other than the Advisor, Directors,
Sponsor or any Affiliate thereof, but not at exercise prices less than the fair
market value of the underlying Securities on the date of grant and not for
consideration (which may include services) that in the judgment of the
Independent Directors has a market value less than the value of such option or
warrant on the date of grant. Options or warrants issuable to the Advisor,
Directors, Sponsor or any Affiliate thereof shall not exceed ten percent of the
outstanding Shares on the date of grant. The voting rights per share of Shares
of the Corporation (other than the publicly held Shares of the Corporation) sold
in a private offering shall not exceed the voting rights which bear the same
relationship to the voting rights of the publicly held Shares as the
consideration paid to the Corporation for each privately offered Share of the
Corporation bears to the book value of each outstanding publicly held Share.

                  (g) A majority of the Directors shall authorize the
consideration to be paid for each Asset, ordinarily based on the fair market
value of the Asset. If a majority of the Independent Directors determine, or if
the Asset is acquired from the Advisor, a Director, the Sponsor or their
Affiliates, such fair market value shall be determined by a qualified
Independent Appraiser selected by the Independent Directors.

                  (h) The aggregate Leverage shall be reasonable in relation to
the Net Assets and shall be reviewed by the Board at least quarterly. The
maximum amount of such Leverage shall not exceed 60% of the cost (before
deducting depreciation or other non-cash reserves) of all of the Assets.
Notwithstanding the foregoing, Leverage may exceed such limit if any excess in
borrowing over such level is approved by a majority of the Independent
Directors. Any such excess borrowing shall be disclosed to Stockholders in the
next quarterly report of the Corporation following such borrowing, along with
justification for such excess.

                  (i) The Corporation will continually review its investment
activity to attempt to ensure that it is not classified as an "investment
company" under the Investment Company Act of 1940, as amended.

                  (j) The Corporation will not make any investment that the
Corporation believes will be inconsistent with its objectives of qualifying and
remaining qualified as a REIT unless and until the Board determines, in its sole
discretion, that REIT qualification is not in the best interests of the
Corporation.

                  (k) The Corporation shall not invest in real estate contracts
of sale unless such contracts of sale are in recordable form and appropriately
recorded in the chain of title.

                                   ARTICLE XI

                              CONFLICTS OF INTEREST

            Section 11.1 Sales and Leases to the Corporation. The Corporation
may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a
Director, or any Affiliate thereof upon a finding by a majority of Directors
(including a majority of Independent Directors) not otherwise interested in the
transaction that such transaction is fair and reasonable to the Corporation and
at a price to the Corporation no greater than the cost of the Asset to such
Sponsor, Advisor, Director or Affiliate, or, if the price to the Corporation is
in excess of such cost, that substantial justification for such excess exists
and such excess is reasonable. In no event shall the purchase price of any
Property to the Corporation exceed its current appraised value.

                                      -22-


            Section 11.2 Sales and Leases to the Sponsor, Advisor, Directors or
Affiliates. An Advisor, Sponsor, Director or Affiliate thereof may purchase or
lease Assets from the Corporation if a majority of Directors (including a
majority of Independent Directors) not otherwise interested in the transaction
determine that the transaction is fair and reasonable to the Corporation.

            Section 11.3 Other Transactions.

                  (a) No goods or services will be provided by the Advisor or
its Affiliates to the Corporation unless a majority of the Directors (including
a majority of the Independent Directors) not otherwise interested in such
transaction approve such transaction as fair and reasonable to the Corporation
and on terms and conditions not less favorable to the Corporation than those
available from unaffiliated third parties.

                  (b) The Corporation shall not make loans to the Sponsor,
Advisor, Directors or any Affiliates thereof except Mortgages pursuant to
Section 10.4(c) hereof or loans to wholly owned subsidiaries of the Corporation.
The Sponsor, Advisor, Directors and any Affiliates thereof shall not make loans
to the Corporation, or to joint ventures in which the Corporation is a
co-venturer, unless approved by a majority of the Directors (including a
majority of the Independent Directors) not otherwise interested in such
transaction as fair, competitive, and commercially reasonable, and no less
favorable to the Corporation than comparable loans between unaffiliated parties.

            Section 11.4 Conflict Resolution Procedures. In the event that an
investment opportunity becomes available that is suitable for both the
Corporation and a public or private entity with which the Advisor or its
Affiliates are affiliated, for which both entities have sufficient uninvested
funds, then the entity that has had the longest period of time elapse since it
was offered an investment opportunity will first be offered the investment
opportunity. An investment opportunity will not be considered suitable for an
entity if the 2%/25% Guidelines could not be satisfied if the entity were to
make the investment. In determining whether or not an investment opportunity is
suitable for more than one entity, the Board and the Advisor will examine such
factors, among others, as the cash requirements of each entity, the effect of
the acquisition both on diversification of each entity's investments by type of
property and geographic area and on diversification of the tenants of its
properties, the policy of each entity relating to leverage of properties, the
anticipated cash flow of each entity, the income tax effects of the purchase to
each entity, the size of the investment and the amount of funds available to
each program and the length of time such funds have been available for
investment. If a subsequent development, such as a delay in the closing of the
acquisition of such investment or a delay in the construction of a property,
causes any such investment, in the opinion of the Board and the Advisor, to be
more appropriate for an entity other than the entity that committed to make the
investment, the Advisor may determine that the other entity affiliated with the
Advisor or its Affiliates will make the investment. It shall be the duty of the
Board, including the Independent Directors, to ensure that the method used by
the Advisor for the allocation of the acquisition of investments by two or more
affiliated programs seeking to acquire similar types of Assets is applied fairly
to the Corporation.

                                   ARTICLE XII

                                  STOCKHOLDERS

            Section 12.1 Meetings. There shall be an annual meeting of the
Stockholders, to be held at such time and place as shall be determined by or in
the manner prescribed in the Bylaws, at which the Directors shall be elected and
any other proper business may be conducted. The annual meeting will be held on a
date that is a reasonable period of time following the distribution of the
Corporation's annual report to Stockholders but not less than thirty days after
delivery of such report. A majority of Stockholders present in person or by
proxy at an annual meeting at which a quorum is present, may, without the
necessity for concurrence by the Board, vote to elect the Directors. A quorum
shall be 50% of the then outstanding Shares. Special meetings of Stockholders
may be called in the manner provided in the Bylaws, including by the president
or by a majority of the Directors or a majority of the Independent Directors,
and shall be called by an officer of the Corporation upon the written request of
Stockholders holding in the aggregate not less than ten percent of the
outstanding Shares entitled to be voted on any issue proposed to be considered
at any such special meeting. Notice of any special meeting of Stockholders shall
be given as provided in the Bylaws, and the special meeting shall be held not
less than 15 days nor more than 60 days after the delivery of such notice. If
the meeting is called by written request of Stockholders as described in this

                                      -23-

Section 12.1, the special meeting shall be held at the time and place specified
in the Stockholder request; provided, however, that if none is so specified, at
such time and place convenient to the Stockholders. If there are no Directors,
the officers of the Corporation shall promptly call a special meeting of the
Stockholders entitled to vote for the election of successor Directors. Any
meeting may be adjourned and reconvened as the Board may determine or as
otherwise provided in the Bylaws. The Directors, including the Independent
Directors, shall take reasonable steps to insure that all requirements within
this Section 12.1 are met.

            Section 12.2 Voting Rights of Stockholders. Subject to the
provisions of any class or series of Shares then outstanding and the mandatory
provisions of any applicable laws or regulations, the Stockholders shall be
entitled to vote only on the following matters: (a) election or removal of
Directors, without the necessity for concurrence by the Board, as provided in
Sections 12.1, 8.4 and 8.11 hereof; (b) amendment of the Charter, without the
necessity for concurrence by the Board, as provided in Article XIV hereof; (c)
dissolution of the Corporation, without the necessity for concurrence by the
Board; (d) merger or consolidation of the Corporation, or the sale or other
disposition of all or substantially all of the Corporation's assets; and (e)
such other matters with respect to which the Board of Directors has adopted a
resolution declaring that a proposed action is advisable and directing that the
matter be submitted to the Stockholders for approval or ratification. Except
with respect to the foregoing matters, no action taken by the Stockholders at
any meeting shall in any way bind the Board. Without the approval of a majority
of the Shares entitled to vote on the matter, the Board of Directors may not (i)
amend the Charter to adversely affect the rights, preferences and privileges of
the holders of Common Shares; (ii) amend the Charter provisions relating to
director qualifications, fiduciary duties, liability and indemnification,
conflicts of interest, investment policies or investment restrictions;
(iii) liquidate or dissolve the Corporation other than before the initial
investment in property; (iv) sell all or substantially all of the Corporation's
assets other than in the ordinary course of the Corporation's business or as
otherwise permitted by law; or (v) cause the merger or reorganization of the
Corporation, except as permitted by law.

            Section 12.3 Voting Limitations on Shares Held by the Advisor,
Directors and Affiliates. With respect to Shares owned by the Advisor, any
Director, or any of their Affiliates, neither the Advisor, nor such Director(s),
nor any of their Affiliates may vote or consent on matters submitted to the
Stockholders regarding the removal of the Advisor, such Director(s) or any of
their Affiliates or any transaction between the Corporation and any of them. In
determining the requisite percentage in interest of Shares necessary to approve
a matter on which the Advisor, such Director(s) and any of their Affiliates may
not vote or consent, any Shares owned by any of them shall not be included.

            Section 12.4 Right of Inspection. Any Stockholder and any designated
representative thereof shall be permitted access to the records of the
Corporation to which it is entitled under applicable law at all reasonable
times, and may inspect and copy any of them for a reasonable charge. Inspection
of the Corporation's books and records by the office or agency administering the
securities laws of a jurisdiction shall be provided upon reasonable notice and
during normal business hours.

            Section 12.5 Access to Stockholder List. An alphabetical list of the
names, addresses and telephone numbers of the Stockholders, along with the
number of Shares held by each of them (the "Stockholder List"), shall be
maintained as part of the books and records of the Corporation and shall be
available for inspection by any Stockholder or the Stockholder's designated
agent at the home office of the Corporation upon the request of the Stockholder.
The Stockholder List shall be updated at least quarterly to reflect changes in
the information contained therein. A copy of such list shall be mailed to any
Stockholder so requesting within ten days of receipt by the Corporation of the
request. The copy of the Stockholder List shall be printed in alphabetical
order, on white paper, and in a readily readable type size (in no event smaller
than ten-point type). The Corporation may impose a reasonable charge for
expenses incurred in reproduction pursuant to the Stockholder request. A
Stockholder may request a copy of the Stockholder List in connection with
matters relating to Stockholders' voting rights, and the exercise of Stockholder
rights under federal proxy laws.

            If the Advisor or the Board neglects or refuses to exhibit, produce
or mail a copy of the Stockholder List as requested, the Advisor and/or the
Board, as the case may be, shall be liable to any Stockholder requesting the
list for the costs, including reasonable attorneys' fees, incurred by that
Stockholder for compelling the production of the Stockholder List, and for
actual damages suffered by any Stockholder by reason of such refusal or neglect.
It shall be a defense that the actual purpose and reason for the requests for
inspection or for a copy of the Stockholder List is to secure such list of
Stockholders or other information for the purpose of selling such list or copies
thereof, or of using the same for a commercial purpose other than in the
interest of the applicant as a

                                      -24-


Stockholder relative to the affairs of the Corporation. The Corporation may
require the Stockholder requesting the Stockholder List to represent that the
list is not requested for a commercial purpose unrelated to the Stockholder's
interest in the Corporation. The remedies provided hereunder to Stockholders
requesting copies of the Stockholder List are in addition, to and shall not in
any way limit, other remedies available to Stockholders under federal law, or
the laws of any state.

            Section 12.6 Reports. The Directors, including the Independent
Directors, shall take reasonable steps to insure that the Corporation shall
cause to be prepared and mailed or delivered to each Stockholder as of a record
date after the end of the fiscal year and each holder of other publicly held
Securities within 120 days after the end of the fiscal year to which it relates
an annual report for each fiscal year ending after the Commencement of the
Initial Public Offering that shall include: (i) financial statements prepared in
accordance with generally accepted accounting principles which are audited and
reported on by independent certified public accountants; (ii) the ratio of the
costs of raising capital during the period to the capital raised; (iii) the
aggregate amount of advisory fees and the aggregate amount of other fees paid to
the Advisor and any Affiliate of the Advisor by the Corporation and including
fees or charges paid to the Advisor and any Affiliate of the Advisor by third
parties doing business with the Corporation; (iv) the Total Operating Expenses
of the Corporation, stated as a percentage of Average Invested Assets and as a
percentage of its Net Income; (v) a report from the Independent Directors that
the policies being followed by the Corporation are in the best interests of its
Stockholders and the basis for such determination; and (vi) separately stated,
full disclosure of all material terms, factors and circumstances surrounding any
and all transactions involving the Corporation, Directors, Advisors, Sponsors
and any Affiliate thereof occurring in the year for which the annual report is
made, and the Independent Directors shall be specifically charged with a duty to
examine and comment in the report on the fairness of such transactions.

                                  ARTICLE XIII

                      LIABILITY LIMITATION, INDEMNIFICATION
                      AND TRANSACTIONS WITH THE CORPORATION

            Section 13.1 Limitation of Stockholder Liability. The shares, when
issued and fully paid, shall be non-assessable by the Company. No Stockholder
shall be liable for any debt, claim, demand, judgment or obligation of any kind
of, against or with respect to the Corporation by reason of his being a
Stockholder, nor shall any Stockholder be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any Person in connection with the
Corporation's assets or the affairs of the Corporation by reason of his being a
Stockholder.

            Section 13.2 Limitation of Director and Officer Liability. Subject
to the provisions of Section 13.3 hereof and the limitations of any applicable
provisions under Maryland law, no Director or officer of the Corporation shall
be liable to the Corporation or its Stockholders for money damages. Without
limiting the generality of the foregoing, and pursuant to Section 13.3 hereof,
the Company shall not hold harmless a Director, Advisor or Affiliate in
connection with or by reason of any act or omission performed or omitted to be
performed on behalf of the Company in such capacity unless the Director, Advisor
or Affiliate has determined, in good faith, that the course of conduct that
caused the loss or liability was in the best interests of the Company. Further,
the Company shall not hold harmless a Director, Advisor or Affiliate if: (a) in
the case of a Director (who was not an Independent Director), Advisor or
Affiliate, the loss or liability was the result of negligence or misconduct by
the Director, Advisor or Affiliate, or (b) in the case of a Director who is an
Independent Director, the loss or liability was the result of gross negligence
or willful misconduct by the Director. Neither the amendment nor repeal of this
Section 13.2, nor the adoption or amendment of any other provision of the
Charter or Bylaws inconsistent with this Section 13.2, shall apply to or affect
in any respect the applicability of the preceding sentence with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption.

            Section 13.3 Indemnification.

                  (a) The Corporation shall indemnify and hold harmless a
Director, officer, employee, agent, Advisor or Affiliate (the "Indemnitee")
against any or all losses or liabilities reasonably incurred by the Indemnitee
in connection with or by reason of any act or omission performed or omitted to
be performed on behalf of the Corporation in such capacity, provided, that the
Indemnitee has determined, in good faith, that the course of conduct that caused
the loss or liability was in the best interests of the Corporation. The
Corporation shall not indemnify or hold harmless the Indemnitee if: (a) in the
case that the Indemnitee is a Director (other than an Independent Director), an
Advisor or an Affiliate, the loss or liability was the result of negligence or
misconduct by the Indemnitee; or (b) in the case that the Indemnitee is an
Independent Director, the loss or liability was the result of gross negligence
or willful misconduct by the Indemnitee. Any indemnification of expenses or
agreement to hold harmless may be paid only out of the net assets of the
Corporation, and no portion may be recoverable from the Stockholders.

                                      -25-


                  (b) The Corporation shall not provide indemnification for any
loss, liability or expense arising from or out of an alleged violation of
federal or state securities laws by such party unless one or more of the
following conditions are met: (a) there has been a successful adjudication on
the merits of each count involving alleged material securities law violations as
to the Indemnitee, (b) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the Indemnitee; or (c) a court
of competent jurisdiction approves a settlement of the claims against the
Indemnitee and finds that indemnification of the settlement and the related
costs should be made, and the court considering the request for indemnification
has been advised of the position of the Securities and Exchange Commission and
of the published position of any state securities regulatory authority in which
Securities were offered or sold as to indemnification for violations of
securities laws.

                  (c) Notwithstanding anything to the contrary contained in the
provisions of subsection (a) and (b) above of this Section, the Corporation
shall not indemnify or hold harmless an Indemnitee if it is established that:
(a) the act or omission was material to the loss or liability and was committed
in bad faith or was the result of active and deliberate dishonesty, (b) the
Indemnitee actually received an improper personal benefit in money, property or
services, (c) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful, or (d) in a
proceeding by or in the right of the Corporation, the Indemnitee shall have been
adjudged to be liable to the Corporation.

                  (d) The Board may take such action as is necessary to carry
out this Section 13.3 and is expressly empowered to adopt, approve and amend
from time to time Bylaws, resolutions or contracts implementing such provisions.
No amendment of the Charter or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.

            Section 13.4 Payment of Expenses. The Corporation shall pay or
reimburse reasonable legal expenses and other costs incurred by an Indemnitee in
advance of final disposition of a proceeding if all of the following are
satisfied: (i) the proceeding relates to acts or omissions with respect to the
performance of duties or services on behalf of the Corporation, (ii) the
Indemnitee provides the Corporation with written affirmation of the Indemnitee's
good faith belief that the Indemnitee has met the standard of conduct necessary
for indemnification by the Corporation as authorized by Section 13.3 hereof,
(iii) the legal proceeding was initiated by a third party who is not a
Stockholder or, if by a Stockholder of the Corporation acting in his or her
capacity as such, a court of competent jurisdiction approves such advancement,
and (iv) the Indemnitee provides the Corporation with a written agreement to
repay the amount paid or reimbursed by the Corporation, together with the
applicable legal rate of interest thereon, if it is ultimately determined that
the Indemnitee did not comply with the requisite standard of conduct and is not
entitled to indemnification. Any indemnification payment or reimbursement of
expenses will be furnished in accordance with the procedures in Section 2-418(e)
of the MGCL or any successor statute.

            Section 13.5 Express Exculpatory Clauses in Instruments. Neither the
Stockholders nor the Directors, officers, employees or agents of the Corporation
shall be liable under any written instrument creating an obligation of the
Corporation by reason of their being Stockholders, Directors, officers,
employees or agents of the Corporation, and all Persons shall look solely to the
Corporation's assets for the payment of any claim under or for the performance
of that instrument. The omission of the foregoing exculpatory language from any
instrument shall not affect the validity or enforceability of such instrument
and shall not render any Stockholder, Director, officer, employee or agent
liable thereunder to any third party, nor shall the Directors or any officer,
employee or agent of the Corporation be liable to anyone as a result of such
omission.

            Section 13.6 Transactions with Affiliates. The Corporation shall not
engage in transactions with the Advisor, the Sponsor, a Director or any of the
Corporation's Affiliates, except to the extent that each such transaction has,
after disclosure of such affiliation, been approved or ratified by the
affirmative vote of a majority of the Directors (including a majority of the
Independent Directors) not Affiliated with the Person who is party to the
transaction and:

                  (a) The transaction is fair and reasonable to the Corporation.

                                      -26-


                  (b) The terms and conditions of such transaction are not less
favorable to the Corporation than those available from unaffiliated third
parties.

                  (c) If an acquisition is involved, the total consideration is
not in excess of the appraised value of the Property being acquired, as
determined by an Independent Appraiser.

                                   ARTICLE XIV

                                   AMENDMENTS

            Section 14.1 General. Subject to Section 12.2, the Corporation
reserves the right from time to time to make any amendment to the Charter, now
or hereafter authorized by law, including any amendment altering the terms or
contract rights, as expressly set forth in the Charter, of any Shares. All
rights and powers conferred by the Charter on Stockholders, Directors and
officers are granted subject to this reservation.

                                   ARTICLE XV

                              ROLL-UP TRANSACTIONS

            In connection with any proposed Roll-Up Transaction, an appraisal of
all of the Corporation's assets shall be obtained from a competent Independent
Appraiser. The Corporation's assets shall be appraised on a consistent basis,
and the appraisal shall be based on the evaluation of all relevant information
and shall indicate the value of the assets as of a date immediately prior to the
announcement of the proposed Roll-Up Transaction. The appraisal shall assume an
orderly liquidation of the assets over a twelve-month period. The terms of the
engagement of the Independent Appraiser shall clearly state that the engagement
is for the benefit of the Corporation and the Stockholders. A summary of the
appraisal, indicating all material assumptions underlying the appraisal, shall
be included in a report to Stockholders in connection with a proposed Roll-Up
Transaction. In connection with a proposed Roll-Up Transaction, the person
sponsoring the Roll-Up Transaction shall offer to Stockholders who vote against
the proposed Roll-Up Transaction the choice of:

                  (a) accepting the securities of a Roll-Up Entity offered in
the proposed Roll-Up Transaction; or

                  (b) one of the following:

                        (i) remaining as Stockholders and preserving their
interests therein on the same terms and conditions as existed previously; or

                        (ii) receiving cash in an amount equal to the
Stockholder's pro rata share of the appraised value of the net assets of the
Corporation.

            The Corporation is prohibited from participating in any proposed
Roll-Up Transaction:

                  (a) that would result in the Stockholders having voting rights
in a Roll-Up Entity that are less than the rights provided for in Sections 12.1
and 12.2 hereof;

                  (b) that includes provisions that would operate as a material
impediment to, or frustration of, the accumulation of Shares by any purchaser of
the securities of the Roll-Up Entity (except to the minimum extent necessary to
preserve the tax status of the Roll-Up Entity), or which would limit the ability
of an investor to exercise the voting rights of its securities of the Roll-Up
Entity on the basis of the number of Shares held by that investor;

                  (c) in which an investor's rights to access of records of the
Roll-Up Entity will be less than those described in Sections 12.4 and 12.5
hereof; or

                                      -27-


                  (d) in which any of the costs of the Roll-Up Transaction would
be borne by the Corporation if the Roll-Up Transaction is not approved by the
Stockholders.

                                   ARTICLE XVI

                                    DURATION

            In the event that Listing does not occur on or before the tenth
anniversary of the Termination of the Initial Public Offering, then the Board of
Directors must either (a) adopt a resolution that sets forth a proposed
amendment to the Charter extending or eliminating this deadline (the "Extension
Amendment"), declare that the Extension Amendment is advisable and direct that
the proposed Extension Amendment be submitted for consideration at either an
annual or special meeting of the Stockholders, or (b) adopt a resolution that
declares that a proposed liquidation and dissolution is advisable on
substantially the terms and conditions set forth in, or referred to, in the
resolution (the "Plan of Liquidation"), and direct that the proposed Plan of
Liquidation be submitted for consideration at either an annual or special
meeting of the Stockholders. If the Board of Directors seeks the Extension
Amendment as described above and the Stockholders do not approve such amendment,
then the Board of Directors shall seek the Plan of Liquidation as described
above. If the Stockholders do not then approve the Plan of Liquidation, the
Corporation shall continue its business. If the Board of Directors seeks the
Plan of Liquidation as described above and the Stockholders do not approve such
resolution, then the Board of Directors shall seek the Extension Amendment as
described above. If the Stockholders do not then approve the Extension
Amendment, the Corporation shall continue its business. In the event that
Listing occurs on or before the tenth anniversary of the Termination of the
Initial Public Offering, the Corporation shall continue perpetually unless
dissolved pursuant to any applicable provision of the MGCL.

      THIRD: The amendment to and restatement of the Charter as hereinabove set
forth have been duly advised by the Board of Directors and approved by the
Stockholders of the Corporation as required by law.

      FOURTH: The current address of the principal office of the Corporation is
as set forth in Article IV of the foregoing amendment and restatement of the
Charter.

      FIFTH: The name and address of the Corporation's current resident agent is
as set forth in Article IV of the foregoing amendment and restatement of the
Charter.

      SIXTH: The number of directors of the Corporation and the names of those
currently in office are as set forth in Article VIII of the foregoing amendment
and restatement of the Charter.

      SEVENTH: The total number of shares of stock that the Corporation had
authority to issue immediately prior to this amendment and restatement was
100,000,000 consisting of 90,000,000 shares of Common Stock, $0.01 par value per
share and 10,000,000 shares of Preferred Stock, $0.01 par value per share. The
aggregate par value of all shares of stock having par value was $1,000,000.

      EIGHTH: The total number of shares of stock which the Corporation has
authority to issue pursuant to the foregoing amendment and restatement of the
charter is 100,000,000, consisting of 90,000,000 shares of Common Stock, $0.01
par value per share, and 10,000,000 shares of Preferred Stock, $0.01 par value
per share. The aggregate par value of all authorized shares of stock having par
value is $1,000,000.

         NINTH: The undersigned Chief Executive Officer acknowledges these
Fourth Articles of Amendment and Restatement to be the corporate act of the
Corporation and as to all matters or facts required to be verified under oath,
the undersigned Executive Vice President acknowledges that, to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties of
perjury.

                                      -28-


      IN WITNESS WHEREOF, the Corporation has caused these Fourth Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
Chief Executive Officer and attested to by its Secretary on this 8th day of
September, 2005.

      ATTEST:                              COLE CREDIT PROPERTY TRUST II, INC.

      /s/ John M. Pons                     By: /s/ Christopher H. Cole (SEAL)
      ---------------------------------        ---------------------------------
      Name:  John M. Pons                      Name:  Christopher H. Cole
      Title: Secretary                         Title: Chief Executive Officer

                                      -29-