EXHIBIT 3.1

                Amended and Restated Articles of Incorporation of
                        CNL Health Care Properties, Inc.



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                      ARTICLES OF AMENDMENT AND RESTATEMENT
                                       OF
                        CNL HEALTH CARE PROPERTIES, INC.


         CNL Health Care  Properties,  Inc., a Maryland  corporation  having its
principal office at 32 South Street, Baltimore, Maryland 21202 (hereinafter, the
"Company"),  hereby  certifies to the Department of Assessments  and Taxation of
the State of Maryland, that:

         FIRST:  The  Company  desires  to amend and  restate  its  articles  of
incorporation as currently in effect.

         SECOND: The provisions of the articles of incorporation, dated December
22, 1997, which are now in effect and as amended hereby,  in accordance with the
Maryland General Corporation Law (the "MGCL"), are as follows.

                              AMENDED AND RESTATED
                            ARTICLES OF INCORPORATION
                                       OF
                        CNL HEALTH CARE PROPERTIES, INC.


                               * * * * * * * * * *


                                    ARTICLE 1

                            THE COMPANY; DEFINITIONS

         SECTION 1.1      Name.  The name of the corporation (the "Company") is:

                        CNL Health Care Properties, Inc.

         So far as may be  practicable,  the  business of the  Company  shall be
conducted and  transacted  under that name,  which name (and the word  "Company"
wherever used in these Articles of Amendment and  Restatement of CNL Health Care
Properties,  Inc. (these "Articles of Incorporation"),  except where the context
otherwise   requires)  shall  refer  to  the  Directors   collectively  but  not
individually  or personally  and shall not refer to the  Stockholders  or to any
officers, employees or agents of the Company or of such Directors.

         Under  circumstances  in which the Directors  determine that the use of
the name "CNL Health Care Properties, Inc." is not practicable, they may use any
other designation or name for the Company.


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         SECTION 1.2 Resident Agent.  The name and address of the resident agent
for  service  of  process  of  the  Company  in the  State  of  Maryland  is The
Corporation Trust Incorporated,  32 South Street, Baltimore, Maryland 21202. The
Company  may have such  principal  office  within the State of  Maryland  as the
Directors may from time to time determine.

         The  Company  may also have such other  offices  or places of  business
within or without the State of Maryland as the  Directors  may from time to time
determine.

         SECTION  1.3 Nature of Company.  The Company is a Maryland  corporation
within the meaning of the MGCL.

         SECTION 1.4 Purposes.  The purposes for which the Company is formed are
to conduct any business for which  corporations  may be organized under the laws
of the State of Maryland  including,  but not limited to, the following:  (i) to
acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease,
transfer,  encumber, convey, exchange and otherwise dispose of or deal with real
and personal  property;  (ii) to engage in the  business of offering  furniture,
fixture,  and equipment financing to operators of Health Care Facilities;  (iii)
to engage  in the  business  of  offering  mortgage  financing  secured  by Real
Property; and (iv) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing.

         SECTION 1.5  Definitions.  As used in these Articles of  Incorporation,
the  following  terms  shall have the  following  meanings  unless  the  context
otherwise  requires  (certain other terms used in Article VII hereof are defined
in Sections 7.2, 7.3, 7.6, and 7.7 hereof):

         "Acquisition  Expenses"  means  any and all  expenses  incurred  by the
Company,  the  Advisor,  or any  Affiliate  of  either  in  connection  with the
selection or  acquisition  of any  Property or the making of any Mortgage  Loan,
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.

         "Acquisition Fees" means any and all fees and commissions, exclusive of
Acquisition Expenses, paid by any Person or entity to any other Person or entity
(including any fees or commissions paid by or to any Affiliate of the Company or
the Advisor) in  connection  with making or  investing in Mortgage  Loans or the
purchase,   development  or  construction  of  a  Property,  including,  without
limitation, real estate commissions,  acquisition fees, finder's fees, selection
fees,  Development  Fees,   Construction  Fees,  nonrecurring  management  fees,
consulting fees, loan fees,  points,  the Secured Equipment Lease Servicing Fee,
or any  other  fees or  commissions  of a  similar  nature.  Excluded  shall  be
development  fees  and  construction  fees  paid to any  Person  or  entity  not
affiliated  with the  Advisor  in  connection  with the actual  development  and
construction of any Property.



                                                        -2-

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         "Advisor" or "Advisors" means the Person or Persons, if any, appointed,
employed or  contracted  with by the Company  pursuant to Section 4.1 hereof and
responsible for directing or performing the day-to-day  business  affairs of the
Company, including any Person to whom the Advisor subcontracts substantially all
of such functions.

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

         "Affiliate" or "Affiliated"  means, as to any individual,  corporation,
partnership,  trust or other  association  (other than the Excess Shares Trust),
(i)  any  Person  or  entity   directly  or  indirectly   through  one  or  more
intermediaries controlling,  controlled by, or under common control with another
Person or entity;  (ii) any Person or entity,  directly  or  indirectly  owning,
controlling,  or  holding  with power to vote ten  percent  (10%) or more of the
outstanding  voting  securities of another Person or entity;  (iii) any officer,
director,  partner  or trustee  of such  Person or  entity;  (iv) any Person ten
percent (10%) or more of whose  outstanding  voting  securities  are directly or
indirectly owned,  controlled or held, with power to vote, by such other Person;
and (v) if such other  Person or entity is an  officer,  director,  partner,  or
trustee  of a Person or entity,  the  Person or entity for which such  Person or
entity acts in any such capacity.

         "Asset  Management  Fee"  means  the fee  payable  to the  Advisor  for
day-to-day  professional  management services in connection with the Company and
its  investments  in  Properties,  and Mortgage  Loans  pursuant to the Advisory
Agreement.

         "Assets" means Properties, Mortgage Loans and Secured Equipment Leases,
collectively.

         "Average Invested Assets" means, for a specified period, the average of
the  aggregate  book value of the assets of the  Company  invested,  directly or
indirectly,  in equity  interests  in and loans  secured by real  estate  before
reserves  for  depreciation  or bad debts or other  similar  non-cash  reserves,
computed by taking the  average of such  values at the end of each month  during
such period.

         "Bylaws"  means the  bylaws of the  Company,  as the same are in effect
from time to time.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor  statute thereto.  Reference to any provision of the Code
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.

         "Company  Property"  means  any and all  property,  real,  personal  or
otherwise,  tangible  or  intangible,  including  Secured  Equipment  Leases and
Mortgage Loans,  which is transferred or conveyed to the Company  (including all
rents, income,  profits and gains therefrom),  which is owned or held by, or for
the account of, the Company.


                                                        -3-

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         "Competitive  Real Estate  Commission" means a real estate or brokerage
commission for the purchase or sale of property which is reasonable,  customary,
and  competitive in light of the size,  type, and location of the property.  The
total  of all  real  estate  commissions  paid  by the  Company  to all  Persons
(including the subordinated real estate  disposition fee payable to the Advisor)
in connection with any Sale of one or more of the Company's Properties shall not
exceed  the  lesser of (i) a  Competitive  Real  Estate  Commission  or (ii) six
percent (6%) of the gross sales price of the Property or Properties.

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

         "Development  Fee" means a fee for such  activities as negotiating  and
approving  plans and  undertaking  to assist in obtaining  zoning and  necessary
variances and necessary  financing for a specific Property,  either initially or
at a later date.

         "Directors," "Board of Directors" or "Board" means,  collectively,  the
individuals  named in Section  2.4 of these  Amended  and  Restated  Articles of
Incorporation  so long as they continue in office and all other  individuals who
have been duly elected and qualify as Directors of the Company hereunder.

         "Distributions"  means any  distributions  of money or other  property,
pursuant  to  Section  7.2(iv)  hereof,  by the  Company  to owners  of  Shares,
including  distributions  that may  constitute  a return of capital  for federal
income  tax  purposes.  The  Company  will  make  no  distributions  other  than
distributions of money or readily marketable  securities unless the requirements
of Section 7.2(iv) hereof are satisfied.

         "Equipment"  shall mean the  furniture,  fixtures and equipment used at
Health Care Facilities by operators of Health Care Facilities.

         "Equity Shares" means transferable shares of beneficial interest of the
Company of any class or series, including Common Shares or Preferred Shares.

         "Gross Proceeds" means the aggregate  purchase price of all Shares sold
for the account of the  Company,  without  deduction  for  Selling  Commissions,
volume discounts,  the marketing support and due diligence expense reimbursement
fee or Organizational and Offering Expenses.  For the purpose of computing Gross
Proceeds,  the purchase price of any Share for which reduced Selling Commissions
are paid to the Managing  Dealer or a Soliciting  Dealer  (where net proceeds to
the Company are not reduced) shall be deemed to be $10.00.

         "Health Care Facilities" means facilities at which health care services
are provided, including, but not limited to, congregate living, assisted living,
and skilled nursing facilities,  continuing care retirement communities and life
care communities, and medical office buildings and walk-in clinics.

                                                        -4-

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         "Independent Director" means a Director who is not, and within the last
two (2) years has not been,  directly or indirectly  associated with the Advisor
by virtue of (i) ownership of an interest in the Advisor or its Affiliates, (ii)
employment  by the  Advisor or its  Affiliates,  (iii)  service as an officer or
director of the Advisor or its Affiliates,  (iv) performance of services,  other
than as a  Director,  for the  Company,  (v) service as a director or trustee of
more than three (3) real estate  investment  trusts  advised by the Advisor,  or
(vi) maintenance of a material  business or professional  relationship  with the
Advisor  or  any of its  Affiliates.  An  indirect  relationship  shall  include
circumstances  in  which  a  Director's  spouse,  parents,  children,  siblings,
mothers-  or  fathers-in-law,   sons-  or   daughters-in-law   or  brothers-  or
sisters-in-law is or has been associated with the Advisor, any of its Affiliates
or the Company. A business or professional  relationship is considered  material
if the gross  revenue  derived by the Director  from the Advisor and  Affiliates
exceeds five percent (5%) of either the  Director's  annual gross revenue during
either of the last two (2) years or the  Director's  net worth on a fair  market
value basis.

         "Independent  Expert" means a Person or entity with no material current
or prior business or personal relationship with the Advisor or the Directors and
who is engaged to a  substantial  extent in the business of  rendering  opinions
regarding the value of assets of the type held by the Company.

         "Initial Public  Offering" means the offering and sale of Equity Shares
of the Company pursuant to the Company's first effective  registration statement
covering such Common Shares filed under the Securities Act of 1933, as amended.

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

         "Joint  Ventures"  means  those  joint  venture or general  partnership
arrangements  in which the Company is a co-venturer or general partner which are
established to acquire Properties.

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

         "Line of Credit"  means a line of credit  initially  in an amount up to
$45,000,000,  the proceeds of which will be used to acquire  Properties and make
Mortgage Loans and Secured Equipment Leases.

         "Listing"  means the listing of the Shares of the Company on a national
securities exchange or over-the-counter market.



                                                        -5-

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         "Managing  Dealer"  means CNL  Securities  Corp.,  an  Affiliate of the
Advisor,  or such other  Person or entity  selected by the Board of Directors to
act as the managing dealer for the offering. CNL Securities Corp. is a member of
the National Association of Securities Dealers, Inc.

         "MGCL" means the Maryland  General  Corporation Law as contained in the
Corporations and Associations Article of the Annotated Code of Maryland.

         "Mortgage Loans" means, in connection with mortgage  financing provided
by the Company,  notes or other evidences of  indebtedness or obligations  which
are secured or collateralized by real estate owned by the borrowers.

         "Mortgages" means mortgages, deeds of trust or other security interests
on or applicable to Real Property.

         "NASAA REIT Guidelines" means the guidelines for Real Estate Investment
Trusts published by the North American Securities Administrators Association.

         "Net  Assets"  means  the  total  assets  of the  Company  (other  than
intangibles), at cost, before deducting depreciation or other non-cash reserves,
less  total  liabilities,  calculated  quarterly  by  the  Company  on  a  basis
consistently applied.

         "Net Income"  means for any period,  the total  revenues  applicable to
such  period,  less the  total  expenses  applicable  to such  period  excluding
additions  to reserves for  depreciation,  bad debts or other  similar  non-cash
reserves;  provided,  however,  Net Income for  purposes  of  calculating  total
allowable  Operating  Expenses  shall  exclude  the  gain  from  the sale of the
Company's assets.

         "Net Sales  Proceeds"  means in the case of a transaction  described in
clause (i)(A) of the  definition of Sale,  the proceeds of any such  transaction
less the amount of all real estate  commissions  and  closing  costs paid by the
Company.  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 any legal 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 Company from the Joint  Venture.  In the case of a
transaction  or  series  of  transactions  described  in  clause  (i)(D)  of the
Definition  of  Sale,  Net  Sales  Proceeds  means  the  proceeds  of  any  such
transaction  less the amount of all  commissions  and closing  costs paid by the
Company. 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 and reinvested in one or more
Properties  within one hundred eighty (180) days  thereafter and less the amount
of any real  estate  commissions,  closing  costs,  and legal and other  selling
expenses  incurred  by or  allocated  to the  Company  in  connection  with such
transaction or series of transactions. Net Sales Proceeds shall also include, in
the case of any lease of a Property  consisting of a building only, any Mortgage
Loan or any Secured Equipment Lease, any amounts

                                                        -6-

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from  tenants,  borrowers  or  lessees  that  the  Company  determines,  in  its
discretion,  to be economically  equivalent to the proceeds of a Sale. Net Sales
Proceeds shall not include, as determined by the Company in its sole discretion,
any  amounts  reinvested  in one or more  Properties,  Mortgage  Loans,  Secured
Equipment  Leases or other  assets,  to repay  outstanding  indebtedness,  or to
establish reserves.

         "Operating  Expenses"  mean all  costs  and  expenses  incurred  by the
Company, as determined under generally accepted accounting principles,  which in
any way are  related to the  operation  of the  Company or to Company  business,
including (a) advisory fees, (b) the Asset  Management  Fee, (c) the Performance
Fee, and (d) the  Subordinated  Incentive Fee, but excluding (i) the expenses of
raising capital such as  Organizational  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) the Advisor's  subordinated ten percent
(10%) share of Net Sales  Proceeds,  and (vi)  Acquisition  Fees and Acquisition
Expenses,  real estate  commissions on the Sale of property,  and other expenses
connected with the acquisition and ownership of real estate interests,  mortgage
loans, or other property (such as the costs of foreclosure,  insurance premiums,
legal services, maintenance, repair, and improvement of property).

         "Organizational  and  Offering  Expenses"  means  any and all costs and
expenses, other than Selling Commissions, the Soliciting Dealer Warrants and the
0.5% marketing support and due diligence  expense  reimbursement fee incurred by
the  Company,  the Advisor or any  Affiliate  of either in  connection  with the
formation,  qualification  and registration of the Company and the marketing and
distribution of Shares,  including,  without limitation,  the following:  legal,
accounting  and escrow  fees;  printing,  amending,  supplementing,  mailing and
distributing  costs;  filing,  registration  and  qualification  fees and taxes;
telegraph and  telephone  costs;  and all  advertising  and marketing  expenses,
including the costs related to investor and  broker-dealer  sales meetings.  The
Organizational  and Offering  Expenses  paid by the Company in  connection  with
formation of the Company, together with all Selling Commissions,  the Soliciting
Dealer Warrants and the 0.5% marketing  support and due diligence  reimbursement
fee  incurred by the  Company,  will not exceed  thirteen  percent  (13%) of the
proceeds raised in connection with such offering.

         "Performance  Fee" means the fee payable to the Advisor  under  certain
circumstances   if  certain   performance   standards  have  been  met  and  the
Subordinated Incentive Fee has not been paid.

         "Permanent  Financing"  means financing (i) to acquire Assets,  (ii) to
pay the Secured Equipment Lease Servicing Fee, (iii) to pay a fee of 4.5% of any
Permanent  Financing,  excluding  amounts to fund Secured  Equipment  Leases, as
Acquisition Fees, and (iv) refinance outstanding amounts on the Line of Credit.



                                                        -7-

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         "Person" means an individual,  corporation,  partnership, estate, trust
(including a trust  qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust  permanently set aside for or to be used  exclusively for the
purposes  described  in  Section  642(c)  of  the  Code,  association,   private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other  entity,  or any  government  or any  agency or  political  subdivision
thereof,  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,  but does not
include (i) an  underwriter  that  participates  in a public  offering of Equity
Shares for a period of sixty (60) days  following  the initial  purchase by such
underwriter  of such Equity Shares in such public  offering,  or (ii) CNL Health
Care Advisors,  Inc., during the period ending December 31, 1998,  provided that
the foregoing exclusions shall apply only if the ownership of such Equity Shares
by an underwriter or CNL Health Care Advisors,  Inc. would not cause the Company
to fail to  qualify  as a REIT by  reason of being  "closely  held"  within  the
meaning of Section 856(a) of the Code or otherwise  cause the Company to fail to
qualify as a REIT.

         "Property" or "Properties" means (i) the real properties, including the
buildings located thereon, (ii) the real properties only, or (iii) the buildings
only,  which are  acquired by the  Company,  either  directly  or through  joint
venture arrangements or other partnerships.

         "Prospectus" means the same as that term is defined in Section 2(10) of
the  Securities  Act of 1933,  including a preliminary  prospectus,  an offering
circular as described in Rule 256 of the General Rules and Regulations under the
Securities Act of 1933 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.

         "Real Estate Asset Value" or "Contract Purchase Price" means the amount
actually  paid  or  allocated  to the  purchase,  development,  construction  or
improvement  of a  Property,  exclusive  of  Acquisition  Fees  and  Acquisition
Expenses.

         "Real Property" or "Real Estate" means 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.

         "REIT"  means  real  estate  investment  trust as defined  pursuant  to
Sections 856 through 860 of the Code.

         "REIT  Provisions  of the Code" means  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.

         "Roll-Up  Entity" means 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.

                                                        -8-

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         "Roll-Up  Transaction"  means a transaction  involving the acquisition,
merger, conversion, or consolidation, directly or indirectly, of the Company and
the issuance of securities of a Roll- Up Entity. Such term does not include: (i)
a  transaction  involving  securities  of the Company that have been listed on a
national  securities  exchange or included for quotation on the National  Market
System of the National  Association of Securities  Dealers  Automated  Quotation
System for at least 12 months; or (ii) a transaction involving the conversion to
corporate,  trust, or association  form of only the Company if, as a consequence
of the transaction,  there will be no significant  adverse change in Stockholder
voting rights, the term of existence of the Company, compensation to the Advisor
or the investment objectives of the Company.

         "Sale" or "Sales" (i) means any  transaction or series of  transactions
whereby: (A) the Company sells, grants,  transfers,  conveys or relinquishes its
ownership  of any  Property  or  portion  thereof,  including  the  lease of any
Property  consisting of the 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 Company sells,  grants,  transfers,  conveys or
relinquishes  its ownership of all or  substantially  all of the interest of the
Company in any Joint  Venture in which it is a co-venturer  or partner;  (C) any
Joint Venture in which the Company 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 Company  sells,  grants,
conveys,  or relinquishes its interest in any Mortgage Loan,  Secured  Equipment
Lease, or other asset, or portion  thereof,  including any event with respect to
any Mortgage Loan,  Secured Equipment Lease or other asset which gives rise to a
significant  amount of insurance  proceeds or similar awards, but (ii) shall not
include any  transaction or series of  transactions  specified in clause (i)(A),
(i)(B),  or (i)(C) above in which the proceeds of such  transaction or series of
transactions are reinvested in one or more Properties  within one hundred eighty
(180) days thereafter.

         "Secured Equipment Leases" means the Equipment financing made available
by the  Company to  operators  of Health Care  Facilities  pursuant to which the
Company will finance, through loans or direct financing leases, the Equipment.

         "Secured  Equipment  Lease  Servicing Fee" means the fee payable to the
Advisor by the  Company out of the  proceeds of the Line of Credit or  Permanent
Financing for negotiating  Secured  Equipment Leases and supervising the Secured
Equipment  Lease  program  equal to 2% of the  purchase  price of the  Equipment
subject to each Secured  Equipment  Lease and paid upon entering into such lease
or loan.

         "Securities"  means  Equity  Shares,  Excess  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.


                                                        -9-

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         "Selling   Commissions"  means  any  and  all  commissions  payable  to
underwriters,  managing dealers, or other  broker-dealers in connection with the
sale of  Shares,  including,  without  limitation,  commissions  payable  to CNL
Securities Corp.

         "Shares"  means the Common  Shares,  as such term is defined in Section
7.2 hereof.

         "Soliciting Dealers" means those broker-dealers that are members of the
National  Association  of  Securities  Dealers,  Inc.,  or that are exempt  from
broker-dealer  registration,  and that, in either case, enter into participating
broker or other agreements with the Managing Dealer to sell Shares.

         "Sponsor"  means any Person  directly  or  indirectly  instrumental  in
organizing,  wholly or in part,  the  Company or any  Person  who will  control,
manage or  participate  in the  management of the Company,  and any Affiliate of
such Person. Not included is any Person whose only relationship with the Company
is that of an independent  property  manager of Company  assets,  and whose only
compensation  is as such.  Sponsor  does not include  wholly  independent  third
parties such as attorneys, accountants, and underwriters whose only compensation
is for  professional  services.  A Person  may also be deemed a  Sponsor  of the
Company by:

         a.       taking the initiative,  directly or indirectly, in founding or
                  organizing  the business or enterprise of the Company,  either
                  alone or in conjunction with one or more other Persons;

         b.       receiving   a  material   participation   in  the  Company  in
                  connection  with the founding or organizing of the business of
                  the Company, in consideration of services or property, or both
                  services and property;

         c.       having a substantial number of relationships and contacts with
                  the Company;

         d.       possessing significant rights to control Company properties;

         e.       receiving fees for providing services to the Company which are
                  paid on a basis that is not customary in the industry; or

         f.       providing  goods or  services  to the Company on a basis which
                  was not negotiated at arms length with the Company.

         "Stock  Option  Plan"  means a plan that  provides  for the matters set
forth  in  Rule  260.140.41  of  Section  25140  of  the  Corporations  Code  of
California, as in effect as of the date of these Articles of Incorporation.

         "Stockholders'  8% Return," as of each date,  means an aggregate amount
equal to an eight  percent  (8%)  cumulative,  noncompounded,  annual  return on
Invested Capital.


                                                       -10-

<PAGE>



         "Stockholders"  means the  registered  holders of the Company's  Equity
Shares.

         "Subordinated Incentive Fee" means the fee payable to the Advisor under
certain circumstances if the Shares are listed on a national securities exchange
or over-the-counter market.

         "Successor" means any successor in interest of the Company.

         "Termination  Date"  means  the  date of  termination  of the  Advisory
Agreement.

         "Total Proceeds" means Gross Proceeds plus loan proceeds from Permanent
Financing and amounts  outstanding on the Line of Credit, if any, at the time of
Listing, but excluding loan proceeds used to finance Secured Equipment Leases.

         "Unimproved  Real Property"  means Property in which the Company has an
equity  interest  that is 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 2

                               BOARD OF DIRECTORS

         SECTION 2.1 Number.  The number of  Directors  initially  shall be five
(5),  which number may be increased or decreased from time to time by resolution
of the  Directors  then in  office  or by a  majority  vote of the  Stockholders
entitled to vote: provided, however, that the total number of Directors shall be
not fewer than three (3) and not more than fifteen  (15),  subject to the Bylaws
and to any express  rights of any holders of any series of  Preferred  Shares to
elect  additional  directors  under specified  circumstances.  A majority of the
Board of Directors will be Independent  Directors except for a period of 90 days
after the death, removal or resignation of an Independent Director.  Independent
Directors shall nominate  replacements for vacancies in the Independent Director
positions.  No reduction  in the number of Directors  shall cause the removal of
any  Director  from  office  prior to the  expiration  of his term.  Any vacancy
created by an increase in the number of Directors will be filled, at any regular
meeting or at any special meeting of the Directors called for that purpose, by a
majority  of the  Directors.  Any other  vacancy  will be  filled at any  annual
meeting or at any special meeting of the  Stockholders  called for that purpose,
by a majority of the Common Shares present in person or by proxy and entitled to
vote. For the purposes of voting for Directors, each Share of stock may be voted
for as many  individuals  as there are  directors  to be  elected  and for whose
election the Share is entitled to be voted,  or as may  otherwise be required by
the MGCL or other applicable law as in effect from time to time.



                                                       -11-

<PAGE>



         SECTION 2.2  Experience.  A Director  shall have had at least three (3)
years of relevant experience demonstrating the knowledge and experience required
to  successfully  acquire  and manage the type of assets  being  acquired by the
Company. At least one of the Independent Directors shall have three (3) years of
relevant real estate experience.

         SECTION  2.3  Committees.  Subject  to  the  MGCL,  the  Directors  may
establish  such  committees  as they  deem  appropriate,  in  their  discretion,
provided  that the  majority of the members of each  committee  are  Independent
Directors.

         SECTION 2.4 Initial  Board;  Term.  The initial  Directors are James M.
Seneff, Jr., Robert A. Bourne,  David W. Dunbar,  Timothy S. Smick and Edward A.
Moses.  Each Director shall hold office for one (1) year,  until the next annual
meeting of Stockholders and until his successor shall have been duly elected and
shall  have  qualified.  Directors  may be  elected  to an  unlimited  number of
successive terms.

         The names and address of the initial Directors are as follows:

         Name                                        Address
         ----                                        -------

         James M. Seneff, Jr.                        400 E. South Street
                                                     Orlando, Florida 32801

         Robert A. Bourne                            400 E. South Street
                                                     Orlando, Florida 32801

         David W. Dunbar                             400 E. South Street
                                                     Orlando, Florida 32801

         Timothy S. Smick                            400 E. South Street
                                                     Orlando, Florida 32801

         Edward A. Moses                             400 E. South Street
                                                     Orlando, Florida 32801

         SECTION 2.5 Fiduciary  Obligations.  The Directors serve in a fiduciary
capacity to the Company and have a  fiduciary  duty to the  Stockholders  of the
Company,  including a specific  fiduciary duty to supervise the  relationship of
the Company with the Advisor.

   
         SECTION  2.6  Approval  by   Independent   Directors.   A  majority  of
Independent  Directors must approve all matters to which Sections 2.1,  3.2(vii)
and (xii),  3.3, 4.1, 4.2, 4.6, 4.7, 4.8, 4.10,  4.13, 5.2, 5.4 and (xvi),  6.3,
6.4, 8.1, 8.2, 9.2 and 9.4 herein apply.
    



                                                       -12-

<PAGE>



         SECTION 2.7  Resignation,  Removal or Death. Any Director may resign by
written notice to the Board of Directors,  effective upon execution and delivery
to the Company of such written  notice or upon any future date  specified in the
notice.  A Director may be removed  from office with or without  cause only at a
meeting of the Stockholders  called for that purpose, by the affirmative vote of
the  holders of not less than a majority of the Equity  Shares then  outstanding
and entitled to vote,  subject to the rights of any Preferred Shares to vote for
such Directors.  The notice of such meeting shall indicate that the purpose,  or
one of the  purposes,  of such meeting is to  determine if a Director  should be
removed.

         SECTION 2.8 Business  Combination  Statute.  Notwithstanding  any other
provision of these Articles of Incorporation  or any contrary  provision of law,
the Maryland Business Combination  Statute,  found in Title 3, subtitle 6 of the
MGCL, as amended from time to time, or any successor statute thereto,  shall not
apply to any "business combination" (as defined in Section 3-601(e) of the MGCL,
as amended from time to time, or any successor  statute  thereto) of the Company
and any Person.

         SECTION 2.9 Control  Share  Acquisition  Statute.  Notwithstanding  any
other provision of these Articles of Incorporation or any contrary  provision of
law, the Maryland Control Share Acquisition Statute,  found in Title 3, subtitle
7 of the MGCL, as amended from time to time, or any  successor  statute  thereto
shall not apply to any acquisition of Securities of the Company by any Person.

                                    ARTICLE 3

                               POWERS OF DIRECTORS

         SECTION 3.1 General.  Subject to the express  limitations  herein or in
the Bylaws and to the general  standard of care required of directors  under the
MGCL and other applicable law, (i) the business and affairs of the Company shall
be managed  under the direction of the Board of Directors and (ii) the Directors
shall have full,  exclusive and absolute  power,  control and authority over the
Company  Property and over the business of the Company as if they,  in their own
right,  were the sole  owners  thereof,  except as  otherwise  limited  by these
Articles of  Incorporation.  The Directors have established the written policies
on investments  and borrowing set forth in this Article III and Article V hereof
and shall  monitor the  administrative  procedures,  investment  operations  and
performance  of the Company and the  Advisor to assure  that such  policies  are
carried out. The Directors may take any actions that, in their sole judgment and
discretion, are necessary or desirable to conduct the business of the Company. A
majority  of the  Board  of  Directors,  including  a  majority  of  Independent
Directors,  hereby  ratify  these  Articles  of  Incorporation,  which  shall be
construed with a presumption in favor of the grant of power and authority to the
Directors. Any construction of these Articles of Incorporation or determination


                                                       -13-

<PAGE>



made in good  faith by the  Directors  concerning  their  powers  and  authority
hereunder  shall be  conclusive.  The  enumeration  and definition of particular
powers of the Directors  included in this Article III shall in no way be limited
or restricted  by reference to or inference  from the terms of this or any other
provision of these Articles of Incorporation or construed or deemed by inference
or  otherwise  in any manner to exclude or limit the powers  conferred  upon the
Directors under the general laws of the State of Maryland as now or hereafter in
force.

         SECTION 3.2 Specific Powers and Authority.  Subject only to the express
limitations  herein, and in addition to all other powers and authority conferred
by these Articles of Incorporation  or by law, the Directors,  without any vote,
action or consent by the Stockholders,  shall have and may exercise, at any time
or times,  in the name of the Company or on its behalf the following  powers and
authorities:

                  (i) Investments.  Subject to Article V and Section 9.5 hereof,
to invest in, purchase or otherwise acquire and to hold real, personal or mixed,
tangible or  intangible,  property of any kind  wherever  located,  or rights or
interests therein or in connection therewith, all without regard to whether such
property,  interests or rights are authorized by law for the investment of funds
held by  trustees  or other  fiduciaries,  or whether  obligations  the  Company
acquires  have a term greater or lesser than the term of office of the Directors
or the  possible  termination  of the  Company,  for such  consideration  as the
Directors may deem proper (including cash, property of any kind or Securities of
the Company);  provided,  however, that the Directors shall take such actions as
they deem  necessary and desirable to comply with any  requirements  of the MGCL
relating to the types of assets held by the Company.

                  (ii) REIT Qualification.  The Board of Directors shall use its
best  efforts to cause the  Company  and its  Stockholders  to qualify  for U.S.
federal  income tax  treatment in  accordance  with the  provisions  of the Code
applicable  to REITs (as those  terms are  defined in Section  1.5  hereof).  In
furtherance of the foregoing,  the Board of Directors shall use its best efforts
to take such  actions as are  necessary,  and may take such  actions as it deems
desirable  (in its sole  discretion)  to preserve the status of the Company as a
REIT;  provided,  however,  that  in the  event  that  the  Board  of  Directors
determines,  by vote of at least two-thirds  (2/3) of the Directors,  that it no
longer is in the best  interests of the Company to qualify as a REIT,  the Board
of Directors  shall take such actions as are required by the Code,  the MGCL and
other  applicable law, to cause the matter of termination of  qualification as a
REIT to be submitted to a vote of the  Stockholders  of the Company  pursuant to
Section 8.2.

                  (iii) Sale,  Disposition and Use of Company Property.  Subject
to Article V and Sections 9.5 and 10.3 hereof, the Board of Directors shall have
the authority to sell, rent, lease, hire, exchange, release, partition,  assign,
mortgage,  grant security  interests in, encumber,  negotiate,  dedicate,  grant
easements in and options with respect to, convey,  transfer (including transfers
to  entities  wholly or  partially  owned by the  Company or the  Directors)  or
otherwise  dispose of any or all of the  Company  Property  by deeds  (including
deeds  in lieu of  foreclosure  with or  without  consideration),  trust  deeds,
assignments,  bills of sale, transfers, leases, mortgages, financing statements,
security agreements and other instruments for any of such purposes executed

                                                       -14-

<PAGE>



and  delivered  for and on behalf of the Company or the Directors by one or more
of the Directors or by a duly authorized officer,  employee, agent or nominee of
the Company,  on such terms as they deem appropriate;  to give consents and make
contracts  relating to the  Company  Property  and its use or other  property or
matters;  to develop,  improve,  manage,  use,  alter or otherwise deal with the
Company  Property;  and to rent, lease or hire from others property of any kind;
provided,  however,  that the Company may not use or apply land for any purposes
not permitted by applicable law.

   
                  (iv)  Financings.  To borrow  or, in any other  manner,  raise
money for the  purposes  and on the terms they  determine,  which  terms may (i)
include  evidencing  the same by issuance of  Securities of the Company and (ii)
may  have  such  provisions  as  the  Directors  determine;  to  reacquire  such
Securities  of the  Excess  Shares  Trust;  to enter  into  other  contracts  or
obligations on behalf of the Excess Shares Trust; to guarantee, indemnify or act
as surety with respect to payment or  performance  of obligations of any Person;
to mortgage,  pledge,  assign, grant security interests in or otherwise encumber
the Company Property to secure any such Securities of the Company,  contracts or
obligations  (including  guarantees,  indemnifications and suretyships);  and to
renew, modify, release,  compromise,  extend, consolidate or cancel, in whole or
in  part,   any   obligation  to  or  of  the  Company  or  participate  in  any
reorganization of obligors to the Company; provided, however, that the Company's
Leverage, may not exceed 300% of Net Assets.
    

                  (v) Lending.  Subject to the provisions of Section 9.5 hereof,
to lend money or other Company  Property on such terms, for such purposes and to
such Persons as they may determine.

                  (vi) Secured  Equipment  Leases.  To engage in the business of
offering furniture,  fixture, and equipment financing to the operators of Health
Care Facilities,  provided, however, that the Company shall use its best efforts
to ensure that the total value of Secured  Equipment  Leases,  in the  aggregate
will not exceed 25% of the  Company's  total assets and that  Secured  Equipment
Leases to a single lessee or borrower,  in the aggregate,  will not exceed 5% of
the Company's total assets.

                  (vii)  Issuance of  Securities.  Subject to the  provisions of
Article VII hereof, to create and authorize and direct the issuance (on either a
pro rata or a non-pro rata basis) by the Company, in shares, units or amounts of
one or more types,  series or classes,  of Securities of the Company,  which may
have  such   voting   rights,   dividend   or   interest   rates,   preferences,
subordinations,  conversion  or  redemption  prices or rights;  maturity  dates,
distribution,  exchange,  or liquidation rights or other rights as the Directors
may  determine,  without  vote of or other action by the  Stockholders,  to such
Persons for such consideration,  at such time or times and in such manner and on
such terms as the  Directors  determine,  to list any of the  Securities  of the
Company on any securities exchange;  and to purchase or otherwise acquire, hold,
cancel, reissue, sell and transfer any Securities of the Company.



                                                       -15-

<PAGE>



                  (viii)  Expenses and Taxes.  To pay any  charges,  expenses or
liabilities necessary or desirable, in the sole discretion of the Directors, for
carrying  out the purposes of these  Articles of  Incorporation  and  conducting
business of the Company, including compensation or fees to Directors,  officers,
employees  and  agents  of the  Company,  and to  Persons  contracting  with the
Company, and any taxes, levies, charges and assessments of any kind imposed upon
or  chargeable  against the Company,  the Company  Property or the  Directors in
connection therewith;  and to prepare and file any tax returns, reports or other
documents and take any other  appropriate  action relating to the payment of any
such charges, expenses or liabilities.

                  (ix)  Collection  and  Enforcement.  To  collect,  sue for and
receive money or other property due to the Company;  to consent to extensions of
the time for payment,  or to the renewal,  of any Securities or obligations;  to
engage or to intervene in, prosecute,  defend,  compound,  enforce,  compromise,
release, abandon or adjust any actions, suits,  proceedings,  disputes,  claims,
demands,  security  interests  or things  relating to the  Company,  the Company
Property or the  Company's  affairs;  to exercise  any rights and enter into any
agreements and take any other action  necessary or desirable in connection  with
the foregoing.

                  (x) Deposits. To deposit funds or Securities constituting part
of  the  Company  Property  in  banks,   trust   companies,   savings  and  loan
associations, financial institutions and other depositories, whether or not such
deposits  will draw  interest,  subject to  withdrawal on such terms and in such
manner as the Directors determine.

                  (xi)  Allocation;   Accounts.  To  determine  whether  moneys,
profits or other  assets of the  Company  shall be charged  or  credited  to, or
allocated between, income and capital,  including whether or not to amortize any
premium  or  discount   and  to   determine  in  what  manner  any  expenses  or
disbursements  are to be borne as between income and capital  (regardless of how
such items would normally or otherwise be charged to or allocated between income
and  capital  without  such  determination);  to  treat  any  dividend  or other
distribution on any investment as, or apportion it between,  income and capital;
in  their  discretion  to  provide  reserves  for  depreciation,   amortization,
obsolescence  or other  purposes  in respect  of any  Company  Property  in such
amounts and by such methods as they determine; to determine what constitutes net
earnings,  profits  or  surplus;  to  determine  the method or form in which the
accounts and records of the Company shall be maintained;  and to allocate to the
Stockholders'  equity  account  less  than  all of the  consideration  paid  for
Securities and to allocate the balance to paid-in capital or capital surplus.

                  (xii) Valuation of Property.  To determine the value of all or
any part of the Company  Property and of any services,  Securities,  property or
other  consideration  to be  furnished  to or  acquired by the  Company,  and to
revalue all or any part of the Company  Property,  all in  accordance  with such
appraisals or other information as are reasonable, in their sole judgment.

                  (xiii)  Ownership  and Voting  Powers.  To exercise all of the
rights,  powers,  options and  privileges  pertaining  to the  ownership  of any
Mortgages,  Securities,  Real Estate, Secured Equipment Leases and other Company
Property to the same extent that an individual

                                                       -16-

<PAGE>



owner might,  including without limitation to vote or give any consent,  request
or  notice  or  waive  any  notice,  either  in  person  or by proxy or power of
attorney, which proxies and powers of attorney may be for any general or special
meetings or action, and may include the exercise of discretionary powers.

                  (xiv) Officers,  Etc.; Delegation of Powers. To elect, appoint
or employ such  officers  for the Company  and such  committees  of the Board of
Directors  with such  powers  and duties as the  Directors  may  determine,  the
Company's  Bylaws  provide or the MGCL requires;  to engage,  employ or contract
with and pay  compensation  to any Person  (including  subject  to  Section  9.5
hereof,  any Director and Person who is an Affiliate of any  Director) as agent,
representative,  Advisor,  member of an advisory board,  employee or independent
contractor  (including  advisors,  consultants,   transfer  agents,  registrars,
underwriters,  accountants,  attorneys-at-law,  real estate agents, property and
other  managers,  appraisers,  brokers,  architects,   engineers,   construction
managers,  general  contractors  or  otherwise)  in one or more  capacities,  to
perform such services on such terms as the Directors may determine;  to delegate
to one or more  Directors,  officers  or other  Persons  engaged or  employed as
aforesaid or to committees of Directors or to the Advisor,  the  performance  of
acts or other things (including  granting of consents),  the making of decisions
and the execution of such deeds, contracts, leases or other instruments,  either
in the names of the Company,  the Directors or as their  attorneys or otherwise,
as the Directors may determine;  and to establish  such  committees as they deem
appropriate.

                  (xv) Associations. Subject to Section 9.5 hereof, to cause the
Company  to  enter  into  joint  ventures,   general  or  limited  partnerships,
participation  or  agency   arrangements  or  any  other  lawful   combinations,
relationships or associations of any kind.

                  (xvi) Reorganizations,  Etc. Subject to Sections 10.2 and 10.3
hereof,  to cause to be organized or assist in  organizing  any Person under the
laws of any  jurisdiction  to acquire all or any part of the  Company  Property,
carry on any  business in which the Company  shall have an interest or otherwise
exercise the powers the Directors deem  necessary,  useful or desirable to carry
on the business of the Company or to carry out the  provisions of these Articles
of Incorporation,  to merge or consolidate the Company with any Person; to sell,
rent, lease, hire, convey,  negotiate,  assign,  exchange or transfer all or any
part of the Company Property to or with any Person in exchange for Securities of
such Person or otherwise;  and to lend money to,  subscribe for and purchase the
Securities  of,  and enter  into any  contracts  with,  any  Person in which the
Company holds, or is about to acquire, Securities or any other interests.

                  (xvii)  Insurance.  To  purchase  and pay  for out of  Company
Property insurance  policies insuring the Stockholders,  Company and the Company
Property  against any and all risks,  and insuring the  Directors,  Advisors and
Affiliates of the Company  individually  (each an "Insured")  against all claims
and  liabilities of every nature arising by reason of holding or having held any
such status,  office or position or by reason of any action alleged to have been
taken or omitted by the  Insured in such  capacity,  whether or not the  Company
would have the power to indemnify against such claim or liability, provided that
such insurance be limited to the indemnification permitted by Section 9.2 hereof
in regard to any liability or loss resulting from

                                                       -17-

<PAGE>



negligence,  gross  negligence,  misconduct,  willful  misconduct  or an alleged
violation of federal or state  securities laws.  Nothing  contained herein shall
preclude the Company  from  purchasing  and paying for such types of  insurance,
including extended coverage liability and casualty and workers' compensation, as
would be  customary  for any Person  owning  comparable  assets and engaged in a
similar  business,  or from naming the Insured as an  additional  insured  party
thereunder,  provided that such addition does not add to the premiums payable by
the  Company.  The  Board  of  Directors'  power  to  purchase  and pay for such
insurance  policies shall be limited to policies that comply with all applicable
state laws and the NASAA REIT Guidelines.

                  (xviii)  Distributions.  To declare and pay dividends or other
Distributions to Stockholders, subject to the provisions of Section 7.2 hereof.

                  (xix) Discontinue Operations;  Bankruptcy.  To discontinue the
operations of the Company (subject to Section 10.2 hereof); to petition or apply
for relief under any  provision of federal or state  bankruptcy,  insolvency  or
reorganization  laws or similar  laws for the relief of  debtors;  to permit any
Company  Property to be foreclosed  upon without  raising any legal or equitable
defenses  that may be  available  to the Company or the  Directors  or otherwise
defending or responding to such  foreclosure;  to confess  judgment  against the
Excess Shares Trust (as hereinafter  defined); or to take such other action with
respect to  indebtedness  or other  obligations  of the  Directors,  the Company
Property  or the  Company  as the  Directors,  in such  capacity,  and in  their
discretion may determine.

                  (xx)  Termination  of Status.  To terminate  the status of the
Company as a real estate investment trust under the REIT Provisions of the Code;
provided, however, that the Board of Directors shall take no action to terminate
the Company's status as a real estate investment trust under the REIT Provisions
of the Code until such time as (i) the Board of  Directors  adopts a  resolution
recommending  that the Company  terminate its status as a real estate investment
trust  under  the REIT  Provisions  of the  Code,  (ii) the  Board of  Directors
presents the resolution at an annual or special meeting of the  Stockholders and
(iii) such resolution is approved by the holders of a majority of the issued and
outstanding Common Shares (as defined in Section 7.2(ii) hereof).

                  (xxi) Fiscal  Year.  Subject to the Code,  to adopt,  and from
time to time change, a fiscal year for the Company.

                  (xxii)  Seal.  To adopt and use a seal,  but the use of a seal
shall not be required for the execution of  instruments  or  obligations  of the
Company.

                  (xxiii)  Bylaws.  To  adopt,  implement  and from time to time
alter,  amend or repeal the Bylaws of the Company  relating to the  business and
organization of the Company,  provided that such amendments are not inconsistent
with the provisions of these  Articles of  Incorporation,  and further  provided
that the Directors may not amend the Bylaws,  without the affirmative  vote of a
majority  of the Equity  Shares,  to the extent that such  amendments  adversely
affect the rights, preferences and privileges of Stockholders.


                                                       -18-

<PAGE>



                  (xxiv) Listing  Shares.  To cause the Listing of the Shares at
any time after  completion of the Initial Public  Offering but in no event shall
such Listing occur more than ten (10) years after completion of the offering.

                  (xxv)  Further  Powers.  To do all other  acts and  things and
execute and deliver all  instruments  incident to the foregoing  powers,  and to
exercise all powers which they deem  necessary,  useful or desirable to carry on
the business of the Company or to carry out the  provisions of these Articles of
Incorporation, even if such powers are not specifically provided hereby.

         SECTION 3.3  Determination of Best Interest of Company.  In determining
what is in the best  interest of the  Company,  a Director  shall  consider  the
interests  of the  Stockholders  of the  Company  and,  in his or her  sole  and
absolute discretion,  may consider (i) the interests of the Company's employees,
suppliers,  creditors  and  customers,  (ii) the  economy of the  nation,  (iii)
community and societal  interests,  and (iv) the long-term as well as short-term
interests of the Company and its  Stockholders,  including the possibility  that
these interests may be best served by the continued independence of the Company.

                                    ARTICLE 4

                                     ADVISOR

         SECTION  4.1  Appointment  and  Initial  Investment  of  Advisor.   The
Directors are  responsible  for setting the general  policies of the Company and
for the general  supervision  of its business  conducted  by  officers,  agents,
employees,  advisors or  independent  contractors of the Company.  However,  the
Directors  are not required  personally  to conduct the business of the Company,
and they 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  Directors  may, in their sole
discretion,  deem  necessary or desirable.  The term of retention of any Advisor
shall not exceed one (1) year, although there is no limit to the number of times
that a particular  Advisor may be retained.  The Advisor is the holder of 20,000
Shares,  representing  an initial  investment  of  $200,000.  The Advisor or any
Affiliate  may not sell this  initial  investment  while the  Advisor  remains a
Sponsor but may transfer the 20,000 Shares to other Affiliates.

         SECTION 4.2  Supervision of Advisor.  The Directors  shall evaluate the
performance of the Advisor before entering into or renewing an advisory contract
and the criteria  used in such  evaluation  shall be reflected in the minutes of
meetings of the Board.  The Directors may exercise broad  discretion in allowing
the Advisor to administer and regulate the operations of the Company,  to act as
agent for the Company, to execute documents on behalf of the Company and to make
executive decisions which conform to general policies and principles established
by the Directors.



                                                       -19-

<PAGE>



         The Directors  shall  establish  written  policies on  investments  and
borrowing and shall monitor the administrative procedures, investment operations
and  performance of the Company and the Advisor to assure that such  procedures,
operations  and programs are in the best interests of the  Stockholders  and are
fulfilled.

         The Board of Directors is also  responsible  for reviewing the fees and
expenses  of the  Company at least  annually  or with  sufficient  frequency  to
determine  that  the  expenses  incurred  are  in  the  best  interests  of  the
Stockholders  and each such  determination  shall be reflected in the minutes of
the  meeting  of  the  Board  of  Directors.  In  addition,  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. A majority of the Independent Directors also will be responsible for
reviewing 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 to be performed and the investment  performance of the Company and that
the  provisions  of the Advisory  Agreement  are being carried out and each such
determination  shall be  reflected in the minutes of the meeting of the Board of
Directors. Specifically, the Independent Directors will consider factors such as
the Net Assets and Net Income of the Company,  the amount of the fee paid to the
Advisor in relation to the size,  composition  and  performance of the Company's
portfolio,  the success of the Advisor in generating opportunities that meet the
investment  objectives  of the  Company,  rates  charged  to other  REITs and to
investors other than REITs by advisors  performing the same or similar services,
additional  revenues  realized by the Advisor and its  Affiliates  through their
relationship  with the  Company,  whether  paid by the Company or by others with
whom the  Company  does  business,  the quality and extent of service and advice
furnished by the Advisor,  the  performance of the  investment  portfolio of the
Company, including income, conservation or appreciation of capital, frequency of
problem investments and competence in dealing with distress situations,  and the
quality of the portfolio of the Company relative to the investments generated by
the Advisor for its own account. The Independent  Directors also shall determine
whether any successor Advisor possesses sufficient qualifications to perform the
advisory  function for the Company and whether the compensation  provided for in
its contract with the Company is justified.

         SECTION  4.3  Fiduciary  Obligations.   The  Advisor  has  a  fiduciary
responsibility to the Company and to the Stockholders.

         SECTION 4.4 Affiliation and Functions.  The Directors, by resolution or
in the Bylaws, may provide guidelines,  provisions,  or requirements  concerning
the affiliation and functions of the Advisor.

         SECTION 4.5 Termination. Either a majority of the Independent Directors
or the Advisor may terminate  the advisory  contract on sixty (60) days' written
notice without cause or penalty,  and, in such event, the Advisor will cooperate
with the  Company  and the  Directors  in making an  orderly  transition  of the
advisory function.



                                                       -20-

<PAGE>



         SECTION 4.6 Real Estate  Commission  on Sale of  Property.  The Company
shall pay the Advisor a deferred,  subordinated real estate disposition fee upon
Sale of one or more Properties, in an amount equal to the lesser of (i) one-half
(1/2) of a Competitive Real Estate Commission, or (ii) three percent (3%) of the
sales price of such  Property or  Properties.  Payment of such fee shall be made
only if the Advisor provides a substantial amount of services in connection with
the Sale of a Property or Properties and shall be subordinated to receipt by the
Stockholders  of  Distributions   equal  to  the  sum  of  (i)  their  aggregate
Stockholders' 8% Return and (ii) their aggregate  Invested  Capital.  If, at the
time  of a Sale,  payment  of  such  disposition  fee is  deferred  because  the
subordination conditions have not been satisfied, then the disposition fee shall
be paid at such later time as the subordination  conditions are satisfied.  Upon
Listing,  if the  Advisor  has  accrued  but not  been  paid  such  real  estate
disposition  fee,  then for purposes of  determining  whether the  subordination
conditions have been satisfied,  Stockholders  will be deemed to have received a
Distribution  in the amount  equal to the product of the total  number of Shares
outstanding and the average closing price of the Shares over a period, beginning
180 days after Listing, of 30 days during which the Shares are traded.

         SECTION 4.7 Subordinated Share of Net Sales Proceeds. The Company shall
pay the  Advisor a  deferred,  subordinated  share  from  Sales of assets of the
Company, whether or not in liquidation of the Company, equal to 10% of Net Sales
Proceeds payable after receipt by the Stockholders of Distributions equal to the
sum of (i) the  Stockholders'  8%  Return  and (ii)  100% of  Invested  Capital.
Following Listing, no share of Net Sales Proceeds will be paid to the Advisor.

         SECTION 4.8       Incentive Fees.

                  (i) At such time, if any, as Listing occurs, the Advisor shall
be paid the  Subordinated  Incentive Fee in an amount equal to ten percent (10%)
of the amount by which (i) the market  value of the Company  (as defined  below)
plus the total  Distributions paid to Stockholders from the Company's  inception
until the date of Listing exceeds (ii) the sum of (A) one hundred percent (100%)
of Invested Capital and (B) the total  Distributions  required to be paid to the
Stockholders in order to pay the  Stockholders' 8% Return from inception through
the date the  market  value is  determined.  For  purposes  of  calculating  the
Subordinated Incentive Fee, the market value of the Company shall be the average
closing  price or average  of bid and asked  price,  as the case may be,  over a
period of thirty (30) days  during  which the Shares are traded with such period
beginning one hundred eighty (180) days after  Listing.  In the case of multiple
Advisors,  Advisors and any Affiliate  shall be allowed  incentive fees provided
such fees are  distributed  by a  proportional  method  reasonably  designed  to
reflect  the value  added to Company  assets by each  respective  Advisor or any
Affiliate.  The Subordinated  Incentive Fee will be reduced by the amount of any
prior  payment to the  Advisor of a  deferred,  subordinated  share of Net Sales
Proceeds from Sales of assets of the Company.

                  (ii) In no event shall the Company pay a single  Advisor  both
the Subordinated Incentive Fee and the Performance Fee.


                                                       -21-

<PAGE>



                  (iii) In the event that the Company  becomes a perpetual  life
entity,  which will occur if the Shares become  listed on a national  securities
exchange or over-the-counter  market, the Company and the Advisor will negotiate
in good faith a fee structure  appropriate  for an entity with a perpetual life,
subject to approval by a majority of the Independent Directors. In negotiating a
new fee structure,  the Independent  Directors shall consider all of the factors
they deem relevant.  These are expected to include,  but will not necessarily be
limited to: (i) the amount of the  advisory  fee in relation to the asset value,
composition,  and profitability of the Company's portfolio;  (ii) the success of
the Advisor in generating  opportunities that meet the investment  objectives of
the Company;  (iii) the rates charged to other REITs and to investors other than
REITs by Advisors  that perform the same or similar  services;  (iv)  additional
revenues realized by the Advisor and its Affiliates  through their  relationship
with  the  Company,  including  loan  administration,   underwriting  or  broker
commissions,  servicing, engineering, inspection and other fees, whether paid by
the Company or by others with whom the Company  does  business;  (v) the quality
and extent of service and advice furnished by the Advisor;  (vi) the performance
of the investment  portfolio of the Company,  including income,  conservation or
appreciation of capital,  and number and frequency of problem  investments;  and
(vii) the quality of the Property  portfolio of the Company in  relationship  to
the  investments  generated  by the  Advisor for its own  account.  The Board of
Directors,  including a majority of the Independent Directors, may not approve a
new fee structure  that, in its judgment,  is more favorable to the Advisor than
the current fee structure.

         SECTION  4.9  Performance   Fee.  Upon   termination  of  the  Advisory
Agreement,  the  Advisor  shall be  entitled  to  receive a  Performance  Fee if
performance  standards  satisfactory  to a majority  of the Board of  Directors,
including  a majority of the  Independent  Directors,  when  compared to (a) the
performance  of the  Advisor  in  comparison  with  its  performance  for  other
entities;  and (b) the performance of other advisors for similar entities,  have
been met. If Listing has not occurred,  the Performance Fee, if any, shall equal
ten percent (10%) of the amount, if any, by which (i) the appraised value of the
assets  of  the  Company  on  the  Termination  Date,  less  the  amount  of all
indebtedness  secured  by such  assets,  plus the  total  Distributions  paid to
Stockholders from the Company's  inception through the Termination Date, exceeds
(ii) Invested  Capital plus an amount equal to the  Stockholders' 8% Return from
inception through the Termination Date. The Advisor shall be entitled to receive
all accrued but unpaid  compensation and expense  reimbursements  in cash within
thirty  (30) days of the  Termination  Date.  All other  amounts  payable to the
Advisor in the event of a  termination  shall be evidenced by a promissory  note
and shall be payable  from time to time.  The  Performance  Fee shall be paid in
twelve (12) equal quarterly installments without interest on the unpaid balance,
provided,  however,  that no payment  will be made in any  quarter in which such
payment  would  jeopardize  the  Company's  REIT status,  in which case any such
payment or  payments  will be delayed  until the next  quarter in which  payment
would not jeopardize REIT status.  Notwithstanding the preceding  sentence,  any
amounts  which  may be  deemed  payable  at the date the  obligation  to pay the
Performance  Fee is incurred which relate to the  appreciation  of the Company's
assets shall be an amount which provides  compensation to the terminated Advisor
only for that portion of the holding  period for the  respective  assets  during
which such terminated  Advisor provided  services to the Company.  Upon Listing,
the Performance  Fee, if any, payable  thereafter will be as negotiated  between
the

                                                       -22-

<PAGE>



Company and the  Advisor.  The  Advisor  shall not be entitled to payment of the
Performance  Fee in the event the Advisory  Agreement is  terminated  because of
failure of the Company and the Advisor to establish a fee structure  appropriate
for a perpetual-life entity at such time, if any, as the Shares become listed on
a national securities exchange or over-the-counter  market. The Performance Fee,
to the extent payable at the time of Listing, will not be paid in the event that
the Subordinated Incentive Fee is paid.

         SECTION 4.10  Acquisition  Fee and  Acquisition  Expenses.  The Company
shall  pay  the  Advisor  a fee in the  amount  of  4.5% of  Total  Proceeds  as
Acquisition  Fees.  Acquisition Fees shall be reduced to the extent that, and if
necessary to limit, the total  compensation  paid to all persons involved in the
acquisition  of any Property to the amount  customarily  charged in  arms-length
transactions  by other  persons or  entities  rendering  similar  services as an
ongoing  public  activity in the same  geographical  location and for comparable
types of Properties,  and to the extent that other  acquisition  fees,  finder's
fees, real estate commissions,  or other similar fees or commissions are paid by
any person in connection with the  transaction.  The Company shall reimburse the
Advisor  for  Acquisition  Expenses  incurred  in  connection  with the  initial
selection and acquisition of Properties,  provided that  reimbursement  shall be
limited  to the  actual  cost of goods  and  services  used by the  Company  and
obtained from  entities not  affiliated  with the Advisor,  or the lesser of the
actual  cost or 90% of the  competitive  rate  charged by  unaffiliated  persons
providing  similar goods and services in the same geographic  location for goods
or  services  provided  by the  Advisor  or its  Affiliates.  The  total  of all
Acquisition Fees and any Acquisition  Expenses shall be reasonable and shall not
exceed an amount equal to six percent (6%) of the Real Estate Asset Value or the
Contract  Purchase  Price of a Property,  or in the case of a Mortgage Loan, six
percent (6%) of the funds advanced, unless a majority of the Board of Directors,
including a majority of the  Independent  Directors not otherwise  interested in
the  transaction,  approves  fees  in  excess  of  these  limits  subject  to  a
determination  that  the  transaction  is  commercially  competitive,  fair  and
reasonable to the Company.

         SECTION 4.11 Asset  Management Fee. The Company shall pay the Advisor a
monthly Asset  Management  Fee in an amount equal to  one-twelfth of .60% of the
Company's Real Estate Asset Value and the  outstanding  principal  amount of any
Mortgage Loans, as of the end of the preceding month. Specifically,  Real Estate
Asset Value  equals the amount  invested in the  Properties  wholly owned by the
Company,  determined on the basis of cost, plus, in the case of Properties owned
by any Joint Venture or  partnership  in which the Company is a  co-venturer  or
partner,  the  portion  of the  cost of  such  Properties  paid by the  Company,
exclusive of Acquisition  Fees and Acquisition  Expenses.  The Asset  Management
Fee, which will not exceed fees which are  competitive  for similar  services in
the same geographic area, may or may not be taken, in whole or in part as to any
year,  in the sole  discretion  of the Advisor.  All or any portion of the Asset
Management  Fee not  taken  as to any  fiscal  year  shall be  deferred  without
interest  and may be  taken  in such  other  fiscal  year as the  Advisor  shall
determine.



                                                       -23-

<PAGE>



         SECTION 4.12 Secured  Equipment  Lease Servicing Fee. The Company shall
pay the  Advisor a fee out of the  proceeds  of the Line of Credit or  Permanent
Financing for negotiating  Secured  Equipment Leases and supervising the Secured
Equipment  Lease  program  equal to 2% of the  purchase  price of the  Equipment
subject to each Secured  Equipment  Lease and paid upon entering into such lease
or loan.

         SECTION 4.13  Reimbursement for Operating  Expenses.  The Company shall
not  reimburse  the  Advisor  at the end of any  fiscal  quarter  for  Operating
Expenses that, in the four consecutive  fiscal quarters then ended (the "Expense
Year") exceed the greater of 2% of Average  Invested Assets or 25% of Net Income
(the  "2%/25%  Guidelines")  for such year.  Within 60 days after the end of any
fiscal quarter of the Company for which total Operating Expenses for the Expense
Year exceed the 2%/25%  Guidelines,  the Advisor shall reimburse the Company the
amount by which the total  Operating  Expenses  paid or  incurred by the Company
exceed the 2%/25% Guidelines.

                                    ARTICLE 5

                      INVESTMENT OBJECTIVES AND LIMITATIONS

         SECTION 5.1 Investment  Objectives.  The Company's  primary  investment
objectives are to preserve, protect, and enhance the Company's assets; while (i)
making Distributions commencing in the initial year of Company operations;  (ii)
obtaining  fixed income  through the receipt of base rent,  and  increasing  the
Company's income (and Distributions) and providing  protection against inflation
through  automatic  fixed  increases  in base rent or increases in the base rent
based on  increases  in consumer  price  indices  over the term of the lease and
obtaining  fixed  income  through the receipt of payments on Mortgage  Loans and
Secured Equipment Leases; (iii) qualifying and remaining qualified as a REIT for
federal income tax purposes; and (iv) providing Stockholders of the Company with
liquidity  of  their  investment  within  five  (5)  to  ten  (10)  years  after
commencement of the offering,  either in whole or in part,  through (a) Listing,
or, (b) if Listing  does not occur within ten (10) years after  commencement  of
the offering, the commencement of orderly Sales of the Company's assets (outside
the ordinary  course of business and consistent with its objective of qualifying
as a REIT) and distribution of the proceeds thereof.  The sheltering from tax of
income from other sources is not an objective of the Company. Subject to Section
3.2(v) hereof and to the restrictions  set forth herein,  the Directors will use
their best  efforts to conduct the affairs of the Company in such a manner as to
continue  to qualify  the  Company  for the tax  treatment  provided in the REIT
Provisions of the Code;  provided,  however, no Director,  officer,  employee or
agent of the Company  shall be liable for any act or omission  resulting  in the
loss of tax benefits  under the Code,  except to the extent  provided in Section
9.2 hereof.



                                                       -24-

<PAGE>



         SECTION  5.2 Review of  Objectives.  The  Independent  Directors  shall
review the investment  policies of the Company with sufficient  frequency and at
least  annually to determine  that the policies being followed by the Company at
any time 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 of Directors.

         SECTION 5.3       Certain Permitted Investments.

                  (i) The Company may invest in  Properties  including,  but not
limited to,  Properties  to be leased to operators of Health Care  Facilities in
various locations across the United States.

                  (ii)  The  Company  may  invest  in  Joint  Ventures  with the
Advisor,  one or more  Directors  or any  Affiliate,  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 Company
and on  substantially  the same terms and  conditions  as those  received by the
other joint venturers.

                  (iii)  The  Company  may  invest  in  equity  securities,  and
Mortgage Loans, 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.

                  (iv)  The  Company  may  offer  Secured  Equipment  Leases  to
operators  of Health  Care  Facilities  provided  that a majority  of  Directors
(including a majority of Independent  Directors)  approve the Secured  Equipment
Leases as being fair, competitive and commercially reasonable.

         SECTION 5.4  Investment  Limitations.  In addition to other  investment
restrictions  imposed by the Directors  from time to time,  consistent  with the
Company's  objective of qualifying as a REIT,  the following  shall apply to the
Company's investments:

                  (i) Not more than 10% of the  Company's  total assets shall be
invested  in  unimproved  real  property or mortgage  loans on  unimproved  real
property.  For purposes of this paragraph,  "unimproved  real property" does not
include any  Property or Real Estate  under  construction,  under  contract  for
development or planned for development within one year.

                  (ii) The Company shall not invest in  commodities or commodity
future  contracts.  This  limitation  is not intended to apply to interest  rate
futures, when used solely for hedging purposes.

                  (iii) The Company shall not invest in or make  mortgage  loans
unless an appraisal is obtained  concerning  the underlying  property.  Mortgage
indebtedness on any property shall not exceed such property's  appraised  value.
In cases in which a majority of Independent  Directors so determine,  and in all
cases in which the mortgage loan involves the Advisor,

                                                       -25-

<PAGE>



Directors,  or Affiliates,  such  appraisal of the  underlying  property must be
obtained from an Independent  Expert.  Such appraisal shall be maintained in the
Company's  records  for at least  five (5)  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.

                  (iv) The Company  shall not make or invest in mortgage  loans,
including construction loans, on any one (1) property if the aggregate amount of
all mortgage  loans  outstanding  on the  property,  including  the loans of the
Company  would  exceed  an  amount  equal to  eighty-five  percent  (85%) of the
appraised  value of the property as determined by 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 Company" 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  (5%) per annum of the  principal
balance of the loan.

                  (v) The  Company  shall not  invest in  indebtedness  ("Junior
Debt")  secured by a mortgage on real property  which is subordinate to the lien
or other indebtedness  ("Senior Debt"),  except where such amount of such Junior
Debt,  plus the  outstanding  amount of Senior Debt,  does not exceed 90% of the
appraised value of such property,  if after giving effect thereto,  the value of
all such mortgage  loans of the Company (as shown on the books of the Company in
accordance with generally accepted accounting  principles,  after all reasonable
reserves but before provision for depreciation) would not then exceed 25% of the
Company's Net Assets. The value of all investments in Junior Debt of the Company
which does not meet the  aforementioned  requirements shall be limited to 10% of
the  Company's   tangible  assets  (which  would  be  included  within  the  25%
limitation).

                  (vi) The  Company  shall  not  engage in any  short  sale,  or
borrow,  on an  unsecured  basis,  if such  borrowing  will  result  in an Asset
Coverage of less than 300%,  except  that such  borrowing  limitation  shall not
apply to a first  mortgage  trust.  "Asset  Coverage,"  for the  purpose of this
Section  5.4(vi)  means  the ratio  which  the  value of the total  assets of an
issuer,  less all liabilities and indebtedness except indebtedness for unsecured
borrowings,  bears to the aggregate  amount of all unsecured  borrowings of such
issuer.

                  (vii) The  Company  shall  not make or invest in any  mortgage
loans  that are  subordinate  to any  mortgage,  other  indebtedness  or  equity
interest of the Advisor, the Directors or an Affiliate of the Company.

                  (viii)  The  Company  shall not  invest  in equity  securities
unless  a  majority  of the  Directors  (including  a  majority  of  Independent
Directors) not otherwise  interested in such transaction approve the transaction
as being fair,  competitive and  commercially  reasonable and determine that the
transaction  will not  jeopardize  the  Company's  ability to qualify and remain
qualified as a REIT.  Investments  in entities  affiliated  with the Advisor,  a
Director, the Company

                                                       -26-

<PAGE>



or their Affiliates are subject to restrictions on Joint Venture investments. In
addition,  the Company  shall not invest in any  security of any entity  holding
investments   or  engaging  in  activities   prohibited  by  these  Articles  of
Incorporation.

                  (ix)  The  Company  shall  not  issue  (A)  equity  securities
redeemable  solely at the option of the holder  (except  that  Stockholders  may
offer their Common  Shares to the Company  pursuant to that  certain  redemption
plan adopted or to be adopted by the Board of Directors on terms outlined in the
section  relating  to Common  Shares  entitled  "Redemption  of  Shares"  in the
Company's  Prospectus  relating  to  the  Initial  Public  Offering);  (B)  debt
securities  unless the  historical  debt service  coverage (in the most recently
completed  fiscal year) as adjusted for known  charges is sufficient to properly
service that higher level of debt; (C) Equity Shares on a deferred payment basis
or under similar  arrangements;  (D)  non-voting or assessable  securities;  (E)
options,  warrants,  or  similar  evidences  of a right  to buy  its  securities
(collectively,  "Options") unless (1) issued to all of its Stockholders ratably,
(2) as part of a financing  arrangement,  or (3) as part of a Stock  Option Plan
available  to  Directors,  officers or  employees of the Company or the Advisor.
Options  may not be issued to the  Advisor,  Director or any  Affiliate  thereof
except on the same terms as such Options are sold to the general public. Options
may be issued to persons  other than the  Advisor,  Directors  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 that in the
judgment of the Independent  Directors has a market value less than the value of
such Option on the date of grant. Options issuable to the Advisor,  Directors or
any Affiliate thereof shall not exceed 10% of the outstanding Shares on the date
of grant.  The voting  rights per share of Equity  Shares of the Company  (other
than the publicly held Equity Shares of the Company) sold in a private  offering
shall not exceed  the voting  rights  which  bear the same  relationship  to the
voting rights of the publicly held Equity  Shares as the  consideration  paid to
the Company for each privately  offered Equity Share of the Company bears to the
book value of each outstanding publicly held Equity Share.

                  (x) The Company  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.

                  (xi)  A  majority  of  the  Directors   shall   authorize  the
consideration  to be paid for each  Property,  based on the fair market value of
the Property.  If a majority of the Independent  Directors determine,  or if the
Property is acquired from the Advisor,  a Director,  or their  Affiliates,  such
fair market value shall be determined by an Independent  Expert  selected by the
Independent Directors.

                  (xii) The  Company  shall not  engage in  underwriting  or the
agency distribution of securities issued by others or in trading, as compared to
investment activities.

                  (xiii) The Company shall not invest in any foreign currency or
bullion or engage in short sales.



                                                       -27-

<PAGE>



                  (xiv) The Company  shall not issue  senior  securities  except
notes to banks and other lenders and Preferred Shares.

   
                  (xv) The aggregate Leverage of the Company shall be reasonable
in  relation  to the Net  Assets of the  Company  and shall be  reviewed  by the
Directors at least quarterly. The maximum amount of such Leverage in relation to
the Net Assets shall not exceed three hundred percent (300%).

                  (xvi) The Company may borrow money from the Advisor,  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,  competitive and  commercially  reasonable and no
less favorable to the Company than loans between  unaffiliated parties under the
same  circumstances.   Notwithstanding  the  foregoing,   the  Advisor  and  its
Affiliates  shall be entitled to  reimbursement,  at cost,  for actual  expenses
incurred  by the  Advisor or its  Affiliates  on behalf of the  Company or Joint
Ventures in which the Company is a  co-venturer,  subject to  subsection  xviii)
below.

                  (xvii)  The Company shall not make loans to the Advisor or its
Affiliates.

                  (xviii) The Company  shall not operate so as to be  classified
as an "investment company" under the Investment Company Act of 1940, as amended.

                  (xix)  The  Company  will  not make  any  investment  that the
Company  believes will be  inconsistent  with its  objectives of qualifying  and
remaining qualified as a REIT.
    

         The foregoing investment  limitations may not be modified or eliminated
without the approval of Stockholders owning a majority of the outstanding Equity
Shares.

                                    ARTICLE 6

                              CONFLICTS OF INTEREST

         SECTION  6.1 Sales and Leases to Company.  The Company may  purchase or
lease a Property or Properties from the Advisor, Director, or any Affiliate 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 Company and at a price to the Company no greater than
the cost of the asset to such Advisor,  Director or Affiliate,  or, if the price
to the Company is in excess of such cost,  that  substantial  justification  for
such excess exists and such excess is reasonable.  In no event shall the cost of
such asset to the Company exceed its current appraised value.



                                                       -28-

<PAGE>



         SECTION 6.2 Sales and Leases to the Advisor,  Directors or  Affiliates.
An Advisor,  Director or Affiliate  may acquire or lease assets from the Company
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 Company.

         SECTION 6.3       Multiple Programs.

                  (i) Until  completion of the Initial Public Offering of Shares
by the Company,  the Advisor and its Affiliates will not offer or sell interests
in any  subsequently  formed public program that has  investment  objectives and
structure  similar to those of the Company and that intends to (a) invest,  on a
cash  and/or  leveraged  basis,  in  a  diversified  portfolio  of  health  care
properties  to be leased on a  "triple-net"  basis to  operators  of Health Care
Facilities;  (b) offer Mortgage Loans; and (c) offer Secured  Equipment  Leases.
The Advisor  and its  Affiliates  also will not  purchase a property or offer or
invest in a mortgage loan or secured  equipment lease for any such  subsequently
formed public  program that has investment  objectives and structure  similar to
the  Company  and that  intends  to  invest  on a cash  and/or  leveraged  basis
primarily in a diversified portfolio of health care properties to be leased on a
"triple-net"  basis to operators of Health Care Facilities  until  substantially
all (generally, eighty percent (80%)) of the funds available for investment (net
offering proceeds) by the Company have been invested or committed to investment.
(For  purposes of the  preceding  sentence  only,  funds are deemed to have been
committed to investment to the extent written agreements in principle or letters
of understanding are executed and in effect at any time, whether or not any such
investment is  consummated,  and also to the extent any funds have been reserved
to make contingent payments in connection with any Property,  whether or not any
such payments are made). The Advisor or its Affiliates  currently are and in the
future may offer interests in one or more public or private  programs  organized
to  purchase  properties  of the type to be acquired  by the  Company,  to offer
mortgage loans and/or to offer secured equipment leases.

                  (ii) In the  event  that  an  investment  opportunity  becomes
available  which is suitable for both the Company 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  which has had the longer
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 a program if the requirements of subparagraph (i) above
could  not be  satisfied  if  the  program  were  to  make  the  investment.  In
determining  whether or not an investment  opportunity is suitable for more than
one program,  the Advisor will examine such factors,  among others,  as the cash
requirements  of  each  program,   the  effect  of  the   acquisition   both  on
diversification of each program's investments by types of health care facilities
and  geographic  area, and on  diversification  of the tenants of its properties
(which  also may affect the need for one of the  programs  to prepare or produce
audited financial  statements for a property or a tenant),  the anticipated cash
flow of each program, the size of the investment,  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 a
property  or a  delay  in  the  construction  of a  property,  causes  any  such
investment, in the opinion of the Advisor and its

                                                       -29-

<PAGE>



Affiliates,  to be more  appropriate  for an entity  other than the entity which
committed to make the  investment,  however,  the Advisor has the right to agree
that the other entity affiliated with the Advisor or its Affiliates may make the
investment.

         SECTION 6.4       Other Transactions.

                  (i) No goods or  services  will be  provided by the Advisor or
its  Affiliates to the Company except for  transactions  in which the Advisor or
its Affiliates provide goods or services to the Company in accordance with these
Articles  of  Incorporation  or if a  majority  of the  Directors  (including  a
majority  of  the  Independent  Directors)  not  otherwise  interested  in  such
transactions approve such transactions as fair and reasonable to the Company and
on terms and conditions  not less favorable to the Company than those  available
from unaffiliated third parties.

                  (ii) The Company  will not make any loans to  Affiliates.  Any
loans to the  Company by the  Advisor or its  Affiliates  must be  approved by a
majority of the Directors  (including a majority of  Independent  Directors) not
otherwise interested in such transaction as fair, competitive,  and commercially
reasonable,  and no less favorable to the Company than comparable  loans between
unaffiliated parties.

                                    ARTICLE 7

                                     SHARES

         SECTION 7.1 Authorized Shares.  The beneficial  interest in the Company
shall be divided into Equity Shares. The total number of Equity Shares which the
Company is authorized to issue is two hundred six million  (206,000,000)  shares
of beneficial interest,  consisting of one hundred million  (100,000,000) Common
Shares (as defined and  described  in Section  7.2(ii)  hereof),  three  million
(3,000,000)  Preferred Shares (as defined in Section 7.3 hereof) and one hundred
three  million  (103,000,000)  Excess Shares (as defined in Section 7.7 hereof).
All Shares  shall be fully paid and  nonassessable  when  issued.  Shares may be
issued for such  consideration  as the  Directors  determine  or, if issued as a
result of a Share dividend or Share split, without any consideration.

         SECTION 7.2       Common Shares.

                  (i) Common Shares  Subject to Terms of Preferred  Shares.  The
Common  Shares shall be subject to the express  terms of any series of Preferred
Shares.

                  (ii) Description.  Common Shares (herein so called) shall have
a par value of $.01 per share and shall  entitle the holders to one (1) vote per
share on all matters upon which  Stockholders  are entitled to vote  pursuant to
Section 8.2 hereof,  and shares of a particular  class of issued  Common  Shares
shall have equal dividend, distribution, liquidation and other rights, and shall
have no preference,  cumulative,  preemptive,  appraisal, conversion or exchange
rights.  The Directors may classify or reclassify any unissued  Common Shares by
setting or changing the

                                                       -30-

<PAGE>



number,  designation,  preferences,  conversion or other rights,  voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption  of any such Common  Shares and, in such event,  the Company shall
file for record with the State  Department  of  Assessments  and Taxation of the
State of Maryland  amended articles in substance and form as prescribed by Title
2 of the MGCL.

                  (iii) Distribution  Rights. The holders of Common Shares shall
be entitled  to receive  such  Distributions  as may be declared by the Board of
Directors of the Company out of funds legally available therefor.

                  (iv) Dividend or Distribution  Rights. The Directors from time
to time may declare and pay to Stockholders  such dividends or  Distributions in
cash or other property as the Directors in their discretion shall determine. The
Directors shall endeavor to declare and pay such dividends and  Distributions as
shall be necessary for the Company to qualify as a real estate  investment trust
under the REIT Provisions of the Code;  provided,  however,  Stockholders  shall
have no right to any dividend or  Distribution  unless and until declared by the
Directors.  The exercise of the powers and rights of the  Directors  pursuant to
this section shall be subject to the provisions of any class or series of Equity
Shares at the time  outstanding.  The  receipt  by any  Person in whose name any
Equity  Shares  are  registered  on the  records  of the  Company or by his duly
authorized  agent  shall  be  a  sufficient   discharge  for  all  dividends  or
Distributions  payable or  deliverable in respect of such Equity 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 these  Articles  of  Incorporation;  or  distributions  of  in-kind
property  as long as the  Directors  (i) advise  each  Stockholder  of the risks
associated with direct  ownership of the property;  (ii) offer each  Stockholder
the election of receiving in-kind property  distributions;  and (iii) distribute
in-kind property only to those Stockholders who accept the Directors' offer.

                  (v) Rights Upon Liquidation.  In the event of any voluntary or
involuntary  liquidation,  dissolution or winding up, or any distribution of the
assets of the Company,  the  aggregate  assets  available  for  distribution  to
holders of the Common Shares (including  holders of Excess Shares resulting from
the exchange of Common  Shares  pursuant to Section  7.6(iii)  hereof)  shall be
determined in accordance  with  applicable  law.  Except as provided  below as a
consequence  of the  limitations on  distributions  to holders of Excess Shares,
each holder of Common Shares shall be entitled to receive, ratably with (i) each
other holder of Common  Shares and (ii) each holder of Excess  Shares  resulting
from the  exchange  of Common  Shares,  that  portion of such  aggregate  assets
available for  distribution as the number of the outstanding  Common Shares held
by such holder bears to the total number of outstanding Common Shares and Excess
Shares resulting from the exchange of Common Shares then  outstanding.  Anything
herein to the contrary notwithstanding,  in no event shall the amount payable to
a holder of Excess  Shares  exceed (i) the price per share such  holder paid for
the Common Shares in the purported  Transfer or Acquisition  (as those terms are
defined in Section 7.6(i)) or change in capital  structure or other  transaction
or event that resulted in the Excess Shares or (ii) if the holder did

                                                       -31-

<PAGE>



not give full value for such Excess Shares (as through a gift, a devise or other
event or transaction), a price per share equal to the Market Price (as that term
is defined in Section 7.6(i)) for the Common Shares on the date of the purported
Transfer, Acquisition, change in capital structure or other transaction or event
that resulted in such Excess Shares.  Any amount  available for  distribution in
excess of the  foregoing  limitations  shall be paid  ratably to the  holders of
Common Shares and other holders of Excess Shares  resulting from the exchange of
Common Shares to the extent permitted by the foregoing limitations.

                  (vi)  Voting  Rights.  Except  as may  be  provided  in  these
Articles of  Incorporation,  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 of the
Company, and shall be entitled to one (1) vote for each Common Share entitled to
vote at such meeting.

         SECTION  7.3  Preferred  Shares.  The  Directors  are hereby  expressly
granted the authority to authorize from time to time the issuance of one or more
series of Preferred  Shares.  The issuance of Preferred Shares shall be approved
by a majority of the  Independent  Directors  who do not have an interest in the
transaction and who have access, at the expense of the Company, to the Company's
or  independent  legal counsel.  Prior to the issuance of each such series,  the
Board of Directors, by resolution, shall fix the number of shares to be included
in each series,  and the terms,  rights,  restrictions and qualifications of the
shares  of each  series,  however,  the  voting  rights  for  each  share of the
Preferred Shares shall not exceed voting rights which bear the same relationship
to the  voting  rights of the  Common  Shares as the  consideration  paid to the
Company  for each of  Preferred  Shares  bears to the book  value of the  Common
Shares on the date that such Preferred  Shares are issued.  The authority of the
Board of Directors with respect to each series shall include, but not be limited
to, determination of the following:

                  (i)  The  designation  of  the  series,  which   may   be   by
distinguishing number, letter or title.

                  (ii) The  dividend  rate on the shares of the series,  if any,
whether any dividends  shall be cumulative and, if so, from which date or dates,
and the relative  rights of priority,  if any, of payment of dividends on shares
of the series.

                  (iii) The  redemption  rights,  including  conditions  and the
price or prices, if any, for shares of the series.

                  (iv)  The  terms  and  amounts  of any  sinking  fund  for the
purchase or redemption of shares of the series.

                  (v) The rights of the shares of the series in the event of any
voluntary or involuntary  liquidation,  dissolution or winding up of the affairs
of the  Company,  and the  relative  rights of  priority,  if any, of payment of
shares of the series.

                                                       -32-

<PAGE>




                  (vi)  Whether  the shares of the series  shall be  convertible
into shares of any other class or series, or any other security,  of the Company
or any other corporation or other entity,  and, if so, the specification of such
other class or series of such other security,  the conversion price or prices or
rate or rates, any adjustments  thereof,  the date or dates on which such shares
shall be  convertible  and all  other  terms  and  conditions  upon  which  such
conversion may be made.

                  (vii)  Restrictions  on the  issuance  of  shares  of the same
series or of any other class or series.

                  (viii)  The  voting  rights  of the  holders  of shares of the
series subject to the limitations contained in this Section 7.3.

                  (ix) Any other relative rights, preferences and limitations on
that series.

         Subject to the  express  provisions  of any other  series of  Preferred
Shares  then  outstanding,  and  notwithstanding  any other  provision  of these
Articles of Incorporation,  the Board of Directors may increase or decrease (but
not below the number of shares of such  series then  outstanding)  the number of
shares,  or alter the  designation or classify or reclassify any unissued shares
of a particular  series of Preferred  Shares,  by fixing or altering,  in one or
more respects,  from time to time before issuing the shares, the terms,  rights,
restrictions  and  qualifications  of the shares of any such series of Preferred
Shares.

         SECTION  7.4  General  Nature of Shares.  All Shares  shall be personal
property  entitling  the  Stockholders  only to those  rights  provided in these
Articles of Incorporation,  the MGCL or in the resolution  creating any class or
series of Shares.  The legal ownership of the Company  Property and the right to
conduct the business of the Company are vested exclusively in the Directors; the
Stockholders  shall have no interest therein other than the beneficial  interest
in the Company  conferred  by their Shares and shall have no right to compel any
partition,  division,  dividend  or  Distribution  of the  Company or any of the
Company Property.  The death of a Stockholder shall not terminate the Company or
give his  legal  representative  any  rights  against  other  Stockholders,  the
Directors or the Company  Property,  except the right,  exercised in  accordance
with applicable  provisions of the Bylaws,  to require the Company to reflect on
its books the change in  ownership  of the Shares.  Holders of Shares  shall not
have any  preemptive  or other right to purchase or  subscribe  for any class of
securities of the Company which the Company may at any time issue or sell.

         SECTION 7.5 No Issuance Of Share  Certificates.  The Company  shall not
issue share  certificates  except to Stockholders  who make a written request to
the Company.  A Stockholder's  investment  shall be recorded on the books of the
Company.  To transfer his or her Shares a  Stockholder  shall submit an executed
form to the Company,  which form shall be provided by the Company upon  request.
Such transfer  will also be recorded on the books of the Company.  Upon issuance
or transfer of shares, the Company will provide the Stockholder with information
concerning his or her rights with regard to such stock, in a form  substantially
similar to Section  7.6(xii),  and  required by the Bylaws and the MGCL or other
applicable law.

                                                       -33-

<PAGE>




         SECTION 7.6       Restrictions On Ownership and Transfer.

                  (i)  Definitions.  For  purposes of Sections  7.6 and 7.7, the
following terms shall have the following meanings:

         "Acquire" means the acquisition of Beneficial or Constructive Ownership
of Equity Shares by any means,  including,  without limitation,  the exercise of
any rights  under any option,  warrant,  convertible  security,  pledge or other
security interest or similar right to acquire shares,  but shall not include the
acquisition  of any such  rights  unless,  as a result,  the  acquiror  would be
considered a Beneficial  Owner or Constructive  Owner.  The terms "Acquires" and
"Acquisition" shall have correlative meanings.

         "Beneficial  Ownership"  means ownership of Shares by an individual who
would be treated as an owner of such Shares under Section 542(a)(2) of the Code,
either directly or constructively  through the application of Section 544 of the
Code,  as modified by Section  856(h)(1)(B)  of the Code.  For  purposes of this
definition,  the term  "individual"  shall include any  organization,  trust, or
other entity that is treated as an individual for purposes of Section  542(a)(2)
of the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have correlative meanings.

         "Beneficiary"  means  a  beneficiary  of the  Excess  Shares  Trust  as
determined pursuant to Section 7.7(v)(a) hereof.

         "Closing Price" on any day shall mean the last sale price,  regular way
on such day,  or, if no such sale takes  place on that day,  the  average of the
closing  bid and asked  prices,  regular  way, in either case as reported on the
principal  consolidated  transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange, or if the affected
class or series of Equity  Shares are not so listed or admitted  to trading,  as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national  securities  exchange  (including
the National  Market System of the National  Association of Securities  Dealers,
Inc. Automated Quotation System) on which the affected class or series of Equity
Shares are listed or admitted to trading, or, if the affected class or series of
Equity  Shares are not so listed or admitted to trading,  the last quoted  price
or, if not  quoted,  the  average  of the high bid and low  asked  prices in the
over-the-counter  market, as reported by the National  Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal  automated quotation system then in use, or, if the affected class
or series of Equity Shares are not so quoted by any such system,  the average of
the closing bid and asked  prices as furnished  by a  professional  market maker
selected  by the Board of  Directors  making a market in the  affected  class or
series of Equity  Shares,  or, if there is no such market  maker or such closing
prices otherwise are not available,  the fair market value of the affected class
or series  of  Equity  Shares  as of such  day,  as  determined  by the Board of
Directors in its discretion.



                                                       -34-

<PAGE>



         "Common  Share  Ownership  Limit"  means,  with  respect  to the Common
Shares,  nine point  eight  percent  (9.8%) of the  outstanding  Common  Shares,
subject to adjustment  pursuant to Section  7.6(x) (but not more than nine point
nine percent (9.9%) of the outstanding Common Shares, as so adjusted) and to the
limitations contained in Section 7.6(xi).

         "Constructive  Ownership"  means ownership of Equity Shares by a person
who  would  be  treated  as  an  owner  of  such  shares,   either  actually  or
constructively,  directly or indirectly,  through the application of Section 318
of the Code, as modified by Section 856(d)(5) thereof.  The terms  "Constructive
Owner,"  "Constructively Owns" and "Constructively Owned" shall have correlative
meanings.

         "Excess  Shares  Trust"  means the trust  created  pursuant  to Section
7.7(i) hereof.

         "Excess  Shares  Trustee"  means the  Company as trustee for the Excess
Shares Trust, and any successor trustee appointed by the Company.

         "Market Price" means,  during the offering,  the price per Equity Share
and thereafter, until the Equity Shares are listed for trading on an exchange or
market,  a price  determined  on the  basis of the  quarterly  valuation  of the
Company's  assets.  Upon  listing of the  Shares,  market  price  shall mean the
average  of the  Closing  Prices  for  the ten  (10)  consecutive  Trading  Days
immediately  preceding  such day (or those days during such ten (10)-day  period
for which Closing Prices are available).

         "Ownership  Limit"  means  the  Common  Share  Ownership  Limit  or the
Preferred Share Ownership Limit, or both, as the context may require.

         "Preferred Share Ownership Limit" means,  with respect to the Preferred
Shares,  nine  point  eight  percent  (9.8%)  of  the  outstanding  Shares  of a
particular  series of  Preferred  Shares of the Company,  subject to  adjustment
pursuant to Section  7.6(x) (but not more than nine point nine percent (9.9%) of
the  outstanding  Preferred  Shares,  as so  adjusted)  and to  the  limitations
contained in this Section 7.6.

         "Purported  Beneficial  Holder"  means,  with  respect  to any event or
transaction  other than a purported  Transfer or  Acquisition  which  results in
Excess Shares,  the Person for whom the applicable  Purported Record Holder held
the Equity  Shares that were,  pursuant to paragraph  (iii) of this Section 7.6,
automatically  exchanged for Excess Shares upon the  occurrence of such event or
transaction. The Purported Beneficial Holder and the Purported Record Holder may
be the same Person.

         "Purported Beneficial  Transferee" means, with respect to any purported
Transfer or Acquisition which results in Excess Shares, the purported beneficial
transferee for whom the Purported  Record  Transferee would have acquired Equity
Shares if such Transfer or  Acquisition  which results in Excess Shares had been
valid  under  Section  7.6(ii).  The  Purported  Beneficial  Transferee  and the
Purported Record Transferee may be the same Person.

                                                       -35-

<PAGE>




         "Purported   Record  Holder"  means,  with  respect  to  any  event  or
transaction  other than a purported  Transfer or  Acquisition  which  results in
Excess  Shares,  the record holder of the Equity  Shares that were,  pursuant to
Section 7.6(iii),  automatically exchanged for Excess Shares upon the occurrence
of such an event or transaction.  The Purported  Record Holder and the Purported
Beneficial Holder may be the same Person.

         "Purported  Record  Transferee"  means,  with respect to any  purported
Transfer or Acquisition which results in Excess Shares, the record holder of the
Equity Shares if such Transfer or Acquisition which results in Excess Shares had
been valid under  Section  7.6(ii).  The  Purported  Record  Transferee  and the
Purported Beneficial Transferee may be the same Person.

         "Restriction  Termination  Date"  means the first day after the date of
the closing of the Initial  Public  Offering on which the Board of  Directors of
the Company  determines,  pursuant to Section  3.2(xxii)  hereof,  that it is no
longer in the best interests of the Company to attempt or continue to qualify as
REIT.

         "Trading  Day" means a day on which the principal  national  securities
exchange on which the  affected  class or series of Equity  Shares are listed or
admitted to trading is open for the  transaction of business or, if the affected
class or series of Equity  Shares are not listed or admitted  to trading,  shall
mean  any day  other  than a  Saturday,  Sunday  or other  day on which  banking
institutions  in the State of New York are  authorized  or  obligated  by law or
executive order to close.

         "Transfer" means any sale, transfer, gift,  hypothecation,  assignment,
devise or other disposition of a direct or indirect interest in Equity Shares or
the right to vote or  receive  dividends  on Equity  Shares  (including  (i) the
granting of any option  (including any option to acquire an option or any series
of such options) or entering into any agreement for the sale,  transfer or other
disposition of Equity Shares or the right to vote or receive dividends on Equity
Shares  or (ii) the  sale,  transfer,  assignment  or other  disposition  of any
securities or rights convertible into or exchangeable for Equity Shares, whether
voluntary or involuntary, of record, constructively or beneficially, and whether
by operation  of law or  otherwise.  The terms  "Transfers,"  "Transferred"  and
"Transferable" shall have correlative meanings.

                  (ii)     Ownership and Transfer Limitations.

                           (a)  Notwithstanding  any  other  provision  of these
                  Articles  of  Incorporation,  except as  provided  in  Section
                  7.6(ix) and Section 7.8,  from the date of the Initial  Public
                  Offering and prior to the  Restriction  Termination  Date,  no
                  Person shall  Beneficially or Constructively Own Equity Shares
                  in excess of the Common or Preferred Share Ownership Limit.

                           (b)  Notwithstanding  any  other  provision  of these
                  Articles  of  Incorporation,  except as  provided  in  Section
                  7.6(ix) and Section 7.8,  from the date of the Initial  Public
                  Offering and prior to the Restriction Termination Date, any

                                                       -36-

<PAGE>



                  Transfer,  Acquisition, change in the capital structure of the
                  Company,  other purported change in Beneficial or Constructive
                  Ownership of Equity Shares or other event or transaction that,
                  if  effective,  would  result in any  Person  Beneficially  or
                  Constructively Owning Equity Shares in excess of the Common or
                  Preferred  Share Ownership Limit shall be void ab initio as to
                  the Transfer,  Acquisition, change in the capital structure of
                  the  Company,   other   purported   change  in  Beneficial  or
                  Constructive  Ownership  or other  event or  transaction  with
                  respect to that number of Equity Shares which would  otherwise
                  be  Beneficially  or  Constructively  Owned by such  Person in
                  excess of the Common or Preferred Share Ownership  Limit,  and
                  none of the  Purported  Beneficial  Transferee,  the Purported
                  Record  Transferee,  the  Purported  Beneficial  Holder or the
                  Purported  Record  Holder  shall  acquire  any  rights in that
                  number of Equity Shares.

                           (c)  Notwithstanding  any  other  provision  of these
                  Articles of  Incorporation,  and except as provided in Section
                  7.8, from the date of the Initial Public Offering and prior to
                  the Restriction  Termination Date, any Transfer,  Acquisition,
                  change  in the  capital  structure  of the  Company,  or other
                  purported  change  in  Beneficial  or  Constructive  Ownership
                  (including  actual  ownership) of Equity Shares or other event
                  or transaction that, if effective,  would result in the Equity
                  Shares  being   actually  owned  by  fewer  than  100  Persons
                  (determined  without  reference  to any rules of  attribution)
                  shall  be  void ab  initio  as to the  Transfer,  Acquisition,
                  change  in  the  capital  structure  of  the  Company,   other
                  purported  change  in  Beneficial  or  Constructive  Ownership
                  (including  actual  ownership)  with respect to that number of
                  Equity   Shares  which   otherwise   would  be  owned  by  the
                  transferee,  and the intended  transferee or subsequent  owner
                  (including a  Beneficial  Owner or  Constructive  Owner) shall
                  acquire no rights in that number of Equity Shares.

                           (d)  Notwithstanding  any  other  provision  of these
                  Articles of Incorporation,  except as provided in Section 7.8,
                  from the date of the Initial Public  Offering and prior to the
                  Restriction  Termination  Date,  any  Transfer,   Acquisition,
                  change  in  the  capital  structure  of  the  Company,   other
                  purported  change in Beneficial or  Constructive  Ownership of
                  Equity  Shares  or  other  event  or   transaction   that,  if
                  effective,  would  cause the  Company  to fail to qualify as a
                  REIT by reason of being  "closely  held" within the meaning of
                  Section   856(h)  of  the  Code  or  otherwise,   directly  or
                  indirectly,  would  cause the  Company to fail to qualify as a
                  REIT shall be void ab initio as to the Transfer,  Acquisition,
                  change  in  the  capital  structure  of  the  Company,   other
                  purported  change in Beneficial or  Constructive  Ownership or
                  other  event or  transaction  with  respect to that  number of
                  Equity  Shares  which  would  cause the Company to be "closely
                  held"  within the  meaning  of  Section  856(h) of the Code or
                  otherwise,  directly or indirectly, would cause the Company to
                  fail to qualify as a REIT, and none of the Purported


                                                       -37-

<PAGE>



                  Beneficial  Transferee,  the Purported Record Transferee,  the
                  Purported  Beneficial  Holder or the  Purported  Record Holder
                  shall acquire any rights in that number of Equity Shares.

                           (e)  Notwithstanding  any  other  provision  of these
                  Articles of Incorporation,  except as provided in Section 7.8,
                  from the date of the Initial Public  Offering and prior to the
                  Restriction  Termination  Date,  any  Transfer,   Acquisition,
                  change in capital structure of the Company, or other purported
                  change  in  Beneficial  or  Constructive  Ownership  of Equity
                  Shares or other event or transaction that, if effective, would
                  (i) cause the Company to own (directly or  Constructively)  an
                  interest in a tenant that is described in Section 856(d)(2)(B)
                  of the Code and (ii) cause the  Company to fail to satisfy any
                  of the gross  income  requirements  of  section  856(c) of the
                  Code, shall be void ab initio as to the Transfer, Acquisition,
                  change in capital  structure of the Company,  other  purported
                  change in Beneficial or Constructive  Ownership or other event
                  or  transaction  with respect to that number of Equity  Shares
                  which would cause the Company to own an interest  (directly or
                  Constructively)  in a  tenant  that is  described  in  Section
                  856(d)(2)(B) of the Code, and none of the Purported Beneficial
                  Transferee,  the Purported  Record  Transferee,  the Purported
                  Beneficial Holder or the Purported Record Holder shall acquire
                  any rights in that number of Equity Shares.

                           (f)  Notwithstanding  any  other  provision  of these
                  Articles of  Incorporation,  any person selling  securities on
                  behalf of the Company in its Initial  Public  Offering may not
                  complete a sale of securities to a Stockholder  until at least
                  five (5) business days after the date the Stockholder receives
                  a  final   Prospectus  and  shall  send  each   Stockholder  a
                  confirmation of his or her purchase.

                  (iii)    Exchange for Excess Shares.

                           (a)  If,   notwithstanding   the   other   provisions
                  contained  in this  Article  VII, at any time from the date of
                  the  Initial  Public  Offering  and  prior to the  Restriction
                  Termination Date, there is a purported Transfer,  Acquisition,
                  change  in  the  capital  structure  of  the  Company,   other
                  purported  change in the Beneficial or Constructive  Ownership
                  of Equity Shares or other event or  transaction  such that any
                  Person would either  Beneficially or Constructively Own Equity
                  Shares in excess of the Common or  Preferred  Share  Ownership
                  Limit,  then, except as otherwise provided in Section 7.6(ix),
                  such Equity  Shares  (rounded  up to the next whole  number of
                  shares) in excess of the Common or Preferred  Share  Ownership
                  Limit  automatically shall be exchanged for an equal number of
                  Excess   Shares  having  terms,   rights,   restrictions   and
                  qualifications  identical  thereto,  except to the extent that
                  this Article VII requires different terms. Such exchange shall
                  be  effective  as of the close of business on the business day
                  next preceding the date


                                                       -38-

<PAGE>



                  of the  purported  Transfer,  Acquisition,  change in  capital
                  structure,   other   change   in   purported   Beneficial   or
                  Constructive   Ownership   of  Shares,   or  other   event  or
                  transaction.

                           (b)  If,   notwithstanding   the   other   provisions
                  contained  in this  Article VII, at any time after the date of
                  the  Initial  Public  Offering  and  prior to the  Restriction
                  Termination Date, there is a purported Transfer,  Acquisition,
                  change  in  the  capital  structure  of  the  Company,   other
                  purported  change in the Beneficial or Constructive  Ownership
                  of  Equity  Shares or other  event or  transaction  which,  if
                  effective,   would  result  in  a  violation  of  any  of  the
                  restrictions  described in subparagraphs (b), (c), (d) and (e)
                  of  paragraph  (ii)  of  this  Section  7.6  or,  directly  or
                  indirectly,  would cause the Company for any reason to fail to
                  qualify as a REIT by reason of being "closely held" within the
                  meaning of Section 856(h) of the Code, or otherwise,  directly
                  or indirectly, would cause the Company to fail to qualify as a
                  REIT,  then the Shares (rounded up to the next whole number of
                  Shares) being  Transferred or which are otherwise  affected by
                  the change in capital  structure or other purported  change in
                  Beneficial or  Constructive  Ownership and which, in any case,
                  would  cause the  Company  to be  "closely  held"  within  the
                  meaning of such Section  856(h) or  otherwise  would cause the
                  Company to fail to qualify  as a REIT  automatically  shall be
                  exchanged  for an equal number of Excess  Shares having terms,
                  rights,  restrictions and  qualifications  identical  thereto,
                  except to the extent that this Article VII requires  different
                  terms.  Such  exchange  shall be  effective as of the close of
                  business  on  the  business  day  prior  to  the  date  of the
                  purported Transfer,  Acquisition, change in capital structure,
                  other purported change in Beneficial or Constructive Ownership
                  or other event or transaction.

                  (iv)  Remedies  For Breach.  If the Board of  Directors or its
designee shall at any time determine in good faith that a Transfer, Acquisition,
change in the  capital  structure  of the Company or other  purported  change in
Beneficial or  Constructive  Ownership or other event or  transaction  has taken
place in violation of Section 7.6(ii) or that a Person intends to Acquire or has
attempted to Acquire  Beneficial or Constructive  Ownership of any Equity Shares
in violation  of this Section 7.6, the Board of Directors or its designee  shall
take such action as it deems advisable to refuse to give effect to or to prevent
such  Transfer,  Acquisition,  change in the capital  structure  of the Company,
other attempt to Acquire  Beneficial or Constructive  Ownership of any Shares or
other event or  transaction,  including,  but not  limited to,  refusing to give
effect thereto on the books of the Company or instituting injunctive proceedings
with respect thereto; provided, however, that any Transfer,  Acquisition, change
in the capital structure of the Company,  attempted Transfer or other attempt to
Acquire Beneficial or Constructive Ownership of any Equity Shares or other event
or  transaction in violation of  subparagraphs  (b), (c), (d) and (e) of Section
7.6(ii)  (as  applicable)   shall  be  void  ab  initio  and  where   applicable
automatically  shall  result in the  exchange  described  in  Section  7.6(iii),
irrespective  of any  action  (or  inaction)  by the Board of  Directors  or its
designee.



                                                       -39-

<PAGE>



                  (v) Notice of Restricted Transfer.  Any Person who acquires or
attempts to Acquire  Beneficial  or  Constructive  Ownership of Equity Shares in
violation of Section 7.6(ii) and any Person who  Beneficially or  Constructively
Owns Excess Shares as a transferee of Equity Shares resulting in an exchange for
Excess Shares, pursuant to Section 7.6(iii), or otherwise shall immediately give
written  notice to the  Company,  or, in the event of a  proposed  or  attempted
Transfer,  Acquisition,  or  purported  change  in  Beneficial  or  Constructive
Ownership,  shall give at least  fifteen (15) days prior  written  notice to the
Company,  of such event and shall  promptly  provide to the  Company  such other
information  as the  Company,  in its sole  discretion,  may request in order to
determine the effect, if any, of such Transfer, attempted Transfer, Acquisition,
Attempted   Acquisition  or  purported  change  in  Beneficial  or  Constructive
Ownership on the Company's status as a REIT.

                  (vi) Owners Required To Provide Information.  From the date of
the Initial Public Offering and prior to the Restriction Termination Date:

                           (a) Every  Beneficial or  Constructive  Owner of more
                  than  five  percent  (5%),  or  such  lower   percentages   as
                  determined pursuant to regulations under the Code or as may be
                  requested by the Board of Directors,  in its sole  discretion,
                  of the  outstanding  shares  of any  class or series of Equity
                  Shares of the Company shall annually, no later than January 31
                  of each  calendar  year,  give  written  notice to the Company
                  stating  (i)  the  name  and  address  of such  Beneficial  or
                  Constructive Owner; (ii) the number of shares of each class or
                  series of Equity Shares Beneficially or Constructively  Owned;
                  and (iii) a description of how such shares are held. Each such
                  Beneficial or Constructive Owner promptly shall provide to the
                  Company such  additional  information  as the Company,  in its
                  sole discretion, may request in order to determine the effect,
                  if any, of such  Beneficial or  Constructive  Ownership on the
                  Company's  status as a REIT and to ensure  compliance with the
                  Common  or   Preferred   Share   Ownership   Limit  and  other
                  restrictions set forth herein.

                           (b) Each Person who is a Beneficial  or  Constructive
                  Owner  of  Equity  Shares  and  each  Person   (including  the
                  Stockholder  of  record)  who is holding  Equity  Shares for a
                  Beneficial or Constructive Owner promptly shall provide to the
                  Company  such   information  as  the  Company,   in  its  sole
                  discretion,  may request in order to determine  the  Company's
                  status  as a REIT,  to  comply  with the  requirements  of any
                  taxing authority or other  governmental  agency,  to determine
                  any such compliance or to ensure compliance with the Common or
                  Preferred  Share Ownership  Limit and other  restrictions  set
                  forth herein.

                  (vii) Remedies Not Limited.  Nothing contained in this Article
VII except  Section 7.8 shall limit scope or  application  of the  provisions of
this Section 7.6, the ability of the Company to implement or enforce  compliance
with the terms  thereof or the  authority  of the Board of Directors to take any
such other  action or actions as it may deem  necessary  or advisable to protect
the  Company  and the  interests  of its  Stockholders  by  preservation  of the
Company's

                                                       -40-

<PAGE>



status as a REIT and to ensure compliance with the Ownership Limit for any class
or series of Equity Shares and other  restrictions set forth herein,  including,
without limitation,  refusal to give effect to a transaction on the books of the
Company.

                  (viii)  Ambiguity.   In  the  case  of  an  ambiguity  in  the
application  of any  of the  provisions  of  this  Section  7.6,  including  any
definition  contained in Sections 1.5 and 7.6(i),  the Board of Directors  shall
have  the  power  and  authority,  in its  sole  discretion,  to  determine  the
application  of the provisions of this Section 7.6 with respect to any situation
based on the facts known to it.

                  (ix)  Exception.  The Board of  Directors,  upon  receipt of a
ruling  from the  Internal  Revenue  Service,  an  opinion  of  counsel or other
evidence satisfactory to the Board of Directors, in its sole discretion, in each
case to the effect that the restrictions contained in subparagraphs (c), (d) and
(e) of Section 7.6(ii) will not be violated, may waive or change, in whole or in
part, the  application  of the Common or Preferred  Share  Ownership  Limit with
respect to any Person.  In connection with any such waiver or change,  the Board
of Directors may require such  representations and undertakings from such Person
or affiliates and may impose such other conditions as the Board deems necessary,
advisable or prudent,  in its sole discretion,  to determine the effect, if any,
of the  proposed  transaction  or ownership  of Equity  Shares on the  Company's
status as a REIT.

                  (x) Increase in Common or  Preferred  Share  Ownership  Limit.
Subject to the limitations  contained in Section 7.6(xi), the Board of Directors
may from time to time increase the Common or Preferred Share Ownership Limit.

                  (xi)     Limitations on Modifications.

                           (a) The  Ownership  Limit  for a class or  series  of
                  Equity Shares may not be increased and no additional ownership
                  limitations  may be created if,  after  giving  effect to such
                  increase  or  creation,  the Company  would be "closely  held"
                  within the  meaning of  Section  856(h) of the Code  (assuming
                  ownership of shares of Equity  Shares by all Persons  equal to
                  the greatest of (A) the actual  ownership,  (B) the Beneficial
                  Ownership  of  Equity  Shares  by  each  Person,  or  (C)  the
                  applicable Ownership Limit with respect to such Person.

                           (b) Prior to any  modification of the Ownership Limit
                  with respect to any Person, the Board of Directors may require
                  such  opinions  of  counsel,   affidavits,   undertakings   or
                  agreements as it may deem necessary,  advisable or prudent, in
                  its sole  discretion,  in order to  determine  or  ensure  the
                  Company's status as a REIT.

                           (c) Neither the Preferred  Share  Ownership Limit nor
                  the  Common  Share  Ownership  Limit  may  be  increased  to a
                  percentage  that is  greater  than  nine  point  nine  percent
                  (9.9%).

                                                       -41-

<PAGE>




                  (xii) Notice to Stockholders  Upon Issuance or Transfer.  Upon
issuance or transfer of Shares,  the Company shall provide the recipient  with a
notice   containing   information   about  the  shares  purchased  or  otherwise
transferred, in lieu of issuance of a share certificate, in a form substantially
similar to the following:

                  "The   securities   issued  or  transferred   are  subject  to
                  restrictions  on  transfer  and  ownership  for the purpose of
                  maintenance   of  the  Company's   status  as  a  real  estate
                  investment  trust (a "REIT") under Sections 856 through 860 of
                  the Internal  Revenue Code of 1986,  as amended (the  "Code").
                  Except as  otherwise  provided  pursuant  to the  Articles  of
                  Incorporation  of the Company,  no Person may (i) Beneficially
                  or  Constructively  Own Common Shares of the Company in excess
                  of 9.8% (or such greater  percent as may be  determined by the
                  Board of Directors of the Company) of the  outstanding  Common
                  Shares;  (ii) Beneficially or Constructively Own shares of any
                  series of Preferred Shares of the Company in excess of 9.8% of
                  the outstanding  shares of such series of Preferred Shares; or
                  (iii)  Beneficially  or  Constructively  Own Common  Shares or
                  Preferred  Shares (of any class or series)  which would result
                  in the Company being  "closely  held" under Section  856(h) of
                  the Code or which otherwise would cause the Company to fail to
                  qualify  as  a  REIT.   Any  Person  who  has   Beneficial  or
                  Constructive Ownership, or who Acquires or attempts to Acquire
                  Beneficial or  Constructive  Ownership of Common Shares and/or
                  Preferred  Shares in excess of the above  limitations  and any
                  Person who Beneficially or  Constructively  Owns Excess Shares
                  as a transferee of Common or Preferred  Shares resulting in an
                  exchange for Excess  Shares (as described  below)  immediately
                  must  notify  the  Company  in  writing  or, in the event of a
                  proposed or  attempted  Transfer or  Acquisition  or purported
                  change in  Beneficial  or  Constructive  Ownership,  must give
                  written  notice to the  Company  at least 15 days prior to the
                  proposed or attempted  transfer,  transaction  or other event.
                  Any Transfer or Acquisition of Common Shares and/or  Preferred
                  Shares  or other  event  which  results  in  violation  of the
                  ownership or transfer  limitations  set forth in the Company's
                  Articles  of  Incorporation  shall be void ab  initio  and the
                  Purported  Beneficial and Record  Transferee shall not have or
                  acquire  any rights in such  Common  Shares  and/or  Preferred
                  Shares. If the transfer and ownership  limitations referred to
                  herein are  violated,  the Common  Shares or Preferred  Shares
                  represented hereby  automatically will be exchanged for Excess
                  Shares to the extent of  violation  of such  limitations,  and
                  such Excess  Shares will be held in trust by the Company,  all
                  as provided by the Articles of  Incorporation  of the Company.
                  All defined terms used in this

                                              -42-

<PAGE>



                  legend have the meanings  identified in the Company's Articles
                  of  Incorporation,  as the same may be  amended  from  time to
                  time, a copy of which, including the restrictions on transfer,
                  will  be  sent  without  charge  to  each  Stockholder  who so
                  requests."

         SECTION 7.7       Excess Shares.

                  (i)  Ownership  In  Trust.   Upon  any   purported   Transfer,
Acquisition,  change in the capital  structure of the Company,  other  purported
change in  Beneficial or  Constructive  Ownership or event or  transaction  that
results in Excess Shares pursuant to Section 7.6(iii),  such Excess Shares shall
be deemed to have been  transferred to the Company,  as Excess Shares Trustee of
an Excess Shares Trust for the benefit of such  Beneficiary or  Beneficiaries to
whom an  interest  in such Excess  Shares may later be  transferred  pursuant to
Section  7.6(v).  Excess Shares so held in trust shall be issued and outstanding
stock of the Company.  The Purported  Record  Transferee  (or  Purported  Record
Holder) shall have no rights in such Excess Shares except the right to designate
a transferee of such Excess Shares upon the terms  specified in Section  7.6(v).
The Purported  Beneficial  Transferee shall have no rights in such Excess Shares
except as provided in Section 7.7(iii) and (v).

                  (ii) Distribution Rights.  Excess Shares shall not be entitled
to any dividends or Distributions (except as provided in Section 7.7(iii)).  Any
dividend or  Distribution  paid prior to the  discovery  by the Company that the
Equity  Shares  have been  exchanged  for Excess  Shares  shall be repaid to the
Company upon demand, and any dividend or Distribution declared but unpaid at the
time of such  discovery  shall be void ab initio  with  respect  to such  Excess
Shares.

                  (iii)    Rights Upon Liquidation.

                           (a)  Except as  provided  below,  in the event of any
                  voluntary or involuntary  liquidation,  dissolution or winding
                  up, or any other  distribution of the assets,  of the Company,
                  each holder of Excess  Shares  resulting  from the exchange of
                  Preferred  Shares of any specified series shall be entitled to
                  receive,  ratably  with each  other  holder  of Excess  Shares
                  resulting from the exchange of Preferred Shares of such series
                  and each  holder  of  Preferred  Shares of such  series,  such
                  accrued  and unpaid  dividends,  liquidation  preferences  and
                  other preferential  payments, if any, as are due to holders of
                  Preferred Shares of such series.  In the event that holders of
                  shares of any  series of  Preferred  Shares  are  entitled  to
                  participate  in the  Company's  distribution  of its  residual
                  assets,  each  holder  of  Excess  Shares  resulting  from the
                  exchange  of  Preferred  Shares  of any such  series  shall be
                  entitled to participate, ratably with (A) each other holder of
                  Excess Shares  resulting from the exchange of Preferred Shares
                  of all series entitled to so  participate;  (B) each holder of
                  Preferred Shares of all series entitled to so participate; and
                  (C) each holder of Common Shares and Excess  Shares  resulting
                  from the exchange of Common Shares (to the extent permitted by
                  Section 7.6(iii) hereof), that portion of the aggregate assets
                  available for distribution (determined

                                                       -43-

<PAGE>



                  in accordance  with applicable law) as the number of shares of
                  such  Excess  Shares  held by such  holder  bears to the total
                  number of (1)  outstanding  Excess Shares  resulting  from the
                  exchange  of  Preferred  Shares of all series  entitled  to so
                  participate;  (2) outstanding  Preferred  Shares of all series
                  entitled to so participate;  and (3) outstanding Common Shares
                  and  Excess  Shares  resulting  from the  exchange  of  Common
                  Shares. The Company,  as holder of the Excess Shares in trust,
                  or, if the  Company  shall have been  dissolved,  any  trustee
                  appointed  by the  Company  prior  to its  dissolution,  shall
                  distribute  ratably to the  Beneficiaries of the Excess Shares
                  Trust, when determined, any such assets received in respect of
                  the Excess Shares in any  liquidation,  dissolution or winding
                  up,  or any  distribution  of  the  assets,  of  the  Company.
                  Anything to the contrary herein  notwithstanding,  in no event
                  shall the amount  payable to a holder  with  respect to Excess
                  Shares  resulting from the exchange of Preferred Shares exceed
                  (A) the price per share  such  holder  paid for the  Preferred
                  Shares  in the  purported  Transfer,  Acquisition,  change  in
                  capital  structure or other transaction or event that resulted
                  in the  Excess  Shares or (B) if the  holder did not give full
                  value for such  Excess  Shares (as  through a gift,  devise or
                  other  event or  transaction),  a price per share equal to the
                  Market Price for the shares of Preferred Shares on the date of
                  the  purported  Transfer,   Acquisition,   change  in  capital
                  structure or other  transaction or event that resulted in such
                  Excess Shares. Any amount available for distribution in excess
                  of the  foregoing  limitations  shall be paid  ratably  to the
                  holders of Preferred  Shares and Excess Shares  resulting from
                  the  exchange of Preferred  Shares to the extent  permitted by
                  the foregoing limitations.

                           (b)  Except as  provided  below,  in the event of any
                  voluntary or involuntary  liquidation,  dissolution or winding
                  up, or any other  distribution of the assets,  of the Company,
                  each holder of Excess  Shares  resulting  from the exchange of
                  Common  Shares shall be entitled to receive,  ratably with (A)
                  each other holder of such Excess Shares and (B) each holder of
                  Common Shares,  that portion of the aggregate assets available
                  for  distribution  to  holders  of  Common  Shares  (including
                  holders of Excess Shares resulting from the exchange of Common
                  Shares pursuant to Section 7.6(iii)), determined in accordance
                  with  applicable law, as the number of such Excess Shares held
                  by such holder bears to the total number of outstanding Common
                  Shares  and  outstanding  Excess  Shares  resulting  from  the
                  exchange of Common Shares then  outstanding.  The Company,  as
                  holder of the Excess Shares in trust, or, if the Company shall
                  have been  dissolved,  any  trustee  appointed  by the Company
                  prior to its  dissolution,  shall  distribute  ratably  to the
                  Beneficiaries of the Excess Shares, when determined,  any such
                  assets  received  in  respect  of  the  Excess  Shares  in any
                  liquidation, dissolution or winding up, or any distribution of
                  the assets,  of the Company.  Anything  herein to the contrary
                  notwithstanding,  in no event  shall the  amount  payable to a
                  holder with respect to Excess  Shares exceed (A) the price per
                  share such holder paid for the Equity  Shares in the purported
                  Transfer,  Acquisition,  change in capital  structure or other
                  transaction or event that resulted in the Excess Shares or (B)
                  if the holder did not

                                                       -44-

<PAGE>



                  give full value for such  Equity  Shares  (as  through a gift,
                  devise or other event or transaction), a price per share equal
                  to the Market  Price for the Equity  Shares on the date of the
                  purported Transfer,  Acquisition,  change in capital structure
                  or other  transaction  or event that  resulted  in such Excess
                  Shares. Any amount available for distribution in excess of the
                  foregoing  limitations shall be paid ratably to the holders of
                  Common Shares and Excess Shares resulting from the exchange of
                  Common  Shares  to  the  extent  permitted  by  the  foregoing
                  limitations.

                  (iv) Voting Rights.  The holders of Excess Shares shall not be
entitled to vote on any matters (except as required by the MGCL).

                  (v)      Restrictions on Transfer; Designation of Beneficiary.

                           (a)  Excess  Shares  shall not be  transferable.  The
                  Purported  Record  Transferee (or Purported Record Holder) may
                  freely  designate a Beneficiary  of its interest in the Excess
                  Shares Trust (representing the number of Excess Shares held by
                  the Excess Shares Trust attributable to the purported Transfer
                  or Acquisition that resulted in the Excess Shares), if (A) the
                  Excess  Shares  held in the Excess  Shares  Trust would not be
                  Excess  Shares  in the hands of such  Beneficiary  and (B) the
                  Purported  Beneficial   Transferee  (or  Purported  Beneficial
                  Holder)  does  not  receive  a  price  for  designating   such
                  Beneficiary  that  reflects a price per share for such  Excess
                  Shares  that  exceeds  (1) the price per share such  Purported
                  Beneficial  Transferee (or Purported  Beneficial  Holder) paid
                  for the Equity Shares in the purported Transfer,  Acquisition,
                  change in capital  structure,  or other  transaction  or event
                  that  resulted  in the Excess  Shares or (2) if the  Purported
                  Beneficial Transferee (or Purported Beneficial Holder) did not
                  give value for such Excess  Shares (as through a gift,  devise
                  or other event or transaction), a price per share equal to the
                  Market  Price  for  the  Equity  Shares  on  the  date  of the
                  purported Transfer,  Acquisition, change in capital structure,
                  or other  transaction  or event  that  resulted  in the Excess
                  Shares. Upon such transfer of an interest in the Excess Shares
                  Trust,  the  corresponding  Excess Shares in the Excess Shares
                  Trust  automatically shall be exchanged for an equal number of
                  Equity Shares  (depending on the type and class of Shares that
                  were originally  exchanged for such Excess  Shares),  and such
                  Equity   Shares  shall  be   transferred   of  record  to  the
                  Beneficiary  of  the  interest  in  the  Excess  Shares  Trust
                  designated by the Purported  Record  Transferee  (or Purported
                  Record  Holder),  as described  above,  if such Equity  Shares
                  would not be Excess  Shares in the hands of such  Beneficiary.
                  Prior to any  transfer of any  interest  in the Excess  Shares
                  Trust,  the Purported  Record  Transferee (or Purported Record
                  Holder) must give advance written notice to the Company of the
                  intended  transfer and the Company must have waived in writing
                  its purchase rights under Section 7.7(vi).



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<PAGE>



                           (b)  Notwithstanding  the  foregoing,  if a Purported
                  Beneficial   Transferee  (or  Purported   Beneficial   Holder)
                  receives a price for  designating a Beneficiary of an interest
                  in the Excess Shares Trust that exceeds the amounts  allowable
                  under subparagraph (i) of this Section 7.6(v),  such Purported
                  Beneficial  Transferee (or Purported  Beneficial Holder) shall
                  pay, or cause the  Beneficiary  of the  interest in the Excess
                  Shares Trust to pay, such excess in full to the Company.

                           (c) If any of the transfer  restrictions set forth in
                  this  Section  7.6(v),   or  any  application   thereof,   are
                  determined to be void,  invalid or  unenforceable by any court
                  having  jurisdiction  over the  issue,  the  Purported  Record
                  Transferee (or Purported Record Holder) may be deemed,  at the
                  option  of the  Company,  to have  acted  as the  agent of the
                  Company  in  acquiring  the  Excess  Shares  as to which  such
                  restrictions  would  otherwise,  by their terms,  apply and to
                  hold such Excess Shares on behalf of the Company.

                  (vi) Purchase Right in Excess  Shares.  Excess Shares shall be
deemed to have been offered for sale to the Company, or its designee, at a price
per share equal to the lesser of (i) the price per share in the transaction that
created  such  Excess  Shares  (or, in the case of devise or gift or event other
than a Transfer or  Acquisition  which results in the issuance of Excess Shares,
the  Market  Price at the time of such  devise  or gift or  event  other  than a
Transfer or Acquisition which results in the issuance of Excess Shares) and (ii)
the Market Price of the Equity  Shares  exchanged  for such Excess Shares on the
date the  Company,  or its  designee,  accepts  such offer.  The Company and its
assignees  shall have the right to accept such offer for a period of ninety (90)
days  after the later of (i) the date of the  purported  Transfer,  Acquisition,
change in capital  structure  of the  Company,  purported  change in  Beneficial
Ownership or other event or transaction which resulted in such Excess Shares and
(ii) the date on which the Board of  Directors  determines  in good faith that a
Transfer,  Acquisition,  change in capital  structure of the Company,  purported
change in Beneficial or  Constructive  Ownership  resulting in Excess Shares has
occurred,  if the Company does not receive a notice  pursuant to Section 7.6(v),
but in no event later than a permitted  Transfer  pursuant to and in  compliance
with the terms of Section 7.7(v).

                  (vii) Remedies Not Limited.  Nothing contained in this Article
VII except  Section 7.8 shall limit scope or  application  of the  provisions of
this Section 7.7, the ability of the Company to implement or enforce  compliance
with the terms  hereof or the  authority  of the Board of  Directors to take any
such other  action or actions as it may deem  necessary  or advisable to protect
the  Company  and the  interests  of its  Stockholders  by  preservation  of the
Company's  status  as a REIT and to  ensure  compliance  with  applicable  Share
Ownership Limits and the other restrictions set forth herein, including, without
limitation, refusal to give effect to a transaction on the books of the Company.

                  (viii)  Authorization.  At such time as the Board of Directors
authorizes a series of Preferred  Shares pursuant to Section 7.3 of this Article
VII,  without any further or separate  action of the Board of  Directors,  there
shall be deemed to be authorized a series of Excess Shares

                                                       -46-

<PAGE>



consisting of the number of shares included in the series of Preferred Shares so
authorized and having terms, rights,  restrictions and qualifications  identical
thereto,  except to the extent that such Excess Shares are already authorized or
this Article VII requires different terms.

         SECTION 7.8 Settlements. Nothing in Sections 7.6 and 7.7 shall preclude
the settlement of any transaction with respect to the Common Shares entered into
through  the  facilities  of the New  York  Stock  Exchange  or  other  national
securities exchange on which the Common Shares are listed.

         SECTION 7.9  Severability.  If any provision of this Article VII or any
application  of  any  such  provision  is  determined  to be  void,  invalid  or
unenforceable by any court having  jurisdiction over the issue, the validity and
enforceability  of the  remaining  provisions  of this  Article VII shall not be
affected and other  applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.

         SECTION 7.10 Waiver.  The Company  shall have  authority at any time to
waive the requirements that Excess Shares be issued or be deemed  outstanding in
accordance  with the  provisions of this Article VII if the Company  determines,
based on an opinion of nationally  recognized tax counsel,  that the issuance of
such  Excess  Shares  or the fact  that  such  Excess  Shares  are  deemed to be
outstanding,  would jeopardize the status of the Company as a REIT (as that term
is defined in Section 1.5).

                                    ARTICLE 8

                                  STOCKHOLDERS

         SECTION 8.1 Meetings of Stockholders.  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 at a  location  convenient  to the  Stockholders,  on a date  which is a
reasonable  period of time following the  distribution  of the Company's  annual
report to Stockholders but not less than thirty (30) 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 Directors, 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 at any time by Stockholders  holding,  in the
aggregate,  not less than ten percent  (10%) of the  outstanding  Equity  Shares
entitled to be cast on any issue  proposed to be  considered at any such special
meeting.  If there are no Directors,  the officers of the Company 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
Directors determine or as provided by the Bylaws.



                                                       -47-

<PAGE>



         SECTION 8.2 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 as provided
in  Sections  8.1,  2.4 and 2.7  hereof;  (b)  amendment  of these  Articles  of
Incorporation as provided in Section 10.1 hereof; (c) termination of the Company
as  provided  in Section  11.2  hereof;  (d)  reorganization  of the  Company as
provided in Section  10.2  hereof;  (e) merger,  consolidation  or sale or other
disposition of all or substantially all of the Company Property,  as provided in
Section 10.3  hereof;  and (f)  termination  of the  Company's  status as a real
estate  investment  trust under the REIT  Provisions of the Code, as provided in
Section  3.2(xxii)  hereof.  The  Stockholders  may  terminate the status of the
Company  as a  REIT  under  the  Code  by a vote  of a  majority  of the  Shares
outstanding and entitled to vote. Except with respect to the foregoing  matters,
no action  taken by the  Stockholders  at any meeting  shall in any way bind the
Directors.

         SECTION 8.3 Voting Limitations on Shares held by the Advisor, Directors
and Affiliates.  With respect to Shares owned by the Advisor, the Directors,  or
any of their  Affiliates,  neither the Advisor,  nor the  Directors,  nor any of
their  Affiliates may vote or consent on matters  submitted to the  Stockholders
regarding  the removal of the Advisor,  Directors or any of their  Affiliates or
any  transaction  between  the  Company  and any of  them.  In  determining  the
requisite  percentage  in  interest of Shares  necessary  to approve a matter on
which  the  Advisor,  Directors  and any of  their  Affiliates  may not  vote or
consent, any Shares owned by any of them shall not be included.

         SECTION  8.4  Stockholder  Action to be Taken by  Meeting.  Any  action
required or  permitted  to be taken by the  Stockholders  of the Company must be
effected  at a duly  called  annual or special  meeting of  Stockholders  of the
Company and may not be effected by any consent in writing of such Stockholders.

         SECTION 8.5 Right of  Inspection.  Any  Stockholder  and any designated
representative  thereof shall be permitted  access to all records of the Company
at all reasonable  times,  and may inspect and copy any of them for a reasonable
charge.  Inspection  of the  Company  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 8.6 Access to  Stockholder  List. An  alphabetical  list of the
names, addresses and telephone numbers of the Stockholders of the Company, 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  Company  and shall be
available for  inspection by any  Stockholder  or the  Stockholder's  designated
agent at the home office of the Company 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 (10) days 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  10-point  type).  The
Company may impose a reasonable charge for expenses incurred in

                                                       -48-

<PAGE>



reproduction  pursuant to the Stockholder  request.  A Stockholder may request a
copy of the Stockholder List in connection  with,  without  limitation,  matters
relating to Stockholders'  voting rights, and the exercise of Stockholder rights
under federal proxy laws.

         If the Advisor or  Directors  neglect or refuse to exhibit,  produce or
mail a copy of the Stockholder List as requested,  the Advisor and the Directors
shall be liable to any Stockholder  requesting the list for the costs, including
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 Stockholder relative to
the affairs of the Company.  The Company 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 Company.  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  8.7  Reports.   The  Directors,   including  the   Independent
Directors, shall take reasonable steps to insure that the Company 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 of the Company  within one hundred twenty (120) days after the end of
the fiscal year to which it relates an annual report for each fiscal year ending
after the initial  public  offering of its securities  which 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 Company and including fees or changes paid to the Advisor and any
Affiliate of the Advisor by third parties doing business with the Company;  (iv)
the  Operating  Expenses  of the  Company,  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 Company are in the
best interests of its  Stockholders and the basis for such  determination;  (vi)
separately  stated,  full  disclosure  of  all  material  terms,   factors,  and
circumstances  surrounding  any  and all  transactions  involving  the  Company,
Directors,  Advisors 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;  and  (vii)  Distributions  to the  Stockholders  for the  period,
identifying  the source of such  Distributions,  and if such  information is not
available at the time of the distribution, a written explanation of the relevant
circumstances  will  accompany the  Distributions  (with the statement as to the
source of  Distributions  to be sent to  Stockholders  not later than sixty (60)
days after the end of the fiscal year in which the distribution was made).



                                                       -49-

<PAGE>



                                    ARTICLE 9

         LIABILITY OF STOCKHOLDERS, DIRECTORS, ADVISORS AND AFFILIATES;
                 TRANSACTIONS BETWEEN AFFILIATES AND THE COMPANY

         SECTION 9.1 Limitation of Stockholder  Liability.  No Stockholder shall
be liable for any debt,  claim,  demand,  judgment or obligation of any kind of,
against or with respect to the Company 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 Company Property or
the  affairs of the  Company by reason of his being a  Stockholder.  The Company
shall include a clause in its contracts which provides that  Stockholders  shall
not be personally liable for obligations entered into on behalf of the Company.

         SECTION 9.2       Limitation of Liability and Indemnification.

                  (i) The Company shall  indemnify and hold harmless a Director,
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 Company in such capacity,  provided, that the Indemnitee has determined,  in
good faith, that the course of conduct which caused the loss or liability was in
the best  interests  of the  Company.  The Company  shall not  indemnify or hold
harmless  the  Indemnitee  if:  (i) in the case  that the  Indemnitee  is not an
Independent  Director,  the loss or liability  was the result of  negligence  or
misconduct  by the  Indemnitee,  or (ii) 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 Company
and no portion may be recoverable from the Stockholders.

                  (ii) The  Company  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: (i) there has been a successful  adjudication  on
the merits of each count involving  alleged  securities law violations as to the
Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by
a court of  competent  jurisdiction  as to the  Indemnitee;  or (iii) 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  of the  Company  were  offered  or  sold as to  indemnification  for
violations of securities laws.

                  (iii)  Notwithstanding  anything to the contrary  contained in
the  provisions  of subsection  (i) and (ii) above of this Section,  the Company
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 or deliberate dishonesty, (b) the

                                                       -50-

<PAGE>



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 Company,  the  Indemnitee  shall have been
adjudged to be liable to the Company.

                  (iv) The  Directors  may take such action as is  necessary  to
carry out this Section 9.2 and are  expressly  empowered  to adopt,  approve and
amend from time to time  Bylaws,  resolutions  or  contracts  implementing  such
provisions.  No amendment of these Articles of Incorporation 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 9.3 Payment of  Expenses.  The Company  shall pay or  reimburse
reasonable  legal expenses and other costs incurred by a Director,  Advisor,  or
Affiliate  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 Company,  (ii)
the Indemnitee  provides the Company with written  affirmation of his good faith
belief that he has met the standard of conduct necessary for  indemnification by
the Company as authorized by Section 9.2 hereof,  (iii) the legal proceeding was
initiated by a third party who is not a Stockholder  or, if by a Stockholder  of
the  Company  acting  in his or her  capacity  as  such,  a court  of  competent
jurisdiction  approves such  advancement,  and (iv) the Indemnitee  provides the
Company with a written  agreement to repay the amount paid or  reimbursed by the
Company,  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 Maryland General Corporation Law.

         SECTION 9.4 Express  Exculpatory  Clauses In  Instruments.  Neither the
Stockholders  nor the  Directors,  officers,  employees or agents of the Company
shall be liable  under any  written  instrument  creating an  obligation  of the
Company by reason of their being Stockholders, Directors, officers, employees or
agents of the Company, and all Persons shall look solely to the Company Property
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
Company be liable to anyone as a result of such omission.

         SECTION 9.5 Transactions with Affiliates.  The Company shall not engage
in  transactions  with any  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:


                                                       -51-

<PAGE>



                  (i)      The transaction is fair and reasonable to the Company
and its Stockholders.

                  (ii) The terms of such  transaction  are at least as favorable
as the terms of any comparable  transactions  made on an  arms-length  basis and
known to the Directors.

                  (iii)  The  total  consideration  is  not  in  excess  of  the
appraised value of the property being acquired, if an acquisition is involved.

                  (iv) Payments to the Advisor, its Affiliates and the Directors
for services  rendered in a capacity  other than that as Advisor or Director may
only be made upon a determination that:

                           (a) The  compensation  is  not  in  excess  of  their
                  compensation paid for any comparable services; and

                           (b) The  compensation is not greater than the charges
                  for  comparable   services   available  from  others  who  are
                  competent and not Affiliated with any of the parties involved.

         Transactions between the Company and its Affiliates are further subject
to any  express  restrictions  in these  Articles  of  Incorporation  (including
Article IV and  Section  7.7) or adopted  by the  Directors  in the Bylaws or by
resolution,  and further subject to the disclosure and ratification requirements
of MGCL Section 2-419 and other applicable law.

                                   ARTICLE 10

                     AMENDMENT; REORGANIZATION; MERGER, ETC.

         SECTION 10.1  Amendment.

                  (i) These Articles of  Incorporation  may be amended,  without
the necessity for concurrence by the Directors,  by the affirmative  vote of the
holders of not less than a majority of the Equity  Shares then  outstanding  and
entitled to vote  thereon,  except that (1) no amendment may be made which would
change any  rights  with  respect to any  outstanding  class of  securities,  by
reducing the amount  payable  thereon upon  liquidation,  or by  diminishing  or
eliminating any voting rights  pertaining  thereto;  and (2) Section 10.2 hereof
and this  Section  10.1 shall not be amended  (or any other  provision  of these
Articles  of  Incorporation  be amended or any  provision  of these  Articles of
Incorporation  be added that would have the effect of amending  such  sections),
without the  affirmative  vote of the holders of two-thirds  (2/3) of the Equity
Shares then outstanding and entitled to vote thereon.



                                                       -52-

<PAGE>



                  (ii) The  Directors,  by a  two-thirds  (2/3) vote,  may amend
provisions of these Articles of Incorporation  from time to time as necessary to
enable the Company to qualify as a real estate  investment  trust under the REIT
Provisions of the Code.  With the exception of the foregoing,  the Directors may
not amend these Articles of Incorporation.

                  (iii) An amendment to these  Articles of  Incorporation  shall
become effective as provided in Section 12.5.

                  (iv) These Articles of Incorporation may not be amended except
as provided in this Section 10.1.

         SECTION 10.2 Reorganization.  Subject to the provisions of any class or
series of Equity Shares at the time  outstanding,  the Directors  shall have the
power (i) to cause the  organization  of a  corporation,  association,  trust or
other organization to take over the Company Property and to carry on the affairs
of the Company, or (ii) merge the Company into, or sell, convey and transfer the
Company Property to any such corporation,  association, trust or organization in
exchange  for  Securities  thereof  or  beneficial  interests  therein,  and the
assumption by the  transferee of the  liabilities  of the Company,  and upon the
occurrence  of  (i) or  (ii)  above  terminate  the  Company  and  deliver  such
Securities or beneficial  interests ratably among the Stockholders  according to
the  respective  rights of the class or  series of Equity  Shares  held by them;
provided,  however,  that any such action shall have been approved, at a meeting
of the  Stockholders  called for that purpose,  by the  affirmative  vote of the
holders of not less than a majority of the Equity  Shares then  outstanding  and
entitled to vote thereon.

         SECTION 10.3 Merger, Consolidation or Sale of Company Property. Subject
to  the  provisions  of any  class  or  series  of  Equity  Shares  at the  time
outstanding,  the  Directors  shall have the power to (i) merge the Company into
another entity, (ii) consolidate the Company with one (1) or more other entities
into a new entity;  (iii) sell or otherwise  dispose of all or substantially all
of the Company Property;  or (iv) dissolve or liquidate the Company,  other than
before the initial investment in Company Property;  provided, however, that such
action shall have been  approved,  at a meeting of the  Stockholders  called for
that purpose, by the affirmative vote of the holders of not less than a majority
of the Equity Shares then  outstanding  and entitled to vote  thereon.  Any such
transaction  involving  an  Affiliate of the Company or the Advisor also must be
approved by a majority of the Directors (including a majority of the Independent
Directors) not otherwise  interested in such  transaction as fair and reasonable
to the Company and on terms and  conditions  not less  favorable  to the Company
than those available from unaffiliated third parties.

         In connection with any proposed Roll-Up Transaction,  which, in general
terms, is any transaction  involving the  acquisition,  merger,  conversion,  or
consolidation,  directly  or  indirectly,  of the  Company  and the  issuance of
securities of a Roll-Up  Entity that would be created or would survive after the
successful completion of the Roll-Up Transaction, an appraisal of all Properties
shall be obtained from an Independent  Expert. The Properties shall be appraised
on a consistent basis, and the appraisal shall be based on the evaluation of all
relevant information and shall

                                                       -53-

<PAGE>



indicate  the  value of the  Properties  as of a date  immediately  prior to the
announcement of the proposed Roll-Up Transaction.  The appraisal shall assume an
orderly  liquidation  of  Properties  over a 12-month  period.  The terms of the
engagement of the Independent  Expert shall clearly state that the engagement is
for the benefit of the Company 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:

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

                  (ii)     one of the following:

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

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

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

                  (iii) which would result in the Stockholders  having democracy
rights  in a Roll- Up  Entity  that are less  than the  rights  provided  for in
Sections 8.1, 8.2, 8.4, 8.5, 8.6 and 9.1 of these Articles of Incorporation;

                  (iv)  which  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;

                  (v) in which  investor's  rights to access of  records  of the
Roll-Up Entity will be less than those described in Sections 8.5 and 8.6 hereof;
or

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



                                                       -54-

<PAGE>



                                   ARTICLE 11

                               DURATION OF COMPANY

         SECTION 11.1 The Company  automatically  will terminate and dissolve on
December 31,  2008,  will  undertake  orderly  liquidation  and Sales of Company
assets  and will  distribute  any Net Sales  Proceeds  to  Stockholders,  unless
Listing  occurs,  in which event the Company shall continue  perpetually  unless
dissolved  pursuant  to the  provisions  contained  herein  or  pursuant  to any
applicable provision of the MGCL.

         SECTION  11.2  Dissolution  of the  Company by  Stockholder  Vote.  The
Company may be terminated at any time,  without the necessity for concurrence by
the Board of  Directors,  by the vote or written  consent  of a majority  of the
outstanding Equity Shares.

                                   ARTICLE 12

                                  MISCELLANEOUS

         SECTION  12.1  Governing  Law.  These  Articles  of  Incorporation  are
executed by the  undersigned  Directors  and  delivered in the State of Maryland
with  reference  to the laws  thereof,  and the  rights of all  parties  and the
validity,  construction and effect of every provision hereof shall be subject to
and construed  according to the laws of the State of Maryland  without regard to
conflicts of laws provisions thereof.

         SECTION 12.2 Reliance by Third Parties.  Any certificate shall be final
and  conclusive  as to any  persons  dealing  with the Company if executed by an
individual  who,  according  to the records of the  Company or of any  recording
office in which these Articles of Incorporation  may be recorded,  appears to be
the  Secretary  or an Assistant  Secretary of the Company or a Director,  and if
certifying to: (i) the number or identity of Directors,  officers of the Company
or  Stockholders;  (ii) the due  authorization of the execution of any document;
(iii) the action or vote taken,  and the existence of a quorum,  at a meeting of
the Directors or  Stockholders;  (iv) a copy of the Articles of Incorporation or
of the Bylaws as a true and complete copy as then in force;  (v) an amendment to
these Articles of Incorporation;  (vi) the dissolution of the Company;  or (vii)
the  existence  of any fact or facts which relate to the affairs of the Company.
No purchaser,  lender, transfer agent or other person shall be bound to make any
inquiry  concerning  the validity of any  transaction  purporting  to be made on
behalf  of the  Company  by the  Directors  or by any duly  authorized  officer,
employee or agent of the Company.

         SECTION 12.3  Provisions in Conflict with Law or Regulations.


                  (i) The  provisions  of these  Articles of  Incorporation  are
severable,  and if the Directors  shall  determine  that any one or more of such
provisions  are in  conflict  with the REIT  Provisions  of the  Code,  or other
applicable  federal or state laws, the  conflicting  provisions  shall be deemed
never  to have  constituted  a part of these  Articles  of  Incorporation,  even
without any

                                                       -55-

<PAGE>



amendment of these  Articles of  Incorporation  pursuant to Section 10.1 hereof;
provided,  however, that such determination by the Directors shall not affect or
impair any of the remaining  provisions of these  Articles of  Incorporation  or
render   invalid  or  improper  any  action  taken  or  omitted  prior  to  such
determination.  No Director shall be liable for making or failing to make such a
determination.

                  (ii) If any provision of these Articles of Incorporation shall
be held invalid or unenforceable in any jurisdiction,  such holding shall not in
any manner affect or render invalid or unenforceable such provision in any other
jurisdiction  or any other provision of these Articles of  Incorporation  in any
jurisdiction.

         SECTION 12.4 Construction.  In these Articles of Incorporation,  unless
the  context  otherwise  requires,  words used in the  singular or in the plural
include both the plural and singular and words  denoting any gender include both
genders.  The title and headings of different parts are inserted for convenience
and shall not affect the meaning,  construction  or effect of these  Articles of
Incorporation.  In defining or interpreting the powers and duties of the Company
and  its  Directors  and  officers,   reference  may  be  made,  to  the  extent
appropriate,  to the Code and to  Titles 1  through  3 of the  Corporations  and
Associations  Article of the Annotated  Code of Maryland,  referred to herein as
the "MGCL."

         SECTION  12.5  Recordation.  These  Articles of  Incorporation  and any
amendment  hereto  shall be  filed  for  record  with the  State  Department  of
Assessments  and  Taxation of Maryland and may also be filed or recorded in such
other places as the Directors deem  appropriate,  but failure to file for record
these Articles of Incorporation or any amendment hereto in any office other than
in  the  State  of  Maryland   shall  not  affect  or  impair  the  validity  or
effectiveness  of these Articles of  Incorporation  or any amendment  hereto.  A
restated Articles of Incorporation shall, upon filing, be conclusive evidence of
all  amendments  contained  therein and may thereafter be referred to in lieu of
the original Declaration of Trust and the various amendments thereto.

                               * * * * * * * * * *


         THIRD:  This amendment and restatement of the Articles of Incorporation
of the Company has been  approved by a majority of the Directors and approved by
the Stockholders as required by law.

         FOURTH:  The  Company  currently  has  authority  to issue one  hundred
thousand  (100,000)  shares of capital stock,  all of one class of common stock,
par value $0.01 per share.  The  number,  classes,  par values and  preferences,
rights, powers, restrictions, limitations,  qualifications, terms and conditions
of the shares of capital  stock that the Company  will have  authority  to issue
upon  effectiveness  of  this  amendment  and  restatement  of its  Articles  of
Incorporation  are set  forth in  Article  VII of the  foregoing  amendment  and
restatement of such Articles of Incorporation.


                                                       -56-

<PAGE>


         IN WITNESS  WHEREOF,  these Articles of Amendment and Restatement  have
been  signed  on  this  15th  day of  September,  1998,  by the  undersigned
President and Secretary,  each of whom  acknowledges,  under penalty of perjury,
that this document is his or her free act and deed,  and that to the best of his
or her knowledge, information and belief, the matters and facts set forth herein
are true in all material respects.

                                        CNL HEALTH CARE PROPERTIES, INC.


                                        By:      /s/ Robert A. Bourne
                                                 ------------------------ 
                                        Name:    Robert A. Bourne
                                        Title:   President


                                        Attest:


                                        By:      /s/ Lynn E. Rose
                                                 ------------------------
                                        Name:    Lynn E. Rose
                                        Title:   Secretary


                                                       -57-

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