exv4w2






Exhibit 4.2




CERTIFICATE OF ADOPTION




OF



SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION



OF



ASSOCIATED ESTATES REALTY CORPORATION



          Jeffrey I. Friedman, President, and Martin A. Fishman, Secretary, of Associated Estates Realty
Corporation, an Ohio corporation (the “Corporation”), do hereby certify that on November 6, 1993,
in a writing approved and signed as specified in Section 1701.54 of the Ohio Revised Code, the sole
shareholder of the Corporation adopted the following resolutions, and that said resolutions are
valid and binding, have not been amended, modified or rescinded, and are in full force and effect
on the date hereof:





     RESOLVED, that the Second Amended and Restated Articles of Incorporation of the
Corporation, in the form attached as Exhibit A hereto, be, and the same hereby are, adopted
in their entirety; and




     FURTHER RESOLVED, that the President ad Secretary of the Corporation be, and they
hereby are, authorized and directed, for and on behalf of the Corporation, to execute a
certificate setting forth the foregoing resolution adopting the Second Amended and Restated
Articles of Incorporation and to cause such certificate to be filed in the office of the
Secretary of Sate of Ohio.



          IN WITNESS WHEREOF, we have executed this instrument in one or more counterparts as of the 6th
day of November, 1993.




	 	 	 	 	 
	 	 	 
	 	/s/ Jeffrey I. Friedman
 	 
	 	Jeffrey I.  Friedman, President 	 
	 	 	 
	 	                                              /s/ Martin A. Fishman
 	 
	 	Martin A. Fishman, Secretary 	 
	 	 	 



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SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION




OF



ASSOCIATED ESTATES REALTY CORPORATION




          FIRST: The name of the Corporation shall be Associated Estates Realty Corporation.



          SECOND: The place in the State of Ohio where the principal office of the Corporation is
located is Mayfield Village, Cuyahoga County.



          THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be formed under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code.



          FOURTH: The total number of shares of all classes that the Corporation shall have authority
to issue is Fifty Million (50,000,000) shares, all of which shall be Common Shares, without par
value (the “Common Shares”).



     The Common Shares shall have the following express terms:



          Section 1. DIVIDEND RIGHTS. The holders of Common Shares shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of the assets of the
Corporation which are by law available therefor, dividends or distributions payable in cash, in
property or in securities of the Corporation.



          Section 2. RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation,
each holder of Common Shares shall be entitled to receive, ratably with each other holder of Common
Shares, that portion of the assets of the Corporation available for distribution to its
shareholders as the number of Common Shares held by such holder bears to the total number of Common
Shares then outstanding.



          Section 3. VOTING RIGHTS. The holders of Common Shares shall be entitled to vote on all
matters at all meetings of the shareholders of the Corporation, and shall be entitled to one vote
for each Common Share entitled to vote at such meeting.



          Section 4. RESTRICTIONS ON TRANSFER TO PRESERVE TAX BENEFIT; COMMON SHARES SUBJECT TO
REDEMPTION.



               (a) DEFINITIONS. For the purposes of Section 4 of this Article FOURTH, the following terms
shall have the following meanings:



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               “Beneficial Ownership” shall mean ownership of Common Shares by a Person who would be treated
as an owner of such Common Shares either directly or constructively through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial
Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.



               “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



               “Constructive Ownership” shall mean ownership of Common Shares by a Person who would be
treated as an owner of such Common Shares either directly or constructively through the application
of Section 318 of the Code, as modified by Section 856(d)(5) of the Code.



               The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have
the correlative meanings.



               “Excess Shares” shall mean any Common Shares (i) acquired or proposed to be acquired by any
Person (other than an Existing Holder) pursuant to a Transfer to the extent that, if effective,
such Transfer would result in the transferee either (A) Beneficially Owning Common Shares in excess
of the Ownership Limit or (B) Constructively Owning Common Shares in excess of the Related Party
Limit, (ii) acquired or proposed to be acquired by an Existing Holder pursuant to a Transfer to the
extent that, if effective, such Transfer would result in such Existing Holder Beneficially Owning
Common Shares in excess of the Existing Holder Limit for such Existing Holder, or (iii) which are
the subject of a Transfer which, if effective, would result in (A) the Common Shares being owned by
fewer than 100 Persons (determined without reference to any rules of attribution), or (B) the
Corporation being “closely held” within the meaning of Section 856(h) of the Code.



               “Existing Holder” shall mean (i) Jeffrey I. Friedman, (ii) Susan Friedman, (iii) Mark L.
Milstein, (iv) Robert Milstein, and (v) any Person to whom an Existing Holder Transfers Beneficial
Ownership of Common Shares causing such transferee to Beneficially Own Common Shares in excess of
the Ownership Limit.



               “Existing Holder Limit” (i) for any Existing Holder who is an Existing Holder by virtue of
clause (i), (ii), (iii) or (iv) of the definition thereof, shall mean, initially, the percentage of
the outstanding Common Shares Beneficially Owned by such Existing Holder upon the consummation of
the Initial Public Offering, and after any adjustment pursuant to Section (4)(i) of this Article
FOURTH, shall mean such percentage of the outstanding Common Shares as so adjusted; and (ii) for
any Existing Holder who becomes an Existing Holder by virtue of clause (v) of the definition
thereof, shall mean, initially, the percentage of the outstanding Common Shares Beneficially Owned
by such Existing Holder at the time that such Existing Holder becomes an Existing Holder, and after
any adjustment pursuant to Section 4(i) of this Article FOURTH, shall mean such percentage of the
outstanding Common Shares as so adjusted. From and after the date of the Initial Public Offering,
the secretary of the Corporation shall maintain and, upon request, make available to each Existing
Holder, a schedule which sets forth the then current Existing Holder Limits for each Existing
Holder.



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               “Initial Public Offering” means the sale of Common Shares pursuant to the Corporation’s first
effective registration statement for such Common Shares filed under the Securities Act of 1933, as
amended.



               “Market Price” shall mean the last reported sales price of Common Shares reported on the New
York Stock Exchange on the trading day immediately preceding the relevant date or, if the Common
Shares are not then traded on the New York Stock Exchange, the last reported sales price of the
Common Shares on the trading day immediately preceding the relevant date as reported on any
exchange or quotation system on which the Common Shares may be traded, or if the Common Shares are
not then traded on any exchange or quotation system, then the market price of the Common Shares on
the relevant date as determined in good faith by the Board of Directors of the Corporation.



               “Ownership Limit” initially shall mean 4.0% of the outstanding Common Shares of the
Corporation and, after any modification as set forth in Section 4(i) of this Article FOURTH, shall
mean such greater percentage (but not more than 9.9%) of the outstanding Common Shares determined
by the Board of Directors of the Corporation pursuant to such Section 4(i).



               “Person” shall mean 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, an
association, a private foundation within the meaning of Section 509(a) of the Code, a joint stock
company, other entity or a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; provided, however, that a “person” does not mean an
underwriter participating in a public offering of Common Shares, for a period of 25 days following
the purchase by such underwriter of the Common Shares.



               “REIT” shall mean a Real Estate Investment Trust as defined under Section 856 of the Code.



               “Related Party Limit” shall mean 9.8% of the outstanding Common Shares of the Corporation.



               “Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition of
Common Shares (including, without limitation, (i) the granting of any option or entering in to any
agreement for the sale, transfer or other disposition of Common Shares or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible into or exchangeable for
Common Shares), whether voluntary or involuntary, whether of record or beneficially and whether by
operation of law or otherwise.



               (b) RESTRICTIONS ON TRANSFERS.




          (i) Except as provided in Section 4(i) of this Article FOURTH, from and after
the date of the Initial Public Offering, no Person (other than an Existing Holder)
shall Beneficially Own Common Shares in excess of the Ownership Limit, no Existing
Holder shall Beneficially Own Common Shares in excess of the Existing Holder Limit
for such Existing Holder and no Person (other



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than an Existing Holder who Constructively Owns in excess of 9.8% of the
outstanding Common Shares immediately following the completion of the Initial Public
Offering) shall Constructively Own Common Shares in excess of 9.8% of the
outstanding Common Shares.




          (ii) Except as provided in Section 4(i) of this Article FOURTH, from and after
the date of the Initial Public Offering, any Transfer which, if effective, would
result in any Person (other than an Existing Holder) Beneficially Owning Common
Shares in excess of the Ownership Limit shall be void AB INITIO as to the Transfer
of such Common Shares which would be otherwise Beneficially Owned by such Person in
excess of the Ownership Limit, and the intended transferee shall acquire no rights
in such Common Shares.




          (iii) Except as provided in Section 4(i) of this Article FOURTH, from and after
the date of the Initial Public Offering, any Transfer which, if effective, would
result in any Existing Holder Beneficially Owning Common Shares in excess of the
applicable Existing Holder Limit shall be void AB INITIO as to the Transfer of such
Common Shares which would be otherwise Beneficially Owned by such Existing Holder in
excess of the applicable Existing Holder Limit, and such Existing Holder shall
acquire no rights in such Common Shares.




          (iv) Except as provided in Section 4(i) of this Article FOURTH, from and after
the date of the Initial Public Offering, any Transfer which, if effective, would
result in any Person Constructively Owning Common Shares in excess of the Related
Party Limit shall be void AB INITIO as to the Transfer of such Common Shares which
would be otherwise Constructively Owned by such Person in excess of such amount, and
the intended transferee shall acquire no rights in such Common Shares.




          (v) Except as provided in Section 4(i) of this Article FOURTH, from and after
the date of the Initial Public Offering, any Transfer which, if effective, would
result in the Common Shares being beneficially owned by fewer than 100 Persons
(determined without reference to any rules of attribution) shall be void AB INITIO
as to the Transfer of such Common Shares which would be otherwise beneficially owned
by the transferee, and the intended transferee shall acquire no rights in such
Common Shares.




          (vi) From and after the date of the Initial Public Offering, any Transfer
which, if effective, would result in the Corporation being “closely held” within the
meaning of Section 856(h) of the Code shall be void AB INITIO as to the Transfer of
the Common Shares which would cause the Corporation to be “closely held” within the
meaning of Section 856(h) of the Code, and the intended transferee shall acquire no
rights in such Common Shares.



               (c) REMEDIES FOR BREACH. If the Board of Directors or its designees shall at any time
determine in good faith that a Transfer has taken place in violation of Section 4(b) of this
Article FOURTH or that a Person intends to acquire or has attempted to



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acquire beneficial ownership (determined without reference to any rules of attribution),
Beneficial Ownership or Constructive Ownership of any Common Shares of the Corporation in violation
of Section 4(b) of this Article FOURTH, or that any such Transfer, intended or attempted
acquisition or acquisition would jeopardize the status of the Company as a REIT under the Code, the
Board of Directors or its designees shall take such actions as it deems advisable to refuse to give
effect or to prevent such Transfer, including, but not limited to, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer and, in
addition, exercising its rights under Section 4(d) of this Article FOURTH.




               (d) PURCHASE RIGHT IN EXCESS SHARES. Beginning on the date of the occurrence of a Transfer
which, if consummated, in the good faith judgment of the Board of Directors of the Corporation,
could result in Excess Shares, such Excess Shares shall be deemed to have been offered for sale to
the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that created such Excess Shares (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept
such offer for a period of ninety (90) days after the later of (i) the date of the Transfer which
resulted in such Excess Shares and (ii) the date the Board of Directors determines in good faith
that such Transfer has occurred if the Corporation does not receive a notice of such Transfer
pursuant to Section 4(e) of this Article FOURTH. Prompt payment of the purchase price shall be
made in such reasonable manner as may be determined by the Corporation. From and after the date
fixed for purchase by the Corporation, and so long as payment of the purchase price for the Excess
Shares to be so purchased shall have been made or duly provided for, the holder of any Excess
Shares so called for purchase shall cease to be entitled to dividends, distributions, voting rights
and other benefits with respect to such Excess Shares, excepting only the right to payment of the
purchase price fixed as aforesaid. Any dividend or distribution paid to a proposed transferee of
Excess Shares prior to the discovery by the Corporation that the Excess Shares have been
transferred in violation of Section 4(b) of this Article FOURTH shall be repaid to the Corporation
upon demand. If the foregoing provisions are determined to be void or invalid by virtue of any
legal decision, statute, rule or regulation, then the intended transferee of such Excess Shares
shall be deemed, at the option of the Corporation, to have acted as agent on behalf of the
Corporation in acquiring such Excess Shares and to hold such Excess Shares on behalf of the
Corporation.



               (e) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or intends to acquire Common
Shares in violation of Section 4(b) of this Article FOURTH or any Person who is a transferee of
Excess Shares shall immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or intended Transfer on the Corporation’s status as
a REIT.



               (f) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the Initial Public
Offering:




          (i) every Beneficial Owner of more than 5.0% (or such other percentage, between
0.5% and 5.0%, as provided in the regulations promulgated from time to time pursuant
to the Code) of the outstanding Common Shares of the



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Corporation shall, within 30 days after January 1 of each year, give written
notice to the Corporation stating the name and address of such Beneficial Owner, the
number of shares Beneficially Owned, and a description of how such shares are held.
Each such Beneficial Owner shall provide to the Corporation such additional
information as the Corporation may from time to time request in order to determine
the effect, if any, of such Beneficial Ownership on the Corporation’s status as a
REIT.




          (ii) each Person who is a Beneficial Owner or Constructive Owner of Common
Shares and each Person (including the shareholder of record) who is holding Common
Shares for a Beneficial Owner or Constructive Owner shall provide to the Corporation
such information as the Corporation may from time to time request, in good faith, in
order to determine the effect, if any, of such ownership or holding on the
Corporation’s status as a REIT.



               (g) REMEDIES NOT LIMITED. Subject to the provisions of Section 4(m) of this Article Fourth,
nothing contained in this Article FOURTH shall limit the authority of the Board of Directors to
take such other action as it deems necessary or advisable to protect the Corporation and the
interests of its shareholders by preservation of the Corporation’s status as a REIT.



               (h) AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of
Section 4 of this Article FOURTH, including any definition contained in Section 4(a), the Board of
Directors shall have the power to determine the application of the provisions of this Section 4
with respect to any situation based on the facts known to it.



               (i) MODIFICATION OF EXISTING HOLDER LIMITS. Subject to the provisions of Section 4(k) of this
Article Fourth, the Existing Holder Limits may be modified as follows:




          (i) any Existing Holder may Transfer Common Shares to a Person who is already
an Existing Holder up to the number of Common Shares Beneficially Owned by such
transferor Existing Holder in excess of the Ownership Limit. Any such Transfer will
decrease the Existing Holder Limit for such transferor Existing Holder and increase
the Existing Holder Limit for such transferee Existing Holder by the percentage of
the outstanding Common Shares so Transferred. The transferor Existing Holder shall
give the Board of Directors of the Corporation prior written notice of any such
Transfer.




          (ii) any grant of a stock option pursuant to a stock option plan approved by
the shareholders of the Corporation shall increase the Existing Holder Limit for the
affected Existing Holder to the maximum extent possible under Section 4(k) of this
Article Fourth to permit the Beneficial Ownership of the Common Shares issuable upon
the exercise of such stock option.




          (iii) the Board of Directors may reduce the Existing Holder Limit for any
Existing Holder, with the written consent of such Existing Holder,



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after any Transfer permitted in this Section 4 by such Existing Holder to a
Person other than an Existing Holder or after the lapse (without exercise) of a
stock option described in Section 4(i)(ii).




          (iv) any Common Shares issued to an Existing Holder pursuant to a dividend
reinvestment plan adopted by the Corporation shall increase the Existing Holder
Limit for the Existing Holder to the maximum extent possible under Section 4(k) of
this Article Fourth to permit the Beneficial Ownership of such Common Shares.




          (v) the Related Party Limit may not be increased to a percentage which is
greater than 9.8%.



               (j) MODIFICATION OF OWNERSHIP LIMIT. Subject to the limitations provided in Section 4(k),
the Board of Directors may from time to time increase the Ownership Limit.



               (k) LIMITATIONS ON MODIFICATIONS. Notwithstanding any other provision of this Article
FOURTH:




          (i) Neither the Ownership Limit nor any Existing Holder Limit may be increased
(nor may any additional Existing Holder Limit be created) if, after giving effect to
such increase (or creation), five Beneficial Owners of Common Shares (including all
of the then Existing Holders) could Beneficially Own, in the aggregate, more than
49.5% of the outstanding Common Shares.




          (ii) Prior to the modification of any Existing Holder Limit or Ownership Limit
pursuant to Section 4(i) or Section 4(j) of this Article FOURTH, the Board of
Directors of the Corporation may require such opinions of counsel, affidavits,
undertakings or agreements as it may deem necessary or advisable in order to
determine or ensure the Corporation’s status as a REIT.




          (iii) No Existing Holder Limit shall be reduced to a percentage that is less
than the Ownership Limit.




          (iv) The Ownership Limit may not be increased to a percentage which is greater
than 9.9%.



               (l) EXCEPTIONS.




          (i) The Board of Directors, with a ruling from the Internal Revenue Service or
an opinion of counsel, may exempt a Person from the Ownership Limits or the Existing
Holder Limits, as the case may be, if such Person is not an individual for purposes
of Section 542(a)(2) of the Code, if such Persons make such representations and
undertakings to the Corporation as are, in the judgment of the Board of Directors,
reasonably necessary to ascertain that no individual’s Beneficial Ownership of such
Common Shares will violate the Ownership Limit or the applicable Existing Holder
Limit, as the case may be, and



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if such Person agrees that any violation or attempted violation will result in
such Common Shares in excess of 4.0% of the outstanding Common Shares being deemed
to be Excess Shares and subject to repurchase by the Corporation as set forth in
Section 4(d) of this Article FOURTH.




          (ii) The Board of Directors, with a ruling from the Internal Revenue Service or
an opinion of counsel, may exempt a Person from the limitation on such Person
Constructively Owning Common Shares in excess of the Related Party Limit if such
Person does not own, and represents that it will not own, directly or constructively
(by virtue of the application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code), more than a 9.9% interest (as set forth in Section
856(d)(2)(B)) in a tenant of any real property owned or leased by the Corporation,
and the Corporation obtains such representations and undertakings from such Person
as are reasonably necessary to ascertain this fact and agrees that any violation or
attempted violation will result in such Common Shares in excess of 9.9% being deemed
to be Excess Shares and subject to repurchase by the Corporation as set forth in
Section 4(d) of this Article FOURTH.



               (m) NEW YORK STOCK EXCHANGE TRANSACTIONS. Notwithstanding any other provision of Section 4 of
this Article FOURTH, nothing in Section 4 of Article FOURTH shall preclude the settlement of any
transaction entered into through the facilities of the New York Stock Exchange.



          Section 5. LEGEND. Each certificate for Common Shares shall bear the following legend:



          “The Common Shares represented by this certificate are subject to restrictions on transfer for
the purpose of preserving the Corporation’s status as a Real Estate Investment Trust under the
Internal Revenue Code of 1986, as amended. Subject to certain provisions of the Corporation’s
Amended and Restated Articles of Incorporation, no Person may Beneficially Own Common Shares in
excess of 4.0% of the outstanding Common Shares of the Corporation (unless such Person is an
Existing Holder) and no Person (other than an Existing Holder who Constructively Owns in excess of
9.8% of the Common Shares immediately following the consummation of the Initial Public Offering)
may Constructively Own Common Shares in excess of 9.8% of the outstanding Common Shares of the
Corporation. Any Person who attempts to Beneficially Own or Constructively Own Common Shares in
excess of the above limitations must immediately notify the Corporation. All capitalized terms in
this legend have the meanings defined in the Corporation’s Amended and Restated Articles of
Incorporation, a copy of which, including the restrictions on transfer, will be sent without charge
to each shareholder who so requests. If the restrictions on transfer are violated, certain of the
Common Shares represented may be subject to repurchase by the Corporation on the terms and
conditions set forth in the Corporation’s Amended and Restated Articles of Incorporation.”



          FIFTH: At all times following the consummation of the Initial Public Offering (as defined in
Article FOURTH), at least a majority of the members of the Board of Directors shall, except during
the period of a vacancy or vacancies therein, be Independent Directors. An



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“Independent Director” shall mean a person who is not (i) employed by the Corporation or (ii)
an “affiliate” (as defined in Rule 405 under the Securities Act of 1933, as amended) of (A) any
entity which now or hereafter is part of the Associated Estates Group, including, without
limitation, Associated Estates Corporation, an Ohio corporation, Adam Construction Company, an Ohio
corporation, and Estates Insurance Agency, Inc., an Ohio corporation, or (B) any entity which is an
affiliate (as defined above) of any entity listed in clause (ii)(A) of this Article FIFTH.




          SIXTH: No holder of shares of the Corporation of any class shall be entitled as such, as a
matter of right, to subscribe for or purchase shares of any class, now or hereafter authorized, or
to subscribe for or purchase securities convertible into or exchangeable for shares of the
Corporation or to which shall be attached or appertain any warrants or rights entitling the holder
thereof to subscribe for or purchase shares, except such rights of subscription or purchase, if
any, for such considerations and upon such terms and conditions as its Board of Directors from time
to time may determine.



          SEVENTH: Notwithstanding any provision of Sections 1701.01 to 1701.98, inclusive, of the Ohio
Revised Code, or any successor statutes now or hereafter in force, requiring for the authorization
or taking of any action the vote or consent of the holders of shares entitling them to exercise
two-thirds or any other proportion of the voting power of the Corporation or of any class or
classes of shares thereof, such action, unless otherwise expressly required by law or these Second
Amended and Restated Articles of Incorporation, may be authorized or taken by the vote or consent
of the holders of shares entitling them to exercise a majority of the voting power of the
Corporation or of such class or classes of shares thereof.



          EIGHTH: To the extent permitted by law, the Corporation, by action of its Board of Directors,
may purchase or otherwise acquire shares of any class issued by it at such times, for such
consideration and upon such terms and conditions as its Board of Directors may determine.



          NINTH: No person who is serving or has served as a director of the corporation shall be
personally liable to the corporation or any of its shareholders for monetary damages for breach of
any fiduciary duty of such person as a director by reason of any act or omission of such person as
a director; provided, however, that the foregoing provision shall not eliminate or limit the
liability of any person (a) for any breach of such person’s duty of loyalty as a director to the
corporation or its shareholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 1701.95 of the Ohio Revised
Code, (d) for any transaction from which such person derived any improper personal benefit, or (e)
to the extent that such liability may not be limited or eliminated by virtue of the provisions of
Section 1701.13 of the Ohio Revised Code or any successor section or statute. Any repeal or
modification of this Article EIGHTH by the shareholders of the corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability of a director or the
corporation existing at the time of such repeal or modification.



          TENTH: The provisions of Chapter 1701.831 of the Ohio Revised Code shall not apply to the
Corporation.



          ELEVENTH: The provisions of Chapter 1707.043 of the Ohio Revised Code shall not apply to the
Corporation.



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          TWELFTH: If any provision (or portion thereof) of these Second Amended and Restated Articles
of Incorporation shall be found to be invalid, prohibited, or unenforceable for any reason, the
remaining provisions (or portions thereof) of these Second Amended and Restated Articles of
Incorporation shall be deemed to remain in full force and effect, and shall be construed as if such
invalid, prohibited, or unenforceable provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of the Corporation and its shareholders that each such remaining
provision (or portion thereof) of these Second Amended and Restated Articles of Incorporation
remain, to the fullest extent permitted by law, applicable and enforceable as to all shareholders,
notwithstanding any such finding.



          THIRTEENTH: No shareholder of the Corporation may cumulate his voting power in the election
of directors.



          FOURTEENTH: The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Second Amended and Restated Articles of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are
granted subject to this reservation.



          FIFTEENTH: These Second Amended and Restated Articles of Incorporation shall take the place
of and supersede the corporation’s existing Articles of Incorporation.



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CERTIFICATE OF AMENDMENT




TO



ARTICLES OF INCORPORATION



OF



ASSOCIATED ESTATES REALTY CORPORATION



     Jeffrey I. Friedman, Chairman of the Board, President, and Chief Executive Officer, and
Martin A. Fishman, Vice President-General Counsel and Secretary, of Associated Estates Realty
Corporation, an Ohio corporation (the “Corporation”), do hereby certify that on May 24, 1994, at
the annual shareholders meeting of the Corporation, the shareholders of the Corporation adopted the
resolutions attached hereto as Exhibit A; and that said resolutions are valid and binding, have not
been amended, modified, or rescinded, and are in full force and effect on the date hereof.



     IN WITNESS WHEREOF, the undersigned have hereunto subscribed their names as of the 17th day of
June 1994.



	 	 	 	 	 
	 	 	 
	 	/s/ JEFFREY I. FRIEDMAN
 	 
	 	Jeffrey I.  Friedman 	 
	 	Chairman of the Board, President,

   and Chief Executive Officer 	 
	 	 	 
	 	                                              /s/ MARTIN A.  FISHMAN
 	 
	 	Martin A. Fishman 	 
	 	Vice President-General Counsel and
Secretary 	 
	 




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EXHIBIT A




          RESOLVED, that Article FOURTH of the Company’s Amended and Restated Articles of Incorporation
be, and the same hereby is, deleted in its entirety and there is substituted therefor the
following:



          FOURTH: The authorized number of shares of the Corporation is 50,000,000, consisting of
41,000,000 Common Shares, without par value (hereinafter called “Common Shares”), and 3,000,000
Class A Cumulative Preferred Shares, without par value (hereinafter called “Class A Shares”),
3,000,000 Class B Cumulative Preferred Shares, without par value (hereinafter called “Class B
Shares”) and 3,000,000 Noncumulative Preferred Shares, without par value (hereinafter called
“Noncumulative Shares”).



DIVISION A




     I. THE CLASS A CUMULATIVE PREFERRED SHARES. The Class A Shares shall have the following
express terms:



          Section 1. SERIES. The Class A Shares may be issued from time to time in one or more
series. All Class A Shares shall be of equal rank and shall be identical, except in respect of
the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of
a series shall be identical with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class A Shares shall rank on a parity with the
Class B Shares and the Noncumulative Shares and shall be identical to all Class B Shares and
Noncumulative Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1 and (2) only
dividends on Class A Shares and Class B Shares shall be cumulative as set forth herein. Subject
to the provisions of Sections 2 through 5, both inclusive, and Item 4 of this Division, which
provisions shall apply to all Class A Shares, the Board of Directors hereby is authorized to cause
such shares to be issued in one or more series and with respect to each such series to determine
and fix prior to the issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:



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



               (b) The authorized number of shares of the series, which number the Board of Directors may
(except where otherwise provided in the creation of the series) increase or decrease from time to
time before or after the issuance thereof (but not below the number of shares thereof then
outstanding);



               (c) The dividend rate or rates of the series, including the means by which such rates may be
established;



13









 





               (d) The date or dates from which dividends shall accrue and be cumulative and the dates on
which and the period or periods for which dividends, if declared, shall be payable, including the
means by which such dates and periods may be established;



               (e) The redemption rights and price or prices, if any, for shares of the series;



               (f) The terms and amount of the sinking fund, if any, for the purchase or redemption of shares
of the series;



               (g) The amounts payable on shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;



               (h) Whether the shares of the series shall be convertible into Common Shares or shares of any
other class and, if so, the conversion rate or rates or price or prices, any adjustments thereof
and all other terms and conditions upon which such conversion may be made; and



               (i) Restrictions (in addition to those set forth in Subsection 5(d) or 5(e) of this Section I)
on the issuance of shares of the same series or of any other class or series.



          The Board of Directors is authorized to adopt from time to time amendments to the Amended and
Restated Articles of Incorporation, as amended, fixing, with respect to each such series, the
matters described in clauses (a) through (i), both inclusive, of this Section and is authorized to
take such actions with respect thereto as may be required by law in order to effect such
amendments.



          Section 2. DIVIDENDS.



               (a) The holders of Class A Shares of each series, in preference to the holders of Common
Shares and of any other class of shares ranking junior to the Class A Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as declared by the Board of
Directors, dividends in cash at the rate or rates for such series fixed in accordance with the
provisions of Section 1 above and no more, payable on the dates fixed for such series. Such
dividends shall accrue and be cumulative, in the case of shares of each particular series, from and
after the date or dates fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class A Shares for any dividend period unless at the
same time (i) a like proportionate dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend rates fixed therefor, shall
have been paid upon or declared or set apart for all Class A Shares of all series then issued and
outstanding and entitled to receive such dividend and (ii) the dividends payable for the dividend
periods terminating on the same or any earlier date (but, with respect to Noncumulative Shares,
only with respect to the then current dividend period), ratably in proportion to the respective
dividend rates fixed therefor, shall have been paid upon or declared or set apart for all Class B
Shares and Noncumulative Shares then issued and outstanding and entitled to receive such dividends.



14









 





               (b) So long as any Class A Shares shall be outstanding no dividend, except a dividend payable
in Common Shares or other shares ranking junior to the Class A Shares, shall be paid or declared or
any distribution be made, except as aforesaid, in respect of the Common Shares or any other shares
ranking junior to the Class A Shares, nor shall any Common Shares or any other shares ranking
junior to the Class A Shares be purchased, retired or otherwise acquired by the Corporation, except
out of the proceeds of the sale of Common Shares or other shares of the Corporation ranking junior
to the Class A Shares received by the Corporation subsequent to the date of first issuance of Class
A Shares of any series, unless:



                    (1) All accrued and unpaid dividends on Class A Shares and Class B Shares, including the full
dividends for all current dividend periods, shall have been declared and paid or a sum sufficient
for payment thereof set apart;



                    (2) All unpaid dividends on Noncumulative Shares for the then current dividend period shall
have been declared and paid or a sum sufficient for payment therefor set apart; and



                    (3) There shall be no arrearages with respect to the redemption of Class A Shares, Class B
Shares or Noncumulative Shares of any series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this Division.



               (c) The foregoing restrictions on the payment of dividends or other distributions on, or on
the purchase, redemption retirement or other acquisition of, Common Shares or any other shares
ranking on a parity with or junior to the Class A Shares shall be inapplicable to (i) any payments
in lieu of issuance of fractional shares thereof, whether upon any merger, conversion, stock
dividend or otherwise, (ii) the conversion of Class A Shares, Class B Shares or Noncumulative
Shares into Common Shares or (iii) the exercise by the Corporation of its rights pursuant to
Section V(d) of this Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Second Amended and Restated Articles of Incorporation, as amended, with respect
to any other class or series of capital stock hereafter created or authorized.



               (d) If, for any taxable year, the Corporation elects to designate as “capital gain dividends”
(as defined in Section 857 of the Code), any portion (the “Capital Gains Amount”) of the dividends
paid or made available for the year to holders of all classes of stock (the “Total Dividends”),
then the portion of the Capital Gains Amount that shall be allocable to holders of the Class A
Shares shall be the amount that the total dividends paid or made available to the holders of the
Class A Shares for the year bears to the Total Dividends.



          Section 3. REDEMPTION.



               (a) Subject to the express terms of each series, the Corporation:



                    (1) May, from time to time at the option of the Board of Directors, redeem all or any part of
any redeemable series of Class A Shares at the time outstanding at the applicable redemption price
for such series fixed in accordance with the provisions of Section 1 of this Division; and



15









 





                    (2) Shall, from time to time, make such redemptions of each series of Class A Shares as may be
required to fulfill the requirements of any sinking fund provided for shares of such series at the
applicable sinking fund redemption price fixed in accordance with the provisions of Section 1 of
this Division;



               and shall in each case pay all accrued and unpaid dividends to the redemption date.



               (b)(1) Notice of every such redemption shall be mailed, postage prepaid, to the holders of
record of the Class A Shares to be redeemed at their respective addresses then appearing on the
books of the Corporation, not less than 30 days nor more than 60 days prior to the date fixed for
such redemption, or such other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Division prior to the issuance thereof. At any time after
notice as provided above has been deposited in the mail, the Corporation may deposit the aggregate
redemption price of Class A Shares to be redeemed, together with accrued and unpaid dividends
thereon to the redemption date, with any bank or trust company in Cleveland, Ohio, or New York, New
York, having capital and surplus of not less than $100,000,000, named in such notice and direct
that there be paid to the respective holders of the Class A Shares so to be redeemed amounts equal
to the redemption price of the Class A Shares so to be redeemed, together with such accrued and
unpaid dividends thereon, on surrender of the share certificate or certificates held by such
holders; and upon the deposit of such notice in the mail and the making of such deposit of money
with such bank or trust company, such holders shall cease to be shareholders with respect to such
shares; and from and after the time such notice shall have been so deposited and such deposit of
money shall have been so made, such holders shall have no rights or claim against the Corporation
with respect to such shares, except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any unexpired privileges of
conversion. In the event less than all of the outstanding Class A Shares are to be redeemed, the
Corporation shall select by lot the shares so to be redeemed in such manner as shall be prescribed
by the Board of Directors.



                    (2) If the holders of Class A Shares which have been called for redemption shall not within
six years after such deposit claim the amount deposited for the redemption thereof, any such bank
or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in
respect thereof and to such holders.



               (c) Any Class A Shares which are (1) redeemed by the Corporation pursuant to the provisions of
this Section, (2) purchased and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express terms thereof, or (4)
otherwise acquired by the Corporation, shall resume the status of authorized but unissued Class A
Shares without serial designation.



               (d) Except in connection with the exercise of the Corporation’s rights pursuant to Section (d)
of Item V of this Division A, Section 4(d) of Division B or any similar Section hereafter contained
in these Second Amended and Restated Articles of Incorporation, as amended, with respect to any
other class or series of capital stock hereafter created or authorized, the Corporation may not
purchase or redeem (for sinking fund purposes or otherwise) less than



16









 




all of the Class A Shares then outstanding except in accordance with a stock purchase offer
made to all holders of record of Class A Shares, unless all dividends on all Class A Shares then
outstanding for all previous and current dividend periods shall have been declared and paid or
funds therefor set apart and all accrued sinking fund obligations applicable thereto shall have
been complied with.




          Section 4. LIQUIDATION.



               (a)(1) In the event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, the holders of Class A Shares of any series shall be entitled to
receive in full out of the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any other shares ranking
junior to the Class A Shares, the amounts fixed with respect to shares of such series in accordance
with Section 1 of this Division, plus an amount equal to all dividends accrued and unpaid thereon
to the date of payment of the amount due pursuant to such liquidation, dissolution or winding up of
the affairs of the Corporation. In the event the net assets of the Corporation legally available
therefor are insufficient to permit the payment upon all outstanding Class A Shares, Class B Shares
and Noncumulative Shares of the full preferential amount to which they are respectively entitled,
then such net assets shall be distributed ratably upon all outstanding Class A Shares, Class B
Shares and Noncumulative Shares in proportion to the full preferential amount to which each such
share is entitled.



                    (2) After payment to the holders of Class A Shares of the full preferential amounts as
aforesaid, the holders of Class A Shares, as such, shall have no right or claim to any of the
remaining assets of the Corporation.



               (b) The merger or consolidation of the Corporation into or with any other Corporation, the
merger of any other Corporation into it, or the sale, lease or conveyance of all or substantially
all the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding
up for the purposes of this Section.



          Section 5. VOTING.



               (a) The holders of Class A Shares shall have no voting rights, except as provided in this
Section or required by law.



               (b)(1) If, and so often as, the Corporation shall be in default in the payment of dividends on
any series of Class A Shares at the time outstanding, whether or not earned or declared, for a
number of consecutive dividend payment periods which in the aggregate contain at least 540 days,
all holders of such Class A Shares, voting separately as a class, together with all Class B Shares
and Noncumulative Shares upon which like voting rights have been conferred and are exercisable
under the circumstances described in Subsection 5(c), shall be entitled to elect, as herein
provided, two members of the Board of Directors of the Corporation; provided, however, that the
holders of such Class A Shares shall not exercise such special class voting rights except at
meetings of such shareholders for the election of directors at which the holders of not less than
50% of such Class A Shares are present in person or by proxy; and provided further, that the
special class voting rights provided for in this paragraph when the



17









 




same shall have become vested shall remain so vested until all accrued and unpaid dividends on
such Class A Shares then outstanding shall have been paid or declared and a sum sufficient for the
payment thereof set aside for payment, whereupon the holders of such Class A Shares shall be
divested of their special class voting rights in respect of subsequent elections of directors,
subject to the revesting of such special class voting rights in the event above specified in this
paragraph.




                    (2) In the event of default entitling holders of Class A Shares to elect two directors as
specified in paragraph (1) of this Subsection, a special meeting of such holders for the purpose of
electing such directors shall be called by the Secretary of the Corporation upon written request
of, or may be called by, the holders of record of at least 10% of the Class A Shares upon which
such default in the payment of dividends exists and notice thereof shall be given in the same
manner as that required for the annual meeting of shareholders; provided, however, that the
Corporation shall not be required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of receipt of the foregoing
written request from the holders of Class A Shares. At any meeting at which such holders of Class
A Shares shall be entitled to elect directors, holders of 50% of such Class A Shares, present in
person or by proxy, shall be sufficient to constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting at which there shall be such a quorum shall
be sufficient to elect the members of the Board of Directors which such holders of Class A Shares
are entitled to elect as herein provided. Notwithstanding any provision of these Second Articles
of Incorporation, as amended, or the Code of Regulations of the Corporation or any action taken by
the holders of any class of shares fixing the number of directors of the Corporation, the two
directors who may be elected by such holders of Class A Shares pursuant to this Subsection shall
serve in addition to any other directors then in office or proposed to be elected otherwise than
pursuant to this Subsection. Nothing in this Subsection shall prevent any change otherwise
permitted in the total number of or classifications of directors of the Corporation nor require the
resignation of any director elected otherwise than pursuant to this Subsection. Notwithstanding
any classification of the other directors of the Corporation, the two directors elected by such
holders of Class A Shares shall be elected annually for terms expiring at the next succeeding
annual meeting of shareholders.



                    (3) Upon any divesting of the special class voting rights of the holders of the Class A Shares
in respect of elections of directors as provided in this Subsection, the terms of office of all
directors then in office elected by such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a class becomes vacant by reason of death,
resignation, removal from office or otherwise, the remaining director elected by such holders
voting as a class may elect a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.



               (c) If at any time when the holders of Class A Shares are entitled to elect directors pursuant
to the foregoing provisions of this Section the holders of any Class B Shares or Noncumulative
Shares are entitled to elect directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the Class B Shares and the
Noncumulative Shares then entitled to vote shall be combined (with each class of shares having a
number of votes proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Class A Shares and of all such other shares



18









 




then entitled so to vote, voting as a class, shall elect such directors. If the holders of
any such other shares have elected such directors prior to the happening of the default or event
permitting the holders of Class A Shares to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the Corporation as required above,
then a new election shall be held with all such other shares and the Class A Shares voting together
as a single class for such directors, resulting in the termination of the term of such previously
elected directors upon the election of such new directors.




               (d) The affirmative vote of the holders of at least two-thirds of each series of the Class A
Shares at the time outstanding, voting separately as a class, given in person or by proxy either in
writing or at a meeting called for the purpose, shall be necessary to effect either of the
following:



                    (1) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of the Second Amended and Restated Articles of Incorporation, as amended, or of
the Code of Regulations of the Corporation which affects adversely and materially the preferences
or voting or other rights of the holders of Class A Shares which are set forth in these Second
Amended and Restated Articles of Incorporation, as amended; provided, however, neither the
amendment of these Second Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Class A Shares or of any shares
ranking on a parity with or junior to the Class A Shares nor the amendment of the provisions of the
Code of Regulations so as to change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially preferences or voting or other rights of the
holders of Class A Shares; or



                    (2) The authorization, creation or increase in the authorized number of any shares, or any
security convertible into shares, in either case ranking prior to such series of Class A Shares.



               (e) In the event, and only to the extent, that (1) Class A Shares are issued in more than one
series and (2) Ohio law permits the holders of a series of a class of capital stock to vote
separately as a class, the affirmative vote of the holders of at least two-thirds of each series of
Class A Shares at the time outstanding, voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of
any of the provisions of these Second Amended and Restated Articles of Incorporation, as amended,
or of the Code of Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of such series which are set forth in these
Second Amended and Restated Articles of Incorporation, as amended; provided, however, neither the
amendment of these Second Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Class A Shares or of any shares
ranking on a parity with or junior to the Class A Shares nor the Amendment of the provisions of the
Code of Regulations so as to change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially the preferences or voting or other rights of the
holders of such series.



19









 





     II. THE CLASS B CUMULATIVE PREFERRED SHARES. The Class B Cumulative Preferred Shares shall
have the following express terms:



          Section 1. SERIES. The Class B Shares may be issued from time to time in one or more
series. All Class B Shares shall be of equal rank and shall be identical, except in respect of
the matters that may be fixed by the Board of Directors as hereinafter provided, and each share of
a series shall be identical with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class B Shares shall rank on a parity with the
Class A Shares and the Noncumulative Shares and shall be identical to all Class A Shares and
Noncumulative Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1 and (2) only
dividends on the Class A Shares and the Class B shares are cumulative as set forth herein.
Subject to the provisions of Sections 2 through 5, both inclusive, and Item 4 of this Division,
which provisions shall apply to all Class B Shares, the Board of Directors hereby is authorized to
cause such shares to be issued in one or more series and with respect to each such series to
determine and fix prior to the issuance thereof (and thereafter, to the extent provided in clause
(b) of this Section) the following:



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



               (b) The authorized number of shares of the series, which number the Board of Directors may
(except where otherwise provided in the creation of the series) increase or decrease from time to
time before or after the issuance thereof (but not below the number of shares thereof then
outstanding);



               (c) The dividend rate or rates of the series, including the means by which such rates may be
established;



               (d) The date or dates from which dividends shall accrue and be cumulative and the dates on
which and the period or periods for which dividends, if declared, shall be payable, including the
means by which such dates and periods may be established;



               (e) The redemption rights and price or prices, if any, for shares of the series;



               (f) The terms and amount of the sinking fund, if any, for the purchase or redemption of shares
of the series;



               (g) The amounts payable on shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;



               (h) Whether the shares of the series shall be convertible into Common Shares or shares of any
other class and, if so, the conversion rate or rates or price or prices, any adjustments thereof
and all other terms and conditions upon which such conversion may be made; and



20









 





               (i) Restrictions (in addition to those set forth in Subsection 5(d) or 5(e) of this Section
II) on the issuance of shares of the same series or of any other class or series.



          The Board of Directors is authorized to adopt from time to time amendments to the Second
Amended and Restated Articles of Incorporation, as amended, fixing, with respect to each such
series, the matters described in clauses (a) through (i), both inclusive, of this Section and is
authorized to take such actions with respect thereto as may be required by law in order to effect
such amendments.



          Section 2. DIVIDENDS.



               (a) The holders of Class B Shares of each series, in preference to the holders of Common
Shares and of any other class of shares ranking junior to the Class B Shares, shall be entitled to
receive out of any funds legally available therefor, and when and as declared by the Board of
Directors, dividends in cash at the rate or rates for such series fixed in accordance with the
provisions of Section 1 above and no more, payable on the dates fixed for such series. Such
dividends shall accrue and be cumulative, in the case of shares of each particular series, from and
after the date or dates fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class B Shares for any dividend period unless at the
same time (i) a like proportionate dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend rates fixed therefor, shall
have been paid upon or declared or set apart for all Class B Shares of all series then issued and
outstanding and entitled to receive such dividend and (ii) the dividends payable for the dividend
periods terminating on the same or any earlier date (but, with respect to the Noncumulative Shares,
only with respect to the then current dividend period), ratably in proportion to the respective
dividend rates fixed therefor, shall have been paid upon or declared or set apart for all Class A
Shares and Noncumulative Shares then issued and outstanding and entitled to receive such dividends.



               (b) So long as any Class B Shares shall be outstanding no dividend, except a dividend payable
in Common Shares or other shares ranking junior to the Class B Shares, shall be paid or declared or
any distribution be made, except as aforesaid, in respect of the Common Shares or any other shares
ranking junior to the Class B Shares, nor shall any Common Shares or any other shares ranking
junior to the Class B Shares be purchased, retired or otherwise acquired by the Corporation, except
out of the proceeds of the sale of Common Shares or other shares of the Corporation ranking junior
to the Class B Shares received by the Corporation subsequent to the date of first issuance of Class
B Shares of any series, unless:



                    (1) All accrued and unpaid dividends on Class A Shares and Class B Shares, including the full
dividends for all current dividend periods, shall have been declared and paid or a sum sufficient
for payment thereof set apart;



                    (2) All unpaid dividends on Noncumulative Shares for the then current dividend period shall
have been declared and paid or a sum sufficient for payment thereof set apart; and



21









 





                    (3) There shall be no arrearages with respect to the redemption of Class A Shares, Class B
Shares or Noncumulative Shares of any series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this Division.



               (c) The foregoing restrictions on the payment of dividends or other distributions on, or on
the purchase, redemption, retirement or other acquisition of, Common Shares or any other shares
ranking on a parity with or junior to the Class B Shares shall be inapplicable to (i) any payments
in lieu of issuance of fractional shares thereof, whether upon any merger, conversion, stock
dividend or otherwise, (ii) the conversion of Class A Shares, Class B Shares or Noncumulative
Shares into Common Shares or (iii) the exercise by the Corporation of its rights pursuant to
Section V(d) of this Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Second Amended and Restated Articles of Incorporation, as amended, with respect
to any other class or series of capital stock hereafter created or authorized.



               (d) If, for any taxable year, the Corporation elects to designate as “capital gain dividends”
(as defined in Section 857 of the Code), any portion (the “Capital Gains Amount”) of the dividends
paid or made available for the year to holders of all classes of stock (the “Total Dividends”),
then the portion of the Capital Gains Amount that shall be allocable to holders of the Class B
Shares shall be the amount that the total dividends paid or made available to the holders of the
Class B Shares for the year bears to the Total Dividends.



          Section 3. REDEMPTION.



               (a) Subject to the express terms of each series, the Corporation:



                    (1) May, from time to time at the option of the Board of Directors, redeem all or any part of
any redeemable series of Class B Shares at the time outstanding at the applicable redemption price
for such series fixed in accordance with the provisions of Section 1 of this Division; and



                    (2) Shall, from time to time, make such redemptions of each series of Class B Shares as may be
required to fulfill the requirements of any sinking fund provided for shares of such series at the
applicable sinking fund redemption price fixed in accordance with the provisions of Section 1 of
this Division; and shall in each case pay all accrued and unpaid dividends to the redemption date.



               (b) (1) Notice of every such redemption shall be mailed, postage prepaid, to the holders of
record of the Class B Shares to be redeemed at their respective addresses then appearing on the
books of the Corporation, not less than 30 days nor more than 60 days prior to the date fixed for
such redemption, or such other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Division prior to the issuance thereof. At any time after
notice as provided above has been deposited in the mail, the Corporation may deposit the aggregate
redemption price of Class B Shares to be redeemed, together with accrued and unpaid dividends
thereon to the redemption date, with any bank or trust company in Cleveland, Ohio, or New York, New
York, having capital and surplus of not less than $100,000,000, named in such notice and direct
that there be paid to the respective holders of the



22









 




Class B Shares so to be redeemed amounts equal to the redemption price of the Class B Shares
so to be redeemed, together with such accrued and unpaid dividends thereon, on surrender of the
share certificate or certificates held by such holders; and upon the deposit of such notice in the
mail and the making of such deposit of money with such bank or trust company, such holders shall
cease to be shareholders with respect to such shares; and from and after the time such notice shall
have been so deposited and such deposit of money shall have been so made, such holders shall have
no rights or claim against the Corporation with respect to such shares, except only the right to
receive such money from such bank or trust company without interest or to exercise before the
redemption date any unexpired privileges of conversion. In the event less than all of the
outstanding Class B Shares are to be redeemed, the Corporation shall select by lot the shares so to
be redeemed in such manner as shall be prescribed by the Board of Directors.




                    (2) If the holders of Class B Shares which have been called for redemption shall not within
six years after such deposit claim the amount deposited for the redemption thereof, any such bank
or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved of all responsibility in
respect thereof and to such holders.



               (c) Any Class B Shares which are (1) redeemed by the Corporation pursuant to the provisions of
this Section, (2) purchased and delivered in satisfaction of any sinking fund requirements provided
for shares of such series, (3) converted in accordance with the express terms thereof, or (4)
otherwise acquired by the Corporation, shall resume the status of authorized but unissued Class B
Shares without serial designation.



               (d) Except in connection with the exercise of the Corporation’s rights pursuant to Section (d)
of Item V of this Division A, Section 4(d) of Division B or any similar Section hereafter contained
in these Second Amended and Restated Articles of Incorporation, as amended, with respect to any
other class or series of capital stock hereafter created or authorized, the Corporation may not
purchase or redeem (for sinking fund purposes or otherwise) less than all of the Class B Shares
then outstanding except in accordance with a stock purchase offer made to all holders of record of
Class B Shares, unless all dividends on all Class B Shares then outstanding for all previous and
current dividend periods shall have been declared and paid or funds therefor set apart and all
accrued sinking fund obligations applicable thereto shall have been complied with.



          Section 4. LIQUIDATION.



               (a) (1) In the event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, the holders of Class B Shares of any series shall be entitled to
receive in full out of the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any other shares ranking
junior to the Class B Shares, the amounts fixed with respect to shares of such series in accordance
with Section 1 of this Division, plus an amount equal to all dividends accrued and unpaid thereon
to the date of payment of the amount due pursuant to such liquidation, dissolution or winding up of
the affairs of the Corporation. In the event the net assets of the Corporation legally available
therefor are insufficient to permit the payment upon all outstanding Class A Shares, Class B Shares
and Noncumulative Shares of the full preferential amount to which they



23









 




are respectively entitled, then such net assets shall be distributed ratably upon all
outstanding Class A Shares, Class B Shares and Noncumulative Shares in proportion to the full
preferential amount to which each such share is entitled.




                    (2) After payment to the holders of Class B Shares of the full preferential amounts as
aforesaid, the holders of Class B Shares, as such, shall have no right or claim to any of the
remaining assets of the Corporation.



               (b) The merger or consolidation of the Corporation into or with any other corporation, the
merger of any other corporation into it, or the sale, lease or conveyance of all or substantially
all the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding
up for the purposes of this Section.



          Section 5. VOTING.



               (a) The holders of Class B Shares shall have no voting rights, except as provided in this
Section or required by law.



               (b) (1) If, and so often as, the Corporation shall be in default in the payment of dividends
on any series of Class B Shares at the time outstanding, whether or not earned or declared, for a
number of consecutive dividend payment periods which in the aggregate contain at least 540 days,
all holders of Class B Shares, voting separately as a class, together with all Class A Shares and
Noncumulative Shares upon which like voting rights have been conferred and are exercisable under
the circumstances described in Subsection 5(c), shall be entitled to elect, as herein provided, a
total of two members of the Board of Directors of the Corporation; provided, however, that the
holders of such Class B Shares shall not exercise such special class voting rights except at
meetings of such shareholders for the election of directors at which the holders of not less than
50% of such Class B Shares are present in person or by proxy; and provided further, that the
special class voting rights provided for in this paragraph when the same shall have become vested
shall remain so vested until all accrued and unpaid dividends on such Class B Shares then
outstanding shall have been paid or declared and a sum sufficient therefor set aside for payment,
whereupon the holders of such Class B Shares shall be divested of their special class voting rights
in respect of subsequent elections of directors, subject to the revesting of such special class
voting rights in the event above specified in this paragraph.



                   (2) In the event of default entitling holders of Class B Shares to elect two directors as
specified in paragraph (1) of this Subsection, a special meeting of such holders for the purpose of
electing such directors shall be called by the Secretary of the Corporation upon written request
of, or may be called by, the holders of record of at least 10% of the Class B Shares upon which
such default in the payment of dividends exists and notice thereof shall be given in the same
manner as that required for the annual meeting of shareholders; provided, however, that the
Corporation shall not be required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of receipt of the foregoing
written request from the holders of Class B Shares. At any meeting at which such holders of Class
B Shares shall be entitled to elect directors, holders of 50% of such Class B Shares, present in
person or by proxy, shall be sufficient to constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting at which there shall be



24









 




such a quorum shall be sufficient to elect the members of the Board of Directors which such
holders of Class B Shares are entitled to elect as herein provided. Notwithstanding any provision
of these Second Articles of Incorporation, as amended, or the Code of Regulations of the
Corporation or any action taken by the holders of any class of shares fixing the number of
directors of the Corporation, the two directors who may be elected by such holders of Class B
Shares pursuant to this Subsection shall serve in addition to any other directors then in office or
proposed to be elected otherwise than pursuant to this Subsection. Nothing in this Subsection
shall prevent any change otherwise permitted in the total number of or classifications of directors
of the Corporation nor require the resignation of any director elected otherwise than pursuant to
this Subsection. Notwithstanding any classification of the other directors of the Corporation, the
two directors elected by such holders of Class B Shares shall be elected annually for terms
expiring at the next succeeding annual meeting of shareholders.




                    (3) Upon any divesting of the special class voting rights of the holders of the Class B Shares
in respect of elections of directors as provided in this Subsection, the terms of office of all
directors then in office elected by such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a class becomes vacant by reason of death,
resignation, removal from office or otherwise, the remaining director elected by such holders
voting as a class may elect a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.



               (c) If at any time when the holders of Class B Shares are entitled to elect directors pursuant
to the foregoing provisions of this Section the holders of any Class A Shares or Noncumulative
Shares are entitled to elect directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, the Class B Shares and the
Noncumulative Shares then entitled to vote shall be combined (with class of shares having a number
of votes proportional to the aggregate liquidation preference of its outstanding shares). In such
case, the holders of Class B Shares and of all such other shares then entitled so to vote, voting
as a class, shall elect such directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the holders of Class B Shares
to elect directors, or prior to a written request for the holding of a special meeting being
received by the Secretary of the Corporation as required above, then a new election shall be held
with all such other shares and the Class B Shares voting together as a single class for such
directors, resulting in the termination of the term of such previously elected directors upon the
election of such new directors.



               (d) The affirmative vote of the holders of at least two-thirds of the Class B Shares at the
time outstanding, voting separately as a class, given in person or by proxy either in writing or at
a meeting called for the purpose, shall be necessary to effect either of the following:



                    (1) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of the Second Amended and Restated Articles of Incorporation, as amended, or of
the Code of Regulations of the Corporation which affects adversely and materially the preferences
or voting or other rights of the holders of Class B Shares which are set forth in these Second
Amended and Restated Articles of Incorporation, as amended; provided, however, neither the
amendment of these Second Amended and Restated



25









 




Articles of Incorporation, as amended, so as to authorize, create or change the authorized or
outstanding number of Class B Shares or of any shares ranking on a parity with or junior to the
Class B Shares nor the amendment of the provisions of the Code of Regulations so as to change the
number or classification of directors of the Corporation shall be deemed to affect adversely and
materially preferences or voting or other rights of the holders of Class B Shares; or




                    (2) The authorization, creation or increase in the authorized number of any shares, or any
security convertible into shares, in either case ranking prior to such Class B Shares.



               (e) In the event, and only to the extent, that (1) Class B Shares are issued in more than one
series and (2) Ohio law permits the holders of a series of a class of capital stock to vote
separately as a class, the affirmative vote of the holders of at least two-thirds of each series of
Class B Shares at the time outstanding voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of
any of the provisions of these Second Amended and Restated Articles of Incorporation, as amended,
or of the Code of Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of such series which are set forth in these
Second Amended and Restated Articles of Incorporation, as amended; provided, however, neither the
amendment of these Second Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Class B Shares or of any shares
remaining on a parity with or junior to the Class B Shares nor the amendment of the provisions of
the Code of Regulations so as to change the number of classification of directors of the
Corporation shall be deemed to affect adversely and materially preferences or voting or other
rights of the holders of such series.



     III. THE NONCUMULATIVE PREFERRED SHARES. The Noncumulative Preferred Shares shall have the
following express terms:



          Section 1. Series. The Noncumulative Shares may be issued from time to time in one or more
series. All Noncumulative Shares shall be of equal rank and shall be identical, except in respect
of the matters that may be fixed by the Board of Directors as hereinafter provided, and each share
of a series shall be identical with all other shares of such series, except as to the dates on
which and the periods for which dividends may be payable. All Noncumulative Shares shall rank on a
parity with the Class A Shares and the Class B Shares and shall be identical to all Class A Shares
and Class B Shares except (1) in respect of the matters that may be fixed by the Board of Directors
as provided in clauses (a) through (i), inclusive, of this Section 1 and (2) only dividends on the
Noncumulative Shares are noncumulative as set forth herein. Subject to the provisions of Sections
2 through 5, both inclusive, and Item 4 of this Division, which provisions shall apply to all
Noncumulative Shares, the Board of Directors hereby is authorized to cause such shares to be issued
in one or more series and with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this Section) the
following:



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



26









 





               (b) The authorized number of shares of the series, which number the Board of Directors may
(except where otherwise provided in the creation of the series) increase or decrease from time to
time before or after the issuance thereof (but not below the number of shares thereof then
outstanding);



               (c) The dividend rate or rates of the series, including the means by which such rates may be
established;



               (d) The dates on which and the period or periods for which dividends, if declared, shall be
payable, including the means by which such dates and periods may be established;



               (e) The redemption rights and price or prices, if any, for shares of the series;



               (f) The terms and amount of the sinking fund, if any, for the purchase or redemption of shares
of the series;



               (g) The amounts payable on shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation;



               (h) Whether the shares of the series shall be convertible into Common Shares or shares of any
other class and, if so, the conversion rate or rates or price or prices, any adjustments thereof
and all other terms and conditions upon which such conversion may be made; and



               (i) Restrictions (in addition to those set forth in Subsection 5(d) or 5(e) of this Section
III) on the issuance of shares of the same series or of any other class or series.



          The Board of Directors is authorized to adopt from time to time amendments to the Second
Amended and Restated Articles of Incorporation, as amended, fixing, with respect to each such
series, the matters described in clauses (a) through (i), both inclusive, of this Section and is
authorized to take such actions with respect thereto as may be required by law in order to effect
such amendments.



          Section 2. DIVIDENDS.



               (a) The holders of Noncumulative Shares of each series, in preference to the holders of Common
Shares and of any other class of shares ranking junior to the Noncumulative Shares, shall be
entitled to receive out of any funds legally available therefor, if, when and as declared by the
Board of Directors, dividends in cash at the rate or rates for such series fixed in accordance with
the provisions of Section 1 above and no more, payable on the dates fixed for such series. Such
dividends shall accrue, in the case of shares of each particular series, from and after the date or
dates fixed with respect to such series; provided, however, that if the Board of Directors fails to
declare a dividend payable on a dividend payment date on any Noncumulative Shares, the holders of
the Noncumulative Shares shall have no right to receive a dividend in respect of the dividend
period ending on such dividend payment date, and the



27









 




Corporation shall have no obligation to pay the dividend accrued for such period, whether or
not dividends on such Noncumulative Shares are declared payable on any future dividend payment
date. No dividends shall be paid upon or declared or set apart for any series of the Noncumulative
Shares for any dividend period unless at the same time (i) a like proportionate dividend for the
then current dividend period, ratably in proportion to the respective annual dividend rates fixed
therefor, shall have been paid upon or declared or set apart for all Noncumulative Shares of all
series then issued and outstanding and entitled to receive such dividend and (ii) the dividends
payable for the dividend periods terminating on the same or any earlier date, ratably in proportion
to the respective dividend rates fixed therefor, shall have been paid upon or declared or set apart
for all Class A Shares and Class B Shares then issued and outstanding and entitled to receive such
dividends.




               (b) So long as any Noncumulative Shares shall be outstanding no dividend, except a dividend
payable in Common Shares or other shares ranking junior to the Noncumulative Shares, shall be paid
or declared or any distribution be made, except as aforesaid, in respect of the Common Shares or
any other shares ranking junior to the Noncumulative Shares, nor shall any Common Shares or any
other shares ranking junior to the Noncumulative Shares be purchased, retired or otherwise acquired
by the Corporation, except out of the proceeds of the sale of Common Shares or other shares of the
Corporation ranking junior to the Noncumulative Shares received by the Corporation subsequent to
the date of first issuance of Noncumulative Shares of any series, unless:



                    (1) All accrued and unpaid dividends on Class A Shares and Class B Shares including the full
dividends for all current dividend periods, shall have been declared and paid or a sum sufficient
for payment thereof set apart;



                    (2) All unpaid dividends on Noncumulative Shares for the then current dividend period shall
have been declared and paid or a sum sufficient for payment therefor set apart; and



                    (3) There shall be no arrearages with respect to the redemption of Class A Shares, Class B
Shares or Noncumulative Shares of any series from any sinking fund provided for shares of such
series in accordance with the provisions of Section 1 of this Division.



               (c) The foregoing restrictions on the payment of dividends or other distributions on, or on
the purchase, redemption retirement or other acquisition of, Common Shares or any other shares
ranking on a parity with or junior to the Noncumulative Shares shall be inapplicable to (i) any
payments in lieu of issuance of fractional shares thereof, whether upon any merger, conversion,
stock dividend or otherwise, (ii) the conversion of Class A Shares, Class B Shares or Noncumulative
Shares into Common Shares or (iii) the exercise by the Corporation of its rights pursuant to
Section V(d) of this Division A, Section 4(d) of Division B or any similar Section hereafter
contained in these Second Amended and Restated Articles of Incorporation with respect to any other
class or series of capital stock hereafter created or authorized.



               (d) If, for any taxable year, the Corporation elects to designate as “capital gain dividends”
(as defined in Section 857 of the Code), any portion (the “Capital Gains



28









 




Amount”) of the dividends paid or made available for the year to holders of all classes of
stock (the “Total Dividends”), then the portion of the Capital Gains Amount that shall be allocable
to holders of the Noncumulative Shares shall be the amount that the total dividends paid or made
available to the holders of the Noncumulative Shares for the year bears to the Total Dividends.




          Section 3. REDEMPTION.



               (a) Subject to the express terms of each series, the Corporation:



                    (1) May, from time to time at the option of the Board of Directors, redeem all or any part of
any redeemable series of Noncumulative Shares at the time outstanding at the applicable redemption
price for such series fixed in accordance with the provisions of Section 1 of this Division; and



                    (2) Shall, from time to time, make such redemptions of each series of Noncumulative Shares as
may be required to fulfill the requirements of any sinking fund provided for shares of such series
at the applicable sinking fund redemption price fixed in accordance with the provisions of Section
1 of this Division; and shall in each case pay all unpaid dividends for the then current dividend
period to the redemption date.



               (b) (1) Notice of every such redemption shall be mailed, postage prepaid, to the holders of
record of the Noncumulative Shares to be redeemed at their respective addresses then appearing on
the books of the Corporation, not less than 30 days nor more than 60 days prior to the date fixed
for such redemption, or such other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Division prior to the issuance thereof. At any time after
notice as provided above has been deposited in the mail, the Corporation may deposit the aggregate
redemption price of Noncumulative Shares to be redeemed, together with accrued and unpaid dividends
thereon for the then current dividend period to the redemption date, with any bank or trust company
in Cleveland, Ohio, or New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the respective holders of the
Noncumulative Shares so to be redeemed amounts equal to the redemption price of the Noncumulative
Shares so to be redeemed together with such accrued and unpaid dividends thereon for the then
current dividend period, on surrender of the share certificate or certificates held by such
holders; and upon the deposit of such notice in the mail and the making of such deposit of money
with such bank or trust company, such holders shall cease to be shareholders with respect to such
shares; and from and after the time such notice shall have been so deposited and such deposit of
money shall have been so made, such holders shall have no rights or claim against the Corporation
with respect to such shares, except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any unexpired privileges of
conversion. In the event less than all of the outstanding Noncumulative Shares are to be redeemed,
the Corporation shall select by lot the shares so to be redeemed in such manner as shall be
prescribed by the Board of Directors.



                    (2) If the holders of Noncumulative Shares which have been called for redemption shall not
within six years after such deposit claim the amount deposited for the redemption thereof, any such
bank or trust company shall, upon demand, pay over to the



29









 




Corporation such unclaimed amounts and thereupon such bank or trust company and the
Corporation shall be relieved of all responsibility in respect thereof and to such holders.




               (c) Any Noncumulative Shares which are (1) redeemed by the Corporation pursuant to the
provisions of this Section, (2) purchased and delivered in satisfaction of any sinking fund
requirements provided for shares of such series, (3) converted in accordance with the express terms
thereof, or (4) otherwise acquired by the Corporation, shall resume the status of authorized but
unissued Noncumulative Shares without serial designation.



               (d) Except in connection with the exercise of the Corporation’s rights pursuant to Section (d)
of Item V of this Division A, Section 4(d) of Division B or any similar Section hereafter contained
in these Second Amended and Restated Articles of Incorporation, as amended, with respect to any
other class or series of capital stock hereafter created or authorized, the Corporation may not
purchase or redeem (for sinking fund purposes or otherwise) of less than all of the Noncumulative
Shares then outstanding except in accordance with a stock purchase offer made to all holders of
record of Noncumulative Shares, unless all dividends on all Noncumulative Shares then outstanding
for the then current dividend period shall have been declared and paid or funds therefor set apart
and all accrued sinking fund obligations applicable thereto shall have been complied with.



          Section 4. LIQUIDATION.



               (a) (1) In the event of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation, the holders of Noncumulative Shares of any series shall be entitled
to receive in full out of the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any other shares ranking
junior to the Noncumulative Shares, the amounts fixed with respect to shares of such series in
accordance with Section 1 of this Division, plus an amount equal to all dividends accrued and
unpaid thereon for the then current dividend period to the date of payment of the amount due
pursuant to such liquidation, dissolution or winding up of the affairs of the Corporation. In the
event the net assets of the Corporation legally available therefor are insufficient to permit the
payment upon all outstanding Class A Shares, Class B Shares and Noncumulative Shares of the full
preferential amount to which they are respectively entitled, then such net assets shall be
distributed ratably upon all outstanding Noncumulative Shares in proportion to the full
preferential amount to which each such share is entitled.



                    (2) After payment to the holders of Noncumulative Shares of the full preferential amounts as
aforesaid, the holders of Noncumulative Shares, as such, shall have no right or claim to any of the
remaining assets of the Corporation.



               (b) The merger or consolidation of the Corporation into or with any other Corporation, the
merger of any other Corporation into it, or the sale, lease or conveyance of all or substantially
all the assets of the Corporation, shall not be deemed to be a dissolution, liquidation or winding
up for the purposes of this Section.



          Section 5. VOTING.



30









 





               (a) The holders of Noncumulative Shares shall have no voting rights, except as provided in
this Section or required by law.



               (b) (1) If, and so often as, the Corporation shall not have fully paid, or shall not have
declared and set aside a sum sufficient for the payment of, dividends on any series of
Noncumulative Shares at the time outstanding, for a number of consecutive dividend payment periods
which in the aggregate contain at least 540 days, the holders of such Noncumulative Shares, voting
separately as a class, together with all Class A Shares and Class B Shares upon which like voting
rights have been conferred and are exercisable, shall be entitled to elect, as herein provided, two
members of the Board of Directors of the Corporation; provided, however, that the holders of such
Noncumulative Shares shall not exercise such special class voting rights except at meetings of such
shareholders for the election of directors at which the holders of not less than 50% of such
Noncumulative Shares are present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall have become vested shall
remain so vested until the Corporation shall have fully paid, or shall have set aside a sum
sufficient for the payment of, dividends on such Noncumulative Shares then outstanding for a number
of consecutive dividend payment periods which in the aggregate contain at least 360 days, whereupon
the holders of such Noncumulative Shares shall be divested of their special class voting rights in
respect of subsequent elections of directors, subject to the revesting of such special class voting
rights in the event above specified in this paragraph.



                    (2) In the event of default entitling holders of Noncumulative Shares to elect two directors
as specified in paragraph (1) of this Subsection, a special meeting of such holders for the purpose
of electing such directors shall be called by the Secretary of the Corporation upon written request
of, or may be called by, the holders of record of at least 10% of the Noncumulative Shares upon
which such default in the payment of dividends exists and notice thereof shall be given in the same
manner as that required for the annual meeting of shareholders; provided, however, that the
Corporation shall not be required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of receipt of the foregoing
written request from the holders of Noncumulative Shares. At any meeting at which such holders of
Noncumulative Shares shall be entitled to elect directors, holders of 50% of such Noncumulative
Shares, present in person or by proxy, shall be sufficient to constitute a quorum, and the vote of
the holders of a majority of such shares so present at any such meeting at which there shall be
such a quorum shall be sufficient to elect the members of the Board of Directors which such holders
of Noncumulative Shares are entitled to elect as herein provided. Notwithstanding any provision of
these Second Amended and Restated Articles of Incorporation, as amended, or the Code of Regulations
of the Corporation or any action taken by the holders of any class of shares fixing the number of
directors of the Corporation, the two directors who may be elected by such holders of Noncumulative
Shares pursuant to this Subsection shall serve in addition to any other directors then in office or
proposed to be elected otherwise than pursuant to this Subsection. Nothing in this Subsection
shall prevent any change otherwise permitted in the total number of or classifications of directors
of the Corporation nor require the resignation of any director elected otherwise than pursuant to
this Subsection. Notwithstanding any classification of the other directors of the Corporation, the
two directors elected by such holders of Noncumulative Shares shall be elected annually for terms
expiring at the next succeeding annual meeting of shareholders.



31









 





                    (3) Upon any divesting of the special class voting rights of the holders of the Noncumulative
Shares in respect of elections of directors as provided in this Subsection, the terms of office of
all directors then in office elected by such holders shall terminate immediately thereupon. If the
office of any director elected by such holders voting as a class becomes vacant by reason of death,
resignation, removal from office or otherwise, the remaining director elected by such holders
voting as a class may elect a successor who shall hold office for the unexpired term in respect of
which such vacancy occurred.



               (c) If at any time when the holders of Noncumulative Shares are entitled to elect directors
pursuant to the foregoing provisions of this Section the holders of any Class A Shares or Class B
Shares are entitled to elect directors pursuant hereto by reason of any default in the payment of
dividends thereon, then the voting rights of the Class A Shares, Class B Shares and Noncumulative
Shares then entitled to vote shall be combined (with class of shares having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares). In such case, the
holders of Noncumulative Shares and of all such other shares then entitled so to vote, voting as a
class, shall elect such directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the holders of Noncumulative
Shares to elect directors, or prior to a written request for the holding of a special meeting being
received by the Secretary of the Corporation as required above, then a new election shall be held
with all such other shares and the Noncumulative Shares voting together as a single class for such
directors, resulting in the termination of the term of such previously elected directors upon the
election of such new directors.



               (d) The affirmative vote of the holders of at least two-thirds of the Noncumulative Shares at
the time outstanding, voting separately as a class, given in person or by proxy either in writing
or at a meeting called for the purpose, shall be necessary to effect either of the following:



                    (1) Any amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of the Second Amended and Restated Articles of Incorporation, as amended, or of
the Code of Regulations of the Corporation which affects adversely and materially the preferences
or voting or other rights of the holders of Noncumulative Shares which are set forth in these
Second Amended and Restated Articles of Incorporation, as amended; provided, however, neither the
amendment of these Second Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Noncumulative Shares or of any
shares ranking on a parity with or junior to the Noncumulative Shares nor the amendment of the
provisions of the Code of Regulations so as to change the number or classification of directors of
the Corporation shall be deemed to affect adversely and materially preferences or voting or other
rights of the holders of Noncumulative Shares; or



                    (2) The authorization, creation or increase in the authorized number of any shares, or any
security convertible into shares, in either case ranking prior to such Noncumulative Shares.



               (e) In the event, and only to the extent, that (1) Noncumulative Shares are issued in more
than one series and (2) Ohio law permits the holders of a series of a class of



32









 




capital stock to vote separately as a class, the affirmative vote of the holders of at least
two-thirds of each series of the Noncumulative Shares at the time outstanding, voting separately as
a class, given in person or by proxy either in writing or at a meeting called for the purpose of
voting on such matters, shall be required for any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of these Second Amended and Restated
Articles of Incorporation, as amended, or of the Code of Regulations of the Corporation which
affects adversely and materially the preferences or voting or other rights of the holders of such
series which are set forth in these Second Amended and Restated Articles of Incorporation, as
amended; provided, however, neither the amendment of these Second Amended and Restated Articles of
Incorporation, as amended, so as to authorize, create or change the authorized or outstanding
number of Noncumulative Shares or of any shares remaining on a parity with or junior to the
Noncumulative Shares nor the amendment of the provisions of the Code of Regulations so as to change
the number or classification of directors of the Corporation shall be deemed to affect adversely
and materially preferences or voting or other rights of the holder of such series.




     IV. DEFINITIONS. For the purposes of this Division:



               (a) Whenever reference is made to shares “ranking prior to” Class A Shares, Class B Shares or
Noncumulative Shares, such reference shall mean and include all shares of the Corporation in
respect of which the rights of the holders thereof as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation are given preference over the rights of the holders of Class A
Shares, Class B Shares or Noncumulative Shares, as the case may be;



               (b) Whenever reference is made to shares “on a parity with” Class A Shares, Class B Shares or
Noncumulative Shares, such reference shall mean and include all shares of the Corporation in
respect of which the rights of the holders thereof as to the payment of dividends or as to
distributions in the event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation rank equally (except as to the amounts fixed therefor) with the
rights of the holders of Class A Shares, Class B Shares or Noncumulative Shares, as the case may
be; and



               (c) Whenever reference is made to shares “ranking junior to” Class A Shares, Class B Shares or
Noncumulative Shares, such reference shall mean and include all shares of the Corporation other
than those defined under Subsections (a) and (b) of this Section as shares “ranking prior to” or
“on a parity with” Class A Shares, Class B Shares or Noncumulative Shares, as the case may be.



     V. RESTRICTIONS ON TRANSFER TO PRESERVE TAX BENEFIT; SHARES SUBJECT TO REDEMPTION.



          (a) DEFINITIONS. For the purposes of this Item V of this Division A of this Article FOURTH,
the following terms shall have the following meanings:



               “Beneficial Ownership” shall mean ownership of Preferred Shares by a Person who would be
treated as an owner of such Preferred Shares either directly or



33









 




constructively through the application of Section 544 of the Code, as modified by Section
856(h) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned”
shall have the correlative meanings.




               “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



               “Constructive Ownership” shall mean ownership of Preferred Shares by a Person who would be
treated as an owner of such Preferred Shares either directly or constructively through the
application of Section 318 of the Code, as modified by Section 856(d)(5) of the Code.



               The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have
the correlative meanings.



               “Excess Preferred Shares” shall mean any Preferred Shares (i) acquired or proposed to be
acquired by any Person pursuant to a Transfer to the extent that, if effective, such Transfer would
result in the transferee either Beneficially Owning Preferred Shares or Constructively Owning
Preferred Shares in excess of the Ownership Limit, or (ii) which are the subject of a Transfer
that, if effective, which would result in the Corporation being “closely held” within the meaning
of Section 856(h) of the Code.



               “Market Price” shall mean, with respect to any series of any class of Preferred Shares, the
last reported sales price of such series reported on the New York Stock Exchange on the trading day
immediately preceding the relevant date or, if shares of such series are not then traded on the New
York Stock Exchange, the last reported sales price of shares of such series on the trading day
immediately preceding the relevant date as reported on any exchange or quotation system over which
the shares of such series may be traded, or if shares of such series are not then traded over any
exchange or quotation system, then the market price of shares of such series on the relevant date
as determined in good faith by the Board of Directors of the Corporation.



               “Ownership Limit” shall mean, with respect to each series of each class of Preferred Shares,
9.8% of the outstanding shares of such series.



               “Person” shall mean 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, an
association, a private foundation within the meaning of Section 509(a) of the Code, a joint stock
company, other entity or a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; provided, however, that a “person” does not mean an
underwriter which participates in a public offering of Preferred Shares, for a period of 35 days
following the purchase by such underwriter of such Preferred Shares.



               “Preferred Shares” shall mean, collectively, Class A Shares, Class B Shares and Noncumulative
Shares.



34









 





               “REIT” shall mean a Real Estate Investment Trust under Section 856 of the Code.



               “Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition of
Preferred Shares (including, without limitation, (i) the granting of any option or entering in to
any agreement for the sale, transfer or other disposition of Preferred Shares or (ii) the sale,
transfer, assignment or other disposition of any securities or rights convertible into or
exchangeable for Preferred Shares), whether voluntary or involuntary, whether of record or
beneficially and whether by operation of law or otherwise.



          (b) RESTRICTIONS ON TRANSFERS.




     (i) Except as provided in Section (h) of Item V of this Division A of this
Article FOURTH, no Person shall Beneficially Own or Constructively Own shares of
any series of any class of Preferred Shares in excess of the Ownership Limit
applicable to such series.




     (ii) Except as provided in Section (h) of Item V of this Division A of this
Article FOURTH, any Transfer that, if effective, would result in any Person
Beneficially Owning shares of any series of any class of Preferred Shares in
excess of the Ownership Limit applicable to such series shall be void AB INITIO as
to the Transfer of such Preferred Shares which would be otherwise Beneficially Owned
by such Person in excess of such Ownership Limit, and the intended transferee shall
acquire no rights in such Preferred Shares.




     (iii) Except as provided in Section (h) of Item V of this Division A of this
Article FOURTH, any Transfer that, if effective, would result in any Person
Constructively Owning shares of any series of any class of Preferred Shares in
excess of the Ownership Limit applicable to such series shall be void AB INITIO as
to the Transfer of such Preferred Shares which would be otherwise Constructively
Owned by such Person in excess of such amount, and the intended transferee shall
acquire no rights in such Preferred Shares.




     (iv) Notwithstanding any other provisions contained in this Item V, any
Transfer (whether or not such Transfer is the result of a transaction entered into
through the facilities of the New York Stock Exchange) or other event that, if
effective, would result in the Corporation being “closely held” within the meaning
of Section 856(h) of the Code, or would otherwise result in the Corporation failing
to qualify as a REIT (including, but not limited to, a Transfer or other event that
would result in the Corporation owning (directly or Constructively) an interest in a
tenant that is described in Section 856(d)(2)(B) of the Code if the income derived
by the Corporation from such tenant would cause the Corporation to fail to satisfy
any of the gross income requirement of Section 856(c) of the Code) shall be void AB
INITIO as to the Transfer of the Preferred Shares or other event which would cause
the Corporation to be “closely held” within the meaning of Section 856(h) of the
Code or would otherwise result in the Corporation failing




35











 






to qualify as a REIT; and the intended transferee or owner or Constructive or
Beneficial Owner shall acquire or retain no rights in such Preferred Shares.




     (v) For purposes of construing the foregoing provisions, any attempt to
transfer Preferred Shares in violation of the Ownership Limit applicable to the
series of the class of such Preferred Shares (as such Ownership Limit may be
modified by the Board of Directors pursuant to Section (h) of Item V) shall be
construed as causing such Preferred Shares to be transferred by operation of law to
the Corporation as trustee of a trust for the exclusive benefit of the person or
persons to whom such Preferred Shares can ultimately be transferred without
violating the Ownership Limit and any Excess Preferred Shares while held in such
trust shall not have any voting rights, shall not be considered for purposes of any
shareholder vote or for determining a quorum for such a vote, and shall not be
entitled to any dividends or other distributions.



          (c) REMEDIES FOR BREACH. If the Board of Directors or its designees shall at any time
determine in good faith that a Transfer has taken place in violation of Section (b) of Item V of
this Division A of this Article FOURTH or that a Person intends to acquire or has attempted to
acquire beneficial ownership (determined without reference to any rules of attribution), Beneficial
Ownership or Constructive Ownership of any Preferred Shares of the Corporation in violation of
Section (b) of Item V of this Division A of this Article FOURTH, or that any such Transfer,
intended or attempted acquisition or acquisition would jeopardize the status of the Company as a
REIT under the Code, the Board of Directors or its designees shall take such actions as it deems
advisable to refuse to give effect or to prevent such Transfer, including, but not limited to,
refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings
to enjoin such Transfer and, in addition, exercising its rights under Section (d) of Item V of this
Division A of Article FOURTH.



          (d) PURCHASE RIGHT IN EXCESS PREFERRED SHARES. Beginning on the date of the occurrence of a
Transfer which, if consummated, in the good faith judgment of the Board of Directors of the
Corporation, could result in Excess Preferred Shares, such Excess Preferred Shares shall be deemed
to have been offered for sale to the Corporation, or its designee, at a price per share equal to
the lesser of (i) the price per share in the transaction that created such Excess Preferred Shares
(or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii)
the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer for a period of 90 days after the later of (i) the date
of such Transfer and (ii) if the Corporation does not receive a notice of such Transfer pursuant to
Section (e) of Item V of this Division A of this Article FOURTH, the date the Board of Directors
determines in good faith that such Transfer has occurred. Prompt payment of the purchase price
shall be made in such reasonable manner as may be determined by the Corporation. From and after
the date fixed for purchase by the Corporation, and so long as payment of the purchase price for
the Excess Preferred Shares to be so purchased shall have been made or duly provided for, the
holder of any Excess Preferred Shares so called for purchase shall cease to be entitled to
dividends, distributions, voting rights and other benefits with respect to such Excess Preferred
Shares, excepting only the right to payment of the purchase price fixed as aforesaid. Any dividend
or distribution paid to a proposed transferee of Excess Preferred Shares prior to the discovery by
the Corporation that the



36









 




Excess Preferred Shares have been transferred in violation of Section (b) of Item V of this
Division A of this Article FOURTH shall be repaid to the Corporation upon demand. If the foregoing
provisions are determined to be void or invalid by virtue of any legal decision, statute, rule or
regulation, then the intended transferee of such Excess Preferred Shares shall be deemed, at the
option of the Corporation, to have acted as agent on behalf of the Corporation in acquiring such
Excess Preferred Shares and to hold such Excess Preferred Shares on behalf of the Corporation.




          (e) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts to acquire Preferred
Shares or other securities in violation of subparagraph (b) of this Item V, or any Person who owns
or will own Excess Preferred Shares as a result of an event under clause (b) of this Item V, shall
immediately give written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to determine the effect,
if any, of such Transfer or attempted Transfer or other event on the Corporation’s status as a
REIT.



          (f) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the Initial Public
Offering:



               (i) every Beneficial Owner of more than 5.0% (or such other percentage, between 0.5% and 5.0%,
as provided in the regulation promulgated pursuant to the Code) of the outstanding Preferred Shares
of the Corporation shall, within 30 days after January 1 of each year, give written notice to the
Corporation state the name and address of such Beneficial Owner, the number of shares Beneficially
Owned, and description of how such shares are held. Each such Beneficial Owner shall provide to the
Corporation such additional information as the Corporation may request in order to determine the
effect, if any, of such Beneficial Ownership on the Corporation’s status as a REIT.



               (ii) each Person who is a Beneficial owner or Constructive Owner of Preferred Shares and each
Person (including the shareholder of record) who is holding Preferred Shares for a Beneficial Owner
or Constructive Owner shall provide to the Corporation such information that the Corporation may
request, in good faith, in order to determine the Corporation’s status as a REIT.



          (g) REMEDIES NOT LIMITED. Nothing contained in this Division A of this Article FOURTH shall
limit the authority of the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its shareholders by preservation of the
Corporation’s status as a REIT.



          (h) AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of
Item V of this Division A of this Article FOURTH, including any definition contained in Section (a)
of Item V, the Board of Directors shall have the power to determine the application of the
provisions of this Item V with respect to any situation based on the facts known to it.



          (i) EXCEPTIONS.



37









 






     (i) Subject to Section (b)(iv) of Item V of this Division A, the Board of
Directors may exempt a Person from the Ownership Limit applicable to a series of a
class of Preferred Shares if such Person is not an individual (other than pension
plans described in Section 856(h)(3)) for purposes of Section 542(a)(2) of the Code
if the Board of Directors obtains such representations and undertakings from such
Person as are reasonably necessary to ascertain that no individual’s Beneficial
Ownership of such Preferred Shares will violate the Ownership Limit, and agrees that
any violation or attempted violation will result in such Preferred Shares in excess
of the Ownership Limit being subject to repurchase by the Corporation as set forth
in Section (d) of Item V of this Division A of this Article FOURTH.




     (ii) The Board of Directors may exempt a Person from the limitation on such
Person Constructively Owning Preferred Shares in excess of the Ownership Limit
applicable to a series of a class of such Preferred Shares if such Person does not
own and represents that it will not own, directly or constructively (by virtue of
the application of Section 318 of the Code, as modified by Section 856(d)(5) of the
Code), more than a 9.8% interest (as set forth in Section 856(d)(2)(B)) in a tenant
of any real property owned or leased by the Corporation, if the Board of Directors
obtains such representations and undertakings from such Person as are reasonably
necessary to ascertain this fact and agrees that any violation or attempted
violation will result in such Preferred Shares in excess of the Ownership Limit
being deemed to be Excess Preferred Shares and subject to repurchase by the
Corporation as set forth in Section (d) of Item V of this Division A of this Article
FOURTH.



     VI. LEGEND. Each certificate for Preferred Shares shall bear the following legend:



          “The Preferred Shares represented by this certificate are subject to restrictions on transfer
for the purpose of the corporation’s maintenance of its status as a Real Estate Investment Trust
under the Internal Revenue Code of 1986, as amended. Subject to certain provisions of the
Corporation’s Articles of Incorporation, no Person may Beneficially Own or Constructively Own
shares of any series of any class of Preferred Shares in excess of 9.8% of the outstanding
Preferred Shares of such series. Any Person who attempts to Beneficially Own or Constructively Own
shares of any series of any class of Preferred Shares in excess of the above limitations must
immediately notify the Corporation. All capitalized terms in this legend have the meanings defined
in the Corporation’s Articles of Incorporation, a copy of which, including the restrictions on
transfer, will be sent without charge to each shareholder who so requests. If the restrictions on
transfer are violated, certain of the Preferred Shares represented hereby may be subject to
repurchase by the Corporation on the terms and conditions set forth in the Corporation’s Articles
of Incorporation.”



DIVISION B




          Subject to the terms of the Preferred Shares, the Common Shares shall have the following
express terms:



38









 





          Section 1. DIVIDEND RIGHTS. The holders of Common Shares shall be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of the assets of the
Corporation which are by law available therefor, dividends or distributions payable in cash, in
property or in securities of the Corporation.



          Section 2. RIGHTS UPON LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation,
each holder of Common Shares shall be entitled to receive, ratably with each other holder of Common
Shares, that portion of the assets of the Corporation available for distribution to its
shareholders as the number of Common Shares held by such holder bears to the total number of Common
Shares then outstanding.



          Section 3. VOTING RIGHTS. The holders of Common Shares shall be entitled to vote on all
matters (for which holders of Common Shares shall be entitled to vote thereon) at all meetings of
the shareholders of the Corporation, and shall be entitled to one vote for each Common Share
entitled to vote at such meeting.



          Section 4. RESTRICTIONS ON TRANSFER TO PRESERVE TAX BENEFIT; COMMON SHARES SUBJECT TO
REDEMPTION.



          (a) DEFINITIONS. For the purposes of this Section 4 of this Division B of this Article
FOURTH, the following terms shall have the following meanings:



               “Beneficial Ownership” shall mean ownership of Common Shares by a Person who would be treated
as an owner of such Common Shares either directly or constructively through the application of
Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial
Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.



               “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



               “Constructive Ownership” shall mean ownership of Common Shares by a Person who would be
treated as an owner of such Common Shares either directly or constructively through the
application of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The terms
“Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative
meanings.



               “Excess Shares” shall mean any Common Shares (i) acquired or proposed to be acquired by any
Person (other than an Existing Holder) pursuant to a Transfer to the extent that, if effective,
such Transfer would result in the transferee either (A) Beneficially Owning Common Shares in excess
of the Ownership Limit or (B) Constructively Owning Common Shares in excess of the Related Party
Limit, (ii) acquired or proposed to be acquired by an Existing Holder pursuant to a Transfer to the
extent that, if effective, such Transfer would result in such Existing Holder Beneficially Owning
Common Shares in excess of the Existing Holder Limit for such Existing Holder, or (iii) which are
the subject of a Transfer that, if effective, which would result in (A) the Common Shares being
owned by fewer than 100 Persons



39









 




(determined without reference to any rules of attribution), or (B) the Corporation being
“closely held” within the meaning of Section 856(h) of the Code.




          “Existing Holder” shall mean (i) Jeffrey I. Friedman, (ii) Susan Friedman, (iii) Mark L.
Milstein, (iv) Robert Milstein, and (v) any Person to whom an Existing Holder Transfers Beneficial
Ownership of Common Shares causing such transferee to Beneficially Own Common Shares in excess of
the Ownership Limit.



          “Existing Holder Limit” (i) for any Existing Holder who is an Existing Holder by virtue of
clause (i), (ii), (iii) or (iv) of the definition thereof, shall mean, initially, the percentage of
the outstanding Common Shares Beneficially Owned by such Existing Holder upon the consummation of
the Initial Public Offering, and after any adjustment pursuant to Section (4)(i) of this Division B
of this Article FOURTH, shall mean such percentage of the outstanding Common Shares as so adjusted;
and (ii) for any Existing Holder who becomes an Existing Holder by virtue of clause (v) of the
definition thereof, shall mean, initially, the percentage of the outstanding Common Shares
Beneficially Owned by such Existing Holder at the time that such Existing Holder becomes an
Existing Holder, and after any adjustment pursuant to Section 4(i) of this Division B of this
Article FOURTH, shall mean such percentage of the outstanding Common Shares as so adjusted. From
and after the date of the Initial Public Offering, the secretary of the Corporation shall maintain
and, upon request, make available to each Existing Holder, a schedule which sets forth the then
current Existing Holder Limits for each Existing Holder.



          “Initial Public Offering” means the sale of Common Shares pursuant to the Company’s first
effective registration statement for such Common Shares filed under the Securities Act of 1933, as
amended.



          “Market Price” shall mean the last reported sales price of Common Shares reported on the New
York Stock Exchange on the trading day immediately preceding the relevant date or, if the Common
Shares are not then traded on the New York Stock Exchange, the last reported sales price of the
Common Shares on the trading day immediately preceding the relevant date as reported on any
exchange or quotation system over which the Common Shares may be traded, or if the Common Shares
are not then traded over any exchange or quotation system, then the market price of the Common
Shares on the relevant date as determined in good faith by the Board of Directors of the
Corporation.



          “Ownership Limit” shall mean 4.0% of the outstanding Common Shares of the Corporation.



          “Person” shall mean 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, an
association, a private foundation within the meaning of Section 509(a) of the Code, a joint stock
company, other entity or a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; provided, however, that a “person” does not mean an
underwriter which participates in a public offering of the Common



40









 




Shares, for a period of 35 days following the purchase by such underwriter of the Common
Shares.




          “REIT” shall mean a Real Estate Investment Trust under Section 856 of the Code.



          “Related Party Limit” shall mean 9.8% of the outstanding Common Shares of the Corporation.



          “Transfer” shall mean any sale, transfer, gift, assignment, devise or other disposition of
Common Shares (including, without limitation, (i) the granting of any option or entering in to any
agreement for the sale, transfer or other disposition of Common Shares or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible into or exchangeable for
Common Shares), whether voluntary or involuntary, whether of record or beneficially and whether by
operation of law or otherwise.



          (b) RESTRICTIONS ON TRANSFERS.




     (i) Except as provided in Section 4(i) of this Division B of this Article
FOURTH, from and after the date of the Initial Public Offering, no Person (other
than an Existing Holder) shall Beneficially Own Common Shares in excess of the
Ownership Limit, no Existing Holder shall Beneficially Own Common Shares in excess
of the Existing Holder Limit for such Existing Holder and no Person (other than an
Existing Holder who Constructively Owns in excess of 9.8% of the outstanding Common
Shares immediately following the completion of the Initial Public Offering) shall
Constructively Own Common Shares in excess of 9.8% of the outstanding Common Shares.




     (ii) Except as provided in Section 4(i) of this Division B of this Article
FOURTH, from and after the date of the Initial Public Offering, any Transfer that,
if effective, would result in any Person (other than an Existing Holder)
Beneficially Owning Common Shares in excess of the Ownership Limit shall be void AB
INITIO as to the Transfer of such Common Shares which would be otherwise
Beneficially Owned by such Person in excess of the Ownership Limit, and the intended
transferee shall acquire no rights in such Common Shares.




     (iii) Except as provided in Section 4(i) of this Division B of this Article
FOURTH, from and after the date of the Initial Public Offering, any Transfer that,
if effective, would result in any Existing Holder Beneficially Owning Common Shares
in excess of the applicable Existing Holder Limit shall be void AB INITIO as to the
Transfer of such Common Shares which would be otherwise Beneficially Owned by such
Existing Holder in excess of the applicable Existing Holder Limit, and such Existing
Holder shall acquire no rights in such Common Shares.




     (iv) Except as provided in Section 4(i) of this Division B of this Article
FOURTH, from and after the date of the Initial Public Offering, any Transfer that,
if effective, would result in any Person Constructively Owning Common Shares in
excess of the Related Party Limit shall be void AB INITIO as to the Transfer of such
Common Shares which would be otherwise Constructively Owned by such



41









 







Person in excess of such amount, and the intended transferee shall acquire no
rights in such Common Shares.




     (v) Except as provided in Section 4(i) of this Division B of this Article
FOURTH, from and after the date of the Initial Public Offering, any Transfer that,
if effective, would result in the Common Shares being beneficially owned by less
than 100 Persons (determined without reference to any rules of attribution) shall be
void AB INITIO as to the Transfer of such Common Shares which would be otherwise
beneficially owned by the transferee, and the intended transferee shall acquire no
rights in such Common Shares.




     (vi) From and after the date of the Initial Public Offering, any Transfer that,
if effective, would result in the Corporation being “closely held” within the
meaning of Section 856(h) of the Code shall be void AB INITIO as to the Transfer of
the Common Shares which would cause the Corporation to be “closely held” within the
meaning of Section 856(h) of the Code, and the intended transferee shall acquire no
rights in such Common Shares.



          (c) REMEDIES FOR BREACH. If the Board of Directors or its designees shall at any time
determine in good faith that a Transfer has taken place in violation of Section 4(b) of this
Division B of this Article FOURTH or that a Person intends to acquire or has attempted to acquire
beneficial ownership (determined without reference to any rules of attribution), Beneficial
Ownership or Constructive Ownership of any Common Shares of the Corporation in violation of Section
4(b) of this Division B of this Article FOURTH, or that any such Transfer, intended or attempted
acquisition or acquisition would jeopardize the status of the Company as a REIT under the Code, the
Board of Directors or its designees shall take such actions as it deems advisable to refuse to give
effect or to prevent such Transfer, including, but not limited to, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer and, in
addition, exercising its rights under Section 4(d) of this Division B of this Article FOURTH.



          (d) PURCHASE RIGHT IN EXCESS SHARES. Beginning on the date of the occurrence of a Transfer
which, if consummated, in the good faith judgment of the Board of Directors of the Corporation,
could result in Excess Shares, such Excess Shares shall be deemed to have been offered for sale to
the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that created such Excess Shares (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept
such offer for a period of ninety days after the later of (i) the date of such Transfer and (ii) if
the Corporation does not receive a notice of such Transfer pursuant to Section 4(e) of this
Division B of this Article FOURTH, the date the Board of Directors determines in good faith that
such Transfer has occurred. Prompt payment of the purchase price shall be made in such reasonable
manner as may be determined by the Corporation. From and after the date fixed for purchase by the
Corporation, and so long as payment of the purchase price for the Excess Shares to be so purchased
shall have been made or duly provided for, the holder of any Excess Shares so called for purchase
shall cease to be entitled to dividends, distributions, voting rights and other benefits with
respect to such Excess Shares, excepting only the right to payment of the purchase



42









 




price fixed as aforesaid. Any dividend or distribution paid to a proposed transferee of
Excess Shares prior to the discovery by the Corporation that the Excess Shares have been
transferred in violation of Section 4(b) of this Division B of this Article FOURTH shall be repaid
to the Corporation upon demand. If the foregoing provisions are determined to be void or invalid
by virtue of any legal decision, statute, rule or regulation, then the intended transferee of such
Excess Shares shall be deemed, at the option of the Corporation, to have acted as agent on behalf
of the Corporation in acquiring such Excess Shares and to hold such Excess Shares on behalf of the
Corporation.




          (e) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or intends to acquire shares in
violation of Section 4(b) of this Division B of this Article FOURTH or any Person who is a
transferee of Excess Shares shall immediately give written notice to the Corporation of such event
and shall provide to the Corporation such other information as the Corporation may request in order
to determine the effect, if any, of such Transfer or intended Transfer on the Corporation’s status
as a REIT.



          (f) OWNERS REQUIRED TO PROVIDE INFORMATION. From and after the date of the Initial Public
Offering:




     (i) every Beneficial Owner of more than 5.0% (or such other percentage, between
0.5% and 5.0%, as provided in the regulations promulgated pursuant to the Code) of
the outstanding Common Shares of the Corporation shall, within 30 days after January
1 of each year, give written notice to the Corporation stating the name and address
of such Beneficial Owner, the number of shares Beneficially Owned, and description
of how such shares are held. Each such Beneficial Owner shall provide to the
Corporation such additional information as the Corporation may request in order to
determine the effect, if any, of such Beneficial Ownership on the Corporation’s
status as a REIT.




     (ii) each Person who is a Beneficial Owner or Constructive Owner of Common
Shares and each Person (including the shareholder of record) who is holding Common
Shares for a Beneficial Owner or Constructive Owner shall provide to the Corporation
such information that the Corporation may request, in good faith, in order to
determine the Corporation’s status as a REIT.



          (g) REMEDIES NOT LIMITED. Nothing contained in this Division B of this Article FOURTH shall
limit the authority of the Board of Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its shareholders by preservation of the
Corporation’s status as a REIT.



          (h) AMBIGUITY. In the case of an ambiguity in the application of any of the provisions of
Section 4 of this Division B of this Article FOURTH, including any definition contained in Section
4(a), the Board of Directors shall have the power to determine the application of the provisions of
this Section 4 with respect to any situation based on the facts known to it.



43









 





          (i) MODIFICATION OF EXISTING HOLDER LIMITS. Subject to the provisions of Section 4(k) of this
Division B, the Existing Holder Limits may be modified as follows:




     (i) Subject to the limitations provided in Section 4(k), any Existing Holder
may Transfer Common Shares to a Person who is already an Existing Holder up to the
number of Common Shares Beneficially Owned by such transferor Existing Holder in
excess of the Ownership Limit. Any such Transfer will decrease the Existing Holder
Limit for such transferor Existing Holder and increase the Existing Holder Limit for
such transferee Existing Holder by the percentage of the outstanding Common Shares
so Transferred. The transferor Existing Holder shall give the Board of Directors of
the Corporation prior written notice of any such Transfer.




     (ii) Any grant of a stock option pursuant to a stock option plan approved by
the shareholders of the Corporation shall increase the Existing Holder Limit for the
affected Existing Holder to the maximum extent possible under Section 4(k) to permit
the Beneficial Ownership of the Common Shares issuable upon the exercise of such
stock option.




     (iii) The Board of Directors may reduce the Existing Holder Limit for any
Existing Holder, with the written consent of such Existing Holder, after any
Transfer permitted in this Section 4 by such Existing Holder to a Person other than
an Existing Holder or after the lapse (without exercise) of a stock option described
in Section 4(i)(ii).




     (iv) Any Common Shares issued to an Existing Holder pursuant to a dividend
reinvestment plan adopted by the Corporation shall increase the Existing Holder
Limit for the Existing Holder to the maximum extent possible under Section 4(k) to
permit the Beneficial Ownership of such Common Shares.



          (j) MODIFICATION OF OWNERSHIP LIMIT. Subject to the limitations provided in Section 4(k) of
this Division B, the Board of Directors may from time to time increase the Ownership Limit.



          (k) LIMITATIONS ON MODIFICATIONS. Notwithstanding any other provision of this Division B of
this Article FOURTH:




     (i) Neither the Ownership Limit nor any Existing Holder Limit may be increased
(nor may any additional Existing Holder Limit be created) if, after giving effect to
such increase (or creation), five Beneficial Owners of Common Shares (including all
of the then Existing Holders) could Beneficially Own, in the aggregate, more than
49.6% of the outstanding Common Shares.




     (ii) Prior to the modification of any Existing Holder Limit or Ownership Limit
pursuant to Section 4(i) or Section 4(j) of this Division B of this Article FOURTH,
the Board of Directors of the Corporation may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem



44









 







necessary or advisable in order to determine or ensure the Corporation’s status
as a REIT.




     (iii) No Existing Holder Limit shall be reduced to a percentage which is less
than the Ownership Limit.




     (iv) The Ownership Limit may not be increased to a percentage which is greater
than 9.8%.




     (v) The Related Party Limit may not be increased to a percentage which is
greater than 9.8%.



          (l) EXCEPTIONS.




     (i) The Board of Directors, with a ruling from the Internal Revenue Service or
an opinion of counsel, may exempt a Person from the Ownership Limits or the Existing
Holder Limits, as the case may be, if such Person is not an individual for purposes
of Section 542(a)(2) of the Code and the Board of Directors obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain that no individual’s Beneficial Ownership of such Common Shares will
violate the Ownership Limit or the applicable Existing Holder Limit, as the case may
be, and agrees that any violation or attempted violation will result in such Common
Shares in excess of 4.0% of the outstanding Common Shares being deemed to be Excess
Shares and subject to repurchase by the Corporation as set forth in Section 4(d) of
this Division B of this Article FOURTH.




     (ii) The Board of Directors, with a ruling from the Internal Revenue Service or
an opinion of counsel, may exempt a Person from the limitation on such Person
Constructively Owning Common Shares in excess of the Related Party Limit if such
Person does not own and represents that it will not own, directly or constructively
(by virtue of the application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code), more than a 9.9% interest (as set forth in Section
856(d)(2)(B)) in a tenant of any real property owned or leased by the Corporation,
and the Corporation obtains such representations and undertakings from such Person
as are reasonably necessary to ascertain this fact and agrees that any violation or
attempted violation will result in such Common Shares in excess of 9.8% being deemed
to be Excess Shares and subject to repurchase by the Corporation as set forth in
Section 4(d) of this Division B of this Article FOURTH.



          Section 5. LEGEND. Each certificate for Common Shares shall bear the following legend:



          “The Common Shares represented by this certificate are subject to restrictions on transfer for
the purpose of the Corporation’s maintenance of its status as a Real Estate Investment Trust under
the Internal Revenue Code of 1986, as amended. Subject to certain provisions of the Corporation’s
Articles of Incorporation, no Person may Beneficially Own



45









 




Common Shares in excess of 4.0% of the outstanding Common Shares of the Corporation (unless
such Person is an Existing Holder) and no Person (other than an Existing Holder who Constructively
Owns in excess of 9.8% of the Common Shares immediately following the consummation of the Initial
Public Offering) may Constructively Own Common Shares in excess of 9.8% of the outstanding Common
Shares of the Corporation. Any Person who attempts to Beneficially Own or Constructively Own
Common Shares in excess of the above limitations must immediately notify the Corporation. All
capitalized terms in this legend have the meanings defined in the Corporation’s Articles of
Incorporation, a copy of which, including the restrictions on transfer, will be sent without charge
to each shareholder who so requests. If the restrictions on transfer are violated, certain of the
Common Shares represented may be subject to repurchase by the Company on the terms and conditions
set forth in the Corporation’s Articles of Incorporation.”








46









 








CERTIFICATE OF AMENDMENT

TO

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

ASSOCIATED ESTATES REALTY CORPORATION




          JEFFREY I. FRIEDMAN, President and Chief Executive Officer, and MARTIN A. FISHMAN, Secretary,
of Associated Estates Realty Corporation, an Ohio Corporation (the “Company”), do hereby certify
that an Action of Directors Without a Meeting of the Pricing Committee of the Board of Directors of
the Company was duly executed by all members of the Pricing Committee of the Board of Directors on
July 19, 1995 and that the following resolution to amend the Second Amended and Restated Articles
of Incorporation of the Company was adopted pursuant to said Action of Directors Without a Meeting
by the Pricing Committee of the Board of Directors of the Company pursuant to the authority of
Section 1701.70(B)(1) and 1701.73(A) of the Ohio Revised Code:



          RESOLVED, that the Second Amended and Restated Articles of Incorporation of the Company be and
they hereby are amended by adding at the end of Division A-I of Article FOURTH thereof a new
Section 6 reading as follows:



          SECTION 6. 9 3/4% CLASS A CUMULATIVE REDEEMABLE PREFERRED SHARES. Of the 3,000,000
authorized Class A Shares, 230,000 shares are designated as a series entitled “9 3/4% Class A
Cumulative Redeemable Preferred Shares” (hereinafter called “9 3/4% Class A Preferred Shares”).
The 9 3/4% Class A Preferred Shares shall have the express terms set forth in this Division as
being applicable to all Class A Shares as a class and, in addition, the following express terms
applicable to all 9 3/4% Class A Preferred Shares as a series of Class A Shares:



          (a) The annual dividend rate of the 9 3/4% Class A Preferred Shares shall be 9 3/4% of the
liquidation preference of $250.00 per share.



          (b) Dividends on the 9 3/4% Class A Preferred Shares shall be payable, if declared, quarterly
on or about the 15th day of March, June, September, and December each year, the first quarterly
dividend being payable, if declared, on September 15, 1995. The dividends payable for each full
quarterly dividend period on each 9 3/4% Class A Preferred Shares shall be $6.0938.



          Dividends for the initial dividend period on the 9 3/4% Class A Preferred Shares, or for any
period shorter or longer than a full dividend period on the 9 3/4% Class A Preferred Shares, shall
be computed on the basis of a 360-day year consisting of twelve 30-day months. The aggregate
dividend payable quarterly to each holder of 9 3/4% Class A Preferred Shares shall be rounded to
the nearest one one-hundredth of one cent with $.00005 being rounded upward. Each dividend shall
be payable to the holders of record on such record date, no less than 10 nor more than 30 days
preceding the payment date thereof, as shall be fixed from time to time by the corporation’s Board
of Directors.



47









 





          (c) Dividends on 9 3/4% Class A Preferred Shares shall be cumulative as follows:



          (1) With respect to shares included in the initial issue of 9 3/4% Class A Preferred Shares
and shares issued any time thereafter up to and including the record date for the payment of the
first dividend on the initial issue of 9 3/4% Class A Preferred Shares, dividends shall be
cumulative from the date of the initial issue of 9 3/4% Class A Preferred Shares; and



          (2) With respect to shares issued any time after the aforesaid record date, dividends shall be
cumulative from the dividend payment date next preceding the date of issue of such shares, except
that if such shares are issued during the period commencing the day after the record date for the
payment of a dividend on 9 3/4% Class A Preferred Shares and ending on the payment date of that
dividend, dividends with respect to such shares shall be cumulative from that dividend payment
date.



          (d) Except as required to preserve the Company’s status as a real estate investment trust
under the Internal Revenue Code of 1986, as amended, the 9 3/4% Class A Preferred Shares may not be
redeemed prior to July 25, 2000. At any time or from time to time on and after July 25, 2000 the
Company, at its option, may redeem all or any part of the 9 3/4% Class A Preferred Shares at a
redemption price of $250.00 per share plus, in each case, an amount equal to all dividends accrued
and unpaid thereon to the redemption date. The redemption price (other than the portion thereof
consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other
capital shares of the Company, which may include common shares, preferred shares, depositary
shares, interests, participations or other ownership interests in the Company (however designated)
and any rights (other than debt securities convertible into or exchangeable for corporate shares),
warrants or options to purchase any thereof.



          (e) The amount payable per 9 3/4% Class A Preferred Share in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the corporation shall be
$250.00, plus an amount equal to all dividends accrued and unpaid thereon to the date of payment.



          IN WITNESS WHEREOF, we have executed this instrument in one or more counterparts as of the
21st day of July, 1995.



	 	 	 	 	 
	 	 	 
	 	                                              /S/ JEFFREY I. FRIEDMAN
 	 
	 	Jeffrey I. Friedman 	 
	 	President and Chief Executive Officer 	 
	 
	 	 	 
	 	                                              /S/ MARTIN A. FISHMAN
 	 
	 	Martin A. Fishman 	 
	 	Secretary 	 



48









 






	 	 	 	 	 



CERTIFICATE OF AMENDMENT

TO THE

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

ASSOCIATED ESTATES REALTY CORPORATION





               Jeffrey I. Friedman, President and Chief Executive Officer, and Martin A. Fishman, Secretary,
of Associated Estates Realty Corporation, an Ohio Corporation (the “Company”), do hereby certify
that at a meeting of the Board of Directors of the Company held on January 6, 1999, the following
resolution to amend the Second Amended and Restated Articles of Incorporation, as amended, of the
Company was adopted pursuant to the authority granted by Section 1701.70(B)(1) of the Ohio Revised
Code:



               RESOLVED, that the Second Amended and Restated Articles of Incorporation, as amended, of the
Company be, and they hereby are, amended by adding at the end of Division A-2 of Article FOURTH a
new Section 6 that reads as follows:



               Section 6. Class B Series I Cumulative Preferred Shares.



               A. Designation and Amount. Of the 3,000,000 authorized Class B Shares, 400,000 are
designated as a series designated as “Class B Series I Cumulative Preferred Shares” (the “Series I
Preferred Shares”). The Series I Preferred Shares have the express terms set forth in this
Division as being applicable to all Class B Shares as a class and, in addition, the following
express terms applicable to all Series I Preferred Shares as a series of Preferred Shares. The
number of Series I Preferred Shares may be increased or decreased by resolution of the Board of
Directors and by the filing of a certificate of amendment pursuant to the provisions of the General
Corporate Law of the State of Ohio stating that such increase or reduction has been so authorized;
however, no decrease shall reduce the number of Series I Preferred Shares to a number less than
that of the Series I Preferred Shares then outstanding plus the number of Series I Preferred Shares
issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.



               B. Dividends and Distributions.



               (1)(a) Subject to the rights of the holders of any series of preferred shares (or any similar
shares) ranking prior to the Series I Preferred Shares with respect to dividends, the holders of
Series I Preferred Shares, in preference to the holders of Common Shares and of any other junior
shares, will be entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day
of March, June, September and December in each year (each such date being referred to herein as a
“Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a Series I Preferred Share or fraction thereof, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provisions
for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind)



49









 




of all noncash dividends or other distributions other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or otherwise), declared on the
Common Shares after the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, after the first issuance of any Series I Preferred Share
or fraction thereof. The multiple of cash and noncash dividends declared on the Common Shares to
which holders of the Series I Preferred Shares are entitled, which is 1,000 initially but which
will be adjusted from time to time as hereinafter provided, is hereinafter referred to as the
“Dividend Multiple.” If the Company at any time after January 6, 1999 (the “Rights Declaration
Date”): (i) declares or pays any dividend on the Common Shares payable in Common Shares, or (ii)
effects a subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the Dividend Multiple thereafter applicable
to the determination of the amount of dividends that holders of Series I Preferred Shares are
entitled to receive will be the Dividend Multiple applicable immediately prior to that event
multiplied by a fraction, the numerator of which is the number of Common Shares outstanding
immediately after that event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to that event.





               (b) Notwithstanding anything else contained in this paragraph (1), the Company shall,
out of funds legally available for that purpose, declare a dividend or distribution on the
Series I Preferred Shares as provided in this paragraph (1) immediately after it declares a
dividend or distribution on the Common Shares (other than a dividend payable in Common
Shares); but if no dividend or distribution has been declared on the Common Shares during
the period has been declared on the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series I Preferred Shares shall nevertheless accrue on such
subsequent Quarterly Dividend Payment Date.



               (2) Dividends will begin to accrue and be cumulative on outstanding Series I Preferred Shares
from the Quarterly Dividend Payment Date next preceding the date of issue of such Series I
Preferred Shares, unless the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares will begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of Series I Preferred Shares
entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends will begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends will not bear interest. Dividends paid on the Series I
Preferred Shares in an amount less than the total amount of such dividends at the time accrued and
payable on such shares will be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix in accordance with applicable law a record
date for the determination of holders of Series I Preferred Shares entitled to receive payment of a
dividend or distribution declared thereon, which record date will be not more than such number of
days prior to the date fixed for the payment thereof as may be allowed by applicable law.



               C. Reacquired Shares. Any Series I Preferred Shares purchased or otherwise acquired
by the Company in any manner whatsoever will be retired and canceled



50









 




promptly after the acquisition thereof. All such shares will upon their cancellation become
authorized but unissued preferred shares and may be reissued as part of a new series of Class B
Preferred Shares to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.




               D. Liquidation, Dissolution or Winding Up. Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Company, no distribution may be made (x) to the
holders of shares ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series I Preferred Shares unless, prior thereto, the holders of Series I
Preferred Shares shall have received an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, plus an amount equal
to the greater of (1) $1,000.00 per share or (2) an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of Common Shares, or (y) to the holders of shares ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series I
Preferred Shares, except distributions made ratably on the Series I Preferred Shares and all other
such parity stock in proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. If the Company at any time after the
Rights Declaration Date (i) declares or pays any dividend on Common Shares payable in Common
Shares, or (ii) effects a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a
greater or lesser number of Common Shares, then in each such case the aggregate amount per share to
which holders of Series I Preferred Shares were entitled immediately prior to such event under
clause (x) of the preceding sentence will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding immediately prior to such
event.



               Neither the consolidation of nor merging of the Company with or into any other corporation or
corporations, nor the sale or other transfer of all or substantially all of the assets of the
Company, will be considered to be a liquidation, dissolution or winding up of the Company within
the meaning of this paragraph D.



               E. Consolidation, Merger, etc. If the Company shall enter into any consolidation,
merger, combination or other transaction in which the Common Shares are exchanged for or changed
into other shares, stock or securities, cash or any other property, then in such case the Series I
Preferred Shares will at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate
amount of shares, stock, securities, or other property, as the case may be, into which or for which
each Common Share is changed or exchanged, plus accrued and unpaid dividends, if any, payable with
respect to the Series I Preferred Shares. If the Company at any time after the Rights Declaration
Date (i) declares or pays any dividend on Common Shares payable in Common Shares, or (ii) effects a
subdivision or combination or consolidation of the outstanding Common Shares (by reclassification
or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of
Common Shares, then in each such case the amount set forth in the preceding sentence with respect
to the exchange or change of Series I Preferred Shares will be adjusted by multiplying such amount
by



51









 




a fraction, the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.




               F. Redemption. The Series I Preferred Shares are not redeemable, but the foregoing
does not limit the ability of the Company to purchase or otherwise deal in the Series I Preferred
Shares to the extent otherwise permitted hereby and by law.



               G. Amendment. The Second Amended Articles of Incorporation of the Company, as
amended, may not be amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series I Preferred Shares so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the outstanding Series I
Preferred Shares, voting separately as a class.



               H. Fractional Shares. Series I Preferred Shares may be issued in whole shares or in
any fraction of a share that is one one-thousandth (1/1,000th) of a share or any integral multiple
of such fraction, which will entitle the holder, in proportion to such holder’s fractional shares,
to exercise voting rights, receive dividends, participate in distributions and have the benefit of
all other rights of holders of Series I Preferred Shares. In lieu of fractional shares, the
Company may elect to make a cash payment as provided in that certain Rights Agreement dated as of
January 6, 1999, between the Company and National City Bank, a national banking association, as
rights agent, for fractions of a share other than one one-thousandth (1/1,000th) of a share or any
integral multiple thereof.



          IN WITNESS WHEREOF, we have executed this instrument in one or more counterparts as of January
19, 1999.



	 	 	 	 	 
	 	ASSOCIATED ESTATES REALTY CORPORATION, an Ohio
corporation

 	 
	 	/S/ JEFFREY I. FRIEDMAN
 	 
	 	Jeffrey I. Friedman, 	 
	 	President and Chief Executive Officer 	 
	 	 	 
	 	                                             /S/ MARTIN A. FISHMAN
 	 
	 	Martin A. Fishman, Secretary 	 
	 	 	 



52









 






	 	 	 	 	 




     The following amendment to the Second Amended and Restated Articles of Incorporation of
Associated Estates Realty Corporation was adopted by the board of directors pursuant to section
1701.70(B)(1) of the Ohio Revised Code at a meeting duly called and held on December 2, 2004:



     ARTICLE FOURTH: A new Section 7 shall be added to the end of Division A-II of Article FOURTH,
which Section 7 shall read as follows:



          “SECTION 7. 8.70% CLASS B SERIES II CUMULATIVE REDEEMABLE PREFERRED SHARES. Of the 3,000,000
authorized Class B Shares, 232,000 shares are designated as a series entitled 8.70% Class B Series
II Cumulative Redeemable Preferred Shares” (hereinafter called “Class B Series II Preferred
Shares”). The Class B Series II Preferred Shares shall have the express terms set forth in this
Division as being applicable to all Class B Shares as a class and, in addition, the following
express terms applicable to all Class B Series II Preferred Shares as a series of Class B Shares:




	 	(a)	 	The annual dividend rate of the Class B Series II Preferred Shares shall be
8.70% of the liquidation preference of $250.00 per share.
	 
	 	(b)	 	Dividends on the Class B Series II Preferred Shares shall be payable, if
declared, quarterly on or about the 15th day of March, June, September, and December
each year, the first quarterly dividend being payable, if declared, on March 15, 2005.
The dividends payable for each full quarterly dividend period on each Class B Series II
Preferred Share shall be $21.75.
	 
	 	(c)	 	Dividends for the initial dividend period on the Class B Series II Preferred
Shares, or for any period shorter or longer than a full dividend period on the Class B
Series II Preferred Shares, shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. The aggregate dividend payable quarterly to each holder of
Class B Series II Preferred Shares shall be rounded to the nearest one one-hundredth of
one cent with $.00005 being rounded upward. Each dividend shall be payable to the
holders of record on such record date, no less than 10 nor more than 30 days preceding
the payment date thereof, as shall be fixed from time to time by the corporation’s
Board of Directors.
	 
	 	(d)	 	Dividends on Class B Series II Preferred Shares shall be cumulative as follows:






	 	(1)	 	With respect to shares included in the initial issue of Class B
Series II Preferred Shares and shares issued any time thereafter up to and
including the record date for the payment of the first dividend on the initial
issue of Class B Series II Preferred Shares, dividends shall be cumulative from
the date of the initial issue of Class B Series II Preferred Shares; and
	 
	 	(2)	 	With respect to shares issued any time after the aforesaid
record date, dividends shall be cumulative from the dividend payment date next
preceding the date of issue of such shares, except that if such shares are




53









 






	 	 	 	issued during the period commencing the day after the record date for the
payment of a dividend on Class B Series II Preferred Shares and ending on
the payment date of that dividend, dividends with respect to such shares
shall be cumulative from that dividend payment date.






	 	(e)	 	Except as required to preserve the Company’s status as a real estate investment
trust under the Internal Revenue Code of 1986, as amended, the Class B Series II
Preferred Shares may not be redeemed prior to December 15, 2009. At any time or from
time to time on and after December 15, 2009, the Company, at its option, may redeem all
or any part of the Class B Series II Preferred Shares at a redemption price of $250.00
per share plus, in each case, an amount equal to all dividends accrued and unpaid
thereon to the redemption date.
	 
	 	(f)	 	In the event of a Going Private Transaction (as defined below), each holder of
Class B Series II Preferred Shares will have the right, at the holder’s option, to
require the Company to repurchase all or any part of the holder’s Class B Series II
Preferred Shares for cash at a repurchase price of $250.00 per share, plus all accrued
and unpaid dividends, if any, up to the date fixed for repurchase (except with respect
to Class B Series II Preferred Shares which have been converted into Excess Shares),
without interest pursuant to the procedures described below (the “Going Private Put
Option”), subject to the Ohio Revised Code. A “Going Private Transaction” means the
occurrence of any merger or other transaction or series of transactions as a
consequence of which a majority of the Company’s outstanding Common Shares are owned or
acquired by the merging or acquiring person, entity or group and, following the
transaction(s), the Common Shares of the Company or its successor are not listed for
trading on a national stock exchange or NASDAQ. The Company shall mail to each holder
of Class B Series II Preferred Shares, not later than the date of the occurrence of the
Going Private Transaction, a notice of such occurrence, which will specify the purchase
price and the purchase date, which will be no fewer than 30 business days and no more
than 40 business days from the date the notice is mailed (the “Put Option Payment
Date”), and describe the procedure that must be followed by the holder to tender the
holder’s Class B Series II Preferred Shares. To exercise the Going Private Put Option,
a holder of Class B Series II Preferred Shares must deliver, on or before the third
business day preceding the Put Option Payment Date, written notice to the Company (or
to a paying agent designated by the Company for such purpose) of the holder’s exercise
of the Going Private Put Option, indicating the number of Class B Series II Preferred
Shares to be repurchased by the Company. Holders of Class B Series II Preferred Shares
will be entitled to withdraw, in whole or in part, any tender of Class B Series II
Preferred Shares pursuant to an exercise of the Going Private Put Option by delivering
to the Company (or to a paying agent designated by the Company for such purpose) on or
before the second business day preceding the Put Option Payment Date, a telegram,
telex, facsimile transmission or letter stating the name of the holder, the number of
Class B Series II Preferred Shares initially to be delivered for purchase, and a
statement that the holder is withdrawing its exercise of the Going Private Put Option
as to all or part of the tendered Class B Series II Preferred Shares.




54









 












	 	(g)	 	The amount payable per Class B Series II Preferred Share in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs of the
corporation shall be $250.00, plus an amount equal to all dividends accrued and unpaid
thereon to the date of payment.




55









 











     The following amendment to the Second Amended and Restated Articles of Incorporation of
Associated Estates Realty Corporation was adopted by shareholders at a meeting duly called and held on
May 5, 2010:



     The current first paragraph of Article Fourth of the Second Amended and Restated Articles of
Incorporation of Associated Estates Realty Corporation is hereby deleted and replaced with the
following paragraph:



     “FOURTH: The authorized number of shares of the corporation is 100,000,000, consisting of
91,000,000 Common Shares, without par value (hereinafter called “Common Shares”), and 3,000,000
Class A Cumulative Preferred Shares, without par value (hereinafter called “Class A Shares”)
3,000,000 Class B Cumulative Preferred Shares, without par value (hereinafter called “Class B
Shares”) and 3,000,000 Noncumulative Preferred Shares, without par value (hereinafter called
“Noncumulative Shares”).




56