**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 Ohiocorporation (the "Corporation"), do hereby certify that on November 6, 1993, ina writing approved and signed as specified in Section 1701.54 of the OhioRevised Code, the sole shareholder of the Corporation adopted the followingresolutions, and that said resolutions are valid and binding, have not beenamended, modified or rescinded, and are in full force and effect on the datehereof:

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

FURTHERRESOLVED, that the President ad Secretary of the Corporation be, and theyhereby are, authorized and directed, for and on behalf of the Corporation, to execute a certificate setting forth the foregoing resolutionadopting the Second Amended and Restated Articles of Incorporation and to causesuch certificate to be filed in the office of the Secretary of Sate of Ohio.

                                    IN WITNESS WHEREOF, we have executed thisinstrument 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 AssociatedEstates Realty Corporation.

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

                    THIRD:  The purpose of the Corporation is to engage in anylawful act or activity for which corporations may be formed under Sections1701.01 to 1701.98, inclusive, of the Ohio Revised Code.

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

The Common Shares shall have thefollowing express terms:

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

                    Section 2.   RIGHTS UPONLIQUIDATION.  In the event of any voluntary or involuntary liquidation,dissolution or winding up of, or any distribution of the assets of, theCorporation, each holder of Common Shares shall be entitled to receive, ratablywith each other holder of Common Shares, that portion of the assets of theCorporation available for distribution to its shareholders as the number ofCommon Shares held by such holder bears to the total number of Common Sharesthen outstanding.

                    Section 3.   VOTING RIGHTS.  Theholders of Common Shares shall be entitled to vote on all matters at allmeetings of the shareholders of the Corporation, and shall be entitled to onevote for each Common Share entitled to vote at such meeting.

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

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

                                                                             2

                                "Beneficial Ownership" shall mean ownership of CommonShares by a Person who would be treated as an owner of such Common Shares eitherdirectly 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, asamended from time to time.

                                "Constructive Ownership" shall mean ownership of CommonShares by a Person who would be treated as an owner of such Common Shareseither 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) acquiredor proposed to be acquired by any Person (other than an Existing Holder)pursuant to a Transfer to the extent that, if effective, such Transfer wouldresult in the transferee either (A) Beneficially Owning Common Shares in excessof the Ownership Limit or (B) Constructively Owning Common Shares in excess ofthe Related Party Limit, (ii) acquired or proposed to be acquired by anExisting Holder pursuant to a Transfer to the extent that, if effective, suchTransfer would result in such Existing Holder Beneficially Owning Common Sharesin excess of the Existing Holder Limit for such Existing Holder, or (iii) whichare the subject of a Transfer which, if effective, would result in (A) theCommon Shares being owned by fewer than 100 Persons (determined without referenceto 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) anyPerson to whom an Existing Holder Transfers Beneficial Ownership of CommonShares causing such transferee to Beneficially Own Common Shares in excess ofthe Ownership Limit.

                                "Existing Holder Limit" (i) for any Existing Holder whois an Existing Holder by virtue of clause (i), (ii), (iii) or (iv) of thedefinition thereof, shall mean, initially, the percentage of the outstandingCommon Shares Beneficially Owned by such Existing Holder upon the consummationof the Initial Public Offering, and after any adjustment pursuant to Section(4)(i) of this Article FOURTH, shall mean such percentage of the outstandingCommon Shares as so adjusted; and (ii) for any Existing Holder who becomes anExisting Holder by virtue of clause (v) of the definition thereof, shall mean,initially, the percentage of the outstanding Common Shares Beneficially Ownedby such Existing Holder at the time that such Existing Holder becomes anExisting Holder, and after any adjustment pursuant to Section 4(i) of thisArticle FOURTH, shall mean such percentage of the outstanding Common Shares asso adjusted.  From and after the date of the Initial Public Offering, thesecretary of the Corporation shall maintain and, upon request, make availableto each Existing Holder, a schedule which sets forth the then current ExistingHolder Limits for each Existing Holder.

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                                "Initial Public Offering" means the sale of Common Sharespursuant to the Corporation's first effective registration statement for suchCommon Shares filed under the Securities Act of 1933, as amended.

                                "Market Price" shall mean the last reported sales priceof Common Shares reported on the New York Stock Exchange on the trading dayimmediately preceding the relevant date or, if the Common Shares are not thentraded on the New York Stock Exchange, the last reported sales price of theCommon Shares on the trading day immediately preceding the relevant date asreported on any exchange or quotation system on which the Common Shares may betraded, or if the Common Shares are not then traded on any exchange orquotation system, then the market price of the Common Shares on the relevantdate as determined in good faith by the Board of Directors of the Corporation.

                                "Ownership Limit" initially shall mean 4.0% of theoutstanding Common Shares of the Corporation and, after any modification as setforth in Section 4(i) of this Article FOURTH, shall mean such greaterpercentage (but not more than 9.9%) of the outstanding Common Shares determinedby 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) or501(c)(17) of the Code), a portion of a trust permanently set aside for or tobe 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) ofthe Code, a joint stock company, other entity or a group as that term is usedfor purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, asamended; provided, however, that a "person" does not mean an underwriterparticipating in a public offering of Common Shares, for a period of 25 daysfollowing the purchase by such underwriter of the Common Shares.

                                "REIT" shall mean a Real Estate Investment Trust asdefined under Section 856 of the Code.

                                "Related Party Limit" shall mean 9.8% of the outstandingCommon Shares of the Corporation.

                                "Transfer" shall mean any sale, transfer, gift,assignment, devise or other disposition of Common Shares (including, withoutlimitation, (i) the granting of any option or entering in to any agreement forthe sale, transfer or other disposition of Common Shares or (ii) the sale,transfer, assignment or other disposition of any securities or rightsconvertible into or exchangeable for Common Shares), whether voluntary orinvoluntary, whether of record or beneficially and whether by operation of lawor otherwise.

                                (b)              RESTRICTIONS ON TRANSFERS.

                                                                             4

                                (i)                 Except as provided in Section 4(i) of this Article FOURTH, from andafter the date of the Initial Public Offering, no Person (other than anExisting Holder) shall Beneficially Own Common Shares in excess of theOwnership Limit, no Existing Holder shall Beneficially Own Common Shares inexcess 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 theoutstanding Common Shares immediately following the completion of the InitialPublic Offering) shall Constructively Own Common Shares in excess of 9.8% ofthe outstanding Common Shares.

                                (ii)               Except as provided in Section 4(i) of this Article FOURTH, from andafter the date of the Initial Public Offering, any Transfer which, ifeffective, would result in any Person (other than an Existing Holder)Beneficially Owning Common Shares in excess of the Ownership Limit shall bevoid AB INITIO as to the Transfer of such Common Shares which would beotherwise 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 andafter the date of the Initial Public Offering, any Transfer which, ifeffective, would result in any Existing Holder Beneficially Owning CommonShares in excess of the applicable Existing Holder Limit shall be void ABINITIO as to the Transfer of such Common Shares which would be otherwiseBeneficially Owned by such Existing Holder in excess of the applicable ExistingHolder Limit, and such Existing Holder shall acquire no rights in such CommonShares.

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

                                (v)               Except as provided in Section 4(i) of this Article FOURTH, from andafter the date of the Initial Public Offering, any Transfer which, ifeffective, would result in the Common Shares being beneficially owned by fewerthan 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 beotherwise beneficially owned by the transferee, and the intended transfereeshall acquire no rights in such Common Shares.

                                (vi)             From and after the date of the Initial Public Offering, any Transferwhich, 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 tothe 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 theintended transferee shall acquire no rights in such Common Shares.

                                                                             5

                                (c)               REMEDIES FOR BREACH.  If the Board of Directors or its designees shallat any time determine in good faith that a Transfer has taken place inviolation of Section 4(b) of this Article FOURTH or that a Person intends toacquire or has attempted to acquire beneficial ownership (determined withoutreference to any rules of attribution), Beneficial Ownership or ConstructiveOwnership of any Common Shares of the Corporation in violation of Section 4(b)of this Article FOURTH, or that any such Transfer, intended or attemptedacquisition or acquisition would jeopardize the status of the Company as a REITunder the Code, the Board of Directors or its designees shall take such actionsas 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 thebooks of the Corporation or instituting proceedings to enjoin such Transferand, in addition, exercising its rights under Section 4(d) of this ArticleFOURTH.

                                (d)              PURCHASE RIGHT IN EXCESS SHARES.  Beginning on the date of theoccurrence of a Transfer which, if consummated, in the good faith judgment ofthe Board of Directors of the Corporation, could result in Excess Shares, suchExcess 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 pershare in the transaction that created such Excess Shares (or, in the case of adevise 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 suchoffer.   The Corporation shall have the right to accept such offer for a periodof ninety (90) days after the later of (i) the date of the Transfer whichresulted in such Excess Shares and (ii) the date the Board of Directorsdetermines in good faith that such Transfer has occurred if the Corporationdoes not receive a notice of such Transfer pursuant to Section 4(e) of thisArticle FOURTH.  Prompt payment of the purchase price shall be made in suchreasonable manner as may be determined by the Corporation.   From and after thedate fixed for purchase by the Corporation, and so long as payment of thepurchase price for the Excess Shares to be so purchased shall have been made orduly provided for, the holder of any Excess Shares so called for purchase shallcease to be entitled to dividends, distributions, voting rights and otherbenefits with respect to such Excess Shares, excepting only the right topayment of the purchase price fixed as aforesaid.  Any dividend or distributionpaid to a proposed transferee of Excess Shares prior to the discovery by theCorporation that the Excess Shares have been transferred in violation ofSection 4(b) of this Article FOURTH shall be repaid to the Corporation upondemand.  If the foregoing provisions are determined to be void or invalid byvirtue of any legal decision, statute, rule or regulation, then the intendedtransferee of such Excess Shares shall be deemed, at the option of theCorporation, 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 toacquire Common Shares in violation of Section 4(b) of this Article FOURTH orany Person who is a transferee of Excess Shares shall immediately give writtennotice to the Corporation of such event and shall provide to the Corporationsuch other information as the Corporation may request in order to determine theeffect, if any, of such Transfer or intended Transfer on the Corporation'sstatus as a REIT.

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

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                                (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 totime pursuant to the Code) of the outstanding Common Shares of the Corporationshall, within 30 days after January 1 of each year, give written notice to theCorporation stating the name and address of such Beneficial Owner, the numberof shares Beneficially Owned, and a description of how such shares are held.  Each such Beneficial Owner shall provide to the Corporation such additionalinformation as the Corporation may from time to time request in order to determinethe effect, if any, of such Beneficial Ownership on the Corporation's status asa REIT.

                                (ii)               each Person who is a Beneficial Owner or Constructive Owner of CommonShares and each Person (including the shareholder of record) who is holdingCommon Shares for a Beneficial Owner or Constructive Owner shall provide to theCorporation 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 orholding on the Corporation's status as a REIT.

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

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

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

(i)                 any Existing Holder may Transfer Common Shares to a Person who isalready an Existing Holder up to the number of Common Shares Beneficially Ownedby such transferor Existing Holder in excess of the Ownership Limit.  Any suchTransfer will decrease the Existing Holder Limit for such transferor ExistingHolder and increase the Existing Holder Limit for such transferee ExistingHolder by the percentage of the outstanding Common Shares so Transferred.   Thetransferor Existing Holder shall give the Board of Directors of the Corporationprior written notice of any such Transfer.

(ii)               any grant of a stock option pursuant to a stock option plan approved bythe shareholders of the Corporation shall increase the Existing Holder Limitfor the affected Existing Holder to the maximum extent possible under Section4(k) of this Article Fourth to permit the Beneficial Ownership of the CommonShares issuable upon the exercise of such stock option.

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(iii)              the Board of Directors may reduce the Existing Holder Limit for anyExisting Holder, with the written consent of such Existing Holder, after anyTransfer permitted in this Section 4 by such Existing Holder to a Person otherthan an Existing Holder or after the lapse (without exercise) of a stock optiondescribed in Section 4(i)(ii).

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

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

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

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

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

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

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

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

(l)                 EXCEPTIONS.

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(i)                 The Board of Directors, with a ruling from the Internal Revenue Serviceor an opinion of counsel, may exempt a Person from the Ownership Limits or theExisting Holder Limits, as the case may be, if such Person is not an individualfor purposes of Section 542(a)(2) of the Code, if such Persons make suchrepresentations and undertakings to the Corporation as are, in the judgment ofthe Board of Directors, reasonably necessary to ascertain that no individual'sBeneficial Ownership of such Common Shares will violate the Ownership Limit orthe applicable Existing Holder Limit, as the case may be, and if such Person agreesthat any violation or attempted violation will result in such Common Shares inexcess of 4.0% of the outstanding Common Shares being deemed to be ExcessShares and subject to repurchase by the Corporation as set forth in Section4(d) of this Article FOURTH.

(ii)               The Board of Directors, with a ruling from the Internal Revenue Serviceor an opinion of counsel, may exempt a Person from the limitation on suchPerson Constructively Owning Common Shares in excess of the Related Party Limitif such Person does not own, and represents that it will not own, directly orconstructively (by virtue of the application of   Section 318 of the Code, as modified by Section 856(d)(5) of the Code), morethan a 9.9% interest (as set forth in Section 856(d)(2)(B)) in a tenant of anyreal property owned or leased by the Corporation, and the Corporation obtainssuch representations and undertakings from such Person as are reasonablynecessary to ascertain this fact and agrees that any violation or attemptedviolation will result in such Common Shares in excess of 9.9% being deemed tobe Excess Shares and subject to repurchase by the Corporation as set forth inSection 4(d) of this Article FOURTH.

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

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

"The Common Shares represented by this certificate aresubject to restrictions on transfer for the purpose of preserving theCorporation's status as a Real Estate Investment Trust under the InternalRevenue Code of1986, as amended.   Subject to certain provisions of theCorporation's Amended and Restated Articles of Incorporation, no Person mayBeneficially Own Common Shares in excess of 4.0% of the outstanding CommonShares of the Corporation (unless such Person is an Existing Holder) and noPerson (other than an Existing Holder who Constructively Owns in excess of 9.8%of the Common Shares immediately following the consummation of the InitialPublic Offering) may Constructively Own Common Shares in excess of 9.8% of theoutstanding Common Shares of the Corporation.  Any Person who attempts toBeneficially Own or Constructively Own Common Shares in excess of the abovelimitations must immediately notify the Corporation.  All capitalized terms inthis legend have the meanings defined in the Corporation's Amended and RestatedArticles of Incorporation, a copy of which, including the restrictions ontransfer, will be sent without charge to each shareholder who so requests.  Ifthe restrictions on transfer are violated, certain of the Common Sharesrepresented may be subject to repurchase by the Corporation on the terms andconditions set forth in the Corporation's Amended and Restated Articles ofIncorporation."

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FIFTH:  At all times following the consummation of theInitial Public Offering (as defined in Article FOURTH), at least a majority ofthe members of the Board of Directors shall, except during the period of avacancy or vacancies therein, be Independent Directors.   An "IndependentDirector" 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, asamended) of (A) any entity which now or hereafter is part of the AssociatedEstates Group, including, without limitation, Associated Estates Corporation,an Ohio corporation, Adam Construction Company, an Ohio corporation, andEstates Insurance Agency, Inc., an Ohio corporation, or (B) any entity which isan affiliate (as defined above) of any entity listed in clause (ii)(A) of thisArticle FIFTH.

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

SEVENTH:  Notwithstanding any provision of Sections1701.01 to 1701.98, inclusive, of the Ohio Revised Code, or any successorstatutes now or hereafter in force, requiring for the authorization or takingof any action the vote or consent of the holders of shares entitling them toexercise two-thirds or any other proportion of the voting power of theCorporation or of any class or classes of shares thereof, such action, unlessotherwise expressly required by law or these Second Amended and RestatedArticles of Incorporation, may be authorized or taken by the vote or consent ofthe holders of shares entitling them to exercise a majority of the voting powerof 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 sharesof any class issued by it at such times, for such consideration and upon suchterms and conditions as its Board of Directors may determine.

NINTH:  No person who is serving or has served as adirector of the corporation shall be personally liable to the corporation orany of its shareholders for monetary damages for breach of any fiduciary dutyof such person as a director by reason of any act or omission of such person asa director; provided, however, that the foregoing provision shall not eliminateor limit the liability of any person (a) for any breach of such person's dutyof loyalty as a director to the corporation or its shareholders, (b) for actsor omissions not in good faith or which involve intentional misconduct or aknowing violation of law, (c) under Section 1701.95 of the Ohio Revised Code,(d) for any transaction from which such person derived any improper personalbenefit, or (e) to the extent that such liability may not be limited oreliminated by virtue of the provisions of Section 1701.13 of the Ohio RevisedCode or any successor section or statute.   Any repeal or modification of thisArticle EIGHTH by the shareholders of the corporation shall be prospectiveonly, and shall not adversely affect any limitation on the personal liabilityof a director or the corporation existing at the time of such repeal ormodification.

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

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

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

THIRTEENTH:  No shareholder of the Corporation maycumulate 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 andRestated Articles of Incorporation, in the manner now or hereafter prescribedby statute, and all rights conferred upon shareholders herein are grantedsubject to this reservation.

FIFTEENTH:  These Second Amended and Restated Articles ofIncorporation shall take the place of and supersede the corporation's existingArticles 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-GeneralCounsel and Secretary, of Associated Estates Realty Corporation, an Ohiocorporation (the "Corporation"), do hereby certify that on May 24, 1994, at theannual shareholders meeting of the Corporation, the shareholders of the Corporationadopted the resolutions attached hereto as Exhibit A; and that said resolutionsare valid and binding, have not been amended, modified, or rescinded, and arein full force and effect on the date hereof.

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

/S/ JEFFREY I. FRIEDMAN  Jeffrey I.  FriedmanChairman of the Board, President,       and Chief Executive Officer

/S/ MARTIN A.  FISHMANMartin A. Fishman  Vice President-General Counsel and      Secretary

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EXHIBIT A

RESOLVED, that Article FOURTH of the Company's Amended andRestated Articles of Incorporation be, and the same hereby is, deleted in itsentirety and there is substituted therefor the following:

FOURTH:  The authorized number of shares of theCorporation is 50,000,000, consisting of 41,000,000 Common Shares, without parvalue (hereinafter called "Common Shares"), and 3,000,000 Class A CumulativePreferred Shares, without par value (hereinafter called "Class A Shares"),3,000,000 Class B Cumulative Preferred Shares, without par value (hereinaftercalled "Class B Shares") and 3,000,000 Noncumulative Preferred Shares, withoutpar value (hereinafter called "Noncumulative Shares").

DIVISION A

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

Section 1.   SERIES.   The Class AShares may be issued from time to time in one or more series.   All Class AShares shall be of equal rank and shall be identical, except in respect of thematters 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 suchseries, except as to the dates from which dividends shall accrue and becumulative.   All Class A Shares shall rank on a parity with the Class B Sharesand the Noncumulative Shares and shall be identical to all Class B Shares andNoncumulative Shares except (1) in respect of the matters that may be fixed bythe Board of Directors as provided in clauses (a) through (i), inclusive, ofthis Section 1 and (2) only dividends on Class A Shares and Class B Sharesshall be cumulative as set forth herein.   Subject to the provisions ofSections 2 through 5, both inclusive, and Item 4 of this Division, whichprovisions shall apply to all Class A Shares, the Board of Directors hereby isauthorized to cause such shares to be issued in one or more series and withrespect 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) thefollowing:

(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 ofDirectors 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 whichsuch rates may be established;

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(d)              The date or dates from which dividends shall accrue and be cumulativeand the dates on which and the period or periods for which dividends, ifdeclared, shall be payable, including the means by which such dates and periodsmay be established;

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

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

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

(h)               Whether the shares of the series shall be convertible into Common Sharesor shares of any other class and, if so, the conversion rate or rates or priceor prices, any adjustments thereof and all other terms and conditions uponwhich 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 otherclass or series.

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

Section 2.   DIVIDENDS.

(a)               The holders of Class A Shares of each series, in preference to theholders of Common Shares and of any other class of shares ranking junior to theClass A Shares, shall be entitled to receive out of any funds legally availabletherefor, and when and as declared by the Board of Directors, dividends in cashat the rate or rates for such series fixed in accordance with the provisions ofSection 1 above and no more, payable on the dates fixed for such series.   Suchdividends shall accrue and be cumulative, in the case of shares of eachparticular 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 theClass A Shares for any dividend period unless at the same time (i) a likeproportionate dividend for the dividend periods terminating on the same or anyearlier date, ratably in proportion to the respective annual dividend ratesfixed therefor, shall have been paid upon or declared or set apart for allClass A Shares of all series then issued and outstanding and entitled toreceive such dividend and (ii) the dividends payable for the dividend periodsterminating on the same or any earlier date (but, with respect to NoncumulativeShares, only with respect to the then current dividend period), ratably inproportion to the respective dividend rates fixed therefor, shall have beenpaid upon or declared or set apart for all Class B Shares and NoncumulativeShares then issued and outstanding and entitled to receive such dividends.

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(b)              So long as any Class A Shares shall be outstanding no dividend, except adividend payable in Common Shares or other shares ranking junior to the Class AShares, shall be paid or declared or any distribution be made, except asaforesaid, in respect of the Common Shares or any other shares ranking juniorto the Class A Shares, nor shall any Common Shares or any other shares rankingjunior to the Class A Shares be purchased, retired or otherwise acquired by theCorporation, except out of the proceeds of the sale of Common Shares or othershares of the Corporation ranking junior to the Class A Shares received by theCorporation subsequent to the date of first issuance of Class A Shares of anyseries, 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 beendeclared and paid or a sum sufficient for payment thereof set apart;

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

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

(c)               The foregoing restrictions on the payment of dividends or otherdistributions on, or on the purchase, redemption retirement or otheracquisition of, Common Shares or any other shares ranking on a parity with orjunior to the Class A Shares shall be inapplicable to (i) any payments in lieuof issuance of fractional shares thereof, whether upon any merger, conversion,stock dividend or otherwise, (ii) the conversion of Class A Shares, Class BShares or Noncumulative Shares into Common Shares or (iii) the exercise by theCorporation of its rights pursuant to Section V(d) of this Division A, Section4(d) of Division B or any similar Section hereafter contained in these Amendedand Restated Articles of Incorporation with respect to any other class orseries 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 theyear to holders of all classes of stock (the "Total Dividends"), then theportion of the Capital Gains Amount that shall be allocable to holders of theClass A Shares shall be the amount that the total dividends paid or madeavailable to the holders of the Class A Shares for the year bears to the TotalDividends.

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, redeemall or any part of any redeemable series of Class A Shares at the timeoutstanding at the applicable redemption price for such series fixed inaccordance with the provisions of Section 1 of this Division; and 

                                                                            15

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

                                    andshall 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 redeemedat 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 suchredemption, or such other time prior thereto as the Board of Directors shallfix for any series pursuant to Section 1 of this Division prior to the issuancethereof.   At any time after notice as provided above has been deposited in themail, the Corporation may deposit the aggregate redemption price of Class AShares to be redeemed, together with accrued and unpaid dividends thereon tothe redemption date, with any bank or trust company in Cleveland, Ohio, or NewYork, New York, having capital and surplus of not less than $100,000,000, namedin such notice and direct that there be paid to the respective holders of theClass A Shares so to be redeemed amounts equal to the redemption price of theClass A Shares so to be redeemed, together with such accrued and unpaiddividends thereon, on surrender of the share certificate or certificates heldby such holders; and upon the deposit of such notice in the mail and the makingof such deposit of money with such bank or trust company, such holders shallcease to be shareholders with respect to such shares; and from and after thetime such notice shall have been so deposited and such deposit of money shallhave been so made, such holders shall have no rights or claim against theCorporation with respect to such shares, except only the right to receive suchmoney from such bank or trust company without interest or to exercise beforethe redemption date any unexpired privileges of conversion.   In the event lessthan all of the outstanding Class A Shares are to be redeemed, the Corporationshall select by lot the shares so to be redeemed in such manner as shall beprescribed by the Board of Directors.

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

(c)               Any Class A Shares which are (1) redeemed by the Corporation pursuant tothe provisions of this Section, (2) purchased and delivered in satisfaction ofany sinking fund requirements provided for shares of such series, (3) convertedin accordance with the express terms thereof, or (4) otherwise acquired by theCorporation, shall resume the status of authorized but unissued Class A Shareswithout serial designation.  

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(d)              Except in connection with the exercise of the Corporation's rightspursuant to Section (d) of Item V of this Division A, Section 4(d) of DivisionB or any similar Section hereafter contained in these Amended and Restated Articlesof Incorporation with respect to any other class or series of capital stockhereafter created or authorized, the Corporation may not purchase or redeem(for sinking fund purposes or otherwise) less than all of the Class A Sharesthen outstanding except in accordance with a stock purchase offer made to allholders of record of Class A Shares, unless all dividends on all Class A Sharesthen outstanding for all previous and current dividend periods shall have beendeclared and paid or funds therefor set apart and all accrued sinking fundobligations applicable thereto shall have been complied with.

Section 4.   LIQUIDATION.

(a)(1)   In the event of anyvoluntary or involuntary liquidation, dissolution or winding up of the affairsof the Corporation, the holders of Class A Shares of any series shall beentitled to receive in full out of the assets of the Corporation, including itscapital, before any amount shall be paid or distributed among the holders ofthe Common Shares or any other shares ranking junior to the Class A Shares, theamounts fixed with respect to shares of such series in accordance with Section1 of this Division, plus an amount equal to all dividends accrued and unpaidthereon 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 thenet assets of the Corporation legally available therefor are insufficient topermit the payment upon all outstanding Class A Shares, Class B Shares and NoncumulativeShares of the full preferential amount to which they are respectively entitled,then such net assets shall be distributed ratably upon all outstanding Class AShares, Class B Shares and Noncumulative Shares in proportion to the fullpreferential amount to which each such share is entitled.

(2)              After payment to the holders of Class A Shares of the full preferentialamounts as aforesaid, the holders of Class A Shares, as such, shall have noright or claim to any of the remaining assets of the Corporation.  

(b)              The merger or consolidation of the Corporation into or with any otherCorporation, the merger of any other Corporation into it, or the sale, lease orconveyance of all or substantially all the assets of the Corporation, shall notbe deemed to be a dissolution, liquidation or winding up for the purposes ofthis Section.

Section 5.   VOTING.

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

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(b)(1)   If, and so oftenas, the Corporation shall be in default in the payment of dividends on anyseries of Class A Shares at the time outstanding, whether or not earned ordeclared, for a number of consecutive dividend payment periods which in theaggregate contain at least 540 days, all holders of such Class A Shares, votingseparately as a class, together with all Class B Shares and NoncumulativeShares upon which like voting rights have been conferred and are exercisableunder the circumstances described in Subsection 5(e), shall be entitled toelect, as herein provided, two members of the Board of Directors of theCorporation; provided, however, that the holders of such Class A Shares shallnot exercise such special class voting rights except at meetings of suchshareholders for the election of directors at which the holders of not lessthan 50% of such Class A Shares are present in person or by proxy; and providedfurther, that the special class voting rights provided for in this paragraphwhen the same shall have become vested shall remain so vested until all accruedand unpaid dividends on such Class A Shares then outstanding shall have beenpaid or declared and a sum sufficient for the payment thereof set aside forpayment, whereupon the holders of such Class A Shares shall be divested oftheir special class voting rights in respect of subsequent elections ofdirectors, subject to the revesting of such special class voting rights in theevent above specified in this paragraph.

(2)              In the event of default entitling holders of Class A Shares to elect twodirectors as specified in paragraph (1) of this Subsection, a special meetingof such holders for the purpose of electing such directors shall be called bythe 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 suchdefault in the payment of dividends exists and notice thereof shall be given inthe same manner as that required for the annual meeting of shareholders;provided, however, that the Corporation shall not be required to call suchspecial meeting if the annual meeting of shareholders shall be called to beheld within 90 days after the date of receipt of the foregoing written requestfrom the holders of Class A Shares.   At any meeting at which such holders ofClass A Shares shall be entitled to elect directors, holders of 50% of suchClass A Shares, present in person or by proxy, shall be sufficient toconstitute a quorum, and the vote of the holders of a majority of such sharesso present at any such meeting at which there shall be such a quorum shall besufficient to elect the members of the Board of Directors which such holders ofClass A Shares are entitled to elect as herein provided.   Notwithstanding anyprovision of these Articles of Incorporation or the Code of Regulations of theCorporation or any action taken by the holders of any class of shares fixingthe number of directors of the Corporation, the two directors who may beelected by such holders of Class A Shares pursuant to this Subsection shallserve in addition to any other directors then in office or proposed to beelected otherwise than pursuant to this Subsection.   Nothing in thisSubsection shall prevent any change otherwise permitted in the total number ofor classifications of directors of the Corporation nor require the resignationof 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 electedannually for terms expiring at the next succeeding annual meeting ofshareholders.   

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

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(c)               If at any time when the holders of Class A Shares are entitled to electdirectors pursuant to the foregoing provisions of this Section the holders ofany Class B Shares or Noncumulative Shares are entitled to elect directorspursuant 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 theNoncumulative Shares then entitled to vote shall be combined (with each classof shares having a number of votes proportional to the aggregate liquidationpreference of its outstanding shares).   In such case, the holders of Class AShares and of all such other shares then entitled so to vote, voting as aclass, shall elect such directors.   If the holders of any such other shareshave elected such directors prior to the happening of the default or eventpermitting the holders of Class A Shares to elect directors, or prior to awritten request for the holding of a special meeting being received by theSecretary of the Corporation as required above, then a new election shall beheld with all such other shares and the Class A Shares voting together as asingle class for such directors, resulting in the termination of the term ofsuch previously elected directors upon the election of such new directors.   

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

(1)              Any amendment, alteration or repeal, whether by merger, consolidation orotherwise, of any of the provisions of the Amended and Restated Articles ofIncorporation or of the Code of Regulations of the Corporation which affectsadversely and materially the preferences or voting or other rights of theholders of Class A Shares which are set forth in these Amended and RestatedArticles of Incorporation; provided, however, neither the amendment of theseAmended and Restated Articles of Incorporation so as to authorize, create orchange the authorized or outstanding number of Class A Shares or of any sharesranking on a parity with or junior to the Class A Shares nor the amendment ofthe provisions of the Code of Regulations so as to change the number or classificationof directors of the Corporation shall be deemed to affect adversely andmaterially preferences or voting or other rights of the holders of Class AShares; or 

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

(e)               In the event, and only to the extent, that (1) Class A Shares are issuedin more than one series and (2) Ohio law permits the holders of a series of aclass of capital stock to vote separately as a class, the affirmative vote ofthe holders of at least two-thirds of each series of Class A Shares at the timeoutstanding, voting separately as a class, given in person or by proxy eitherin 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 Amended andRestated Articles of Incorporation or of the Code of Regulations of theCorporation which affects adversely and materially the preferences or voting orother rights of the holders of such series which are set forth in these Amendedand Restated Articles of Incorporation; provided, however, neither the amendmentof these Amended and Restated Articles of Incorporation, so as to authorize,create or change the authorized or outstanding number of Class A Shares or ofany shares ranking on a parity with or junior to the Class A Shares nor theAmendment of the provisions of the Code of Regulations so as to change thenumber or classification of directors of the Corporation shall be deemed toaffect adversely and materially the preferences or voting or other rights ofthe holders of such series.   

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

Section 1.   SERIES.   The Class BShares may be issued from time to time in one or more series.   All Class BShares shall be of equal rank and shall be identical, except in respect of thematters 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 suchseries, 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 theNoncumulative Shares and shall be identical to all Class A Shares andNoncumulative Shares except (1) in respect of the matters that may be fixed bythe Board of Directors as provided in clauses (a) through (i), inclusive, ofthis Section 1 and (2) only dividends on the Class A Shares and the Class Bshares are cumulative as set forth herein.   Subject to the provisions ofSections 2 through 5, both inclusive, and Item 4 of this Division, whichprovisions shall apply to all Class B Shares, the Board of Directors hereby isauthorized to cause such shares to be issued in one or more series and withrespect 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) thefollowing:  

(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 ofDirectors 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 whichsuch rates may be established; 

(d)              The date or dates from which dividends shall accrue and be cumulativeand the dates on which and the period or periods for which dividends, ifdeclared, shall be payable, including the means by which such dates and periodsmay be established; 

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

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

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

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

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(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 anyother class or series.   

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

Section 2.   DIVIDENDS.

(a)               The holders of Class B Shares of each series, in preference to theholders of Common Shares and of any other class of shares ranking junior to theClass B Shares, shall be entitled to receive out of any funds legally availabletherefor, and when and as declared by the Board of Directors, dividends in cashat the rate or rates for such series fixed in accordance with the provisions ofSection 1 above and no more, payable on the dates fixed for such series.   Suchdividends shall accrue and be cumulative, in the case of shares of eachparticular series, from and after the date or dates fixed with respect to suchseries.   No dividends shall be paid upon or declared or set apart for anyseries 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 thesame or any earlier date, ratably in proportion to the respective annualdividend rates fixed therefor, shall have been paid upon or declared or setapart for all Class B Shares of all series then issued and outstanding andentitled to receive such dividend and (ii) the dividends payable for thedividend periods terminating on the same or any earlier date (but, with respectto the Noncumulative Shares, only with respect to the then current dividendperiod), 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 andNoncumulative Shares then issued and outstanding and entitled to receive suchdividends.

(b)              So long as any Class B Shares shall be outstanding no dividend, except adividend payable in Common Shares or other shares ranking junior to the Class BShares, shall be paid or declared or any distribution be made, except asaforesaid, in respect of the Common Shares or any other shares ranking juniorto the Class B Shares, nor shall any Common Shares or any other shares rankingjunior to the Class B Shares be purchased, retired or otherwise acquired by theCorporation, except out of the proceeds of the sale of Common Shares or othershares of the Corporation ranking junior to the Class B Shares received by theCorporation subsequent to the date of first issuance of Class B Shares of anyseries, 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 beendeclared and paid or a sum sufficient for payment thereof set apart;

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

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

(c)               The foregoing restrictions on the payment of dividends or otherdistributions on, or on the purchase, redemption, retirement or otheracquisition of, Common Shares or any other shares ranking on a parity with or juniorto the Class B Shares shall be inapplicable to (i) any payments in lieu ofissuance of fractional shares thereof, whether upon any merger, conversion,stock dividend or otherwise, (ii) the conversion of Class A Shares, Class BShares or Noncumulative Shares into Common Shares or (iii) the exercise by theCorporation of its rights pursuant to Section V(d) of this Division A, Section4(d) of Division B or any similar Section hereafter contained in these Amendedand Restated Articles of Incorporation with respect to any other class orseries 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 theyear to holders of all classes of stock (the "Total Dividends"), then theportion of the Capital Gains Amount that shall be allocable to holders of theClass B Shares shall be the amount that the total dividends paid or madeavailable to the holders of the Class B Shares for the year bears to the TotalDividends.

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, redeemall or any part of any redeemable series of Class B Shares at the timeoutstanding at the applicable redemption price for such series fixed inaccordance with the provisions of Section 1 of this Division; and 

(2)              Shall, from time to time, make such redemptions of each series of ClassB Shares as may be required to fulfill the requirements of any sinking fundprovided for shares of such series at the applicable sinking fund redemptionprice 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 redemptiondate.   

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(b) (1)  Notice of every such redemption shall be mailed,postage prepaid, to the holders of record of the Class B Shares to be redeemedat 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 suchredemption, or such other time prior thereto as the Board of Directors shallfix for any series pursuant to Section 1 of this Division prior to the issuancethereof.   At any time after notice as provided above has been deposited in themail, the Corporation may deposit the aggregate redemption price of Class BShares to be redeemed, together with accrued and unpaid dividends thereon tothe redemption date, with any bank or trust company in Cleveland, Ohio, or NewYork, New York, having capital and surplus of not less than $100,000,000, namedin such notice and direct that there be paid to the respective holders of theClass B Shares so to be redeemed amounts equal to the redemption price of theClass B Shares so to be redeemed, together with such accrued and unpaiddividends thereon, on surrender of the share certificate or certificates heldby such holders; and upon the deposit of such notice in the mail and the makingof such deposit of money with such bank or trust company, such holders shallcease to be shareholders with respect to such shares; and from and after thetime such notice shall have been so deposited and such deposit of money shallhave been so made, such holders shall have no rights or claim against theCorporation with respect to such shares, except only the right to receive suchmoney from such bank or trust company without interest or to exercise beforethe redemption date any unexpired privileges of conversion.   In the event lessthan all of the outstanding Class B Shares are to be redeemed, the Corporationshall select by lot the shares so to be redeemed in such manner as shall beprescribed by the Board of Directors.   

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

(c)               Any Class B Shares which are (1) redeemed by the Corporation pursuant tothe provisions of this Section, (2) purchased and delivered in satisfaction ofany sinking fund requirements provided for shares of such series, (3) convertedin accordance with the express terms thereof, or (4) otherwise acquired by theCorporation, shall resume the status of authorized but unissued Class B Shareswithout serial designation.  

(d)              Except in connection with the exercise of the Corporation's rightspursuant to Section (d) of Item V of this Division A, Section 4(d) of DivisionB or any similar Section hereafter contained in these Amended and RestatedArticles of Incorporation with respect to any other class or series of capitalstock hereafter created or authorized, the Corporation may not purchase orredeem (for sinking fund purposes or otherwise) less than all of the Class BShares then outstanding except in accordance with a stock purchase offer madeto all holders of record of Class B Shares, unless all dividends on all Class BShares then outstanding for all previous and current dividend periods shallhave been declared and paid or funds therefor set apart and all accrued sinkingfund obligations applicable thereto shall have been complied with.

Section 4.   LIQUIDATION.

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(a) (1)  In the event of any voluntary or involuntaryliquidation, dissolution or winding up of the affairs of the Corporation, theholders of Class B Shares of any series shall be entitled to receive in fullout of the assets of the Corporation, including its capital, before any amountshall be paid or distributed among the holders of the Common Shares or anyother shares ranking junior to the Class B Shares, the amounts fixed withrespect 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 ofpayment of the amount due pursuant to such liquidation, dissolution or windingup of the affairs of the Corporation.  In the event the net assets of theCorporation legally available therefor are insufficient to permit the paymentupon all outstanding Class A Shares, Class B Shares and Noncumulative Shares ofthe full preferential amount to which they are respectively entitled, then suchnet assets shall be distributed ratably upon all outstanding Class A Shares,Class B Shares and Noncumulative Shares in proportion to the full preferentialamount to which each such share is entitled.  

(2)              After payment to the holders of Class B Shares of the full preferentialamounts as aforesaid, the holders of Class B Shares, as such, shall have noright or claim to any of the remaining assets of the Corporation.  

(b)              The merger or consolidation of the Corporation into or with any othercorporation, the merger of any other corporation into it, or the sale, lease orconveyance of all or substantially all the assets of the Corporation, shall notbe deemed to be a dissolution, liquidation or winding up for the purposes ofthis Section.  

Section 5.   VOTING.

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

(b) (1)  If, and so often as, the Corporation shall be indefault in the payment of dividends on any series of Class B Shares at the timeoutstanding, whether or not earned or declared, for a number of consecutivedividend payment periods which in the aggregate contain at least 540 days, allholders of Class B Shares, voting separately as a class, together with allClass A Shares and Noncumulative Shares upon which like voting rights have beenconferred and are exercisable under the circumstances described in Subsection5(c), shall be entitled to elect, as herein provided, a total of two members ofthe Board of Directors of the Corporation; provided, however, that the holdersof such Class B Shares shall not exercise such special class voting rightsexcept at meetings of such shareholders for the election of directors at whichthe holders of not less than 50% of such Class B Shares are present in personor by proxy; and provided further, that the special class voting rights providedfor in this paragraph when the same shall have become vested shall remain sovested until all accrued and unpaid dividends on such Class B Shares thenoutstanding shall have been paid or declared and a sum sufficient therefor setaside for payment, whereupon the holders of such Class B Shares shall bedivested of their special class voting rights in respect of subsequentelections of directors, subject to the revesting of such special class votingrights in the event above specified in this paragraph.  

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(2)              In the event of default entitling holders of Class B Shares to elect twodirectors as specified in paragraph (1) of this Subsection, a special meetingof such holders for the purpose of electing such directors shall be called bythe 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 suchdefault in the payment of dividends exists and notice thereof shall be given inthe same manner as that required for the annual meeting of shareholders;provided, however, that the Corporation shall not be required to call suchspecial meeting if the annual meeting of shareholders shall be called to beheld within 90 days after the date of receipt of the foregoing written requestfrom the holders of Class B Shares.  At any meeting at which such holders ofClass B Shares shall be entitled to elect directors, holders of 50% of suchClass B Shares, present in person or by proxy, shall be sufficient toconstitute a quorum, and the vote of the holders of a majority of such sharesso present at any such meeting at which there shall be such a quorum shall besufficient to elect the members of the Board of Directors which such holders ofClass B Shares are entitled to elect as herein provided.  Notwithstanding anyprovision of these Articles of Incorporation or the Code of Regulations of theCorporation or any action taken by the holders of any class of shares fixingthe number of directors of the Corporation, the two directors who may beelected by such holders of Class B Shares pursuant to this Subsection shallserve in addition to any other directors then in office or proposed to beelected otherwise than pursuant to this Subsection.  Nothing in this Subsectionshall prevent any change otherwise permitted in the total number of orclassifications of directors of the Corporation nor require the resignation ofany 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 electedannually for terms expiring at the next succeeding annual meeting ofshareholders.  

(3)              Upon any divesting of the special class voting rights of the holders ofthe Class B Shares in respect of elections of directors as provided in thisSubsection, the terms of office of all directors then in office elected by suchholders shall terminate immediately thereupon.  If the office of any directorelected by such holders voting as a class becomes vacant by reason of death,resignation, removal from office or otherwise, the remaining director electedby such holders voting as a class may elect a successor who shall hold officefor 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 electdirectors pursuant to the foregoing provisions of this Section the holders ofany Class A Shares or Noncumulative Shares are entitled to elect directorspursuant 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 theNoncumulative Shares then entitled to vote shall be combined (with class ofshares having a number of votes proportional to the aggregate liquidationpreference of its outstanding shares).  In such case, the holders of Class BShares and of all such other shares then entitled so to vote, voting as aclass, shall elect such directors.  If the holders of any such other shareshave elected such directors prior to the happening of the default or eventpermitting the holders of Class B Shares to elect directors, or prior to awritten request for the holding of a special meeting being received by theSecretary of the Corporation as required above, then a new election shall beheld with all such other shares and the Class B Shares voting together as asingle class for such directors, resulting in the termination of the term ofsuch previously elected directors upon the election of such new directors.  

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

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(1)              Any amendment, alteration or repeal, whether by merger, consolidation orotherwise, of any of the provisions of the Amended and Restated Articles ofIncorporation or of the Code of Regulations of the Corporation which affectsadversely and materially the preferences or voting or other rights of theholders of Class B Shares which are set forth in these Amended and RestatedArticles of Incorporation; provided, however, neither the amendment of theseAmended and Restated Articles of Incorporation so as to authorize, create orchange the authorized or outstanding number of Class B Shares or of any sharesranking on a parity with or junior to the Class B Shares nor the amendment ofthe provisions of the Code of Regulations so as to change the number orclassification of directors of the Corporation shall be deemed to affectadversely and materially preferences or voting or other rights of the holdersof Class B Shares; or 

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

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

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

Section 1.   Series.  TheNoncumulative 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, exceptin respect of the matters that may be fixed by the Board of Directors ashereinafter provided, and each share of a series shall be identical with allother shares of such series, except as to the dates on which and the periodsfor which dividends may be payable.  All Noncumulative Shares shall rank on aparity with the Class A Shares and the Class B Shares and shall be identical toall Class A Shares and Class B Shares except (1) in respect of the matters thatmay 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 Sharesare noncumulative as set forth herein.  Subject to the provisions of Sections 2through 5, both inclusive, and Item 4 of this Division, which provisions shallapply to all Noncumulative Shares, the Board of Directors hereby is authorizedto cause such shares to be issued in one or more series and with respect toeach such series to determine and fix prior to the issuance thereof (andthereafter, to the extent provided in clause (b) of this Section) thefollowing:   

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

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(b)              The authorized number of shares of the series, which number the Board ofDirectors 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 whichsuch rates may be established;

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

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

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

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

(h)               Whether the shares of the series shall be convertible into Common Sharesor shares of any other class and, if so, the conversion rate or rates or priceor prices, any adjustments thereof and all other terms and conditions uponwhich 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 anyother class or series.   

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

Section 2.   DIVIDENDS.

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(a)               The holders of Noncumulative Shares of each series, in preference to theholders of Common Shares and of any other class of shares ranking junior to theNoncumulative Shares, shall be entitled to receive out of any funds legallyavailable 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 withthe provisions of Section 1 above and no more, payable on the dates fixed forsuch series.  Such dividends shall accrue, in the case of shares of eachparticular series, from and after the date or dates fixed with respect to suchseries; provided, however, that if the Board of Directors fails to declare adividend payable on a dividend payment date on any Noncumulative Shares, theholders of the Noncumulative Shares shall have no right to receive a dividendin respect of the dividend period ending on such dividend payment date, and theCorporation shall have no obligation to pay the dividend accrued for suchperiod, whether or not dividends on such Noncumulative Shares are declaredpayable on any future dividend payment date.  No dividends shall be paid uponor declared or set apart for any series of the Noncumulative Shares for anydividend period unless at the same time (i) a like proportionate dividend forthe then current dividend period, ratably in proportion to the respectiveannual dividend rates fixed therefor, shall have been paid upon or declared orset apart for all Noncumulative Shares of all series then issued andoutstanding and entitled to receive such dividend and (ii) the dividendspayable for the dividend periods terminating on the same or any earlier date,ratably in proportion to the respective dividend rates fixed therefor, shallhave been paid upon or declared or set apart for all Class A Shares and Class BShares 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 tothe Noncumulative Shares, shall be paid or declared or any distribution bemade, except as aforesaid, in respect of the Common Shares or any other sharesranking junior to the Noncumulative Shares, nor shall any Common Shares or anyother shares ranking junior to the Noncumulative Shares be purchased, retiredor otherwise acquired by the Corporation, except out of the proceeds of thesale of Common Shares or other shares of the Corporation ranking junior to theNoncumulative Shares received by the Corporation subsequent to the date offirst issuance of Noncumulative Shares of any series, unless:  

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

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

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

(c)               The foregoing restrictions on the payment of dividends or otherdistributions on, or on the purchase, redemption retirement or otheracquisition of, Common Shares or any other shares ranking on a parity with orjunior to the Noncumulative Shares shall be inapplicable to (i) any payments inlieu 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 exerciseby 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 theseAmended and Restated Articles of Incorporation with respect to any other classor series of capital stock hereafter created or authorized.

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(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 theyear to holders of all classes of stock (the "Total Dividends"), then theportion of the Capital Gains Amount that shall be allocable to holders of theNoncumulative Shares shall be the amount that the total dividends paid or madeavailable to the holders of the Noncumulative Shares for the year bears to theTotal 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, redeemall or any part of any redeemable series of Noncumulative Shares at the timeoutstanding at the applicable redemption price for such series fixed in accordancewith the provisions of Section 1 of this Division; and

(2)              Shall, from time to time, make such redemptions of each series ofNoncumulative Shares as may be required to fulfill the requirements of anysinking fund provided for shares of such series at the applicable sinking fundredemption price fixed in accordance with the provisions of Section 1 of thisDivision; and shall in each case pay all unpaid dividends for the then currentdividend 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 beredeemed at their respective addresses then appearing on the books of theCorporation, not less than 30 days nor more than 60 days prior to the datefixed for such redemption, or such other time prior thereto as the Board ofDirectors shall fix for any series pursuant to Section 1 of this Division priorto the issuance thereof.  At any time after notice as provided above has been depositedin the mail, the Corporation may deposit the aggregate redemption price ofNoncumulative Shares to be redeemed, together with accrued and unpaid dividendsthereon for the then current dividend period to the redemption date, with anybank or trust company in Cleveland, Ohio, or New York, New York, having capitaland surplus of not less than $100,000,000, named in such notice and direct thatthere be paid to the respective holders of the Noncumulative Shares so to beredeemed amounts equal to the redemption price of the Noncumulative Shares soto be redeemed together with such accrued and unpaid dividends thereon for thethen current dividend period, on surrender of the share certificate orcertificates held by such holders; and upon the deposit of such notice in themail 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; andfrom and after the time such notice shall have been so deposited and suchdeposit of money shall have been so made, such holders shall have no rights orclaim against the Corporation with respect to such shares, except only theright to receive such money from such bank or trust company without interest orto exercise before the redemption date any unexpired privileges of conversion. In the event less than all of the outstanding Noncumulative Shares are to beredeemed, the Corporation shall select by lot the shares so to be redeemed insuch manner as shall be prescribed by the Board of Directors.  

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(2)              If the holders of Noncumulative Shares which have been called forredemption shall not within six years after such deposit claim the amountdeposited for the redemption thereof, any such bank or trust company shall,upon demand, pay over to the Corporation such unclaimed amounts and thereuponsuch bank or trust company and the Corporation shall be relieved of allresponsibility in respect thereof and to such holders.

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

(d)              Except in connection with the exercise of the Corporation's rightspursuant to Section (d) of Item V of this Division A, Section 4(d) of DivisionB or any similar Section hereafter contained in these Amended and RestatedArticles of Incorporation with respect to any other class or series of capitalstock hereafter created or authorized, the Corporation may not purchase orredeem (for sinking fund purposes or otherwise) of less than all of theNoncumulative Shares then outstanding except in accordance with a stockpurchase offer made to all holders of record of Noncumulative Shares, unlessall dividends on all Noncumulative Shares then outstanding for the then currentdividend period shall have been declared and paid or funds therefor set apartand all accrued sinking fund obligations applicable thereto shall have beencomplied with.  

Section 4.   LIQUIDATION.

(a) (1)  In the event of any voluntary or involuntaryliquidation, dissolution or winding up of the affairs of the Corporation, theholders of Noncumulative Shares of any series shall be entitled to receive infull out of the assets of the Corporation, including its capital, before anyamount shall be paid or distributed among the holders of the Common Shares orany other shares ranking junior to the Noncumulative Shares, the amounts fixedwith respect to shares of such series in accordance with Section 1 of thisDivision, plus an amount equal to all dividends accrued and unpaid thereon forthe then current dividend period to the date of payment of the amount duepursuant to such liquidation, dissolution or winding up of the affairs of theCorporation.  In the event the net assets of the Corporation legally availabletherefor are insufficient to permit the payment upon all outstanding Class AShares, Class B Shares and Noncumulative Shares of the full preferential amountto which they are respectively entitled, then such net assets shall bedistributed ratably upon all outstanding Noncumulative Shares in proportion tothe full preferential amount to which each such share is entitled.  

(2)              After payment to the holders of Noncumulative Shares of the fullpreferential amounts as aforesaid, the holders of Noncumulative Shares, assuch, shall have no right or claim to any of the remaining assets of theCorporation.   (b) The merger or consolidation of the Corporation into or withany other Corporation, the merger of any other Corporation into it, or thesale, lease or conveyance of all or substantially all the assets of theCorporation, shall not be deemed to be a dissolution, liquidation or winding upfor the purposes of this Section.

Section 5.   VOTING.

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

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

(2)              In the event of default entitling holders of Noncumulative Shares toelect two directors as specified in paragraph (1) of this Subsection, a specialmeeting of such holders for the purpose of electing such directors shall becalled by the Secretary of the Corporation upon written request of, or may becalled by, the holders of record of at least 10% of the Noncumulative Sharesupon which such default in the payment of dividends exists and notice thereofshall be given in the same manner as that required for the annual meeting ofshareholders; provided, however, that the Corporation shall not be required tocall such special meeting if the annual meeting of shareholders shall be calledto be held within 90 days after the date of receipt of the foregoing writtenrequest from the holders of Noncumulative Shares.  At any meeting at which suchholders of Noncumulative Shares shall be entitled to elect directors, holdersof 50% of such Noncumulative Shares, present in person or by proxy, shall besufficient to constitute a quorum, and the vote of the holders of a majority ofsuch shares so present at any such meeting at which there shall be such aquorum shall be sufficient to elect the members of the Board of Directors whichsuch holders of Noncumulative Shares are entitled to elect as herein provided. Notwithstanding any provision of these Amended and Restated Articles ofIncorporation or the Code of Regulations of the Corporation or any action takenby the holders of any class of shares fixing the number of directors of theCorporation, the two directors who may be elected by such holders ofNoncumulative Shares pursuant to this Subsection shall serve in addition to anyother directors then in office or proposed to be elected otherwise thanpursuant to this Subsection.  Nothing in this Subsection shall prevent anychange otherwise permitted in the total number of or classifications ofdirectors of the Corporation nor require the resignation of any directorelected otherwise than pursuant to this Subsection.  Notwithstanding anyclassification of the other directors of the Corporation, the two directorselected by such holders of Noncumulative Shares shall be elected annually forterms expiring at the next succeeding annual meeting of shareholders.  

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

(c)               If at any time when the holders of Noncumulative Shares are entitled toelect directors pursuant to the foregoing provisions of this Section theholders of any Class A Shares or Class B Shares are entitled to elect directorspursuant 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 NoncumulativeShares then entitled to vote shall be combined (with class of shares having anumber of votes proportional to the aggregate liquidation preference of itsoutstanding shares).  In such case, the holders of Noncumulative Shares and ofall such other shares then entitled so to vote, voting as a class, shall electsuch directors.  If the holders of any such other shares have elected suchdirectors prior to the happening of the default or event permitting the holdersof Noncumulative Shares to elect directors, or prior to a written request forthe holding of a special meeting being received by the Secretary of theCorporation as required above, then a new election shall be held with all suchother shares and the Noncumulative Shares voting together as a single class forsuch directors, resulting in the termination of the term of such previouslyelected directors upon the election of such new directors.  

(d)              The affirmative vote of the holders of at least two-thirds of theNoncumulative 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 thepurpose, shall be necessary to effect either of the following:  

(1)              Any amendment, alteration or repeal, whether by merger, consolidation orotherwise, of any of the provisions of the Amended and Restated Articles ofIncorporation or of the Code of Regulations of the Corporation which affectsadversely and materially the preferences or voting or other rights of theholders of Noncumulative Shares which are set forth in these Amended andRestated Articles of Incorporation; provided, however, neither the amendment ofthese Amended and Restated Articles of Incorporation so as to authorize, createor change the authorized or outstanding number of Noncumulative Shares or ofany shares ranking on a parity with or junior to the Noncumulative Shares northe amendment of the provisions of the Code of Regulations so as to change thenumber or classification of directors of the Corporation shall be deemed toaffect adversely and materially preferences or voting or other rights of theholders of Noncumulative Shares; or 

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

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(e)               In the event, and only to the extent, that (1) Noncumulative Shares areissued in more than one series and (2) Ohio law permits the holders of a seriesof a class of capital stock to vote separately as a class, the affirmative voteof the holders of at least two-thirds of each series of the NoncumulativeShares at the time outstanding, voting separately as a class, given in personor by proxy either in writing or at a meeting called for the purpose of votingon such matters, shall be required for any amendment, alteration or repeal,whether by merger, consolidation or otherwise, of any of the provisions ofthese Amended and Restated Articles of Incorporation or of the Code ofRegulations of the Corporation which affects adversely and materially thepreferences or voting or other rights of the holders of such series which areset forth in these Amended and Restated Articles of Incorporation; provided,however, neither the amendment of these Amended and Restated Articles ofIncorporation, so as to authorize, create or change the authorized oroutstanding number of Noncumulative Shares or of any shares remaining on aparity with or junior to the Noncumulative Shares nor the amendment of theprovisions of the Code of Regulations so as to change the number orclassification of directors of the Corporation shall be deemed to affectadversely and materially preferences or voting or other rights of the holder ofsuch 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 includeall shares of the Corporation in respect of which the rights of the holdersthereof as to the payment of dividends or as to distributions in the event of avoluntary or involuntary liquidation, dissolution or winding up of the affairsof the Corporation are given preference over the rights of the holders of ClassA 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 includeall shares of the Corporation in respect of which the rights of the holdersthereof as to the payment of dividends or as to distributions in the event of avoluntary or involuntary liquidation, dissolution or winding up of the affairsof the Corporation rank equally (except as to the amounts fixed therefor) withthe rights of the holders of Class A Shares, Class B Shares or NoncumulativeShares, 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 includeall 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 TOREDEMPTION.

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

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"Beneficial Ownership" shall mean ownership of PreferredShares by a Person who would be treated as an owner of such Preferred Shareseither directly or constructively through the application of   Section 544 of the Code, as modified by Section 856(h) of the Code.  Theterms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shallhave the correlative meanings.

"Code" shall mean the Internal Revenue Code of 1986, asamended from time to time.

"Constructive Ownership" shall mean ownership ofPreferred Shares by a Person who would be treated as an owner of such PreferredShares 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 tothe extent that, if effective, such Transfer would result in the transfereeeither Beneficially Owning Preferred Shares or Constructively Owning PreferredShares in excess of the Ownership Limit, or (ii) which are the subject of aTransfer 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 ofany class of Preferred Shares, the last reported sales price of such seriesreported on the New York Stock Exchange on the trading day immediatelypreceding the relevant date or, if shares of such series are not then traded onthe New York Stock Exchange, the last reported sales price of shares of suchseries on the trading day immediately preceding the relevant date as reportedon any exchange or quotation system over which the shares of such series may betraded, or if shares of such series are not then traded over any exchange orquotation system, then the market price of shares of such series on therelevant date as determined in good faith by the Board of Directors of theCorporation.

"Ownership Limit" shall mean, with respect to each seriesof  each class of Preferred Shares, 9.8% of the outstanding shares of suchseries.

"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  orto be used exclusively for the purposes described in Section 642(c) of theCode, an association, a private foundation within the meaning of  Section509(a) of the Code, a joint stock company, other entity or a  group as thatterm is used for purposes of Section 13(d)(3) of the  Securities Exchange Actof 1934, as amended; provided, however, that a  "person" does not mean anunderwriter which participates in a public  offering of Preferred Shares, for aperiod of 35 days following the  purchase by such underwriter of such PreferredShares.

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

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"REIT" shall mean a Real Estate Investment Trust underSection 856 of the Code.

"Transfer" shall mean any sale, transfer, gift,assignment, devise or other disposition of Preferred Shares (including, withoutlimitation, (i) the granting of any option or entering in to any agreement forthe sale, transfer or other disposition of Preferred Shares or (ii) the sale,transfer, assignment or other disposition of any securities or rightsconvertible into or exchangeable for Preferred Shares), whether voluntary orinvoluntary, whether of record or beneficially and whether by operation of lawor otherwise.

(b)              RESTRICTIONS ON TRANSFERS.

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

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

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

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(iv)             Notwithstanding any other provisions contained in this Item V, any Transfer(whether or not such Transfer is the result of a transaction entered intothrough the facilities of the New York Stock Exchange) or other event that, ifeffective, would result in the Corporation being "closely held" within themeaning of Section 856(h) of the Code, or would otherwise result in theCorporation failing to qualify as a REIT (including, but not limited to, aTransfer or other event that would result in the Corporation owning (directlyor Constructively) an interest in a tenant that is described in Section856(d)(2)(B) of the Code if the income derived y the Corporation from suchtenant would cause the Corporation to fail to satisfy any of the gross incomerequirement of Section 856(c) of the Code) shall be void AB INITIO as to theTransfer of the Preferred Shares or other event which would cause theCorporation to be "closely held" within the meaning of Section 856(h) of theCode or would otherwise result in the Corporation failing to qualify as a REIT;and the intended transferee or owner or Constructive or Beneficial Owner shallacquire or retain no rights in such Preferred Shares.

(v)               For purposes of construing the foregoing provisions, any attempt totransfer Preferred Shares in violation of the Ownership Limit applicable to theseries of the class of such Preferred Shares (as such Ownership Limit may bemodified by the Board of Directors pursuant to Section (h) of Item V) shall beconstrued as causing such Preferred Shares to be transferred by operation oflaw to the Corporation as trustee of a trust for the exclusive benefit of theperson or persons to whom such Preferred Shares can ultimately be transferredwithout violating the Ownership Limit and any Excess Preferred Shares whileheld in such trust shall not have any voting rights, shall not be consideredfor purposes of any shareholder vote or for determining a quorum for such avote, and shall not be entitled to any dividends or other distributions.

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

                                                                            36

(d)              PURCHASE RIGHT IN EXCESS PREFERRED SHARES.  Beginning on the date of theoccurrence of a Transfer which, if consummated, in the good faith judgment ofthe Board of Directors of the Corporation, could result in Excess PreferredShares, such Excess Preferred Shares shall be deemed to have been offered forsale to the Corporation, or its designee, at a price per share equal to thelesser of (i) the price per share in the transaction that created such ExcessPreferred Shares (or, in the case of a devise or gift, the Market Price at thetime of such devise or gift) and (ii) the Market Price on the date theCorporation, or its designee, accepts such offer.  The Corporation shall havethe 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 noticeof such Transfer pursuant to Section (e) of Item V of this Division A of thisArticle FOURTH, the date the Board of Directors determines in good faith thatsuch Transfer has occurred.  Prompt payment of the purchase price shall be madein such reasonable manner as may be determined by the Corporation.  From andafter the date fixed for purchase by the Corporation, and so long as payment ofthe purchase price for the Excess Preferred Shares to be so purchased shallhave been made or duly provided for, the holder of any Excess Preferred Sharesso 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 PreferredShares prior to the discovery by the Corporation that the Excess PreferredShares have been transferred in violation of Section (b) of Item V of thisDivision A of this Article FOURTH shall be repaid to the Corporation upondemand.  If the foregoing provisions are determined to be void or invalid byvirtue of any legal decision, statute, rule or regulation, then the intendedtransferee of such Excess Preferred Shares shall be deemed, at the option ofthe Corporation, to have acted as agent on behalf of the Corporation in acquiring such Excess Preferred Shares and to hold such ExcessPreferred Shares on behalf of the Corporation.

(e)               NOTICE OF RESTRICTED TRANSFER.  Any Person who acquires or attempts toacquire 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 aresult of an event under clause (b) of this Item V, shall immediately givewritten notice to the Corporation of such event and shall provide to theCorporation such other information as the Corporation may request in order todetermine the effect, if any, of such Transfer or attempted Transfer or otherevent on the Corporation's status as a REIT.

(f)                REMEDIES NOT LIMITED.  Nothing contained in this Division A of thisArticle FOURTH shall limit the authority of the Board of Directors to take suchother action as it deems necessary or advisable to protect the Corporation andthe interests of its shareholders by preservation of the Corporation's statusas a REIT.

(g)               AMBIGUITY.  In the case of an ambiguity in the application of any of theprovisions of Item V of this Division A of this Article FOURTH, including anydefinition contained in Section (a) of Item V, the Board of Directors shallhave the power to determine the application of the provisions of this Item Vwith respect to any situation based on the facts known to it.

(h)               EXCEPTIONS.

(i)                 Subject to Section (b)(iv) of Item V of this Division A, the Board ofDirectors may exempt a Person from the Ownership Limit applicable to a seriesof a class of Preferred Shares if such Person is not an individual (other thanpension 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 andundertakings from such Person as are reasonably necessary to ascertain that noindividual's Beneficial Ownership of such Preferred Shares will violate theOwnership Limit, and agrees that any violation or attempted violation willresult in such Preferred Shares in excess of the Ownership Limit being subjectto repurchase by the Corporation as set forth in Section (d) of Item V of thisDivision A of this Article FOURTH.

                                                                            37

(ii)               The Board of Directors may exempt a Person from the limitation on suchPerson Constructively Owning Preferred Shares in excess of the Ownership Limitapplicable to a series of a class of such Preferred Shares if such Person doesnot own and represents that it will not own, directly or constructively (byvirtue of the application of    Section 318 of the Code, as modified by Section 856(d)(5) of the Code), morethan a 9.8% interest (as set forth in Section 856(d)(2)(B)) in a tenant of anyreal property owned or leased by the Corporation, if the Board of Directorsobtains such representations and undertakings from such Person as arereasonably necessary to ascertain this fact and agrees that any violation orattempted violation will result in such Preferred Shares in excess of theOwnership Limit being deemed to be Excess Preferred Shares and subject torepurchase by the Corporation as set forth in Section (d) of Item V of thisDivision A of this Article FOURTH.

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

                         "The Preferred Shares represented by this certificate are subject torestrictions on transfer for the purpose of the corporation's maintenance ofits status as a Real Estate Investment Trust under the Internal Revenue Code of1986, as amended.  Subject to certain provisions of the Corporation's Articlesof Incorporation, no Person may Beneficially Own or Constructively Own sharesof any series of any class of Preferred Shares in excess of 9.8% of theoutstanding Preferred Shares of such series.  Any Person who attempts toBeneficially Own or Constructively Own shares of any series of any class ofPreferred Shares in excess of the above limitations must immediately notify theCorporation.  All capitalized terms in this legend have the meanings defined inthe Corporation's Articles of Incorporation, a copy of which, including therestrictions on transfer, will be sent without charge to each shareholder whoso requests.  If the restrictions on transfer are violated, certain of thePreferred Shares represented hereby may be subject to repurchase by theCorporation on the terms and conditions set forth in the Corporation's Articlesof Incorporation.    

DIVISION B 

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

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

Section 2.   RIGHTS UPONLIQUIDATION.  In the event of any voluntary or involuntary liquidation,dissolution or winding up of, or any distribution of the assets of, theCorporation, each holder of Common Shares shall be entitled to receive, ratablywith each other holder of Common Shares, that portion of the assets of theCorporation available for distribution to its shareholders as the number ofCommon Shares held by such holder bears to the total number of Common Sharesthen outstanding.  

Section 3.   VOTING RIGHTS.  Theholders of Common Shares shall be entitled to vote on all matters (for whichholders of Common Shares shall be entitled to vote thereon) at all meetings ofthe shareholders of the Corporation, and shall be entitled to one vote for eachCommon Share entitled to vote at such meeting.  

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

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

"Beneficial Ownership" shall mean ownership of CommonShares by a Person who would be treated as an owner of such Common Shareseither 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, asamended from time to time.  

"Constructive Ownership" shall mean ownership of CommonShares  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.  Theterms "Constructive Owner," "Constructively Owns" and "Constructively Owned"shall have the correlative meanings.  

"Excess Shares" shall mean any Common Shares (i) acquiredor proposed to be acquired by any Person (other than an Existing Holder)pursuant to a Transfer to the extent that, if effective, such Transfer wouldresult in the transferee either (A) Beneficially Owning Common Shares in excessof the Ownership Limit or (B) Constructively Owning Common Shares in excess ofthe Related Party Limit, (ii) acquired or proposed to be acquired by anExisting Holder pursuant to a Transfer to the extent that, if effective, suchTransfer would result in such Existing Holder Beneficially Owning Common Sharesin excess of the Existing Holder Limit for such Existing Holder, or (iii) whichare the subject of a Transfer that, if effective, which would result in (A) theCommon Shares being owned by fewer than 100 Persons (determined withoutreference to any rules of attribution), or (B) the Corporation being "closelyheld" 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) anyPerson to whom an Existing Holder Transfers Beneficial Ownership of CommonShares causing such transferee to Beneficially Own Common Shares in excess ofthe Ownership Limit.

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"Existing Holder Limit" (i) for any Existing Holder who isan Existing Holder by virtue of clause (i), (ii) or (iii) of the definitionthereof, shall mean, initially, the percentage of the outstanding Common SharesBeneficially Owned by such Existing Holder upon the consummation of the InitialPublic Offering, and after any adjustment pursuant to paragraph C(4)(i) of thisDivision B of this Article FOURTH, shall mean such percentage of theoutstanding Common Shares as so adjusted; and (ii) for any Existing Holder whobecomes an Existing Holder by virtue of clause (iv) of the definition thereof,shall mean, initially, the percentage of the outstanding Common SharesBeneficially Owned by such Existing Holder at the time that such ExistingHolder becomes an Existing Holder, and after any adjustment pursuant to Section4(i) of this Division B of this Article FOURTH, shall mean such percentage ofthe outstanding Common Shares as so adjusted.  From and after the date of theInitial Public Offering, the secretary of the Corporation shall maintain and,upon request, make available to each Existing Holder, a schedule which setsforth the then current Existing Holder Limits for each Existing Holder.

"Initial Public Offering" means the sale of Common Sharespursuant to the Company's first effective registration statement for suchCommon Shares filed under the Securities Act of 1933, as amended.

"Market Price" shall mean the last reported sales price ofCommon Shares reported on the New York Stock Exchange on the trading dayimmediately preceding the relevant date or, if the Common Shares are not thentraded on the New York Stock Exchange, the last reported sales price of theCommon Shares on the trading day immediately preceding the relevant date asreported on any exchange or quotation system over which the Common Shares maybe traded, or if the Common Shares are not then traded over any exchange orquotation system, then the market price of the Common Shares on the relevantdate as determined in good faith by the Board of Directors of the Corporation.

"Ownership Limit" shall mean 4.0% of the outstandingCommon  Shares of the Corporation.

"Person" shall mean an individual, corporation,partnership, estate, trust (including a trust qualified under Section 401(a) or501(c)(17) of the Code), a portion of a trust permanently set aside for or tobe 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) ofthe Code, a joint stock company, other entity or a group as that term is used forpurposes of Section 13(d)(3) of the Securities Exchange Act of 1934, asamended; provided, however, that a "person" does not mean an underwriter whichparticipates in a public offering of the Common Shares, for a period of 35 daysfollowing the purchase by such underwriter of the Common Shares.

"REIT" shall mean a Real Estate Investment Trust underSection 856 of the Code.

"Related Party Limit" shall mean 9.8% of the outstandingCommon Shares of the Corporation.

"Transfer" shall mean any sale, transfer, gift,assignment, devise or other disposition of Common Shares (including, withoutlimitation, (i) the granting of any option or entering in to any agreement forthe sale, transfer or other disposition of Common Shares or (ii) the sale,transfer, assignment or other disposition of any securities or rightsconvertible into or exchangeable for Common Shares), whether voluntary orinvoluntary, whether of record or beneficially and whether by operation of lawor otherwise.

(b)              RESTRICTIONS ON TRANSFERS.

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

(ii)               Except as provided in Section 4(i) of this Division B of this ArticleFOURTH, from and after the date of the Initial Public Offering, any Transferthat, if effective, would result in any Person (other than an Existing Holder)Beneficially Owning Common Shares in excess of the Ownership Limit shall bevoid AB INITIO as to the Transfer of such Common Shares which would beotherwise 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 ArticleFOURTH, from and after the date of the Initial Public Offering, any Transferthat, if effective, would result in any Existing Holder Beneficially OwningCommon Shares in excess of the applicable Existing Holder Limit shall be voidAB INITIO as to the Transfer of such Common Shares which would be otherwiseBeneficially Owned by such Existing Holder in excess of the applicable ExistingHolder Limit, and such Existing Holder shall acquire no rights in such CommonShares.

(iv)             Except as provided in Section 4(i) of this Division B of this ArticleFOURTH, from and after the date of the Initial Public Offering, any Transferthat, if effective, would result in any Person Constructively Owning CommonShares in excess of the Related Party Limit shall be void AB INITIO as to theTransfer of such Common Shares which would be otherwise Constructively Owned bysuch Person in excess of such amount, and the intended transferee shall acquireno rights in such Common Shares.

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

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

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(c)               REMEDIES FOR BREACH.  If the Board of Directors or its designees shallat any time determine in good faith that a Transfer has taken place inviolation of Section 4(b) of this Division B of this Article FOURTH or that aPerson intends to acquire or has attempted to acquire beneficial ownership(determined without reference to any rules of attribution), BeneficialOwnership or Constructive Ownership of any Common Shares of the Corporation inviolation of Section 4(b) of this Division B of this Article FOURTH, or thatany such Transfer, intended or attempted acquisition or acquisition wouldjeopardize the status of the Company as a REIT under the Code, the Board ofDirectors or its designees shall take such actions as it deems advisable torefuse to give effect or to prevent such Transfer, including, but not limitedto, refusing to give effect to such Transfer on the books of the Corporation orinstituting proceedings to enjoin such Transfer and, in addition, exercisingits rights under Section 4(d) of this Division B of this Article FOURTH.

(d)              PURCHASE RIGHT IN EXCESS SHARES.  Beginning on the date of theoccurrence of a Transfer which, if consummated, in the good faith judgment ofthe Board of Directors of the Corporation, could result in Excess Shares, suchExcess 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 pershare in the transaction that created such Excess Shares (or, in the case of adevise 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 suchoffer.  The Corporation shall have the right to accept such offer for a periodof ninety days after the later of (i) the date of such Transfer and (ii) if theCorporation 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 Directorsdetermines in good faith that such Transfer has occurred.  Prompt payment ofthe purchase price shall be made in such reasonable manner as may be determinedby the Corporation.  From and after the date fixed for purchase by theCorporation, and so long as payment of the purchase price for the Excess Sharesto be so purchased shall have been made or duly provided for, the holder of anyExcess Shares so called for purchase shall cease to be entitled to dividends,distributions, voting rights and other benefits with respect to such ExcessShares, excepting only the right to payment of the purchase price fixed asaforesaid.  Any dividend or distribution paid to a proposed transferee ofExcess Shares prior to the discovery by the Corporation that the Excess Shareshave been transferred in violation of Section 4(b) of this Division B of thisArticle FOURTH shall be repaid to the Corporation upon demand.  If theforegoing provisions are determined to be void or invalid by virtue of anylegal decision, statute, rule or regulation, then the intended transferee ofsuch Excess Shares shall be deemed, at the option of the Corporation, to haveacted 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 toacquire shares in violation of Section 4(b) of this Division B of this ArticleFOURTH or any Person who is a transferee of Excess Shares shall immediatelygive written notice to the Corporation of such event and shall provide to theCorporation such other information as the Corporation may request in order todetermine the effect, if any, of such Transfer or intended Transfer on theCorporation's status as a REIT.

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

                                                                            42

(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 tothe Code) of the outstanding Common Shares of the Corporation shall, within 30days after January 1 of each year, give written notice to the Corporationstating the name and address of such Beneficial Owner, the number of sharesBeneficially Owned, and description of how such shares are held.  Each suchBeneficial Owner shall provide to the Corporation such additional informationas the Corporation may request in order to determine the effect, if any, ofsuch Beneficial Ownership on the Corporation's status as a REIT.

(ii)               each Person who is a Beneficial Owner or Constructive Owner of CommonShares and each Person (including the shareholder of record) who is holdingCommon Shares for a Beneficial Owner or Constructive Owner shall provide to theCorporation 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 thisArticle FOURTH shall limit the authority of the Board of Directors to take suchother action as it deems necessary or advisable to protect the Corporation andthe interests of its shareholders by preservation of the Corporation's statusas a REIT.

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

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

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

(ii)               Any grant of a stock option pursuant to a stock option plan approved bythe shareholders of the Corporation shall increase the Existing Holder Limitfor the affected Existing Holder to the maximum extent possible under Section4(k) to permit the Beneficial Ownership of the Common Shares issuable upon theexercise of such stock option.

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(iii)              The Board of Directors may reduce the Existing Holder Limit for anyExisting Holder, with the written consent of such Existing Holder, after anyTransfer permitted in this Section 4 by such Existing Holder to a Person otherthan an Existing Holder or after the lapse (without exercise) of a stock optiondescribed in Section 4(i)(ii).

(iv)             Any Common Shares issued to an Existing Holder pursuant to a dividendreinvestment plan adopted by the Corporation shall increase the Existing HolderLimit 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 inSection 4(k) of this Division B, the Board of Directors may from time to timeincrease the Ownership Limit.

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

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

(ii)               Prior to the modification of any Existing Holder Limit or OwnershipLimit pursuant to Section 4(i) or Section 4(j) of this Division B of thisArticle FOURTH, the Board of Directors of the Corporation may require suchopinions of counsel, affidavits, undertakings or agreements as it may deemnecessary or advisable in order to determine or ensure the Corporation's statusas a REIT.

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

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

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

(l)                 EXCEPTIONS.

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(i)                 The Board of Directors, with a ruling from the Internal Revenue Serviceor an opinion of counsel, may exempt a Person from the Ownership Limits or theExisting Holder Limits, as the case may be, if such Person is not an individualfor purposes of Section 542(a)(2) of the Code and the Board of Directorsobtains such representations and undertakings from such Person as arereasonably necessary to ascertain that no individual's Beneficial Ownership ofsuch Common Shares will violate the Ownership Limit or the applicable ExistingHolder Limit, as the case may be, and agrees that any violation or attemptedviolation will result in such Common Shares in excess of 4.0% of theoutstanding Common Shares being deemed to be Excess Shares and subject torepurchase by the Corporation as set forth in Section 4(d) of this Division Bof this Article FOURTH.

(ii)               The Board of Directors, with a ruling from the Internal Revenue Serviceor an opinion of counsel, may exempt a Person from the limitation on suchPerson Constructively Owning Common Shares in excess of the Related Party Limitif such Person does not own and represents that it will not own, directly orconstructively (by virtue of the application of   Section 318 of the Code, as modified by Section 856(d)(5) of the Code), morethan a 9.9% interest (as set forth in Section 856(d)(2)(B)) in a tenant of anyreal property owned or leased by the Corporation, and the Corporation obtainssuch representations and undertakings from such Person as are reasonablynecessary to ascertain this fact and agrees that any violation or attemptedviolation will result in such Common Shares in excess of 9.8% being deemed tobe Excess Shares and subject to repurchase by the Corporation as set forth inSection 4(d) of this Division B of this Article FOURTH.

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

"The Common Shares represented by this certificate aresubject to restrictions on transfer for the purpose of the Corporation'smaintenance of its status as a Real Estate Investment Trust under the InternalRevenue Code of 1986, as amended.  Subject to certain provisions of theCorporation's Articles of Incorporation, no Person may Beneficially Own CommonShares 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 anExisting Holder who Constructively Owns in excess of 9.8% of the Common Sharesimmediately following the consummation of the Initial Public Offering) mayConstructively Own Common Shares in excess of 9.8% of the outstanding CommonShares of the Corporation.  Any Person who attempts to Beneficially Own orConstructively Own Common Shares in excess of the above limitations mustimmediately notify the Corporation.  All capitalized terms in this legend havethe meanings defined in the Corporation's Articles of Incorporation, a copy ofwhich, including the restrictions on transfer, will be sent without charge toeach shareholder who so requests.  If the restrictions on transfer are violated,certain of the Common Shares represented may be subject to repurchase by theCompany on the terms and conditions set forth in the Corporation's Articles ofIncorporation." 

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CERTIFICATE OF AMENDMENT

TO

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

ASSOCIATED ESTATES REALTY CORPORATION

JEFFREY I. FRIEDMAN, President and Chief ExecutiveOfficer, and MARTIN A. FISHMAN, Secretary, of Associated Estates RealtyCorporation, an Ohio Corporation (the "Company"), do hereby certify that anAction of Directors Without a Meeting of the Pricing Committee of the Board ofDirectors of the Company was duly executed by all members of the PricingCommittee of the Board of Directors on July 19, 1995 and that the followingresolution to amend the Second Amended and Restated Articles of Incorporationof the Company was adopted pursuant to said Action of Directors Without aMeeting by the Pricing Committee of the Board of Directors of the Companypursuant to the authority of Section 1701.70(B)(1) and 1701.73(A) of the OhioRevised Code:  

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

SECTION 6.  9 3/4% CLASS A CUMULATIVE REDEEMABLE PREFERREDSHARES.  Of the 3,000,000 authorized Class A Shares, 230,000 shares aredesignated as a series entitled "9 3/4% Class A Cumulative Redeemable PreferredShares" (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 thisDivision 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 Sharesas a series of Class A Shares:

(a)        The annual dividend rate of the 9 3/4% Class APreferred  Shares shall be 9 3/4% of the liquidation preference of  $250.00 pershare.

(b)        Dividends on the 9 3/4% Class A PreferredShares shall be  payable, if declared, quarterly on or about the 15th day ofMarch, June, September, and December each year, the first quarterly dividendbeing payable, if declared, on September 15, 1995.  The dividends payable foreach full quarterly dividend period on each 9 3/4% Class A Preferred Sharesshall 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 fulldividend period on the 9 3/4% Class A Preferred Shares, shall be computed onthe basis of a 360-day year consisting of twelve 30-day months.  The aggregatedividend payable quarterly to each holder of 9 3/4% Class A Preferred Sharesshall be rounded to the nearest one one-hundredth of one cent with $.00005being rounded upward.  Each dividend shall be payable to the holders of recordon such record date, no less than 10 nor more than 30 days preceding thepayment date thereof, as shall be fixed from time to time by the corporation'sBoard of Directors.

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

(1)        With respect to shares included in the initialissue of 9 3/4% Class A Preferred Shares and shares issued any time thereafterup to and including the record date for the payment of the first dividend onthe initial issue of 9 3/4% Class A Preferred Shares, dividends shall becumulative from the date of the initial issue of 9 3/4% Class A PreferredShares; and

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

(d)        Except as required to preserve the Company'sstatus as a real estate investment trust under the Internal Revenue Code of1986, as amended, the 9 3/4% Class A Preferred Shares may not be redeemed priorto July 25, 2000.  At any time or from time to time on and after July 25, 2000the Company, at its option, may redeem all or any part of the 9 3/4% Class APreferred 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 redemptiondate.  The redemption price (other than the portion thereof consisting ofaccrued and unpaid dividends) is payable solely out of the sale proceeds ofother capital shares of the Company, which may include common shares, preferredshares, depositary shares, interests, participations or other ownershipinterests in the Company (however designated) and any rights (other than debtsecurities convertible into or exchangeable for corporate shares), warrants oroptions to purchase any thereof.

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

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

/S/ JEFFREY I. FRIEDMAN  Jeffrey I. FriedmanPresident and Chief Executive Officer/S/ MARTIN A. FISHMANMartin A. FishmanSecretary

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CERTIFICATE OF AMENDMENT

TO THE

SECOND AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

ASSOCIATED ESTATES REALTY CORPORATION

            Jeffrey I. Friedman, President and ChiefExecutive Officer, and Martin A. Fishman, Secretary, of Associated EstatesRealty Corporation, an Ohio Corporation (the "Company"), do hereby certify thatat 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 ofIncorporation, as amended, of the Company was adopted pursuant to the authoritygranted by Section 1701.70(B)(1) of the Ohio Revised Code:  

            RESOLVED, that the Second Amended and RestatedArticles 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 6reading as follows:  

**Section 6.        Class B Series I CumulativePreferred Shares.**

A.        Designation and Amount.  Of the3,000,000 authorized Class B Shares, 400,000 are designated as a seriesdesignated as "Class B Series I Cumulative Preferred Shares" (the "Series IPreferred Shares").  The Series I Preferred Shares have the express terms setforth in this Division as being applicable to all Class A Shares as a classand, in addition, the following express terms applicable to all Series IPreferred Shares as a series of Preferred Shares.  The number of Series IPreferred Shares may be increased or decreased by resolution of the Board ofDirectors and by the filing of a certificate of amendment pursuant to theprovisions of the General Corporate Law of the State of Ohio stating that suchincrease or reduction has been so authorized; however, no decrease shall reducethe number of Series I Preferred Shares to a number less than that of theSeries I Preferred Shares then outstanding plus the number of Series IPreferred Shares issuable upon exercise of outstanding rights, options or warrantsor upon conversion of outstanding securities issued by the Company.

B.         Dividends and Distributions.

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                                    (1)(a)   Subjectto the rights of the holders of any series of preferred shares (or any similarshares) ranking prior to the Series I Preferred Shares with respect todividends, the holders of Series I Preferred Shares, in preference to theholders of Common Shares and of any other junior shares, will be entitled toreceive, when, as and if declared by the Board of Directors out of fundslegally available for the purpose, quarterly dividends payable in cash on thefifteenth day of March, June, September and December in each year (each suchdate being referred to herein as a "Quarterly Dividend Payment Date"),commencing on the first Quarterly Dividend Payment Date after the firstissuance of a Series I Preferred Share or fraction thereof, in an amount pershare (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 theaggregate per share amount of all cash dividends, and 1,000 times the aggregateper share amount (payable in kind) of all noncash dividends or otherdistributions other than a dividend payable in Common Shares or a subdivisionof the outstanding Common Shares (by reclassification or otherwise), declaredon the Common Shares after the immediately preceding Quarterly Dividend PaymentDate, or, with respect to the first Quarterly Dividend Payment Date, after thefirst issuance of any Series I Preferred Share or fraction thereof.   Themultiple of cash and noncash dividends declared on the Common Shares to whichholders of the Series I Preferred Shares are entitled, which is 1,000 initiallybut which will be adjusted from time to time as hereinafter provided, ishereinafter referred to as the "Dividend Multiple."  If the Company at any timeafter January 6, 1999 (the "Rights Declaration Date"):  (i) declares or paysany dividend on the Common Shares payable in Common Shares, or (ii) effects asubdivision or combination or consolidation of the outstanding Common Shares(by reclassification or otherwise than by payment of a dividend in CommonShares) into a greater or lesser number of Common Shares, then in each suchcase the Dividend Multiple thereafter applicable to the determination of theamount of dividends that holders of Series I Preferred Shares are entitled toreceive will be the Dividend Multiple applicable immediately prior to thatevent multiplied by a fraction, the numerator of which is the number of CommonShares outstanding immediately after that event and the denominator of which isthe number of Common Shares that were outstanding immediately prior to thatevent.

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

                                    (2)        Dividendswill begin to accrue and be cumulative on outstanding Series I Preferred Sharesfrom the Quarterly Dividend Payment Date next preceding the date of issue ofsuch Series I Preferred Shares, unless the date of issue of such shares isprior to the record date for the first Quarterly Dividend Payment Date, inwhich case dividends on such shares will begin to accrue from the date of issueof such shares, or unless the date of issue is a Quarterly Dividend PaymentDate or is a date after the record date for the determination of holders ofSeries I Preferred Shares entitled to receive a quarterly dividend and beforesuch Quarterly Dividend Payment Date, in either of which events such dividendswill begin to accrue and be cumulative from such Quarterly Dividend PaymentDate.  Accrued but unpaid dividends will not bear interest.  Dividends paid onthe Series I Preferred Shares in an amount less than the total amount of suchdividends at the time accrued and payable on such shares will be allocated prorata 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 datefor the determination of holders of Series I Preferred Shares entitled toreceive payment of a dividend or distribution declared thereon, which recorddate will be not more than such number of days prior to the date fixed for thepayment thereof as may be allowed by applicable law.

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C.        Reacquired Shares.  Any Series IPreferred Shares purchased or otherwise acquired by the Company in any mannerwhatsoever will be retired and canceled promptly after the acquisitionthereof.  All such shares will upon their cancellation become authorized butunissued preferred shares and may be reissued as part of a new series of ClassB 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 theCompany, no distribution may be made (x) to the holders of shares rankingjunior (either as to dividends or upon liquidation, dissolution or winding up)to the Series I Preferred Shares unless, prior thereto, the holders of Series IPreferred Shares shall have received an amount equal to accrued and unpaiddividends and distributions thereon, whether or not declared, to the date ofsuch 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 adjustmenthereinafter set forth, equal to 1,000 times the aggregate amount to bedistributed per share to holders of Common Shares, or (y) to the holders ofshares ranking on a parity (either as to dividends or upon liquidation,dissolution or winding up) with the Series I Preferred Shares, exceptdistributions made ratably on the Series I Preferred Shares and all other suchparity stock in proportion to the total amounts to which the holders of allsuch shares are entitled upon such liquidation, dissolution or winding up.  Ifthe Company at any time after the Rights Declaration Date (i) declares or paysany dividend on Common Shares payable in Common Shares, or (ii) effects asubdivision or combination or consolidation of the outstanding Common Shares(by reclassification or otherwise than by payment of a dividend in CommonShares) into a greater or lesser number of Common Shares, then in each suchcase the aggregate amount per share to which holders of Series I PreferredShares were entitled immediately prior to such event under clause (x) of thepreceding sentence will be adjusted by multiplying such amount by a fraction,the numerator of which is the number of Common Shares outstanding immediatelyafter such event and the denominator of which is the number of Common Sharesthat were outstanding immediately prior to such event.

Neither the consolidation of nor merging of the Companywith or into any other corporation or corporations, nor the sale or othertransfer of all or substantially all of the assets of the Company, will beconsidered to be a liquidation, dissolution or winding up of the Company withinthe meaning of this paragraph D.

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E.         Consolidation, Merger, etc.  If theCompany shall enter into any consolidation, merger, combination or othertransaction in which the Common Shares are exchanged for or changed into othershares, stock or securities, cash or any other property, then in such case theSeries I Preferred Shares will at the same time be similarly exchanged orchanged in an amount per share (subject to the provision for adjustmenthereinafter 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 forwhich each Common Share is changed or exchanged, plus accrued and unpaiddividends, if any, payable with respect to the Series I Preferred Shares.  Ifthe Company at any time after the Rights Declaration Date (i) declares or paysany dividend on Common Shares payable in Common Shares, or (ii) effects asubdivision or combination or consolidation of the outstanding Common Shares(by reclassification or otherwise than by payment of a dividend in CommonShares) into a greater or lesser number of Common Shares, then in each suchcase the amount set forth in the preceding sentence with respect to the exchangeor change of Series I Preferred Shares will be adjusted by multiplying suchamount by a fraction, the numerator of which is the number of Common Sharesoutstanding immediately after such event and the denominator of which is thenumber of Common Shares that were outstanding immediately prior to such event.

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

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

H.        Fractional Shares.  Series I PreferredShares may be issued in whole shares or in any fraction of a share that is oneone-thousandth (1/1,000th) of a share or any integral multiple of suchfraction, which will entitle the holder, in proportion to such holder'sfractional shares, to exercise voting rights, receive dividends, participate indistributions and have the benefit of all other rights of holders of Series IPreferred Shares.  In lieu of fractional shares, the Company may elect to makea cash payment as provided in that certain Rights Agreement dated as of January6, 1999, between the Company and National City Bank, a national bankingassociation, as rights agent, for fractions of a share other than oneone-thousandth (1/1,000th) of a share or any integral multiple thereof.

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

ASSOCIATEDESTATES REALTY CORPORATION, an Ohio corporation

 

/S/ JEFFREY I. FRIEDMAN

Jeffrey I. Friedman,

President and ChiefExecutive Officer

/S/ MARTIN A. FISHMAN

Martin A. Fishman, Secretary

                                                                            51**