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                                                                     EXHIBIT 4.1

                        ASHFORD HOSPITALITY TRUST, INC.

          ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND
                   PREFERENCES OF A SERIES OF PREFERRED STOCK

                  Ashford Hospitality Trust, Inc., a Maryland corporation (the
"Corporation"), certifies to the State Department of Assessments and Taxation of
Maryland that:

                  FIRST: Under a power contained in Section 2-208 of the
Maryland General Corporation Law and Article V of the Corporation's Articles of
Amendment and Restatement (as the same may be amended or supplemented, the
"Charter"), the Board of Directors, by resolutions duly adopted on December 28,
2004, classified and designated 7,447,865 shares of the unissued preferred
stock, par value $0.01 per share, of the Corporation as Series B-1 Cumulative
Convertible Redeemable Preferred Stock, with the following preferences, rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption.
Capitalized terms used and not otherwise defined herein have the meanings set
forth in the Charter.

         Section 1. Number of Shares, Designation and Ranking. This series of
preferred stock shall be designated as Series B-1 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall be 7,447,865 shares, par value $0.01 per share, which number may be
decreased (but not below the aggregate number thereof then outstanding and/or
which have been reserved for issuance) from time to time by the Board of
Directors and is hereafter in these Articles Supplementary called the "Series
B-1 Preferred Stock". Each share of Series B-1 Preferred Stock shall be
identical in all respects to each other share of Series B-1 Preferred Stock.

         Section 2. Definitions. For purposes of the Series B-1 Preferred Stock,
the following terms shall have the meanings indicated:

                  "Affiliate" of, or Person "Affiliated" with, a specified
Person, shall mean a Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the Person specified.

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

                  "Board of Directors" shall mean the Board of Directors of the
         Corporation.

                  "Business Day" shall mean each day other than a Saturday or
         Sunday which is not a day on which banking institutions in New York
         City, New York are authorized or required by law, regulation or
         executive order to close.

                  "Change of Control" shall have the meaning set forth in
         Section 7(e).

                  "Change of Control Date" shall have the meaning set forth in
         Section 7(a).

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                  "Change of Control Repurchase Dividend Period" shall have the
         meaning set forth in Section 7(a).

                  "Change of Control Repurchase Event" shall have the meaning
         set forth in Section 7(a).

                  "Change of Control Repurchase Offer" shall have the meaning
         set forth in Section 7(a).

                  "Change of Control Repurchase Payment" shall have the meaning
         set forth in Section 7(a).

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended, or any successor statute thereto.

                  "Common Special Dividend" shall have the meaning set forth in
         Section 3(b).

                  "Common Stock" shall mean the Corporation's common stock, par
         value $0.01 per share.

                  "Constituent Person" shall have the meaning set forth in
         Section 6(e).

                  "Conversion Date" shall have the meaning set forth in Section
         6(a).

                  "Conversion Price" shall mean the conversion price per share
         of Common Stock for which each share of Series B-1 Preferred Stock is
         convertible, as such Conversion Price may be adjusted pursuant to
         Section 6. The initial Conversion Price shall be $10.07.

                  "Conversion Dividend Period" shall have the meaning set forth
         in Section 6(b).

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

                  "Covenant Violation" shall mean (i) any breach or
         non-performance of any covenant of the Corporation contained in the
         Purchase Agreement, which breach or non-performance shall remain
         uncured for more than 120 days after such breach or non-performance has
         occurred or (ii) if and whenever the Corporation has failed to pay
         Dividends on the Series B-1 Preferred Stock for four quarterly Dividend
         Periods whether or not such Dividend Periods are consecutive (which
         shall, with respect to any such Dividend, mean that any such Dividend
         has not been paid in full).

                  "Current Market Price" of publicly traded Common Stock or any
         other class of stock or other security of the Corporation or any other
         issuer for any day shall mean the last reported sales price, regular
         way, on such day, or, if no sale takes place on such day, the average
         of the reported closing bid and asked prices on such day, regular way,
         in either case as reported on the New York Stock Exchange ("NYSE") or,
         if such security is

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         not listed or admitted for trading on the NYSE, on the principal
         national securities exchange on which such security is listed or
         admitted for trading or, if not listed or admitted for trading
         on any national securities exchange, on the Nasdaq National
         Market ("NASDAQ") or, if such security is not quoted on NASDAQ, the
         average of the closing bid and asked prices on such day in the
         over-the-counter market as reported by the National Association of
         Securities Dealers, Inc. (the "NASD") or, if bid and asked prices for
         such security on such day shall not have been reported through the
         NASD, the average of the bid and asked prices on such day as furnished
         by any NYSE member firm regularly making a market in such security
         selected for such purpose by the Board of Directors.

                  "Default Dividend" shall have the meaning set forth in Section
         3(d).

                  "Dividends" shall have the meaning set forth in Section 3.

                  "Dividend Periods" with respect to any share of Series B-1
                  Preferred Stock, shall mean quarterly dividend periods
                  commencing on January 1, April 1, July 1 and October 1 of each
                  year and ending on and including the day preceding the first
                  day of the next succeeding Dividend Period (other than the
                  initial Dividend Period for any share of Series B-1 Preferred
                  Stock, which shall commence on the Issue Date for such share
                  of Series B-1 Preferred Stock and end on and include the last
                  day of the calendar quarter which includes such Issue Date).

                  "Expiration Time" shall have the meaning set forth in Section
         6(d)(iv).

                  "Fair Market Value" shall mean the number obtained, for the 30
         Trading Days before, and ending not later than, the earlier of the day
         in question and the day before the "ex date" with respect to any
         issuance or distribution requiring such computation, by dividing (a)
         the sum of the products for all sales of Common Stock during such 30
         Trading Day period of (i) the sale prices per share of Common Stock as
         reported on the consolidated transaction reporting system contemplated
         by Rule 11Aa3-1 of the Securities Exchange Act of 1934, as amended,
         times (ii) the number of shares of Common Stock sold at such prices by
         (b) the total number of shares of Common Stock sold during such 30
         Trading Day period. The term "ex date", when used with respect to any
         issuance or distribution, means the first day on which the Common Stock
         trades regular way, without the right to receive such issuance or
         distribution, on the exchange or in the market, as the case may be,
         used to determine that day's Current Market Price. Appropriate
         adjustments shall be made to the Fair Market Value to maintain
         comparability during any 30 day Trading Day period in the event of any
         subdivision or combination of shares of Common Stock, whether by stock
         split, stock dividend, recapitalization, reverse stock split or
         otherwise, which occurs during such 30 Trading Day period.

                  "Final Closing" shall have the meaning set forth in Section
         5(a).

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                  "Fully Junior Stock" shall mean the Common Stock and any other
         class or series of stock of the Corporation now or hereafter issued and
         outstanding over which the Series B-1 Preferred Stock has preference or
         priority in both (i) the payment of dividends and (ii) the distribution
         of assets on any liquidation, dissolution or winding up of the
         Corporation.

                  "Investor" shall mean Security Capital Preferred Growth
         Incorporated and its successors and assigns.

                  "Issue Date" with respect to any share of Series B-1 Preferred
         Stock shall mean the date on which the Series B-1 Preferred Stock is
         issued.

                  "Junior Stock" shall mean the Common Stock and any other class
         or series of stock of the Corporation now or hereafter issued and
         outstanding over which the Series B-1 Preferred Stock has preference or
         priority in the payment of dividends or in the distribution of assets
         on any liquidation, dissolution or winding up of the Corporation.

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

                  "NASD" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "NASDAQ" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "Non-Electing Share" shall have the meaning set forth in
         Section 6(e).

                  "NYSE" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "Operating Partnership" shall mean Ashford Hospitality Limited
         Partnership, a Delaware limited partnership.

                  "Parity Stock" shall have the meaning set forth in Section
         10(c).

                  "Person" shall mean any individual, firm, partnership,
         corporation, limited liability company, trust or other entity, and
         shall include any successor (by merger or otherwise) of such entity.

                  "Principal Market" means the NYSE, the NASDAQ National Market
         System or the American Stock Exchange.

                  "Principal Market Repurchase Event" shall have the meaning set
         forth in Section 8(a).

                  "Principal Market Limit" shall mean the number of voting
         securities, or securities convertible therefor, which the Corporation
         may issue without obtaining a stockholder

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         vote under the rules or regulations of the Principal Market, if any,
         on which the Corporation's Common Stock is then traded, which rule
         while the Corporation's Common Stock is listed on the NYSE, shall be
         Listed Company Manual 312.03(c), or any successor or replacement rule.

                  "Purchase Agreement" shall mean the Class B Cumulative
         Convertible Redeemable Preferred Stock Purchase Agreement dated as of
         December 23, 2004 among the Investor, the Corporation and the
         Operating Partnership

                  "Purchased Shares" shall have the meaning set forth in Section
         6(d)(iv).

                  "Ratchet Dividend" shall have the meaning set forth in Section
         3(c).

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

                  "Redemption Dividend Period" shall have the meaning set forth
         in Section 5(b).

                  "REIT Termination Event" shall mean the earliest to occur of:

                  (i)      the filing of a federal income tax return by the
                           Corporation for any taxable year on which the
                           Corporation does not compute its income as a real
                           estate investment trust;

                  (ii)     the approval by the stockholders of the Corporation
                           of a proposal for the Corporation to cease to qualify
                           as a real estate investment trust;

                  (iii)    the approval by the Board of Directors of the
                           Corporation of a proposal for the Corporation to
                           cease to qualify as a real estate investment trust;

                  (iv)     a determination by the Board of Directors of the
                           Corporation, based on the advice of counsel, that the
                           Corporation has ceased to qualify as a real estate
                           investment trust; or

                  (v)      a "determination" within the meaning of Section
                           1313(a) of the Code that the Corporation has ceased
                           to qualify as a real estate investment trust.

                  "Repurchase Date" shall have the meaning set forth in Section
         8(a).

                  "Repurchase Offer" shall have the meaning set forth in Section
         8(a).

                  "Repurchase Payment" shall have the meaning set forth in
         Section 8(a).

                  "Securities" and "Security" shall have the meanings set forth
         in Section 6(d)(iii).

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended.

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                  "Series A Preferred Stock" shall have the meaning given to
         such term in Section 10(c).

                  "Series B-1 Preferred Stock" shall have the meaning given such
         term in the preamble to these Articles Supplementary.

                  "Series B-2 Preferred Articles Supplementary" shall mean the
         Articles Supplementary of the Corporation establishing and fixing the
         rights and preferences of the Series B-2 Preferred Stock.

                  "Series B-2 Preferred Stock" shall mean the Series B-2
         Cumulative Convertible Redeemable Preferred Stock, par value $.01 per
         share, of the Company.

                  "set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Corporation
         in its accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to an authorization by the Board of Directors and a
         declaration of dividends or other distribution by the Corporation, the
         allocation of funds to be so paid on any series or class of stock of
         the Corporation; provided, however, that if any funds for any class or
         series of Junior Stock or any class or series of stock ranking on a
         parity with the Series B-1 Preferred Stock as to the payment of
         dividends are placed in a separate account of the Corporation or
         delivered to a disbursing, paying or other similar agent, then "set
         apart for payment" with respect to the Series B-1 Preferred Stock shall
         mean placing such funds in a separate account or delivering such funds
         to a disbursing, paying or other similar agent.

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

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

                  "Trading Day" shall mean any day on which the securities in
         question are traded on the NYSE, or if such securities are not listed
         or admitted for trading on the NYSE, on the principal national
         securities exchange on which such securities are listed or admitted, or
         if not listed or admitted for trading on any national securities
         exchange, on NASDAQ, or if such securities are not quoted on NASDAQ, in
         the securities market in which the securities are traded.

                  "Transaction" shall have the meaning set forth in Section
         6(e).

                  "Transfer Agent" shall mean the Corporation, or such other
         agent or agents of the Corporation as may be designated by the Board of
         Directors or their designee as the transfer agent, registrar and
         dividend disbursing agent for the Series B-1 Preferred Stock.

                  "Trigger Event" shall have the meaning set forth in Section
         6(d).

                  "Volume Weighted Average Price" shall mean the number
         obtained, for the 30 Trading Days before and ending on the day in
         question, by dividing (a) the sum of the

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         products for all sales of Common Stock during such 30 Trading
         Day period of (i) the sale prices per share of Common Stock as
         reported on the consolidated transaction reporting system
         contemplated by Rule 11Aa3-1 of the Securities Exchange Act of
         1934, as amended, times (ii) the number of shares of Common
         Stock sold at such prices by (b) the total number of shares of
         Common Stock sold during such 30 Trading Day period.
         Appropriate adjustments shall be made to the Volume Weighted
         Average Price to maintain comparability during any 30 day
         Trading Day period in the event of any subdivision or
         combination of the Common Stock, whether by stock split, stock
         dividend, recapitalization, reverse stock split or otherwise,
         which occurs during such 30 Trading Day period.

Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Charter.

         Section 3. Dividends.

                  Dividends for each Dividend Period shall consist of Base
Dividends, Special Dividends, Ratchet Dividends and Default Dividends, if any,
each as defined below (collectively referred to herein as "Dividends"). All
Dividends shall be cumulative from the Issue Date whether or not in any Dividend
Period or Dividend Periods (i) such Dividends shall be authorized or declared,
(ii) there shall be funds legally available for the payment of such Dividends or
(iii) any agreement prohibits payment of such Dividends.

                  (a) Base Dividend. Holders of the Series B-1 Preferred Stock
         shall be entitled to receive, when and as authorized by the Board of
         Directors and declared by the Corporation, out of funds legally
         available for payment, cash dividends at the rate of $0.14 per share of
         Series B-1 Preferred Stock per quarter ("Base Dividend"). Base
         Dividends shall be payable quarterly in arrears on the 15th day after
         the end of the applicable Dividend Period (on the 15th day of January,
         April, July and October of each year), or if such day is not a Business
         Day, the next succeeding Business Day, to holders of record on the last
         day of each of March, June, September and December, as the case may be,
         immediately preceding the applicable dividend payment date.

                  (b) Special Dividend. In the event the Corporation declares a
         special or extraordinary cash dividend or distribution on the Common
         Stock (a "Common Special Dividend"), holders of the Series B-1
         Preferred Stock shall be entitled to receive a special dividend per
         share of Series B-1 Preferred Stock (a "Special Dividend") in an amount
         equal to the product of (i) any Common Special Dividend and (ii) the
         number of shares of Common Stock into which a share of Series B-1
         Preferred Stock is convertible as of the record date of such Common
         Special Dividend. Any such Special Dividend shall be paid to holders of
         the Series B-1 Preferred Stock as of the record date for the Common
         Special Dividend and shall be paid on the payment date for the Common
         Special Dividend. Any such Special Dividend shall be deemed to be a
         dividend payable to holders of Series B-1 Preferred Stock for the
         Dividend Period in which the record date for the corresponding

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         Common Special Dividend falls, and shall be in addition to and shall
         not reduce any Base Dividend, Ratchet Dividend or Default Dividend, if
         any, for such Dividend Period.

                  (c) Ratchet Dividend. With respect to each Dividend Period,
         holders of the Series B-1 Preferred Stock shall be entitled to a
         ratchet dividend per share of Series B-1 Preferred Stock (a "Ratchet
         Dividend") in an amount equal to (i) the sum of the products of (x)
         each dividend paid or payable on a share of Common Stock (excluding
         Common Special Dividends), having a record date within the applicable
         Dividend Period, and (y) the number of shares of Common Stock into
         which a share of Series B-1 Preferred Stock is convertible as of the
         record date for such dividend minus (ii) the Base Dividend of $0.14 per
         share of Series B-1 Preferred Stock. Ratchet Dividends shall be payable
         quarterly in arrears on the 15th day after the end of the applicable
         Dividend Period (on the 15th day of January, April, July and October of
         each year), or if such day is not a Business Day, the next succeeding
         Business Day, to holders of record on the last day of each of March,
         June, September and December, as the case may be, immediately preceding
         the applicable dividend payment date. Any such Ratchet Dividend shall
         be in addition to and shall not reduce any Base Dividend, Special
         Dividend or Default Dividend for the applicable Dividend Period.

                  (d) Default Dividend. For any Dividend Period in which a
         Covenant Violation has occurred or is continuing, holders of Series B-1
         Preferred Stock shall be entitled to a default dividend (a "Default
         Dividend") in an amount equal to $.05015 per share of Series B-1
         Preferred Stock for such Dividend Period. Default Dividends shall be
         payable quarterly in arrears on the 15th day after the end of the
         applicable Dividend Period (on the 15th day of January, April, July and
         October of each year), or if such day is not a Business Day, the next
         succeeding Business Day, to holders of record on the last day of each
         of March, June, September and December, as the case may be, immediately
         preceding the applicable dividend payment date. Any such Default
         Dividend shall be in addition to and shall not reduce any Base
         Dividend, Special Dividend or Ratchet Dividend for the applicable
         Dividend Period.

                  (e) Nature of Dividends. Base Dividends, Special Dividends,
         Ratchet Dividends and Default Dividends shall all be considered to be
         Dividends on the Series B-1 Preferred Stock and shall have equal
         priority to one another and shall be senior in priority to dividends on
         any stock which is Junior Stock with respect to the payment of
         dividends, subject to the terms of this Section 3.

                  (f) Accumulated and Unpaid Dividends. Accumulated but unpaid
         Dividends for any past quarterly Dividend Periods may be declared and
         paid at any time, without reference to any regularly scheduled
         quarterly dividend payment date, to holders of record on such date, not
         exceeding 50 days preceding such dividend payment date, fixed for the
         purpose by the Board of Directors in advance of payment of each
         particular Dividend. Any Dividend payment made on Series B-1 Preferred
         Stock shall first be credited against the earliest accrued but unpaid
         Dividend due with respect to Series B-1 Preferred Stock which remains
         payable.

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                  (g) Initial Dividends and Other Matters. The initial Dividend
         Period for any share of Series B-1 Preferred Stock will include a
         partial Base Dividend, Ratchet Dividend and Default Dividend, if any,
         for the period from the Issue Date until the last day of the calendar
         quarter which includes such Issue Date. Ratchet Dividends will be
         calculated (but paid in accordance with the immediately preceding
         sentence) for any such initial Dividend Period as though the share of
         Series B-1 Preferred Stock had been outstanding for the entire Dividend
         Period. The amount of Base Dividend, Ratchet Dividend and Default
         Dividend, if any, payable for such initial period on the Series B-1
         Preferred Stock shall be computed by dividing the number of days in
         such period by 90 and multiplying the result by the Series B-1
         Preferred Stock Base Dividend, Ratchet Dividend and Default Dividend,
         if any. Holders of Series B-1 Preferred Stock shall not be entitled to
         any Dividends in excess of cumulative Dividends on the Series B-1
         Preferred Stock. No interest shall be payable in respect of any
         Dividend payment or payments on the Series B-1 Preferred Stock which
         may be in arrears.

                  (h) Regarding Parity Stock. So long as any Series B-1
         Preferred Stock remains outstanding, no dividends, except as described
         in the immediately following sentence, shall be declared or paid or set
         apart for payment on any class or series of Parity Stock for any period
         unless full cumulative Dividends have been or contemporaneously are
         declared and paid or declared and a sum sufficient for the payment
         thereof set apart for such payment on the Series B-1 Preferred Stock
         for all Dividend Periods ending on or prior to the date of declaration
         or payment on such class or series of Parity Stock. When Dividends are
         not paid in full or a sum sufficient for such payment is not set apart,
         as aforesaid, all Dividends declared upon Series B-1 Preferred Stock
         and all dividends declared upon any other class or series of Parity
         Stock shall be declared ratably in proportion to the respective amounts
         of Dividends accumulated and unpaid on the Series B-1 Preferred Stock
         and accumulated and unpaid dividends on such Parity Stock.

                  (i) Regarding Junior Stock. So long as any Series B-1
         Preferred Stock remains outstanding, no dividends (other than dividends
         or distributions paid solely in Fully Junior Stock, or options,
         warrants or rights to subscribe for or purchase, Fully Junior Stock)
         shall be declared or paid or set apart for payment or other
         distribution shall be declared or made or set apart for payment upon
         Junior Stock, nor shall any Junior Stock be redeemed, purchased or
         otherwise acquired (other than a redemption, purchase or other
         acquisition of Common Stock made for purposes of an employee incentive
         or benefit plan of the Corporation or any subsidiary) for any
         consideration (or any moneys be paid to or made available for a sinking
         fund for the redemption of any Junior Stock) by the Corporation or any
         subsidiaries or controlled Affiliates, directly or indirectly (except
         by conversion into or exchange for Fully Junior Stock or options,
         warrants or rights to subscribe for or purchase Fully Junior Stock),
         unless in each case the full cumulative dividends on all outstanding
         Series B-1 Preferred Stock and any other Parity Stock of the
         Corporation shall have been or contemporaneously are declared and paid
         or declared and a sum sufficient for the payment thereof set apart for
         payment for all Dividend Periods ending on or prior to the date of
         declaration or payment with respect to the Series B-1 Preferred Stock
         and all dividend periods ending on or prior to the date of

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         declaration or payment with respect to such Parity Stock. Subject to
         the foregoing, and not otherwise, such dividends and distributions may
         be authorized by the Board of Directors and declared and paid on
         Common Stock by the Corporation from time to time out of any funds
         legally available therefor, and the Series B-1 Preferred Stock shall
         not be entitled to participate in any such dividends, whether payable
         in cash, stock or otherwise, except as provided in Section 3(b) or (c)
         hereof.

                  (j) Prohibitions. No distributions on Series B-1 Preferred
         Stock shall be authorized by the Board of Directors or declared and
         paid or set apart for payment by the Corporation at such time as the
         terms and provisions of any agreement of the Corporation, including any
         agreement relating to its indebtedness, prohibits such declaration,
         payment or setting apart for payment or provides that such declaration,
         payment or setting apart for payment would constitute a breach thereof
         or a default thereunder, or if such declaration or payment shall be
         restricted or prohibited by law; provided that no such prohibition or
         restriction described in this paragraph (j) shall limit the accrual or
         accumulation of Dividends as described above in this Section 3.

                  (k) Permitted Distributions. In determining, with respect to
         the Series B-1 Preferred Stock, whether a distribution by dividend,
         redemption or other acquisition of stock or otherwise is permitted
         under Maryland law, no effect shall be given to amounts that would be
         needed, if the Corporation were to be dissolved at the time of the
         distribution, to satisfy the preferential rights upon dissolution of
         stockholders whose preferential rights on dissolution are superior to
         those receiving the distribution.

                  (l) Allocations. If, for any taxable year, the Corporation
         elects to designate as "capital gain dividends" (as defined in Section
         857 of the Code) any portion of the dividends (as determined for
         federal income tax purposes) paid or made available for the year to
         holders of all classes of capital stock, then the portion of the
         capital gains amount that shall be allocable to the holders of Series
         B-1 Preferred Stock shall be the amount that the total dividends (as
         determined for federal income tax purposes) paid or made available to
         the holders of the Series B-1 Preferred Stock for the year bears to the
         total dividends (as determined for federal income tax purposes) paid or
         made available for the year to holders of all classes of capital stock.

                  (m) Regarding Accrued and Unpaid Dividends on Series B-2
         Preferred Stock. Upon conversion of Series B-2 Preferred Stock into
         Series B-1 Preferred Stock, each share of Series B-1 Preferred Stock
         resulting from the conversion of a share of Series B-2 Preferred Stock
         pursuant to the terms of the Series B-2 Preferred Stock shall be deemed
         to have accrued and unpaid Dividends on such share equal to the accrued
         and unpaid dividends, if any, on the applicable share of Series B-2
         Preferred Stock immediately prior to conversion.

         Section 4. Liquidation Preference.

                  (a) In the event of any liquidation, dissolution or winding up
         of the Corporation, whether voluntary or involuntary, subject to the
         prior preferences and other

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         rights of any series of stock ranking senior to the Series B-1
         Preferred Stock upon liquidation, distribution or winding up
         of the Corporation, before any payment or distribution of the assets
         of the Corporation (whether capital or surplus) shall be made to
         or set apart for the holders of Junior Stock, the holders of the
         Series B-1 Preferred Stock shall be entitled to receive Ten Dollars
         and Seven Cents ($10.07) (the "Liquidation Preference") per share of
         Series B-1 Preferred Stock plus an amount equal to all accumulated,
         accrued and unpaid Dividends (whether or not earned or declared), if
         any, thereon to the date of liquidation, dissolution or winding up of
         the affairs of the Corporation (any such date, a "Series B-1
         Liquidation Date"). The Dividend payable with respect to the Dividend
         Period containing the Series B-1 Liquidation Date shall be equal to the
         sum of (x) any Special Dividend determined pursuant to Section 3 above
         with respect to such Dividend Period plus (y) the product of the
         Dividend determined pursuant to Section 3 above for the preceding
         Dividend Period (but excluding any Special Dividend for such preceding
         Dividend Period) times a fraction equal to the actual number of days
         elapsed from the end date of the calendar quarter most recently
         completed to the relevant Series B-1 Liquidation Date over 90 days. If,
         upon any liquidation, dissolution or winding up of the Corporation, the
         assets of the Corporation, or proceeds thereof, distributable among the
         holders of the Series B-1 Preferred Stock shall be insufficient to pay
         in full the preferential amount aforesaid and liquidating payments on
         any other shares of any class or series of Parity Stock, then such
         assets, or the proceeds thereof, shall be distributed among the holders
         of Series B-1 Preferred Stock and any such other Parity Stock ratably
         in accordance with the respective amounts that would be payable on such
         Series B-1 Preferred Stock and any such other Parity Stock if all
         amounts payable thereon were paid in full. For the purposes of this
         Section 4, (i) a consolidation or merger of the Corporation with one or
         more corporations, real estate investment trusts or other entities,
         (ii) a sale, lease or conveyance of all or substantially all of the
         Corporation's property or business or (iii) a statutory share exchange
         shall not be deemed to be a liquidation, dissolution or winding up,
         voluntary or involuntary, of the Corporation. Other than as set forth
         in this Section 4(a), the holders of Series B-1 Preferred Stock shall
         not be entitled to any additional payment upon any liquidation,
         dissolution or winding up of the Corporation.

                  (b) Subject to the rights of the holders of shares of any
         series or class or classes of stock ranking on a parity with or prior
         to the Series B-1 Preferred Stock, upon any liquidation, dissolution or
         winding up of the Corporation, after payment shall have been made in
         full to the holders of the Series B-1 Preferred Stock, as provided in
         this Section 4, the holders of Series B-1 Preferred Stock shall have no
         other claim to the remaining assets of the Corporation and any other
         series or class or classes of Junior Stock shall, subject to the
         respective terms and provisions (if any) applying thereto, be entitled
         to receive any and all assets remaining to be paid or distributed, and
         the holders of the Series B-1 Preferred Stock shall not be entitled to
         share therein.

                  (c) Written notice of any such liquidation, dissolution or
         winding up of the Corporation, stating the payment date or dates when,
         and the place or places where, the amounts distributable in such
         circumstances shall be payable, shall be given by first class

                                       11

<PAGE>

         mail, postage pre-paid, or by recognized overnight courier, not
         less than 30 or more than 60 days prior to the payment date stated
         therein, to each record holder of the Series B-1 Preferred Stock
         at the respective addresses of such holders as the same shall appear
         on the stock transfer records of the Corporation.

                  (d) The liquidation preference of the outstanding Series B-1
         Preferred Stock will not be added to the liabilities of the Corporation
         for the purpose of determining whether under Maryland law a
         distribution may be made to stockholders of the Corporation whose
         preferential rights upon dissolution of the Corporation are junior to
         those of holders of the Series B-1 Preferred Stock.

         Section 5. Redemption at the Option of the Corporation.

                  (a) The Series B-1 Preferred Stock shall not be redeemable by
         the Corporation prior to the second anniversary of the final closing of
         the acquisition of Series B-1 Preferred Stock under the Purchase
         Agreement (the "Final Closing"), except as set forth below. The
         Corporation, at its option, upon giving notice as provided below, may
         redeem the Series B-1 Preferred Stock, in whole at any time or from
         time to time in part (except as provided below), (i) at any time
         between the second anniversary and third anniversary of the Final
         Closing if (x) the Volume Weighted Average Price of the Common Stock is
         equal to or greater than the product of 117.5% times the Conversion
         Price and (y) the number of shares of Common Stock traded during the
         thirty-day period used in the calculation of Volume Weighted Average
         Price is at least equal to the number of shares of Common Stock then
         issuable upon conversion of the Series B-1 Preferred Stock proposed to
         be redeemed, (ii) on and after the third anniversary of the Final
         Closing or (iii) in the event of a determination by nationally
         recognized tax counsel that redemption is necessary to preserve the
         status of the Corporation as a REIT for federal income tax purposes
         prior to the third anniversary of the Final Closing, upon written
         notice and the delivery of such opinion to each holder of Series B-1
         Preferred Stock, as though such redemption were occurring on or after
         the third anniversary of the Final Closing. Any such redemption by the
         Corporation shall be out of funds legally available therefor at a
         redemption price payable in cash equal to 100% of the Liquidation
         Preference per share of Series B-1 Preferred Stock (plus all
         accumulated, accrued and unpaid Dividends, whether or not earned or
         declared, as provided in paragraph (b) below).

                  (b) Upon any redemption of Series B-1 Preferred Stock pursuant
         to this Section 5, the Corporation shall pay in cash all accumulated,
         accrued and unpaid Dividends, whether or not earned or declared, if
         any, with respect to the Initial Dividend Period and all full Dividend
         Periods ended prior to the Redemption Date, without interest. In
         addition, without limiting the amount of Dividends to which a holder of
         Series B-1 Preferred Stock is entitled pursuant to the immediately
         preceding sentence, on the fifteenth day of the first calendar quarter
         which begins following the Redemption Date (or if such day is not a
         Business Day, the next succeeding Business Day), the Corporation shall
         pay in cash to such holders upon redemption a pro rata Dividend,

                                       12

<PAGE>

         whether or not earned or declared, on each such share of Series B-1
         Preferred Stock so redeemed for the Dividend Period in which the
         redemption occurred (the "Redemption Dividend Period"), which Dividend
         shall be equal to the product of (x) the value per share of Series B-1
         Preferred Stock of all Dividends (except Special Dividends determined
         pursuant to Section 3(b)) as to which record dates occurred (or would
         have occurred if the Series B-1 Preferred Stock had been outstanding
         for the entire Redemption Dividend Period) during the Redemption
         Dividend Period multiplied by (y) the ratio of (a) the number of days
         from the last day of the preceding Dividend Period to, and including,
         the date of redemption of such Series B-1 Preferred Stock to (b) the
         actual number of days in the Redemption Dividend Period.

                  Notwithstanding the foregoing, if any Special Dividend is
         payable on a dividend payment date on or after the Redemption Date, but
         as to which the dividend record date preceded the Redemption Date, then
         the holders upon redemption shall remain entitled to receive such
         Special Dividend on the applicable dividend payment date,
         notwithstanding the prior redemption.

                  (c) Notwithstanding anything to the contrary contained herein,
         unless full cumulative Dividends on all Series B-1 Preferred Stock
         shall have been or contemporaneously are authorized, declared and paid
         or authorized, declared and a sum sufficient for the payment thereof
         set apart for payment for all past Dividend Periods and the then
         current Dividend Period, no Series B-1 Preferred Stock shall be
         redeemed unless all outstanding Series B-1 Preferred Stock are
         simultaneously redeemed. In addition, unless full cumulative Dividends
         on all outstanding Series B-1 Preferred Stock have been or
         contemporaneously are authorized, declared and paid or authorized,
         declared and a sum sufficient for the payment thereof set apart for
         payment for all past Dividend Periods and the then current Dividend
         Period, the Corporation shall not, and shall cause its subsidiaries and
         controlled Affiliates not to, purchase or otherwise acquire directly or
         indirectly for any consideration, nor shall any monies be paid to or
         made available for a sinking fund for the redemption of, any Series B-1
         Preferred Stock or any other class or series of Junior Stock or Parity
         Stock (except by conversion into or exchange for shares of any class or
         series of Junior Stock). Notwithstanding the foregoing, this paragraph
         (c) shall not prevent the purchase or acquisition of Series B-1
         Preferred Stock pursuant to a purchase or exchange offer made on the
         same terms to holders of all outstanding Series B-1 Preferred Stock or
         as otherwise approved by a majority of the Series B-1 Preferred Stock
         outstanding.

                  (d) Notice of the redemption of any Series B-1 Preferred Stock
         under this Section 5 shall be mailed by first-class mail or recognized
         overnight courier to each holder of record of Series B-1 Preferred
         Stock to be redeemed at the address of each such holder as shown on the
         Corporation's records, not less than 30 nor more than 90 days prior to
         the Redemption Date (as defined below). Neither the failure to mail any
         notice required by this paragraph (d), nor any defect therein or in the
         mailing thereof, to any particular holder, shall affect the sufficiency
         of the notice or the validity of the proceedings for redemption with
         respect to the other holders. Each such mailed notice

                                       13

<PAGE>

         shall state, as appropriate: (1) the date set for redemption (the
         "Redemption Date"); (2) the number of Series B-1 Preferred Stock
         to be redeemed and, if fewer than all the shares held by such holder
         are to be redeemed, the number of such shares to be redeemed from such
         holder; (3) the redemption price; (4) the place or places at which
         certificates representing such shares are to be surrendered; (5) the
         then-current Conversion Price; and (6) that dividends on the shares to
         be redeemed shall cease to accrue on such Redemption Date except as
         otherwise provided herein. Notice having been mailed as aforesaid, from
         and after the Redemption Date (unless the Corporation shall fail to
         make available an amount of cash necessary to effect such redemption),
         (i) except as otherwise provided herein, dividends on the Series B-1
         Preferred Stock so called for redemption shall cease to accrue, (ii)
         such shares shall no longer be deemed to be outstanding, and (iii)
         except as set forth in paragraph (b) above, all rights of the holders
         thereof as holders of Series B-1 Preferred Stock shall cease (except
         the rights to receive the cash payable upon such redemption, without
         interest thereon, upon surrender and endorsement of their certificates
         if so required and to receive any dividends accumulated, accrued and
         unpaid thereon). The Corporation's obligation to provide cash in
         accordance with the preceding sentence shall be deemed fulfilled if, on
         or before the Redemption Date, the Corporation shall deposit with a
         bank or trust company that has an office in the Borough of Manhattan,
         City of New York, and that has capital and surplus of at least
         $150,000,000, cash necessary for such redemption, in trust, with
         irrevocable instructions that such cash be applied to the redemption of
         the Series B-1 Preferred Stock so called for redemption. No interest
         shall accrue for the benefit of the holders of Series B-1 Preferred
         Stock to be redeemed on any cash so set aside by the Corporation.
         Subject to applicable escheat laws, any such cash unclaimed at the end
         of two years from the Redemption Date shall revert to the general funds
         of the Corporation, after which reversion the holders of such shares so
         called for redemption shall look only to the general funds of the
         Corporation for the payment of such cash.

                  As promptly as practicable after the surrender in accordance
         with such notice of the certificates representing any such shares so
         redeemed (properly endorsed or assigned for transfer, if the
         Corporation shall so require and if the notice shall so state) (the
         "Surrender Date"), but in no event later than the Business Day
         immediately following the latest of the Surrender Date or the
         Redemption Date, such shares shall be exchanged for any cash (without
         interest thereon) for which such shares have been redeemed. If fewer
         than all the outstanding shares of Series B-1 Preferred Stock is to be
         redeemed, shares to be redeemed shall be selected by the Corporation
         from outstanding Series B-1 Preferred Stock not previously called for
         redemption pro rata (as nearly as may be), by lot or by any other
         method determined by the Corporation in its reasonable discretion to be
         equitable. If fewer than all the shares of Series B-1 Preferred Stock
         represented by any certificate is redeemed, then new certificates
         representing the unredeemed shares shall be issued without cost to the
         holder thereof.

         Section 6. Conversion.  Holders of Series B-1 Preferred Stock shall
         have the right to convert all or a portion of such shares into shares
         of Common Stock, as follows:

                                       14

<PAGE>

                  (a) Subject to and upon compliance with the provisions of this
         Section 6, a holder of Series B-1 Preferred Stock shall have the right,
         at his or her option, at any time from time to time (such time being,
         the "Conversion Date"), to convert all or any portion of such shares
         into the number of fully paid and non-assessable shares of Common Stock
         obtained by dividing the aggregate Liquidation Preference of such
         shares by the Conversion Price (as in effect at the time and on the
         date provided for in the last paragraph of paragraph (b) of this
         Section 6) by surrendering such shares to be converted, such surrender
         to be made in the manner provided in paragraph (b) of this Section 6;
         provided, however, that the right to convert shares called for
         redemption pursuant to Section 5 shall terminate at the close of
         business on the Redemption Date fixed for such redemption, unless the
         Corporation shall default in making payment of the cash payable upon
         such redemption under Section 5.

                  (b) In order to exercise the conversion right, the holder of
         each share of Series B-1 Preferred Stock to be converted shall
         surrender the certificate representing such share, duly endorsed or
         assigned to the Corporation or in blank, at the office of the Transfer
         Agent, accompanied by written notice to the Corporation that the holder
         thereof irrevocably elects to convert such share of Series B-1
         Preferred Stock. Unless the shares issuable on conversion are to be
         issued in the same name as the name in which such Series B-1 Preferred
         Stock is registered, each share surrendered for conversion shall be
         accompanied by instruments of transfer, in form satisfactory to the
         Corporation, duly executed by the holder or such holder's duly
         authorized attorney and an amount sufficient to pay any transfer or
         similar tax (or evidence reasonably satisfactory to the Corporation
         demonstrating that such taxes have been paid or are not required to be
         paid).

                  Upon any conversion of Series B-1 Preferred Stock, the
         Corporation shall pay in cash to the holders of the Series B-1
         Preferred Stock being so converted (the "Converting Holders") all
         accumulated, accrued and unpaid Dividends, whether or not earned or
         declared, if any, with respect to the Initial Dividend Period and all
         full Dividend Periods ended prior to the Conversion Date. Such payment
         shall be made as promptly as practicable following the Conversion Date,
         but in no event later than the Business Day immediately following the
         Conversion Date.

                  In addition, on the fifteenth day of the first calendar
         quarter which begins following the Conversion Date (or if such day is
         not a Business Day, the next succeeding Business Day), the Corporation
         shall pay in cash to such Converting Holders a pro rated Dividend,
         whether or not earned or declared, on each share of Series B-1
         Preferred Stock so converted for the Dividend Period in which the
         conversion occurred (the "Conversion Dividend Period"), which Dividend
         shall be equal to the sum of the following: (i) the product of (x) the
         value per share of Series B-1 Preferred Stock of all Dividends (except
         Special Dividends determined pursuant to Section 3(b)) as to which
         record dates occurred (or would have occurred if the Series B-1
         Preferred Stock had been outstanding for the entire Conversion Dividend
         Period) during the Conversion Dividend Period, multiplied by (y) the
         ratio of (a) the number of days from the last day of the preceding
         Dividend Period to, but excluding the date of conversion of such Series
         B-1 Preferred Stock to (b)

                                       15

<PAGE>

         the actual number of days in the Conversion Dividend Period; plus
         (ii) the product of (x) the value per share of Common Stock of
         all common stock dividends (excluding Common Special Dividends
         as described in Section 3(b)) as to which record dates occurred
         during the Conversion Dividend Period, multiplied by (y) the
         conversion ratio at which the applicable shares of Series B-1 Preferred
         Stock were converted, multiplied by (z) the ratio of (a) the number of
         days from and including the date of conversion of the Series B-1
         Preferred Stock through the last day of the Conversion Dividend Period
         to (b) the actual number of days in the Conversion Dividend Period;
         minus (iii) the product of (x) the value per share of Common Stock of
         all common stock dividends as to which record dates occurred during the
         Conversion Dividend Period but after the date of conversion, and (y)
         the conversion ratio at which the applicable Series B-1 Preferred Stock
         were converted.

                  Notwithstanding the foregoing, if any Special Dividend is
         payable on a dividend payment date on or after the Conversion Date, but
         as to which the dividend record date preceded the Conversion Date, then
         the Converting Holders shall remain entitled to receive such Special
         Dividend on the applicable dividend payment date, notwithstanding the
         prior conversion.

                  As promptly as practicable after the surrender of certificates
         for Series B-1 Preferred Stock as aforesaid (but in any event not later
         than the Business Day following surrender if the Common Stock is issued
         in book entry form (via the facilities of the Depository Trust Company
         or otherwise) or the fifth Business Day following surrender otherwise),
         the Corporation shall issue and shall deliver at such office to such
         holder, or on his or her written order, a certificate or certificates
         for the number of full shares of Common Stock issuable upon the
         conversion of such shares in accordance with provisions of this Section
         6, and any fractional interest in respect of a share of Common Stock
         arising upon such conversion shall be settled as provided in paragraph
         (c) of this Section 6.

                  Each conversion shall be deemed to have been effected
         immediately prior to the close of business on the date on which the
         certificates representing Series B-1 Preferred Stock shall have been
         surrendered and such notice shall have been received by the Corporation
         as aforesaid, and the Person or Persons in whose name or names any
         certificate or certificates representing Common Stock shall be issuable
         upon such conversion shall be deemed to have become the holder or
         holders of record of the shares represented thereby at such time on
         such date and such conversion shall be at the Conversion Price in
         effect at such time on such date.

                  (c) No fractional shares or scrip representing fractions of
         Common Stock shall be issued upon conversion of any share of the Series
         B-1 Preferred Stock. Instead of any fractional interest in a share of
         Common Stock that would otherwise be deliverable upon the conversion of
         a share of Series B-1 Preferred Stock, the Corporation shall pay to the
         holder of such share an amount in cash based upon the Current Market
         Price of the Common Stock on the Trading Day immediately preceding the
         date of conversion. If

                                       16

<PAGE>

         more than one share shall be surrendered for conversion at one
         time by the same holder, the number of full shares of Common Stock
         issuable upon conversion thereof shall be computed on the basis of
         the aggregate number of Series B-1 Preferred Stock so surrendered.

                  (d) The Conversion Price shall be adjusted from time to time
         as follows:

                           (i) If the Corporation shall after the Issue Date (A)
                  pay a dividend or make a distribution on its Common Stock in
                  Common Stock, (B) subdivide its outstanding Common Stock into
                  a greater number of shares, (C) combine its outstanding Common
                  Stock into a smaller number of shares or (D) issue any shares
                  of stock by reclassification of its Common Stock, the
                  Conversion Price in effect at the opening of business on the
                  day following the date fixed for the determination of
                  stockholders entitled to receive such dividend or distribution
                  or at the opening of business on the Business Day next
                  following the day on which such subdivision, combination or
                  reclassification becomes effective, as the case may be, shall
                  be adjusted so that the holder of any Series B-1 Preferred
                  Stock thereafter surrendered for conversion shall be entitled
                  to receive the number of shares of Common Stock that such
                  holder would have owned or have been entitled to receive after
                  the happening of any of the events described above as if such
                  Series B-1 Preferred Stock had been converted immediately
                  prior to the record date in the case of a dividend or
                  distribution or the effective date in the case of a
                  subdivision, combination or reclassification. An adjustment
                  made pursuant to this subparagraph (i) shall become effective
                  immediately after the opening of business on the Business Day
                  next following the record date in the case of a dividend or
                  distribution and shall become effective immediately after the
                  opening of business on the Business Day next following the
                  effective date in the case of a subdivision, combination or
                  reclassification.

                           (ii) If the Corporation shall issue after the Issue
                  Date rights, options or warrants to all holders of Common
                  Stock entitling them (for a period expiring within 45 days
                  after the record date mentioned below) to subscribe for or
                  purchase Common Stock at a price per share less than 95% (100%
                  if a stand-by underwriter is used and charges the Corporation
                  a commission) of the Fair Market Value per share of Common
                  Stock on the record date for the determination of stockholders
                  entitled to receive such rights, options or warrants, then the
                  Conversion Price in effect at the opening of business on the
                  Business Day next following such record date shall be adjusted
                  to equal the price determined by multiplying (A) the
                  Conversion Price in effect immediately prior to the opening of
                  business on the Business Day next following the date fixed for
                  such determination by (B) a fraction, the numerator of which
                  shall be the sum of (x) the number of shares of Common Stock
                  outstanding on the close of business on the date fixed for
                  such determination and (y) the number of shares that the
                  aggregate proceeds to the Corporation from the exercise of
                  such rights, options or warrants for Common Stock would
                  purchase at 95% of such Fair Market Value (or 100% in the case
                  of a

                                       17

<PAGE>

                  stand-by underwriting), and the denominator of which shall be
                  the sum of (x) the number of shares of Common Stock
                  outstanding on the close of business on the date fixed for
                  such determination and (y) the number of additional shares of
                  Common Stock offered for subscription or purchase pursuant to
                  such rights, options or warrants. Such adjustment shall become
                  effective immediately after the opening of business on the day
                  next following such record date. In determining whether any
                  rights, options or warrants entitle the holders of Common
                  Stock to subscribe for or purchase Common Stock at less than
                  95% of such Fair Market Value (or 100% in the case of a
                  stand-by underwriting), there shall be taken into account any
                  consideration received by the Corporation upon issuance and
                  upon exercise of such rights, options or warrants, the value
                  of such consideration, if other than cash, to be determined in
                  good faith by the Board of Directors in a reasonable manner
                  and described in a resolution of the Board of Directors. To
                  the extent that Common Stock is not delivered pursuant to such
                  rights, options or warrants, upon the expiration or
                  termination of such rights, options or warrants, the
                  Conversion Price shall be readjusted to the Conversion Price
                  which would then be in effect had the adjustments made upon
                  the issuance of such rights, options or warrants been made on
                  the basis of delivery of only the number of shares of Common
                  Stock actually delivered. In the event that such rights,
                  options or warrants are not so issued, the Conversion Price
                  shall again be adjusted to be the Conversion Price which would
                  then be in effect if such date fixed for the determination of
                  stockholders entitled to receive such rights, options or
                  warrants had not been fixed.

                           (iii) If the Corporation shall distribute to all
                  holders of its Common Stock any securities of the Corporation
                  (other than Common Stock) or evidence of its indebtedness or
                  assets (other than cash dividends or distributions as to which
                  the provisions of Sections 3((b) or (c) apply) or rights,
                  options or warrants to subscribe for or purchase any of its
                  securities (excluding those rights, options and warrants
                  issued to all holders of Common Stock entitling them for a
                  period expiring within 45 days after the record date referred
                  to in subparagraph (ii) above to subscribe for or purchase
                  Common Stock, which rights and warrants are referred to in and
                  treated under subparagraph (ii) above) (any of the foregoing
                  being hereinafter in this subparagraph (iii) collectively
                  called the "Securities" and individually a "Security"), then
                  in each such case the Conversion Price shall be adjusted so
                  that it shall equal the price determined by multiplying (x)
                  the Conversion Price in effect immediately prior to the close
                  of business on the date fixed for the determination of
                  stockholders entitled to receive such distribution by (y) a
                  fraction, the numerator of which shall be the Fair Market
                  Value per share of Common Stock on the record date mentioned
                  below less the then fair market value (as determined in good
                  faith by the Board of Directors in a reasonable manner and
                  described in a resolution of the Board of Directors) of the
                  portion of the Securities or assets or evidences of
                  indebtedness so distributed or of such rights, options or
                  warrants applicable to one share of Common Stock, and the
                  denominator of which shall be the Fair Market Value per share
                  of Common Stock

                                       18

<PAGE>

                  on the record date mentioned below. Such adjustment shall
                  become effective on the date of distribution retroactive to
                  the opening of business on the Business Day next following the
                  record date for the determination of stockholders entitled to
                  receive such distribution. For the purposes of this
                  subparagraph (iii), the distribution of a Security, which is
                  distributed not only to the holders of the Common Stock on the
                  date fixed for the determination of stockholders entitled to
                  such distribution of such Security, but also is distributed
                  with each share of Common Stock delivered to a Person
                  converting a share of Series B-1 Preferred Stock after such
                  determination date, shall not require an adjustment of the
                  Conversion Price pursuant to this subparagraph (iii); provided
                  that on the date, if any, on which a Person converting a share
                  of Series B-1 Preferred Stock would no longer be entitled to
                  receive such Security with a share of Common Stock (other than
                  as a result of the termination of all such Securities), a
                  distribution of such Securities shall be deemed to have
                  occurred and the Conversion Price shall be adjusted as
                  provided in this subparagraph (iii) (and such day shall be
                  deemed to be "the date fixed for the determination of the
                  stockholders entitled to receive such distribution" and "the
                  record date" within the meaning of the two preceding
                  sentences). If any dividend or distribution of the type
                  described in this paragraph (iii) is declared but not so paid
                  or made, the Conversion Price shall again be adjusted to the
                  Conversion Price which would then be in effect if such
                  dividend or distribution had not been declared.

                           Rights or warrants distributed by the Corporation to
                  all holders of Common Stock entitling the holders thereof to
                  subscribe for or purchase shares of the Corporation's capital
                  stock (either initially or under certain circumstances), which
                  rights or warrants, until the occurrence of a specified event
                  or events ("Trigger Event"): (i) are deemed to be transferred
                  with such shares of Common Stock; (ii) are not exercisable;
                  and (iii) are also issued in respect of future issuances of
                  Common Stock, shall be deemed not to have been distributed for
                  purposes of this subparagraph (iii) (and no adjustment to the
                  Conversion Price under this subparagraph (iii) will be
                  required) until the occurrence of the earliest Trigger Event.
                  If such right or warrant is subject to subsequent events, upon
                  the occurrence of which such right or warrant shall become
                  exercisable to purchase different securities, evidences of
                  indebtedness or other assets or entitle the holder to purchase
                  a different number or amount of the foregoing or to purchase
                  any of the foregoing at a different purchase price, then the
                  occurrence of each such event shall be deemed to be the date
                  of issuance and record date with respect to a new right or
                  warrant (and a termination or expiration of the existing right
                  or warrant without exercise by the holder thereof to the
                  extent not exercised). In addition, in the event of any
                  distribution (or deemed distribution) of rights or warrants,
                  or any Trigger Event or other event (of the type described in
                  the preceding sentence) with respect thereto, that resulted in
                  an adjustment to the Conversion Price under this Subparagraph
                  (iii), (1) in the case of any such rights or warrants which
                  shall all have been redeemed or repurchased without exercise
                  by any holders thereof, the Conversion Price shall be
                  readjusted upon such final redemption or repurchase

                                       19

<PAGE>

                  to give effect to such distribution or Trigger Event, as the
                  case may be, as though it were a cash distribution (but not a
                  distribution paid exclusively in cash), equal to the per share
                  redemption or repurchase price received by a holder of Common
                  Stock with respect to such rights or warrants (assuming such
                  holder had retained such rights or warrants), made to all
                  holders of Common Stock as of the date of such redemption or
                  repurchase, and (2) in the case of such rights or warrants all
                  of which shall have expired or been terminated without
                  exercise, the Conversion Price shall be readjusted as if such
                  rights and warrants had never been issued.

                           (iv) In case a tender or exchange offer (which term
                  shall not include open market repurchases by the Corporation)
                  made by the Corporation or any subsidiary or controlled
                  Affiliate of the Corporation for all or any portion of the
                  Common Stock shall expire and such tender or exchange offer
                  shall require the payment by the Corporation or such
                  subsidiary or controlled Affiliate of consideration per share
                  of Common Stock having a fair market value (as determined in
                  good faith by the Board of Directors in a reasonable manner
                  and described in a resolution of the Board of Directors), at
                  the last time (the "Expiration Time") tenders or exchanges may
                  be made pursuant to such tender or exchange offer, that
                  exceeds the Current Market Price per share of Common Stock on
                  the Trading Day next succeeding the Expiration Time, the
                  Conversion Price shall be reduced so that the same shall equal
                  the price determined by multiplying the Conversion Price in
                  effect immediately prior to the effectiveness of the
                  Conversion Price reduction contemplated by this subparagraph,
                  by a fraction of which the numerator shall be the number of
                  shares of Common Stock outstanding (including any tendered or
                  exchanged shares) at the Expiration Time, multiplied by the
                  Current Market Price per shares of Common Stock on the Trading
                  Day next succeeding the Expiration Time, and the denominator
                  shall be the sum of (A) the fair market value (determined as
                  aforesaid) of the aggregate consideration payable to
                  stockholders based upon the acceptance (up to any maximum
                  specified in the terms of the tender or exchange offer) of all
                  shares validly tendered or exchanged and not withdrawn as of
                  the Expiration Time (the shares deemed so accepted, up to any
                  maximum, being referred to as the "Purchased Shares") and (B)
                  the product of the number of shares of Common Stock
                  outstanding (less any Purchased Shares) at the Expiration Time
                  and the Current Market Price per share of Common Stock on the
                  Trading Day next succeeding the Expiration Time, such
                  reduction to become effective immediately prior to the opening
                  of business on the day following the Expiration Time. In the
                  event the Corporation or any subsidiary or controlled
                  Affiliate is obligated to purchase shares pursuant to any such
                  tender offer, but the Corporation or such subsidiary or
                  controlled Affiliate is permanently prevented by applicable
                  law from effecting any such purchases, or all such purchases
                  are rescinded, the Conversion Price shall again be adjusted to
                  be the Conversion Price which would then be in effect if such
                  tender offer had not been made.

                                       20

<PAGE>

                           (v) No adjustment in the Conversion Price shall be
                  required unless such adjustment would require a cumulative
                  increase or decrease of at least 1% in such price; provided,
                  however, that any adjustments that by reason of this
                  subparagraph (v) are not required to be made shall be carried
                  forward and taken into account in any subsequent adjustment
                  until made; and provided, further, that any adjustment shall
                  be required and made in accordance with the provisions of this
                  Section 6 (other than this subparagraph (v)) not later than
                  such time as may be required in order to preserve the tax-free
                  nature of a distribution to the holders of Common Stock.
                  Notwithstanding any other provisions of this Section 6, the
                  Corporation shall not be required to make any adjustment of
                  the Conversion Price for the issuance of any Common Stock
                  pursuant to any plan providing for the reinvestment of
                  dividends or interest payable on securities of the Corporation
                  and the investment of additional optional amounts in Common
                  Stock under such plan. All calculations under this Section 6
                  shall be made to the nearest cent (with $.005 being rounded
                  upward) or to the nearest one-hundredth of a share (with .005
                  of a share being rounded upward), as the case may be. Anything
                  in this paragraph (d) to the contrary notwithstanding, the
                  Corporation shall be entitled, to the extent permitted by law,
                  to make such reductions in the Conversion Price, in addition
                  to those required by this paragraph (d), as it in its
                  discretion shall determine to be advisable in order that any
                  share dividends, subdivision of shares, reclassification or
                  combination of shares, distribution of rights or warrants to
                  purchase shares or securities, or distribution of other assets
                  (other than cash dividends) hereafter made by the Corporation
                  to its stockholders shall not be taxable. To the extent
                  permitted by applicable law, the Corporation from time to time
                  may reduce the Conversion Price by any amount for any period
                  of time if the period is at least 20 days, the reduction is
                  irrevocable during the period and the Board of Directors shall
                  have made a determination that such reduction would be in the
                  best interests of the Corporation, which determination shall
                  be conclusive. Whenever the Conversion Price is reduced
                  pursuant to the preceding sentence, the Corporation shall mail
                  to the holder of each share of Series B-1 Preferred Stock at
                  his or her last address appearing on the share register a
                  notice of reduction prior to the date the reduced Conversion
                  Price takes effect and such notice shall state the reduced
                  Conversion Price and the period during which it will be in
                  effect.

                  (e) If the Corporation shall be a party to any transaction
         (including without limitation a merger, consolidation, statutory share
         exchange, self tender offer for 40% or more of its Common Stock, sale
         or lease of all or substantially all of the Corporation's assets or
         recapitalization of the Common Stock but excluding any transaction as
         to which subparagraph (d)(i) of this Section 6 applies) (each of the
         foregoing being referred to herein as a "Transaction"), in each case as
         a result of which all or substantially all of the Common Stock is
         converted into the right to receive different securities or other
         property (including cash or any combination thereof), each share of
         Series B-1 Preferred Stock which is not redeemed or converted into the
         right to receive different securities or other property prior to such
         Transaction shall thereafter be convertible, in lieu of Common Stock,
         into the kind and amount of different securities and other property
         (including cash

                                       21

<PAGE>

         or any combination thereof) receivable upon the consummation of
         such Transaction by a holder of that number of shares of Common Stock
         into which one share of Series B-1 Preferred Stock was convertible
         immediately prior to such Transaction, assuming such holder of
         Common Stock (i) is not a Person with which the Corporation
         consolidated or into which the Corporation merged or which merged into
         the Corporation or to which such sale or transfer was made, as the case
         may be ("Constituent Person"), or an Affiliate of a Constituent Person
         and (ii) failed to exercise his rights of election, if any, as to the
         kind or amount of shares, securities and other property (including
         cash) receivable upon such Transaction (provided that if the kind or
         amount of shares, securities and other property (including cash)
         receivable upon such Transaction is not the same for each share of
         Common Stock held immediately prior to such Transaction by other than a
         Constituent Person or an Affiliate thereof and in respect of which such
         rights of election shall not have been exercised ("Non-Electing
         Share"), then for the purpose of this paragraph (e) the kind and amount
         of shares, securities and other property (including cash) receivable
         upon such Transaction by each Non-Electing Share shall be deemed to be
         the kind and amount so receivable per share by holders of a plurality
         of the Non-Electing Shares). The Corporation shall not be a party to
         any Transaction unless the terms of such Transaction are consistent
         with the provisions of this paragraph (e), and it shall not consent or
         agree to the occurrence of any Transaction until the Corporation has
         entered into an agreement with the successor or purchasing entity, as
         the case may be, for the benefit of the holders of the Series B-1
         Preferred Stock that will contain provisions enabling the holders of
         the Series B-1 Preferred Stock that remain outstanding after such
         Transaction to convert into the consideration received by holders of
         Common Stock at the Conversion Price in effect immediately prior to
         such Transaction. The provisions of this paragraph (e) shall similarly
         apply to successive Transactions.

                  (f) If:

                           (i) the Corporation shall distribute to all holders
                  of its Common Stock any Securities; or

                           (ii) the Corporation shall authorize the granting to
                  all holders of Common Stock of rights, options or warrants to
                  subscribe for or purchase any shares of any class or any other
                  rights, options or warrants; or

                           (iii) there shall be any reclassification of the
                  Common Stock (other than an event to which subparagraph (d)(i)
                  of this Section 6 applies) or any consolidation or merger to
                  which the Corporation is a party (other than a merger in which
                  the Corporation is the surviving entity) and for which
                  approval of any stockholders of the Corporation is required,
                  or a statutory share exchange, or a self tender offer by the
                  Corporation for all or substantially all of its outstanding
                  Common Stock or the sale or transfer of all or substantially
                  all of the assets of the Corporation as an entirety; or

                                       22

<PAGE>

                           (iv) the Board of Directors makes any required
                  determination pursuant to this Section 6; or

                           (v)  there shall occur the voluntary or involuntary
                  liquidation, dissolution or winding up of the Corporation;

         then the Corporation shall cause to be filed with the Transfer Agent
         and shall cause to be mailed to the holders of Series B-1 Preferred
         Stock at their addresses as shown on the records of the Corporation, as
         promptly as possible, but at least 10 days prior to the applicable date
         hereinafter specified, a notice stating (A) the date on which a record
         is to be taken for the purpose of such dividend, distribution or
         granting of rights, options or warrants, or, if a record is not to be
         taken, the date as of which the holders of Common Stock of record to be
         entitled to such dividend, distribution or rights, options or warrants
         are to be determined or (B) the date on which such reclassification,
         consolidation, merger, statutory share exchange, sale, transfer,
         liquidation, dissolution or winding up is expected to become effective,
         and the date as of which it is expected that holders of Common Stock of
         record shall be entitled to exchange their Common Stock for securities
         or other property, if any, deliverable upon such reclassification,
         consolidation, merger, statutory share exchange, sale, transfer,
         liquidation, dissolution or winding up or (C) details regarding any
         such Board of Directors determination and sufficient background
         information to understand such determination and the basis therefor.
         Failure to give or receive such notice or any defect therein shall not
         affect the legality or validity of the proceedings described in this
         Section 6.

                  (g) Whenever the Conversion Price is adjusted as herein
         provided, the Corporation shall promptly file with the Transfer Agent
         an officer's certificate setting forth the Conversion Price after such
         adjustment and setting forth a brief statement of the facts requiring
         such adjustment. Promptly after delivery of such certificate, the
         Corporation shall prepare a notice of such adjustment of the Conversion
         Price setting forth the adjusted Conversion Price and the effective
         date of such adjustment and shall mail such notice of such adjustment
         of the Conversion Price to the holder of each share of Series B-1
         Preferred Stock at such holder's last address as shown on the records
         of the Corporation.

                  (h) There shall be no adjustment of the Conversion Price in
         case of the issuance of any stock of the Corporation in a
         reorganization, acquisition or other similar transaction except as
         specifically set forth in this Section 6. If any action or transaction
         would require adjustment of the Conversion Price pursuant to both
         paragraph (d) and paragraph (e) of this Section 6, only one adjustment
         shall be made and such adjustment shall be the amount of adjustment
         that has the highest absolute value.

                  (i) If the Corporation shall take any action affecting the
         Common Stock, other than action described in this Section 6, that in
         the reasonable opinion of the Board of Directors would materially and
         adversely affect the conversion rights of the holders of the Series B-1
         Preferred Stock, the Conversion Price for the Series B-1 Preferred
         Stock

                                       23

<PAGE>

         shall be adjusted downward, to the extent permitted by law, in such
         manner and at such time, as the Board of Directors, in its reasonable
         discretion, determines to be equitable in the circumstances.

                  (j) The Corporation covenants that it will at all times
         reserve and keep available, free from preemptive rights, out of the
         aggregate of its authorized but unissued Common Stock, for the purpose
         of effecting conversion of the Series B-1 Preferred Stock, the full
         number of shares of Common Stock deliverable upon the conversion of all
         outstanding Series B-1 Preferred Stock not theretofore converted. For
         purposes of this paragraph (j), the number of shares of Common Stock
         that shall be deliverable upon the conversion of all outstanding Series
         B-1 Preferred Stock shall be computed as if at the time of computation
         all such outstanding shares were held by a single holder.

                  Any Common Stock issued upon conversion of the Series B-1
         Preferred Stock shall be validly issued, fully paid and non-assessable.
         Before taking any action that would cause an adjustment reducing the
         Conversion Price below the then-par value of the Common Stock
         deliverable upon conversion of the Series B-1 Preferred Stock, the
         Corporation will take any action that, in the opinion of its counsel,
         may be necessary in order that the Corporation may validly and legally
         issue fully paid and non-assessable Common Stock at such adjusted
         Conversion Price.

                  The Corporation shall use its best efforts to list the Common
         Stock required to be delivered upon conversion of the Series B-1
         Preferred Stock, prior to such delivery, upon each national securities
         exchange, if any, upon which the outstanding Common Stock is listed at
         the time of such delivery.

                  The Corporation shall use its best efforts to comply with all
         federal and state securities laws and regulations thereunder in
         connection with the issuance of any securities that the Corporation
         shall be obligated to deliver upon conversion of the Series B-1
         Preferred Stock. The certificates evidencing such securities shall bear
         such legends restricting transfer thereof in the absence of
         registration under applicable securities laws or an exemption therefrom
         as the Corporation may in good faith deem appropriate.

                  (k) The Corporation will pay any and all documentary stamp or
         similar issue or transfer taxes payable in respect of the issue or
         delivery of Common Stock or other securities or property on conversion
         of the Series B-1 Preferred Stock pursuant hereto; provided, however,
         that the Corporation shall not be required to pay any tax that may be
         payable in respect of any transfer involved in the issue or delivery of
         Common Stock or other securities or property in a name other than that
         of the holder of the Series B-1 Preferred Stock to be converted, and no
         such issue or delivery shall be made unless and until the Person
         requesting such issue or delivery has paid to the Corporation the
         amount of any such tax or established, to the reasonable satisfaction
         of the Corporation, that such tax has been paid.

         Section 7. Redemption at the Option of the Holder -- Change of Control.

                                       24

<PAGE>

                  (a) If a Change of Control (as defined below) occurs (a
         "Change of Control Repurchase Event"), the holders of Series B-1
         Preferred Stock shall have the right to require the Corporation, to the
         extent the Corporation shall have funds legally available therefor, to
         redeem any or all of the Series B-1 Preferred Stock held by such holder
         at a repurchase price payable in cash (the "Change of Control
         Repurchase Payment") in an amount equal to 100% of the Liquidation
         Preference thereof, plus accumulated, accrued and unpaid Dividends
         whether or not earned or declared, if any, with respect to the Initial
         Dividend Period and all full Dividend Periods ended prior to the date
         of repurchase or the date payment is made available (the "Change of
         Control Date") pursuant to the offer described in subsection (b) below
         (the "Change of Control-Repurchase Offer"). In addition, without
         limiting the amount of Dividends to which a holder of Series B-1
         Preferred Stock is entitled pursuant to the immediately preceding
         sentence, on the fifteenth day of the first calendar quarter which
         begins following the Change of Control Date (or if such day is not a
         Business Day, the next succeeding Business Day), the Corporation shall
         pay in cash to such holders upon redemption a pro rata Dividend (which
         shall be deemed to be a part of the Change of Control Repurchase
         Payment), whether or not earned or declared, on each such share of
         Series B-1 Preferred Stock so redeemed for the Dividend Period in which
         the redemption occurred (the "Change of Control Repurchase Dividend
         Period"), which Dividend shall be equal to the product of (x) the value
         per share of Series B-1 Preferred Stock of all Dividends (except
         Special Dividends determined pursuant to Section 3(b)) as to which
         record dates occurred (or would have occurred if the Series B-1
         Preferred Stock had been outstanding for the entire Change of Control
         Repurchase Dividend Period) during the Change of Control Repurchase
         Dividend Period multiplied by (y) the ratio of (a) the number of days
         from the last day of the preceding Dividend Period to, and including,
         the date of redemption of such Series B-1 Preferred Stock to (b) the
         actual number of days in the Change of Control Repurchase Dividend
         Period. If funds are not legally available to make the full Change of
         Control Repurchase Payment as described in this paragraph, then the
         Corporation shall make the Change of Control Repurchase Payment to the
         extent such funds are legally available and shall make remaining Change
         of Control Repurchase Payments immediately upon such funds becoming
         legally available therefor.

                  Notwithstanding the foregoing, if any Special Dividend is
         payable on a dividend payment date on or after the Change of Control
         Date but as to which the dividend record date preceded the Change of
         Control Date, then the holders upon redemption shall remain entitled to
         receive such Special Dividend on the applicable dividend payment date,
         notwithstanding the prior redemption.

                  (b) Within 5 days following the Corporation becoming aware
         that a Change of Control Repurchase Event has occurred, the Corporation
         shall mail by recognized overnight courier a notice to the each holder
         of Series B-1 Preferred Stock stating (A) that a Change of Control
         Repurchase Event has occurred and that such holder has the right to
         require the Corporation to repurchase any or all of the Series B-1
         Preferred Stock then held by such holder for cash, (B) the date of
         repurchase (which shall be a Business Day, no earlier than 30 days and
         no later than 60 days from the date such notice is

                                       25

<PAGE>

         mailed, or such later date as may be necessary to comply with the
         requirements of applicable law; provided, however, that if the
         transaction giving rise to the Change of Control consists of an
         exchange of the Common Stock for cash or other securities, the date of
         repurchase shall be no later than the consummation of such exchange),
         (C) the repurchase price and (D) the instructions determined by the
         Corporation, consistent with this subsection, that such holder must
         follow in order to have its Series B-1 Preferred Stock repurchased.

                  (c) On the Change of Control Repurchase Date, the Corporation,
         to the extent lawful, shall accept for payment Series B-1 Preferred
         Stock or portions thereof tendered by each holder of Series B Preferred
         Stock pursuant to the Change of Control Repurchase Offer and promptly
         by wire transfer of immediately available funds to such holder, as
         directed by such holder, send an amount equal to the Change of Control
         Repurchase Payment in respect of all Series B-1 Preferred Stock or
         portions thereof so tendered.

                  (d) Notwithstanding anything else herein, to the extent they
         are applicable to any Change of Control Repurchase Offer, the
         Corporation will comply with any federal and state securities laws,
         rules and regulations and all time periods and requirements shall be
         adjusted accordingly.

                  (e) "Change of Control" means each occurrence of any of the
         following: (i) the acquisition, directly or indirectly, by any
         individual or entity or group (as such term is used in Section 13(d)(3)
         of the Exchange Act) (other than the Investor or any of its controlled
         Affiliates or Archie Bennett, Jr. or Montgomery J. Bennett, or any of
         their respective controlled Affiliates) of beneficial ownership (as
         defined in Rule 13d-3 under the Exchange Act, except that such
         individual or entity shall be deemed to have beneficial ownership of
         all shares that any such individual or entity has the right to acquire,
         whether such right is exercisable immediately or only after passage of
         time) of more than 35% of the Corporation's outstanding capital stock
         with voting power, under ordinary circumstances, to elect directors of
         the Corporation; (ii) other than with respect to the election,
         resignation or replacement of any director designated, appointed or
         elected by the holders of the Series A Preferred Stock, the Series B-1
         Preferred Stock or any other Parity Stock, in each case pursuant to the
         terms of such securities (each a "Preferred Director"), during any
         period of two consecutive years, individuals who at the beginning of
         such period constituted the Board of Directors of the Corporation
         (together with any new directors whose election by such Board of
         Directors or whose nomination for election by the stockholders of the
         Corporation was approved by a vote of 75% of the directors of the
         Corporation (excluding Preferred Directors) (the "Incumbent Board")
         then still in office who were either directors at the beginning of such
         period, or whose election or nomination for election was previously so
         approved) cease for any reason to constitute a majority of the Board of
         Directors the Corporation then in office; (iii) the Corporation (which
         shall include for this purpose any one or more of its directly or
         indirectly wholly-owned subsidiaries) ceases to be the sole general
         partner of the Operating Partnership; or (iv) (A) the Corporation
         consolidating with or merging into another entity or conveying,
         transferring or leasing all or substantially all of its assets

                                       26

<PAGE>

         (including, but not limited to, real property investments) to any
         individual or entity in a single transaction or series of related
         transactions, or (B) any corporation consolidating with or merging into
         the Corporation; provided, however, that the events described in clause
         (iv) shall not be deemed to be a Change of Control (a) if the sole
         purpose of such event is that the Corporation is seeking to change its
         domicile or to change its form of organization from a corporation to a
         statutory business trust or (b) if (x) the holders of the exchanged
         securities of the Corporation immediately after such transaction
         beneficially own at least a majority of the securities of the merged or
         consolidated entity normally entitled to vote in elections of
         directors, (y) the chairman and the president of the Corporation
         immediately prior to the execution of the transaction agreement are the
         chairman and the president of the merged or consolidated company, and
         (z) the individuals who were members of the Incumbent Board immediately
         prior to the execution of the transaction agreement constitute at least
         a majority of the members of the board of directors of the merged or
         consolidated company.

         Section 8. Redemption at the Option of the Holder-- REIT Termination or
         Delisting.

                  (a) If at any time (i) there shall occur a REIT Termination
         Event (a "REIT-Repurchase Event") or (ii) the Corporation shall cease
         to be listed for trading on a Principal Market (a "Principal Market
         Repurchase Event" and together with a REIT Repurchase Event, a
         "Repurchase Event"), the holders of Series B-1 Preferred Stock shall
         have the right to require the Corporation, to the extent the
         Corporation shall have funds legally available therefor, to repurchase
         any or all of the Series B-1 Preferred Stock held by such holder at a
         repurchase price payable in cash in an amount equal to (i) 110% of the
         Liquidation Preference thereof if such repurchase occurs prior to the
         third anniversary of the Final Closing or (ii) 100% of the Liquidation
         Preference thereof if such repurchase occurs thereafter, plus, in each
         case, accumulated, accrued and unpaid Dividends whether or not earned
         or declared, if any (the "Repurchase Payment"), to the date of
         repurchase or the date payment is made available (the "Repurchase
         Date"), pursuant to the offer described in subsection (b) below (the
         "Repurchase Offer"). If funds are not legally available to make the
         full Repurchase Payment as described in this paragraph, then the
         Corporation shall make the Repurchase Payment to the extent such funds
         are legally available and shall make remaining Repurchase Payments
         immediately upon such funds becoming legally available therefor.

                  (b) Within 5 days following the Corporation becoming aware
         that a Repurchase Event has occurred, the Corporation shall mail by
         recognized overnight courier a notice to each holder of Series B-1
         Preferred Stock stating (i) that a Repurchase Event has occurred and
         that such holder has the right to require the Corporation to repurchase
         any or all Series B-1 Preferred Stock then held by such holder for
         cash, (ii) the date of repurchase (which shall be a Business Day, no
         earlier than 30 days and no later than 60 days from the date such
         notice is mailed, or such later date as may be necessary to comply with
         applicable law), (iii) the repurchase price and (iv) the instructions
         determined by the Corporation, consistent with this subsection, that
         such holder must follow in order to have its Series B-1 Preferred Stock
         repurchased.

                                       27

<PAGE>

                  (c) On the Repurchase Date, the Corporation, to the extent
         lawful, shall accept for payment Series B-1 Preferred Stock or portions
         thereof tendered by each holder of Series B-1 Preferred Stock pursuant
         to the Repurchase Offer and promptly by recognized overnight courier or
         by wire transfer of immediately available funds to such holder, as
         directed by such holder, send an amount equal to the Repurchase Payment
         in respect of all Series B-1 Preferred Stock or portions thereof so
         tendered.

                  (d) Notwithstanding anything else herein, to the extent they
         are applicable to any Repurchase Offer, the Corporation will comply
         with any federal and state securities laws, rules and regulations and
         all time periods and requirements shall be adjusted accordingly.

         Section 9. Shares To Be Reacquired. All Series B-1 Preferred Stock
which shall have been issued and reacquired in any manner by the Corporation
shall be restored to the status of authorized but unissued preferred stock,
without discretion as to class or series, and subject to applicable limitations
set forth in the Charter may thereafter be reissued as shares of any series of
preferred stock.

         Section 10. Ranking.  The Series B-1 Preferred Stock will rank:

                  (a) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, prior or senior to
any class or series of Common Stock of the Corporation and any other class or
series of equity securities, if such class or series constitutes Fully Junior
Stock;

                  (b) with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Corporation, prior or senior to
any class or series of Common Stock of the Corporation and any other class or
series of equity securities, if such class or series constitutes Junior Stock;

                  (c) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, on a parity with any
class or series of the equity securities of the Corporation if, pursuant to the
specific terms of such class or series of equity securities, the holders of such
class or series of equity securities and the holders of the Series B-1 Preferred
Stock are entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective amounts
of accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other ("Parity Stock"), which Parity Stock
shall expressly include the Corporation's Series B-2 Preferred Stock and its
8.55% Series A Cumulative Preferred Stock (the "Series A Preferred Stock");

                  (d) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, junior to any class
or series of equity securities of the Corporation if, pursuant to the specific
terms of such class or series, the holders of such class or

                                       28

<PAGE>

series are entitled to the receipt of dividends or amounts distributable upon
liquidation, dissolution or winding up in preference or priority to the holders
of the Series B-1 Preferred Stock; and

                  (e) junior to all of the existing and future indebtedness
of the Corporation.

         The term "equity securities" does not include convertible debt
securities, which will rank senior to the Series B-1 Preferred Stock.

         Section 11. Voting. (a) Except as required by applicable law or
otherwise set forth herein, all holders of shares of Series B-1 Preferred Stock
shall be entitled to vote on an as-converted basis, voting as a single class
together with the holders of the Common Stock, on all matters to be voted upon
by the Corporation's stockholders.

         (b) In lieu of any right to vote together as a single class with the
holders of the Series A Preferred Stock and any Parity Stock for the election of
directors, if and whenever any Covenant Violation has occurred or is continuing,
then the number of directors then constituting the Board of Directors shall be
increased by two and the holders of Series B-1 Preferred Stock, voting as a
separate class, shall be entitled to elect the two additional directors to serve
on the Board of Directors, at any annual meeting of stockholders or special
meeting held in place thereof, or at a special meeting of the holders of the
Series B-1 Preferred Stock called as hereinafter provided; provided, however,
that except as set forth in the next sentence hereto, the holders of Series B-1
Preferred Stock shall not have the right to elect more than two directors. If,
other than through the operation of this Section 11(b) or pursuant to the
provisions of the Charter relating to Parity Stock, the Board of Directors shall
be increased at any time to more than ten directors, then, upon the occurrence
or continuance of any of the events described in this Section 11(b), the Board
of Directors shall be increased by such number of additional directors, and the
holders of Series B-1 Preferred Stock shall be entitled to elect such number of
additional directors, as shall be necessary to maintain the ratio of directors
elected by the holders of the Series B-1 Preferred Stock to the directors
otherwise elected, as nearly as possible (rounding to the next larger whole
number), equal to the ratio that would have existed if the holders of the Series
B-1 Preferred Stock were able to elect the full number of directors then
permitted to be elected by them under this Section 11 and the directors
otherwise elected numbered only ten (or ten plus the number of directors, if
any, which all series of Parity Stock then have the right to elect). Whenever no
Covenant Violation has occurred or been continuing for two consecutive quarters,
then the right of the holders of the Series B-1 Preferred Stock to elect such
additional directors shall cease (but subject always to the same provision for
the vesting of such voting rights in the case of any similar future Covenant
Violation), and the terms of office of all persons elected as directors by the
holders of the Series B-1 Preferred Stock shall forthwith terminate and the
number of the Board of Directors shall be reduced accordingly. At any time after
such voting power shall have been so vested in the holders of Series B-1
Preferred Stock, the Secretary of the Corporation may, and upon the written
request of any holders of 10% of the aggregate amount of outstanding Series B-1
Preferred Stock (addressed to the Secretary at the principal office of the
Corporation) shall, call a special meeting of the holders of the Series B-1
Preferred Stock for the election of the directors to be elected by them as
herein provided, such call to be made by notice

                                       29

<PAGE>

similar to that provided in the Bylaws of the Corporation for a special meeting
of the stockholders or as required by law; provided, however, if such a request
from holders of Series B-1 Preferred Stock is received less than 90 days before
the date fixed for the next annual or special meeting of stockholders, the vote
for such additional directors will be held at the earlier of the next annual or
special meeting of stockholders. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 20 days
after receipt of any such request, then any holder of Series B-1 Preferred Stock
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the records of the Corporation. The directors elected at
any such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Series B-1 Preferred Stock, a
successor shall be elected by the Board of Directors, upon the nomination of the
then-remaining director elected by the holders of the Series B-1 Preferred Stock
or the successor of such remaining director (or, if there are then no such
directors or director elected by the holders of Series B-1 Preferred Stock, such
director shall be elected by the holders of Series B-1 Preferred Stock as
described above), to serve until the next annual meeting of the stockholders or
special meeting held in place thereof if the term of such director shall not
have previously terminated as provided above.

         (c) So long as any share of Series B-1 Preferred Stock is outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Articles, the affirmative vote of the holders of 66-2/3% of the outstanding
shares of Series B-1 Preferred Stock, voting together as a class, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:

                           (i) Any amendment, alteration or repeal of any of the
                  provisions of the Charter or these Articles Supplementary that
                  materially and adversely affects the voting powers, rights,
                  preferences or other terms of the holders of the Series B-1
                  Preferred Stock;

                           (ii) Any issuance by the Corporation of (a) any
                  capital stock or other equity security to which the Series B-1
                  Preferred Stock would be junior as to the payment of dividends
                  or as to the distribution of assets upon liquidation,
                  dissolution or winding up or (b) any capital stock or other
                  equity security which is redeemable at the option of the
                  holder thereof, except with respect to this clause (b), any
                  such capital stock or other equity security having redemption
                  rights which are no more favorable in any material respect to
                  the holder of such security than the redemption rights
                  contained in these Articles Supplementary;

                           (iii) Any merger or consolidation of the Corporation
                  and another entity in which the Corporation is not the
                  surviving corporation and each holder of Series B-1 Preferred
                  Stock does not receive shares of the surviving corporation
                  with substantially similar rights, preferences , powers and
                  other terms in the surviving corporation as the Series B-1
                  Preferred Stock have with respect to the

                                       30

<PAGE>

                  Corporation (except for changes that do not materially and
                  adversely affect the holders of the Series B-1 Preferred
                  Stock).

provided, however, that no such vote of the holders of Series B-1 Preferred
Stock shall be required if, at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such prior
shares or convertible security is to be made, as the case may be, provision is
made for the redemption of all Series B-1 Preferred Stock at the time
outstanding to the extent such redemption is otherwise permitted pursuant to
Section 5 of these Articles Supplementary.

         For purposes of the foregoing provisions of this Section 11(c), each
share of Series B-1 Preferred Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein, the Series B-1
Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers other than as set forth herein, and the consent
of the holders thereof shall not be required for the taking of any corporate
action.

         Section 12. Record Holders. The Corporation and the Transfer Agent may
deem and treat the record holder of any Series B-1 Preferred Stock as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.

         Section 13. Applicability of Charter Article VI. The Series B-1
Preferred Stock shall be subject to the provisions of Article VI of the Charter
pursuant to which Series B-1 Preferred Stock owned by a stockholder in excess of
the Ownership Limit shall automatically be transferred to a Trust for the
exclusive benefit of a Charitable Beneficiary, as provided in Article VI of the
Charter.

         Section  14. Title.  This resolution shall be known and may be
referred to as "A Resolution of the Board of Directors of Ashford Hospitality
Trust, Inc. Designating Series B-1 Preferred Stock and Fixing Preferences and
Rights Thereof".

                  SECOND: The Series B-1 Preferred Stock has been classified and
designated by the Board under the authority contained in the Charter.

                  THIRD: These Articles Supplementary have been approved by the
Board in the manner and by the vote required by law.

                  FOURTH: These Articles Supplementary shall be effective at the
time the State Department of Assessments and Taxation of Maryland accepts these
Articles Supplementary for record.

                  FIFTH: The undersigned Chief Operating Officer of the
Corporation acknowledges these Articles Supplementary to be the act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned Chief Operating Officer acknowledges that to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.

                                       31

<PAGE>

                  IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed in its name and on its behalf by its Chief
Operating Officer and attested to by its Secretary of this 28th day of December,
2004.

                                    ASHFORD HOSPITALITY TRUST, INC.

                                    By:              /s/ Douglas Kessler
                                            ------------------------------------
                                     Name:           Douglas Kessler
                                     Its:            Chief Operating Officer

                                    ATTEST:

                                    By:              /s/ David A. Brooks
                                            ------------------------------------
                                     Name:           David A. Brooks
                                     Its:            Secretary

                                       32<PAGE>
                                                                     EXHIBIT 4.2

                        ASHFORD HOSPITALITY TRUST, INC.

          ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND
                   PREFERENCES OF A SERIES OF PREFERRED STOCK

                  Ashford Hospitality Trust, Inc., a Maryland corporation (the
"Corporation"), certifies to the State Department of Assessments and Taxation of
Maryland that:

                  FIRST: Under a power contained in Section 2-208 of the
Maryland General Corporation Law and Article V of the Corporation's Articles of
Amendment and Restatement (as the same may be amended or supplemented, the
"Charter"), the Board of Directors, by resolutions duly adopted on December 28,
2004, classified and designated 2,285,865 shares of the unissued preferred
stock, par value $0.01 per share, of the Corporation as Series B-2 Cumulative
Convertible Redeemable Preferred Stock, with the following preferences, rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption.
Capitalized terms used and not otherwise defined herein have the meanings set
forth in the Charter.

         Section 1. Number of Shares, Designation and Ranking. This series of
preferred stock shall be designated as Series B-2 Cumulative Convertible
Redeemable Preferred Stock and the number of shares which shall constitute such
series shall be 2,285,865 shares, par value $0.01 per share, which number may be
decreased (but not below the aggregate number thereof then outstanding and/or
which have been reserved for issuance) from time to time by the Board of
Directors and is hereafter in these Articles Supplementary called the "Series
B-2 Preferred Stock". Each share of Series B-2 Preferred Stock shall be
identical in all respects to each other share of Series B-2 Preferred Stock.

         Section 2. Definitions. For purposes of the Series B-2 Preferred Stock,
the following terms shall have the meanings indicated:

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

                  "Affiliate" of, or Person "Affiliated" with, a specified
Person, shall mean a Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the Person specified.

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

                  "Board of Directors" shall mean the Board of Directors of the
         Corporation.

                  "Business Day" shall mean each day other than a Saturday or
         Sunday which is not a day on which banking institutions in New York
         City, New York are authorized or required by law, regulation or
         executive order to close.

                  "Change of Control" shall have the meaning set forth in
         Section 7(e).

<PAGE>

                  "Change of Control Date" shall have the meaning set forth in
         Section 7(a).

                  "Change of Control Repurchase Dividend Period" shall have the
         meaning set forth in Section 7(a).

                  "Change of Control Repurchase Event" shall have the meaning
         set forth in Section 7(a).

                  "Change of Control Repurchase Offer" shall have the meaning
         set forth in Section 7(a).

                  "Change of Control Repurchase Payment" shall have the meaning
         set forth in Section 7(a).

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended, or any successor statute thereto.

                  "Common Special Dividend" shall have the meaning set forth in
         Section 3(b).

                  "Common Stock" shall mean the Corporation's common stock, par
         value $0.01 per share.

                  "Covenant Violation" shall mean (i) any breach or
         non-performance of any covenant of the Corporation contained in the
         Purchase Agreement, which breach or non-performance shall remain
         uncured for more than 120 days after such breach or non-performance has
         occurred or (ii) if and whenever the Corporation has failed to pay
         Dividends on the Series B-2 Preferred Stock for four quarterly Dividend
         Periods whether or not such Dividend Periods are consecutive (which
         shall, with respect to any such Dividend, mean that any such Dividend
         has not been paid in full).

                  "Current Market Price" of publicly traded Common Stock or any
         other class of stock or other security of the Corporation or any other
         issuer for any day shall mean the last reported sales price, regular
         way, on such day, or, if no sale takes place on such day, the average
         of the reported closing bid and asked prices on such day, regular way,
         in either case as reported on the New York Stock Exchange ("NYSE") or,
         if such security is not listed or admitted for trading on the NYSE, on
         the principal national securities exchange on which such security is
         listed or admitted for trading or, if not listed or admitted for
         trading on any national securities exchange, on the Nasdaq National
         Market ("NASDAQ") or, if such security is not quoted on NASDAQ, the
         average of the closing bid and asked prices on such day in the
         over-the-counter market as reported by the National Association of
         Securities Dealers, Inc. (the "NASD") or, if bid and asked prices for
         such security on such day shall not have been reported through the
         NASD, the average of the bid and asked prices on such day as furnished
         by any NYSE member firm regularly making a market in such security
         selected for such purpose by the Board of Directors.

                                       2
<PAGE>

                  "Default Dividend" shall have the meaning set forth in Section
         3(d).

                  "Dividends" shall have the meaning set forth in Section 3.

                  "Dividend Periods" with respect to any share of Series B-2
         Preferred Stock, shall mean quarterly dividend periods commencing on
         January 1, April 1, July 1 and October 1 of each year and ending on and
         including the day preceding the first day of the next succeeding
         Dividend Period (other than the initial Dividend Period for any share
         of Series B-2 Preferred Stock, which shall commence on the Issue Date
         for such share of Series B-2 Preferred Stock and end on and include the
         last day of the calendar quarter which includes such Issue Date).

                  "Fair Market Value" shall mean the number obtained, for the 30
         Trading Days before, and ending not later than, the earlier of the day
         in question and the day before the "ex date" with respect to any
         issuance or distribution requiring such computation, by dividing (a)
         the sum of the products for all sales of Common Stock during such 30
         Trading Day period of (i) the sale prices per share of Common Stock as
         reported on the consolidated transaction reporting system contemplated
         by Rule 11Aa3-1 of the Securities Exchange Act of 1934, as amended,
         times (ii) the number of shares of Common Stock sold at such prices by
         (b) the total number of shares of Common Stock sold during such 30
         Trading Day period. The term "ex date", when used with respect to any
         issuance or distribution, means the first day on which the Common Stock
         trades regular way, without the right to receive such issuance or
         distribution, on the exchange or in the market, as the case may be,
         used to determine that day's Current Market Price. Appropriate
         adjustments shall be made to the Fair Market Value to maintain
         comparability during any 30 day Trading Day period in the event of any
         subdivision or combination of shares of Common Stock, whether by stock
         split, stock dividend, recapitalization, reverse stock split or
         otherwise, which occurs during such 30 Trading Day period.

                  "Final Closing" shall have the meaning set forth in Section
         5(a).

                  "Fully Junior Stock" shall mean the Common Stock and any other
         class or series of stock of the Corporation now or hereafter issued and
         outstanding over which the Series B-2 Preferred Stock has preference or
         priority in both (i) the payment of dividends and (ii) the distribution
         of assets on any liquidation, dissolution or winding up of the
         Corporation.

                  "Investor" shall mean Security Capital Preferred Growth
         Incorporated and its successors and assigns.

                  "Issue Date" with respect to any share of Series B-2 Preferred
         Stock shall mean the date on which the Series B-2 Preferred Stock is
         issued.

                  "Junior Stock" shall mean the Common Stock and any other class
         or series of stock of the Corporation now or hereafter issued and
         outstanding over which the Series

                                       3

<PAGE>

         B-2 Preferred Stock has preference or priority in the payment of
         dividends or in the distribution of assets on any liquidation,
         dissolution or winding up of the Corporation.

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

                  "NASD" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "NASDAQ" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "NYSE" shall have the meaning set forth in the definition of
         "Current Market Price".

                  "Operating Partnership" shall mean Ashford Hospitality Limited
         Partnership, a Delaware limited partnership.

                  "Parity Stock" shall have the meaning set forth in Section
         10(c).

                  "Person" shall mean any individual, firm, partnership,
         corporation, limited liability company, trust or other entity, and
         shall include any successor (by merger or otherwise) of such entity.

                  "Principal Market" means the NYSE, the NASDAQ National Market
         System or the American Stock Exchange.

                   "Principal Market Limit" shall mean the number of voting
         securities, or securities convertible therefor, which the Corporation
         may issue without obtaining a stockholder vote under the rules or
         regulations of the Principal Market, if any, on which the Corporation's
         Common Stock is then traded, which rule while the Corporation's Common
         Stock is listed on the NYSE, shall be Listed Company Manual 312.03(c),
         or any successor or replacement rule.

                  "Principal Market Repurchase Event" shall have the meaning set
         forth in Section 8(a).

                  "Purchase Agreement" shall mean the Class B Cumulative
         Convertible Redeemable Preferred Stock Purchase Agreement dated as of
         December 23, 2004 among the Investor, the Corporation and the
         Operating Partnership

                  "Ratchet Dividend" shall have the meaning set forth in Section
         3(c).

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

                  "Redemption Dividend Period" shall have the meaning set forth
         in Section 5(b).

                  "REIT Termination Event" shall mean the earliest to occur of:

                                       4
<PAGE>

                  (i)    the filing of a federal income tax return by the
                         Corporation for any taxable year on which the
                         Corporation does not compute its income as a real
                         estate investment trust;

                  (ii)   the approval by the stockholders of the Corporation of
                         a proposal for the Corporation to cease to qualify as a
                         real estate investment trust;

                  (iii)  the approval by the Board of Directors of the
                         Corporation of a proposal for the Corporation to cease
                         to qualify as a real estate investment trust;

                  (iv)  a determination by the Board of Directors of the
                        Corporation, based on the advice of counsel, that the
                        Corporation has ceased to qualify as a real estate
                        investment trust; or

                  (v)   a "determination" within the meaning of Section 1313(a)
                        of the Code that the Corporation has ceased to qualify
                        as a real estate investment trust.

                  "Repurchase Date" shall have the meaning given to such term in
         Section 8(a).

                  "Repurchase Offer" shall have the meaning given to such term
         in Section 8(a).

                  "Repurchase Payment" shall have the meaning given to such term
         in Section 8(a).

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended.

                  "Series A Preferred Stock" shall have the meaning given to
         such term in Section 10(c).

                  "Series B-1 Preferred Stock" shall mean the Series B-1
         Cumulative Convertible Redeemable Preferred Stock, par value $.01 per
         share, of the Company.

                  "Series B-2 Preferred Stock" shall have the meaning given such
         term in the preamble to these Articles Supplementary.

                  "set apart for payment" shall be deemed to include, without
         any action other than the following, the recording by the Corporation
         in its accounting ledgers of any accounting or bookkeeping entry which
         indicates, pursuant to an authorization by the Board of Directors and a
         declaration of dividends or other distribution by the Corporation, the
         allocation of funds to be so paid on any series or class of stock of
         the Corporation; provided, however, that if any funds for any class or
         series of Junior Stock or any class or series of stock ranking on a
         parity with the Series B-2 Preferred Stock as to the payment of
         dividends are placed in a separate account of the Corporation or
         delivered to a disbursing, paying or other similar agent, then "set
         apart for payment" with respect to the Series B-2 Preferred Stock shall
         mean placing such funds in a separate account or delivering such funds
         to a disbursing, paying or other similar agent.

                                       5
<PAGE>

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

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

                  "Trading Day" shall mean any day on which the securities in
         question are traded on the NYSE, or if such securities are not listed
         or admitted for trading on the NYSE, on the principal national
         securities exchange on which such securities are listed or admitted, or
         if not listed or admitted for trading on any national securities
         exchange, on NASDAQ, or if such securities are not quoted on NASDAQ, in
         the securities market in which the securities are traded.

                  "Transfer Agent" shall mean the Corporation, or such other
         agent or agents of the Corporation as may be designated by the Board of
         Directors or their designee as the transfer agent, registrar and
         dividend disbursing agent for the Series B-2 Preferred Stock.

                  "Trigger Date" shall mean the first date following December
         31, 2008 on which the Volume Weighted Average Price of the Common Stock
         exceeds the then applicable conversion price of the Series B-1
         Preferred Stock.

                  "Volume Weighted Average Price" shall mean the number
         obtained, for the 30 Trading Days before and ending on the day in
         question, by dividing (a) the sum of the products for all sales of
         Common Stock during such 30 Trading Day period of (i) the sale prices
         per share of Common Stock as reported on the consolidated transaction
         reporting system contemplated by Rule 11Aa3-1 of the Securities
         Exchange Act of 1934, as amended, times (ii) the number of shares of
         Common Stock sold at such prices by (b) the total number of shares of
         Common Stock sold during such 30 Trading Day period. Appropriate
         adjustments shall be made to the Volume Weighted Average Price to
         maintain comparability during any 30 day Trading Day period in the
         event of any subdivision or combination of the Common Stock, whether by
         stock split, stock dividend, recapitalization, reverse stock split or
         otherwise, which occurs during such 30 Trading Day period.

Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Charter.

         Section 3. Dividends.

                  Dividends for each Dividend Period shall consist of Base
Dividends, Special Dividends, Ratchet Dividends, Default Dividends and
Additional Dividends, if any, each as defined below (collectively referred to
herein as "Dividends"). All Dividends shall be cumulative from the Issue Date
whether or not in any Dividend Period or Dividend Periods (i) such Dividends
shall be authorized or declared, (ii) there shall be funds legally available for
the payment of such Dividends or (iii) any agreement prohibits payment of such
Dividends.

                  (a) Base Dividend. Holders of the Series B-2 Preferred Stock
         shall be entitled to receive, when and as authorized by the Board of
         Directors and declared by the

                                       6
<PAGE>

         Corporation, out of funds legally available for payment, cash
         dividends at the rate of $0.14 per share of Series B-2 Preferred Stock
         per quarter ("Base Dividend"). Base Dividends shall be payable
         quarterly in arrears on the 15th day after the end of the applicable
         Dividend Period (on the 15th day of January, April, July and October
         of each year), or if such day is not a Business Day, the next
         succeeding Business Day, to holders of record on the last day of each
         of March, June, September and December, as the case may be,
         immediately preceding the applicable dividend payment date.

                  (b) Special Dividend. In the event the Corporation declares a
         special or extraordinary cash dividend or distribution on the Common
         Stock (a "Common Special Dividend"), holders of the Series B-2
         Preferred Stock shall be entitled to receive a special dividend per
         share of Series B-2 Preferred Stock (a "Special Dividend") in an amount
         equal to the product of (i) any Common Special Dividend and (ii) the
         number of shares of Common Stock into which a share of Series B-2
         Preferred Stock is convertible as of the record date of such Common
         Special Dividend. Any such Special Dividend shall be paid to holders of
         the Series B-2 Preferred Stock as of the record date for the Common
         Special Dividend and shall be paid on the payment date for the Common
         Special Dividend. Any such Special Dividend shall be deemed to be a
         dividend payable to holders of Series B-2 Preferred Stock for the
         Dividend Period in which the record date for the corresponding Common
         Special Dividend falls, and shall be in addition to and shall not
         reduce any Base Dividend, Ratchet Dividend, Default Dividend or
         Additional Dividend, if any, for such Dividend Period.

                  (c) Ratchet Dividend. With respect to each Dividend Period,
         holders of the Series B-2 Preferred Stock shall be entitled to a
         ratchet dividend per share of Series B-2 Preferred Stock (a "Ratchet
         Dividend") in an amount equal to (i) the sum of the products of (x)
         each dividend paid or payable on a share of Common Stock (excluding
         Common Special Dividends), having a record date within the applicable
         Dividend Period, and (y) the number of shares of Common Stock into
         which a share of Series B-2 Preferred Stock is convertible as of the
         record date for such dividend minus (ii) the Base Dividend of $0.14 per
         share of Series B-2 Preferred Stock. Ratchet Dividends shall be payable
         quarterly in arrears on the 15th day after the end of the applicable
         Dividend Period (on the 15th day of January, April, July and October of
         each year), or if such day is not a Business Day, the next succeeding
         Business Day, to holders of record on the last day of each of March,
         June, September and December, as the case may be, immediately preceding
         the applicable dividend payment date. Any such Ratchet Dividend shall
         be in addition to and shall not reduce any Base Dividend, Special
         Dividend, Default Dividend or Additional Dividend for the applicable
         Dividend Period.

                  (d) Default Dividend. For any Dividend Period in which a
         Covenant Violation has occurred or is continuing, holders of Series B-2
         Preferred Stock shall be entitled to a default dividend (a "Default
         Dividend") in an amount equal to $.05015 per share of Series B-2
         Preferred Stock for such Dividend Period. Default Dividends shall be
         payable quarterly in arrears on the 15th day after the end of the
         applicable Dividend Period (on the 15th day of January, April, July and
         October of each year), or if such day

                                       7

<PAGE>

         is not a Business Day, the next succeeding Business Day, to holders of
         record on the last day of each of March, June, September and December,
         as the case may be, immediately preceding the applicable dividend
         payment date. Any such Default Dividend shall be in addition to and
         shall not reduce any Base Dividend, Special Dividend, Ratchet Dividend
         or Additional Dividend for the applicable Dividend Period.

                  (e) Additional Dividend. For any Dividend Period which begins
         following the Trigger Date, holders of Series B-2 Preferred Stock shall
         be entitled to an additional dividend (an "Additional Dividend") in an
         amount equal to $.05015 per share of Series B-2 Preferred Stock for
         such Dividend Period. Additional Dividends shall be payable quarterly
         in arrears on the 15th day after the end of the applicable Dividend
         Period (on the 15th day of January, April, July and October of each
         year), or if such day is not a Business Day, the next succeeding
         Business Day, to holders of record on the last day of each of March,
         June, September and December, as the case may be, immediately preceding
         the applicable dividend payment date. Any such Additional Dividend
         shall be in addition to and shall not reduce any Base Dividend, Special
         Dividend, Ratchet Dividend or Default Dividend for the applicable
         Dividend Period.

                  (f) Nature of Dividends. Base Dividends, Special Dividends,
         Ratchet Dividends, Default Dividends and Additional Dividends shall all
         be considered to be Dividends on the Series B-2 Preferred Stock and
         shall have equal priority to one another and shall be senior in
         priority to dividends on any stock which is Junior Stock with respect
         to the payment of dividends, subject to the terms of this Section 3.

                  (g) Accumulated and Unpaid Dividends. Accumulated but unpaid
         Dividends for any past quarterly Dividend Periods may be declared and
         paid at any time, without reference to any regularly scheduled
         quarterly dividend payment date, to holders of record on such date, not
         exceeding 50 days preceding such dividend payment date, fixed for the
         purpose by the Board of Directors in advance of payment of each
         particular Dividend. Any Dividend payment made on Series B-2 Preferred
         Stock shall first be credited against the earliest accrued but unpaid
         Dividend due with respect to Series B-2 Preferred Stock which remains
         payable.

                  (h) Initial Dividends and Other Matters. The initial Dividend
         Period for any share of Series B-2 Preferred Stock will include a
         partial Base Dividend, Ratchet Dividend, Default Dividend and
         Additional Dividend, if any, for the period from the Issue Date until
         the last day of the calendar quarter which includes such Issue Date.
         Ratchet Dividends will be calculated (but paid in accordance with the
         immediately preceding sentence) for any such initial Dividend Period as
         though the share of Series B-2 Preferred Stock had been outstanding for
         the entire Dividend Period. The amount of Base Dividend, Ratchet
         Dividend, Default Dividend and Additional Dividend, if any, payable for
         such initial period on the Series B-2 Preferred Stock shall be computed
         by dividing the number of days in such period by 90 and multiplying the
         result by the Series B-2 Preferred Stock Base Dividend, Ratchet
         Dividend, Default Dividend and Additional Dividend, if any. Holders of
         Series B-2 Preferred Stock shall not be entitled to any

                                       8

<PAGE>

         Dividends in excess of cumulative Dividends on the Series B-2
         Preferred Stock. No interest shall be payable in respect of any
         Dividend payment or payments on the Series B-2 Preferred Stock which
         may be in arrears.

                  (i) Regarding Parity Stock. So long as any Series B-2
         Preferred Stock remains outstanding, no dividends, except as described
         in the immediately following sentence, shall be declared or paid or set
         apart for payment on any class or series of Parity Stock for any period
         unless full cumulative Dividends have been or contemporaneously are
         declared and paid or declared and a sum sufficient for the payment
         thereof set apart for such payment on the Series B-2 Preferred Stock
         for all Dividend Periods ending on or prior to the date of declaration
         or payment on such class or series of Parity Stock. When Dividends are
         not paid in full or a sum sufficient for such payment is not set apart,
         as aforesaid, all Dividends declared upon Series B-2 Preferred Stock
         and all dividends declared upon any other class or series of Parity
         Stock shall be declared ratably in proportion to the respective amounts
         of Dividends accumulated and unpaid on the Series B-2 Preferred Stock
         and accumulated and unpaid dividends on such Parity Stock.

                  (j) Regarding Junior Stock. So long as any Series B-2
         Preferred Stock remains outstanding, no dividends (other than dividends
         or distributions paid solely in Fully Junior Stock, or options,
         warrants or rights to subscribe for or purchase, Fully Junior Stock)
         shall be declared or paid or set apart for payment or other
         distribution shall be declared or made or set apart for payment upon
         Junior Stock, nor shall any Junior Stock be redeemed, purchased or
         otherwise acquired (other than a redemption, purchase or other
         acquisition of Common Stock made for purposes of an employee incentive
         or benefit plan of the Corporation or any subsidiary) for any
         consideration (or any moneys be paid to or made available for a sinking
         fund for the redemption of any Junior Stock) by the Corporation or any
         subsidiaries or controlled Affiliates, directly or indirectly (except
         by conversion into or exchange for Fully Junior Stock or options,
         warrants or rights to subscribe for or purchase Fully Junior Stock),
         unless in each case the full cumulative dividends on all outstanding
         Series B-2 Preferred Stock and any other Parity Stock of the
         Corporation shall have been or contemporaneously are declared and paid
         or declared and a sum sufficient for the payment thereof set apart for
         payment for all Dividend Periods ending on or prior to the date of
         declaration or payment with respect to the Series B-2 Preferred Stock
         and all dividend periods ending on or prior to the date of declaration
         or payment with respect to such Parity Stock. Subject to the foregoing,
         and not otherwise, such dividends and distributions may be authorized
         by the Board of Directors and declared and paid on Common Stock by the
         Corporation from time to time out of any funds legally available
         therefor, and the Series B-2 Preferred Stock shall not be entitled to
         participate in any such dividends, whether payable in cash, stock or
         otherwise, except as provided in Section 3(b) or (c) hereof.

                  (k) Prohibitions. No distributions on Series B-2 Preferred
         Stock shall be authorized by the Board of Directors or declared and
         paid or set apart for payment by the Corporation at such time as the
         terms and provisions of any agreement of the Corporation, including any
         agreement relating to its indebtedness, prohibits such

                                       9
<PAGE>

         declaration, payment or setting apart for payment or provides that
         such declaration, payment or setting apart for payment would
         constitute a breach thereof or a default thereunder, or if such
         declaration or payment shall be restricted or prohibited by law;
         provided that no such prohibition or restriction described in this
         paragraph (j) shall limit the accrual or accumulation of Dividends as
         described above in this Section 3.

                  (l) Permitted Distributions. In determining, with respect to
         the Series B-2 Preferred Stock, whether a distribution by dividend,
         redemption or other acquisition of stock or otherwise is permitted
         under Maryland law, no effect shall be given to amounts that would be
         needed, if the Corporation were to be dissolved at the time of the
         distribution, to satisfy the preferential rights upon dissolution of
         stockholders whose preferential rights on dissolution are superior to
         those receiving the distribution.

                  (m) Allocations. If, for any taxable year, the Corporation
         elects to designate as "capital gain dividends" (as defined in Section
         857 of the Code) any portion of the dividends (as determined for
         federal income tax purposes) paid or made available for the year to
         holders of all classes of capital stock, then the portion of the
         capital gains amount that shall be allocable to the holders of Series
         B-2 Preferred Stock shall be the amount that the total dividends (as
         determined for federal income tax purposes) paid or made available to
         the holders of the Series B-2 Preferred Stock for the year bears to the
         total dividends (as determined for federal income tax purposes) paid or
         made available for the year to holders of all classes of capital stock.

                  (n) Accrued and Unpaid Dividends on Series B-2 Preferred Stock
         Upon Conversion. Upon conversion of Series B-2 Preferred Stock into
         Series B-1 Preferred Stock, each share of Series B-1 Preferred Stock
         resulting from the conversion of a share of Series B-2 Preferred Stock
         pursuant to the terms of the Series B-2 Preferred Stock shall be deemed
         to have accrued and unpaid Dividends on such share equal to the accrued
         and unpaid dividends, if any, on the applicable share of Series B-2
         Preferred Stock immediately prior to conversion.

         Section 4. Liquidation Preference.

                  (a) In the event of any liquidation, dissolution or winding up
         of the Corporation, whether voluntary or involuntary, subject to the
         prior preferences and other rights of any series of stock ranking
         senior to the Series B-2 Preferred Stock upon liquidation, distribution
         or winding up of the Corporation, before any payment or distribution of
         the assets of the Corporation (whether capital or surplus) shall be
         made to or set apart for the holders of Junior Stock, the holders of
         the Series B-2 Preferred Stock shall be entitled to receive Ten Dollars
         and Seven Cents ($10.07) (the "Liquidation Preference") per share of
         Series B-2 Preferred Stock plus an amount equal to all accumulated,
         accrued and unpaid Dividends (whether or not earned or declared), if
         any, thereon to the date of liquidation, dissolution or winding up of
         the affairs of the Corporation (any such date, a "Series B-2
         Liquidation Date"). The Dividend payable with respect to the Dividend
         Period containing the Series B-2 Liquidation Date shall be

                                       10

<PAGE>

         equal to the sum of (x) any Special Dividend determined pursuant to
         Section 3 above with respect to such Dividend Period plus (y) the
         product of the Dividend determined pursuant to Section 3 above for the
         preceding Dividend Period (but excluding any Special Dividend for such
         preceding Dividend Period) times a fraction equal to the actual number
         of days elapsed from the end date of the calendar quarter most
         recently completed to the relevant Series B-2 Liquidation Date over 90
         days. If, upon any liquidation, dissolution or winding up of the
         Corporation, the assets of the Corporation, or proceeds thereof,
         distributable among the holders of the Series B-2 Preferred Stock
         shall be insufficient to pay in full the preferential amount aforesaid
         and liquidating payments on any other shares of any class or series of
         Parity Stock, then such assets, or the proceeds thereof, shall be
         distributed among the holders of Series B-2 Preferred Stock and any
         such other Parity Stock ratably in accordance with the respective
         amounts that would be payable on such Series B-2 Preferred Stock and
         any such other Parity Stock if all amounts payable thereon were paid
         in full. For the purposes of this Section 4, (i) a consolidation or
         merger of the Corporation with one or more corporations, real estate
         investment trusts or other entities, (ii) a sale, lease or conveyance
         of all or substantially all of the Corporation's property or business
         or (iii) a statutory share exchange shall not be deemed to be a
         liquidation, dissolution or winding up, voluntary or involuntary, of
         the Corporation. Other than as set forth in this Section 4(a), the
         holders of Series B-2 Preferred Stock shall not be entitled to any
         additional payment upon any liquidation, dissolution or winding up of
         the Corporation.

                  (b) Subject to the rights of the holders of shares of any
         series or class or classes of stock ranking on a parity with or prior
         to the Series B-2 Preferred Stock, upon any liquidation, dissolution or
         winding up of the Corporation, after payment shall have been made in
         full to the holders of the Series B-2 Preferred Stock, as provided in
         this Section 4, the holders of Series B-2 Preferred Stock shall have no
         other claim to the remaining assets of the Corporation and any other
         series or class or classes of Junior Stock shall, subject to the
         respective terms and provisions (if any) applying thereto, be entitled
         to receive any and all assets remaining to be paid or distributed, and
         the holders of the Series B-2 Preferred Stock shall not be entitled to
         share therein.

                  (c) Written notice of any such liquidation, dissolution or
         winding up of the Corporation, stating the payment date or dates when,
         and the place or places where, the amounts distributable in such
         circumstances shall be payable, shall be given by first class mail,
         postage pre-paid, or by recognized overnight courier, not less than 30
         or more than 60 days prior to the payment date stated therein, to each
         record holder of the Series B-2 Preferred Stock at the respective
         addresses of such holders as the same shall appear on the stock
         transfer records of the Corporation.

                  (d) The liquidation preference of the outstanding Series B-2
         Preferred Stock will not be added to the liabilities of the Corporation
         for the purpose of determining whether under Maryland law a
         distribution may be made to stockholders of the Corporation whose
         preferential rights upon dissolution of the Corporation are junior to
         those of holders of the Series B-2 Preferred Stock.

                                       11
<PAGE>

         Section 5. Redemption at the Option of the Corporation.

                  (a) The Series B-2 Preferred Stock shall not be redeemable by
         the Corporation prior to the second anniversary of the final closing of
         the acquisition of Series B-2 Preferred Stock under the Purchase
         Agreement (the "Final Closing"), except as set forth below. The
         Corporation, at its option, upon giving notice as provided below, may
         redeem the Series B-2 Preferred Stock, in whole at any time or from
         time to time in part (except as provided below), (i) at any time
         between the second anniversary and third anniversary of the Final
         Closing, if the Volume Weighted Average Price of the Common Stock is
         equal to or greater than the product of 117.5% times the then
         applicable conversion price of the Series B-1 Preferred Stock, out of
         funds legally available therefor at a redemption price payable in cash
         equal to the greater, in each case as of the Trading Day immediately
         prior to the mailing of notice of redemption under this Section 5, of
         (x) the Volume Weighted Average Price of the Common Stock and (y) the
         Current Market Price of the Common Stock, (ii) on and after the third
         anniversary of the Final Closing, out of funds legally available
         therefor at a redemption price payable in cash equal to the greater, in
         each case as of the Trading Day immediately prior to the mailing of
         notice of redemption under this Section 5, of (x) the Liquidation
         Preference and (y) the Volume Weighted Average Price of the Common
         Stock and (z) the Current Market Price of the Common Stock or (iii) in
         the event of a determination by nationally recognized tax counsel that
         redemption is necessary to preserve the status of the Corporation as a
         REIT for federal income tax purposes prior to the third anniversary of
         the Final Closing, upon written notice and the delivery of such opinion
         to each holder of Series B-2 Preferred Stock, as though such redemption
         were occurring on or after the third anniversary of the Final Closing
         (plus, in the case of each of (i), (ii) and (iii) above, all
         accumulated, accrued and unpaid Dividends, whether or not earned or
         declared, as provided in paragraph (b) below).

                  (b) Upon any redemption of Series B-2 Preferred Stock pursuant
         to this Section 5, the Corporation shall pay in cash all accumulated,
         accrued and unpaid Dividends, whether or not earned or declared, if
         any, with respect to the Initial Dividend Period and all full Dividend
         Periods ended prior to the Redemption Date, without interest. In
         addition, without limiting the amount of Dividends to which a holder of
         Series B-2 Preferred Stock is entitled pursuant to the immediately
         preceding sentence, on the fifteenth day of the first calendar quarter
         which begins following the Redemption Date (or if such day is not a
         Business Day, the next succeeding Business Day), the Corporation shall
         pay in cash to such holders upon redemption a pro rata Dividend,
         whether or not earned or declared, on each such share of Series B-2
         Preferred Stock so redeemed for the Dividend Period in which the
         redemption occurred (the "Redemption Dividend Period"), which Dividend
         shall be equal to the product of (x) the value per share of Series B-2
         Preferred Stock of all Dividends (except Special Dividends determined
         pursuant to Section 3(b)) as to which record dates occurred (or would
         have occurred if the Series B-2 Preferred Stock had been outstanding
         for the entire Redemption Dividend Period) during the Redemption
         Dividend Period multiplied by (y)

                                       12
<PAGE>

         the ratio of (a) the number of days from the last day of the preceding
         Dividend Period to, and including, the date of redemption of such
         Series B-2 Preferred Stock to (b) the actual number of days in the
         Redemption Dividend Period.

                  Notwithstanding the foregoing, if any Special Dividend is
         payable on a dividend payment date on or after the Redemption Date, but
         as to which the dividend record date preceded the Redemption Date, then
         the holders upon redemption shall remain entitled to receive such
         Special Dividend on the applicable dividend payment date,
         notwithstanding the prior redemption.

                  (c) Notwithstanding anything to the contrary contained herein,
         unless full cumulative Dividends on all Series B-2 Preferred Stock
         shall have been or contemporaneously are authorized, declared and paid
         or authorized, declared and a sum sufficient for the payment thereof
         set apart for payment for all past Dividend Periods and the then
         current Dividend Period, no Series B-2 Preferred Stock shall be
         redeemed unless all outstanding Series B-2 Preferred Stock are
         simultaneously redeemed. In addition, unless full cumulative Dividends
         on all outstanding Series B-2 Preferred Stock have been or
         contemporaneously are authorized, declared and paid or authorized,
         declared and a sum sufficient for the payment thereof set apart for
         payment for all past Dividend Periods and the then current Dividend
         Period, the Corporation shall not, and shall cause its subsidiaries and
         controlled Affiliates not to, purchase or otherwise acquire directly or
         indirectly for any consideration, nor shall any monies be paid to or
         made available for a sinking fund for the redemption of, any Series B-2
         Preferred Stock or any other class or series of Junior Stock or Parity
         Stock (except by conversion into or exchange for shares of any class or
         series of Junior Stock). Notwithstanding the foregoing, this paragraph
         (c) shall not prevent the purchase or acquisition of Series B-2
         Preferred Stock pursuant to a purchase or exchange offer made on the
         same terms to holders of all outstanding Series B-2 Preferred Stock or
         as otherwise approved by a majority of the Series B-2 Preferred Stock
         outstanding.

                  (d) Notice of the redemption of any Series B-2 Preferred Stock
         under this Section 5 shall be mailed by first-class mail or recognized
         overnight courier to each holder of record of Series B-2 Preferred
         Stock to be redeemed at the address of each such holder as shown on the
         Corporation's records, not less than 30 nor more than 90 days prior to
         the Redemption Date (as defined below). Neither the failure to mail any
         notice required by this paragraph (d), nor any defect therein or in the
         mailing thereof, to any particular holder, shall affect the sufficiency
         of the notice or the validity of the proceedings for redemption with
         respect to the other holders. Each such mailed notice shall state, as
         appropriate: (1) the date set for redemption (the "Redemption Date");
         (2) the number of Series B-2 Preferred Stock to be redeemed and, if
         fewer than all the shares held by such holder are to be redeemed, the
         number of such shares to be redeemed from such holder; (3) the
         redemption price; (4) the place or places at which certificates
         representing such shares are to be surrendered; (5) the then-current
         Conversion Price; and (6) that dividends on the shares to be redeemed
         shall cease to accrue on such Redemption Date except as otherwise
         provided herein. Notice having been mailed as aforesaid, from

                                       13

<PAGE>

         and after the Redemption Date (unless the Corporation shall fail to
         make available an amount of cash necessary to effect such redemption),
         (i) except as otherwise provided herein, dividends on the Series B-2
         Preferred Stock so called for redemption shall cease to accrue, (ii)
         such shares shall no longer be deemed to be outstanding, and (iii)
         except as set forth in paragraph (b) above, all rights of the holders
         thereof as holders of Series B-2 Preferred Stock shall cease (except
         the rights to receive the cash payable upon such redemption, without
         interest thereon, upon surrender and endorsement of their certificates
         if so required and to receive any dividends accumulated, accrued and
         unpaid thereon). The Corporation's obligation to provide cash in
         accordance with the preceding sentence shall be deemed fulfilled if, on
         or before the Redemption Date, the Corporation shall deposit with a
         bank or trust company that has an office in the Borough of Manhattan,
         City of New York, and that has capital and surplus of at least
         $150,000,000, cash necessary for such redemption, in trust, with
         irrevocable instructions that such cash be applied to the redemption of
         the Series B-2 Preferred Stock so called for redemption. No interest
         shall accrue for the benefit of the holders of Series B-2 Preferred
         Stock to be redeemed on any cash so set aside by the Corporation.
         Subject to applicable escheat laws, any such cash unclaimed at the end
         of two years from the Redemption Date shall revert to the general funds
         of the Corporation, after which reversion the holders of such shares so
         called for redemption shall look only to the general funds of the
         Corporation for the payment of such cash.

                  As promptly as practicable after the surrender in accordance
         with such notice of the certificates representing any such shares so
         redeemed (properly endorsed or assigned for transfer, if the
         Corporation shall so require and if the notice shall so state) (the
         "Surrender Date"), but in no event later than the Business Day
         immediately following the latest of the Surrender Date or the
         Redemption Date, such shares shall be exchanged for any cash (without
         interest thereon) for which such shares have been redeemed. If fewer
         than all the outstanding shares of Series B-2 Preferred Stock is to be
         redeemed, shares to be redeemed shall be selected by the Corporation
         from outstanding Series B-2 Preferred Stock not previously called for
         redemption pro rata (as nearly as may be), by lot or by any other
         method determined by the Corporation in its reasonable discretion to be
         equitable. If fewer than all the shares of Series B-2 Preferred Stock
         represented by any certificate is redeemed, then new certificates
         representing the unredeemed shares shall be issued without cost to the
         holder thereof.

                  Section 6. Conversion. The Series B-2 Preferred Stock shall
         convert automatically without any action on the part of the holders of
         such Series B-2 Preferred Stock or the Corporation into validly issued,
         fully paid and non-assessable shares of Series B-1 Preferred Stock on a
         share-for-share basis immediately upon the earliest to occur of (A) the
         Corporation obtaining the approval of its stockholders as required by
         the applicable rules of the Principal Market, if any, on which the
         Corporation's Common Stock is then traded for issuance of the
         authorized Series B-1 Preferred Stock and all of the Common Stock
         deliverable upon conversion of the Series B-1 Preferred Stock in excess
         of the Principal Market Limit or (B) the Board of Directors determining
         that such approval is not required with respect to all or any portion
         of the authorized Series B-1

                                       14

<PAGE>

         Preferred Stock. From and after such date, each certificate
         representing shares of Series B-2 Preferred Stock so converted shall be
         deemed for all purposes to evidence ownership of and to represent the
         number of shares of Series B-1 Preferred Stock into which such shares
         of Series B-2 Preferred Stock shall have been converted. Promptly after
         such date, the Corporation shall issue a stock certificate or
         certificates representing shares of Series B-1 Preferred Stock, in
         exchange for the certificate or certificates which formerly represented
         shares of Series B-2 Preferred Stock, which shall be cancelled, and
         shall issue new Series B-2 Preferred Stock certificates with respect to
         any Series B-2 Preferred Stock certificates converted in part, and no
         payment shall be made or other consideration paid with respect to the
         operation of this Section 6. Upon conversion of Series B-2 Preferred
         Stock into Series B-1 Preferred Stock, each share of Series B-1
         Preferred Stock resulting from the conversion of a share of Series B-2
         Preferred Stock pursuant to the terms of the Series B-2 Preferred Stock
         shall be deemed to have accrued and unpaid Dividends on such share
         equal to the accrued and unpaid dividends, if any, on the applicable
         share of Series B-2 Preferred Stock immediately prior to conversion.

         Section 7. Redemption at the Option of the Holder-- Change of Control.

                  (a) If a Change of Control (as defined below) occurs (a
         "Change of Control Repurchase Event"), the holders of Series B-2
         Preferred Stock shall have the right to require the Corporation, to the
         extent the Corporation shall have funds legally available therefor, to
         redeem any or all of the Series B-2 Preferred Stock held by such holder
         at a repurchase price payable in cash (the "Change of Control
         Repurchase Payment") in an amount equal to 100% of the Liquidation
         Preference thereof, plus accumulated, accrued and unpaid Dividends
         whether or not earned or declared, if any, with respect to the Initial
         Dividend Period and all full Dividend Periods ended prior to the date
         of repurchase or the date payment is made available (the "Change of
         Control Date") pursuant to the offer described in subsection (b) below
         (the "Change of Control-Repurchase Offer"). In addition, without
         limiting the amount of Dividends to which a holder of Series B-2
         Preferred Stock is entitled pursuant to the immediately preceding
         sentence, on the fifteenth day of the first calendar quarter which
         begins following the Change of Control Date (or if such day is not a
         Business Day, the next succeeding Business Day), the Corporation shall
         pay in cash to such holders upon redemption a pro rata Dividend (which
         shall be deemed to be a part of the Change of Control Repurchase
         Payment), whether or not earned or declared, on each such share of
         Series B-2 Preferred Stock so redeemed for the Dividend Period in which
         the redemption occurred (the "Change of Control Repurchase Dividend
         Period"), which Dividend shall be equal to the product of (x) the value
         per share of Series B-2 Preferred Stock of all Dividends (except
         Special Dividends determined pursuant to Section 3(b)) as to which
         record dates occurred (or would have occurred if the Series B-2
         Preferred Stock had been outstanding for the entire Change of Control
         Repurchase Dividend Period) during the Change of Control Repurchase
         Dividend Period multiplied by (y) the ratio of (a) the number of days
         from the last day of the preceding Dividend Period to, and including,
         the date of redemption of such Series B-2 Preferred Stock to (b) the
         actual number of days in the Change of Control Repurchase Dividend
         Period. If funds are not legally available to make the full Change

                                       15
<PAGE>

         of Control Repurchase Payment as described in this paragraph, then the
         Corporation shall make the Change of Control Repurchase Payment to the
         extent such funds are legally available and shall make remaining Change
         of Control Repurchase Payments immediately upon such funds becoming
         legally available therefor.

                  Notwithstanding the foregoing, if any Special Dividend is
         payable on a dividend payment date on or after the Change of Control
         Date but as to which the dividend record date preceded the Change of
         Control Date, then the holders upon redemption shall remain entitled to
         receive such Special Dividend on the applicable dividend payment date,
         notwithstanding the prior redemption.

                  (b) Within 5 days following the Corporation becoming aware
         that a Change of Control Repurchase Event has occurred, the Corporation
         shall mail by recognized overnight courier a notice to the each holder
         of Series B-2 Preferred Stock stating (A) that a Change of Control
         Repurchase Event has occurred and that such holder has the right to
         require the Corporation to repurchase any or all of the Series B-2
         Preferred Stock then held by such holder for cash, (B) the date of
         repurchase (which shall be a Business Day, no earlier than 30 days and
         no later than 60 days from the date such notice is mailed, or such
         later date as may be necessary to comply with the requirements of
         applicable law; provided, however, that if the transaction giving rise
         to the Change of Control consists of an exchange of the Common Stock
         for cash or other securities, the date of repurchase shall be no later
         than the consummation of such exchange), (C) the repurchase price and
         (D) the instructions determined by the Corporation, consistent with
         this subsection, that such holder must follow in order to have its
         Series B-2 Preferred Stock repurchased.

                  (c) On the Change of Control Repurchase Date, the Corporation,
         to the extent lawful, shall accept for payment Series B-2 Preferred
         Stock or portions thereof tendered by each holder of Series B Preferred
         Stock pursuant to the Change of Control Repurchase Offer and promptly
         by wire transfer of immediately available funds to such holder, as
         directed by such holder, send an amount equal to the Change of Control
         Repurchase Payment in respect of all Series B-2 Preferred Stock or
         portions thereof so tendered.

                  (d) Notwithstanding anything else herein, to the extent they
         are applicable to any Change of Control Repurchase Offer, the
         Corporation will comply with any federal and state securities laws,
         rules and regulations and all time periods and requirements shall be
         adjusted accordingly.

                  (e) "Change of Control" means each occurrence of any of the
         following: (i) the acquisition, directly or indirectly, by any
         individual or entity or group (as such term is used in Section 13(d)(3)
         of the Exchange Act) (other than the Investor or any of its controlled
         Affiliates or Archie Bennett, Jr. or Montgomery J. Bennett, or any of
         their respective controlled Affiliates) of beneficial ownership (as
         defined in Rule 13d-3 under the Exchange Act, except that such
         individual or entity shall be deemed to have beneficial ownership of
         all shares that any such individual or entity has the right to

                                       16

<PAGE>

         acquire, whether such right is exercisable immediately or only after
         passage of time) of more than 35% of the Corporation's outstanding
         capital stock with voting power, under ordinary circumstances, to elect
         directors of the Corporation; (ii) other than with respect to the
         election, resignation or replacement of any director designated,
         appointed or elected by the holders of the Series A Preferred Stock,
         the Series B-2 Preferred Stock or any other Parity Stock, in each case
         pursuant to the terms of such securities (each a "Preferred Director"),
         during any period of two consecutive years, individuals who at the
         beginning of such period constituted the Board of Directors of the
         Corporation (together with any new directors whose election by such
         Board of Directors or whose nomination for election by the stockholders
         of the Corporation was approved by a vote of 75% of the directors of
         the Corporation (excluding Preferred Directors) (the "Incumbent Board")
         then still in office who were either directors at the beginning of such
         period, or whose election or nomination for election was previously so
         approved) cease for any reason to constitute a majority of the Board of
         Directors the Corporation then in office; (iii) the Corporation (which
         shall include for this purpose any one or more of its directly or
         indirectly wholly-owned subsidiaries) ceases to be the sole general
         partner of the Operating Partnership; or (iv) (A) the Corporation
         consolidating with or merging into another entity or conveying,
         transferring or leasing all or substantially all of its assets
         (including, but not limited to, real property investments) to any
         individual or entity in a single transaction or series of related
         transactions, or (B) any corporation consolidating with or merging into
         the Corporation; provided, however, that the events described in clause
         (iv) shall not be deemed to be a Change of Control (a) if the sole
         purpose of such event is that the Corporation is seeking to change its
         domicile or to change its form of organization from a corporation to a
         statutory business trust or (b) if (x) the holders of the exchanged
         securities of the Corporation immediately after such transaction
         beneficially own at least a majority of the securities of the merged or
         consolidated entity normally entitled to vote in elections of
         directors, (y) the chairman and the president of the Corporation
         immediately prior to the execution of the transaction agreement are the
         chairman and the president of the merged or consolidated company, and
         (z) the individuals who were members of the Incumbent Board immediately
         prior to the execution of the transaction agreement constitute at least
         a majority of the members of the board of directors of the merged or
         consolidated company.

         Section 8. Redemption at the Option of the Holder-- REIT Termination or
         Delisting.

                  (a) If at any time (i) there shall occur a REIT Termination
         Event (a "REIT-Repurchase Event") or (ii) the Corporation shall cease
         to be listed for trading on a Principal Market (a "Principal Market
         Repurchase Event" and together with a REIT Repurchase Event, a
         "Repurchase Event"), the holders of Series B-2 Preferred Stock shall
         have the right to require the Corporation, to the extent the
         Corporation shall have funds legally available therefor, to repurchase
         any or all of the Series B-2 Preferred Stock held by such holder at a
         repurchase price payable in cash in an amount equal to (i) 110% of the
         Liquidation Preference thereof if such repurchase occurs prior to the
         third anniversary of the Final Closing or (ii) 100% of the Liquidation
         Preference thereof if such repurchase occurs thereafter, plus, in each
         case, accumulated, accrued and unpaid Dividends whether

                                       17

<PAGE>

         or not earned or declared, if any (the "Repurchase Payment"), to the
         date of repurchase or the date payment is made available (the
         "Repurchase Date"), pursuant to the offer described in subsection (b)
         below (the "Repurchase Offer"). If funds are not legally available to
         make the full Repurchase Payment as described in this paragraph, then
         the Corporation shall make the Repurchase Payment to the extent such
         funds are legally available and shall make remaining Repurchase
         Payments immediately upon such funds becoming legally available
         therefor.

                  (b) Within 5 days following the Corporation becoming aware
         that a Repurchase Event has occurred, the Corporation shall mail by
         recognized overnight courier a notice to each holder of Series B-2
         Preferred Stock stating (i) that a Repurchase Event has occurred and
         that such holder has the right to require the Corporation to repurchase
         any or all Series B-2 Preferred Stock then held by such holder for
         cash, (ii) the date of repurchase (which shall be a Business Day, no
         earlier than 30 days and no later than 60 days from the date such
         notice is mailed, or such later date as may be necessary to comply with
         applicable law), (iii) the repurchase price and (iv) the instructions
         determined by the Corporation, consistent with this subsection, that
         such holder must follow in order to have its Series B-2 Preferred Stock
         repurchased.

                  (c) On the Repurchase Date, the Corporation, to the extent
         lawful, shall accept for payment Series B-2 Preferred Stock or portions
         thereof tendered by each holder of Series B-2 Preferred Stock pursuant
         to the Repurchase Offer and promptly by recognized overnight courier or
         by wire transfer of immediately available funds to such holder, as
         directed by such holder, send an amount equal to the Repurchase Payment
         in respect of all Series B-2 Preferred Stock or portions thereof so
         tendered.

                  (d) Notwithstanding anything else herein, to the extent they
         are applicable to any Repurchase Offer, the Corporation will comply
         with any federal and state securities laws, rules and regulations and
         all time periods and requirements shall be adjusted accordingly.

         Section 9. Shares To Be Reacquired. All Series B-2 Preferred Stock
which shall have been issued and reacquired in any manner by the Corporation
shall be restored to the status of authorized but unissued preferred stock,
without discretion as to class or series, and subject to applicable limitations
set forth in the Charter may thereafter be reissued as shares of any series of
preferred stock.

         Section 10. Ranking. The Series B-2 Preferred Stock will rank:

                  (a) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, prior or senior to
any class or series of Common Stock of the Corporation and any other class or
series of equity securities, if such class or series constitutes Fully Junior
Stock;

                                       18

<PAGE>

                  (b) with respect to dividend rights or rights upon
liquidation, dissolution or winding up of the Corporation, prior or senior to
any class or series of Common Stock of the Corporation and any other class or
series of equity securities, if such class or series constitutes Junior Stock;

                  (c) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, on a parity with any
class or series of the equity securities of the Corporation if, pursuant to the
specific terms of such class or series of equity securities, the holders of such
class or series of equity securities and the holders of the Series B-2 Preferred
Stock are entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective amounts
of accrued and unpaid dividends per share or liquidation preferences, without
preference or priority one over the other ("Parity Stock"), which Parity Stock
shall expressly include the Corporation's Series B-1 Preferred Stock and its
8.55% Series A Cumulative Preferred Stock (the "Series A Preferred Stock");

                  (d) with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Corporation, junior to any class
or series of equity securities of the Corporation if, pursuant to the specific
terms of such class or series, the holders of such class or series are entitled
to the receipt of dividends or amounts distributable upon liquidation,
dissolution or winding up in preference or priority to the holders of the Series
B-2 Preferred Stock; and

                  (e) junior to all of the existing and future indebtedness of
the Corporation.

         The term "equity securities" does not include convertible debt
securities, which will rank senior to the Series B-2 Preferred Stock.

         Section 11. Voting. (a) Except as expressly provided herein, the
holders of Series B-2 Preferred Stock shall have no voting rights.

         (b) So long as any share of Series B-2 Preferred Stock is outstanding,
in addition to any other vote or consent of stockholders required by law or by
the Articles, the affirmative vote of the holders of 66-2/3% of the outstanding
shares of Series B-2 Preferred Stock, voting together as a class, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:

                           (i) Any amendment, alteration or repeal of any of the
                  provisions of the Charter or these Articles Supplementary that
                  materially and adversely affects the voting powers, rights,
                  preferences or other terms of the holders of the Series B-2
                  Preferred Stock;

                           (ii) Any issuance by the Corporation of (a) any
                  capital stock or other equity security to which the Series B-2
                  Preferred Stock would be junior as to the payment of dividends
                  or as to the distribution of assets upon liquidation,
                  dissolution or winding up or (b) any capital stock or other
                  equity security which is

                                       19

<PAGE>

                  redeemable at the option of the holder thereof, except with
                  respect to this clause (b), any such capital stock or other
                  equity security having redemption rights which are no more
                  favorable in any material respect to the holder of such
                  security than the redemption rights contained in these
                  Articles Supplementary;

                           (iii) Any merger or consolidation of the Corporation
                  and another entity in which the Corporation is not the
                  surviving corporation and each holder of Series B-2 Preferred
                  Stock does not receive shares of the surviving corporation
                  with substantially similar rights, preferences, powers and
                  other terms in the surviving corporation as the Series B-2
                  Preferred Stock have with respect to the Corporation (except
                  for changes that do not materially and adversely affect the
                  holders of the Series B-2 Preferred Stock);

                           (iv) (x) Any merger or consolidation of the
                  Corporation and another entity if a vote of the holders of the
                  Common Stock is required or being obtained with respect to
                  such merger or consolidation and the Series B-2 Preferred
                  Stock would not be permitted to convert, prior to or
                  concurrent with the closing of such merger or consolidation,
                  into shares of Series B-1 Preferred Stock and therefore be
                  treated identically to the Series B-1 Preferred Stock in such
                  merger or consolidation or (y) any merger or consolidation of
                  the Corporation and another entity in which the Corporation is
                  not the surviving corporation and the Series B-2 Preferred
                  Stock would not be treated identically to the Series B-1
                  Preferred Stock in such merger or consolidation;

                           (v) Any liquidation, dissolution or winding up of the
                  Corporation if the Series B-2 Preferred Stock would not be
                  permitted to convert, prior to or concurrent with the closing
                  of such liquidation, dissolution or winding up, into shares of
                  Series B-1 Preferred Stock and therefore be treated
                  identically to the Series B-1 Preferred Stock in such
                  liquidation, dissolution or winding up.

provided, however, that no such vote of the holders of Series B-2 Preferred
Stock shall be required if, at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such prior
shares or convertible security is to be made, as the case may be, provision is
made for the redemption of all Series B-2 Preferred Stock at the time
outstanding to the extent such redemption is otherwise permitted pursuant to
Section 5 of these Articles Supplementary.

         For purposes of the foregoing provisions of this Section 11(d), each
share of Series B-2 Preferred Stock shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein, the Series B-2
Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers other than as set forth herein, and the consent
of the holders thereof shall not be required for the taking of any corporate
action.

         Section 12. Record Holders. The Corporation and the Transfer Agent may
deem and treat the record holder of any Series B-2 Preferred Stock as the true
and lawful owner thereof for

                                       20

<PAGE>

all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.

         Section 13. Applicability of Charter Article VI. The Series B-2
Preferred Stock shall be subject to the provisions of Article VI of the Charter
pursuant to which Series B-2 Preferred Stock owned by a stockholder in excess of
the Ownership Limit shall automatically be transferred to a Trust for the
exclusive benefit of a Charitable Beneficiary, as provided in Article VI of the
Charter.

         Section 14. Title. This resolution shall be known and may be referred
to as "A Resolution of the Board of Directors of Ashford Hospitality Trust, Inc.
Designating Series B-2 Preferred Stock and Fixing Preferences and Rights
Thereof".

                  SECOND: The Series B-2 Preferred Stock has been classified and
designated by the Board under the authority contained in the Charter.

                  THIRD: These Articles Supplementary have been approved by the
Board in the manner and by the vote required by law.

                  FOURTH: These Articles Supplementary shall be effective at the
time the State Department of Assessments and Taxation of Maryland accepts these
Articles Supplementary for record.

                  FIFTH: The undersigned Chief Operating Officer of the
Corporation acknowledges these Articles Supplementary to be the act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned Chief Operating Officer acknowledges that to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.

                                       21

<PAGE>

                  IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed in its name and on its behalf by its Chief
Operating Officer and attested to by its Secretary of this 28th day of December,
2004.

                                ASHFORD HOSPITALITY TRUST, INC.

                                         By:          /s/ Douglas Kessler
                                                 -------------------------------
                                         Name:        Douglas Kessler

                                         Its:         Chief Operating Officer

                                         ATTEST:

                                         By:          /s/ David A. Brooks
                                                 -------------------------------
                                         Name:        David A. Brooks

                                         Its:         Secretary

                                       22

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