ANNALY MORTGAGE MANAGEMENT, INC.

                             ARTICLES SUPPLEMENTARY

                       6% SERIES B CUMULATIVE CONVERTIBLE

                                 PREFERRED STOCK

     Annaly Mortgage Management, Inc., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

         FIRST: Under a power contained in Article VI of the Articles of
Amendment and Restatement of the Corporation, as amended (the "Charter"), the
Board of Directors by duly adopted resolutions classified and designated
4,600,000 shares of authorized but unissued Common Stock (as defined in the
Charter) as shares of 6% Series B Cumulative Convertible Preferred Stock, with
the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications, and terms and conditions of redemption, which, upon any
restatement of the Charter, shall become part of Article VI of the Charter, with
any necessary or appropriate renumbering or relettering of the sections or
subsections hereof:

                            SERIES B PREFERRED STOCK

     (1) DESIGNATION AND NUMBER. A series of preferred stock, designated the "6%
Series B Cumulative Convertible Preferred Stock" (the "Series B Preferred
Stock"), is hereby established. The number of shares of the Series B Preferred
Stock shall be 4,600,000.

     (2) DEFINITIONS.

     (a) "Closing Sale Price" means with regard to shares of the Common Stock,
on any date, the closing sale price per share (or if no closing sale price is
reported, the average of the closing bid and ask prices or, if more than one in
either case, the average of the average closing bid and the average closing ask
prices) on such date as reported on the principal United States national or
regional securities exchange on which shares of the Common Stock are traded or,
if shares of the Common Stock are not listed on a United States national or
regional securities exchange, as reported by Nasdaq or by the National Quotation
Bureau Incorporated, or in the absence of such a quotation, the Corporation
shall determine the closing sale price, in good faith, on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.

     (b) "Current Market Price" on any date means the average of the daily
Closing Sale Prices per share of Common Stock for the ten consecutive Trading
Days immediately prior to such date (subject to any adjustment as required
pursuant to Section 9(g)).

     (c) "Fair Market Value" means the amount which a willing buyer would pay a
willing seller in an arm's length transaction (as determined by the Board of
Directors, whose determination shall be made in good faith and, absent manifest
error, shall be final and binding on holders of the Series B Preferred Stock).



     (d) "Original Issue Date" means April 12, 2006.

     (e) "Parity Preferred Stock" means all classes and series of preferred
stock that the Corporation may issue ranking on parity with the Series B
Preferred Stock, including the Series A Preferred Stock, with respect to the
payments of distributions and rights to payment upon liquidation, dissolution or
winding up.

     (f) "Person" means any individual, corporation, general partnership,
limited partnership, limited liability partnership, joint venture, association,
joint-stock Corporation, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.

     (g) "Record Date" means, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock have the right
to receive any cash, securities or other property or in which the Common Stock
(or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).

     (h) "Series A Preferred Stock" means the 7.875% Series A Cumulative
Redeemable Preferred Stock of the Corporation.

     (i) "Trading Day" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Common Stock is not listed on
the New York Stock Exchange, on the principal other United States national or
regional securities exchange on which the Common Stock is then listed or, if the
Common Stock is not listed on a United States national or regional securities
exchange, on Nasdaq or, if the Common Stock is not quoted on Nasdaq, on the
principal other market on which the Common Stock is then traded.

     (3) RANK. The Series B Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the
Corporation, rank (a) senior to all classes or series of Common Stock of the
Corporation, and to all equity securities the terms of which specifically
provide that such equity securities rank junior to such Series B Preferred
Stock; (b) on parity with the Parity Preferred Stock; and (c) junior to all
equity securities issued by the Corporation the terms of which specifically
provide that such equity securities rank senior to the Series B Preferred Stock.
The term "equity securities" shall not include convertible debt securities.

     (4) DIVIDENDS.

     (a) Holders of the then outstanding shares of Series B Preferred Stock
shall be entitled to receive, when and as authorized by the Board of Directors,
out of funds legally available for the payment of dividends, cumulative
preferential cash dividends at the rate of 6% of the $25.00 liquidation
preference per annum (equivalent to a fixed annual amount of $1.50 per share).
Such dividends shall be cumulative from the first date on which any Series B
Preferred Stock is issued and shall be payable quarterly in arrears on or before
March 31, June 30, September 30, and December 31 of each year or, if not a
business day, the next succeeding business day (each, a "Dividend Payment
Date"). Any dividend payable on the Series B Preferred Stock for any partial



                                       2



dividend period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months (it being understood that the dividend payable on June 30,
2006 shall be for less than the full quarterly dividend period). Dividends shall
be payable to holders of record as they appear in the stock records of the
Corporation at the close of business on the applicable record date, which shall
be the first day of the calendar month on which the applicable Dividend Payment
Date falls or on such other date designated by the Board of Directors of the
Corporation for the payment of dividends that is not more than 30 nor less than
10 days prior to such Dividend Payment Date (each, a "Dividend Record Date").

     (b) No dividends on shares of Series B Preferred Stock shall be declared by
the Corporation or 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, prohibit such declaration, payment or
setting apart for payment or provide 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.

     (c) Notwithstanding the foregoing, dividends on the Series B Preferred
Stock shall accrue whether or not the terms and provisions set forth in Section
4(b) hereof at any time prohibit the current payment of dividends, whether or
not the Corporation has earnings, whether or not there are funds legally
available for the payment of such dividends and whether or not such dividends
are declared. Accrued but unpaid dividends on the Series B Preferred Stock shall
accumulate as of the Dividend Payment Date on which they first become payable.

     (d) Except as provided in Section 4(e) below, unless full cumulative
dividends on the Series B Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then current
dividend period, no dividends (other than in shares of Common Stock or in shares
of any series of preferred stock ranking junior to the Series B Preferred Stock
as to dividends and upon liquidation) shall be declared or paid or set aside for
payment nor shall any other distribution be declared or made upon the Common
Stock, or any preferred stock of the Corporation ranking junior to or on a
parity with the Series B Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any shares of preferred stock of the
Corporation ranking junior to or on a parity with the Series B Preferred Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any such shares) by the Corporation (except by
conversion into or exchange for other capital stock of the Corporation ranking
junior to the Series B Preferred Stock as to dividends and upon liquidation and
except for transfers made pursuant to the provisions of Article XI of the
Charter).

     (e) When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) on the Series B Preferred Stock and the shares of
any other series of Parity Preferred Stock, all dividends declared upon the
Series B Preferred Stock and the shares of any other series of Parity Preferred
Stock shall be declared pro rata so that the amount of dividends declared per
share of Series B Preferred Stock and the shares of any other series of Parity
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series B Preferred Stock and the shares of
any other series of Parity Preferred Stock (which shall not include any accrual
in respect of unpaid dividends for prior dividend periods if such preferred


                                       3


stock does not have a cumulative dividend) bear to each other. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on Series B Preferred Stock which may be in arrears.

     (f) Any dividend payment made on shares of the Series B Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to such shares which remains payable. Holders of Series B Preferred
Stock shall not be entitled to any dividend, whether payable in cash, property
or stock in excess of full cumulative dividends on the Series B Preferred Stock
as described above.

     (5) LIQUIDATION PREFERENCE.

     (a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding are entitled to be paid out of the assets of
the Corporation, legally available for distribution to its stockholders, a
liquidation preference of $25.00 per share, plus an amount equal to any accrued
and unpaid dividends (whether or not declared) to the date of payment, before
any distribution of assets is made to holders of Common Stock or any series of
preferred stock of the Corporation that ranks junior to the Series B Preferred
Stock as to liquidation rights.

     (b) In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Corporation are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Series B Preferred Stock and the corresponding amounts
payable on all shares of other classes or series of Parity Preferred Stock in
the distribution of assets, then the holders of shares of Series B Preferred
Stock and stockholders of such classes or series of Parity Preferred Stock shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.

     (c) After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Series B Preferred Stock shall have no
right or claim to any of the remaining assets of the Corporation.

     (d) 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, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series B Preferred Stock at the respective addresses of such holders as the same
shall appear on the stock transfer records of the Corporation.

     (e) The consolidation or merger of the Corporation with or into any other
corporation, trust or entity or of any other corporation with or into the
Corporation, or the sale, lease or conveyance of all or substantially all of the
assets or business of the Corporation, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Corporation.

                                       4


     (6) REDEMPTION.

     The Series B Preferred Stock is not redeemable. However, in order to ensure
that the Corporation remains a qualified real estate investment trust for
federal income tax purposes, the Series B Preferred Stock shall be subject to
the provisions of Article XI of the Charter. Pursuant to Article XI, and without
limitation of any provisions of such Article XI, Series B Preferred Stock,
together with other equity stock of the Corporation, owned by a stockholder in
excess of the Ownership Limit (as defined in the Charter) shall automatically be
transferred to a Trust (as defined in the Charter) for the benefit of a
Beneficiary (as defined in the Charter).

     (7) VOTING RIGHTS.

     (a) Holders of the Series B Preferred Stock shall not have any voting
rights, except as set forth below.

     (b) Whenever dividends on any shares of Series B Preferred Stock shall be
in arrears for six or more quarterly periods (whether or not consecutive) (a
"Preferred Dividend Default"), the holders of such shares of Series B Preferred
Stock (voting separately as a class with all other series of Parity Preferred
Stock, upon which like voting rights have been conferred and are exercisable),
shall be entitled to vote for the election of a total of two additional
directors of the Corporation (the "Preferred Stock Directors"), and the number
of directors on the Board of Directors shall increase by two, at a special
meeting called by the holders of record of at least 20% of the Series B
Preferred Stock or the holders of any other series of Parity Preferred Stock so
in arrears (unless such request is received less than 90 days before the date
fixed for the next annual or special meeting of stockholders) or at the next
annual meeting of stockholders, and at each subsequent annual meeting until all
dividends accumulated on such shares of Series B Preferred Stock for the past
dividend periods and the dividend for the then current dividend period shall
have been fully paid or declared and a sum sufficient for the payment thereof
set aside for payment.

     (c) If and when all accumulated dividends and the dividend for the then
current dividend period on the Series B Preferred Stock shall have been paid in
full or set aside for payment in full, the holders of shares of Series B
Preferred Stock shall be divested of the voting rights set forth in Section 7(b)
hereof (subject to revesting in the event of each and every subsequent Preferred
Dividend Default) and, if all accumulated dividends and the dividend for the
current dividend period have been paid in full or set aside for payment in full
on all other series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, the term of office of each Preferred Stock
Director so elected shall terminate and the number of directors on the Board of
Directors shall decrease by two. Any Preferred Stock Director may be removed at
any time with or without cause by the vote of, and shall not be removed
otherwise than by the vote of, the holders of record of a majority of the
outstanding shares of the Series B Preferred Stock when they have the voting
rights set forth in Section 7(b) (voting separately as a class with the Parity
Preferred Stock upon which like voting rights have been conferred and are
exercisable). So long as a Preferred Dividend Default shall continue, any
vacancy in the office of a Preferred Stock Director may be filled by written
consent of the Preferred Stock Director remaining in office, or, if none remains
in office, by a vote of the holders of record of a majority of the outstanding
shares of Series B Preferred Stock when they have the voting rights set forth


                                       5


in Section 7(b) (voting separately as a class with all other series of Parity
Preferred Stock upon which like voting rights have been conferred and are
exercisable). The Preferred Stock Directors shall each be entitled to one vote
per director on any matter.

     (d) So long as any shares of Series B Preferred Stock remain outstanding,
the Corporation shall not, without the affirmative vote of the holders of at
least two thirds of the shares of the Series B Preferred Stock outstanding at
the time, given in person or by proxy, either in writing or at a meeting (voting
separately as a class, together with all other series of Parity Preferred Stock
upon which like voting rights have been conferred and are exercisable), (i)
authorize or create, or increase the authorized or issued amount of, any class
or series of capital stock ranking prior to the Series B Preferred Stock with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, or reclassify any authorized capital stock of the
Corporation into any such shares, or create, authorize or issue any obligation
or security convertible into or evidencing the right to purchase any such shares
or (ii) amend, alter or repeal the provisions of the Charter, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of the Series B Preferred Stock or the
holders thereof; provided, however, that with respect to the occurrence of any
event set forth in (ii) above, so long as the Series B Preferred Stock remains
outstanding with the terms thereof materially unchanged, the occurrence of any
such event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers of the Series B Preferred Stock and;
provided, further, that any increase in the amount of the authorized preferred
stock, including the Series B Preferred Stock, or the creation or issuance of
any additional Series B Preferred Stock or any other series of preferred stock,
or any increase in the amount of authorized shares of such series, in each case
ranking on a parity with or junior to the Series B Preferred Stock with respect
to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.

     (8) CONVERSION.

     (a) Conversion Rights.

         (i) Subject to and upon compliance with the provisions of this Section
8, a holder of any share or shares of Series B Preferred Stock shall have the
right, at its option, to convert all or any portion of such holder's outstanding
Series B Preferred Stock (the "Conversion Right"), subject to the conditions
described below, into the number of fully paid and non-assessable shares of
Common Stock initially at a conversion rate of 1.7730 shares of Common Stock per
$25.00 liquidation preference (the "Conversion Rate"), which is equivalent to an
initial Conversion Price of approximately $14.10 per share of Common Stock
(subject to adjustment in accordance with the provisions of Section 9). Such
holder shall surrender to the Corporation such Series B Preferred Stock to be
converted in accordance with the provisions in paragraph (b) and (c) of this
Section 8, as applicable.

         (ii) In connection with the conversion of any Series B Preferred Stock,
no fractional shares of Common Stock shall be issued, but the Corporation shall
pay a cash adjustment in respect of any fractional interest in an amount equal
to the fractional interest multiplied by the Closing Sale Price on the Trading
Day immediately prior to the Conversion Date or the


                                       6


Corporation Conversion Option Date. If more than one share of Series B Preferred
Stock shall be surrendered for conversion by the same holder at the same time,
the number of full shares of Common Stock issuable on conversion of those shares
of Series B Preferred Stock shall be computed on the basis of the total number
of shares of Series B Preferred Stock so surrendered.

         (iii) A holder of Series B Preferred Stock is not entitled to any
rights of a holder of shares of Common Stock until that holder has converted its
Series B Preferred Stock, and only to the extent the Series B Preferred Stock
are deemed to have been converted to shares of Common Stock in accordance with
the provisions of this Section 8.

         (iv) The Corporation shall, prior to issuance of any Series B Preferred
Stock hereunder, and from time to time as may be necessary, reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the conversion of the Series B
Preferred Stock, such number of its duly authorized Common Stock as shall from
time to time be sufficient to effect the conversion of all Series B Preferred
Stock then outstanding into such Common Stock at any time (assuming that, at the
time of the computation of such number of Common Stock, all such Series B
Preferred Stock would be held by a single holder). The Corporation covenants
that all Common Stock which may be issued upon conversion of Series B Preferred
Stock shall upon issue be fully paid and nonassessable and free from all liens
and charges and, except as provided in Section 8(c), taxes with respect to the
issue thereof. The Corporation further covenants that, if at any time the Common
Stock shall be listed on the New York Stock Exchange or any other national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market or any other automated quotation system, the Corporation shall, if
permitted by the rules of such exchange or automated quotation system, list and
keep listed or quoted, so long as the Common Stock shall be so listed or quoted
on such exchange or automated quotation system, all Common Stock issuable upon
conversion of the Series B Preferred Stock. Before the delivery of any
securities that the Corporation shall be obligated to deliver upon conversion of
the Series B Preferred Stock, the Corporation shall comply with all applicable
federal and state laws and regulations.

     (b) Corporation Conversion Option

         (i) On or after April 5, 2011, the Corporation shall have the option to
convert all of the outstanding shares of Series B Preferred Stock into that
number of shares of Common Stock that are issuable at the Conversion Rate (as
adjusted, the "Corporation Conversion Option"). The Corporation may exercise the
Corporation Conversion Option only if the Closing Sale Price equals or exceeds
130% of the Conversion Price of the Series B Preferred Stock for at least twenty
(20) Trading Days in a period of thirty (30) consecutive Trading Days (including
the last Trading Day of such period), ending on the Trading Day prior to the
Corporation's issuance of a press release announcing its intent to exercise the
Corporation Conversion Option in accordance with Section 8(b)(ii).

         (ii) To exercise the Corporation Conversion Option right set forth in
this Section 8(b), the Corporation must issue a press release for publication on
the Dow Jones & Company, Inc., Business Wire or Bloomberg Business News (or, if
such organizations are not in existence at the time of issuance of such press
release, such other news or press organization as is reasonably calculated to
broadly disseminate the relevant information to the public) prior to the opening
of


                                       7


business on the first Trading Day following any date on which the conditions set
forth in Section 8(b)(i) shall have been satisfied, announcing the Corporation's
intention to exercise the Corporation Conversion Option. The Corporation shall
also give notice by mail or by publication (with subsequent prompt notice by
mail) to the holders of the Series B Preferred Stock ("Notice") (not more than
four (4) Trading Days after the date of the press release) of the Corporation
Conversion Option announcing the Corporation's intention to exercise the
Corporation Conversion Option. The conversion date (the "Corporation Conversion
Option Date") shall be on the date that is five (5) Trading Days after the date
on which the Corporation issues such press release. In addition to any
information required by applicable law or regulation, the press release and
Notice of a Corporation Conversion Option shall state, as appropriate: (i) the
Corporation Conversion Option Date; (ii) the number of shares of Common Stock to
be issued upon conversion of each Series B Preferred Stock; (iii) the number of
Series B Preferred Stock to be converted; and (iv) that dividends on the Series
B Preferred Stock to be converted shall cease to accrue on the Corporation
Conversion Option Date.

         (iii) Upon exercise of the Corporation Conversion Option and surrender
of shares of the Series B Preferred Stock by a holder thereof, the Corporation
shall issue and shall deliver or cause to be issued and delivered to such
holder, or to such other person on such holder's written order (a) certificates
representing the number of validly issued, fully paid and non-assessable full
shares of Common Stock to which a holder of shares of Series B Preferred Stock
being converted, or a holder's transferee, shall be entitled and (b) any
fractional interest in respect of a share of Common Stock arising upon such
conversion shall be settled as provided in Section 8(a)(ii).

         (iv) Each conversion shall be deemed to have been made at the close of
business on the Corporation Conversion Option Date so that the rights of the
holder thereof as to the Series B Preferred Stock being converted shall cease
except for the right to receive the number of fully paid and non-assessable
shares of Common Stock at the Conversion Rate (subject to adjustment in
accordance with the provisions of Section 9), and the person entitled to receive
shares of Common Stock shall be treated for all purposes as having become the
record holder of those shares of Common Stock at that time.

         (v) In lieu of the foregoing procedures, if the Series B Preferred
Stock are held in global form, each holder of beneficial interest in Series B
Preferred Stock must comply with the procedures of The Depository Trust Company
("DTC") to convert such holder's beneficial interest in respect of the Series B
Preferred Stock evidenced by a global share of the Series B Preferred Stock.

         (vi) In case any Series B Preferred Stock are to be converted pursuant
to this Section 8(b), such holder's right to voluntarily convert its Series B
Preferred Stock shall terminate at 5:00 p.m., New York City time, on the Trading
Day immediately preceding the Corporation Conversion Option Date.

     (c) Conversion Right Procedures

         (i) To exercise the Conversion Right as set forth in Section 8(a), a
holder of the Series B Preferred Stock must surrender to the Corporation at its
principal office or at the office


                                       8


of the transfer agent of the Corporation, as may be designated by the Board of
Directors, the certificate or certificates for the Series B Preferred Stock to
be converted accompanied by a written notice stating that the holder of Series B
Preferred Stock elects to convert all or a specified whole number of those
shares in accordance with this Section 8(c) and specifying the name or names in
which the holder wishes the certificate or certificates for the shares of Common
Stock to be issued ("Conversion Notice"). In case the notice specifies that the
shares of Common Stock are to be issued in a name or names other than that of
the holder of Series B Preferred Stock, the notice shall be accompanied by
payment of all transfer taxes payable upon the issuance of shares of Common
Stock in that name or names. Other than those transfer taxes payable pursuant to
the preceding sentence, the Corporation shall pay any documentary, stamp or
similar issue or transfer taxes that may be payable in respect of any issuance
or delivery of shares of Common Stock upon conversion of the Series B Preferred
Stock.

         (ii) As promptly as practicable after the surrender of the certificate
or certificates for the Series B Preferred Stock in accordance with Section
8(c)(i), the receipt of the Conversion Notice and payment of all required
transfer taxes, if any, or the demonstration to the Corporation's satisfaction
that those taxes have been paid, the Corporation shall issue and shall deliver
or cause to be issued and delivered to such holder, or to such other person on
such holder's written order (a) certificates representing the number of validly
issued, fully paid and non-assessable full shares of Common Stock to which the
holder of the Series B Preferred Stock being converted, or the holder's
transferee, shall be entitled, (b) if less than the full number of Series B
Preferred Stock evidenced by the surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares of Series B Preferred Stock evidenced by the surrendered
certificate or certificates, less the number of shares being converted and (c)
any fractional interest in respect of a share of Common Stock arising upon such
conversion shall be settled as provided in Section 8(a)(ii).

         (iii) Each conversion shall be deemed to have been made at the close of
business on the date of giving the notice and of surrendering the certificate or
certificates representing the shares of the Series B Preferred Stock to be
converted (the "Conversion Date") so that the rights of the holder thereof as to
the Series B Preferred Stock being converted shall cease except for the right to
receive the number of fully paid and non-assessable shares of Common Stock at
the Conversion Rate (subject to adjustment in accordance with the provisions of
Section 9), and, if applicable, the person entitled to receive shares of Common
Stock shall be treated for all purposes as having become the record holder of
those shares of Common Stock at that time.

         (iv) In lieu of the foregoing procedures, if the Series B Preferred
Stock are held in global form, each holder of beneficial interest in Series B
Preferred Stock must comply with the procedures of DTC to convert such holder's
beneficial interest in respect of the Series B Preferred Stock evidenced by a
global share of the Series B Preferred Stock.

         (v) If a holder of Series B Preferred Stock has exercised its right to
require the Corporation to repurchase shares of Series B Preferred Stock in
accordance with Section 14 hereof, such holder's Conversion Rights with respect
to the Series B Preferred Stock so subject to repurchase shall expire at 5:00PM,
New York City time, on the Trading Day immediately preceding the repurchase
date, unless the Corporation defaults on the payment of the purchase price. If a
holder of Series B Preferred Stock has submitted any such share for repurchase,
such


                                       9


share may be converted only if such holder submits a notice of withdrawal or
complies with applicable DTC procedures.

     (d) Payment of Dividends

         (i) Optional Conversion

             (A) If a holder of shares of Series B Preferred Stock exercises its
Conversion Right, upon delivery of the Series B Preferred Stock for conversion,
those Series B Preferred Stock shall cease to cumulate dividends as of the end
of the day immediately preceding the Conversion Date and the holder shall not
receive any cash payment representing accrued and unpaid dividends of the Series
B Preferred Stock, except in those limited circumstances discussed in this
Section 8(d). Except as provided herein, the Corporation shall make no payment
for accrued and unpaid dividends, whether or not in arrears, on Series B
Preferred Stock converted at a holder's election pursuant to a Conversion Right,
or for dividends on shares of Common Stock issued upon such conversion.

             (B) If the Corporation receives a Conversion Notice before the
close of business on a Dividend Record Date, the holder shall not be entitled to
receive any portion of the dividend payable on such converted Series B Preferred
Stock on the corresponding Dividend Payment Date.

             (C) If the Corporation receives a Conversion Notice after the
Dividend Record Date but prior to the corresponding Dividend Payment Date, the
holder on the Dividend Record Date shall receive on that Dividend Payment Date
accrued dividends on those Series B Preferred Stock, notwithstanding the
conversion of those Series B Preferred Stock prior to that Dividend Payment
Date, because that holder shall have been the holder of record on the
corresponding Divided Record Date. However, at the time that such holder
surrenders the Series B Preferred Stock for conversion, the holder shall pay to
the Corporation an amount equal to the dividend that has accrued and that shall
be paid on the related Dividend Payment Date.

             (D) A holder of shares of Series B Preferred Stock on a Dividend
Record Date who exercises its Conversion Right and converts such Series B
Preferred Stock into Common Stock on or after the corresponding Dividend Payment
Date shall be entitled to receive the dividend payable on such Series B
Preferred Stock on such Dividend Payment Date, and the converting holder need
not include payment of the amount of such dividend upon surrender for conversion
of Series B Preferred Stock.

         (ii) Corporation Conversion Option

             (A) If the Corporation exercises the Corporation Conversion Option,
whether the Corporation Conversion Option Date is prior to, on or after the
Dividend Record Date for the current period, all unpaid dividend which are in
arrears as of the Corporation Conversion Option Date shall be payable to the
holder of the Series B Preferred Stock.

             (B) If the Corporation exercises the Corporation Conversion Option
and the Corporation Conversion Option Date is a date that is prior to the close
of business on any


                                       10


Dividend Record Date, the holder shall not be entitled to receive any portion of
the dividend payable for such period on such converted shares on the
corresponding Dividend Payment Date.

             (C) If the Corporation exercises the Corporation Conversion Option
and the Corporation Conversion Option Date is a date that is on, or after the
close of business on, any Dividend Record Date and prior to the close of
business on the corresponding Dividend Payment Date, all dividends, including
accrued and unpaid dividends, whether or not in arrears, with respect to the
Series B Preferred Stock called for conversion on such date, shall be payable on
such Dividend Payment Date to the record holder of such shares on such record
date.

     (9) ADJUSTMENT OF CONVERSION RATE.

     (a) If the Corporation shall, at any time or from time to time after the
Original Issue Date while any of the Series B Preferred Stock are outstanding,
issue Common Stock as a dividend or distributions to all or substantially all
holders of Common Stock (other than pursuant to the Corporation's existing
dividend reinvestment and share purchase plan or any future dividend
reinvestment and share purchase plan the Corporation adopts which is not
materially adverse to the holders of shares of Series B Preferred Stock and in
any case which is without duplication subject to an adjustment under Section
9(e)), then the Conversion Rate in effect immediately prior to the close of
business on the Record Date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be adjusted by multiplying
such Conversion Rate by a fraction:

         (i) the numerator of which shall be the sum of (x) the total number of
shares of Common Stock outstanding at the close of business on such Record Date
and (y) the total number of shares of Common Stock constituting such dividend or
other distribution; and

         (ii) the denominator of which shall be the number of shares of Common
Stock outstanding at the close of business on such Record Date.

         An adjustment made pursuant to this Section 9(a) shall become effective
immediately prior to the opening of business on the day following the Record
Date fixed for such determination. If any dividend or distribution of the type
described in this Section 9(a) is declared but not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate which would then
be in effect if such dividend or distribution had not been declared.

     (b) If the Corporation shall, at any time or from time to time after the
Original Issue Date while any of the Series B Preferred Stock are outstanding,
subdivide, combine reclassify, or split its outstanding shares of Common Stock
into a greater or lesser number of shares of Common Stock, the Conversion Rate
in effect immediately prior to the opening of business on the day following the
day upon which such subdivision, combination, reclassification or split becomes
effective shall be adjusted by multiplying such Conversion Rate by a fraction:

         (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the opening of business on the day
following the day such subdivision, combination, reclassification or split
becomes effective; and

                                       11


         (ii) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to the opening of business on the day that
such subdivision, combination, reclassification or split becomes effective.

         An adjustment made pursuant to this Section 9(b) shall become effective
immediately prior to the opening of business on the day following the day upon
which such subdivision, reclassification, split or combination becomes
effective.

     (c) If the Corporation shall, at any time or from time to time after the
Original Issue Date while any of the Series B Preferred Stock are outstanding,
issue rights or warrants for a period expiring within 60 days to all or
substantially all holders of its outstanding Common Stock entitling them to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), at a price per share of Common
Stock (or having a conversion, exchange or exercise price per share of Common
Stock) less than the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the date of the announcement by public notice of such
issuance or distribution (treating the conversion, exchange or exercise price
per share of Common Stock of the securities convertible, exchangeable or
exercisable into Common Stock as equal to (x) the sum of (i) the price for a
unit of the security convertible into or exchangeable or exercisable for Common
Stock and (ii) any additional consideration initially payable upon the
conversion of or exchange or exercise for such security into Common Stock
divided by (y) the number of shares of Common Stock initially underlying such
convertible, exchangeable or exercisable security), then the Conversion Rate
shall be adjusted by multiplying the Conversion Rate in effect at the opening of
business on the date after such date of announcement by a fraction:

         (i) the numerator of which shall be the sum of (x) the number of shares
of Common Stock outstanding at the close of business on the date of
announcement, and (y) the total number of additional shares of Common Stock
issuable pursuant to such rights, warrants, options, other securities, or
convertible securities; and

         (ii) 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 of
announcement, and (y) the number of shares of Common Stock equal to the
aggregate exercise price or conversion price payable to exercise or convert such
rights, warrants, options, other securities or convertible securities divided by
the Current Market Price immediately preceding the date of announcement of the
issuance of such rights, warrants, options, other securities or convertible
securities.

         An adjustment made pursuant to this Section 9(c) shall become effective
immediately prior to the opening of business on the day following the Record
Date for such issuance. If the shares of Common Stock are not delivered pursuant
to such rights, warrants, options, other securities, or convertible securities
upon the expiration or termination of such rights, warrants, options, other
securities, or convertible securities, the Conversion Rate shall be readjusted
to the Conversion Rate which would then be in effect had the adjustments made
upon the issuance of such rights, warrants, options, other securities, or
convertible securities have been made on the basis of the delivery of only the
number of shares of Common Stock actually issued (or the number of shares of
Common Stock actually issued upon conversion, exchange, or exercise of such
other securities). In determining whether any rights, warrants options, other
securities, or


                                       12


convertible securities entitle the holders to subscribe for or purchase shares
of Common Stock at less than such Closing Sale Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights, warrants options, other
securities, or convertible securities, the value of such consideration if other
than cash, to be determined by the Board of Directors.

     (d)

         (i) If the Corporation shall, at any time or from time to time after
the Original Issue Date while any of the Series B Preferred Stock are
outstanding, by dividend or otherwise, distribute to all or substantially all of
the holders of its outstanding shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing corporation and the shares of Common Stock are not
changed or exchanged), shares of its capital stock, evidences of the
Corporation's indebtedness, or other assets or property, including securities,
(including capital stock of any subsidiary of the Corporation) but excluding (i)
dividends or distributions of Common Stock referred to in Section 9(a), (ii) any
rights or warrants referred to in Section 9(c), (iii) dividends and
distributions paid exclusively in cash referred to in Section 9(e) and (iv)
dividends and distributions of stock, securities or other property or assets
(including cash) in connection with the reclassification, change, merger,
consolidation, combination, sale or conveyance to which Section 9 applies (such
capital stock, evidence of its indebtedness, other assets or property or
securities being distributed hereinafter in this Section 9(d) called the
"Distributed Assets"), then, in each such case, subject to paragraphs (D) and
(E) of this Section 9(d), the Conversion Rate shall be adjusted by multiplying
the Conversion Rate in effect immediately prior to the close of business on the
Record Date with respect to such distribution by a fraction:

             (A) the numerator of which shall be the Current Market Price; and

             (B) the denominator of which shall be (x) such Current Market
Price, less (y) the Fair Market Value on such date of the portion of the
Distributed Assets so distributed with respect to each share of Common Stock
outstanding on the Record Date for such distribution.

         An adjustment made pursuant to Section 9(d)(i) shall become effective
immediately prior to the opening of business on the day following the Record
Date for such distribution. If such dividend or distribution is not so paid or
made, the Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such dividend or distribution had not been
declared.

         (ii) If the Board of Directors determines the Fair Market Value of any
distribution for purposes of this Section 9(d) by reference to the actual or
when issued trading market for any Distributed Assets comprising all or part of
such distribution, it must in doing so consider the prices in such market over
the same period (the "Reference Period") used in computing the Current Market
Price pursuant to this Section 9(d) to the extent possible, unless the Board of
Directors determines in good faith that determining the Fair Market Value during
the Reference Period would not be in the best interest of the holders of the
Series B Preferred Stock.

                                       13


         (iii) If any such distribution consists of shares of capital stock of,
or similar equity interests in, one or more of the Corporation's subsidiaries (a
"Spin Off"), the Fair Market Value of the securities to be distributed shall
equal the average of the Closing Sale Prices of such securities for the ten (10)
consecutive Trading Days commencing on and including the first Trading Day of
those securities after the effectiveness of the Spin Off, and the Current Market
Price shall be measured for the same period. If, however, an underwritten
initial public offering of the securities in the Spin Off occurs simultaneously
with the Spin Off, Fair Market Value of the securities distributed in the Spin
Off shall mean the initial public offering price of such securities and the
Current Market Price shall mean the Closing Sale Price for the Common Stock on
the same Trading Day.

         (iv) Rights or warrants distributed by the Corporation to all or
substantially all holders of the outstanding shares of Common Stock entitling
them to subscribe for or purchase equity securities of the Corporation (either
initially or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"), (x) are deemed to
be transferred with such shares of Common Stock, (y) are not exercisable and (z)
are also issued in respect of future issuances of shares of Common Stock shall
be deemed not to have been distributed for purposes of this Section 9(d) (and no
adjustment to the Conversion Rate under this Section 9(d) shall 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 Distributed Assets, or entitle
the holder to purchase a different number or amount of the foregoing Distributed
Assets or to purchase any of the foregoing Distributed Assets 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). 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 Rate under this Section 9(d):

             (A) in the case of any such rights or warrants which shall all have
been repurchased without exercise by any holders thereof, the Conversion Rate
shall be readjusted upon such final repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share repurchase price received by a holder of
shares Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights or warrants), made to all or substantially all
holders of Common Stock as of the date of such repurchase; and

             (B) in the case of such rights or warrants which shall have expired
or been terminated without exercise, the Conversion Rate shall be readjusted as
if such rights and warrants had never been issued.

         (v) For purposes of this Section 9(d) and Section 9(a), Section 9(b)
and Section 9(c), any dividend or distribution to which this Section 9(d) is
applicable that also includes (x) shares of Common Stock, (y) a subdivision,
split or combination of shares of Common Stock to which Section 9(b) applies or
(z) rights or warrants to subscribe for or purchase shares of Common Stock to
which Section 9(c) applies (or any combination thereof), shall be deemed instead
to be:

                                       14


             (A) a dividend or distribution of the evidences of indebtedness,
assets, shares of capital stock, rights or warrants, other than such shares of
Common Stock, such subdivision, split or combination or such rights or warrants
to which Section 9(a), Section 9(b) and Section 9(c) apply, respectively (and
any Conversion Rate adjustment required by this Section 9(d) with respect to
such dividend or distribution shall then be made), immediately followed by

             (B) a dividend or distribution of such shares of Common Stock, such
subdivision, split or combination or such rights or warrants (and any further
Conversion Rate increase required by Section 9(a), Section 9(b) and Section 9(c)
with respect to such dividend or distribution shall then be made), except:

                (I) the Record Date of such dividend or distribution shall be
substituted as (i) "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution," "Record Date fixed for
such determinations" and "Record Date" within the meaning of Section 9(a), (ii)
"the day upon which such subdivision or split becomes effective" or "the day
upon which such combination becomes effective" (as applicable) within the
meaning of Section 9(b), and (iii) as "the Record Date fixed for the
determination of the stockholders entitled to receive such rights or warrants"
and such "Record Date" within the meaning of Section 9(c); and

                (II) any reduction or increase in the number of shares of Common
Stock resulting from such subdivision, split or combination (as applicable)
shall be disregarded in connection with such dividend or distribution.

     (e) If the Corporation shall, at any time or from time to time after the
Original Issue Date while any of the Series B Preferred Stock are outstanding,
by dividend or otherwise, distribute to all or substantially all holders of its
outstanding shares of Common Stock during any quarterly fiscal period, cash
(including any quarterly cash dividends, but excluding any cash that is
distributed upon a reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance to which Section 10 applies or
as part of a distribution referred to in Section 9(d)) in excess of $0.11 per
share of Common Stock (the "Dividend Threshold Amount"), then, and in each case,
immediately after the close of business on such date, the Conversion Rate shall
be adjusted based on the following formula:

         (i) CR1 = CRo x (SP/(SP-DI)) where,

             (A) CRo = the Conversion Rate in effect immediately prior to the
Record Date for such distribution;

             (B) CR1 = the Conversion Rate in effect immediately after the
Record Date for such distribution;

             (C) SP = the average of the Closing Sale price per share of Common
Stock over the ten (10) consecutive Trading Day period prior to the Trading Day
immediately preceding the earlier of the Record Date or the ex-dividend date of
such cash excess dividend or cash excess distribution; and

                                       15


             (D) DI = the amount in cash per share the Corporation distributes
to holders of shares of Common Stock that exceeds the Dividend Threshold Amounts
(with such Dividend Threshold Amounts appropriately adjusted from time to time
as provided in this Section 9).

Such increase shall become effective immediately prior to the opening of
business on the day following the Record Date for such distribution. In the
event that such distribution is not so made, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if such
distribution had not been declared.

     (f)

         (i) If any tender offer made by the Corporation or any of its
subsidiaries for all or any portion of Common Stock shall expire, then, if the
tender offer shall require the payment to the holders of Common Stock of
consideration per share of Common Stock having a Fair Market Value that exceeds
the Closing Price per share of Common Stock on the Trading Day next succeeding
the last date (the "Expiration Date") tenders could have been made pursuant to
such tender offer (as it may be amended) (the last time at which such tenders
could have been made on the Expiration Date is hereinafter sometimes called the
"Expiration Time"), the Conversion Rate shall be adjusted so that the same shall
equal the rate determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the Expiration Date by a fraction:

             (A) the numerator of which shall be the sum of (w) the Fair Market
Value of the aggregate consideration payable to holder of the Common Stock based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of all shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (x) the product of (y) the number of shares of Common
Stock outstanding (less any Purchased Shares and excluding any shares held in
the treasury of the Corporation) at the Expiration Time and (z) the Current
Market Price on the Trading Day next succeeding the Expiration Date; and

             (B) the denominator of which shall be the product of (x) the number
of shares of Common Stock outstanding (including Purchased Shares but excluding
any shares held in the treasury of the Corporation) at the Expiration Time
multiplied by (y) the Current Market Price on the Trading Day next succeeding
the Expiration Date.

         (ii) An adjustment pursuant to Section 9(f)(i) shall become effective
immediately prior to the opening of business on the day following the Expiration
Date.

         (iii) If the Corporation is obligated to purchase shares pursuant to
any such tender offer, but the Corporation is permanently prevented by
applicable law from effecting any or all such purchases or any or all such
purchases are rescinded, the Conversion Rate shall again be adjusted to be the
Conversion Rate which would have been in effect based upon the number of shares
actually purchased, if any. If the application of this Section 9(f) to any
tender offer would result in a decrease in the Conversion Rate, no adjustment
shall be made for such tender offer under this Section 9(f).

                                       16


         (iv) For purposes of this Section 9, the term "tender offer" shall mean
and include both tender offers and exchange offers, all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar references) shall mean and include shares tendered in both tender
offers and exchange offers.

     (g) Notwithstanding the foregoing and to the extent permitted by law,
whenever successive adjustments to the Conversion Rate are called for pursuant
to this Section 9, such adjustments shall be made as may be necessary or
appropriate to effectuate the intent of this Section 9 and to avoid unjust or
inequitable results as determined in good faith by the Board of Directors.

     (h) The Corporation shall be entitled to make such additional increases in
the Conversion Rate, in addition to those required by Section 9(a), Section
9(b), Section 9(c), Section 9(d), Section 9(e) or Section 9(f), if the Board of
Directors determines that it is advisable, in order that any dividend or
distribution of Common Stock, any subdivision, reclassification or combination
of Common Stock or any issuance of rights or warrants referred to above, or any
event treated as such for United States federal income tax purposes, shall not
be taxable to the holders of Common Stock for United States federal income tax
purposes or to diminish any such tax. The Corporation shall give holders of
Series B Preferred Stock at least fifteen (15) Trading Days' notice of any
increase in the Conversion Rate.

     (i) To the extent permitted by law, the Corporation may, from time to time,
increase the Conversion Rate for a period of at least twenty (20) Trading Days
if the Board of Directors determines that such an increase would be in the
Corporation's best interests. Any such determination by Board of Directors shall
be conclusive. The Corporation shall give holders of Series B Preferred Stock at
least fifteen (15) Trading Days' notice of any increase in the Conversion Rate.

     (j) The Corporation shall not adjust the Conversion Rate pursuant to this
Section 9 to the extent that the adjustments would reduce the Conversion Price
below $0.01. The Corporation shall not be required to make an adjustment in the
Conversion Rate unless the adjustment would require a change of at least one
percent in the Conversion Rate. However, any adjustments that are not required
to be made because they would have required an increase or decrease of less than
one percent shall be carried forward and taken into account in any subsequent
adjustment of the Conversion Rate. Except as described in this Section 9, the
Corporation shall not adjust the Conversion Rate for any issuance of shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for its shares of Common Stock or rights to purchase its shares of Common Stock
or such convertible, exchangeable or exercisable securities.

     (k) In the event that at any time, as a result of an adjustment made
pursuant to this Section 9, the holder of any Series B Preferred Stock
thereafter surrendered for conversion shall become entitled to receive any
shares of capital stock of the Corporation other than Common Stock into which
the Series B Preferred Stock originally were convertible, the Conversion Rate of
such other shares so receivable upon conversion of any such Series B Preferred
Stock shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to Common
Stock contained in subparagraphs (a) through (l) of this


                                       17


Section 9, and any other applicable provisions of this Charter with respect to
the Common Stock shall apply on like or similar terms to any such other shares

     (l) To the extent the Corporation has a rights plan in effect upon
conversion of the Series B Preferred Stock into shares of Common Stock, the
holder shall receive (except to the extent the Corporation settles its
conversion obligations in cash), in addition to the shares of Common Stock, the
rights under the rights plan unless the rights have separated from the shares of
Common Stock prior to the time of conversion, in which case the Conversion Rate
shall be adjusted at the time of separation as if the Corporation made a
distribution referred to in Section 9(d)above (without regard to any of the
exceptions there).

     (10) CONSOLIDATION OR MERGER OF THE CORPORATION.

     In the case of the following events (each, a "Business Combination"):

         (i) any recapitalization, reclassification or change of the Common
Stock, other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of subdivision or a combination;

         (ii) a consolidation, merger or binding share exchange of the
Corporation with another Person (as defined in the Charter);

         (iii) a sale, conveyance or lease to another corporation of all or
substantially all of the property and assets of the Corporation; or

         (iv) a statutory share exchange;

in each case, as a result of which holders of Common Stock are entitled to
receive stock, other securities, other property or assets (including cash or any
combination thereof) with respect to or in exchange for Common Stock, the
Corporation or the successor or purchasing corporation, as the case may be,
shall provide that the Series B Preferred Stockholders will be entitled
thereafter to convert such Series B Preferred Stock into the kind and amount of
stock, other securities or other property or assets (including cash or any
combination thereof) which the Series B Preferred Stockholder would have owned
or been entitled to receive upon such Business Combination had such shares been
converted into Common Stock immediately prior to such Business Combination;
provided, that the Series B Preferred Stockholders shall not be entitled to
receive any Additional Shares (as defined in Section 13(a) if such holder does
not convert its Series B Preferred Stock "in connection with" (as defined in
Section 13(a)) the relevant fundamental change. If holders of Common Stock have
the opportunity to elect the form of consideration to be received in such
Business Combination, the Corporation will make adequate provision whereby the
holders of the Series B Preferred Stock shall have a reasonable opportunity to
determine the form of consideration into which all of the Series B Preferred
Stock, treated as a single class, shall be convertible from and after the
effective date of such Business Combination. Such determination shall be based
on the weighted average of elections made by the holders of the Series B
Preferred Stock who participate in such determination, shall be subject to any
limitations to which all of the holders of Common Stock are subject, such as pro
rata reductions applicable to any portion of the consideration payable in such
Business Combination, and shall be conducted in such a manner as to be completed
by the date which is the earliest of (1) the


                                       18


deadline for elections to be made by holders of Common Stock, and (2) two
Trading Days prior to the anticipated effective date of the Business
Combination. The Corporation shall provide notice of the opportunity to
determine the form of such consideration, as well as notice of the determination
made by the holders of the Series B Preferred Stock (and the weighted average of
elections), by issuing a press release or providing other appropriate notice,
and by providing a copy of such notice to the Board of Directors. If the
effective date of the Business Combination is delayed beyond the initially
anticipated effective date, the holders of the Series B Preferred Stock shall be
given the opportunity to make subsequent similar determinations in regard to
such delayed effective date. The documents governing the rights of such
securities shall provide for adjustments of the Conversion Rate and other
appropriate numerical thresholds which shall be as nearly equivalent as may be
practicable to the adjustments of the Conversion Rate provided for in Article 9.
If, in the case of any such Business Combination, the stock or other securities
and assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such Business
Combination, then such documents governing the rights of such securities shall
also be executed by such other corporation and shall contain such additional
provisions to protect the interests of the holders of the Series B Preferred
Stock as the Board of Directors shall reasonably consider necessary by reason of
the foregoing, including to the extent practicable the provisions providing for
the repurchase rights set forth in Section 14(a) hereof.

         The Corporation shall cause notice of the execution of such documents
governing the rights of such securities to be mailed to each holder of Series B
Preferred Stock, at the address of such holder as it appears on the Register,
within twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of such documents governing the rights
of such securities.

         The above provisions of this Section 10 shall similarly apply to
successive Business Combinations.

         The Corporation shall not become a party to any Business Combination
unless its terms are consistent in all material respects with the provisions of
this Section 10.

         None of the provisions of this Section 10 shall affect the right of a
Series B Preferred Stockholder to convert its shares of Series B Preferred Stock
into Common Stock prior to the effective date of a Business Combination.

         If this Section 10 applies to any event or occurrence, Section 9 hereof
shall not apply.

     (11) NOTICE OF ADJUSTMENT.

         Whenever an adjustment in the Conversion Rate with respect to the
Series B Preferred Stock is required:

     (a) the Corporation shall forthwith place on file with the transfer agent
for the Series B Preferred Stock a certificate of the Chief Financial Officer
(or such person having similar responsibilities of the Corporation, stating the
adjusted Conversion Rate determined as provided herein and setting forth in
reasonable detail such facts as shall be necessary to show the reason for and
the manner of computing such adjustment; and

                                       19


     (b) a Notice stating that the Conversion Rate has been adjusted and setting
forth the adjusted Conversion Rate shall forthwith be given by the Corporation
to each holder of Series B Preferred Stock. Any Notice so given shall be
conclusively presumed to have been duly given, whether or not the holder
receives such Notice.

     (12) NOTICE IN CERTAIN EVENTS.

         In case of:

     (a) a consolidation or merger to which the Corporation is a party and for
which approval of any holders of Common Stock of the Corporation is required, or
of the sale or conveyance to another person or entity or group of persons or
entities acting in concert as a partnership, limited partnership, syndicate or
other group (within the meaning of Rule 13d-3 under the Exchange Act of 1934, as
amended) of all or substantially all of the property and assets of the
Corporation; or

     (b) the voluntary or involuntary dissolution, liquidation or winding up of
the Corporation; or

     (c) any action triggering an adjustment of the Conversion Rate referred to
in clauses (x) or (y) below; then, in each case, the Corporation shall cause to
be given, to the holders of the Series B Preferred Stock, at least 15 days prior
to the applicable date hereinafter specified, a Notice stating:

         (x) the date on which a record is to be taken for the purpose of any
distribution or grant of rights or warrants triggering an adjustment to the
Conversion Rate pursuant to Section 9 hereof, or, if a record is not to be
taken, the date as of which the holders of record of Common Stock entitled to
such distribution, rights or warrants are to be determined; or

         (y) the date on which any reclassification, consolidation, merger,
sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the

         Conversion Rate pursuant to this Section 12 hereof 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 shares of Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.

         Failure to give such Notice or any defect therein shall not affect the
legality or validity of the proceedings described in Section 12(a), Section
12(b) or Section 12(c).

     (13) ADJUSTMENT TO CONVERSION RATE UPON CERTAIN FUNDAMENTAL CHANGES.

     (a) If and only to the extent a holder of Series B Preferred Stock elects
to convert its Series B Preferred Stock in connection with a Fundamental Change
that occurs on or prior to April 1, 2016, the Corporation shall increase the
Conversion Rate for the Series B Preferred Stock surrendered for conversion by a
number of additional shares (the "Additional Shares"), if any, as set forth in
this Section 13. A conversion shall be deemed for the purposes of this Section
13(a) to be "in connection with" such a Fundamental Change if the notice of
conversion is received by the conversion agent (who initially shall be the
transfer agent of the Corporation) from and


                                       20


including the date that is ten (10) Trading Days prior to the anticipated
Effective Date (as defined below) up to and including the Trading Day prior to
the Fundamental Change Repurchase Date.

     (b) The number of Additional Shares, if any, shall be determined by
reference to the table below, based on the date on which such Fundamental Change
transaction becomes effective (the "Effective Date") and the price paid per
share for shares of Common Stock in such Fundamental Change transaction (the
"Share Price"). If holders of shares of Common Stock receive only cash in such
Fundamental Change transaction, the Share Price shall be the cash amount paid
per share. If holders of shares of Common Stock receive consideration other than
only cash in such Fundamental Change transaction, the Share Price shall be the
average of the Closing Sale Prices of shares of Common Stock on the five Trading
Days prior to but not including the Effective Date of such Fundamental Change
transaction.

     (c) The Share Prices set forth in the first row of the table below (i.e.,
the column headers) shall be adjusted as of any date on which the Conversion
Rate is adjusted pursuant to Section 9. The adjusted Share Prices shall equal
the product of the Share Prices applicable immediately prior to such adjustment
multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to the adjustment giving rise to the Share Price adjustment
and the denominator of which is the Conversion Rate as so adjusted. The number
of Additional Shares shall be adjusted in the same manner as the Conversion Rate
as set forth under the provisions of Section 9. The following table sets forth
the hypothetical Share Price and number of Additional Shares to be issuable per
$25.00 liquidation preference of Series B Preferred Stock:



EFFECTIVE DATE    $11.75    $13.00    $14.00    $15.00    $20.00    $25.00    $30.00    $40.00
--------------    ------    ------    ------    ------    ------    ------    ------    ------

April 12, 2006*   0.3546    0.2637    0.2155    0.2000    0.1500    0.1200    0.1000    0.0750
April 1, 2007     0.3546    0.2624    0.2024    0.1700    0.1275    0.1020    0.0850    0.0638
April 1, 2008     0.3546    0.2623    0.1997    0.1558    0.1019    0.0815    0.0679    0.0509
April 1, 2009     0.3546    0.2623    0.1995    0.1445    0.0738    0.0590    0.0492    0.0369
April 1, 2010     0.3546    0.2621    0.1993    0.1441    0.0429    0.0343    0.0286    0.0214
April 1, 2011     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000
April 1, 2012     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000
April 1, 2013     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000
April 1, 2014     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000
April 1, 2015     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000
April 1, 2016     0.3546    0.2621    0.1993    0.1441    0.0000    0.0000    0.0000    0.0000


     (d) The Share Prices and Additional Share amounts set forth above are based
upon a per share Common Stock price of $11.75 on April 6, 2006 and an initial
Conversion Price of $14.10. The exact Share Prices and Effective Dates may not
be set forth in the table above, in which case:

         (i) If the Share Price is between two Share Price amounts in the table
or the Effective Date is between two Effective Dates in the table, the number of
Additional Shares shall be determined by a straight-line interpolation between
the number of Additional Shares set forth for the higher and lower Share Price
amounts and the two dates, as applicable, based on a 365-day year;

                                       21


         (ii) If the Share Price is in excess of $11.75 per share (subject to
adjustment), no Additional Shares shall be issuable upon conversion; or

         (iii) If the Share Price is less than $40.00 per share (subject to
adjustment), no Additional Shares shall be issuable upon conversion.

     (14) PURCHASE OF SERIES B PREFERRED STOCK UPON A FUNDAMENTAL CHANGE.

     (a) In the event of a Fundamental Change, a holder of Series B Preferred
Stock shall have the right to require the Corporation to purchase (the
"Repurchase Right") for cash all or any part of such holder's Series B Preferred
Stock at a purchase price equal to 100% of the liquidation preference of the
Series B Preferred Stock to be purchased plus accrued and unpaid dividends
(including additional dividends, if any) to, but not including, the Fundamental
Change Purchase Date (the "Fundamental Change Purchase Price"). Series B
Preferred Stock submitted for purchase must be $25.00 liquidation preference or
an integral multiple thereof.

     (b) Within thirty (30) calendar days after the occurrence of a Fundamental
Change, the Corporation shall provide to all holders of Series B Preferred Stock
and the transfer agent a Notice of the occurrence of the Fundamental Change and
of the resulting Repurchase Right. Such Notice shall state:

         (i) the events constituting the Fundamental Change;

         (ii) the date of the Fundamental Change;

         (iii) the last date on which a holder may exercise the Repurchase
Right;

         (iv) the Fundamental Change Purchase Price;

         (v) the Fundamental Change Repurchase Date;

         (vi) the name and address of the transfer agent;

         (vii) the Conversion Rate and any adjustment to the Conversion Rate
that shall result from the Fundamental Change, as applicable, pursuant to either
(A) Sections 13(a), (b), (c) and (d) or (B) Section 13(e);

         (viii) that Series B Preferred Stock with respect to which a repurchase
notice is given by the holder may be converted, if otherwise convertible, only
if the repurchase notice has been properly withdrawn; and

         (ix) the procedures that a holder must follow to exercise the
Repurchase Right.

     (c) Simultaneously with providing such Notice, the Corporation shall
publish a notice containing this information in a newspaper of general
circulation in the City of New York or through such other public medium as the
Corporation may use at that time and publish such information on its corporate
website.

                                       22


     (d) To exercise the Repurchase Right, subject to Section 14(e), a holder of
the Series B Preferred Stock must deliver, on or before the twentieth Trading
Day after the date of the Corporation's delivery of Notice of a Fundamental
Change (subject to extension to comply with applicable law), the Series B
Preferred Stock to be purchased, duly endorsed for transfer, together with a
written repurchase notice and the form entitled "Form of Fundamental Change
Repurchase Notice" duly completed to the transfer agent. The repurchase notice
must state:

         (i) the applicable Fundamental Change Repurchase Date;

         (ii) the portion of the liquidation preference of Series B Preferred
Stock to be purchased, in integral multiples of $25.00; and

         (iii) that the Series B Preferred Stock are to be purchased by the
Corporation pursuant to this Section 14.

     (e) If the Series B Preferred Stock are not in certificated form, a
holder's repurchase notice must comply with applicable DTC procedures.

     (f) A holder of Series B Preferred Stock may withdraw any repurchase notice
(in whole or in part) by a written notice of withdrawal delivered to the
Corporation prior to the close of business on the Trading Day prior to the
Fundamental Change Repurchase Date. The notice of withdrawal shall state:

         (i) the liquidation preference of the withdrawn Series B Preferred
Stock, in integral multiples of $25.00;

         (ii) if certificated Series B Preferred Stock have been issued, the
certificate numbers of the withdrawn Series B Preferred Stock; and

         (iii) the liquidation preference, if any, which remains subject to the
repurchase notice.

     (g) If the Series B Preferred Stock are not in certificated form, a
holder's notice of withdrawal must comply with applicable DTC procedures.

     (h) The Corporation shall be required to purchase the Series B Preferred
Stock no less than thirty (30) days nor more than forty-five (45) days after the
date of the Corporation's delivery of Notice of the Fundamental Change, subject
to extension to comply with applicable law (as set forth in the Notice of
Fundamental Change, the "Fundamental Change Repurchase Date"). A holder of
Series B Preferred Stock shall receive payment of the Fundamental Change
Purchase Price promptly following the later of the Fundamental Change Repurchase
Date or the time of book-entry transfer or delivery of the Series B Preferred
Stock.

     (i) If the transfer agent holds cash sufficient to pay the Fundamental
Change Repurchase Price of the Series B Preferred Stock on the Trading Day
following the Fundamental Change Repurchase Date, then:

         (i) the Series B Preferred Stock shall cease to be outstanding and
dividends (including additional dividends, if any) shall cease to accrue
(whether or not book-entry transfer


                                       23


of the Series B Preferred Stock is made or whether or not the Series B Preferred
Stock certificate, if applicable, is delivered to the transfer agent); and

         (ii) all other rights of the holder shall terminate (other than the
right to receive the Fundamental Change Repurchase Price upon delivery or
transfer of the Series B Preferred Stock).

     (j) A "fundamental change" shall be deemed to occur upon a change of
control or a termination of trading. A "change of control" shall be deemed to
have occurred at such time after the original issuance of the Series B Preferred
Stock when the following has occurred:

         (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934) acquires the beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of 50% or more of the total
voting power of the Corporation's total outstanding voting stock other than an
acquisition by the Corporation or any of subsidiaries of the Corporation;

         (ii) the Corporation consolidates with, or merges with or into, another
person or convey, transfer, lease or otherwise dispose of all or substantially
all of the Corporation assets to any person, or any person consolidates with or
merges with or into the Corporation, other than: (1) any transaction (A) that
does not result in any reclassification, exchange, or cancellation of
outstanding shares of the Corporation's capital stock and (B) pursuant to which
the Corporation's capital stockholders immediately prior to the transaction have
the entitlement to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of the Corporation's capital stock entitled to vote
generally in the election of directors of the continuing or surviving person
immediately after the transaction; or (2) any merger solely for the purpose of
changing the Corporation's jurisdiction of formation and resulting in a
reclassification, conversion or exchange of outstanding shares of common stock
solely into shares of common stock of the surviving entity; or

         (iii) the Corporation approves a plan of liquidation or dissolution.

     (k) A "termination of trading" is deemed to occur if the Common Stock (or
other common stock into which the Series B Preferred Stock are then convertible)
is neither listed for trading on a United States national securities exchange
nor approved for trading on an established automated over-the-counter trading
market in the United States. Notwithstanding the foregoing, it shall not
constitute a change of control if 100% of the consideration for the Common Stock
(excluding cash payments for fractional shares and cash payments made in respect
of dissenters' appraisal rights) in the transaction or transactions constituting
the change of control consists of common stock traded on a United States
national securities exchange or quoted on the Nasdaq National Market, or which
shall be so traded or quoted when issued or exchanged in connection with the
change of control, and as a result of such transaction or transactions the
Series B Preferred Stock become convertible solely into such common stock.

     (l) In connection with a Fundamental Change repurchase, the Corporation
shall comply with all U.S. federal and state securities laws in connection with
any offer by the Corporation to purchase the Series B Preferred Stock upon a
Fundamental Change.

                                       24


     (m) The Corporation shall not be required to repurchase the Series B
Preferred Stock upon a Fundamental Change if a third party (1) makes an offer to
purchase the Series B Preferred Stock in the manner, at the times and otherwise
in compliance with the requirements applicable to the Corporation to repurchase
Series B Preferred Stock upon a Fundamental Change and (2) purchases all of the
Series B Preferred Stock validly delivered and not withdrawn under such offer to
purchase Series B Preferred Stock.

     SECOND: The shares of Series B Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Charter.

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

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

                            [SIGNATURE PAGE FOLLOWS]



                                       25




     IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary
to be signed in its name and on its behalf by its Chief Executive Officer and
President and attested to by its Secretary on this 10th day of April, 2006.

ATTEST:                             ANNALY MORTGAGE MANAGEMENT, INC.

By: /s/ R. Nicholas Singh (SEAL)    By: /s/ Michael A.J. Farrell
    ---------------------               ------------------------
Name:  R. Nicholas Singh            Name:  Michael A.J. Farrell
Title: Secretary                    Title: Chief Executive Officer and President