<PAGE>   1

                                                                     EXHIBIT 3.3




                              ARTICLES OF AMENDMENT

                                       TO

                            ARTICLES OF INCORPORATION

                                       OF

                              WINSTON HOTELS, INC.


     The undersigned corporation hereby submits these Articles of Amendment for
the purpose of amending its Amended and Restated Articles of Incorporation:

     1. The name of the corporation is Winston Hotels, Inc. (the "Corporation").

     2. The Corporation's Amended and Restated Articles of Incorporation are
hereby amended by adding the following subsection (a) of Article 5:

(a)  Series A Preferred Stock

     (i) TITLE. The series of Preferred Stock is hereby designated as the "9.25%
Series A Cumulative Preferred Stock" (the "Series A Preferred Stock").

     (ii) NUMBER. The maximum number of authorized shares of the Series A
Preferred Stock shall be 3,000,000.

     (iii) RELATIVE SENIORITY. In respect of rights to receive dividends and to
participate in distributions of payments in the event of any liquidation,
dissolution or winding up of the Corporation, the Series A Preferred Stock shall
rank (i) senior to all classes or series of Common Stock of the Corporation, and
to all equity securities ranking junior to the Series A Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the Corporation; (ii) on a parity with all equity securities issued by the
Corporation, the terms of which specifically provide that such equity securities
rank on a parity with the Series A Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the Corporation;
and (iii) junior to all existing and future indebtedness of the Corporation. The
term "equity securities" does not include convertible debt securities, which
will rank senior to the Series A Preferred Stock prior to conversion.


<PAGE>   2

     (iv) DIVIDENDS.

     (A) The holders of the then outstanding Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors out of any
funds legally available therefor, preferential cumulative cash dividends at the
rate of 9.25% per annum of the Liquidation Preference (as defined herein) per
share (equivalent to a fixed annual amount of $2.3125 per share).

     Dividends on the Series A Preferred Stock shall be cumulative from the date
of original issue and shall be payable quarterly in arrears on or before the
sixteenth day of January, April, July and October of each year, or, if not a
Business Day (as defined below), the next succeeding Business Day (each, a
"Dividend Payment Date"). The first dividend will be paid on or before January
16, 1998. Dividends payable on the Series A Preferred Stock for any partial
dividend period will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Dividends will 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 last Business Day of March, June,
September and December, respectively, 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 the applicable Dividend Payment Date
(each, a "Dividend Record Date").

     "Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in New York City
are authorized or required by law, regulation or executive order to close.

     (B) The amount of any dividends accrued on any Series A Preferred Stock at
any Dividend Payment Date shall be the amount of any unpaid dividends
accumulated thereon, to and including such Dividend Payment Date, whether or not
earned or declared, and the amount of dividends accrued on any shares of Series
A Preferred Stock at any date other than a Dividend Payment Date shall be equal
to the sum of the amount of any unpaid dividends accumulated thereon, to and
including the last preceding Dividend Payment Date, whether or not earned or
declared, plus an amount calculated on the basis of the annual dividend rate of
$2.3125 per share for the period after such last preceding Dividend Payment Date
to and including the date as of which the calculation is made based on a 360-day
year of twelve 30-day months.

     (C) Except as provided in this subsection (a) of Article 5, the Series A
Preferred Stock will not be entitled to any dividends in excess of full
cumulative dividends as described above and shall not be entitled to participate
in the earnings or assets of the Corporation, and no interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series A Preferred Stock which may be in arrears.

     (D) Any dividend payment made on the Series A Preferred Shares shall be
first credited against the earliest accrued but unpaid dividend due with respect
to such shares which remains payable.


                                       2
<PAGE>   3

     (E) No dividends on shares of Series A Preferred Stock shall be declared by
the Board of Directors 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, 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. Notwithstanding the foregoing, dividends on the
Series A Preferred Stock will accrue 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 A Preferred Stock will not bear interest and
holders of the Series A Preferred Stock will not be entitled to any
distributions in excess of full cumulative distributions described above.

     (F) Except as set forth in the next sentence, no dividends will be declared
or paid or set apart for payment on any capital stock of the Corporation or any
other series of Preferred Stock ranking, as to dividends, on a parity with or
junior to the Series A Preferred Stock (other than a dividend in shares of the
Corporation's Common Stock or in shares of any other class of stock ranking
junior to the Series A Preferred Stock as to dividends and upon liquidation) 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 is
set apart for such payment on the Series A Preferred Stock for all past dividend
periods and the then current dividend period. When dividends are not paid in
full (or a sum sufficient for such full payment is not so set apart) upon the
Series A Preferred Stock and the shares of any other series of Preferred Stock
ranking on a parity as to dividends with the Series A Preferred Stock, all
dividends declared upon the Series A Preferred Stock and any other series of
Preferred Stock ranking on a parity as to dividends with the Series A Preferred
Stock shall be declared pro rata so that the amount of dividends declared per
share of Series A Preferred Stock and such other series of Preferred Stock shall
in all cases bear to each other the same ratio that accrued dividends per share
on the Series A Preferred Stock and such other series of Preferred Stock (which
shall not include any accrual in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) bear to
each other.

     (G) Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series A 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 other shares of capital stock ranking junior to the Series A 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 other capital stock of the Corporation ranking junior to or on a
parity with the Series A Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any other shares of capital stock of
the Corporation ranking junior to or on a parity with the Series A Preferred
Stock as to dividends or upon liquidation, be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for 



                                       3
<PAGE>   4

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 A Preferred Stock as to dividends and upon liquidation or redemptions for
the purpose of preserving the Corporation's qualification as a real estate
investment trust ("REIT")). Holders of shares of the Series A 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 A Preferred Stock as
provided above. Any dividend payment made on shares of the Series A Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to such shares which remains payable.

     (v)  LIQUIDATION RIGHTS.

     (A) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation, the holders of shares of Series A
Preferred Stock are entitled to be paid out of the assets of the Corporation
legally available for distribution to its shareholders a liquidation preference
of $25.00 per share (the "Liquidation Preference"), plus an amount equal to any
accrued and unpaid dividends to the date of payment, but without interest,
before any distribution of assets is made to holders of Common Stock or any
other class or series of capital stock of the Corporation that ranks junior to
the Series A Preferred Stock as to liquidation rights. Holders of Series A
Preferred Stock will be entitled to written notice of any event triggering the
right to receive such Liquidation Preference.

     (B) After the payment to the holders of the Series A Preferred Stock of the
full preferential amounts provided for in this subsection (a) of Article 5, the
holders of the Series A Preferred Stock, as such, shall have no right or claim
to any of the remaining assets of the Corporation.

     (C) If, upon any voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the amounts payable with respect to the
Liquidation Preference, plus an amount equal to any accrued and unpaid dividends
to the date of payment, of the Series A Preferred Stock and any other shares of
the Corporation ranking as to any such distribution on a parity with the Series
A Preferred Stock are not paid in full, the holders of the Series A Preferred
Stock and of such other shares will share ratably in any such distribution of
assets of the Corporation in proportion to the full respective preference
amounts to which they are entitled.

     (D) The consolidation, share exchange 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 property or business of the Corporation, shall not be deemed to
constitute a liquidation, dissolution or winding up of the Corporation for the
purposes of this subsection (a) of Article 5.

     (vi) REDEMPTION.

     (A) OPTIONAL REDEMPTION. On and after September 28, 2001, the Corporation
may, at its option, redeem at any time from time to time, in whole or in part,
the Series A Preferred Stock at a price per share (the " Redemption Price"),
payable in cash, of $25.00, 



                                       4
<PAGE>   5

together with all accrued and unpaid dividends to and including the date fixed
for redemption (the "Redemption Date"), without interest, to the full extent the
Corporation has funds legally available therefor. The shares of Series A
Preferred Stock have no stated maturity, except as provided for in subparagraph
(ix) below, and will not be subject to any sinking fund or mandatory redemption
provisions.

     (B) REDEMPTION UPON A CHANGE OF CONTROL.

          (1) At any time prior to September 28, 2001, the Corporation may, at
     its option, upon the occurrence of a Change of Control Event (as defined
     below) redeem all of the outstanding Series A Preferred Stock at the
     applicable redemption price reflected below, plus accrued and unpaid
     dividends (if any) to the date of redemption. The redemption price shall be
     as follows:

<TABLE>
<CAPTION>
           Date of Redemption                           
      -----------------------------                     Purchase
      From                  Through                       Price
      ----                  -------                       -----
<S>                       <C>                           <C>   
     September 11, 1997   December 31, 1997              $25.80
     January 1, 1998      March 31, 1998                  25.75
     April 1, 1998        June 30, 1998                   25.70
     July 1, 1998         September 30, 1998              25.65
     October 1, 1998      December 31, 1998               25.60
     January 1, 1999      March 31, 1999                  25.55
     April 1, 1999        June 30, 1999                   25.50
     July 1, 1999         September 30, 1999              25.45
     October 1, 1999      December 31, 1999               25.40
     January 1, 2000      March 31, 2000                  25.35
     April 1, 2000        June 30, 2000                   25.30
     July 1, 2000         September 30, 2000              25.25
     October 1, 2000      December 31, 2000               25.20
     January 1, 2001      March 31, 2001                  25.15
     April 1, 2001        June 30, 2001                   25.10
     July 1, 2001         September 27, 2001              25.05

</TABLE>

          Such redemption may be consummated at any time prior to,
     contemporaneously with or after the Change of Control (as defined below),
     provided that notice of any such redemption pursuant to this paragraph is
     given no later than 90 days following the date upon which the Change of
     Control Event occurred, the redemption date must be within 60 days of the
     date of notice and a sum sufficient to redeem the shares must be deposited
     in trust to effect the redemption.

          (2) Definitions.

               (a) A "Change of Control Event" shall mean the execution by the
          Corporation or any of its subsidiaries or affiliates of any agreement
          with respect to any proposed transaction or event or series of
          transactions or events which, individually or in the aggregate, may
          reasonably be expected to result in a Change of Control.


                                       5
<PAGE>   6

               (b) A "Change of Control" shall be deemed to have occurred at
          such time as (i) a "person" or "group" (within the meaning of Sections
          13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
          (the "Exchange Act")) becomes the ultimate "beneficial owner" (as
          defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
          person or group shall be deemed to have beneficial ownership of all
          shares of Voting Stock that such person or group has the right to
          acquire regardless of when such right is first exercisable), directly
          or indirectly, of Voting Stock representing more than 35% of the total
          voting power of the total Voting Stock of the Corporation on a fully
          diluted basis; (ii) the date the Corporation sells, transfers or
          otherwise disposes of all or substantially all of the assets of the
          Corporation; and (iii) the date of the consummation of a merger or
          share exchange of the Corporation with another corporation where the
          shareholders of the Corporation immediately prior to the merger or
          share exchange would not beneficially own immediately after the merger
          or share exchange, shares entitling such shareholders to 50% or more
          of all votes (without consideration of the rights of any class of
          stock to elect directors by a separate group vote) to which all
          shareholders of the corporation issuing cash or securities in the
          merger or share exchange would be entitled in the election of
          directors, or where members of the Board of Directors of the
          Corporation immediately prior to the merger or share exchange would
          not immediately after the merger or share exchange constitute a
          majority of the board of directors of the corporation issuing cash or
          securities in the merger or share exchange.

               (c) "Voting Stock" shall mean capital stock of any class or kind
          having the power to vote generally for the election of directors of
          the Corporation.

     (C)  PROCEDURES OF REDEMPTION.

          (1) Notice of redemption will be given by publication in a newspaper
     of general circulation in the City of New York, such publication to be made
     once a week for two successive weeks commencing not less than 30 nor more
     than 60 days prior to the Redemption Date. A similar notice will be mailed
     by the Corporation, postage prepaid, not less than 30 nor more than 60 days
     prior to the Redemption Date, addressed to the respective holders of record
     of the Series A Preferred Stock to be redeemed at their respective
     addresses as they appear on the stock transfer records of the Corporation.
     No failure to give such notice or any defect therein or in the mailing
     thereof shall affect the validity of the proceedings for the redemption of
     any shares of Series A Preferred Stock except as to the holder to whom the
     Corporation has failed to give notice or except as to the holder to whom
     notice was defective. In addition to any information required by law or by
     the applicable rules of any exchange upon which the Series A Preferred
     Stock may be listed or admitted to trading, each such notice shall state:
     (a) the Redemption Date; (b) the Redemption Price; (c) the number of shares
     of Series A Preferred Stock to be redeemed; (d) the place or places where
     certificates for such shares are to be surrendered for payment of the
     Redemption Price; and (e) that dividends on the shares to be redeemed will
     cease to accumulate on the Redemption Date. If less than all of the shares


                                       6
<PAGE>   7

     of Series A Preferred Stock held by any holder are to be redeemed, the
     notice mailed to such holder shall also specify the number of shares of
     Series A Preferred Stock to be redeemed from such holder.

          (2) If notice has been mailed in accordance with subparagraph
     (vi)(C)(1) above and provided that on or before the Redemption Date
     specified in such notice all funds necessary for such redemption shall have
     been irrevocably set aside by the Corporation, separate and apart from its
     other funds in trust for the pro rata benefit of the holders of the Series
     A Preferred Stock so called for redemption, so as to be, and to continue to
     be available therefor, then, from and after the Redemption Date, dividends
     on the Series A Preferred Stock so called for redemption shall cease to
     accumulate, and said shares shall no longer be deemed to be outstanding and
     shall not have the status of Series A Preferred Stock and all rights of the
     holders thereof as shareholders of the Corporation shall cease, except the
     right to receive the Redemption Price. Upon surrender, in accordance with
     such notice, of the certificates for any Series A Preferred Stock so
     redeemed (properly endorsed or assigned for transfer, if the Corporation
     shall so require and the notice shall so state), such Series A Preferred
     Stock shall be redeemed by the Corporation at the Redemption Price. In case
     fewer than all the shares of Series A Preferred Stock represented by any
     such certificate are redeemed, a new certificate or certificates shall be
     issued representing the unredeemed shares of Series A Preferred Stock
     without cost to the holder thereof.

          (3) Any funds deposited with a bank or trust corporation for the
     purpose of redeeming Series A Preferred Stock shall be irrevocable except
     that:

               (a) the Corporation shall be entitled to receive from such bank
          or trust corporation the interest or other earnings, if any, earned on
          any money so deposited in trust, and the holders of any shares
          redeemed shall have no claim to such interest or other earnings; and

               (b) any balance of monies so deposited by the Corporation and
          unclaimed by the holders of the Series A Preferred Stock entitled
          thereto at the expiration of two years from the applicable Redemption
          Date shall be repaid, together with any interest or other earnings
          earned thereon, to the Corporation, and after any such repayment, the
          holders of the shares entitled to the funds so repaid to the
          Corporation shall look only to the Corporation for payment without
          interest or other earnings.

          (4) Unless full cumulative dividends on all shares of Series A
     Preferred Stock 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 past dividend periods and the then current dividend period,
     no shares of Series A Preferred Stock shall be redeemed unless all
     outstanding shares of Series A Preferred Stock are simultaneously redeemed
     and the Corporation shall not purchase or otherwise acquire directly or
     indirectly any shares of Series A Preferred Stock (except by exchange for
     capital stock of the 



                                       7
<PAGE>   8

     Corporation ranking junior to the Series A Preferred Stock as to dividends
     and upon liquidation); provided, however, that the foregoing shall not
     prevent the redemption by the Corporation of shares of Series A Preferred
     Stock in order to ensure that the Corporation continues to meet the
     requirements for qualification as a REIT, or the purchase or acquisition of
     shares of Series A Preferred Stock pursuant to a purchase or exchange offer
     made on the same terms to holders of all outstanding shares of Series A
     Preferred Stock. So long as no dividends are in arrears, the Corporation
     shall be entitled at any time and from time to time to repurchase shares of
     Series A Preferred Stock in open-market transactions duly authorized by the
     Board of Directors and effected in compliance with applicable laws.

          (5) Immediately prior to any redemption of Series A Preferred Stock,
     the Corporation shall pay, in cash, any accumulated and unpaid dividends
     through the Redemption Date, unless a Redemption Date falls after a
     Dividend Record Date and prior to the corresponding Dividend Payment Date,
     in which case each holder of Series A Preferred Stock at the close of
     business on such Dividend Record Date shall be entitled to the dividend
     payable on such shares on the corresponding Dividend Payment Date
     notwithstanding the redemption of such shares before such Dividend Payment
     Date.

          (6) If less than all of the outstanding Series A Preferred Stock is to
     be redeemed, the Series A Preferred Stock to be redeemed shall be selected
     pro rata (as nearly as may be practicable without creating fractional
     shares) or by any other equitable method determined by the Corporation.

     (vii) VOTING RIGHTS. Except as required by law, and as set forth below, the
holders of the Series A Preferred Stock shall not be entitled to vote at any
meeting of the shareholders for election of directors or for any other purpose
or otherwise to participate in any action taken by the Corporation or the
shareholders thereof, or to receive notice of any meeting of shareholders.

     (A) Whenever dividends on any shares of Series A Preferred Stock shall be
in arrears for six or more quarters, whether consecutive or not (a "Preferred
Dividend Default"), the holders of such shares of Series A Preferred Stock
(voting separately as a voting group with all other series of Preferred Stock
ranking on a parity with the Series A Preferred Stock as to dividends or upon
liquidation ("Parity Preferred") upon which like voting rights have been
conferred and are exercisable) will be entitled to vote separately as a voting
group for the election of a total of two additional directors to serve on the
Board of Directors of the Corporation (the "Preferred Stock Directors") at a
special meeting called by the holders of record of at least 20% of the Series A
Preferred Stock and the holders of record of at least 20% of any series of
Parity Preferred so in arrears (unless such request is received less than 90
days before the date fixed for the next annual or special meeting of
shareholders) or at the next annual meeting of shareholders, and at each
subsequent annual meeting until all dividends accumulated on such shares of
Series A 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. A quorum for any such
meeting shall exist if at least a majority of the outstanding 



                                       8
<PAGE>   9

shares of Series A Preferred Stock and shares of Parity Preferred upon which
like voting rights have been conferred and are exercisable are represented in
person or by proxy at such meeting. Such Preferred Stock Directors shall be
elected upon the affirmative vote of a plurality of the shares of Series A
Preferred Stock and such Parity Preferred present and voting in person or by
proxy at a duly called and held meeting at which a quorum is present. If and
when all accumulated dividends and the dividend for the then current dividend
period on the Series A Preferred Stock shall have been paid in full or set aside
for payment in full, the holders thereof shall be divested of the foregoing
voting rights (subject to revesting in the event of each and every Preferred
Dividend Default) and, if all accumulated dividends and the dividend for the
then current dividend period have been paid in full or declared and set aside
for payment in full on all series of Parity Preferred upon which like voting
rights have been conferred and are exercisable, the term of office of each
Preferred Stock Director so elected shall terminate. Any Preferred Stock
Director may be removed at any time with or without cause by, 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 A Preferred Stock and such Parity Preferred
when they have the voting rights described above (voting separately as a voting
group with all series of Parity Preferred 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 A Preferred Stock and such Parity Preferred
when they have the voting rights described above (voting separately as a voting
group with all series of Parity Preferred 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.

     (B) So long as any shares of Series A Preferred Stock remain outstanding,
the Corporation will not, without the affirmative vote or consent of the holders
of at least two-thirds of the shares of Series A Preferred Stock outstanding at
the time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a voting group), amend, alter or repeal the
provisions of the Amended and Restated Articles of Incorporation or this
subsection (a) of Article 5 thereof, whether by merger, share exchange or
otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the Series A Preferred Stock or the
holders thereof; provided, however, that with respect to the occurrence of any
Event set forth above, so long as the Series A Preferred Stock remains
outstanding with the terms thereof materially unchanged, taking into account
that upon the occurrence of an Event, the Corporation might not be the surviving
entity, the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power of holders
of the Series A Preferred Stock, and provided further that (i) any increase in
the amount of the authorized Preferred Stock or the creation or issuance of any
other series of Preferred Stock, or (ii) any increase in the amount of
authorized shares of such series, in each case ranking on a parity with or
junior to the Series A Preferred Stock with respect to payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up, shall
not be deemed to affect materially and adversely such rights, preferences,
privileges or voting powers.


                                       9
<PAGE>   10

     The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Series A Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such redemption.

     (C) On each matter submitted to a vote of the holders of Series A Preferred
Stock in accordance with this paragraph (vii), or as otherwise required by law,
each share of Series A Preferred Stock shall be entitled to one vote. With
respect to each share of Series A Preferred Stock, the holder thereof may
designate a proxy, with each such proxy having the right to vote on behalf of
the holder.

     (viii) CONVERSION. The shares of Series A Preferred Stock are not
convertible into or exchangeable for any other property or securities of the
Corporation.

     (ix) RESTRICTIONS ON OWNERSHIP AND TRANSFER.

      (A) Definitions. The following terms shall have the following meanings:

           "Affiliate" shall mean, with respect to any person, (i) any person
directly or indirectly owning, controlling, or holding, with power to vote ten
percent or more of the outstanding voting securities of such other person, (ii)
any person ten percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held, with power to vote, by such
other person, (iii) any person directly or indirectly controlling, controlled
by, or under common control with such other person, (iv) any executive officer,
director, trustee or general partner of such other person, and (v) any legal
entity for which such person acts as an executive officer, director, trustee or
general partner. The term "person" means and includes any natural person,
corporation, partnership, association, limited liability company or any other
legal entity. An indirect relationship shall include circumstances in which a
person's spouse, children, parents, siblings or mothers-, fathers, sisters- or
brothers-in-law is or has been associated with a person.

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

           "Beneficiary" shall mean, with respect to any Trust, one or more
organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) or (viii) thereof) and Section 170(c)(2) of the Code that are named by the
Corporation as the beneficiary or beneficiaries of such Trust, in accordance
with the provisions of Section 2(a)(ix)(I)(1) hereof.

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


                                       10
<PAGE>   11

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

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

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

           "Equity Stock" shall mean the Common Stock and the Series A Preferred
Stock of the Corporation. The term "Equity Stock" shall include all shares of
Common Stock and Series A Preferred Stock of the Corporation that are held as
Shares-in-Trust in accordance with the provisions of Section 2(a)(ix)(I) hereof.

           "Offering" means the offering and sale of shares of Series A
Preferred Stock pursuant to the Corporation's first effective registration
statement for such shares of Series A Preferred Stock filed under the Securities
Act of 1933, as amended.

           "Market Price" on any date shall mean the average of the Closing
Price for the five consecutive Trading Days ending on such date. The "Closing
Price" on any date shall mean the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange ("NYSE"), or, if the Equity Stock is not
listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Equity Stock is listed
or admitted to trading, or, if the Equity Stock is not listed or admitted to
trading on any national securities exchange, the last quoted price, or if not so
quoted, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System, or, if such system is no longer in use, the
principal other automated quotations system that may then be in use or, if the
shares of Equity Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the shares of Equity Stock selected by the Board of
Directors.

           "Non-Transfer Event" shall mean an event other than a purported
Transfer that would cause any Person to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limitation, including, but not
limited to, the granting of any option or entering into any agreement for the
sale, transfer or other disposition of shares of Equity Stock or the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for shares of Equity Stock.



                                       11
<PAGE>   12

           "Ownership Limitation" shall mean the restriction on ownership by any
stockholder of (a) more than 9.9% of the number of outstanding shares of Series
A Preferred Stock and (b) if the stockholder owns both Series A Preferred Stock
and Common Stock, more than 9.9% of the number of outstanding shares of Common
Stock.

          "Permitted Transferee" shall mean any Person designated as a Permitted
Transferee in accordance with the provisions of Section 2(a)(ix)(I)(5) hereof.

            "Person" shall mean an individual, corporation, partnership, estate,
trust, a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity and also includes a "group" as that term is used for purposes of
Section 12(d)(3) of the Securities Exchange Act of 1934, as amended.

           "Prohibited Owner" shall mean, with respect to any purported Transfer
or Non-Transfer Event, any Person who, but for the provisions of Section
2(a)(ix)(C) hereof, would own record title to shares of Equity Stock.

          "Restriction Termination Date" shall mean the first day after the date
of the Offering on which (i) the Board of Directors determines that it is no
longer in the best interests of the Corporation to attempt to, or continue to,
qualify as a REIT and (ii) there is an affirmative vote of two-thirds of the
number of shares of Common Stock entitled to vote on such matter at a regular or
special meeting of the shareholders of the Corporation.

          "Shares-in-Trust" shall mean any shares of Equity Stock designated
Shares-in-Trust pursuant to Section 2(a)(ix)(C) hereof.

          "Trading Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

           "Transfer" (as a noun) shall mean any sale, transfer, gift,
assignment, devise or other disposition of shares of Equity Stock, whether
voluntary or involuntary, whether of record, constructively or beneficially and
whether by operation of law or otherwise. "Transfer" (as a verb) shall have the
correlative meaning.

           "Trust" shall mean any separate trust created pursuant to Section
2(a)(ix)(C) hereof and administered in accordance with the terms of Section
2(a)(ix)(I) hereof, for the exclusive benefit of any Beneficiary.

           "Trustee" shall mean any Person or entity that is not an Affiliate of
either the Corporation or any Prohibited Owner, such Trustee to be designated by
the Corporation to act as trustee of any Trust, or any successor trustee
thereof.

     (B) Restriction on Transfers.



                                       12
<PAGE>   13

           (1) Except as provided in Section 2(a)(ix)(G) hereof, from the date
of the Offering and prior to the Restriction Termination Date, (i) no Person
shall Beneficially Own or Constructively Own outstanding shares of Equity Stock
in excess of the Ownership Limitation and (ii) any Transfer that, if effective,
would result in any Person Beneficially Owning or Constructively Owning shares
of Equity Stock in excess of the Ownership Limitation shall be void ab initio as
to the Transfer of that number of shares of Equity Stock which would be
otherwise Beneficially Owned or Constructively Owned by such Person in excess of
the Ownership Limitation, and the intended transferee shall acquire no rights in
such shares of Equity Stock.


                                       13
<PAGE>   14

           (2) Except as provided in Section 2(a)(ix)(G) hereof, from the date
of the Offering and prior to the Restriction Termination Date, any Transfer of
shares of Series A Preferred Stock that, if effective, would result in shares of
Equity Stock being Beneficially Owned by fewer than 100 Persons (determined
without reference to any rules of attribution) shall be void ab initio as to the
Transfer of that number of shares which otherwise would be Beneficially Owned
(determined without reference to any rules of attribution) by the transferee,
and the intended transferee shall acquire no rights in such shares of Series A
Preferred Stock.

           (3) From the date of the Offering and prior to the Restriction
Termination Date, any Transfer of shares of Series A Preferred Stock that, if
effective, would result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer
of that number of shares of Equity Stock which would cause the Corporation to be
"closely held" within the meaning of Section 856(h) of the Code, and the
intended transferee shall acquire no rights in such shares of Series A Preferred
Stock.

           (4) From the date of the Offering and prior to the Restriction
Termination Date, any Transfer of shares of Series A Preferred Stock that, if
effective, would cause the Corporation to Constructively Own 10% or more of the
ownership interests in a tenant of the Corporation's or a subsidiary's real
property, within the meaning of Section 856(d)(2)(B) of the Code, shall be void
ab initio as to the Transfer of that number of shares of Equity Stock which
would cause the Corporation to Constructively Own 10% or more of the ownership
interests in a tenant of the Corporation's or a subsidiary's real property,
within the meaning of Section 856(d)(2)(B) of the Code, and the intended
transferee shall acquire no rights in such shares of Series A Preferred Stock.

     (C) Transfer to Trust.

          (1) If, notwithstanding the other provisions contained in this Section
2(a)(ix), at any time after the Offering and prior to the Restriction
Termination Date, there is a purported Transfer or Non-Transfer Event such that
any Person would either Beneficially Own or Constructively Own shares of Equity
Stock in excess of the Ownership Limitation, then, (i) except as otherwise
provided in Section 2(a)(ix)(G) hereof, the purported transferee shall acquire
no right or interest (or, in the case of a Non-Transfer Event, the Person
holding record title to the shares of Equity Stock Beneficially Owned or
Constructively Owned by such Beneficial Owner or Constructive Owner, shall cease
to own any right or interest) in such number of shares of Equity Stock which
would cause such Beneficial Owner or Constructive Owner to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Ownership Limitation,
(ii) such number of shares of Equity Stock in excess of the Ownership Limitation
(rounded up to the nearest whole share) shall be designated Shares-in-Trust and
transferred automatically and by operation of law to a Trust to be held in
accordance with that Section 2(a)(ix)(I), and (iii) the Prohibited Owner shall
submit such number of shares of Equity Stock to the Corporation for registration
in the name of the Trustee. Such transfer to a Trust and the designation of
shares as Shares-in-Trust shall be effective as of the close of business on the
business day prior to the date of the Transfer or Non-Transfer Event, as the
case may be. There shall be a separate Trust with respect to each designation
and transfer of Shares-in-Trust.




                                       14
<PAGE>   15

          (2) If, notwithstanding the other provisions contained in this Section
2(a)(ix), at any time after the Offering and prior to the Restriction
Termination Date, there is a purported Transfer or Non-Transfer Event that, if
effective, would (i) result in shares of Equity Stock being Beneficially Owned
by fewer than 100 Persons (determined without reference to any rules of
attribution), (ii) result in the Corporation being "closely held" within the
meaning of Section 856(h) of the Code, or (iii) cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant of the
Corporation's or a subsidiary's real property, within the meaning of Section
856(d)(2)(B) of the Code, then (x) the purported transferee shall not acquire
any right or interest (or, in the case of a Non-Transfer Event, the Person
holding record title of the shares of Series A Preferred Stock with respect to
which such Non-Transfer Event occurred, shall cease to own any right or
interest) in such number of shares of Series A Preferred Stock, the ownership of
which by such purported transferee or record holder would (A) result in shares
of Equity Stock being Beneficially Owned by fewer than 100 Persons, (B) result
in the Corporation being "closely held" within the meaning of Section 856(h) of
the Code, or (C) cause the Corporation to Constructively Own 10% or more of the
ownership interests in a tenant of the Corporation's or a subsidiary's real
property, within the meaning of Section 856(d)(2)(B) of the Code, (y) such
number of shares of Series A Preferred Stock (rounded up to the nearest whole
share) shall be designated Shares-in-Trust and transferred automatically and by
operation of law to a Trust to be held in accordance with that Section
2(a)(ix)(I), and (z) the Prohibited Owner shall submit such number of shares of
Series A Preferred Stock to the Corporation for registration in the name of the
Trustee. Such transfer to a Trust and the designation of shares as
Shares-in-Trust shall be effective as of the close of business on the business
day prior to the date of the Transfer or Non-Transfer Event, as the case may be.
There shall be a separate Trust with respect to each designation and transfer of
Shares-in-Trust.

      (D) Remedies For Breach. If the Corporation, or its designees, shall at
any time determine in good faith that a Transfer has taken place in violation of
Section 2(a)(ix)(B) hereof or that a Person intends to acquire or has attempted
to acquire Beneficial Ownership or Constructive Ownership of any shares of
Equity Stock in violation of Section 2(a)(ix)(B) hereof, the Corporation shall
take such action as it deems advisable to refuse to give effect to or to prevent
such Transfer or acquisition, including, but not limited to, refusing to give
effect to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer or acquisition.

     (E) Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire shares of Equity Stock in violation of Section 2(a)(ix)(B) hereof, or
any Person who owned shares of Equity Stock that were transferred to a Trust
pursuant to the provisions of Section 2(a)(ix)(C) hereof, shall immediately give
written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such Transfer or Non-Transfer Event, as the
case may be, on the Corporation's status as a REIT.

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

                                       15
<PAGE>   16

           (1) Every Beneficial Owner or Constructive Owner of more than 5%, or
     such lower percentages as required pursuant to regulations under the Code,
     of the outstanding shares of all classes of capital stock of the
     Corporation shall, within 30 days after January 1 of each year, provide to
     the Corporation a written statement or affidavit stating the name and
     address of such Beneficial Owner or Constructive Owner, the number of
     shares of Equity Stock Beneficially Owned or Constructively Owned, and a
     description of how such shares are held. Each such Beneficial Owner or
     Constructive Owner shall provide to the Corporation such additional
     information as the Corporation may request in order to determine the
     effect, if any, of such Beneficial Ownership or Constructive Ownership on
     the Corporation's status as a REIT and to ensure compliance with the
     Ownership Limitation.

            (2) Each Person who is a Beneficial Owner or Constructive Owner of
     shares of Equity Stock and each Person (including the stockholder of
     record) who is holding shares of Equity Stock for a Beneficial Owner or
     Constructive Owner shall provide to the Corporation a written statement or
     affidavit stating such information as the Corporation may request in order
     to determine the Corporation's status as a REIT and to ensure compliance
     with the Ownership Limitation.

     (G) Exception. The Ownership Limitation shall not apply to the acquisition
of shares of Equity Stock by an underwriter that participates in a public
offering of such shares for a period of 90 days following the purchase by such
underwriter of such shares provided that the restrictions contained in Section
2(a)(ix)(B) hereof will not be violated following the distribution by such
underwriter of such shares. In addition, the Board of Directors, upon receipt of
a ruling from the Internal Revenue Service or an opinion of counsel in each case
to the effect that the restrictions contained in Section 2(a)(ix)(B) hereof will
not be violated, may exempt a Person from the Ownership Limitation provided that
(i) the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's
Beneficial Ownership or Constructive Ownership of shares of Equity Stock will
violate the Ownership Limitation and (ii) such Person agrees in writing that any
violation or attempted violation of such representations or undertakings will
result in such transfer to a Trust of shares of Equity Stock pursuant to Section
2(a)(ix)(C) hereof.

       (H) Removal of Ownership Limitation. The Ownership Limitation will not be
removed until (i) the Board of Directors determines that it is no longer in the
best interest of the Corporation to attempt to qualify, or to continue to
qualify, as a REIT and (ii) there is an affirmative vote of two-thirds of the
number of shares of Common Stock entitled to vote on such matter at a regular or
special meeting of the stockholders of the Corporation.

     (I) Shares-in-Trust.

           (1) Trust. Any shares of Equity Stock transferred to a Trust and
designated Shares-in-Trust pursuant to Section 2(a)(ix)(C) hereof shall be held
for the exclusive benefit of the Beneficiary. The Corporation shall name a
Beneficiary for each Trust within five days after 



                                       16
<PAGE>   17

discovery of the existence thereof. No Beneficiary shall be a Beneficiary of
more than one Trust at any time. Any transfer to a Trust, and subsequent
designation of shares of Equity Stock as Shares-in-Trust, pursuant to Section
2(a)(ix)(C) hereof shall be effective as of the close of business on the
business day prior to the date of the Transfer or Non-Transfer Event that
results in the transfer to the Trust. Shares-in-Trust shall remain issued and
outstanding shares of Equity Stock of the Corporation and shall be entitled to
the same rights and privileges on identical terms and conditions as are all
other issued and outstanding shares of Equity Stock of the same class and
series. When transferred to a Permitted Transferee in accordance with the
provisions of Section 2(a)(ix)(I)(5) hereof, such Shares-in-Trust shall cease to
be designated as Shares-in-Trust.

           (2) Dividend Rights. The Trust, as record holder of Shares-in-Trust,
shall be entitled to receive all dividends and distributions as may be declared
by the Board of Directors on such shares of Equity Stock and shall hold such
dividends or distributions in trust for the benefit of the Beneficiary. The
Prohibited Owner with respect to Shares-in-Trust shall repay to the Trust the
amount of any dividends or distributions received by it that (i) are
attributable to any shares of Equity Stock designated Shares-in-Trust and (ii)
the record date of which was on or after the date that such shares became
Shares-in-Trust. The Corporation shall take all measures that it determines
reasonably necessary to recover the amount of any such dividend or distribution
paid to a Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on shares of Equity Stock Beneficially
Owned or Constructively Owned by the Person who, but for the provisions of
Section 2(a)(ix)(C) hereof, would Constructively Own or Beneficially Own the
Shares-in-Trust; and, as soon as reasonably practicable following the
Corporation's receipt or withholding thereof, shall pay over to the Trust for
the benefit of the Beneficiary the dividends so received or withheld, as the
case may be.

           (3) Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled
to receive, ratably with each other holder of shares of Equity Stock of the same
class or series, that portion of the assets of the Corporation which is
available for distribution to the holders of such class and series of shares of
Equity Stock. The Trust shall distribute to the Prohibited Owner the amounts
received upon such liquidation, dissolution, or winding up, or distribution;
provided, however, that the Prohibited Owner shall not be entitled to receive
amounts pursuant to this Section 2(a)(ix)(I)(3) in excess of, in the case of a
purported Transfer in which the Prohibited Owner gave value for shares of Equity
Stock and which Transfer resulted in the transfer of the shares to the Trust,
the price per share, if any, such Prohibited Owner paid for the shares of Equity
Stock and, in the case of a Non-Transfer Event or Transfer in which the
Prohibited Owner did not give value for such shares (e.g., if the shares were
received through a gift or devise) and which Non-Transfer Event or Transfer, as
the case may be, resulted in the transfer of shares to the Trust, the price per
share equal to the Market Price on the date of such Non-Transfer Event or
Transfer. Any remaining amount in such Trust shall be distributed to the
Beneficiary.

           (4) Voting Rights. The Trustee shall be entitled to vote all
Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of Equity
Stock prior to the discovery by 



                                       17
<PAGE>   18

the Corporation that the shares of Equity Stock are Shares-in-Trust shall,
subject to applicable law, be rescinded and shall be void ab initio with respect
to such Shares-in-Trust and the Prohibited Owner shall be deemed to have given,
as of the close of business on the business day prior to the date of the
purported Transfer or Non-Transfer Event that results in the transfer to the
Trust of shares of Equity Stock under Section 2(a)(ix)(C) hereof, an irrevocable
proxy to the Trustee to vote the Shares-in-Trust in the manner in which the
Trustee, in its sole and absolute discretion, desires.

           (5) Designation of Permitted Transferee. The Trustee shall have the
exclusive and absolute right to designate a Permitted Transferee of any and all
Shares-in-Trust. In an orderly fashion so as not to materially adversely affect
the Market Price of the Shares-in-Trust, the Trustee shall designate any Person
as Permitted Transferee, provided, however, that (i) the Permitted Transferee so
designated purchases for valuable consideration (whether in a public or private
sale) the Shares-in-Trust and (ii) the Permitted Transferee so designated may
acquire such Shares-in-Trust without such acquisition resulting in a transfer to
a Trust and the redesignation of such shares of Equity Stock so acquired as
Shares-in-Trust under Section 2(a)(ix)(C) hereof. Upon the designation by the
Trustee of a Permitted Transferee in accordance with the provisions of this
Section 2(a)(ix)(I)(5), the Trustee shall (i) cause to be transferred to the
Permitted Transferee that number of Shares-in-Trust acquired by the Permitted
Transferee, (ii) cause to be recorded on the books of the Corporation that the
Permitted Transferee is the holder of record of such number of shares of Equity
Stock, (iii) cause the Shares-in-Trust to be canceled, and (iv) distribute to
the Beneficiary any and all amounts held with respect to the Shares-in-Trust
after making that payment to the Prohibited Owner pursuant to Section
2(a)(ix)(I)(6) hereof.

           (6) Compensation to Record Holder of Shares of Equity Stock that
Become Shares-in-Trust. Any Prohibited Owner shall be entitled (following
discovery of the Shares-in-Trust and subsequent designation of the Permitted
Transferee in accordance with Section 2(a)(ix)(I)(5) hereof or following the
acceptance of the offer to purchase such shares in accordance with Section
2(a)(ix)(I)(7) hereof) to receive from the Trustee following the sale or other
disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a
purported Transfer in which the Prohibited Owner gave value for shares of Equity
Stock and which Transfer resulted in the transfer of the shares to the Trust,
the price per share, if any, such Prohibited Owner paid for the shares of Equity
Stock, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did
not give value for such shares (e.g., if the shares were received through a gift
or devise) and which Non-Transfer Event or Transfer, as the case may be,
resulted in the transfer of shares to the Trust, the price per share equal to
the Market Price on the date of such Non-Transfer Event or Transfer, and (ii)
the price per share received by the Trustee from the sale or other disposition
of such Shares-in-Trust in accordance with Section 2(a)(ix)(I) hereof. Any
amounts received by the Trustee in respect of such Shares-in-Trust and in excess
of such amounts to be paid the Prohibited Owner pursuant to this Section
2(a)(ix)(I)(6) shall be distributed to the Beneficiary in accordance with the
provisions of Section 2(a)(ix)(I) hereof. Each Beneficiary and Prohibited Owner
waive any and all claims that they may have against the Trustee and the Trust
arising out of the disposition of Shares-in-Trust, except for claims arising out
of the gross negligence or willful misconduct of, or any failure to make
payments in accordance with this Section 2(a)(ix)(I), by such Trustee or the
Corporation.


                                       18
<PAGE>   19

           (7) Purchase Right in Shares-in-Trust. Shares-in-Trust shall be
deemed to have been offered for sale to the Corporation, or its designee, at a
price per share equal to the lesser of (i) the price per share in the
transaction that created such Shares-in-Trust (or, in the case of devise, gift
or Non-Transfer Event, the Market Price at the time of such devise, gift or
Non-Transfer Event) and (ii) the Market Price on the date the Corporation, or
its designee, accepts such offer. The Corporation shall have the right to accept
such offer for a period of ninety days after the later of (i) the date of the
Non-Transfer Event or purported Transfer which resulted in such Shares-in-Trust
and (ii) the date the Corporation determines in good faith that a Transfer or
Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Corporation
does not receive a notice of such Transfer or Non-Transfer Event pursuant to
Section 2(a)(ix)(I)(E) hereof.

      (J) Remedies Not Limited. Nothing contained in this Section 2(a)(ix) shall
limit the authority of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
shareholders by preservation of the Corporation's status as a REIT and to ensure
compliance with the Ownership Limitation.

      (K) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Section 2(a)(ix), including any definition contained in
Section 2(a)(ix)(A) hereof, the Board of Directors shall have the power to
determine the application of the provisions of this Section 2(a)(ix) with
respect to any situation based on the facts known to it.

      (L) Legend. Each certificate for shares of Equity Stock shall bear the
following legend:

     "The shares of Series A Preferred Stock represented by this certificate are
     subject to restrictions on transfer for the purpose of the Corporation's
     maintenance of its status as a real estate investment trust under the
     Internal Revenue Code of 1986, as amended (the "Code"). No Person may (i)
     Beneficially Own or Constructively Own (a) more than 9.9% of the number of
     outstanding shares of Series A Preferred Stock and (b) if the stockholder
     owns both Series A Preferred Stock and Common Stock, more than 9.9% of the
     number of outstanding shares of Common Stock, (ii) Beneficially Own shares
     of Equity Stock that would result in the shares of Equity Stock being
     beneficially owned by fewer than 100 Persons (determined without reference
     to any rules of attribution), (iv) Beneficially Own shares of Equity Stock
     that would result in the Corporation being "closely held" under Section
     856(h) of the Code, or (v) Constructively Own shares of Equity Stock that
     would cause the Corporation to Constructively Own 10% or more of the
     ownership interests in a tenant of the Corporation's or a subsidiary's real
     property, within the meaning of Section 856(d)(2)(B) of the Code. Any
     Person who attempts to Beneficially Own or Constructively Own shares of
     Equity Stock in excess of the above limitations must immediately notify the
     Corporation in writing. If the restrictions above are violated, the shares
     of Equity Stock 



                                       19
<PAGE>   20

     represented hereby will be transferred automatically and by operation of
     law to a Trust and shall be designated Shares-in-Trust. All capitalized
     terms in this legend have the meanings defined in the Corporation's Amended
     and Restated Articles of Incorporation, as the same may be further amended
     from time to time, a copy of which, including the restrictions on transfer,
     will be sent without charge to each shareholder who so requests."

      (M) Severability. If any provision of this Section 2(a)(ix) or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.

     3. The foregoing amendment was duly adopted by the Board of Directors on
September 2, 1997 without shareholder approval in accordance with Section
55-6-02 of the North Carolina General Statutes.

     4. These articles will become effective upon filing.


                                       20
<PAGE>   21

     IN WITNESS WHEREOF, Winston Hotels, Inc. has caused these Articles of
Amendment to be executed by its duly authorized officer this ____ day of
September, 1997.


                          WINSTON HOTELS, INC.


                          By:  /s/ Robert W. Winston, III
                               -------------------------------------------
                               Robert W. Winston, III
                               President and Chief Executive Officer


                                       21