<PAGE>   1

                             ARTICLES OF RESTATEMENT
                                       OF
                              WINSTON HOTELS, INC.



         Pursuant to Section 55-10-07 of the North Carolina General Statutes,
the undersigned corporation hereby submits these Articles of Restatement for the
purposes of amending a provision of, and integrating into one document, its
Articles of Incorporation:

         1. The name of the corporation is Winston Hotels, Inc.

         2. Attached hereto as Exhibit A are the Restated Articles of
Incorporation of the Corporation which contain an amendment to the Articles of
Incorporation requiring shareholder approval.

         3. The amendment to the Articles of Incorporation contained within the
attached Restated Articles of Incorporation was approved and adopted by the
shareholders of Winston Hotels, Inc. on May 18, 1999, in the manner prescribed
by Chapter 55 of the North Carolina General Statutes and other applicable law.

         4. The Restated Articles of Incorporation will become effective upon
filing.


IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of July, 1999.


                                                 WINSTON HOTELS, INC.



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






<PAGE>   2

                                    EXHIBIT A



                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                              WINSTON HOTELS, INC.



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

         2. For Profit. The Corporation is for profit.

         3. Principal and Registered Office. The address of the Corporation's
registered office and its principal office is 2209 Century Drive, Suite 300,
Raleigh, Wake County, North Carolina 27612.

         4. Registered Agent. The name of the Corporation's registered agent at
that office is Robert W. Winston, III.

         5. Authorized Capital Stock. The total number of shares of stock which
the Corporation has authority to issue is fifty million (50,000,000) shares of a
class denominated Common Stock, $.01 par value per share, and ten million
(10,000,000) shares of a class denominated Preferred Stock, $.01 par value per
share.

         The Preferred Stock may be issued from time to time by the Board of
Directors of the Corporation, in such series and with such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or other provisions as may be fixed by the Board of
Directors.

                  (a) Series A Preferred Stock


<PAGE>   3

                           (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.

                           (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



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<PAGE>   4

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.


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<PAGE>   5

         (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



                                       4
<PAGE>   6

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 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



                                       5
<PAGE>   7

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, together with all accrued and



                                       6
<PAGE>   8

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



                                       7
<PAGE>   9

         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.

                           (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



                                       8
<PAGE>   10

                  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 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.



                                       9
<PAGE>   11

                  (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



                                       10
<PAGE>   12

                  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 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.



                                       11
<PAGE>   13

                  (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 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



                                       12
<PAGE>   14

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,



                                       13
<PAGE>   15

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.

         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



                                       14
<PAGE>   16

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 5(a)(ix)(I)(1) hereof.

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

                  "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



                                       15
<PAGE>   17

"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 5(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



                                       16
<PAGE>   18

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.

                  "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 5(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 5(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 5(a)(ix)(C) hereof.



                                       17
<PAGE>   19

                  "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 5(a)(ix)(C) hereof and administered in accordance with the terms of
Section 5(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.

                  (1) Except as provided in Section 5(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.

                  (2) Except as provided in Section 5(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



                                       18
<PAGE>   20

(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 5(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 5(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



                                       19
<PAGE>   21

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 5(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.

                  (2) If, notwithstanding the other provisions contained in this
Section 5(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


                                       20
<PAGE>   22

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 5(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 5(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 5(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 5(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 5(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:

                  (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



                                       21
<PAGE>   23

         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 5(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
5(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



                                       22
<PAGE>   24

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
5(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 5(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 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 5(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 5(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



                                       23
<PAGE>   25

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 5(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 5(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 the



                                       24
<PAGE>   26

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 5(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 5(a)(ix)(C) hereof. Upon the
designation by the Trustee of a Permitted Transferee in accordance with the
provisions of this Section 5(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 5(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 5(a)(ix)(I)(5) hereof or following the
acceptance of the offer to purchase such shares in accordance with Section
5(a)(ix)(I)(7) hereof) to receive from the Trustee following the sale or other
disposition of such Shares-in-Trust the



                                       25
<PAGE>   27

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 5(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 5(a)(ix)(I)(6) shall be distributed to
the Beneficiary in accordance with the provisions of Section 5(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 5(a)(ix)(I), by such Trustee or the Corporation.

                  (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 5(a)(ix)(I)(E) hereof.



                                       26
<PAGE>   28

         (J) Remedies Not Limited. Nothing contained in this Section 5(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 5(a)(ix), including any definition contained in
Section 5(a)(ix)(A) hereof, the Board of Directors shall have the power to
determine the application of the provisions of this Section 5(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 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."



                                       27
<PAGE>   29

         (M) Severability. If any provision of this Section 5(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.

         6. Directors. (a) The Corporation shall have a Board of Directors
consisting of not less than three (3) nor more than nine (9) members. The number
of directors may be fixed from time to time within this range by the
shareholders or by the affirmative vote of at least 80% of the members of the
Board of Directors. However, the number of directors shall never be less than
the minimum number required by the North Carolina Business Corporation Act. A
director need not be a shareholder.

         (b) Independent Directors. Notwithstanding anything herein to the
contrary, at all times (except during a period not to exceed sixty (60) days
following the death, resignation, incapacity or removal from office of a
director prior to expiration of the director's term of office), a majority of
the Board of Directors shall be comprised of persons who are not officers or
employees of the Corporation or "Affiliates" of (i) any advisor to the
Corporation under an advisory agreement, (ii) any lessee of any property of the
Corporation, (iii) any subsidiary of the Corporation or (iv) any partnership
which is an Affiliate of the Corporation.

         (c) Definition of Affiliate. For purposes of the foregoing subsection,
"Affiliate" of a person shall mean (i) any person that, directly or indirectly,
controls or is controlled by or is under common control with such person, (ii)
any other person that owns, beneficially, directly or indirectly, five percent
(5%) or more of the outstanding capital stock, shares or equity interests of
such person, or (iii) any officer, director, employee, partner or trustee of
such person or any person controlling, controlled by or under common control
with such person (excluding trustees and persons serving in similar capacities
who are not otherwise an Affiliate of such person). The term "person" means and
includes individuals, corporations, general and limited partnerships, stock
companies or associations, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, or other entities and



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<PAGE>   30

governments and agencies and political subdivisions thereof. For the purposes of
this definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.

         (d) Amendment of this Section. Notwithstanding any other provisions of
this Charter or the Bylaws of the Corporation (and notwithstanding that some
lesser percentage may be specified by law, this Charter or the Bylaws of the
Corporation), the provisions of this Article 6 shall not be amended, altered,
changed or repealed without the affirmative vote of at least 80% of the members
of the Board of Directors or the affirmative vote of the holders of not less
than 75% of the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, voting separately as a class.

         7. Limitation on Indebtedness. The Corporation may not incur or allow
to exist as of the end of any month Indebtedness (as defined below) in an amount
in excess of sixty percent (60%) of the Corporation's investment in hotel
properties, at cost, after giving effect to the Corporation's use of proceeds
from any indebtedness. For purposes of the foregoing restrictions, "cost" shall
mean that the cost of properties be accounted for using the purchase method of
accounting, including situations where properties are acquired from affiliates
or others and are accounted for at the historical cost basis of the affiliates
or others under generally accepted accounting principles. For purposes of the
foregoing restrictions, "Indebtedness" of the Corporation shall mean all direct
and indirect obligations of the Corporation, its subsidiaries or any partnership
in which the Corporation serves as general partner, for borrowed money
(including all notes payable and drafts accepted representing extensions of
credit) and all obligations evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily paid, including
obligations under capital leases. For purposes of this Article 7, the
Corporation's investment in hotel properties shall include all investments made
directly or indirectly



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<PAGE>   31

through the Corporation or through its subsidiaries or any partnership in which
the Corporation serves as general partner.

         8. Dividends. All shares of Common Stock will participate equally in
dividends payable to holders of shares of Common Stock when and as declared by
the Board of Directors and in net assets available for distribution to holders
of shares of Common Stock upon liquidation or dissolution.

         9. Voting. Each holder of Common Stock shall be entitled to one vote
per share on all matters to be voted on by the shareholders of the Corporation.

         10. Preemptive Rights. No holder of shares of capital stock of the
Corporation shall have any preemptive or preferential right to subscribe to or
purchase (i) any shares of any class of the Corporation, whether now or
hereafter authorized; (ii) any warrants, rights, or options to purchase any such
shares; or (iii) any securities or obligations convertible into any such shares
or into warrants, rights, or options to purchase any such shares.

         11. Limitation on Liability to Shareholders. To the maximum extent that
North Carolina law in effect from time to time permits limitation of the
liability of directors and officers, no director or officer of the Corporation
shall be liable to the Corporation or its shareholders for money damages.
Neither the amendment nor repeal of this provision, nor the adoption or
amendment of any other provision of this Charter or Bylaws inconsistent with
this provision, shall apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.

         12. Indemnification. Any word or words defined in Part 5 of Article 8
of Chapter 55 of the General Statutes of North Carolina, as amended from time to
time, or any successor provision thereof (the "Indemnification Section") used in
this Article 12, shall have the same meaning as provided in the Indemnification
Section.


                                       30
<PAGE>   32

         The Corporation shall indemnify and advance expenses to a director,
officer, employee or agent of the Corporation in connection with a proceeding to
the fullest extent permitted by and in accordance with the Indemnification
Section.

         13. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation or who, while a director, officer, employee or agent of the
Corporation is or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against liability asserted against or incurred by such person in
that capacity or arising from such person's status as a director, officer,
employee or agent, whether or not the Corporation would have power to indemnify
such person against the same liability under the Indemnification Section.

         14. REIT Status. The Corporation shall seek to elect and maintain
status as a real estate investment trust ("REIT") under Sections 856-860 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"). It
shall be the duty of the Board of Directors to ensure that the Corporation
satisfies the requirements for qualification as a REIT under the Code,
including, but not limited to, the ownership of its outstanding stock, the
nature of its assets, the sources of its income, and the amount and timing of
its distributions to its shareholders. The Board of Directors shall take no
action to disqualify the Corporation as a REIT or to otherwise revoke the
Corporation's election to be taxed as a REIT without the affirmative vote of
two-thirds (2/3) of the number of shares of Common Stock entitled to vote on
such matter at a special meeting of the Shareholders.

         15. Restrictions on Transfer.

         (a) Affidavits of Transferees. Whenever it is deemed by the Board of
Directors to be prudent in protecting the tax status of the Corporation as a
REIT under the Code and regulations issued under the Code, the Board of
Directors may require to be filed with the Corporation a statement or affidavit
from each proposed transferee of shares of capital stock of the Corporation
setting forth the



                                       31
<PAGE>   33

number of such shares already owned by the transferee and any related person(s)
specified in the form prescribed by the Board of Directors for that purpose. Any
contract for the sale or other transfer of shares of capital stock of the
Corporation shall be subject to this provision.

         (b) Affidavits of Shareholders. Prior to any transfer or transaction
which would cause a shareholder to own, directly or indirectly, shares in excess
of the "Limit" as defined in paragraph (d) of this Article 15, and in any event
upon demand of the Board of Directors, such shareholder shall file with the
Corporation an affidavit setting forth the number of shares of capital stock of
the Corporation (a) owned directly and (b) owned indirectly by the person filing
the affidavit. For purposes of this paragraph (b), shares of capital stock not
owned directly shall be deemed to be owned indirectly by a person if that person
would be the beneficial owner of such shares for purposes of Rule 13d-3, or any
successor rule thereto, promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") and/or would be considered to own such shares by reason of
the attribution rules in Section 544 (as modified by Section 856(h)) of the Code
or the regulations issued thereunder.

         The affidavit to be filed with the Corporation shall set forth all
information required to be reported in returns filed by shareholders under
Treasury Regulation ss. 1.857-9 issued under the Code or similar provisions of
any successor regulation, and in reports to be filed under Section 13(d), or any
successor rule thereto, of the Exchange Act. The affidavit, or an amendment
thereto, shall be filed with the Corporation within ten (10) days after demand
therefor and at least fifteen (15) days prior to any transfer or transaction
which, if consummated, would cause the filing person to hold a number of shares
of capital stock of the Corporation in excess of the "Limit" as defined in
paragraph (d) of this Article 15.

         (c) Void Transfers. Notwithstanding any other provision hereof to the
contrary except Section 15(e), any acquisition of shares of capital stock that
(i) would cause any person's ownership to exceed the Limit (as defined in
Section 15(d)), (ii) would result in the disqualification of the Corporation as
a REIT under the Code, or (iii) would cause the Corporation to be treated as
owning, directly or indirectly, 10% or more of the ownership interests in a
tenant of the Corporation's real property, within



                                       32
<PAGE>   34

the meaning of Sections 856(d)(2)(B) and 856(d)(5) of the Code, shall be void ab
initio to the fullest extent permitted under applicable law and the intended
transferee of those shares shall be deemed never to have had an interest
therein. If the foregoing provision is determined to be void or invalid by
virtue of any legal decision, statute, rule or regulation, then the transferee
of those shares shall be deemed to be Excess Shares (as defined in Section
15(d)) and subject to Section 15(f) below.

         (d) Excess Shares. Except as provided in Section 15(e), no person shall
at any time directly or indirectly own in the aggregate more than 9.9% of the
outstanding shares of capital stock of the Corporation (the "Limit"). Shares
which but for this Article 15 would be owned by a person and would, at any time,
be in excess of the Limit shall be deemed "Excess Shares" and shall become
subject to Section 15(f). For the purpose of determining whether shares are
Excess Shares, "ownership" of shares shall be deemed to include shares
constructively owned by a person under the provisions of Section 544 (as
modified by Section 856(h)) of the Code. All shares of capital stock of the
Corporation which any person has the right to acquire upon exercise of
outstanding rights, options and warrants, and upon conversion of any securities
convertible into those shares, if any, shall be considered outstanding for
purposes of determining the applicable Limit if such inclusion will cause such
person to own more than the Limit.

         (e) Exemptions. The ownership limits set forth in paragraphs (c) and
(d) of this Article 15 shall not apply to the acquisition of shares of capital
stock of the Corporation by an underwriter in a public offering of those shares
or in any transaction involving the issuance of shares of capital stock by the
Corporation in which the Board of Directors determines that the underwriter or
other person or party initially acquiring those shares will timely distribute
those shares to or among others so that, following such distribution, the
ownership of those shares will not be in violation of Sections 15(c) or (d). The
Board of Directors in its discretion may exempt from the Limit and from the
filing requirements of paragraph (b) of this Article 15 ownership or transfers
of certain designated shares of capital stock of the Corporation while owned by
or transferred to a person who has provided the Board of Directors with



                                       33
<PAGE>   35

evidence and assurances acceptable to the Board of Directors that the
qualification of the Corporation as a REIT under the Code and the regulations
issued under the Code would not be jeopardized thereby.

         (f) Treatment of Excess Shares.

                  (i) If the Board of Directors of the Corporation shall at any
time determine that a transaction has taken place within the scope of Section
15(c) or that any person intends to acquire Excess Shares, the Board of
Directors shall take such action as it or they deem advisable to refuse to give
effect to or to prevent such transaction, including but not limited to refusing
to give effect to such transfer on the books of the Corporation.

                  (ii) If, notwithstanding Sections 15(c) and (f)(i), a
purported transferee (a "Record Transferee") acquires Excess Shares, the Record
Transferee shall be deemed to have received such Excess Shares as agent on
behalf of, and to hold such Excess Shares in trust for the exclusive benefit of,
the person(s) to whom the Excess Shares may be later transferred pursuant to
Section 15(f)(iii). The Record Transferee shall have no right to receive
dividends or other distributions on the Excess Shares and shall have no right to
vote the Excess Shares. The Record Transferee shall have no claim, cause of
action, or any other recourse whatsoever against the transferor of the Excess
Shares. The Record Transferee's sole right with respect to the trust shall be to
receive, at the Corporation's sole and absolute discretion, either (i) an amount
upon the resale of the Excess Shares as directed by the Corporation pursuant to
Section 15(f)(iii) or (ii) an amount upon the redemption of the Excess Shares by
the Corporation pursuant to Section 15(f)(iii).

                  (iii) The Board of Directors will, within six months after
receiving a notice of a transfer that causes a Record Transferee to own Excess
Shares, either, in its sole and absolute discretion, (a) direct the Record
Transferee to sell all of the Excess Shares held in trust pursuant to Section
15(f)(ii) for cash in such manner as the Board of Directors directs or (b)
redeem such Excess Shares for the price and on the terms set forth in Section
15(f)(iii)(b) on such date within such six month period as the Board of
Directors may determine.



                                       34
<PAGE>   36

                  (a) If the Board of Directors directs the Record Transferee to
sell the Excess Shares in held in trust, the Record Transferee shall pay the
Corporation out of the proceeds of such sale all expenses incurred by the
Corporation in connection with such sale plus any remaining amount of such
proceeds that exceeds the amount paid by the Record Transferee for the Excess
Shares, and the Record Transferee shall be entitled to retain only any proceeds
in excess of such amount required to be paid to the Corporation.

                  (b) If the Board of Directors determines to redeem the Excess
Shares, written notice of redemption (the "Notice") shall be provided to the
Record Transferee of the Excess Shares not less than one week prior to the
redemption date (the "Redemption Date") determined by the Board of Directors and
included in the Notice. The redemption price per share to be paid for Excess
Shares will be equal to the lesser of (i) the principal price paid by the Record
Transferee from whom Excess Shares are being redeemed, (ii)(a) the closing price
per share of the shares on the principal national securities exchange on which
the shares are listed or admitted to trading on the date of Notice, or (b) if
the shares are not so listed or admitted to trading, the closing bid price on
the date of Notice as reported on the National Association of Securities
Dealers, Inc. System, if quoted thereon (the price per share determined under
clause (a) or (b) being herein defined as the "Market Price"), or (c) if a
Market Price is not determinable in accordance with either clause (a) or (b) of
this sentence, the net asset value per share on the date of Notice determined in
good faith by the Board of Directors, (iii) the Market Price on the date on
which the person would but for this Article 15 have been deemed to acquire
ownership of the Excess Shares, or (iv) the maximum price allowed under Part 5
of Chapter 35 of Title 48 of the North Carolina Code Annotated. The amount
payable to the Record Transferee for Excess Shares so redeemed may be paid, at
the option of the Corporation, in the form of the number of "Units" equal to the
number of shares redeemed divided by the "Conversion Factor," as those terms are
defined in the Amended and Restated Agreement of Limited Partnership of WINN
Limited Partnership. The redemption price for any shares of capital stock of the
Corporation so redeemed shall be paid on the Redemption Date. From and



                                       35
<PAGE>   37

after the Redemption Date, the holder of any redeemed shares of capital stock of
the Corporation shall cease to be entitled to any distributions or other
benefits with respect to redeemed shares, except the right to receive payment of
the redemption price fixed as aforesaid.

         (g) Application of Article. Nothing contained in this Article 15 or in
any other provision hereof shall limit the authority of the Board of Directors
to take any and all other action as it in its sole discretion deems necessary or
advisable to protect the Corporation and the interests of its shareholders by
maintaining the Corporation's eligibility to be, and preserving the
Corporation's status as, a REIT under the Code.

         (h) Definition of "Person". For purposes of this Article only, the term
"person" shall include individuals, corporations, limited partnerships, general
partnerships, joint stock companies or associations, joint ventures,
associations, consortia, companies, trusts, banks, trust companies, land trusts,
common law trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof.

         (i) Severability. If any provision of this Article 15 or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issue, 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
that court.

         (j) Legend. Certificates representing shares of capital stock of the
Corporation shall bear a legend referencing the restrictions set forth in this
Article 15.

         (k) Nothing in these Articles of Incorporation shall preclude
settlement of any transaction entered into through the facilities of the New
York Stock Exchange.



                                       36