Document:

<PAGE>

                                                                     EXHIBIT 4.3

      8.00% SERIES B                                   8.00% SERIES B
   CUMULATIVE PREFERRED                             CUMULATIVE PREFERRED
           STOCK                                            STOCK

INCORPORATED UNDER THE LAWS                   THIS CERTIFICATE IS TRANSFERABLE
      OF THE STATE OF                                 IN NEW YORK, NY OR
       NORTH CAROLINA                                     WILSON, NC

                                                      CUSIP 97563A 30 0
                                             SEE REVERSE FOR CERTAIN DEFINITIONS

                          [WINSTON HOTELS, INC. LOGO]

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NONASSESSABLE SHARES OF, $.01 PAR VALUE PER SHARE, OF

Winston, Hotels, Inc. (the "Corporation"), a North Carolina corporation. The
shares represented by this Certificate are transferable only on the stock
transfer books of the Corporation by the holder of record hereof in person or by
duly authorized attorney or legal representative upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned
and registered by the Corporation's transfer agent and registrar.

     In Witness Whereof, the Corporation has caused this Certificate to be
executed by the facsimile seal and signatures of its duly authorized officers.

DATED:

                             [WINSTON HOTELS, INC.
                                CORPORATE SEAL]

COUNTERSIGNED AND REGISTERED
            BRANCH BANKING & TRUST CO.              /s/ Charles M. Winston
            (WILSON, NC)                            CHAIRMAN OF THE BOARD

                  TRANSFER AGENT                    /s/ Joseph V. Green
                   AND REGISTRAR                    PRESIDENT

               AUTHORIZED SIGNATURE

<PAGE>
                              WINSTON HOTELS, INC.

         THE SHARES OF SERIES B CUMULATIVE 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 (A
"REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE
CORPORATION'S ARTICLES OF INCORPORATION, NO PERSON MAY ACQUIRE SHARES OF THE
SERIES B CUMULATIVE PREFERRED STOCK THAT WOULD (I) CAUSE ANY PERSON TO OWN,
DIRECTLY OR INDIRECTLY, IN THE AGGREGATE MORE THAN 9.9% OF THE OUTSTANDING
SHARES OF THE SERIES B CUMULATIVE PREFERRED STOCK, (II) CAUSE ANY PERSON TO OWN,
DIRECTLY OR INDIRECTLY, IN THE AGGREGATE MORE THAN 9.9% OF THE OUTSTANDING
SHARES OF THE CAPITAL STOCK OF THE CORPORATION, (III) RESULT IN THE
DISQUALIFICATION OF THE CORPORATION AS A REIT UNDER THE CODE, OR (IV) 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 THE
MEANING OF SECTIONS 856(D)(2)(B) AND 856(D)(5) OF THE CODE. ANY PERSON WHO
ATTEMPTS TO OWN, DIRECTLY OR INDIRECTLY, SHARES OF CAPITAL STOCK OF THE
CORPORATION IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
CORPORATION.

         THE CORPORATION MAY REQUIRE EVIDENCE OF A PROPOSED TRANSFEREE'S
STATUS AND OWNERSHIP INTEREST BEFORE PERMITTING ANY TRANSFER AND MAY REDEEM ANY
SHARES HELD IN VIOLATION OF THE LIMITATIONS DESCRIBED IN THE PRECEDING
PARAGRAPH. THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER WITHOUT CHARGE A FULL
STATEMENT OF THE TRANSFER RESTRICTIONS UPON REQUEST TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL OFFICE.

         THE SHARES OF SERIES B CUMULATIVE PREFERRED STOCK REPRESENTED HEREBY
ARE SUBJECT TO ALL OF THE PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
OF THE CORPORATION, EACH AS AMENDED FROM TIME TO TIME, TO ALL OF WHICH THE
HOLDER BY ACCEPTANCE HEREOF ASSENTS. THE CORPORATION WILL FURNISH TO ANY
SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF THE SHARES OF EACH
CLASS AUTHORIZED TO BE ISSUED AS WELL AS VARIATIONS IN THE RIGHTS, PREFERENCES
AND LIMITATIONS DETERMINED FOR EACH SERIES, SO FAR AS THE SAME HAS BEEN
DETERMINED BY THE BOARD OF DIRECTORS UNDER ITS AUTHORITY.

         The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.
<Table>
     <S>                                               <C>
     TEN COM - as tenants in common                    UNIT TRANSFER MIN ACT - __________ Custodian __________
     TEN ENT - as tenants by the entireties                                      (Cust.)             (Minor)
     JT TEN  - as joint tenants with right                                     under Uniform Transfers to Minors
               of survivorship and not as tenants                              Act ____________________
               in common                                                                 (State)
</Table>

    Additional abbreviations may also be used though not in the above list.

For value received _______________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
  IDENTIFYING NUMBER OF ASSIGNEE
-------------------------------------|
                                     |
-------------------------------------|------------------------------------------

--------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

--------------------------------------------------------------------------------

                                                                          shares
-------------------------------------------------------------------------
represented by this Certificate, and do hereby irrevocably constitute and
appoint

                                                                        Attorney
-----------------------------------------------------------------------
to transfer the said shares on the books of the Corporation with full power of
substitution in the premises.

         Date:
              ---------------------

Signature(s) Guaranteed:                  --------------------------------------
                                                       Signature(s)

--------------------------------------    --------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED     NOTICE: THE SIGNATURES ON THIS ASSIGN-
BY AN ELIGIBLE GUARANTOR INSTITUTION      MENT MUST CORRESPOND WITH THE NAME(S)
AS DEFINED IN RULE 17Ad-15 UNDER          AS WRITTEN UPON THE FACE OF THE CERTI-
THE SECURITIES EXCHANGE ACT OF 1934,      FICATE IN EVERY PARTICULAR, WITHOUT
AS AMENDED.                               ALTERATION OR ENLARGEMENT, OR ANY
                                          CHANGE WHATEVER.Ex-4.4(b) Form of Articles of Amendment

 

EXHIBIT 4.4(b)

ARTICLES OF AMENDMENT

TO

RESTATED ARTICLES OF INCORPORATION

OF

WINSTON HOTELS, INC.

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

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

         2.         The Corporation’s Restated Articles of Incorporation are hereby amended
by adding the following subsection (b) of Article 5:

(b)    Series B Preferred Stock

         (i)       TITLE. The series of Preferred Stock is hereby designated as the
“8.00% Series B Cumulative Preferred Stock” (the “Series B Preferred Stock”).

         (ii)       NUMBER. The maximum number of authorized shares of the Series B
Preferred Stock shall be 5,000,000.

         (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 B 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 B
Preferred Stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Corporation; (ii) on a parity with the
Corporation’s Series A Preferred Stock and all other equity securities issued
by the Corporation, the terms of which specifically provide that such equity
securities rank on a parity with the Series B 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 B Preferred Stock prior to
conversion.

         (iv)     DIVIDENDS.

                    (A)     The holders of the then outstanding Series B 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 8.00% per annum of the Liquidation Preference (as defined herein) per
share (equivalent to a fixed annual amount of $2.00 per share).

 

 

                    Dividends on the Series B 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 April
16, 2004. Dividends payable on the Series B 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 B 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 B 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 $2.00 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 (b) of Article 5, the Series B
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 B Preferred Stock which may be in arrears.

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

                    (E)     No dividends on shares of Series B 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 B 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 B Preferred Stock will not bear interest and
holders of the Series B Preferred Stock will not be entitled to any distributions in excess of full cumulative
distributions described above.

2

 

                    (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 B 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 B 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 B 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 B Preferred Stock and the shares of any other
series of Preferred Stock ranking on a parity as to dividends with the Series B
Preferred Stock, all dividends declared upon the Series B Preferred Stock and
any other series of Preferred Stock ranking on a parity as to dividends with
the Series B Preferred Stock shall be declared pro rata so that the amount of
dividends declared per share of Series B 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 B 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 B Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for payment for all past dividend periods and
the then current dividend period, no dividends (other than in shares of Common
Stock or other shares of capital stock ranking junior to the Series B Preferred
Stock as to dividends and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made upon the
Common Stock or any other capital stock of the Corporation ranking junior to or
on a parity with the Series B Preferred Stock as to dividends or upon
liquidation, nor shall any shares of Common Stock, or any other shares of
capital stock of the Corporation ranking junior to or on a parity with the
Series B Preferred Stock as to dividends or upon liquidation, be redeemed,
purchased or otherwise acquired for any consideration (or any 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 B 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 B Preferred Stock shall not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends on the Series B Preferred Stock as provided above. Any
dividend payment made on shares of the Series B Preferred Stock shall first be
credited against the earliest accrued but unpaid dividend due with respect to
such shares which remains payable.

         (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 B
Preferred Stock are entitled to

3

 

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 B Preferred
Stock as to liquidation rights. Holders of Series B 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 B Preferred Stock of
the full preferential amounts provided for in this subsection (b) of Article 5,
the holders of the Series B 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 B Preferred Stock and any other
shares of the Corporation ranking as to any such distribution on a parity with
the Series B Preferred Stock are not paid in full, the holders of the Series B
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 (b) of Article 5.

         (vi)     REDEMPTION.

                    (A)     OPTIONAL REDEMPTION. Subject to the provision of Article 15 of the
Restated Articles of Incorporation, the Series B Preferred Stock shall not be
redeemable prior to February 24, 2009. On and after February 24, 2009, the
Corporation may, at its option, redeem at any time from time to time, in whole
or in part, the Series B Preferred Stock at a price per share (the “Redemption
Price”), payable in cash, of $25.00, 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 B 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)     Notwithstanding the provisions of clause (A) of this
subparagraph (vi), at any time prior to February 24, 2009, the
Corporation may, at its option, upon the occurrence of a Change of
Control Event (as defined below) redeem all of the outstanding Series B
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:

4

 

	 	 	 	 	 	 	 
	Date of Redemption	 	 
	
	 	Purchase
	From	 	Through	 	Price
	
	 	
	 	

	Closing of Offering
	 	March 31, 2004
	 	$	26.25	 
	April 1, 2004
	 	June 30, 2004
	 	 	26.19	 
	July 1, 2004
	 	September 30, 2004
	 	 	26.13	 
	October 1, 2004
	 	December 31, 2004
	 	 	26.06	 
	January 1, 2005
	 	March 31, 2005
	 	 	26.00	 
	April 1, 2005
	 	June 30, 2005
	 	 	25.94	 
	July 1, 2005
	 	September 30, 2005
	 	 	25.88	 
	October 1, 2005
	 	December 31, 2005
	 	 	25.81	 
	January 1, 2006
	 	March 31, 2006
	 	 	25.75	 
	April 1, 2006
	 	June 30, 2006
	 	 	25.69	 
	July 1, 2006
	 	September 30, 2006
	 	 	25.63	 
	October 1, 2006
	 	December 31, 2006
	 	 	25.56	 
	January 1, 2007
	 	March 31, 2007
	 	 	25.50	 
	April 1, 2007
	 	June 30, 2007
	 	 	25.44	 
	July 1, 2007
	 	September 30, 2007
	 	 	25.38	 
	October 1, 2007
	 	December 31, 2007
	 	 	25.31	 
	January 1, 2008
	 	March 31, 2008
	 	 	25.25	 
	April 1, 2008
	 	June 30, 2008
	 	 	25.19	 
	July 1, 2008
	 	September 30, 2008
	 	 	25.13	 
	October 1, 2008
	 	December 31, 2008
	 	 	25.06	 
	January 1, 2009
	 	February 24, 2009
	 	 	25.00	 

                    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.

          (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

5

 

indirectly, of Voting Stock representing more than 25% 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.

               (3)     Notwithstanding the provisions of subclause (1) of this clause
(B), if applicable law provides that the holders of the Series B
Preferred Stock do not have any right to vote as a separate class with
respect to an event or transaction that results in a Change of Control
(as defined above) or any related amendment, alteration or repeal of any
provision in the Restated Articles of Incorporation, then the Corporation
shall not have the right to redeem the Series B Preferred Stock as
provided in this clause (B) above prior to February 24, 2009.

               (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 B 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 B 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 B 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 B 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 B 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 B Preferred
Stock to be redeemed from such holder.

6

 

               (2)     If notice has been mailed in accordance with clause (vi)(C)(1)
of this subsection (b) of Article V 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 B 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 B 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 B 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 B Preferred Stock so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so require
and the notice shall so state), such Series B Preferred Stock shall be
redeemed by the Corporation at the Redemption Price. In case fewer than
all the shares of Series B Preferred Stock represented by any such
certificate are redeemed, a new certificate or certificates shall be
issued representing the unredeemed shares of Series B Preferred Stock
without cost to the holder thereof.

               (3)     Any funds deposited with a bank or trust corporation for the
purpose of redeeming Series B 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 B 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 B
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 B Preferred Stock shall be redeemed unless
all outstanding shares of Series B Preferred Stock are simultaneously
redeemed and the Corporation shall not purchase or otherwise acquire
directly or indirectly any shares of Series B Preferred Stock (except by
exchange for capital stock of the Corporation ranking junior to the
Series B 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 B Preferred Stock in order to ensure that
the

7

 

Corporation continues to meet the requirements for qualification as
a REIT, or the purchase or acquisition of shares of Series B Preferred
Stock pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of Series B 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 B 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 B 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 B 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 B Preferred Stock is
to be redeemed, the Series B 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 B 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 B 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 B Preferred Stock
together with all other series of Preferred Stock ranking on a parity with the
Series B 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 shares of Series
B Preferred Stock outstanding at that time 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 B Preferred Stock for the past dividend periods and the
dividend for the then current dividend period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. A
quorum for any such meeting shall exist if at least a majority of the
outstanding shares of Series B 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 B 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

8

 

present. If and when all accumulated dividends and the dividend for the
then current dividend period on the Series B Preferred Stock shall have been
paid in full or set aside for payment in full, the holders 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 B 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 B
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 B Preferred Stock remain outstanding,
the Corporation will not, without the affirmative vote or consent of the
holders of at least a majority of the shares of Series B 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 Restated Articles of Incorporation or this
subsection (b) of Article 5 thereof, so as to materially and adversely affect
any right, preference, privilege or voting power of the Series B Preferred
Stock or the holders thereof (an “Event”); provided, however, that with respect
to the occurrence of any Event set forth above, so long as the Series B
Preferred Stock remains outstanding with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event the Company
may not be the surviving entity, the Event shall not be deemed to materially
and adversely affect the rights, preferences, privileges or voting power of
holders of the Series B Preferred Stock and the holders of the Series B
Preferred Stock will not have any voting rights with respect to such Event;
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 B Preferred Stock
with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to affect
materially and adversely the rights, preferences, privileges or voting powers
of the Series B Preferred Stock or its holders.

                    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 B Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been
deposited in trust to effect such redemption.

9

 

                    (C)     On each matter submitted to a vote of the holders of Series B
Preferred Stock in accordance with this paragraph (vii), or as otherwise
required by law, each share of
Series B Preferred Stock shall be entitled to one vote. With respect to
each share of Series B 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 B Preferred Stock are not
convertible into or exchangeable for any other property or securities of the
Corporation.

         (ix)     RESTRICTIONS ON OWNERSHIP AND TRANSFER.

                    (A)     The record and beneficial holders of Series B Preferred Stock shall,
upon demand, disclose to the Board of Directors in writing such information
with respect to direct and indirect ownership of the Corporation’s capital
stock as the Board of Directors deems necessary to comply with the provisions
of the Code pertaining to the qualification of the Corporation as a REIT or to
comply with the requirements of any taxing authority or governmental entity of
agency.

                    (B)     Whenever it is deemed by the Board of Directors to be reasonably
necessary to protect the tax status of the Corporation as a REIT, the Board of
Directors may require a statement or affidavit from any holder of the Series B
Preferred Stock or proposed transferee of shares of Series B Preferred Stock
setting forth the number and class or series of shares of capital stock already
owned by such holder or transferee and any related person in the form
prescribed by the Board of Directors for that purpose. If, in the opinion of
the Board of Directors, which opinion shall be binding on the proposed
transferor and transferee, the proposed transfer may jeopardize the
qualification of the Corporation as a REIT, the Board of Directors has the
right, but not a duty, to refuse to transfer the shares of Series B Preferred
Stock to the proposed transferee. All contracts for the sale or other transfer
of shares of Series B Preferred Stock shall be subject to this provision.

                    (C)     Notwithstanding any other provision of the Restated Articles of
Incorporation to the contrary, no person shall at any time directly or
indirectly, without the express prior written consent of the Board of
Directors, acquire ownership in the aggregate of more than 9.9% of the
outstanding shares of Series B Preferred Stock (the “Series B Preferred Stock
Ownership Limit”). Shares of Series B Preferred Stock directly or indirectly
owned by a person in excess of the Series B Preferred Stock Ownership Limit at
any time shall be deemed to be Excess Shares (as defined in Section 15(d) of
the Restated Articles of Incorporation). For purposed of this clause (C) of
subparagraph (ix) of subsection (b) of Article 5 of the Restated Articles of
Incorporation, a person shall be deemed to own shares of Series B Preferred
Stock owned by such person after applying the rules of Section 544 of the Code
as modified by Section 856(a)(6) and Section 856(h) of the Code. All shares of
Series B Preferred Stock which any person has the right to acquire upon the
exercise of outstanding rights, options and warrants, and upon conversion of
any securities convertible into shares of Series B Preferred Stock, if any,
shall be considered outstanding for purposes of the Series B Preferred Stock
Ownership Limit if such inclusion will cause such person to own more than the
Series B Preferred Stock Ownership Limit.

         3.         These Articles of Amendment were duly adopted by the Board of Directors
of the Corporation on January 22, 2004.

10

 

         4.         These Articles of Amendment were duly adopted by the Board of Directors
of the Corporation without shareholder action as shareholder action was not required
because, as permitted by General Statutes 55-6-02, Article 5 of the Restated
Articles of Incorporation authorizes the Board of Directors to issue from time
to time preferred stock 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.

         5.         These Articles of Amendment will be effective upon filing.

         IN WITNESS WHEREOF, Winston Hotels, Inc. has caused these Articles of
Amendment to be executed by its duly authorized officer 
this ______ day of
February, 2004.

	 	 	 	 	 
	 	 	WINSTON HOTELS, INC
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Robert W. Winston, III

Chairman and Chief Executive Officer

11

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