Exhibit 10.1

 

AMENDMENT NO. 1 TO THE

 

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP

 

DESIGNATION OF 8.250% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

 

August 28, 2020

 

This Amendment NO. 1 to the Amended and Restated Agreement of Limited
Partnership of DiamondRock Hospitality Limited Partnership (this “First
Amendment”) is made as of August 28, 2020 by DiamondRock Hospitality Company, a
Maryland corporation, as the General Partner of DiamondRock Hospitality Limited
Partnership, a Delaware limited partnership (the “Partnership”), pursuant to the
Amended and Restated Agreement of Limited Partnership of DiamondRock Hospitality
Limited Partnership, dated as of August 28, 2018 (the “Partnership Agreement”).
Capitalized terms used and not defined herein shall have the meanings set forth
in the Partnership Agreement.

 

WHEREAS, Section 4.2.E of the Partnership Agreement generally prohibits the
General Partner from issuing shares of capital stock unless (i) the General
Partner shall cause the Partnership to issue to the General Partner additional
Partnership Interests or certain other securities of the Partnership having
designations, preferences and other rights such that the economic interests
thereof are substantially similar to those of such capital stock, and (ii) the
General Partner contributes the proceeds therefrom to the Partnership;

 

WHEREAS, Section 4.2.A of the Partnership Agreement authorizes the General
Partner, in connection with the issuance of shares of capital stock by the
General Partner and the contribution of the proceeds therefrom to the
Partnership, to cause the Partnership to issue to the General Partner additional
Partnership Interests having designations, preferences and other rights such
that the economic interests attributable to such Partnership Interests are
substantially similar to those of such REIT Shares;

 

WHEREAS, Sections 14.2.B(2) and 14.2B(3) of the Partnership Agreement permit the
General Partner, without the consent of the Limited Partners, to amend the
Partnership Agreement for the purpose of reflecting the issuance of additional
Partnership Interests pursuant to Section 4.2 and setting forth the
designations, rights, powers, duties and preferences of the Holders of any
additional Partnership Interests issued pursuant to the Partnership Agreement;

 

WHEREAS, pursuant to and in accordance with Section 4.2.A of the Partnership
Agreement, the General Partner is causing the Partnership to issue additional
Partnership Interests to the General Partner in connection with the issuance by
the General Partner of shares of its 8.250% Series A Cumulative Redeemable
Preferred Stock, par value $0.01 per share, with a stated liquidation preference
of $25.00 per share (the “Series A Preferred Stock”), and the contribution of
the proceeds therefrom to the Partnership; and

 

1

 

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
Partnership Agreement hereby is amended as follows:

 

1.            In accordance with Section 4.2 of the Partnership Agreement, set
forth in Exhibit A hereto are the terms and conditions of units designated as
“8.250% Series A Cumulative Redeemable Preferred Units” (the “Series A Preferred
Units”), which hereby are established and which are to be issued to the General
Partner inconsideration of its contribution to the Partnership of the net
proceeds from the issuance and sale of shares of Series A Preferred Stock. The
Partnership Agreement hereby is amended to incorporate Exhibit A to this First
Amendment as Exhibit D to the Partnership Agreement.

 

2.            Section 6.1 of the Partnership Agreement is hereby amended and
restated as follows:

 

Section 6.1 Capital Account Allocations of Profit and Loss

 

A.Profit.

 

(1)After giving effect to the special allocations, if any, required under
this Article 6 for the applicable period, and subject to the other provisions of
this Section 6.1 and to the allocations to be made with respect to any Preferred
Units or additional class or series of Partnership Units established pursuant
to Section 4.2, Profits in each taxable year or other allocation period shall be
allocated to the Partners’ Capital Accounts in the following order of priority:

 

i.First, to the Partners in the same ratio and reverse order as Loss was
allocated to such Partners pursuant to Section 6.1.B for all fiscal years until
the aggregate amount allocated to such Partners pursuant to such provisions of
Section 6.1B equals the aggregate amount allocated pursuant to this
Section 6.1.A(1)(i); and

 

ii.Thereafter, to the holders of Common Units and LTIP Units in accordance with
their respective Percentage Interests.

 

(2)Notwithstanding the provisions of Section 6.1.A(1) above, items of gross
income shall first be allocated to the holders of each class of Preferred Units,
(a) on a class by class basis (1) in the order of priority in which each such
class is entitled to receive distributions pursuant to the provisions of
Section 5.1 and/or the Certificate of Designations attached hereto and (2) in an
amount equal to the aggregate distributions made to each such class of Preferred
Units pursuant to the provisions of Section 5.1 or the Certificates of
Designations attached hereto (other than distributions properly treated as
return of capital), and (b) within each such class of Preferred Units in
proportion to the distributions with respect to such class referred to in clause
(2) above received by each holder of Preferred Units (other than distributions
properly treated as return of capital). If in any taxable year or other
allocation period the General Partner determines, in consultation with its tax
advisors, that the Partnership is required to treat all or any portion of a
distribution to a Preferred Unit as a guaranteed payment for capital under Code
Section 707(c) (e.g. if the Partnership has insufficient items of gross income
in such allocation period), then for purposes of applying this
Section 6.1A(2) in future allocation periods the Partnership shall be deemed to
have allocated to the applicable holders of Preferred Units, pursuant to this
Section 6.1A(2), items of gross income in an amount equal to the amount of such
guaranteed payment received by each holder of Preferred Units with respect to
such Preferred Units.

 

 2 

 

 

B.Losses. After giving effect to the special allocations, if any, required under
this Article 6 for the applicable period, and subject to the allocations to be
made with respect to any Preferred Units or additional class or series of
Partnership Units established pursuant to Section 4.2, and further subject to
the other provisions of this Section 6.1, Loss in each taxable year or other
period shall be allocated in the following order of priority:

 

(1)First, to the holders of Common Units and LTIP Units with positive balances
in their Economic Capital Account Balances in accordance with their respective
Percentage Interests until their Economic Capital Accounts Balances (excluding,
for this purpose, the portion of any such Economic Capital Account attributable
to Capital Contributions made with respect to Preferred Units) are reduced to
zero;

 

(2)Second, to the holders of each class of Preferred Units, on a class by class
basis, in the reverse priority in which each such class is entitled to
distributions pursuant to the provisions of Section 5.1.A(1) and/or the
Certificate of Designations attached hereto, and within such class to each
holder of such class of Preferred Units, pro rata, in proportion to the portion
of their Economic Capital Account balance attributable to Capital Contributions
made with respect to such class of Preferred Units until such portion of their
Economic Capital Account balance has been reduced to zero; and

 

(3)Thereafter, to the General Partner.

 

For purposes of determining allocations of Losses pursuant to Section 6.1B(1),
an LTIP Unit Limited Partner shall be treated as having a separate Economic
Capital Account Balance, and for this purpose a separate Capital Account with an
appropriate share of Partnership Minimum Gain and Partner Minimum Gain shall be
maintained, for each tranche of LTIP Units with a different issuance date that
it holds and a separate Capital Account for its Common Units, if applicable, and
the Economic Capital Account Balance of each holder of Common Units shall not
include any Economic Capital Account Balance attributable to other series or
classes of Partnership Units.

 

 3 

 

 

C.Nonrecourse Deductions and Minimum Gain Chargeback. Notwithstanding any
provision to the contrary, (i) any expense of the Partnership that is a
“nonrecourse deduction” within the meaning of Regulations
Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’
respective Percentage Interests, (ii) any expense of the Partnership that is a
“partner nonrecourse deduction” within the meaning of Regulations
Section 1.704-2(i)(2) shall be allocated to the Partner that bears the “economic
risk of loss” of such deduction in accordance with Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum
Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be
allocated among the Partners in accordance with Regulations
Section 1.704-2(f) and the ordering rules contained in Regulations
Section 1.704-2(j), and (iv) if there is a net decrease in “partner nonrecourse
debt minimum gain” within the meaning of Regulations Section 1.704-2(i)(4) for
any Partnership taxable year, then items of gain and income shall be allocated
among the Partners in accordance with Regulations Section 1.704-2(i)(4) and the
ordering rules contained in Regulations Section 1.704-2(j).

 

D.Qualified Income Offset.  If a Partner receives in any taxable year an
adjustment, allocation or distribution described in subparagraphs (4), (5) or
(6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
deficit balance in such Partner’s Capital Account that exceeds the sum of such
Partner’s shares of Partnership Minimum Gain and Partner Minimum Gain, as
determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i),
such Partner shall be specially allocated for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such deficit Capital Account balance as quickly as
possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d).

 

E.Capital Account Deficits.  Loss or items thereof shall not be allocated to a
Limited Partner to the extent that such allocation would cause or increase a
deficit in such Partner’s Adjusted Capital Account.

 

F.Definition of Profit and Loss.  “Profit” and “Loss” and any items of income,
gain, expense or loss referred to in this Agreement means the net income, net
loss or items thereof for the applicable period as determined for maintaining
Capital Accounts, and shall be determined in accordance with U.S. federal income
tax accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv),
except that Profit and Loss shall not include items of income, gain, loss and
expense that are specially allocated pursuant to this Article 6 (other than
Section 6.1A(1) or Section 6.1B).

 

 4 

 

 

G.Curative Allocations.  The allocations set forth in Section 6.1C, Section 6.1D
and Section 6.1E hereof (the “Regulatory Allocations”) are intended to comply
with certain regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of this
Section 6.1 and Section 6.2 hereof, the Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss and expense among
the Holders so that to the extent possible without violating the requirements
giving rise to the Regulatory Allocations, the net amount of such allocations of
other items and the Regulatory Allocations to each Holder shall be equal to the
net amount that would have been allocated to each such Holder if the Regulatory
Allocations had not occurred.

 

H.Forfeitures.  Subject to Section 6.1J with respect to a forfeiture of certain
LTIP Units,  upon a forfeiture of any unvested Partnership Interest by any
Partner, gross items of income, gain, loss or deduction shall be allocated to
such Partner if and to the extent required by final Regulations to ensure that
allocations made with respect to all unvested Partnership Interests are
recognized under Code Section 704(b).

 

I.LTIP Allocations.  After giving effect to the special allocations set forth
in Section 6.1A(2), Section 6.1C and Section 6.1D hereof, and the allocations of
Profit under Section 6.1A(1)(i) (including, for the avoidance of doubt
Liquidating Gains that are a component of Profit), and subject to the other
provisions of this Section 6.1, but before allocations of Profit or Losses are
made under Section 6.1A(1)(ii) or Section 6.1B(1):

 

(1)any remaining Liquidating Gains or Liquidating Losses shall first be
allocated among the Partners so as to cause, as nearly as possible, the Economic
Capital Account Balances of the LTIP Unit Limited Partners, to the extent
attributable to their ownership of LTIP Units to be equal to (i) the Common Unit
Economic Balance, multiplied by (ii) the number of their LTIP Units (with
respect to each LTIP Unit Limited Partner, the “Target Balance”); provided that
no such Liquidating Gains will be allocated with respect to any particular LTIP
Unit unless and to the extent that such Liquidating Gains, when aggregated with
other Liquidating Gains realized since the issuance of such LTIP Unit, exceed
Liquidating Losses realized since the issuance of such LTIP Unit.  Any such
allocations shall be made among the Partners in proportion to the aggregate
amounts required to be allocated to each Partner under this Section 6.1I.

 

 5 

 

 

(2)Liquidating Gain or Liquidating Loss allocated to an LTIP Unit Limited
Partner under this Section 6.1I will be attributed to specific LTIP Units of
such LTIP Unit Limited Partner for purposes of determining (i) allocations under
this Section 6.1I, (ii) the effect of the forfeiture or conversion of specific
LTIP Units on such LTIP Unit Limited Partner’s Capital Account and (iii) the
ability of such LTIP Unit Limited Partner to convert specific LTIP Units into
Common Units.  Such Liquidating Gain or Liquidating Loss allocated to such LTIP
Unit Limited Partner will generally be attributed LTIP Units so as to equalize
the Economic Capital Account Balance associated each LTIP Unit and the Common
Unit Economic Balance in the following order:  (i) first, to Vested LTIP Units
held for more than three years, (ii) second, to Vested LTIP Units held for more
than two years, (iii) third, to Vested LTIP Units held for two years or less,
(iv) fourth, to Unvested LTIP Units that have remaining vesting conditions that
only require continued employment or service to the Company, the Partnership or
an Affiliate of either for a certain period of time (with such Liquidating Gains
being attributed in order of vesting from soonest vesting to latest vesting),
and (v) fifth, to other Unvested LTIP Units (with such Liquidating Gains being
attributed in order of issuance from earliest issued to latest issued).  Within
each category, Liquidating Gain will be allocated seriatim (i.e., entirely to
the first unit in a set, then entirely to the next unit in the set, and so on,
until a full allocation is made to the last unit in the set) in the order of
smallest Book-Up Target to largest Book-Up Target.

 

(3)After giving effect to the special allocations set forth above, if, due to
distributions with respect to Common Units in which the LTIP Units do not
participate, forfeitures or otherwise, the Economic Capital Account Balance of
any present or former LTIP Unit Limited Partner attributable to such LTIP Unit
Limited Partner’s LTIP Units, exceeds the Target Balance, then Liquidating
Losses shall be allocated to such LTIP Unit Limited Partner, or Liquidating
Gains shall be allocated to the other Partners, to reduce or eliminate the
disparity; provided, however, that if Liquidating Losses or Liquidating Gains
are insufficient to completely eliminate all such disparities, such losses or
gains shall be allocated among Partners in a manner reasonably determined by the
General Partner.

 

 6 

 

 

(4)The parties agree that the intent of this Section 6.1I is (i) to the extent
possible to make the Economic Capital Account Balance associated with each LTIP
Unit economically equivalent to the Common Unit Economic Balance and (ii) to
allow conversion of an LTIP Unit (assuming prior vesting) into a Common Unit
when sufficient Liquidating Gains have been allocated to such LTIP Unit pursuant
to Section 6.1I(1) so that either its initial Book-Up Target has been reduced to
zero or the parity described in the definition of Target Balance has been
achieved.  The General Partner shall be permitted to interpret
this Section 6.1I or to amend this Agreement to the extent necessary and
consistent with this intention.

 

(5)In the event that Liquidating Gains or Liquidating Losses are allocated under
this Section 6.1I, Profits allocable under clause 6.1A(1)(ii) and any Losses
shall be recomputed without regard to the Liquidating Gains or Liquidating
Losses so allocated.

 

J.LTIP Forfeitures.  If an LTIP Unit Limited Partner forfeits any LTIP Units to
which Liquidating Gain has previously been allocated under Section 6.1I, (i) the
portion of such LTIP Unit Limited Partner’s Capital Account attributable to such
Liquidating Gain allocated to such forfeited LTIP Units will be re-allocated to
that LTIP Unit Limited Partner’s remaining LTIP Units that were outstanding on
the date of the initial allocation of such Liquidating Gain, using a methodology
similar to that described in Section 6.1I(2) above as reasonably determined by
the General Partner, to the extent necessary to cause such LTIP Unit Limited
Partner’s Economic Capital Account Balance attributable to each such LTIP Unit
to equal the Common Unit Economic Balance and (ii) such LTIP Unit Limited
Partner’s Capital Account will be reduced by the amount of any such Liquidating
Gain not re-allocated pursuant to clause (i) above.

 

K.Reimbursements Treated as Guaranteed Payments.  Subject to Section 6.1L, if
and to the extent any payment or reimbursement to the General Partner or the
Company made pursuant to Section 7.7 or otherwise is determined for U.S. federal
income tax purposes not to constitute a payment of expenses of the Partnership,
the amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners’ Capital
Accounts.

 

 7 

 

 

L.Adjustments to Preserve REIT Status and Avoid Gain.  Notwithstanding any
provision in this Agreement to the contrary, if the Partnership pays or
reimburses (directly or indirectly, including by reason of giving the General
Partner or the Company or any direct or indirect Subsidiary of the Company
Capital Account credit in excess of actual Capital Contributions made by the
General Partner or the Company or any direct or indirect Subsidiary of the
Company) fees, expenses or other costs pursuant to Section 4.2, Section 7.4
and/or Section 7.7, or otherwise, and if failure to treat all or part of such
payment or reimbursement as a distribution to the General Partner, the Company
or any Subsidiary of the Company (as appropriate), or the receipt of Capital
Account credit in excess of actual Capital Contributions, would cause the
Company to recognize income that would cause the Company to fail to qualify as a
REIT, then such payment or reimbursement (or portion thereof) shall be treated
as a distribution to the General Partner, the Company or direct or indirect
Subsidiary of the Company (as appropriate) for purposes of this Agreement, or
the Capital Account credit in excess of actual Capital Contributions shall be
reduced, in each case to the extent necessary to preserve the Company’s status
as a REIT.  The Capital Account of the General Partner, the Company or any
direct or indirect Subsidiary of the Company (as appropriate) shall be reduced
by such direct or indirect payment or reimbursement (or a portion thereof) in
the same manner as an actual distribution to the General Partner, the Company,
or any direct or indirect Subsidiary of the Company (as appropriate).  To the
extent treated as distributions, such fees, expenses or other costs shall not be
taken into account as Partnership fees, expenses or costs for the purposes of
this Agreement.  In the event that amounts are recharacterized as distributions
or Capital Accounts are reduced pursuant to this Section 6.1L, allocations under
Section 6.1A(1), Section 6.1B and Section 6.1I for the current and subsequent
periods shall be adjusted as reasonably determined by the General Partner so
that to the extent possible the Partners have the same Capital Account balances
they would have if this Section 6.1L had not applied.  This Section 6.1L is
intended to prevent direct or indirect reimbursements or payments under this
Agreement from giving rise to a violation of the Company’s REIT requirements
while at the same time preserving to the extent possible the parties’ intended
economic arrangement and shall be interpreted and applied consistent with such
intent.

 

M.Modifications to Reflect New Series or Classes.  The General Partner is
authorized to modify the allocations in this Section 6.1 and amend such
provisions (including the defined terms used therein) in such manner as the
General Partner determines is necessary or appropriate to reflect the issues of
additional series or classes of Partnership Interests.  Any such modification
may be made pursuant to the Certificate of Designations or similar instrument
establishing such new class or series.

 

N.Agreement to Bear Disproportionate Losses.  At the request and with the
consent of the applicable Limited Partner, the General Partner may modify these
allocations to provide for disproportionate allocations of Loss (or items of
loss or deduction) and chargebacks thereof to a Limited Partner that agrees to
restore all or part of any deficit in its Capital Account in accordance
with Section 13.3 (in all cases subject to Section 6.1E).

 

 8 

 

 

3.            Except as modified herein, all terms and conditions of the
Partnership Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and confirms.

 

4.            This First Amendment shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.

 

5.            If any provision of this First Amendment is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.

 

[Signature Page Follows]

 

 9 

 

 

IN WITNESS WHEREOF, the undersigned has executed and agrees to be bound by this
First Amendment as of the date first written above.

 

 

  GENERAL PARTNER:       DiamondRock Hospitality Company       By: /s/ Jeffrey
J. Donnelly   Name: Jeffrey J. Donnelly   Title: Executive Vice President &
Chief     Financial Officer

 

[Signature Page to Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of DiamondRock Hospitality Limited Partnership]

 

 

 

 

EXHIBIT A

 

DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP

 

CERTIFICATE OF DESIGNATIONS

 

ESTABLISHING AND FIXING THE RIGHTS, LIMITATIONS AND

 

PREFERENCES OF A SERIES OF PREFERRED UNITS

 

August 28, 2020

 

1.Designation and Number. A series of Preferred Partnership Units, designated as
the “8.250% Series A Cumulative Redeemable Preferred Units,” is hereby
established. The number of Series A Preferred Units shall be 5,000,000.

 

2.Ranking. The Series A Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, rank:

 

a.senior to any class or series of Partnership Units, if such class or series
shall be Common Units or if the holders of Series A Preferred Units shall be
entitled to receipt of distributions or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or in
priority to the holders of the Partnership Units of such class or series;

 

b.on parity with any class or series of Partnership Units, if the holders of
such other class or series of Partnership Units and the Series A Preferred Units
shall be entitled to the receipt of distributions and of amounts distributable
upon liquidation, dissolution or winding up in proportion to their respective
amounts of accrued and unpaid distributions per Partnership Unit or liquidation
preference, without preference or priority one over the other; and

 

c.junior to any class or series of Partnership Units, if the holders of such
class or series of Partnership Units shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or in priority to the holders of
the Series A Preferred Units.

 

The Series A Preferred Units will also rank junior in right of payment to the
Partnership’s other existing and future debt obligations.

 

 A-1 

 

 

3.Distributions and Allocations.

 

a.Subject to the preferential rights of the holders of any class or series of
Partnership Units ranking senior to the Series A Preferred Units as to
distributions, the holders of the Series A Preferred Units shall be entitled to
receive, when, as and if declared by the Partnership acting through the General
Partner, out of funds legally available for the payment of distributions,
cumulative preferential cash distributions at the rate of 8.250% per annum on
the stated value of $25.00 per unit (equivalent to a fixed annual amount of
$2.0625 per unit). Such distributions shall accrue on each Series A Preferred
Unit and be cumulative from and including the first date on which any Series A
Preferred Unit is issued (the “Series A Preferred Unit Original Issue Date”) and
shall be payable quarterly in arrears on each Distribution Payment Date (as
defined below), commencing on September 30, 2020; provided, however, that if any
Distribution Payment Date is not a Business Day (as defined below), then the
distribution which would otherwise have been payable on such Distribution
Payment Date may be paid, at the option of the General Partner, on either the
immediately preceding Business Day or the next succeeding Business Day, except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if paid on such Distribution Payment Date, and no
interest or additional distributions or other sums shall accrue on the amount so
payable from such Distribution Payment Date to such next succeeding Business
Day. The amount of any distribution payable on the Series A Preferred Units for
any period greater or less than a full Distribution Period (as defined below)
shall be prorated and computed on the basis of a 360-day year consisting of
twelve 30-day months. Distributions will be payable to the holders of record as
they appear in the records of the Partnership at the close of business on the
applicable Distribution Record Date (as defined below). Notwithstanding any
provision to the contrary contained herein, each Series A Preferred Unit
outstanding on any Distribution Record Date shall be entitled to receive a
distribution with respect to any Distribution Record Date equal to the
distribution paid with respect to each other Series A Preferred Unit that is
outstanding on such date Distribution Record Date, and no holder of any Series A
Preferred Unit shall be entitled to receive any distributions paid or payable on
the Series A Preferred Unit with a Distribution Record Date before the date such
Series A Preferred Unit is issued. “Distribution Record Date” shall mean the
date designated by the General Partner as the record date for the payment of
distributions that is not more than 35 and not fewer than 10 days prior to the
applicable Distribution Payment Date, which, unless specifically designated
otherwise, shall be the same as the record date for the payment of dividends
with respect to the Series A Preferred Stock. “Distribution Payment Date” shall
mean March 31, June 30, September 30 and December 31 of each year, commencing on
September 30, 2020. “Distribution Period” shall mean the respective periods
commencing on and including the first day of January, April, July and October of
each year and ending on and including the day preceding the first day of the
next succeeding Distribution Period (other than the initial Distribution Period,
which shall commence on the Series A Preferred Unit Original Issue Date and end
on and include September 30, 2020, and other than the Distribution Period during
which any Series A Preferred Units are redeemed pursuant to Section 5 of this
Certificate, which shall end on and include the day preceding the redemption
date with respect to the Series A Preferred Units being redeemed).

 

 A-2 

 

 

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

 

b.Notwithstanding anything contained herein to the contrary, distributions on
the Series A Preferred Units shall accrue whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions, and whether or not such distributions are authorized or
declared.

 

c.Except as provided in Section 3(d) below, no distributions shall be declared
and paid or declared and set apart for payment, and no other distribution of
cash or other property may be declared and made, directly or indirectly, on or
with respect to, any Common Units or any other class or series of Partnership
Units ranking, as to distributions, on parity with or junior to the Series A
Preferred Units (other than a distribution paid in Common Units or in any other
class or series of Partnership Units ranking junior to the Series A Preferred
Units as to distributions and upon liquidation) for any period, nor shall any
Common Units or any other class or series of Partnership Units ranking, as to
distributions or upon liquidation, on parity with or junior to the Series A
Preferred Units be redeemed, purchased or otherwise acquired for any
consideration, nor shall any funds be paid or made available for a sinking fund
for the redemption of such units, and no other distribution of cash or other
property may be made, directly or indirectly, on or with respect thereto by the
Partnership (except by conversion into or in exchange for other units of any
class or series of Partnership Units ranking junior to the Series A Preferred
Units as to distributions and upon liquidation, by redemption, purchase or
acquisition of any class or series of Partnership Units made for the purposes of
and in compliance with requirements of an employee incentive, benefit or share
purchase plan of the Partnership or the General Partner or any of their
subsidiaries, and except for the redemption of Partnership Units corresponding
to any shares of Series A Preferred Stock or any other REIT Shares to be
purchased by the General Partner pursuant to the provisions of Article VII of
its Articles of Amendment and Restatement, as amended (the “Charter”), or
Section 9(b) of the Articles Supplementary to the Charter, dated as of
August 28, 2020 (the “Series A Preferred Stock Articles”), to the extent
necessary to preserve the General Partner’s status as a real estate investment
trust for United States federal income tax purposes, provided such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
Charter or the Series A Preferred Stock Articles, and except for the redemption
of Partnership Units corresponding to the purchase or acquisition of any shares
of Series A Preferred Stock or any other class or series of capital stock of the
General Partner ranking on parity with the Series A Preferred Stock as to
payment of dividends and upon liquidation pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Series A
Preferred Stock), unless full cumulative distributions on the Series A Preferred
Units for all past Distribution Periods that have ended shall have been or
contemporaneously are (i) declared and paid in cash or (ii) declared and a sum
sufficient for the payment thereof in cash is set apart for such payment.

 

 A-3 

 

 

d.When distributions are not paid in full (or a sum sufficient for such full
payment is not so set apart) on the Series A Preferred Units and on any other
class or series of Partnership Units ranking, as to distributions, on parity
with the Series A Preferred Units, all distributions declared upon the Series A
Preferred Units and each such other class or series of Partnership Units
ranking, as to distributions, on parity with the Series A Preferred Units shall
be declared pro rata so that the amount of distributions declared per Series A
Preferred Unit and such other class or series of Partnership Unit shall in all
cases bear to each other the same ratio that accrued distributions per Series A
Preferred Unit and such other class or series of Partnership Unit (which shall
not include any accrual in respect of unpaid distributions on such other class
or series of Partnership Units for prior Distribution Periods if such other
class or series of Partnership Units does not have a cumulative distribution)
bear to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution payment or payments on the Series A
Preferred Units which may be in arrears.

 

e.Holders of the Series A Preferred Units shall not be entitled to any
distribution, whether payable in cash, property or shares of stock, in excess of
full cumulative distributions on the Series A Preferred Units as provided
herein. Any distribution payment made on the Series A Preferred Units shall
first be credited against the earliest accrued but unpaid distributions due with
respect to such units which remain payable. Accrued but unpaid distributions on
the Series A Preferred Units will accumulate as of the Distribution Payment Date
on which they first become payable.

 

f.After allocations have been made pursuant to Section 6.1.A(2) of the
Partnership Agreement and prior to all other allocations under the Partnership
Agreement, remaining Profit shall be allocated to the Series A Preferred Units
(and any other class of Preferred Units ranking on parity with the Series A
Preferred Units with respect to distribution rights and rights upon voluntary or
involuntary liquidation, dissolution or winding up of the Partnership that are
entitled to similar allocations as specifically set forth in the provisions of
the Partnership Agreement relating to such class of Preferred Units) pro rata in
proportion to the aggregate amount of cumulative preferential cash distributions
that have accrued, but not been paid, in respect of the Series A Preferred Units
(and such other class of Preferred Units) until the aggregate amount of the
Profit allocated to the Series A Preferred Units (and such other class of
Preferred Units) pursuant to this provision is equal to the aggregate amount of
cumulative preferential cash distributions that have been accrued, but not been
paid, in respect of the Series A Preferred Units (and such other class of
Preferred Units). In the event allocations are made to the Series A Preferred
Units pursuant to this provision for a taxable year, then the amount allocated
to the Series A Preferred Units pursuant to Section 6.1.A(2) in each future
taxable year shall be reduced until the aggregate amount of the reduction is
equal to the aggregate amount previously allocated pursuant to this provision.
Allocations pursuant to this provision will be subject to any prior allocations
to be made to any class of Preferred Units entitled to the receipt of
distributions and of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or in priority to the holders of
the Series A Preferred Units to the extent set forth in the allocation
provisions relating to such class of Preferred Units.

 

 A-4 

 

 

4.Liquidation Preference.

 

a.Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Partnership, before any distribution or payment shall be made to holders of
Common Units or any other class or series of Partnership Units ranking, as to
rights upon any voluntary or involuntary liquidation, dissolution or winding up
of the Partnership, junior to the Series A Preferred Units, the holders of
Series A Preferred Units shall be entitled to be paid out of the assets of the
Partnership legally available for distribution to its unitholders, after payment
of or provision for the debts and other liabilities of the Partnership, a
liquidation preference of $25.00 per unit, plus an amount equal to any accrued
and unpaid distributions (whether or not declared) up to but excluding the date
of payment. In the event that, upon such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Partnership are
insufficient to pay the full amount of the liquidating distributions on all
outstanding Series A Preferred Units and the corresponding amounts payable on
all other classes or series of Partnership Units ranking, as to liquidation
rights, on parity with the Series A Preferred Units in the distribution of
assets, then the holders of the Series A Preferred Units and the holders of each
such other class or series of Partnership Units ranking, as to rights upon any
voluntary or involuntary liquidation, dissolution or winding up, on parity with
the Series A Preferred Units shall share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled. After payment of the full amount of the
liquidating distributions to which the holders of the Series A Preferred Units
are entitled, the holders of the Series A Preferred Units will have no right or
claim to any of the remaining assets of the Partnership. The consolidation or
merger of the Partnership with or into any other corporation, trust or entity,
or the voluntary sale, lease, transfer or conveyance of all or substantially all
of the property or business of the Partnership, shall not be deemed to
constitute a liquidation, dissolution or winding up of the Partnership within
the meaning of this Section 4.

 

5.Redemption.

 

a.If, on or after August 31, 2025, the General Partner properly exercises the
Redemption Right (as defined in Section 5(b) of the Series A Preferred Stock
Articles) or the Special Optional Redemption Right (as defined in
Section 6(a) of the Series A Preferred Stock Articles) to redeem any of the
Series A Preferred Stock in accordance with the Series A Preferred Stock
Articles, the Partnership shall redeem an equal number of Series A Preferred
Units from the General Partner. In addition, in the event of the liquidation,
dissolution or winding up of the General Partner prior to the occurrence of a
Liquidating Event pursuant to Sections 13.1 or 13.2 of the Partnership
Agreement, the General Partner shall have the right to redeem, on any payment
date established by the General Partner for liquidating distributions to the
Series A Preferred Stock, Series A Preferred Units. Upon any such redemption,
the Partnership shall pay a redemption price, in cash, to the General Partner
for each Series A Preferred Unit redeemed of $25.00 per unit, plus all accrued
and unpaid distributions (whether or not declared) thereon up to, but excluding
the date fixed for redemption, without interest to the extent the Partnership
has funds legally available therefor. So long as full cumulative distributions
on the Series A Preferred Units for all past Distribution Periods that have
ended shall have been or contemporaneously are (i) declared and paid in cash, or
(ii) declared and a sum sufficient for the payment thereof in cash is set apart
for payment, nothing herein shall prevent or restrict the Partnership’s right or
ability to purchase, from time to time, all or any part of the Series A
Preferred Units at such price or prices as the Partnership may determine,
subject to the provisions of applicable law, including the repurchase of
Series A Preferred Units from the General Partner in connection with the General
Partner’s repurchase of shares of Series A Preferred Stock.

 

 A-5 

 

 

b.In the event of any redemption of the Series A Preferred Stock by the General
Partner in order to preserve the status of the General Partner as a REIT for
United States federal income tax purposes pursuant to Section 9(b) of the
Series A Preferred Stock Articles, the Partnership shall redeem an equal number
of Series A Preferred Units from the General Partner at a redemption price equal
to the redemption price paid by the General Partner for such shares of Series A
Preferred Stock pursuant to Section 9(b) of the Series A Preferred Stock
Articles.

 

c.If a redemption date falls after a Distribution Record Date and on or prior to
the corresponding Distribution Payment Date, each holder of Series A Preferred
Units at the close of business of such Distribution Record Date shall be
entitled to the distribution payable on such Series A Preferred Units on the
corresponding Distribution Payment Date notwithstanding the redemption of such
Series A Preferred Units on or prior to such Distribution Payment Date or the
Partnership’s default in the payment of such distribution due.

 

d.From and after the date of any such redemption of Series A Preferred Units,
the Series A Preferred Units so redeemed shall no longer be outstanding, and all
rights of the holders of such Series A Preferred Units shall terminate.

 

6.Voting Rights. The Series A Preferred Units do not have any voting rights with
respect to the Partnership.

 

 A-6