Exhibit 10.1

 

AMENDMENT NO. 4
TO THE THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRAEMAR HOSPITALITY LIMITED PARTNERSHIP

January 24, 2020

 

This Amendment No. 4 to the Third Amended and Restated Agreement of Limited
Partnership of Braemar Hospitality Limited Partnership (this “Amendment”) is
made as of January 24, 2020, by Braemar OP General Partner LLC, a Delaware
limited liability company, as general partner (the “General Partner”) of Braemar
Hospitality Limited Partnership, a Delaware limited partnership (the
“Partnership”), pursuant to the authority granted to the General Partner in
Section 11.1(b) of the Third Amended and Restated Agreement of Limited
Partnership of Braemar Hospitality Limited Partnership, dated March 7, 2017, as
amended by Amendment No. 1 thereto dated as of April 23, 2018, Amendment No. 2
thereto dated as of November 20, 2018 and Amendment No. 3 thereto dated as of
December 3, 2019 (the “Partnership Agreement”), for the purpose of issuing
additional Partnership Units in the form of Preferred Partnership Units.
Capitalized terms used and not defined herein shall have the meanings set forth
in the Partnership Agreement.

 

WHEREAS, the Board of Directors (the “Board”) of Braemar Hotels & Resorts Inc.
(the “Company”) adopted resolutions on November 5, 2019 and January 22, 2020
classifying and designating (i) 28,000,000 shares of Preferred Stock (as defined
in the Articles of Amendment and Restatement of the Company (as amended and
supplemented to date and as may be amended and supplemented from time to time,
the “Charter”)) as Series E Preferred Stock (as defined below) and (ii)
28,000,000 shares of Preferred Stock as Series M Preferred Stock (as defined
below);

 

WHEREAS, the Board filed Articles Supplementary to the Charter with the State
Department of Assessments and Taxation of Maryland on January 23, 2020,
establishing the Series E Preferred Stock, each with such preferences, rights,
powers, restrictions, limitations as to distributions, qualifications and terms
and conditions of redemption as described in the Series E Articles Supplementary
(as defined below);

 

WHEREAS, the Board filed Articles Supplementary to the Charter with the State
Department of Assessments and Taxation of Maryland on January 23, 2020,
establishing the Series M Preferred Stock, with such preferences, rights,
powers, restrictions, limitations as to distributions, qualifications and terms
and conditions of redemption as described in the Series M Articles Supplementary
(as defined below);

 

WHEREAS, Section 11.1(b) of the Partnership Agreement permits the General
Partner to amend the Partnership Agreement without the approval of any other
Partner if such amendment is to create, issue or reflect the creation or
issuance of additional Partnership Interests;

 

WHEREAS, the General Partner has determined that, in connection with the
issuance of the Series E Preferred Stock and the Series M Preferred Stock, it is
necessary and desirable to amend the Partnership Agreement to create additional
Partnership Units in the form of Preferred Partnership Units having
designations, preferences and other rights which are substantially the same as
the economic rights of the Series E Preferred Stock and the Series M Preferred
Stock; and

 

WHEREAS, the General Partner desires to so amend the Partnership Agreement as of
the date first set forth above.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the General Partner hereby amends the Partnership Agreement as
follows:

 

 

 

 

1.                   Article I is amended to add the following defined terms in
their respective alphabetical order within Article I:

 

“Series E Articles Supplementary” shall mean the Articles Supplementary
Establishing and Fixing the Rights and Preferences of a Series of Preferred
Stock, designating the rights and preferences of the Series E Redeemable
Preferred Stock, filed as part of the Company’s charter with the State
Department of Assessments and Taxation of Maryland, on January 23, 2020.

 

“Series E Preferred Partnership Interests” shall mean a partnership interest in
the Partnership evidenced by the Series E Preferred Partnership Units, having a
preference in payment of distributions or on liquidation as set forth in
Exhibit I to this Agreement.

 

“Series E Preferred Partnership Units” shall mean the series of Preferred
Partnership Units established pursuant to this Agreement, representing a
fractional, undivided share of the Series E Preferred Partnership Interests of
all Partners issued under this Agreement.

 

“Series E Preferred Stock” shall mean the Series E Redeemable Preferred Stock of
the Company, with such preferences, rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms and conditions of
redemption as described in the Series E Articles Supplementary.

 

“Series M Articles Supplementary” shall mean the Articles Supplementary
Establishing and Fixing the Rights and Preferences of a Series of Preferred
Stock, designating the rights and preferences of the Series M Redeemable
Preferred Stock, filed as part of the Company’s charter with the State
Department of Assessments and Taxation of Maryland, on January 23, 2020.

 

“Series M Preferred Partnership Interests” shall mean a partnership interest in
the Partnership evidenced by the Series M Preferred Partnership Units, having a
preference in payment of distributions or on liquidation as set forth in
Exhibit J to this Agreement.

 

“Series M Preferred Partnership Units” shall mean the series of Preferred
Partnership Units established pursuant to this Agreement, representing a
fractional, undivided share of the Series M Preferred Partnership Interests of
all Partners issued under this Agreement.

 

“Series M Preferred Stock” shall mean the Series M Redeemable Preferred Stock of
the Company, with such preferences, rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms and conditions of
redemption as described in the Series M Articles Supplementary.

 

2.                   In accordance with Section 4.3 of the Partnership
Agreement, set forth in Exhibit I hereto are the terms and conditions of the
Series E Preferred Partnership Units which are hereby established and issued to
Braemar OP Limited Partner, LLC in consideration of its contribution to the
Partnership of the proceeds from the issuance and sale of the Series E Preferred
Stock by the Company. The Partnership Agreement is hereby amended to incorporate
such Exhibit I as Exhibit I thereto.

 

3.                   In accordance with Section 4.3 of the Partnership
Agreement, set forth in Exhibit J hereto are the terms and conditions of the
Series M Preferred Partnership Units which are hereby established and issued to
Braemar OP Limited Partner, LLC in consideration of its contribution to the
Partnership of the proceeds from the issuance and sale of the Series M Preferred
Stock by the Company. The Partnership Agreement is hereby amended to incorporate
such Exhibit J as Exhibit J thereto.

 

4.                   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.

 

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

 

6.                   If any provision of this 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.

 

[The remainder of this page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the date
first set forth above.

 

  Braemar OP General Partner LLC,
a Delaware limited liability company, as General Partner of Braemar Hospitality
Limited Partnership           By: /s/ Robert G. Haiman     Name: Robert G.
Haiman     Title: Executive Vice President, General Counsel and Secretary

 

[Amendment No. 4 to Third Amended and Restated LP Agreement of Braemar
Hospitality Limited Partnership]

 

 

 

EXHIBIT I

DESIGNATION OF TERMS AND CONDITIONS OF SERIES E PREFERRED PARTNERSHIP UNITS

 

(a)              Designation and Number. A series of Preferred Partnership
Units, designated as Series E Preferred Partnership Units, is hereby
established. The number of authorized Series E Preferred Partnership Units shall
be 28,000,000.

 

(b)              Rank. The Series E Preferred Partnership Units, with respect to
rights to distributions and payments to Partners and the distribution of assets
upon the liquidation, dissolution or winding up of the Partnership, rank (a)
prior or senior to the Common Partnership Units and all Partnership Units issued
by the Partnership (“Junior Units”) the terms of which specifically provide that
such Partnership Units rank junior to the Series E Preferred Partnership Units;
(b) on a parity with the Series B Preferred Partnership Units, the Series D
Preferred Partnership Units, the Series M Preferred Partnership Units and all
other Partnership Units issued in the future by the Partnership (“Parity Units”)
the terms of which specifically provide that such Partnership Units rank on a
parity with the Series E Preferred Partnership Units; (c) junior to all
Partnership Units issued by the Partnership the terms of which specifically
provide that such Partnership Units rank senior to the Series E Preferred
Partnership Units; and (d) junior to all of the Partnership’s existing and
future indebtedness.

 

(c)               Distributions.

 

(i)               Pursuant to Section 8.1 of the Partnership Agreement but
subject to the rights of holders of any Preferred Partnership Units ranking
senior to the Series E Preferred Partnership Units as to the payment of
distributions, Braemar OP Limited Partner LLC, in its capacity as the holder of
the then outstanding Series E Preferred Partnership Units, shall be entitled to
receive, when and as authorized by the General Partner, from the Cash Flow,
cumulative monthly preferential cash distributions in an amount per Series E
Preferred Partnership Unit equal to 6.5% per annum of the stated value of $25.00
per Series E Preferred Partnership Unit (the “Stated Value”) (equivalent to an
annual distribution rate of $1.625 per Series E Preferred Partnership Unit).
Distributions shall be payable monthly on the 15th day of each month (or, if
such payment date is not a Business Day, the next succeeding Business Day, 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). Distributions of Preferred Return shall be payable in arrears to holders
of record as they appear on the records of the Partnership at the close of
business on the last Business Day of each month immediately preceding the
applicable distribution payment date, which dates shall be the Partnership
Record Dates for the Series E Preferred Partnership Units. Any distribution of
Preferred Return payable on the Series E Preferred Partnership Units for any
distribution period (as defined below) will be computed on the basis of twelve
30-day months and a 360-day year. Except for distributions in liquidation or
redemption as provided in Sections D and E, respectively, holders of Series E
Preferred Partnership Units will not be entitled to receive any distributions in
excess of full cumulative Preferred Returns accrued on the Series E Preferred
Partnership Units at the distribution rate specified in this paragraph. No
interest will be paid in respect of any distribution payment or payments on the
Series E Preferred Partnership Units that may be in arrears.

 

(ii)                Distributions of Preferred Return on each Series E Preferred
Partnership Unit shall be cumulative from (and including) the first day of the
distribution period during which such Series E Preferred Partnership Unit was
originally issued, whether or not in any distribution period or periods (x) such
distributions shall be authorized by the General Partner, (y) there shall be
funds legally available for the payment of such distributions or (z) any
agreement prohibits the Partnership’s payment of such distributions. As used
herein, “distribution period” shall mean the respective periods commencing on,
and including, the first day of each month of each year and ending on, and
including, the day preceding the first day of the next succeeding distribution
period (other than the distribution period during which any Series E Preferred
Partnership Units shall be redeemed or otherwise acquired by the Partnership,
which shall end on, and include, the day preceding the redemption or acquisition
date with respect to the Series E Preferred Partnership Units being redeemed or
acquired).

 

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(iii)             When distributions of Preferred Return are not paid in full
upon the Series E Preferred Partnership Units or any other series of Parity
Units, or a sum sufficient for such payment is not set apart, all distributions
of Preferred Return authorized by the General Partner upon the Series E
Preferred Partnership Units and any other series of Parity Units shall be
authorized by the General Partner ratably in proportion to the respective
amounts of such distributions accumulated, accrued and unpaid on the Series E
Preferred Partnership Units and accumulated, accrued and unpaid on such Parity
Units. Except as set forth in the preceding sentence, unless distributions on
the Series E Preferred Partnership Units equal to the full amount of
accumulated, accrued and unpaid distributions of Preferred Return have been or
contemporaneously are authorized by the General Partner and paid, or authorized
by the General Partner and a sum sufficient for the payment thereof set apart
for such payment for all past distribution periods, no distributions (other than
distributions paid in Junior Units or options, warrants or rights to subscribe
for or purchase Junior Units) shall be authorized by the General Partner or paid
or set aside for payment by the Partnership with respect to any class or series
of Parity Units. Unless distributions of Preferred Return on the Series E
Preferred Partnership Units equal to the full amount of accumulated, accrued and
unpaid distributions have been or contemporaneously are authorized by the
General Partner and paid, or authorized by the General Partner and a sum
sufficient for the payment thereof set apart for such payment for all past
distribution periods, no distributions (other than distributions paid in Junior
Units or options, warrants or rights to subscribe for or purchase Junior Units)
shall be authorized by the General Partner or paid or set apart for payment by
the Partnership with respect to any Junior Units, nor shall any Junior Units or
Parity Units 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 Junior Units or Parity Units (except by conversion or exchange for Junior
Units, or options, warrants or rights to subscribe for or purchase Junior
Units), nor shall any other cash or property be paid or distributed to or for
the benefit of holders of Junior Units or Parity Units. Notwithstanding the
foregoing, the General Partner shall not be prohibited from (i) authorizing or
paying or setting apart for payment any Preferred Return or distribution on any
Junior Units or Parity Units or (ii) redeeming, purchasing or otherwise
acquiring any Junior Units or Parity Units, in each case, if such authorization,
payment, redemption, purchase or other acquisition is necessary to maintain the
Company’s qualification as a REIT.

 

(iv)             No distribution of Preferred Return on the Series E Preferred
Partnership Units shall be authorized by the General Partner or paid or set
apart for payment at such time as the terms and provisions of any agreement of
the Partnership, including any agreement of the Partnership relating to the
Partnership’s indebtedness, prohibits such authorization, payment or setting
apart for payment or provides that such authorization, payment or setting apart
for payment would constitute a breach thereof, or a default thereunder, or if
such authorization, payment or setting apart for payment shall be restricted or
prohibited by law.

 

(v)              In determining whether a distribution (other than upon
voluntary or involuntary liquidation, dissolution or winding up of the
Partnership) of Preferred Return or in redemption or otherwise, is permitted,
amounts that would be needed, if the Partnership were to be dissolved at the
time of the distribution, to satisfy the liquidation preference of the Series E
Preferred Partnership Units (as provided in Section D below) will not be added
to the Partnership’s total liabilities.

 

(d)               Liquidation Preference.

 

(i)               Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, before any distribution or payment shall be made
to or set apart for the holders of any Junior Units, Braemar OP Limited Partner
LLC, in its capacity as holder of the Series E Preferred Partnership Units,
shall be entitled to receive a liquidation preference distribution equal to the
Stated Value per Series E Preferred Partnership Unit, plus an amount equal to
all accumulated, accrued and unpaid Preferred Return to, but not including, the
date of final distribution, but Braemar OP Limited Partner LLC shall not be
entitled to any further payment with respect thereto. If upon any liquidation,
dissolution or winding up of the Partnership, its assets, or proceeds thereof,
distributable among Braemar OP Limited Partner LLC, in its capacity as the
holder of the Series E Preferred Partnership Units, shall be insufficient to pay
in full the above described preferential distribution and liquidating
distributions on any other series of Parity Units, then such assets, or the
proceeds thereof, shall be distributed among Braemar OP Limited Partner LLC, in
its capacity as the holder of the Series E Preferred Partnership Units, and the
holders of any such other Parity Units ratably in the same proportion as the
respective amounts that would be payable on such Series E Preferred Partnership
Units and any such other Parity Units if all amounts payable thereon were paid
in full.

 

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(ii)                Upon any liquidation, dissolution or winding up of the
affairs of the Partnership, after payment of the full amount of liquidating
distributions have been made to Breamar OP Limited Partner LLC, in its capacity
as the holder of the Series E Preferred Partnership Units, holders of the Series
E Preferred Partnership Units shall have no right or claim to any of the
remaining assets of the Partnership.

 

(iii)               None of a consolidation or merger of the Partnership with or
into any other corporation, trust or other entity, a consolidation or merger of
any other corporation, trust or other entity with or into the Partnership, a
statutory unit exchange by the Partnership or a sale, lease, transfer or
conveyance of any or all of the Partnership’s assets or business shall be deemed
to constitute a liquidation, dissolution or winding up of the affairs of the
Partnership.

 

(e)               Redemption. In connection with the cash redemption by the
Company of any shares of Series E Preferred Stock in accordance with the
provisions of the Series E Articles Supplementary, the Partnership shall provide
cash to Braemar OP Limited Partner LLC for such purpose which shall be equal to
the applicable redemption price (as set forth in the Series E Articles
Supplementary), plus all distributions of Preferred Return accumulated and
unpaid to, but not including, the applicable redemption date (as set forth in
the Series E Articles Supplementary), and one Series E Preferred Partnership
Unit shall be concurrently redeemed with respect to each share of Series E
Preferred Stock so redeemed by the Company. In connection with the redemption by
the Company of any shares of Series E Preferred Stock for shares of REIT Common
Shares in accordance with the provisions of the Series E Articles Supplementary,
the Partnership shall convert Series E Preferred Partnership Units into Common
Partnership Units and issue such Common Partnership Units to Braemar OP Limited
Partner LLC. The number of Common Partnership Units into which the Series E
Preferred Partnership Units are convertible shall be equal to the number of REIT
Common Shares into which the Series E Preferred Stock is then being redeemed, as
set forth in the Series E Articles Supplementary. From and after the applicable
redemption date, the Series E Preferred Partnership Units so redeemed shall no
longer be outstanding and all rights hereunder, to distributions or otherwise,
with respect to such Series E Preferred Partnership Units shall cease.

 

(f)               Voting Rights. Except as required by applicable law, the
holder of the Series E Preferred Partnership Units, as such, shall have no
voting rights.

 

(g)              Conversion. In connection with the conversion by the Company of
any shares of Series E Preferred Stock into shares of REIT Common Shares in
accordance with the provisions of the Series E Articles Supplementary, the
Partnership shall convert Series E Preferred Partnership Units into Common
Partnership Units and issue such Common Partnership Units to Braemar OP Limited
Partner LLC. The number of Common Partnership Units into which the Series E
Preferred Partnership Units are convertible shall be equal to the number of REIT
Common Shares into which the Series E Preferred Stock is then being converted,
as set forth in the Series E Articles Supplementary. From and after the
applicable Change of Control Conversion Date (as such term is defined in the
Series E Articles Supplementary), the Series E Preferred Partnership Units so
converted shall no longer be outstanding and all rights hereunder, to
distributions or otherwise, with respect to such Series E Preferred Partnership
Units shall cease.

 

(h)              Restriction on Ownership. The Series E Preferred Partnership
Units shall be owned and held solely by Braemar OP Limited Partner LLC.

 

(i)               Allocations. Allocations of the Partnership’s items of income,
gain, loss and deduction allocable with respect to Series E Preferred
Partnership Units shall be allocated pro rata among holders of Series E
Preferred Partnership Units in accordance with Article V of the Partnership
Agreement.

 

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EXHIBIT J

DESIGNATION OF TERMS AND CONDITIONS OF SERIES M PREFERRED PARTNERSHIP UNITS

 

(a)               Designation and Number. A series of Preferred Partnership
Units, designated as Series M Preferred Partnership Units, is hereby
established. The number of authorized Series M Preferred Partnership Units shall
be 28,000,000.

 

(b)               Rank. The Series M Preferred Partnership Units, with respect
to rights to distributions and payments to Partners and the distribution of
assets upon the liquidation, dissolution or winding up of the Partnership, rank
(a) prior or senior to the Common Partnership Units and all Partnership Units
issued by the Partnership (“Junior Units”) the terms of which specifically
provide that such Partnership Units rank junior to the Series M Preferred
Partnership Units; (b) on a parity with the Series B Preferred Partnership
Units, the Series D Preferred Partnership Units, the Series E Preferred
Partnership Units and all other Partnership Units issued in the future by the
Partnership (“Parity Units”) the terms of which specifically provide that such
Partnership Units rank on a parity with the Series M Preferred Partnership
Units; (c) junior to all Partnership Units issued by the Partnership the terms
of which specifically provide that such Partnership Units rank senior to the
Series M Preferred Partnership Units; and (d) junior to all of the Partnership’s
existing and future indebtedness.

 

(c)               Distributions.

 

(i)               Pursuant to Section 8.1 of the Partnership Agreement but
subject to the rights of holders of any Preferred Partnership Units ranking
senior to the Series M Preferred Partnership Units as to the payment of
distributions, Braemar OP Limited Partner LLC, in its capacity as the holder of
the then outstanding Series M Preferred Partnership Units, shall be entitled to
receive, when and as authorized by the General Partner, from the Cash Flow,
cumulative monthly preferential cash distributions in an amount per Series M
Preferred Partnership Unit equal to 7.0% per annum of the stated value of $25.00
per Series M Preferred Partnership Unit (the “Stated Value”) (equivalent to an
annual distribution rate of $1.75 per Series M Preferred Partnership Unit).
Beginning one year from the date of original issuance of each Series M Preferred
Partnership Unit, and on each one year anniversary thereafter for such Series M
Preferred Partnership Unit, the dividend rate shall increase by 0.10% per annum
for such Series M Preferred Partnership Unit; provided, however, that the
dividend rate for any Series M Preferred Partnership Unit shall not exceed 7.5%
per annum of the Stated Value. For purposes of this section (c)(i) only, the
“date of the original issuance” of the Series M Preferred Partnership Unit shall
mean the earliest date that any Series M Preferred Partnership Unit was issued
during the calendar quarter in which the Series M Preferred Partnership Unit was
issued. Distributions shall be payable monthly on the 15th day of each month
(or, if such payment date is not a Business Day, the next succeeding Business
Day, 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). Distributions of Preferred Return shall be payable in
arrears to holders of record as they appear on the records of the Partnership at
the close of business on the last Business Day of each month immediately
preceding the applicable distribution payment date, which dates shall be the
Partnership Record Dates for the Series M Preferred Partnership Units. Any
distribution of Preferred Return payable on the Series M Preferred Partnership
Units for any distribution period (as defined below) will be computed on the
basis of twelve 30-day months and a 360-day year. Except for distributions in
liquidation or redemption as provided in Sections D and E, respectively, holders
of Series M Preferred Partnership Units will not be entitled to receive any
distributions in excess of full cumulative Preferred Returns accrued on the
Series M Preferred Partnership Units at the distribution rate specified in this
paragraph. No interest will be paid in respect of any distribution payment or
payments on the Series M Preferred Partnership Units that may be in arrears.

 

(ii)                Distributions of Preferred Return on each Series M Preferred
Partnership Unit shall be cumulative from (and including) the first day of the
distribution period during which such Series M Preferred Partnership Unit was
originally issued, whether or not in any distribution period or periods (x) such
distributions shall be authorized by the General Partner, (y) there shall be
funds legally available for the payment of such distributions or (z) any
agreement prohibits the Partnership’s payment of such distributions. As used
herein, “distribution period” shall mean the respective periods commencing on,
and including, the first day of each month of each year and ending on, and
including, the day preceding the first day of the next succeeding distribution
period (other than the distribution period during which any Series M Preferred
Partnership Units shall be redeemed or otherwise acquired by the Partnership,
which shall end on, and include, the day preceding the redemption or acquisition
date with respect to the Series M Preferred Partnership Units being redeemed or
acquired).

 

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(iii)              When distributions of Preferred Return are not paid in full
upon the Series M Preferred Partnership Units or any other series of Parity
Units, or a sum sufficient for such payment is not set apart, all distributions
of Preferred Return authorized by the General Partner upon the Series M
Preferred Partnership Units and any other series of Parity Units shall be
authorized by the General Partner ratably in proportion to the respective
amounts of such distributions accumulated, accrued and unpaid on the Series M
Preferred Partnership Units and accumulated, accrued and unpaid on such Parity
Units. Except as set forth in the preceding sentence, unless distributions on
the Series M Preferred Partnership Units equal to the full amount of
accumulated, accrued and unpaid distributions of Preferred Return have been or
contemporaneously are authorized by the General Partner and paid, or authorized
by the General Partner and a sum sufficient for the payment thereof set apart
for such payment for all past distribution periods, no distributions (other than
distributions paid in Junior Units or options, warrants or rights to subscribe
for or purchase Junior Units) shall be authorized by the General Partner or paid
or set aside for payment by the Partnership with respect to any class or series
of Parity Units. Unless distributions of Preferred Return on the Series M
Preferred Partnership Units equal to the full amount of accumulated, accrued and
unpaid distributions have been or contemporaneously are authorized by the
General Partner and paid, or authorized by the General Partner and a sum
sufficient for the payment thereof set apart for such payment for all past
distribution periods, no distributions (other than distributions paid in Junior
Units or options, warrants or rights to subscribe for or purchase Junior Units)
shall be authorized by the General Partner or paid or set apart for payment by
the Partnership with respect to any Junior Units, nor shall any Junior Units or
Parity Units 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 Junior Units or Parity Units (except by conversion or exchange for Junior
Units, or options, warrants or rights to subscribe for or purchase Junior
Units), nor shall any other cash or property be paid or distributed to or for
the benefit of holders of Junior Units or Parity Units. Notwithstanding the
foregoing, the General Partner shall not be prohibited from (i) authorizing or
paying or setting apart for payment any Preferred Return or distribution on any
Junior Units or Parity Units or (ii) redeeming, purchasing or otherwise
acquiring any Junior Units or Parity Units, in each case, if such authorization,
payment, redemption, purchase or other acquisition is necessary to maintain the
Company’s qualification as a REIT.

 

(iv)              No distribution of Preferred Return on the Series M Preferred
Partnership Units shall be authorized by the General Partner or paid or set
apart for payment at such time as the terms and provisions of any agreement of
the Partnership, including any agreement of the Partnership relating to the
Partnership’s indebtedness, prohibits such authorization, payment or setting
apart for payment or provides that such authorization, payment or setting apart
for payment would constitute a breach thereof, or a default thereunder, or if
such authorization, payment or setting apart for payment shall be restricted or
prohibited by law.

 

(v)               In determining whether a distribution (other than upon
voluntary or involuntary liquidation, dissolution or winding up of the
Partnership) of Preferred Return or in redemption or otherwise, is permitted,
amounts that would be needed, if the Partnership were to be dissolved at the
time of the distribution, to satisfy the liquidation preference of the Series M
Preferred Partnership Units (as provided in Section D below) will not be added
to the Partnership’s total liabilities.

 

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(d)               Liquidation Preference.

 

(i)               Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, before any distribution or payment shall be made
to or set apart for the holders of any Junior Units, Braemar OP Limited Partner
LLC, in its capacity as holder of the Series M Preferred Partnership Units,
shall be entitled to receive a liquidation preference distribution equal to the
Stated Value per Series M Preferred Partnership Unit, plus an amount equal to
all accumulated, accrued and unpaid Preferred Return to, but not including, the
date of final distribution, but Braemar OP Limited Partner LLC shall not be
entitled to any further payment with respect thereto. If upon any liquidation,
dissolution or winding up of the Partnership, its assets, or proceeds thereof,
distributable among Braemar OP Limited Partner LLC, in its capacity as the
holder of the Series M Preferred Partnership Units, shall be insufficient to pay
in full the above described preferential distribution and liquidating
distributions on any other series of Parity Units, then such assets, or the
proceeds thereof, shall be distributed among Braemar OP Limited Partner LLC, in
its capacity as the holder of the Series M Preferred Partnership Units, and the
holders of any such other Parity Units ratably in the same proportion as the
respective amounts that would be payable on such Series M Preferred Partnership
Units and any such other Parity Units if all amounts payable thereon were paid
in full.

 

(ii)              Upon any liquidation, dissolution or winding up of the affairs
of the Partnership, after payment of the full amount of liquidating
distributions have been made to Breamar OP Limited Partner LLC, in its capacity
as the holder of the Series M Preferred Partnership Units, holders of the Series
M Preferred Partnership Units shall have no right or claim to any of the
remaining assets of the Partnership.

 

(iii)             None of a consolidation or merger of the Partnership with or
into any other corporation, trust or other entity, a consolidation or merger of
any other corporation, trust or other entity with or into the Partnership, a
statutory unit exchange by the Partnership or a sale, lease, transfer or
conveyance of any or all of the Partnership’s assets or business shall be deemed
to constitute a liquidation, dissolution or winding up of the affairs of the
Partnership.

 

(e)               Redemption. In connection with the cash redemption by the
Company of any shares of Series M Preferred Stock in accordance with the
provisions of the Series M Articles Supplementary, the Partnership shall provide
cash to Braemar OP Limited Partner LLC for such purpose which shall be equal to
the applicable redemption price (as set forth in the Series M Articles
Supplementary), plus all distributions of Preferred Return accumulated and
unpaid to, but not including, the applicable redemption date (as set forth in
the Series M Articles Supplementary), and one Series M Preferred Partnership
Unit shall be concurrently redeemed with respect to each share of Series M
Preferred Stock so redeemed by the Company. In connection with the redemption by
the Company of any shares of Series M Preferred Stock for shares of REIT Common
Shares in accordance with the provisions of the Series M Articles Supplementary,
the Partnership shall convert Series M Preferred Partnership Units into Common
Partnership Units and issue such Common Partnership Units to Braemar OP Limited
Partner LLC. The number of Common Partnership Units into which the Series M
Preferred Partnership Units are convertible shall be equal to the number of REIT
Common Shares into which the Series M Preferred Stock is then being redeemed, as
set forth in the Series M Articles Supplementary. From and after the applicable
redemption date, the Series M Preferred Partnership Units so redeemed shall no
longer be outstanding and all rights hereunder, to distributions or otherwise,
with respect to such Series M Preferred Partnership Units shall cease.

 

(f)                Voting Rights. Except as required by applicable law, the
holder of the Series M Preferred Partnership Units, as such, shall have no
voting rights.

 

(g)               Conversion. In connection with the conversion by the Company
of any shares of Series M Preferred Stock into shares of REIT Common Shares in
accordance with the provisions of the Series M Articles Supplementary, the
Partnership shall convert Series M Preferred Partnership Units into Common
Partnership Units and issue such Common Partnership Units to Braemar OP Limited
Partner LLC. The number of Common Partnership Units into which the Series M
Preferred Partnership Units are convertible shall be equal to the number of REIT
Common Shares into which the Series M Preferred Stock is then being converted,
as set forth in the Series M Articles Supplementary. From and after the
applicable Change of Control Conversion Date (as such term is defined in the
Series M Articles Supplementary), the Series M Preferred Partnership Units so
converted shall no longer be outstanding and all rights hereunder, to
distributions or otherwise, with respect to such Series M Preferred Partnership
Units shall cease.

 

(h)               Restriction on Ownership. The Series M Preferred Partnership
Units shall be owned and held solely by Braemar OP Limited Partner LLC.

 

(i)                Allocations. Allocations of the Partnership’s items of
income, gain, loss and deduction allocable with respect to Series M Preferred
Partnership Units shall be allocated pro rata among holders of Series M
Preferred Partnership Units in accordance with Article V of the Partnership
Agreement.

 

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