Exhibit 10.1

AMENDMENT NO. 1

TO

THIRD AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP

OF

HUMPHREY HOSPITALITY LIMITED PARTNERSHIP

The undersigned hereby certifies that the Third Amended and Restated Agreement
of Limited Partnership of Humphrey Hospitality Limited Partnership, dated as of
June 30, 2000 (the “Partnership Agreement”), is hereby further amended,
effective May 26, 2005, by written consent of the General Partner, so that the
first sentence of Section 2.02 of the Partnership Agreement is revised in its
entirety to read as follows:

“The name of the Partnership shall be Supertel Limited Partnership.”

IN WITNESS WHEREOF, the undersigned has set his hand effective this 26th day of
May, 2005.

 

GENERAL PARTNER: HUMPHREY HOSPITALITY REIT TRUST  

/s/ Paul J. Schulte

By:   Paul J. Schulte Its:   President

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THIRD AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP

OF

HUMPHREY HOSPITALITY LIMITED PARTNERSHIP

THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HUMPHREY
HOSPITALITY LIMITED PARTNERSHIP (the “Agreement”) is made and entered into as of
June 30, 2000, by and among Humphrey Hospitality REIT Trust, a Maryland real
estate investment trust, as General Partner (the “General Partner”), and James
I. Humphrey, Jr., Humphrey Associates, Inc., a Maryland corporation, Humphrey
Development, Inc., a Maryland corporation, Bethany H. Hooper, Randy P. Smith and
Timothy P. Barila, as Majority Limited Partners (the “Limited Partners”).

RECITALS

WHEREAS, Humphrey Hospitality Limited Partnership (the “Partnership”) was formed
as a limited partnership under the laws of the Commonwealth of Virginia upon the
filing of its Certificate of Limited Partnership with the Virginia State
Corporation Commission on August 29, 1994, and is governed by a Second Amended
and Restated Agreement of Limited Partnership, dated September 2, 1997, as
amended by a First Amendment dated June 1, 1998, a Second Amendment dated
August 18, 1998, a Third Amendment dated December 31, 1998, a Fourth Amendment
dated October 20, 1999, and a Fifth Amendment dated October 26, 1999 to make
certain clarifying changes and to reflect certain changes in ownership
(collectively, the “Partnership Agreement”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and in the Partnership Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

ARTICLE I

DEFINED TERMS

The following defined terms used in this Agreement shall have the meanings
specified below:

“Act” means the Virginia Revised Uniform Limited Partnership Act, as it may be
amended from time to time.

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“Additional Limited Partner” means a Person admitted to this Partnership as a
Limited Partner pursuant to Section 4.02 hereof.

“Administrative Expenses” means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner and HHTI, including any salaries or other
payments to directors, officers and/or employees of the General Partner and HHTI
and any accounting and legal expenses of the General Partner and HHTI, which
expenses, the Partners have agreed, are expenses of the Partnership and not the
General Partner and HHTI, and (iii) to the extent not included in clause
(ii) above, REIT Expenses; provided, however, that Administrative Expenses shall
not include (A) any administrative costs and expenses incurred by the General
Partner and HHTI that are attributable to Properties, or ownership interests in
entities that own Properties, that are owned by the General Partner or HHTI
directly, including but not limited to HHTI’s ownership interests in Solomons
Beacon Inn Limited Partnership and E&P Financing Limited Partnership or
(B) interest expenses attributable to any loans incurred by HHTI, the proceeds
of which are distributed to its shareholders or other equity holders pursuant to
Section 4.03 hereof.

“Affiliate” means, (i) any Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person, (ii) any other Person
that owns, beneficially, directly or indirectly, 5% or more of the outstanding
capital stock, shares or equity interests of such Person, or (iii) any officer,
director, employee, partner or trustee of such Person or any Person controlling,
controlled by or under common control with such Person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
Person). For the purposes of this definition, “control” (including the
correlative meanings of the terms “controlled by” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities,
partnership interests or other equity interests.

“Agreed Value” means the fair market value of a Partner’s non-cash Capital
Contribution as of the date hereof as agreed to by the Partners. For purposes of
this Partnership Agreement, the Agreed Value of a Partner’s non-cash Capital
Contribution shall be equal to the number of Partnership Units received by such
Partner in exchange for a Property or an interest therein or in connection with
the merger of a partnership of which such person is a partner with and into the
Partnership, or for any other non-cash asset so contributed, multiplied by the
Public Offering Price or, if the contribution is made after the date hereof, the
“Market Price” calculated in accordance with the second and third sentences of
the definition of “Cash Amount”, or any agreed upon value as set forth in
Exhibit A. The names and addresses of the Partners, number of Partnership Units
issued to each Partner, and the Agreed Value of non-cash Capital Contributions
is set forth on Exhibit A.

“Agreement” means this Third Amended and Restated Agreement of Limited
Partnership.

 

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“Articles of Incorporation” means the Amended and Restated Articles of
Incorporation of HHTI filed with the Secretary of Virginia State Corporation
Commission, as amended or restated from time to time.

“Capital Account” has the meaning provided in Section 4.04 hereof.

“Capital Contribution” means the total amount of capital initially contributed
or agreed to be contributed, as the context requires, to the Partnership by each
Partner pursuant to the terms of the Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner. The paid-in
Capital Contribution shall mean the cash amount or the Agreed Value of other
assets actually contributed by each Partner to the capital of the Partnership.

“Capital Transaction” means the refinancing, sale, exchange, condemnation,
recovery of a damage award or insurance proceeds (other than business or rental
interruption insurance proceeds not reinvested in the repair or reconstruction
of Properties), or other disposition of any of Property (or the Partnership’s
interest therein).

“Cash Amount” means an amount of cash per Partnership Unit equal to the value of
the REIT Shares Amount on the date of receipt by HHTI of a Notice of Redemption.
Except as set forth in any agreement between the Partnership and a Partner
dealing with the redemption of Partnership Units, the value of the REIT Shares
Amount shall be based on the average of the daily market price of REIT Shares
for the ten consecutive trading days immediately preceding the date of such
valuation. The market price for each such trading day shall be: (i) if the REIT
Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the sale price, regular way, on such day, or if
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, (ii) if the REIT Shares are not listed or
admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by HHTI and by a majority in
interest of the Limited Partners; or (iii) if the REIT Shares are not listed or
admitted to trading on any securities exchange or the NASDAQ-National Market
System and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by HHTI and by a
majority in interest of the Limited Partners, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than 10 days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the ten days prior to the date in question,
the value of the REIT Shares shall be determined by an appraiser mutually agreed
upon by the General Partner and a majority in interest of the Limited Partners
(excluding the General Partner). In the event that the parties are unable to
agree upon an appraiser, the General Partner and a majority in interest of the
Limited Partners (excluding the General Partner) each shall select an appraiser.
Each such appraiser shall complete an appraisal of the fair market value of the
REIT Shares within 20 days of the first attempt at evaluating the REIT Shares,
and the fair market value of the REIT Shares

 

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shall be the average of the two appraisals; provided, however, that if the
higher appraisal exceeds the lower appraisal by more than 20% of the lower
appraisal, the two appraisers shall select a third appraiser who shall complete
an appraisal of the fair market value of the REIT Shares no later than 30 days
after the first attempt at evaluating the REIT Shares. In such case, the fair
market value of the REIT Shares shall be the average of the two appraisals
closest in value.

“Certificate” means any instrument or document that is required under the laws
of the Commonwealth of Virginia, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices within the Commonwealth of Virginia or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the Commonwealth of Virginia or such other
jurisdiction.

“Code” means the Internal Revenue Code of 1986, as amended, and as hereafter
amended from time to time. Reference to any particular provision of the Code
shall mean that provision in the Code at the date hereof and any succeeding
provision of the Code.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Units” shall mean all Partnership Units other than Preferred Units.

“Conversion Factor” means one (1), provided that in the event that the General
Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date. Any adjustment to the Conversion Factor
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

“Event of Bankruptcy” as to any Person means the filing of a petition for relief
as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or
similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any

 

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jurisdiction, whether now in existence or hereinafter in effect, either by such
Person or by another, provided that if such proceeding is commenced by another,
such Person indicates his approval of such proceeding, consents thereto or
acquiesces therein, or such proceeding is contested by such Person and has not
been finally dismissed within 90 days.

“Financial Statement” means an annual balance sheet, a statement of partners’
capital as of the end of such year, as well as statements of cash flow and
income, all in accordance with generally accepted accounting principles and
accompanied by an independent auditor’s report.

“Funding Loan” means any loan advanced to the Partnership by the General Partner
or HHTI for any proper Partnership purpose.

“General Partner” means Humphrey Hospitality REIT Trust, a Maryland real estate
investment trust, and any Person who becomes a substitute or additional General
Partner as provided herein, and any of their successors as General Partner.

“General Partnership Interest” means a Partnership Interest held by the General
Partner that is a general partnership interest.

“HHTI” means Humphrey Hospitality Trust, Inc., a Virginia corporation.

“Indemnifying Party” means the party that would otherwise be required to provide
indemnification or the indemnifying party for the purposes of Section 8.06(e)
hereof.

“Indemnitee” means (i) any Person made a party to a proceeding by reason of his
status as the General Partner or a director or officer of the Partnership or the
General Partner, and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time, in its sole and absolute discretion.

“Initial Hotels” means the following hotels: (1) Comfort Inn - Dahlgren,
Virginia, (2) Comfort Inn - Dublin, Virginia, (3) Comfort Inn - Elizabethton,
Tennessee, (4) Comfort Inn - Farmville, Virginia, (5) Comfort Inn - Morgantown,
West Virginia, (6) Comfort Inn - Princeton, West Virginia, (7) Comfort Inn -
Beacon Marina, Solomons, Maryland and (8) Rodeway Inn - Wytheville, Virginia.

“Initial Offering” means the initial offer and sale by HHTI and the purchase by
the Underwriters (as defined in the Prospectus) of the common shares of HHTI for
sale to the public.

“Limited Partner” means any Person named as a Limited Partner on Exhibit A
attached hereto, and any Person who becomes a Substitute or Additional Limited
Partner, in such Person’s capacity as a Limited Partner in the Partnership.

“Limited Partnership Interest” means the ownership interest of a Limited Partner
in the Partnership at any particular time, including the right of such Limited
Partner to any and all benefits to which such Limited Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of such
Limited Partner to comply with all the provisions of this Agreement and of such
Act.

 

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“Loss” has the meaning provided in Section 5.01(f) hereof.

“New Securities” means any REIT Shares in addition to those offered in the
Initial Offering and issued in connection with a redemption pursuant to
Section 8.05 hereof or any rights, options warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares.

“Notice of Redemption” means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.

“Offer” means a purchase, tender or exchange offer.

“Offering” means the initial offer and sale by HHTI and the purchase by the
Underwriters (as defined in the Prospectus) of the common shares of HHTI for
sale to the public.

“Original Limited Partners” means James I. Humphrey, Jr. and Humphrey
Associates, Inc.

“Partner” means any General Partner or Limited Partner.

“Partner Non-recourse Debt Minimum Gain” has the meaning set forth in
Regulations Section 1.704-2(i). A Partner’s share of Partner Non-recourse Debt
Minimum Gain shall be determined in accordance with Regulations Section 1.704-
2(i)(5).

“Partnership Interest” means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.

“Partnership Minimum Gain” has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership non-recourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner’s share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).

“Partnership Record Date” means the record date established by the General
Partner for the distribution of Distributable Cash pursuant to Section 5.02
hereof, which record date shall be the same as the record date established by
HHTI for a distribution to its shareholders of some or all of its portion of
such distribution.

 

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“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. As of the date of this Agreement,
there shall be considered to be the amount of Partnership Units outstanding, as
set forth on Exhibit A. Partnership Units shall consist of both Common Units and
Preferred Units.

“Percentage Interest” means the percentage ownership interest in the Partnership
of each Partner, as determined by dividing the Partnership Units owned by a
Partner by the total number of Partnership Units then outstanding. The
Percentage Interest of each Partner is as set forth opposite its respective name
on Exhibit A.

“Person” means any individual, partnership, corporation, limited liability
company, joint venture, trust or other entity.

“Preferred Units” shall mean each special class of Preferred Units, the specific
terms of which shall be attached hereto as exhibits found under Exhibit C.

“Profit” has the meaning provided in Section 5.01(f) hereof.

“Property” means any hotel property or other investment in which the Partnership
holds an ownership interest.

“Prospectus” means the final prospectus delivered to purchasers of HHTI’s common
stock in the Offering.

“Public Offering Price” shall mean the initial public offering price set forth
in the Prospectus.

“Redeeming Partner” has the meaning provided in Section 8.05(a) hereof.

“Redemption Amount” means either the Cash Amount or the REIT Shares Amount, as
selected by HHTI in its sole discretion pursuant to Section 8.05(c) hereof.

“Redemption Right” has the meaning provided in Section 8.05(a) hereof.

“Redemption Shares” are the REIT Shares that may be issued in redemption of
Partnership Units under Section 8.05(a) hereof.

“Regulations” means the Federal Income Tax Regulations issued under the Code, as
amended and as hereafter amended from time to time. Reference to any particular
provision of the Regulations shall mean that provision of the Regulations on the
date hereof and any succeeding provision of the Regulations.

“REIT” means a real estate investment trust under Sections 856 through 860 of
the Code.

 

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“REIT Expenses” means (i) costs and expenses relating to the formation and
continuity of existence of HHTI and any Subsidiaries thereof (which Subsidiaries
shall, for purposes of this definition, be included within all references to
HHTI in this definition), including taxes, fees and assessments associated
therewith, any and all costs, expenses or fees payable to any director, officer,
or employee of HHTI, (ii) costs and expenses relating to the public offering and
registration of securities by HHTI and all statements, reports, fees and
expenses incidental thereto, including underwriting discounts and selling
commissions applicable to any such offering of securities, (iii) costs and
expenses associated with the preparation and filing of any periodic reports by
HHTI under federal, state or local laws or regulations, including filings with
the Commission, (iv) costs and expenses associated with compliance by HHTI with
laws, rules and regulations promulgated by any regulatory body, including the
Commission, and (v) all other operating or administrative costs of HHTI incurred
in the ordinary course of its business on behalf of the Partnership.

“REIT Share” means a common share of HHTI.

“REIT Shares Amount” shall mean a number of REIT Shares equal to the product of
the number of Partnership Common Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor; provided that in the event HHTI
issues to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares, or any other securities or property (collectively, the “rights”) ,
then the REIT Shares Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.

“Securities Act” means the Securities Act of 1933 as amended.

“Service” means the Internal Revenue Service.

“Shelf Registration” means a shelf registration statement under Rule 415 of the
Securities Act, or any similar rule that may be adopted by the Commission
pursuant to Section 8.06 hereof.

“Specified Redemption Date” means the first business day of the month that is at
least 10 business days after the receipt by HHTI of the Notice of Redemption.

“Subsidiary” means, with respect to any Person, any corporation or other entity
of which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.

“Subsidiary Partnership” means Solomons Beacon Inn Limited Partnership, a
Maryland limited Partnership.

“Substitute Limited Partner” means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.03 hereof.

 

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“Surviving General Partner” means the successor or surviving entity of a merger
or consolidation of the General Partner with another entity.

“Transaction” means, with respect to HHTI any merger, consolidation, or other
combination with or into another Person or sale of all or substantially all of
its assets or any reclassification or any recapitalization or change of
outstanding REIT Shares (other than a change in par value or from par value to
no par value, or as a result of a subdivision or combination of REIT Shares).

“Transfer” means collectively any offer, sale, assignment, hypothecation, pledge
or transfer, of a Limited Partnership Interest by a Limited Partner, in whole or
in part, whether voluntarily or by operation of law or at judicial sale or
otherwise.

ARTICLE II

PARTNERSHIP CONTINUATION AND IDENTIFICATION

2.01 Continuation. The Partners hereby agree to continue the Partnership
pursuant to the Act and upon the terms and conditions set forth in this
Agreement.

2.02 Name, Office and Registered Agent. The name of the Partnership shall be
Humphrey Hospitality Limited Partnership. The specified office and place of
business of the Partnership shall be 12301 Old Columbia Pike, Silver Spring,
Maryland 20904 until September 12, 2000 and thereafter shall be 7170 Riverwood
Drive, Columbia, Maryland 21045. The General Partner may at any time change the
location of such office, provided the General Partner gives notice to the
Partners of any such change. The name and address of the Partnership’s
registered agent is Thurston R. Moore, Riverfront Plaza - East Tower, 951 E.
Byrd St., Richmond, Virginia 23219. The sole duty of the registered agent as
such is to forward to the Partnership any notice that is served on him as
registered agent.

2.03 Partners.

(a) The General Partner of the Partnership is Humphrey Hospitality REIT Trust, a
Maryland real estate investment trust. Its principal place of business shall be
the same as that of the Partnership.

(b) The Limited Partners shall be those Persons identified as Limited Partners
in Exhibit A hereto, as amended from time to time. The Limited Partners (other
than the Original Limited Partners) hereby are admitted as Limited Partners.

 

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2.04 Term and Dissolution.

(a) The term of the Partnership shall continue in full force and effect until
December 31, 2050, except that the Partnership shall be dissolved upon the
happening of any of the following events:

(i) The occurrence of an Event of Bankruptcy as to a General Partner or the
dissolution, death or withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof; provided that if a
General Partner is on the date of such occurrence a partnership, the dissolution
of such General Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such partnership shall not be an
event of dissolution of the Partnership if the business of such General Partner
is continued by the remaining partner or partners, either alone or with
additional partners, and such General Partner and such partners comply with any
other applicable requirements of this Agreement;

(ii) The passage of 90 days after the sale or other disposition of all or
substantially all the assets of the Partnership; (provided that if the
Partnership receives an installment obligation as consideration for such sale or
other disposition, the Partnership shall continue, unless sooner dissolved under
the provisions of this Agreement, until such time as such note or notes are paid
in full);

(iii) The redemption of all Limited Partnership Interests (other than any of
such interests held by the General Partner); or

(iv) The election by the General Partner that the Partnership should be
dissolved.

(b) Upon dissolution of the Partnership (unless the business of the Partnership
is continued pursuant to Section 7.03(b) hereof), the General Partner (or its
trustee, receiver, successor or legal representative) shall amend or cancel the
Certificate and liquidate the Partnership’s assets and apply and distribute the
proceeds thereof in accordance with Section 5.06 hereof. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership’s debts and
obligations), or (ii) distribute the assets to the Partners in kind.

2.05 Filing of Certificate and Perfection of Limited Partnership. The General
Partner shall execute, acknowledge, record and file at the expense of the
Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.

 

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ARTICLE III

BUSINESS OF THE PARTNERSHIP

The purpose and nature of the business to be conducted by the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, provided, however, that such business
shall be limited to and conducted in such a manner as to permit HHTI at all
times to qualify as a REIT, unless HHTI otherwise ceases to qualify as a REIT,
(ii) to enter into any partnership, joint venture or other similar arrangement
to engage in any of the foregoing or the ownership of interests in any entity
engaged in any of the foregoing and (iii) to do anything necessary or incidental
to the foregoing. HHTI and the General Partner shall also be empowered to do any
and all acts and things necessary or prudent to ensure that the Partnership will
not be classified as a “publicly traded partnership” for the purposes of
Section 7704(a) of the Code.

ARTICLE IV

CAPITAL CONTRIBUTIONS AND ACCOUNTS

4.01 Capital Contributions. The General Partner shall contribute to the capital
of the Partnership cash in an amount set forth opposite its name on Exhibit A,
which shall represent the gross proceeds of the Offering. The Limited Partners
shall contribute to the capital of the Partnership cash and interests in one or
more of the Initial Hotels as set forth opposite their names on Exhibit A. The
Agreed Values of the Limited Partners’ ownership interests in the Initial Hotels
that are contributed to the Partnership are as set forth opposite their names on
Exhibit A.

4.02 Additional Capital Contributions and Issuances of Additional Partnership
Interests. Except as provided in this Section 4.02 or in Section 4.03, the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.02.

(a) Issuances of Additional Partnership Interests.

(i) General. The General Partner is hereby authorized to cause the Partnership
to issue such additional Partnership Interests in the form of Partnership Units
for any Partnership purpose at any time or from time to time, to the Partners
(including the General Partner) or to other Persons for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Upon such issuance of Partnership Units hereunder, the General Partner
is hereby authorized to amend Exhibit A (and, if applicable, Exhibit C) attached
hereto to reflect such issuance. Any additional Partnership Interests issued
thereby may be issued in one or more

 

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classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Virginia law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided, however, that no additional
Partnership Interests shall be issued to the General Partner unless either:

(1)(A) the additional Partnership Interests are issued in connection with an
issuance of shares of or other interests in HHTI, which shares or interests have
designations, preferences and other rights, all such that the economic interests
are substantially similar to the designations, preferences and other rights of
the additional Partnership Interests issued to the General Partner by the
Partnership in accordance with this Section 4.02 and (B) the General Partner
shall make a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of such shares of HHTI or other
interests in HHTI, or

(2) the additional Partnership Interests are issued to all Partners in
proportion to their respective Percentage Interests.

Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.

(ii) Upon Issuance of New Securities. After the initial public offering for HHTI
(the “Initial Offering”), HHTI shall not issue any additional REIT Shares (other
than REIT Shares issued in connection with a redemption pursuant to Section 8.05
hereof) or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares (collectively,
“New Securities”) other than to all holders of REIT Shares, unless (A) the
General Partner shall cause the Partnership to issue to the General Partner,
Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights, all such that the economic interests are substantially similar to
those of the New Securities, and (B) HHTI contributes to the General Partner and
the General Partner contributes to the Partnership the proceeds from the
issuance of such New Securities and from the exercise of rights contained in
such New Securities to the Partnership; provided, however, that HHTI is allowed
to issue New Securities in connection with an acquisition of property to be held
directly by HHTI, but if and only if such direct acquisition and issuance of New
Securities have been approved and

 

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determined to be in the best interests of HHTI, the General Partner and the
Partnership by a majority of the directors of HHTI, which majority includes a
majority of the Independent Directors (as defined in the Articles of
Incorporation). Without limiting the foregoing, HHTI is expressly authorized to
issue New Securities for less than fair market value and to cause the
Partnership to issue to the General Partner corresponding Partnership Interests,
so long as (x) HHTI concludes in good faith that such issuance is in the best
interests of HHTI, the General Partner and the Partnership (for example, and not
by way of limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee stock purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise), and
(y) HHTI contributes to the General Partner and the General Partner contributes
to the Partnership all proceeds from such issuance. By way of example, in the
event HHTI issues REIT Shares for a cash purchase price and contributes all of
the proceeds of such issuance to the General Partner for contribution to the
Partnership as required hereunder, the General Partner shall be issued a number
of additional Partnership Units equal to the product of (A) the number of such
REIT Shares issued by HHTI, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is one hundred percent
(100%), and the denominator of which is the Conversion Factor in effect on the
date of such contribution.

(b) Certain Deemed Contributions of Proceeds of Issuance of Shares. In
connection with any and all issuance of REIT Shares, HHTI shall contribute to
the General Partner and the General Partner shall make a Capital Contribution to
the Partnership of the proceeds raised in connection with such issuance as
required above, provided that if the proceeds actually received by the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter’s discount or other expenses paid or incurred in connection with
such issuance, then the General Partner shall be deemed to have made a Capital
Contribution to the Partnership in the amount of the gross proceeds of such
issuance and the Partnership shall be deemed simultaneously to have paid such
offering expenses in connection with the required issuance of additional
Partnership Units to General Partner for such Capital Contribution pursuant to
Section 4.02(a) hereof.

4.03 General Partner Loans. The General Partner or HHTI may from time to time
advance funds to the Partnership for any proper Partnership purpose as a loan
(“Funding Loan”), provided that any such funds must first be obtained by the
General Partner or HHTI from a third party lender, and then all of such funds
must be loaned by the General Partner or HHTI to the Partnership on the same
terms and conditions, including principal amount, interest rate, repayment
schedule and costs and expenses, as shall be applicable with respect to or
incurred in connection with such loan with such third party lender. Except for
Funding Loans, neither the General Partner nor HHTI shall incur any indebtedness
for borrowed funds; provided, however, that upon the affirmative vote of a
majority of the directors of HHTI, which majority must include a majority of the
Independent Directors, any loan proceeds received by the General Partner or HHTI
may be distributed to their respective shareholders or other equity holders if
such loan and distribution have been determined by the aforesaid majorities to
be necessary to enable HHTI to maintain its status as a REIT under Sections 856-
860 of the Code.

 

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4.04 Capital Accounts. A separate capital account (a “Capital Account”) shall be
established and maintained for each Partner in accordance with Regulations
Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an
additional Partnership Interest in exchange for more than a de minimis Capital
Contribution, (ii) the Partnership distributes to a Partner more than a de
minimis amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (taking into account
Section 7701(g) of the Code) in accordance with Regulations Section 1.704-
1(b)(2)(iv)(f). When the Partnership’s property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (taking into account Section 7701(g) of the Code) on
the date of the revaluation.

4.05 Percentage Interests. If the number of outstanding Partnership Units
increases or decreases during a taxable year, each Partner’s Percentage Interest
shall be adjusted to a percentage equal to the number of Partnership Units held
by such Partner divided by the aggregate number of outstanding Partnership
Units. If the Partners’ Percentage Interests are adjusted pursuant to this
Section 4.05, the Profits and Losses for the taxable year in which the
adjustment occurs shall be allocated between the part of the year ending on the
day when the Partnership’s property is revalued by the General Partner and the
part of the year beginning on the following day either (i) as if the taxable
year had ended on the date of the adjustment or (ii) based on the number of days
in each part. The General Partner, in its sole discretion, shall determine which
method shall be used to allocate Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be
based on the adjusted Percentage Interests.

4.06 No Interest on Contributions. No Partner shall be entitled to interest on
its Capital Contribution.

4.07 Return of Capital Contributions. No Partner shall be entitled to withdraw
any part of its Capital Contribution or its Capital Account or to receive any
distribution from the Company, except as specifically provided in this
Agreement. Except as otherwise provided herein, there shall be no obligation to
return to any Partner or withdrawn Partner any part of such Partner’s Capital
Contribution for so long as the Partnership continues in existence.

4.08 No Third Party Beneficiary. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors

 

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and assigns. None of the rights or obligations of the Partners herein set forth
to make Capital Contributions or loans to the Partnership shall be deemed an
asset of the Partnership for any purpose by any creditor or other third party,
nor may such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or of any of the Partners. In addition, it
is the intent of the parties hereto that no distribution to any Limited Partner
shall be deemed a return of money or other property in violation of the Act.
However, if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Limited Partner is obligated to return such
money or property, such obligation shall be the obligation of such Limited
Partner and not of the General Partner. Without limiting the generality of the
foregoing, a deficit Capital Account of a Partner shall not be deemed to be a
liability of such Partner nor an asset or property of the Partnership.

4.09 Loans from Limited Partners. If a Limited Partner guarantying any debt that
is secured by Property is required by the related lender to pay all or part of
such debt, the amount paid toward such debt by such Limited Partner shall be
deemed a loan to the Partnership secured by the assets of the Partnership only
and not those of the General Partner and shall be repaid in full, without
interest, by the Partnership prior to it making any distributions of cash
pursuant to Sections 5.02 or 5.06.

ARTICLE V

PROFITS AND LOSSES; DISTRIBUTIONS

5.01 Allocation of Profit and Loss.

(a) General. Except as otherwise provided in this Section 5.01, Profit and Loss
of the Partnership for each fiscal year of the Partnership shall be allocated
among the Partners in accordance with their respective Percentage Interests.

(b) Minimum Gain Chargeback. Notwithstanding any provision to the contrary,
(i) any expense of the Partnership that is a “non-recourse 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 non-recourse deduction” within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated 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, 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 Non-recourse Debt Minimum Gain within the meaning of
Regulations Section 1.704-2(i)(4) for any Partnership taxable year, 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). A Partner’s “interest in partnership profits”
for purposes of determining its share of the non-recourse liabilities of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Partner’s Percentage Interest.

 

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(c) Qualified Income Offset. If a Limited 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
negative balance in such Partner’s Capital Account that exceeds the sum of such
Partner’s shares of Partnership Minimum Gain and Partner Non-recourse Debt
Minimum Gain, as determined in accordance with Regulations Sections 1.704-2(g)
and 1.704-2(i), such Partner shall be allocated specially for such taxable year
(and, if necessary, later taxable years) items of income and gain in an amount
and manner sufficient to eliminate such negative Capital Account balance as
quickly as possible as provided in Regulations Section 1.704- 1(b)(2)(ii)(d).
After the occurrence of an allocation of income or gain to a Limited Partner in
accordance with this Section 5.01(c), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such Partner
in an amount necessary to offset the income or gain previously allocated to such
Partner under this Section 5.01(c).

(d) Capital Account Deficits. Loss shall not be allocated to a Limited Partner
to the extent that such allocation would cause a deficit in such Partner’s
Capital Account (after reduction to reflect the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such
Partner’s shares of Partnership Minimum Gain and Partner Non-recourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.01(d).

(e) Allocations Between Transferor and Transferee. If a Partner transfers any
part or all of its Partnership Interest, and the transferee is admitted as a
substitute Partner as provided herein, the distributive shares of the various
items of Profit and Loss allocable among the Partners during such fiscal year of
the Partnership shall be allocated between the transferor and the substitute
Partner either (i) as if the Partnership’s fiscal year had ended on the date of
the transfer, or (ii) based on the number of days of such fiscal year that each
was a Partner without regard to the results of Partnership activities in the
respective portions of such fiscal year in which the transferor and the
transferee were Partners. The General Partner, in its sole discretion, shall
determine which method shall be used to allocate the distributive shares of the
various items of Profit and Loss between the transferor and the substitute
Partner.

(f) Definition of Profit and Loss. “Profit” and “Loss” and any items of income,
gain, expense, or loss referred to in this Agreement shall be determined in
accordance with 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 and expense that are specially allocated pursuant
to Section 5.01(b), 5.01(c), 5.01(d), 5.01(g) or 5.01(h). All allocations of
income, Profit, gain, Loss, and expense (and all items contained therein) for
federal income tax purposes shall be identical to all allocations of such items
set forth in this Section 5.01, except as otherwise required by Section 704(c)
of the Code and Regulations Section 1.704-1(b)(4).

 

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(g) Preferred Unit Distribution Allocation. Prior to any allocation set forth in
Section 5.01(a) above, holders of Preferred Units shall be allocated gross
income in an amount equal to the cash distributed to the holder of the Preferred
Units during the year in which such cash distribution is declared and the
Partnership Record Date occurs, even though cash may actually be distributed in
a subsequent year.

(h) Capital Transaction Allocation. All income or gains from Capital
Transactions, including Capital Transactions in connection with the liquidation
of the Partnership, shall be allocated in the following order and priority:

(i) First, to the holders of Preferred Units until each such holder’s Capital
Account balance (before taking into account the distribution of the net proceeds
from the Capital Transaction, but after taking into account the allocations
pursuant to Sections 5.01(a) through 5.01(g)) equals the priority liquidating
distribution of such holder, plus the amount of any accrued but unpaid priority
distributions;

(ii) Second, to the holders of Common Units until each such holder’s Capital
Account balance (before taking into account the distribution of the net proceeds
from the Capital Transaction, but after taking into account the allocations
pursuant to Sections 5.01(a) through 5.01(g)) equals the largest priority
liquidating distribution per Unit of all Preferred Unit holders;

(iii) Thereafter, to the Partners, including both Common Unit holders and
Preferred Unit holders, on an equal per Unit basis.

5.02 Distribution of Cash.

(a) The General Partner shall distribute cash on a quarterly (or, at the
election of the General Partner, more frequent) basis, in an amount determined
by the General Partner in its sole discretion, to the Partners who are Partners
on the Partnership Record Date with respect to such quarter (or other
distribution period) pro rata in accordance with their respective Percentage
Interests on the Partnership Record Date; provided, however, with respect to
Preferred Units, the terms of cash distributions shall be set forth in Exhibit C
describing the terms of such Preferred Units.

(b) In no event may a Partner receive a distribution of cash with respect to a
Partnership Unit if such Partner is entitled to receive a dividend with respect
to a REIT Share for which all or part of such Partnership Unit has been or will
be exchanged. If a new or existing Partner acquires an additional Partnership
Interest in exchange for a Capital Contribution on any date other than a
Partnership Record Date, the cash distribution attributable to such additional
Partnership Interest for the Partnership Record Date following the issuance of
such additional Partnership Interests shall be reduced in the proportion that
the number of days that such

 

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additional Partnership Interest is held by such Partner bears to the number of
days between such Partnership Record Date and the immediately preceding
Partnership Record Date.

(c) Notwithstanding any other provision of this Agreement, the General Partner
is authorized to take an action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
If the Partnership is required to withhold and pay over to any taxing authority
any amount resulting from the allocation or distribution of income to a Partner
or its assignee (including by reason of Section 1446 of the Code) and if the
amount to be distributed to the Partner (the “Distributable Amount”) equals or
exceeds the amount required to be withheld by the Partnership (the “Withheld
Amount”), the Withheld Amount shall be treated as a distribution of cash to such
Partner. If, however, the Distributable Amount is less than the Withheld Amount,
no amount shall be distributed to the Partner, the Distributable Amounts shall
be treated as a distribution of cash to such Partner, and the excess of the
Withheld Amount over the Distributable Amount shall be treated as a loan (a
“Partnership Loan”) from the Partnership to the Partner on the day the
Partnership pays over such excess to a taxing authority. A Partnership Loan may
be repaid, at the election of the General Partner in its sole and absolute
discretion, either (i) through withholding by the Partnership with respect to
subsequent distributions to the applicable Partner or assignee, or (ii) at any
time more than twelve (12) months after a Partnership Loan arises, by
cancellation of Partnership Units with a value equal to the unpaid balance of
the Partnership Loan (including accrued interest). Any amounts treated as a
Partnership Loan pursuant to this Section 5.02(c) shall bear interest at the
lesser of (i) the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in The Wall Street
Journal (or an equivalent successor publication), or (ii) the maximum lawful
rate of interest on such obligation, such interest to accrue from the date the
Partnership is deemed to extend the loan until such loan is repaid in full.

5.03 REIT Distribution Requirements. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient to
enable the General Partner (i) to meet its distribution requirement for
qualification as a REIT as set forth in Section 857(a)(1) of the Code and
(ii) to avoid any federal income or excise tax liability imposed by the Code;
provided, however, that the Limited Partners shall receive their pro rata share
of all distributions.

5.04 No Right to Distributions in Kind. No Partner shall be entitled to demand
property other than cash in connection with any distributions by the
Partnership.

5.05 Limitations on Return of Capital Contributions. Notwithstanding any of the
provisions of this Article V, no Partner shall have the right to receive and the
General Partner shall not have the right to make, a distribution which includes
a return of all or part of a Partner’s Capital Contributions, unless after
giving effect to the return of a Capital Contribution, the sum of all
Partnership liabilities, other than the liabilities to a Partner for the return
of his Capital Contribution, does not exceed the fair market value of the
Partnership’s assets.

 

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5.06 Distributions Upon Liquidation.

(a) Upon liquidation of the Partnership, after payment of, or adequate provision
for, debts and obligations of the Partnership, including any Partner loans, any
remaining assets of the Partnership shall be distributed to all Partners with
positive Capital Accounts in accordance with their respective positive Capital
Account balances. For purposes of the preceding sentence, the Capital Account of
each Partner shall be determined after all adjustments made in accordance with
Sections 5.01 and 5.02, including, without limitation, Section 5.01(h),
resulting from Partnership operations and from all sales and dispositions of all
or any part of the Partnership’s assets. Any distributions pursuant to this
Section 5.06 shall be made by the end of the Partnership’s taxable year in which
the liquidation occurs (or, if later, within 90 days after the date of the
liquidation). To the extent deemed advisable by the General Partner, appropriate
arrangements (including the use of a liquidating trust) may be made to assure
that adequate funds are available to pay any contingent debts or obligations.

(b) If the General Partner has a negative balance in its Capital Account
following a liquidation of the Partnership, as determined after taking into
account all Capital Account Adjustments in accordance with Sections 5.01 and
5.02 resulting from Partnership operations and from all sales and dispositions
of all or any part of the Partnership’s assets, the General Partner shall
contribute to the Partnership an amount of cash equal to the negative balance in
its Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and then to the Limited Partners in accordance
with Section 5.06(a). Such contribution by the General Partner shall be made by
the end of the Partnership’s taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).

5.07 Substantial Economic Effect. It is the intent of the Partners that the
allocations of Profit and Loss under the Agreement have substantial economic
effect (or be consistent with the Partners’ interests in the Partnership in the
case of the allocation of losses attributable to non-recourse debt) within the
meaning of Section 704(b) of the Code as interpreted by the Regulations
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.

ARTICLE VI

RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER

6.01 Management of the Partnership.

(a) Except as otherwise expressly provided in this Agreement, the General
Partner shall have full, complete and exclusive discretion to manage and control
the business of the Partnership for the purposes herein stated, and shall make
all decisions affecting the business and assets of the Partnership. Subject to
the restrictions specifically contained in this Agreement, the powers of the
General Partner shall include, without limitation, the authority to take the
following actions on behalf of the Partnership:

 

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(i) to acquire, purchase, own, lease and dispose of any real property and any
other property or assets that the General Partner determines are necessary or
appropriate or in the best interests of the business of the Partnership;

(ii) to construct buildings and make other improvements on the properties owned
or leased by the Partnership;

(iii) to borrow money for or lend money by the Partnership, issue evidences of
indebtedness in connection therewith, refinance, guarantee, increase the amount
of, modify, amend or change the terms of, or extend the time for the payment of,
any indebtedness or obligation to the Partnership, and secure such indebtedness
by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;

(iv) to pay, either directly or by reimbursement, for all operating costs and
general administrative expenses of the General Partner or the Partnership, to
third parties or to the General Partner as set forth in this Agreement;

(v) to lease all or any portion of any of the Partnership’s assets, whether or
not the terms of such leases extend beyond the termination date of the
Partnership and whether or not any portion of the Partnership’s assets so leased
are to be occupied by the lessee, or, in turn, subleased in whole or in part to
others, for such consideration and on such terms as the General Partner may
determine;

(vi) to prosecute, defend, arbitrate, or compromise any and all claims or
liabilities in favor of or against the Partnership, on such terms and in such
manner as the General Partner may reasonably determine, and similarly to
prosecute, settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership’s assets; provided, however, that the General
Partner may not, without the consent of all of the Partners, confess a judgment
against the Partnership;

(vii) to file applications, communicate, and otherwise deal with any and all
governmental agencies having jurisdiction over, or in any way affecting, the
Partnership’s assets or any other aspect of the Partnership business;

(viii) to make or revoke any election permitted or required of the Partnership
by any taxing authority;

(ix) to maintain such insurance coverage for public liability, fire and
casualty, and any and all other insurance for the protection of the Partnership,
for the conservation of Partnership assets, or for any other purpose convenient
or beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;

 

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(x) to determine whether or not to apply any insurance proceeds for any property
to the restoration of such property or to distribute the same;

(xi) to retain legal counsel, accountants, consultants, real estate brokers, and
such other persons, as the General Partner may deem necessary or appropriate in
connection with the Partnership business and to pay therefor such reasonable
remuneration as the General Partner may deem reasonable and proper;

(xii) to retain other services of any kind or nature in connection with the
Partnership business, and to pay therefor such remuneration as the General
Partner may deem reasonable and proper;

(xiii) to negotiate and conclude agreements on behalf of the Partnership with
respect to any of the rights, powers and authority conferred upon the General
Partner;

(xiv) to maintain accurate accounting records and to file promptly all federal,
state and local income tax returns on behalf of the Partnership;

(xv) to distribute Partnership cash or other Partnership assets in accordance
with this Agreement;

(xvi) to form or acquire an interest in, and contribute property to, any further
limited or general partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the acquisition of interests in,
and the contributions of property to, its Subsidiaries and any other Person in
which it has an equity interest from time to time);

(xvii) to establish Partnership reserves for working capital, capital
expenditures, contingent liabilities, or any other valid Partnership purpose;
and

(xviii) to take such other action, execute, acknowledge, swear to or deliver
such other documents and instruments, and perform any and all other acts the
General Partner deems necessary or appropriate for the formation, continuation
and conduct of the business and affairs of the Partnership and to possess and
enjoy all of the rights and powers of a general partner as provided by the Act.

(b) Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require the
General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.

 

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6.02 Delegation of Authority. The General Partner may delegate any or all of its
powers, rights and obligations hereunder, and may appoint, employ, contract or
otherwise deal with any Person for the transaction of the business of the
Partnership, which Person may, under supervision of the General Partner, perform
any acts or services for the Partnership as the General Partner may approve.

6.03 Indemnification and Exculpation of Indemnitees.

(a) The Partnership shall indemnify an Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 6.03(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation prior
to judgment, creates a rebuttable presumption that the Indemnitee acted in a
manner contrary to that specified in this Section 6.03(a). Any indemnification
pursuant to this Section 6.03 shall be made only out of the assets of the
Partnership.

(b) The Partnership may reimburse an Indemnitee for reasonable expenses incurred
by an Indemnitee who is a party to a proceeding in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee’s good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not yet been met.

(c) The indemnification provided by this Section 6.03 shall be in addition to
any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.

(d) The Partnership may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership’s activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.

 

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(e) For purposes of this Section 6.03, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of this Section 6.03; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

(f) In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

(g) An Indemnitee shall not be denied indemnification in whole or in part under
this Section 6.03 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.

(h) The provisions of this Section 6.03 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.

(i) Any amendment, modification or repeal of this Section 6.03 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the General Partner’s or HHTI’s liability to the Partnership and the Limited
Partners under this Section 6.03 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.

6.04 Liability of the General Partner.

(a) Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner shall not be liable for monetary damages to the Partnership or
any Partners for losses sustained or liabilities incurred as a result of errors
in judgment or of any act or omission if the General Partner acted in good
faith.

(b) The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership and the General Partner’s shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.

 

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(c) Subject to its obligations and duties as General Partner set forth in
Section 6.01 hereof, the General Partner may exercise any of the powers granted
to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.

(d) Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of HHTI to continue to qualify as
a REIT, or (ii) to prevent HHTI from incurring any taxes under Section 857,
Section 4981, or any other provision of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.

(e) Any amendment, modification or repeal of this Section 6.04 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
on the General Partner’s liability to the Partnership and the Limited Partners
under this Section 6.04 as in effect immediately prior to such amendment,
modification or repeal with respect to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when claims
relating to such matters may arise or be asserted.

6.05 Expenditures by Partnership. The General Partner is hereby authorized to
pay compensation for accounting, administrative, legal, technical, management
and other services rendered to the Partnership. All of the aforesaid
expenditures (including Administrative Expenses) shall be made on behalf of the
Partnership, and the General Partner and HHTI shall be entitled to reimbursement
by the Partnership for any expenditure (including Administrative Expenses)
incurred by it on behalf of the Partnership which shall be made other than out
of the funds of the Partnership. The Partnership shall also assume, and pay when
due, all Administrative Expenses.

6.06 Outside Activities; Redemption/Tender Offer of REIT Shares.

(a) Subject to Section 6.09 hereof, the Articles of Incorporation and any
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, Affiliate
or shareholder of the General Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities substantially similar
or identical to those of the Partnership. Neither the Partnership nor any of the
Limited Partners shall have any rights by virtue of this Agreement in any such
business ventures, interest or activities. None of the Limited Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any such business ventures,
interests or activities, and the General Partner shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures,
interests and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any
Limited Partner, could be taken by such Person.

 

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(b) In the event HHTI redeems any REIT Shares, then the General Partner shall
cause the Partnership to purchase from it a number of Partnership Units as
determined based on the application of the Conversion Factor on the same terms
that HHTI redeemed such REIT Shares. Moreover, if HHTI makes a cash tender offer
or other offer to acquire REIT Shares, then the General Partner shall cause the
Partnership to make a corresponding offer to the General Partner to acquire an
equal number of Partnership Units held by the General Partner. In the event any
REIT Shares are redeemed by HHTI pursuant to such offer, the Partnership shall
redeem an equivalent number of the General Partner’s Partnership Units for an
equivalent purchase price based on the application of the Conversion Factor.

6.07 Employment or Retention of Affiliates.

(a) Any Affiliate of the General Partner may be employed or retained by the
Partnership and may otherwise deal with the Partnership (whether as a buyer,
lessor, lessee, manager, furnisher of goods or services, broker, agent, lender
or otherwise) and may receive from the Partnership any compensation, price, or
other payment therefor that is fair and reasonable for the services provided.

(b) The Partnership may lend or contribute to its Subsidiaries or other Persons
in which it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Subsidiary or any other Person.

(c) The Partnership may transfer assets to joint ventures, other partnerships,
corporations or other business entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions as the General
Partner deems are consistent with this Agreement and applicable law.

(d) Except as expressly permitted by this Agreement, neither the General Partner
nor any of its Affiliates shall sell, transfer or convey any property to, or
purchase any property from, the Partnership, directly or indirectly, except
pursuant to transactions that are on terms that are fair and reasonable to the
Partnership.

6.08 General Partner Participation. The General Partner and HHTI agree that all
business activities of the General Partner and HHTI, including activities
pertaining to the acquisition, development and/or ownership of hotels or other
property, shall be conducted through the Partnership; provided, however, that
the General Partner and HHTI are each allowed to make a direct acquisition, but
if and only if, such acquisition is made in connection with the issuance of New
Securities, which direct acquisition and issuance have been approved and
determined to be in the best interests of the General Partner and HHTI and the
Partnership by a majority of the Independent Directors. The General Partner and
HHTI also agree that all borrowings shall constitute Funding Loans, subject to
the exception set forth in Section 4.03 hereof.

 

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ARTICLE VII

CHANGES IN GENERAL PARTNER

7.01 Transfer of the General Partner’s Partnership Interest.

(a) The General Partner may not transfer any of its General Partnership Interest
or Limited Partnership Interests or withdraw as General Partner or HHTI may not
transfer its interest in the General Partner or withdraw from the General
Partner except as provided in Section 7.01(c) or in connection with a
transaction described in Section 7.01(d).

(b) The General Partner agrees that it will at all times own at least a 20%
Percentage Interest in the form of a General Partner Interest.

(c) Except as otherwise provided in Section 6.06(b) or Section 7.01(d) hereof,
the General Partner and HHTI shall not engage in any merger, consolidation or
other combination with or into another Person or sale of all or substantially
all of its assets, or any reclassification, or any recapitalization or change of
outstanding REIT Shares (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination of REIT Shares) (a
“Transaction”), unless (i) the Transaction also includes a merger of the
Partnership or sale of substantially all of the assets of the Partnership as a
result of which all Limited Partners will receive for each Partnership Unit an
amount of cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities other property
paid in the Transaction to a holder of one REIT Share in consideration of one
REIT Share, provided that if, in connection with the Transaction, a purchase,
tender or exchange offer (“Offer”) shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of Partnership Units shall be given the option to exchange its
Partnership Units for the greatest amount of cash, securities, or other property
which a Limited Partner would have received had it (A) exercised its Redemption
Right and (B) sold, tendered or exchanged pursuant to the Offer the REIT Shares
received upon exercise of the Redemption Right immediately prior to the
expiration of the Offer.

(d) Notwithstanding Section 7.01(c), HHTI may merge with or into or consolidate
with another entity if immediately after such merger or consolidation
(i) substantially all of the assets of the successor or surviving entity (the
“Surviving Entity”), other than Partnership Units held by the General Partner or
HHTI’s interest in the General Partner, respectively, are contributed, directly
or indirectly, to the Partnership as a Capital Contribution in exchange for
Partnership Units with a fair market value equal to the value of the assets so
contributed as determined by the Surviving Entity in good faith and (ii) the
Surviving Entity expressly agrees to assume all obligations of HHTI hereunder.
Upon such contribution and assumption, the Surviving Entity shall have the right
and duty to amend this Agreement as set forth in this Section 7.01(d). The
Surviving Entity shall in good faith arrive at a new method for the calculation
of the Cash Amount, the REIT Shares Amount and Conversion Factor for a
Partnership Unit after any such merger or consolidation so as to approximate the
existing method

 

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for such calculation as closely as reasonably possible. Such calculation shall
take into account, among other things, the kind and amount of securities, cash
and other property that was receivable upon such merger or consolidation by a
holder of REIT Shares or options, warrants or other rights relating thereto, and
to which a holder of Partnership Units could have acquired had such Partnership
Units been exchanged immediately prior to such merger or consolidation. Such
amendment to this Agreement shall provide for adjustment to such method of
calculation, which shall be as nearly equivalent as may be practicable to the
adjustments provided for with respect to the Conversion Factor. The Surviving
Entity also shall in good faith modify the definition of REIT Shares and make
such amendments to Section 8.05 hereof so as to approximate the existing rights
and obligations set forth in Section 8.05 as closely as reasonably possible. The
above provisions of this Section 7.01(d) shall similarly apply to successive
mergers or consolidations permitted hereunder.

(e) Notwithstanding Section 4.02(a)(ii), Section 6.08, and Section 7.01(c) and
(d), the Partners acknowledge and agree that the ownership interests in E&P REIT
Trust and E&P Financing Limited Partnership acquired in the Merger with Supertel
Hospitality, Inc. shall be held directly by HHTI and shall not be contributed to
the Partnership.

7.02 Admission of a Substitute or Successor General Partner. A Person shall be
admitted as a substitute or successor General Partner of the Partnership only if
the following terms and conditions are satisfied:

(a) a majority-in-interest of the Limited Partners (other than the General
Partner) shall have consented in writing to the admission of the substitute or
successor General Partner, which consent may be withheld in the sole discretion
of such Limited Partners;

(b) the Person to be admitted as a substitute or additional General Partner
shall have accepted and agreed to be bound by all terms and provisions of this
Agreement by executing a counterpart thereof and such other documents or
instruments as may be required or appropriate in order to effect the admission
of such Person as a General Partner, and a certificate evidencing the admission
of such Person as a General Partner shall have been filed for recordation and
all other actions required by Section 2.05 hereof in connection with such
admission shall have been performed;

(c) if the Person to be admitted as a substitute or additional General Partner
is a corporation or a partnership it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of such Person’s authority
to become a General Partner and to be bound by the terms and provisions of this
Agreement; and

(d) counsel for the Partnership shall have rendered an opinion (relying on such
opinions from other counsel and the state or any other jurisdiction as may be
necessary) that the admission of the person to be admitted as a substitute or
additional General Partner is in conformity with the Act, that none of the
actions taken in connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be classified other
than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner’s limited liability.

 

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7.03 Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.

(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner (and
its removal pursuant to Section 7.04(a) hereof) or the withdrawal, removal or
dissolution of a General Partner (except that, if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners), the
Partnership shall be dissolved and terminated unless the Partnership is
continued pursuant to Section 7.03(b) hereof.

(b) Following the occurrence of an Event of Bankruptcy as to a General Partner
(and its removal pursuant to Section 7.04(a) hereof) or the withdrawal, removal
or dissolution of a General Partner (except that, if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners), the Limited
Partners, within 90 days after such occurrence, may elect to reconstitute the
Partnership and continue the business of the Partnership for the balance of the
term specified in Section 2.04 hereof by selecting, subject to Section 7.02
hereof and any other provisions of this Agreement, a substitute General Partner
by unanimous consent of the Limited Partners. If the Limited Partners elect to
reconstitute the Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired an interest of
a Partner in the Partnership shall be governed by this Agreement.

7.04 Removal of a General Partner.

(a) Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of,
a General Partner, such General Partner shall be deemed to be removed
automatically; provided, however, that if a General Partner is on the date of
such occurrence a partnership, the withdrawal, death, dissolution, Event of
Bankruptcy as to or removal of a partner in such partnership shall be deemed not
to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners.

(b) if a General Partner has been removed pursuant to this Section 7.04 and the
Partnership is continued pursuant to Section 7.03 hereof, such General Partner
shall promptly transfer and assign its General Partnership Interest in the
partnership (i) to the substitute General Partner approved by a
majority-in-interest of the Limited Partners (excluding the General Partner) in
accordance with Section 7.03(b) hereof and otherwise admitted to the Partnership
in accordance with Section 7.02 hereof. At the time of assignment, the removed
General Partner shall be entitled to receive from the substitute General Partner
the fair market value of the General Partnership Interest of such removed
General Partner as reduced by any damages caused

 

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to the Partnership by such General Partner. Such fair market value shall be
determined by an appraiser mutually agreed upon by the General Partner and a
majority-in-interest of the Limited Partners (excluding the General Partner)
within 10 days following the removal of the General Partner. In the event that
the parties are unable to agree upon an appraiser, the General Partner and a
majority-in-interest of the Limited Partners (excluding the General Partner)
each shall select an appraiser. Each such appraiser shall complete an appraisal
of the fair market value of the General Partner’s General Partnership Interest
within 30 days of the General Partner’s removal, and the fair market value of
the General Partner’s General Partnership Interest shall be the average of the
two appraisals; provided however, that if the higher appraisal exceeds the lower
appraisal by more than 20% of the amount of the lower appraisal, the two
appraisers, no later than 40 days after the removal of the General Partner,
shall select a third appraiser who shall complete an appraisal of the fair
market value of the General Partner’s General Partnership Interest no later than
60 days after the removal of the General Partner. In such case, the fair market
value of the General Partner’s General Partnership Interest shall be the average
of the two appraisals closest in value.

(c) The General Partnership Interest of a removed General Partner, during the
time after default until transfer under Section 7.04(b), shall be converted to
that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, profit, gain or loss allocations or cash distributions allocable or
payable as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items which it would have been entitled to receive in its
capacity as General Partner, until the transfer is effective pursuant to
Section 7.04(b).

(d) All Partners shall have given and hereby do give such consents, shall take
such actions and shall execute such documents as shall be legally necessary and
sufficient to effect all the foregoing provisions of this Section.

ARTICLE VIII

RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS

8.01 Management of the Partnership. The Limited Partners shall not participate
in the management or control of Partnership business nor shall they transact any
business for the Partnership, nor shall they have the power to sign for or bind
the Partnership, such powers being vested solely and exclusively in the General
Partner.

8.02 Power of Attorney. Each Limited Partner hereby irrevocably appoints the
General Partner his true and lawful attorney-in-fact, who may act for each
Limited Partner and in his name, place and stead, and for his use and benefit,
to sign, acknowledge, swear to, deliver, file and record, at the appropriate
public offices, any and all documents, certificates, and instruments

 

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as may be deemed necessary or desirable by the General Partner to carry out
fully the provisions of this Agreement and the Act in accordance with their
terms, which power of attorney is coupled with an interest and shall survive the
death, dissolution or legal incapacity of the Limited Partner, or the transfer
by the Limited Partner of any part or all of his Interest in the Partnership.
This power of attorney shall be limited to documents, certificates and
instruments the contents of which shall have no adverse economic impact on the
Limited Partners.

8.03 Limitation on Liability of Limited Partners. No Limited Partner shall be
liable for any debts, liabilities, contracts or obligations of the Partnership.
A Limited Partner shall be liable to the Partnership only to make payments of
his Capital Contribution, if any, as and when due hereunder. After his Capital
Contribution is fully paid, no Limited Partner shall, except as otherwise
required by the Act, be required to make any further Capital Contribution or
other payments or lend any funds to the Partnership.

8.04 Ownership by Limited Partner of Corporate General Partner or Affiliate. No
Limited Partner shall at any time, either directly or indirectly, own any stock
or other interest in the General Partner or in any Affiliate thereof, if such
ownership by itself or in conjunction with other stock or other interests owned
by other Limited Partners would, in the opinion of counsel for the Partnership,
jeopardize the classification of the Partnership as a partnership for federal
income tax purposes. The General Partner shall be entitled to make such
reasonable inquiry of the Limited Partners as is required to establish
compliance by the Limited Partners with the provisions of this Section.

8.05 Redemption Right.

(a) Subject to Sections 8.05(b), 8.05(c) and 8.05(e), and the provisions of any
agreement between the Partnership and any Limited Partner with respect to Common
Units held by such Limited Partner, each Limited Partner shall have the right
(the “Redemption Right”), on or after the first anniversary of the issuance by
the Partnership of any Common Units (the “Redemption Date”), to require the
Partnership to redeem on a Specified Redemption Date all or a portion of the
applicable Common Units held by such Limited Partner at a redemption price equal
to and in the form of the Cash Amount to be paid by the Partnership. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the General Partner and HHTI) by the Limited
Partner who is exercising the Redemption Right (the “Redeeming Partner”);
provided, however, that the Partnership shall not be obligated to satisfy such
Redemption Right if the General Partner or HHTI elects to purchase the Common
Units described in the Notice of Redemption pursuant to Section 8.05(b). A
Limited Partner may not exercise the Redemption Right for less than one thousand
(1,000) Common Units or, if such Limited Partner holds less than one thousand
(1,000) Common Units, all of the Common Units held by such Partner.

(b) Notwithstanding the provisions of Section 8.05(a), a Limited Partner that
exercises the Redemption Right shall be deemed to have offered to sell the
Common Units described in the Notice of Redemption to the General Partner and
HHTI, and the General Partner or HHTI may, in its sole and absolute discretion,
assume directly and satisfy a Redemption Right

 

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within the maximum limits provided in Section 8.05(c) and minimum limits
provided in Section 8.05(a) by paying to the Redeeming Partner the Redemption
Amount on the Specified Redemption Date, whereupon the General Partner or HHTI,
as applicable, shall acquire the Common Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Common Units. If the General Partner or HHTI shall elect to
exercise its right to purchase Common Units under this Section 8.05(b) with
respect to a Notice of Redemption, it shall so notify the Redeeming Partner
within five (5) business days after the receipt by the General Partner and HHTI
of such Notice of Redemption. Such notice shall indicate whether the General
Partner or HHTI will pay the Cash Amount or the REIT Shares Amount, which
determination shall be made by the General Partner or HHTI in its sole
discretion. Unless the General Partner or HHTI (in its sole and absolute
discretion) shall exercise its right to purchase Common Units from the Redeeming
Partner pursuant to this Section 8.05(b), the General Partner and HHTI shall not
have any obligation to the Redeeming Partner or the Partnership with respect to
the Redeeming Partner’s exercise of the Redemption Right. In the event the
General Partner or HHTI shall exercise its right to satisfy the Redemption Right
in the manner described in the first sentence of this Section 8.05(b), the
Partnership shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming Partner’s exercise of the Redemption Right, and
each of the Redeeming Partner, the Partnership, and the General Partner or HHTI,
as applicable, shall treat the transaction between the General Partner or HHTI,
as applicable, and the Redeeming Partner as a sale of the Redeeming Partner’s
Common Units to the General Partner or HHTI, as applicable, for federal income
tax purposes. Each Redeeming Partner agrees to execute such documents as the
General Partner may reasonably require in connection with the issuance of REIT
Shares upon exercise of the Redemption Right.

(c) Notwithstanding Sections 8.05(a) and 8.05(b), except as provided in
Section 8.05(e), a Limited Partner shall not be entitled to exercise the
Redemption Right if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner or HHTI pursuant to Section 8.05(b)
(regardless of whether or not the General Partner or HHTI would in fact exercise
its rights under Section 8.05(b)) would (i) result in such Partner or any other
person owning, directly or indirectly, REIT Shares in excess of the “Ownership
Limit,” as defined in the Articles of Incorporation and calculated in accordance
therewith, except as provided in the Articles of Incorporation, (ii) result in
REIT Shares being owned by fewer than 100 persons (determined without reference
to any rules of attribution), except as provided in the Articles of
Incorporation, (iii) result in HHTI being “closely held” within the meaning of
Section 856(h) of the Code, (iv) cause the General Partner or HHTI to own,
directly or constructively, 10% or more of the ownership interests in a tenant
of the General Partner’s, HHTI’s, the Partnership’s or the Subsidiary
Partnership’s real property, within the meaning of Section 856(d)(2)(B) of the
Code, or (v) cause the acquisition of REIT Shares by such Partner to be
“integrated” with any other distribution of REIT Shares for purposes of
complying with the registration provisions of the Securities Act of 1933, as
amended. The General Partner or HHTI, in its sole and absolute discretion, may
waive the restriction on redemption set forth in this Section 8.05(c); provided,
however, that in the event such restriction is waived, the Redeeming Partner
shall be paid the Cash Amount. Any Cash Amount to be paid to a redeeming Limited
Partner pursuant to Section 8.05(a) or this Section 8.05(c) shall be paid within
sixty (60) days after the initial date of receipt by the Partnership, the
General Partner and HHTI of the Notice of

 

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Redemption relating to the Common Units to be redeemed; provided, however, that
such sixty (60) day period may be extended for up to an additional one hundred
eighty (180) day period to the extent required for the Partnership, the General
Partner and HHTI to obtain financing for the payment of the Cash Amount.
Notwithstanding the foregoing, the General Partner, HHTI and the Partnership
agree to use their best efforts to cause the closing of the acquisition of
redeemed Common Units hereunder to occur as quickly as reasonably possible.

(d) Each certificate, if any, evidencing REIT Shares that may be issued in
redemption of Common Units under this Section 8.05 (the “Redemption Shares”)
shall bear a restrictive legend in substantially the following form:

“The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or any state securities law. No transfer of
the Shares represented by this certificate shall be valid or effective unless
(A) such transfer is made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the “Act”), or (B) the holder of the
securities proposed to be transferred shall have delivered to the company either
a no-action letter from the Securities and Exchange Commission or an opinion of
counsel (who may be an employee of such holder) experienced in securities
matters to the effect that such proposed transfer is exempt from the
registration requirements of the Act which opinion shall be reasonably
satisfactory to the Company.”

(e) Notwithstanding any other provision of this Agreement, the General Partner
shall place appropriate restrictions on the ability of the Limited Partners to
exercise their Redemption Rights as and if deemed necessary to ensure that the
partnership does not constitute a “publicly traded partnership” under
Section 7704 of the Code.

(f) Notwithstanding any other provisions of this Agreement, the terms of any
separate written agreement between the Partnership and a Partner pertaining to
redemption rights shall supersede the terms of this Section 8.05.

8.06 Registration.

(a) Shelf Registration. Within two weeks of any Specified Redemption Date, HHTI
agrees to file with the Commission a shelf registration statement under Rule 415
of the Securities Act, or any similar rule that may be adopted by the Commission
(the “Shelf Registration”), with respect to the issuance and/or the resale of
all of the Redemption Shares that are issuable with respect to a redemption for
the REIT Shares Amount of the Common Units which become redeemable on such date.
HHTI will use its commercially reasonable best efforts to have the Shelf
Registration declared effective under the Securities Act as soon as practicable
after such filing and to keep the Shelf Registration continuously effective
until the earlier of (i) the date when all of the Redemption Shares registered
thereby are sold, or (ii) the date on which

 

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all of the holders of Redemption Shares registered thereunder may sell such
Redemption Shares without registration under the Securities Act pursuant to Rule
144(k) under the Securities Act or any other applicable provision of the
Securities Act. HHTI further agrees to supplement or make amendments to the
Shelf Registration, if required by the rules, regulations or instructions
applicable to the registration form utilized by HHTI or by the Securities Act or
rules and regulations thereunder for the Shelf Registration. Notwithstanding the
foregoing, if for any reason the effectiveness of the Shelf Registration is
delayed or suspended or ceases to be available for sales of Redemption Shares
thereunder, the Shelf Registration period shall be extended by the aggregate
number of days of such delays, suspension or unavailability.

(b) Registration and Qualification Procedures. HHTI is required by the
provisions of Section 8.06(a) hereof to use its commercially reasonable best
efforts to have a Shelf Registration relating to the Redemption Shares declared
effective under the Securities Act as soon as practicable after the filing of
such Shelf Registration. Accordingly, HHTI, as soon as practical after the
filing of such Shelf Registration, shall with respect to the Redemption Shares
first eligible for redemption on such date:

(i) prepare and file with the Commission a registration statement, including
amendments thereof and supplements relating thereto, with respect to such
Redemption Shares;

(ii) use its commercially reasonable best efforts to cause the registration
statement to be declared effective by the Commission;

(iii) use its commercially reasonable best efforts to keep the registration
statement effective and the related prospectus current throughout the Shelf
Registration period; provided, however, that HHTI shall have no obligation to
file any amendment or supplement at its own expense or the Partnership’s expense
more than ninety (90) days after the effective date of the registration
statement;

(iv) furnish to each holder of such Redemption Shares such numbers of copies of
prospectuses, and supplements or amendments thereto, and such other documents as
such holder reasonably requests;

(v) register or qualify such Redemption Shares covered by the registration
statement under the securities or blue sky laws of such jurisdictions within the
United States, if required, as any holder of the such Redemption Shares shall
reasonably request, and do such other reasonable acts and things as may be
required of it to enable such holders to consummate the sale or other
disposition in such jurisdictions of such Redemption Shares; provided, however,
that HHTI shall not be required to (i) qualify as a foreign corporation or
consent to a general and unlimited service or process in any jurisdictions in
which it would not otherwise be required to be qualified or so consent or
(ii) qualify as a dealer in securities; and

(vi) otherwise use its commercially reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its

 

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shareholders as soon as reasonably practicable, but not later than sixteen
(16) months after the effective date of the Shelf Registration, an earnings
statement covering a period of at least twelve (12) months beginning after the
effective date of the Shelf Registration, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act.

(c) Allocation of Expenses. The Partnership shall pay all expenses in connection
with the Shelf Registration, including without limitation (i) all expenses
incident to filing with the National Association of Securities Dealers, Inc.,
(ii) registration fees, (iii) printing expenses, (iv) accounting and legal fees
and expenses, except to the extent holders of Redemption Shares elect to engage
accountants or attorneys in addition to the accountants and attorneys engaged by
HHTI, (v) accounting expenses incident to or required by any such registration
or qualification and (vi) expenses of complying with the securities or blue sky
laws of any jurisdictions in connection with such registration or qualification;
provided, however, the Partnership shall not be liable for (A) any discounts or
commissions to any underwriter or broker attributable to the sale of Redemption
Shares, or (B) any fees or expenses incurred by holders of Redemption Shares in
connection with such registration which, according to the written instructions
of any regulatory authority, the Partnership is not permitted to pay.

(d) Indemnification.

(i) In connection with the Shelf Registration, HHTI and the Partnership agree to
indemnify each holder of Redemption Shares within the meaning of Section 15 of
the Securities Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) caused by any untrue, or
alleged untrue, statement of a material fact contained in the Shelf
Registration, preliminary prospectus or prospectus (as amended or supplemented
if HHTI shall have furnished any amendments or supplements thereto) or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any untrue statement, alleged untrue statement, omission or alleged
omission based upon information furnished to HHTI by or on behalf of the holder
of Redemption Shares expressly for use therein. HHTI and each officer, director
and controlling person of HHTI shall be indemnified by each holder of Redemption
Shares covered by the Shelf Registration for all such losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) caused by
any such untrue, or alleged untrue, statement or any such omission, or alleged
omission, based upon information furnished to HHTI expressly for use therein by
or on behalf of the holder.

(ii) Promptly upon receipt by a party indemnified under this Section 8.06(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 8.06(d), such indemnified party shall
notify HHTI in writing of the commencement of such action, but the failure to so
notify HHTI shall not relieve it of any liability which it may have to any
indemnified party otherwise than under this Section 8.06(d) unless such failure
shall materially adversely affect the defense of such action. In case notice of
commencement of any such action shall be given to HHTI as above provided, HHTI
shall be

 

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entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be paid by the indemnified party
unless (i) HHTI or the Partnership agrees to pay the same, (ii) HHTI fails to
assume the defense of such action with counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) have been advised by counsel selected by HHTI that
representation of such indemnified party and HHTI by the same counsel would be
inappropriate under applicable standards of professional conduct (in which case
HHTI shall not have the right to assume the defense of such action on behalf of
such indemnified party). No indemnifying party shall be liable for any
settlement entered into without its consent.

(e) Contribution.

(i) If for any reason the indemnification provisions contemplated by
Section 8.06(d) are either unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages or liabilities
referred to therein, then the party that would otherwise be required to provide
indemnification or the indemnifying party (in either case, for purposes of this
Section 8.06(e), the “Indemnifying Party”) in respect of such losses, claims,
damages or liabilities, shall contribute to the amount paid or payable by the
party that would otherwise be entitled to indemnification or the indemnified
party (in either case, for purposes of this Section 8.06(e), the “Indemnified
Party”) as a result of such losses, claims, damages, liabilities or expense, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact related to information supplied by the
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party. In no event shall any holder of Redemption Shares covered by the
Shelf Registration be required to contribute an amount greater than the dollar
amount of the proceeds received by such holder from the sale of Redemption
Shares pursuant to the sale of Redemption Shares giving rise to the liability.

(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.06(e) were determined by pro rata
allocation (even if the holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person or
entity determined to have committed a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

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(iii) The contribution provided for in this Section 8.06(e) shall survive the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party.

(f) Listing on Securities Exchange. If HHTI shall list or maintain the listing
of any shares of Common Stock on any securities exchange or national market
system, it will at its expense list thereon, maintain and, when necessary,
increase such listing to include the Redemption Shares.

(g) Notwithstanding any other provisions of this Agreement, the terms of any
separate written agreement between the Partnership and a Partner pertaining to
shelf registration or other registration rights shall supersede the terms of
this Section 8.06.

8.07 Outside Activities of Limited Partners. Except as otherwise provided in
this Agreement or as otherwise agreed to by the Partners, any Limited Partner or
its Affiliate may engage in or possess an interest in other business ventures of
every nature and description, independently or with others, including, but not
limited to, enterprises engaged in the same business as the Partnership, and
neither the Partnership nor the other Partners shall have any right by virtue of
this Agreement in or to such independent ventures or to the income or profits
derived therefrom.

ARTICLE IX

TRANSFERS OF PARTNERSHIP INTERESTS

9.01 Purchase for Investment.

(a) Each Limited Partner hereby represents and warrants to the General Partner
and to the Partnership that the acquisition of his Partnership Interest is made
as a principal for his account for investment purposes only and not with a view
to the resale or distribution of such Partnership Interest.

(b) Each Limited Partner agrees that he will not sell, assign or otherwise
transfer his Partnership Interest or any fraction thereof, whether voluntarily
or by operation of law or at judicial sale or otherwise, to any Person who does
not make the representations and warranties to the General Partner set forth in
Section 9.01(a) above and similarly agree not to sell, assign or transfer such
Partnership Interest or fraction thereof to any Person who does not similarly
represent, warrant and agree.

9.02 Restrictions on Transfer of Limited Partnership Interests.

(a) Except as otherwise provided in Section 9.02(d) hereof, no Limited Partner
may offer, sell, assign, hypothecate, pledge or otherwise transfer his Limited
Partnership Interest, in whole or in part, whether voluntarily or by operation
of law or at judicial sale or

 

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otherwise (collectively, a “Transfer”) without the written consent of the
General Partner, which consent may be withheld in the sole discretion of the
General Partner. The General Partner may require, as a condition of any
Transfer, that the transferor assume all costs incurred by the Partnership in
connection therewith.

(b) No Limited Partner may effect a Transfer of his Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would require the registration of the
Limited Partnership Interest under the Securities Act of 1933, as amended, or
would otherwise violate any applicable federal or state securities or “Blue Sky”
law (including investment suitability standards).

(c) No transfer by a Limited Partner of his Partnership Units, in whole or in
part, may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the transfer would result in the Partnership’s being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), or (ii) such transfer is
effectuated through an “established securities market” or a “secondary market”
(or the substantial equivalent thereof) within the meaning of Section 7704 of
the Code.

(d) Section 9.02(a) shall not apply to the following transactions, except that
the General Partner may require that the transferor assume all costs incurred by
the Partnership in connection therewith:

(i) any Transfer by a Limited Partner pursuant to the exercise of its Redemption
Right under Section 8.05 hereof or any separate written agreement between the
Partnership and a Partner relating to a redemption right;

(ii) any Transfer by a Limited Partner that is a corporation or other business
entity to any of its Affiliates or subsidiaries or to any successor in interest
of such Limited Partner; or

(iii) any donative Transfer by an individual Limited Partner to his immediate
family members or any trust in which the individual or his immediate family
members own, collectively, 100% of the beneficial interests. For purposes of
this Section 9.02(d)(iii), the term “immediate family member” shall be deemed to
include only an individual Limited Partner’s spouse children and grandchildren.

(e) Any Transfer in contravention of any of the provisions of this Article IX
shall be void and ineffectual and shall not be binding upon, or recognized by,
the Partnership.

9.03 Admission of Substitute Limited Partner.

(a) Subject to the other provisions of this Article IX, an assignee of the
Limited Partnership Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any disposition
of such Limited Partnership Interest) shall be deemed admitted as a Limited
Partner of the Partnership only upon the satisfactory completion of the
following:

 

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(i) The assignee shall have accepted and agreed to be bound by the terms and
provisions of this Agreement by executing a counterpart or an amendment thereof,
including a revise Exhibit A, and such other documents or instruments as the
General Partner may require in order to effect the admission of such Person as a
Limited Partner.

(ii) To the extent required, an amended Certificate evidencing the admission of
such Person as a Limited Partner shall have been signed, acknowledged and filed
for record in accordance with the Act.

(iii) The assignee shall have delivered a letter containing the representation
set forth in Section 9.01(a) hereof and the agreement set forth in
Section 9.01(b) hereof.

(iv) If the assignee is a corporation, partnership, limited liability company or
trust, the assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee’s authority to
become a Limited Partner under the terms and provisions of this Agreement.

(v) The assignee shall have executed a power of attorney containing the terms
and provisions set forth in Section 8.02 hereof.

(vi) The assignee shall have paid all reasonable legal fees of the Partnership
and the General Partner and filing and publication costs in connection with his
substitution as a Limited Partner.

(vii) The assignee has obtained the prior written consent of General Partner to
its admission as a Substitute Limited Partner, which consent may be given or
denied in the exercise of General Partner’s sole and absolute discretion.

(b) For the purpose of allocating profits and losses and distributing cash
received by the Partnership, a Substitute Limited Partner shall be treated as
having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.

(c) The General Partner shall cooperate with the Person seeking to become a
Substitute Limited Partner by preparing the documentation required by this
Section and making all official filings and publications. The Partnership shall
take all such action as promptly as practicable after the satisfaction of the
conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.

 

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9.04 Rights of Assignees of Partnership Interests.

(a) Subject to the provisions of Section 9.01 and 9.02 hereof, except as
required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of his
Partnership Interest until the Partnership has received notice thereof.

(b) Any Person who is the assignee of all or any portion of a Limited Partner’s
Partnership Interest, but does not become a Substitute Limited Partner and
desires to make a further assignment of such Limited Partnership Interest, shall
be subject to all of the provisions to this Article IX to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of his
Limited Partnership Interest.

9.05 Effect of Bankruptcy, Death, Incompetence or Termination of a Limited
Partner. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.

9.06 Joint Ownership of Interests. A Partnership Interest may be acquired by two
individuals as joint tenants with right of survivorship, provided that such
individuals either are married or are related and share the same home as tenants
in common. The written consent or vote of both owners of any such jointly held
Partnership Interest shall be required to constitute the action of the owners of
such Partnership Interest; provided, however, that the written consent of only
one joint owner will be required if the Partnership has been provided with
evidence satisfactory to the counsel for the Partnership that the actions of a
single joint owner can bind both owners under the applicable laws of the state
of residence of such joint owners. Upon the death of one owner of a Partnership
Interest held in a joint tenancy with a right of survivorship, the Partnership
Interest shall become owned solely by the survivor as a Limited Partner and not
as an assignee. The Partnership need not recognize the death of one of the
owners of a jointly-held Partnership Interest until it shall have received
notice of such death. Upon notice to the General Partner from either owner, the
General Partner shall cause the Partnership Interest to be divided into two
equal Partnership Interests, which shall thereafter be owned separately by each
of the former owners.

 

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ARTICLE X

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

10.01 Books and Records. At all times during the continuance of the Partnership
the Partners shall keep or cause to be kept at the Partnership’s specified
office true and complete books of account in accordance with generally accepted
accounting principles, including: (a) a current list of the full name and last
known business address of each Partner, (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto, (c) copies of the
Partnership’s federal, state and local income tax returns and reports,
(d) copies of the Agreement and any financial statements of the Partnership for
the three most recent years and (e) all documents and information required under
the Act. Any Partner or his duly authorized representative, upon paying the cost
of collection, duplication and mailing, shall be entitled to inspect or copy
such records during ordinary business hours.

10.02 Custody of Partnership Funds; Bank Accounts.

(a) All funds of the Partnership not otherwise invested shall be deposited in
one or more accounts maintained in such banking or brokerage institutions as the
General Partner shall determine, and withdrawals shall be made only on such
signature or signatures as the General Partner may, from time to time,
determine.

(b) All deposits and other funds not needed in the operation of the business of
the Partnership may be invested by the General Partner in investment grade
instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers’ acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).

10.03 Fiscal and Taxable Year. The fiscal and taxable year of the Partnership
shall be the calendar year.

10.04 Annual Tax Information and Report. Within 75 days after the end of each
fiscal year of the Partnership, the General Partner shall furnish to each person
who was a Limited Partner at any time during such year the tax information
necessary to file such Limited Partner’s individual tax returns as shall be
reasonably required by law.

10.05 Tax Matters Partner; Tax Elections; Special Basis Adjustments.

(a) The General Partner shall be the Tax Matters Partner of the Partnership
within the meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner,
the General Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner
subject to Section 5.01(f) of this Agreement. The General Partner shall have the
right to retain professional assistance in respect

 

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of any audit of the Partnership by the Service and all out-of-pocket expenses
and fees incurred by the General Partner on behalf of the Partnership as Tax
Matters Partner shall constitute Partnership expenses. In the event the General
Partner receives notice of a final partnership adjustment under
Section 6223(a)(2) of the Code, the General Partner shall either (i) file a
court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner’s reasons for determining not to file such a petition.

(b) All elections required or permitted to be made by the Partnership under the
Code shall be made by the General Partner in its sole discretion.

(c) In the event of a transfer of all or any part of the Partnership Interest of
any Partner, the Partnership, at the option of the General Partner, may elect
pursuant to Section 754 of the Code to adjust the basis of the Properties.
Notwithstanding anything contained in Article IV of this Agreement, any
adjustments made pursuant to Section 754 shall affect only the successor in
interest to the transferring Partner and in no event shall be taken into account
in establishing, maintaining or computing Capital Accounts for the other
Partners for any purpose under this Agreement. Each Partner will furnish the
Partnership with all information necessary to give effect to such election.

10.06 Reports to Limited Partners.

(a) The books of the Partnership shall be audited annually as of the end of each
fiscal year of the Partnership by accountants selected by the General Partner,
who shall be the same accountants responsible for the examination of the General
Partner’s books. The General Partner shall determine and prepare an annual
balance sheet, a statement of partners’ capital as of the end of such year, as
well as statements of cash flow and income, all in accordance with generally
accepted accounting principles and accompanied by an independent auditor’s
report (collectively, the “Financial Statements”), together with all
supplementary schedules and information prepared by the accountants related
thereto. As a note to such Financial Statements, the General Partner shall
prepare a schedule of all loans to the Partnership. Such schedule shall
demonstrate that loans have been made, used, carried on the books of the
Partnership (and repaid, if applicable) in accordance with the provisions of
this Agreement. Within 90 days after the end of each fiscal year, the General
Partner shall transmit the Financial Statements to the Limited Partners. The
General Partner also shall prepare quarterly unreviewed Financial Statements and
shall transmit such statements to the Limited Partners within 45 days of the end
of each fiscal quarter of the Partnership.

(b) Any Partner shall further have the right to a private audit of the books and
records of the Partnership, provided such audit is made for Partnership
purposes, at the expense of the Partner desiring it and is made during normal
business hours.

 

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ARTICLE XI

AMENDMENT OF AGREEMENT; MERGER; NOTICE

11.01 Amendment of Agreement; Merger. The General Partner’s consent shall be
required for any amendment to the Agreement or any merger, consolidation or
combination of the Partnership. The General Partner, without the consent of the
Limited Partners, may amend this Agreement in any respect or cause the
Partnership to merge, consolidate or combine with or into any other partnership,
limited partnership, limited liability company or corporation as contemplated in
Section 7.01(c) or (d) hereof; provided, however, that:

A. the following amendments and any other such merger, consolidation or
combination of the Partnership (a “Merger”) shall require the consent of Limited
Partners (other than HHTI or any Subsidiary of the HHTI) holding more than 50%
of the Percentage Interests of the Limited Partners (other than HHTI or any
Subsidiary of HHTI):

(i) any amendment affecting the operation of the Conversion Factor or the
Redemption Right (except as provided in Section 7.01(c)) in a manner adverse to
the Limited Partners;

(ii) any amendment that would adversely affect the rights of the Limited
Partners to receive the distributions payable to them hereunder, other than with
respect to the issuance of additional Partnership Units pursuant to
Section 4.02;

(iii) any amendment that would alter the Partnership’s allocations of Profit and
Loss to the Limited Partners, other than with respect to the issuance of
additional Partnership Units pursuant to Section 4.02; or

(iv) any amendment to this Article XI.

B. The consent of each Limited Partner shall be required for any amendment that
would impose on the Limited Partners any obligation to make additional Capital
Contributions to the Partnership.

11.02 Notice to Limited Partners. The General Partner shall notify the Limited
Partners of the substance of any amendment or Merger requiring the consent of
the Limited Partners pursuant to Section 11.01 at least twenty (20) days prior
to the effective date of such amendment or Merger.

 

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ARTICLE XII

GENERAL PROVISIONS

12.01 Notices. All communications required or permitted under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or upon deposit in the United States mail, registered, postage
prepaid return receipt requested, to the Partners at the addresses set forth in
Exhibit A attached hereto; provided, however, that any Partner may specify a
different address by notifying the General Partner in writing of such different
address. Notices to the Partnership shall be delivered at or mailed to its
specified office.

12.02 Survival of Rights. Subject to the provisions hereof limiting transfers,
this Agreement shall be binding upon and inure to the benefit of the Partners
and the Partnership and their respective legal representatives, successors,
transferees and assigns.

12.03 Additional Documents. Each Partner agrees to perform all further acts and
execute, swear to, acknowledge and deliver all further documents which may be
reasonable, necessary, appropriate or desirable to carry out the provisions of
this Agreement or the Act.

12.04 Severability. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.

12.05 Entire Agreement. This Agreement and exhibits attached hereto constitute
the entire Agreement of the Partners and supersede all prior written agreements
and prior and contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof.

12.06 Pronouns and Plurals. When the context in which words are used in the
Agreement indicates that such is the intent, words in the singular number shall
include the plural and the masculine gender shall include the neuter or female
gender as the context may require.

12.07 Headings. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.

12.08 Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original copy and all of which together shall
constitute one and the same instrument binding on all parties hereto,
notwithstanding that all parties shall not have signed the same counterpart.

12.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.

 

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