exv10w1



 





Exhibit 10.1




SECOND AMENDED AND RESTATED




AGREEMENT OF LIMITED PARTNERSHIP




OF




ASHFORD HOSPITALITY LIMITED PARTNERSHIP

DATED: ________, 2004




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE

	ARTICLE I DEFINED TERMS
	 	 	1	 
	ARTICLE II PARTNERSHIP CONTINUATION; ADMISSION OF LIMITED PARTNERS; NAME; PLACE
OF BUSINESS AND REGISTERED AGENT
	 	 	9	 
	Section 2.1 CONTINUATION
	 	 	9	 
	Section 2.2 CERTIFICATE OF LIMITED PARTNERSHIP; OTHER FILINGS
	 	 	9	 
	Section 2.3 ADDITIONAL LIMITED PARTNERS
	 	 	9	 
	Section 2.4 NAME, OFFICE AND REGISTERED AGENT
	 	 	9	 
	ARTICLE III BUSINESS AND TERM OF PARTNERSHIP
	 	 	9	 
	Section 3.1 BUSINESS
	 	 	9	 
	Section 3.2 TERM
	 	 	10	 
	ARTICLE IV CAPITAL CONTRIBUTIONS
	 	 	10	 
	Section 4.1 GENERAL PARTNER
	 	 	10	 
	Section 4.2 LIMITED PARTNERS
	 	 	10	 
	Section 4.3 ADDITIONAL CAPITAL CONTRIBUTIONS AND
ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS
	 	 	10	 
	Section 4.4 ADDITIONAL FUNDING
	 	 	12	 
	Section 4.5 INTEREST
	 	 	12	 
	Section 4.6 RETURN OF CAPITAL
	 	 	13	 
	Section 4.7 PERCENTAGE INTEREST
	 	 	13	 
	ARTICLE V PROFITS, LOSSES AND ACCOUNTING
	 	 	13	 
	Section 5.1 ALLOCATION OF PROFITS AND LOSSES
	 	 	13	 
	Section 5.2 ACCOUNTING
	 	 	14	 
	Section 5.3 PARTNERS’ CAPITAL ACCOUNTS
	 	 	14	 
	Section 5.4 SECTION 754 ELECTIONS
	 	 	15	 
	ARTICLE VI POWERS, DUTIES, LIABILITIES, COMPENSATION AND VOTING OF GENERAL
PARTNER
	 	 	15	 
	Section 6.1 POWERS OF GENERAL PARTNER
	 	 	15	 
	Section 6.2 DELEGATION OF AUTHORITY
	 	 	19	 
	Section 6.3 DUTIES OF GENERAL PARTNER
	 	 	19	 
	Section 6.4 LIABILITIES OF GENERAL PARTNER; INDEMNIFICATION
	 	 	19	 
	Section 6.5 COMPENSATION OF GENERAL PARTNER; REIMBURSEMENT
	 	 	22	 
	Section 6.6 RELIANCE ON ACT OF GENERAL PARTNER
	 	 	22	 
	Section 6.7 OUTSIDE SERVICES; DEALINGS WITH AFFILIATES;
OUTSIDE ACTIVITIES
	 	 	22	 
	Section 6.8 ADDITIONAL LOANS TO THE PARTNERSHIP
	 	 	23	 
	Section 6.9 CONTRIBUTION OF ASSETS
	 	 	24	 







i









 






	 	 	 	 	 
	 	 	PAGE

	ARTICLE VII RIGHTS, PROHIBITIONS AND REPRESENTATIONS WITH RESPECT TO LIMITED
PARTNERS
	 	 	24	 
	Section 7.1 RIGHTS OF LIMITED PARTNERS
	 	 	24	 
	Section 7.2 PROHIBITIONS WITH RESPECT TO THE LIMITED PARTNERS
	 	 	25	 
	Section 7.3 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE
	 	 	25	 
	Section 7.4 REDEMPTION RIGHT
	 	 	25	 
	Section 7.5 WARRANTIES AND REPRESENTATIONS OF THE LIMITED PARTNERS
	 	 	28	 
	Section 7.6 INDEMNIFICATION BY LIMITED PARTNERS
	 	 	28	 
	Section 7.7 NOTICE OF SALE OR REFINANCING
	 	 	29	 
	Section 7.8 BASIS ANALYSIS AND LIMITED PARTNER GUARANTEES
	 	 	29	 
	ARTICLE VIII DISTRIBUTIONS AND PAYMENTS TO PARTNERS
	 	 	30	 
	Section 8.1 DISTRIBUTIONS OF CASH FLOW
	 	 	30	 
	Section 8.2 REIT DISTRIBUTION REQUIREMENTS
	 	 	30	 
	Section 8.3 NO RIGHT TO DISTRIBUTIONS IN KIND
	 	 	30	 
	Section 8.4 DISPOSITION PROCEEDS
	 	 	30	 
	Section 8.5 WITHDRAWALS
	 	 	30	 
	ARTICLE IX TRANSFERS OF INTERESTS
	 	 	30	 
	Section 9.1 GENERAL PARTNER
	 	 	30	 
	Section 9.2 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER
	 	 	32	 
	Section 9.3 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER
	 	 	32	 
	Section 9.4 REMOVAL OF A GENERAL PARTNER
	 	 	33	 
	Section 9.5 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS
	 	 	33	 
	Section 9.6 ADMISSION OF SUBSTITUTE LIMITED PARTNER
	 	 	34	 
	Section 9.7 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS
	 	 	36	 
	Section 9.8 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A
LIMITED PARTNER
	 	 	36	 
	Section 9.9 JOINT OWNERSHIP OF INTERESTS
	 	 	36	 
	Section 9.10 TRANSFEREES
	 	 	37	 
	Section 9.11 ABSOLUTE RESTRICTION
	 	 	37	 
	Section 9.12 INVESTMENT REPRESENTATION
	 	 	37	 
	ARTICLE X TERMINATION OF THE PARTNERSHIP
	 	 	37	 
	Section 10.1 TERMINATION
	 	 	37	 
	Section 10.2 PAYMENT OF DEBTS
	 	 	38	 
	Section 10.3 DEBTS TO PARTNERS
	 	 	38	 
	Section 10.4 REMAINING DISTRIBUTION
	 	 	38	 
	Section 10.5 RESERVE
	 	 	38	 
	Section 10.6 FINAL ACCOUNTING
	 	 	38	 
	ARTICLE XI AMENDMENTS
	 	 	39	 







ii









 






	 	 	 	 	 
	 	 	PAGE

	Section 11.1 AUTHORITY TO AMEND
	 	 	39	 
	Section 11.2 NOTICE OF AMENDMENTS
	 	 	39	 
	ARTICLE XII POWER OF ATTORNEY
	 	 	40	 
	Section 12.1 POWER
	 	 	40	 
	Section 12.2 SURVIVAL OF POWER
	 	 	40	 
	ARTICLE XIII CONSENTS, APPROVALS, VOTING AND MEETINGS
	 	 	41	 
	Section 13.1 METHOD OF GIVING CONSENT OR APPROVAL
	 	 	41	 
	Section 13.2 MEETINGS OF LIMITED PARTNERS
	 	 	41	 
	Section 13.3 OPINION
	 	 	41	 
	Section 13.4 SUBMISSIONS TO PARTNERS
	 	 	42	 
	ARTICLE XIV MISCELLANEOUS
	 	 	42	 
	Section 14.1 GOVERNING LAW
	 	 	42	 
	Section 14.2 AGREEMENT FOR FURTHER EXECUTION
	 	 	42	 
	Section 14.3 ENTIRE AGREEMENT
	 	 	42	 
	Section 14.4 SEVERABILITY
	 	 	42	 
	Section 14.5 NOTICES
	 	 	42	 
	Section 14.6 TITLES AND CAPTIONS
	 	 	43	 
	Section 14.7 COUNTERPARTS
	 	 	43	 
	Section 14.8 PRONOUNS
	 	 	43	 
	Section 14.9 SURVIVAL OF RIGHTS
	 	 	43	 
	EXHIBIT A —  List of Partners and Initial Contributed Assets
	 	 	 	 
	EXHIBIT B —  Federal Income Tax Matters
	 	 	 	 
	EXHIBIT C —  Notice of Exercise of Redemption Right
	 	 	 	 
	EXHIBIT D —  Designation of Interests Issued to Sea Turtle Inn Limited Partners
	 	 	 	 







iii









 








SECOND AMENDED AND RESTATED




AGREEMENT OF LIMITED PARTNERSHIP




OF




ASHFORD HOSPITALITY LIMITED PARTNERSHIP




RECITALS:




     Ashford Hospitality Limited Partnership (the “Partnership”) was formed as
a limited partnership under the laws of the State of Delaware by the filing of
a Certificate of Limited Partnership with the Secretary of State of Delaware on
May 13, 2003.



     The General Partner and the Original Limited Partner entered into the
Agreement of Limited Partnership as of August 18, 2003, and the General Partner
and the Limited Partners entered into the Amended and Restated Agreement of
Limited Partnership as of August 29, 2003 which was amended by the First
Amendment to Amended and Restated Agreement of Limited Partnership dated
October 16, 2003 and the Second Amendment to Amended and Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership dated April 1,
2004; and



     The General Partner now desires to amend and restate such agreement.



     NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:



ARTICLE I

DEFINED TERMS




Whenever used in this Agreement, the following terms shall have the meanings
respectively assigned to them in this Article I, unless otherwise expressly
provided herein or unless the context otherwise requires:



     “Act” shall mean the Delaware Revised Uniform Limited Partnership Act, 6
Del C. § 17-101, et. seq., as amended, supplemented or restated from time to
time, and any successor to such statute.



     “Additional Funds” has the meaning set forth in Section 4.4 hereof.



     “Additional Limited Partner” shall mean a Person admitted to this
Partnership as a Limited Partner pursuant to and in accordance with Section
2.3(b) of this Agreement.



     “Additional Securities” means any additional REIT Shares (other than REIT
Shares issued in connection with a redemption pursuant to Section 7.4 hereof)
or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares, as set forth in
Section 4.3(a)(ii).



 









 





     “Affiliate” of another Person shall mean (a) any Person directly or
indirectly owning, controlling or holding with power to vote ten percent (10%)
or more of the outstanding voting securities of such other Person; (b) any
Person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power to vote by such
other Person; (c) any Person directly or indirectly controlling, controlled by,
or under common control with, such other Person; (d) any officer, director,
member or partner of such other Person; and (e) if such other Person is an
officer, director, member or partner in a company, the company for which such
Person acts in any such capacity.



     “Agreed Value” shall mean the fair market value of Contributed Property as
agreed to by the contributing partner and the Partnership, using such
reasonable method of valuation as they may adopt.



     “Agreement” shall mean this Second Amended and Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership, as amended from
time to time.



     “Articles of Organization” means the Certificate of Formation of the
General Partner filed with the Secretary of State of the State of Delaware, as
amended or restated from time to time.



     “Ashford OP Limited Partner, LLC” means Ashford OP Limited Partner, LLC, a
Delaware limited liability company.



     “Bankruptcy Code” shall mean the United States Bankruptcy Code, as
amended, 11 U.S.C. ss.ss. 101 ET SEQ., and as hereafter amended from time to
time.



     “Business Day” shall mean any day when the New York Stock Exchange is open
for trading.



     “Capital Account” shall mean, as to any Partner, the account established
and maintained for such Partner pursuant to Section 5.3 hereof.



     “Capital Contribution” shall mean the amount in cash or the Agreed Value
of Contributed Property contributed by each Partner (or his original
predecessor in interest) to the capital of the Partnership for his interest in
the Partnership.



     “Cash Amount” means an amount of cash per Common Partnership Unit equal to
the Value on the Valuation Date of the REIT Common Shares Amount.



     “Cash Flow” shall mean the excess of cash revenues actually received by
the Partnership in respect of Partnership operations for any period, and the
amount of any reduction in reserves of the Partnership, over Operating Expenses
for such period. Cash Flow shall not include Disposition Proceeds.



     “Code” shall mean 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.



2









 





     “Commission” shall mean the U.S. Securities and Exchange Commission.



     “Common Partnership Interest” shall mean an ownership interest in the
Partnership, other than a Preferred Partnership Interest, and includes any and
all benefits to which the holder of such an ownership interest may be entitled
as provided in this Agreement or the Act, together with all obligations of such
Person to comply with the terms and provisions of this Agreement and the Act.



     “Common Partnership Unit” shall mean a fractional, undivided share of the
Common Partnership Interests of all Partners issued hereunder. At all times
there shall be maintained an equivalency of Common Partnership Units and REIT
Common Shares, except as otherwise provided herein.



     “Common Percentage Interest” shall mean the percentage ownership interest
in the Common Partnership Units of each Partner, as determined by dividing the
Common Partnership Units owned by a Partner by the total number of Common
Partnership Units then outstanding.



     “Company” means Ashford Hospitality Trust, Inc., a Maryland corporation.



     “Contributed Property” shall mean a Partner’s interest in property or
other consideration (excluding services and cash) contributed to the
Partnership by such Partner.



     “Conversion Factor” shall mean 1.0; provided, however, that in the event
the Company (i) declares or pays a dividend on its outstanding REIT Common
Shares in REIT Common Shares or makes a distribution to all holders of its
outstanding REIT Common Shares in REIT Common Shares, (ii) subdivides its
outstanding REIT Common Shares, or (iii) combines its outstanding REIT Common
Shares into a smaller number of REIT Common 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 Common 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 Common Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. 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; PROVIDED,
HOWEVER, that if the General Partner receives a Notice of Redemption after the
record date, but prior to the effective date of such dividend, distribution,
subdivision or combination, the Conversion Factor shall be determined as if the
General Partner had received the Notice of Redemption immediately prior to the
record date for such dividend, distribution, subdivision or combination.



3









 







     “Disposition Proceeds” shall mean the excess of the proceeds received by
the Partnership from the sale, exchange or other disposition of all or
substantially all of the Partnership’s Property less any expenses incurred or
paid by the Partnership in connection with such transaction.



     “Event of Bankruptcy” shall mean as to any Person the filing of a petition
for relief as to such Person as debtor or bankrupt under the Bankruptcy Code or
similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within ninety (90) days of the
filing thereof); insolvency of such Person as finally determined by a court of
competent jurisdiction; 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 such Person’s 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
jurisdiction, whether now in existence or hereinafter in effect, either by such
Person or by another, but if such proceeding is commenced by another, only if
such Person indicates his approval of such proceeding, or such proceeding is
contested by such Person and has not been finally dismissed within ninety (90)
days.



     “General Partner” shall mean Ashford OP General Partner, LLC 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” shall mean the ownership interest of a
General Partner in the Partnership, provided that the General Partner shall
have no interest in profits or losses of the Partnership with respect to its
General Partnership Interest.



     “Government Obligations” shall mean securities that are (i) direct
obligations of the United States of America, for the payment of which its full
faith and credit is pledged, or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, that are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust as custodian with respect to any
such obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Obligation or the specific payment of interest on or principal
of the Government Obligation evidenced by such depository receipt.



     “Hotels” means the hotel properties owned by the Partnership, directly or
through any other entity, from time to time.



     “Indemnitee” shall mean (i) any Person made a party to a proceeding by
reason of his or her status as (A) the General Partner or (B) a director,
officer, employee or agent of the Partnership or the General Partner, and (ii)
such other Persons (including Affiliates of



4









 







the General Partner or the Partnership) as the General Partner may designate
from time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.



     “Initial Contributed Assets” shall mean those properties and asset
management and consulting agreements identified as Initial Contributed Assets
on Exhibit A hereto.



     “IRS” shall mean the Internal Revenue Service.



     “Limited Partner” shall mean any Person named as a Limited Partner on
Exhibit A attached hereto and any Person who becomes a Substitute Limited
Partner pursuant to Section 9.6 hereof or an Additional Limited Partner
pursuant to Section 2.3(b) hereof, in such Person’s capacity as a Limited
Partner in the Partnership.



     “Limited Partnership Interest” shall mean 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 the Act.



     “Notice of Redemption” shall mean the Notice of Exercise of Redemption
Right substantially in the form attached as Exhibit C hereto.



     “Offering” shall mean the offer and sale by the Company and the purchase
by the Underwriters (as defined in the Prospectus) of REIT Common Shares for
sale to the public, consummated August 29, 2003.



     “Operating Expenses” shall mean (i) all administrative and operating costs
and expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner, including any salaries or other payments to
directors, officers or employees of the General Partner, and any accounting and
legal expense of the General Partner, which expenses, the Partners have agreed,
are expenses of the Partnership and not the General Partner, and (iii) to the
extent not included in clause (ii) above, REIT Expenses; PROVIDED, HOWEVER,
that Operating Expenses shall not include any administrative costs and expenses
incurred by the General Partner that are attributable to Properties or
partnership interests in a Subsidiary that are owned by the General Partner or
the Company directly.



     “Original Limited Partner” shall mean Ashford OP Limited Partner, LLC.



     “Partner” shall mean the General Partner or any Limited Partner.



     “Partnership” shall mean Ashford Hospitality Limited Partnership, a
Delaware limited partnership.



     “Partnership Interest” shall mean an ownership interest in the Partnership
and includes any and all benefits to which the holder of such an ownership
interest may be



5









 







entitled as provided in this Agreement or the Act, together with all
obligations of such Person to comply with the terms and provisions of this
Agreement and the Act.



     “Partnership Record Date” shall mean the record date established by the
General Partner for the distribution of Cash Flow pursuant to Section 8.1
hereof, which record date shall be the same as the record date established by
the General Partner for a distribution to its member of some or all of its
portion of such distribution.



     “Partnership Unit” means a Common Partnership Unit, a Preferred
Partnership Unit or an other fractional, undivided share of the Partnership
Interests that the General Partner has authorized pursuant to this Agreement.
The Partnership Units of the Partners shall be set forth on Exhibit A, as may
be amended from time to time.



     “Person” shall mean any individual, partnership, corporation, limited
liability company, trust or other entity.



     “Preferred Partnership Interest” shall mean an ownership interest in the
Partnership, having a preference in payment of distributions or on liquidation,
and includes any and all benefits to which the holder of such an ownership
interest may be entitled as provided in this Agreement or the Act, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement and the Act.



     “Preferred Partnership Unit” shall mean a fractional, undivided share of
the Preferred Partnership Interests of all Partners issued hereunder.



     “Preferred Percentage Interest” shall mean the percentage ownership
interest in the Preferred Partnership Units of each Partner, as determined by
dividing the Preferred Partnership Units owned by a Partner by the total number
of Preferred Partnership Units then outstanding.



     “Preferred Return” shall mean any payment made or to be made on any
Preferred Partnership Unit corresponding to any dividend paid or to be paid on
any preferred shares issued by the Company, in accordance with Section 4.3
hereof.



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



     “Prospectus” shall mean the final prospectus, dated August 26, 2003,
delivered to purchasers of REIT Shares in the Offering.



     “Public Offering Price” shall mean the price for REIT shares set forth in
the Prospectus.



     “Redeeming Partner” shall have the meaning provided in Section 7.4(a)
hereof.



     “Redemption Right” shall have the meaning provided in Section 7.4(a)
hereof.



6









 





     “REIT” shall mean a real estate investment trust under Sections 856
through 860, inclusive, of the Code.



     “REIT Common Share” shall mean a share of the common shares of the
Company.



     “REIT Common Shares Amount” shall mean a whole number of REIT Common
Shares equal to the product of the number of Common Partnership Units offered
for redemption by a Redeeming Partner, multiplied by the Conversion Factor in
effect on the Specified Redemption Date (rounded down to the nearest whole
number in the event such product is not a whole number); provided, however,
that in the event the Company at any time issues to all holders of REIT Common
Shares rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase REIT Common Shares, or
any other securities or property (collectively, the “Rights”), which Rights
have not expired pursuant to their terms, then the REIT Common Shares Amount
thereafter shall also include such Rights that a holder of that number of REIT
Common Shares would be entitled to receive.



     “REIT Expenses” means (i) costs and expenses relating to the formation and
continuity of existence of the Company and any Subsidiaries thereof (which
Subsidiaries shall, for purposes hereof, be included within the definition of
Company), including taxes, fees and assessments associated therewith, any and
all costs, expenses or fees payable to any director, officer, or employee of
the Company, (ii) costs and expenses relating to the public offering and
registration of securities or private offering of securities by the Company 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 the Company under federal, state or local
laws or regulations, including filings with the Commission, (iv) costs and
expenses associated with compliance by the Company with laws, rules and
regulations promulgated by any regulatory body, including the Commission, and
(v) all other operating or administrative costs of the Company, including,
without limitation, insurance premiums, and legal, accounting and directors’
fees, incurred in the ordinary course of its business on behalf of or in
connection with the Partnership.



     “REIT Preferred Share” shall mean a share of the preferred shares of the
Company.



     “REIT Share” shall mean a REIT Common Share or a REIT Preferred Share.



     “Specified Redemption Date” shall mean, with respect to a given Partner,
the tenth (10th) Business Day after receipt by the General Partner of a Notice
of Redemption, provided that no Specified Redemption Date may occur with
respect to any Unit before one year after such Unit is issued by the
Partnership.



7









 





     “Subsidiary” shall mean, 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, are owned, directly or
indirectly, by such Person.



     “Substitute General Partner” has the meaning set forth in Section 9.2.



     “Substitute Limited Partner” shall mean any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.6 hereof.



     “Surviving Partner” has the meaning set forth in Section 9.1(c) hereof.



     “Transaction” has the meaning set forth in Section 9.1(b) hereof.



     “Transfer” has the meaning set forth in Section 9.5(a) hereof.



     “Valuation Date” shall mean the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.



     “Value” shall mean, with respect to a REIT Common Share, the average of
the daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Common Shares are listed or admitted to trading on any
securities exchange or the NASDAQ National Market System, the closing 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 on such day; (ii) if the REIT
Common 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 the General Partner; or (iii) if the REIT Common 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 the General
Partner, 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 ten (10) days prior to the date in question) for which prices
have been so reported; provided, however, that if there are no bid and asked
prices reported during the ten (10) days prior to the date in question, the
Value of the REIT Common Shares shall be determined by the General Partner
acting in good faith on the basis of such quotations and other information as
it considers, in its reasonable judgment, appropriate. In the event the REIT
Common Shares Amount includes rights that a holder of REIT Common Shares would
be entitled to receive, and the General Partner acting in good faith determines
that the value of such rights is not reflected in the Value of the REIT Common
Shares determined as aforesaid, then the Value of such rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.



8









 





ARTICLE II

PARTNERSHIP CONTINUATION; ADMISSION OF LIMITED PARTNERS;

NAME; PLACE OF BUSINESS AND REGISTERED AGENT




     Section 2.1 CONTINUATION. The Partners hereby agree to continue the
Partnership pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement. Except as expressly provided herein,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.



     Section 2.2 CERTIFICATE OF LIMITED PARTNERSHIP; OTHER FILINGS. The General
Partner shall prepare (or caused to be prepared), execute, acknowledge, record
and file at the expense of the Partnership, a Certificate of Limited
Partnership and all requisite fictitious name statements and notices in such
places and jurisdictions as may be required by the Act or 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.



     Section 2.3 ADDITIONAL LIMITED PARTNERS. The General Partner shall in
timely fashion amend this Agreement and, if required by the Act, the
Certificate of Limited Partnership filed for record to reflect the admission
pursuant to the terms of this Agreement of a Person as a Limited Partner.



     Section 2.4 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership
shall be Ashford Hospitality Limited Partnership The principal place of
business of the Partnership shall be at 14180 Dallas Parkway, 9th Floor,
Dallas, Texas 75254. 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 statutory agent for
service of process on the Partnership in Texas is Ashford OP General Partner
LLC, 14180 Dallas Parkway, 9th Floor, Dallas, Texas 75254. The name and
address of the Partnership’s statutory agent for service of process on the
Partnership in Delaware is Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808.



ARTICLE III

BUSINESS AND TERM OF PARTNERSHIP




     Section 3.1 BUSINESS. The purpose and nature of the business of the
Partnership is to conduct any business that may lawfully be 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 the Company at all times to be qualified as a REIT
under the Code, unless the board of directors of the Company determines to
cease to qualify as a REIT. To consummate the foregoing and to carry out the
obligations of the Partnership in connection therewith or incidental thereto,
the General Partner shall have the authority, in accordance with and subject to
the limitations set forth elsewhere in this Agreement, to make, enter into,
perform and carry out any



9









 







arrangements, contracts or agreements of every kind
for any lawful purpose, without limit as to amount or otherwise, with any
corporation, association, partnership, limited liability company, firm,
trustee, syndicate, individual or any political or governmental division,
subdivision or agency, domestic or foreign, and generally to make and perform
agreements and contracts of every kind and description and to do any and all
things necessary or incidental to the foregoing for the protection and
enhancement of the assets of the Partnership.



     Section 3.2 TERM. The Partnership as herein constituted shall continue in
perpetuity and shall have perpetual existence, unless earlier dissolved or
terminated pursuant to law or the provisions of this Agreement.



ARTICLE IV

CAPITAL CONTRIBUTIONS




     Section 4.1 GENERAL PARTNER.The General Partner has not contributed, and
shall not be required to contribute, cash or other assets to the capital of the
Partnership.



     Section 4.2 LIMITED PARTNERS. The Limited Partners have contributed their
respective ownership interests in the Contributed Property to the Partnership
as identified on Exhibit A attached hereto. The Agreed Values of the Limited
Partners’ proportionate ownership interest in the Contributed Properties as of
the date of contribution are set forth on Exhibit A attached hereto.



     Section 4.3 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.3 or in Section
4.4, the Partners shall have no preemptive or other right or obligation to make
any additional Capital Contributions or loans to the Partnership. The General
Partner or Ashford OP Limited Partner, LLC may contribute additional capital or
property to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.3.




	 	(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 Common Partnership Units and Preferred
Partnership Units for any Partnership purpose at any time or from
time to time, to the Partners 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 of the Limited
Partners. Any additional Partnership Interest issued thereby may
be issued in one or more 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



10









 






General Partner in its sole and absolute discretion and without the
approval of any Limited Partner, subject to Delaware law, and all
as shall be set forth in an Exhibit to this Agreement, each of
which Exhibit shall be incorporated into and become part of this
Agreement upon adoption by the General Partner, 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;
(iii) the rights of each class or series of Partnership Interests
upon dissolution and liquidation of the Partnership and (iv) the
right to vote; PROVIDED, HOWEVER, that no additional Partnership
Interests shall be issued to the General Partner or Ashford OP
Limited Partner, LLC unless:




        (ii) (1) (A) The additional Partnership Interests are issued
in connection with an issuance of REIT Shares of or other
interests in the Company, 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 or Ashford OP Limited Partner, LLC by the
Partnership in accordance with this Section 4.3 and (B) the
Company shall make, directly or through one or more Affiliates, a
Capital Contribution to the Partnership in an amount equal to the
proceeds raised or other property received by the Company,
directly or through one or more Affiliates, in connection with the
issuance of such shares or other interests in the Company, (2) the
additional Partnership Interests are issued in exchange for
property owned by the Company, the General Partner or Ashford OP
Limited Partner, LLC, as the case may be, with a fair market
value, as determined by the General Partner, in good faith, equal
to the value of the Partnership Interests, or (3) the additional
Partnership Interests are issued to all Partners in proportion to
their respective Common Percentage Interests or Preferred
Percentage Interests, as applicable.



Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Common Partnership Units or Preferred
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 Company and the Partnership.




        (b) UPON ISSUANCE OF ADDITIONAL SECURITIES. After the Offering, the
Company shall not issue any additional REIT Shares (other than REIT
Shares issued in connection with a redemption pursuant to Section 7.4
hereof) or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares
(collectively, “Additional Securities”) other than to all holders of REIT
Shares, unless (A) the General Partner shall cause the Partnership to
issue to the Company or its Affiliates, 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



11









 






of the Additional Securities, and (B) the Company contributes, directly or
through one or more Affiliates, the proceeds or other property received
from the issuance of such Additional Securities and from any exercise of
rights contained in such Additional Securities to the Partnership.



Without limiting the foregoing, the Company may issue Additional Securities for
less than fair market value, and as a result the General Partner is expressly
authorized to cause the Partnership to issue to the Company or its Affiliates
corresponding Partnership Interests, so long as (x) the Company concludes in
good faith that such issuance is in the best interests of the Company and the
Partnership, and (y) the Company, directly or through one or more Affiliates,
contributes all proceeds or other property received from such issuance to the
Partnership. For example, in the event the Company issues REIT Common Shares
for a cash purchase price and contributes, directly or through one or more
Affiliates, all of the proceeds of such issuance to the Partnership as required
hereunder, the Company or its Affiliates shall be issued a number of additional
Common Partnership Units equal to the product of (A) the number of such REIT
Common Shares issued by the Company, the proceeds of which were so contributed,
multiplied by (B) a fraction, the numerator of which is 100%, and the
denominator of which is the Conversion Factor in effect on the date of such
contribution.




        (c) CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF ISSUANCE OF REIT
SHARES. In connection with any and all issuances of REIT Shares, the
Company, directly or through one or more Affiliates, shall contribute all
of the proceeds raised in connection with such issuance to the
Partnership as Capital Contributions, PROVIDED THAT if the proceeds
actually received and contributed by the Company or its Affiliates 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 Company, directly or through one or more
Affiliates, shall be deemed to have made Capital Contributions to the
Partnership in the aggregate 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 the Company or its Affiliates for such
Capital Contributions pursuant to Section 4.3(a) hereof.



     Section 4.4 ADDITIONAL FUNDING. If the General Partner determines that it
is in the best interests of the Partnership to provide for additional
Partnership funds (“Additional Funds”) for any Partnership purpose, the General
Partner may (i) cause the Partnership to obtain such funds from outside
borrowings, or (ii) elect to have the General Partner provide such Additional
Funds to the Partnership through loans or otherwise.



     Section 4.5 INTEREST. No interest shall be paid on the Capital
Contribution of any Partner.



12









 





     Section 4.6 RETURN OF CAPITAL. Except as expressly provided in this
Agreement, no Partner shall be entitled to demand or receive the return of his
Capital Contribution.



     Section 4.7 PERCENTAGE INTEREST. If the number of outstanding Common
Partnership Units increases or decreases during a taxable year, the General
Partner shall adjust each holder of Common Partnership Units’ Percentage
Interest, as reflected on Exhibit A, to a percentage equal to the number of
Common Partnership Units held by such Partner divided by the aggregate number
of outstanding Common Partnership Units.



ARTICLE V

PROFITS, LOSSES AND ACCOUNTING




     Section 5.1 ALLOCATION OF PROFITS AND LOSSES. Except as otherwise provided
herein or in Exhibit B, profits earned and losses incurred by the Partnership
shall be allocated among the Partners as follows:




       (a) Profits for each year shall be allocated among the Partners, and
shall be credited to the respective Capital Accounts of the Partners, in
the following order and priority:




        (i) First, to the Partners to the extent of losses, in the
proportions and in the reverse order in which losses were
allocated to them pursuant to Section 5.1(b), until the cumulative
amounts allocated to each Partner pursuant to this Section
5.1(a)(i) are equal to the cumulative losses so allocated to such
Partner; and




        (ii) Second, any remaining profits shall be allocated to the
holders of Common Partnership Units in accordance with their
Common Percentage Interests.




       (b) Losses for each year shall be allocated among the Partners, and
shall be debited to the respective Capital Accounts of the Partners, in
the following order and priority:




        (i) First, to the holders of Common Partnership Units pro
rata in accordance with, and to the extent of, the positive
balances in their Adjusted Capital Account Balances (as defined in
Exhibit B hereto) attributable to Common Partnership Units; and




        (ii) Thereafter any remaining losses will be allocated to the
holders of Common Partnership Units in accordance with their
Common Percentage Interests.




       (c) In the event that the Partnership issues additional Partnership
Units pursuant to the provisions of this Agreement, the General Partner
is hereby authorized to make revisions to this Section 5.1 as it
determines are necessary or



13









 






desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential
allocations to certain classes of Partnership Units.



     Section 5.2 ACCOUNTING.




       (a) The books of the Partnership shall be kept on the accrual basis
and in accordance with generally accepted accounting principles
consistently applied.




       (b) The fiscal year of the Partnership shall be the calendar year.




       (c) The terms “profits” and “losses,” as used herein, shall mean all
items of income, gain, expense or loss as determined utilizing federal
income tax accounting principles and shall also include each Partner’s
share of income described in Section 705(a)(1)(B) of the Code, any
expenditures described in Section 705(a)(2)(B) of the Code, any
expenditures described in Section 709(a) of the Code which are not
deducted or amortized in accordance with Section 709(b) of the Code,
losses not deductible pursuant to Sections 267(a) and 707(b) of the Code
and adjustments made pursuant to Exhibit B attached hereto.




       (d) 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. The General Partner shall have the right to
retain professional assistance in respect of any audit of the Partnership
by the IRS, and all out-of-pocket expenses and fees incurred by the
General Partner on behalf of the Partnership as Tax Matters Partner shall
constitute Operating Expenses of the Partnership. 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 each Limited Partner on the date such
petition is filed, or (ii) mail a written notice to each Limited Partner,
within such period, that describes the General Partner’s reasons for
determining not to file such a petition.




       (e) Except as specifically provided herein, 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.




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



     Section 5.3 PARTNERS’ CAPITAL ACCOUNTS.




       (a) There shall be maintained a Capital Account for each Partner in
accordance with this Section 5.3 and the principles set forth in Exhibit
B attached



14









 






hereto and made a part hereof. The amount of cash and the
Agreed Value of property contributed to the Partnership by each Partner,
net of liabilities assumed by the Partnership or securing property
contributed by such Partner, shall be credited to its Capital Account,
and from time to time, but not less often than annually, the share of
each Partner in profits, losses and fair market value of distributions
shall be credited or charged to its Capital Account. The determination of
Partners’ Capital Accounts, and any adjustments thereto, shall be made
consistent with tax accounting and other principles set forth in Section
704(b) of the Code and applicable regulations thereunder and Exhibit B
attached hereto.




       (b) Except as otherwise specifically provided herein or in a
guarantee of a Partnership liability, signed by a Limited Partner, no
Limited Partner shall be required to make any further contribution to the
capital of the Partnership to restore a loss, to discharge any liability
of the Partnership or for any other purpose, nor shall any Limited
Partner personally be liable for any liabilities of the Partnership or of
the General Partner except as provided by law or this Agreement. All
Limited Partners hereby waive their right of contribution which they may
have against other Partners in respect of any payments made by them under
any guarantee of Partnership debt.




       (c) Immediately following the transfer of any Partnership Interest,
the Capital Account of the transferee Partner shall be equal to the
Capital Account of the transferor Partner attributable to the transferred
interest, and such Capital Account shall not be adjusted to reflect any
basis adjustment under Section 743 of the Code.




       (d) For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners’ Capital
Accounts, the determination, recognition and classification of any such
item shall be the same as its determination, recognition and
classification for federal income tax purposes, taking into account any
adjustments required pursuant to Section 704(b) of the Code and the
applicable regulations thereunder as more fully described in Exhibit B
attached hereto.



     Section 5.4 SECTION 754 ELECTIONS. The General Partner shall elect,
pursuant to Section 754 of the Code, to adjust the basis of the Partnership’s
assets for all transfers of Partnership Interests if such election would
benefit any Partner or the Partnership.



ARTICLE VI

POWERS, DUTIES, LIABILITIES, COMPENSATION AND VOTING OF

GENERAL PARTNER




     Section 6.1 POWERS OF GENERAL PARTNER. Notwithstanding any provision of
this Agreement to the contrary, the General Partner’s discretion and authority
are subject to the limitations imposed by law, and by the General Partner’s



15









 







Articles of Organization and operating agreement. Subject to the foregoing and
to other limitations imposed by this Agreement, the General Partner shall have
full, complete and exclusive discretion to manage and control the business and
affairs of the Partnership and make all decisions affecting the business and
assets of the Partnership. Without limiting the generality of the foregoing
(but subject to the restrictions specifically contained in this Agreement), the
General Partner shall have the power and authority to take the following
actions on behalf of the Partnership:




       (a) to acquire, purchase, own, manage, operate, 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 conducting the business of the Partnership in each case not
inconsistent with the Company’s qualification as a REIT;




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




       (c) to borrow money for 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 of or to the Partnership,
and secure such indebtedness by mortgage, deed of trust, pledge or other
lien on the Partnership’s assets;




       (d) to pay, either directly or by reimbursement, for all Operating
Expenses to third parties or to the General Partner (as set forth in this
Agreement);




       (e) 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;




       (f) 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;




       (g) 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;




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



16









 






       (i) 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 the General Partner shall determine from time to time;




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




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




       (l) 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, including, without limitation,
management agreements, franchise agreements, agreements with federal,
state or local liquor licensing agencies and agreements with operators of
restaurants and bars;




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




       (n) 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);




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




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




       (q) to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests or any securities (including secured and unsecured
debt obligations of the Partnership, debt obligations of the Partnership
convertible into any class or series of Partnership Interests, or
options, rights, warrants or appreciation rights relating to any
Partnership Interests) of the Partnership;




       (r) subject to the provisions of Section 9.1, to merge, consolidate
or combine the Partnership with or into another Person (to the extent
permitted by applicable law);




       (s) 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 purposes of Section 7704 of the Code;



17









 






       (t) to issue additional Partnership Interests pursuant to Section
4.3 hereof;




       (u) to pay cash to redeem Partnership Units held by a Limited
Partner in connection with a Limited Partner’s exercise of its Redemption
Right under Section 7.4 hereof;




       (v) to amend and restate Exhibit A hereto to reflect accurately at
all times the Capital Contributions, Common Percentage Interests and
Preferred Percentage Interests of the Partners as the same are adjusted
from time to time to the extent necessary to reflect redemptions, Capital
Contributions, the issuance of Partnership Units, the admission of any
Additional Limited Partner or any Substitute Limited Partner or
otherwise, which amendment and restatement, notwithstanding anything in
this Agreement to the contrary, shall not be deemed an amendment to this
Agreement, as long as the matter or event being reflected in Exhibit A
hereto otherwise is authorized by this Agreement;




       (w) to take whatever action the General Partner deems appropriate to
maintain the economic equivalency of Common Partnership Units and REIT
Common Shares and Preferred Partnership Units and REIT Preferred Shares,
respectively; and




       (x) 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 (including, without limitation, all actions consistent with
qualification of the Company as a REIT) and to possess and enjoy all of
the rights and powers of a general partner as provided by the Act.



Each of the Limited Partners agrees that the General Partner is authorized to
execute, deliver and perform the above-mentioned agreements and transactions on
behalf of the Partnership without any further act, approval or vote of the
Partners, notwithstanding any other provisions of this Agreement (except as
provided in this Section 6.1(r), Section 9.1 or Article XI), the Act or any
applicable law, rule or regulation to the fullest extent permitted under the
Act or other applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other persons under this Agreement
or of any duty stated or implied by law or equity.



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.



18









 





     Section 6.2 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.



     Section 6.3 DUTIES OF GENERAL PARTNER.




       (a) The General Partner, subject to the limitations contained
elsewhere in this Agreement, shall manage or cause to be managed the
affairs of the Partnership in a prudent and businesslike manner and shall
devote sufficient time and effort to the Partnership affairs.




       (b) In carrying out its obligations, the General Partner shall:




        (i) Render annual reports to all Partners with respect to the
operations of the Partnership;




        (ii) On or before March 31st of every year, mail to all
persons who were Partners at any time during the Partnership’s
prior fiscal year an annual report of the Partnership, including
all necessary tax information, and any other information regarding
the Partnership and its operations during the prior fiscal year
deemed by the General Partner to be material;




        (iii) Maintain complete and accurate records of all business
conducted by the Partnership and complete and accurate books of
account (containing such information as shall be necessary to
record allocations and distributions), and make such records and
books of account available for inspection and audit by any Partner
or such Partner’s duly authorized representative (at the sole
expense of such Partner) during regular business hours and at the
principal office of the Partnership; and




        (iv) Cause to be filed such certificates and do such other
acts as may be required by law to qualify and maintain the
Partnership as a limited partnership under the laws of the State
of Delaware.




       (c) The General Partner shall take such actions as it deems
necessary to maintain the economic equivalency of Common Partnership
Units and REIT Common Shares and Preferred Partnership Units and REIT
Preferred Shares, respectively, required by this Agreement.



     Section 6.4 LIABILITIES OF GENERAL PARTNER; INDEMNIFICATION.




       (a) The General Partner shall not be liable for the return of all or
any part of the Capital Contributions of the Limited Partners. Any
returns shall be made solely from the assets of the Partnership according
to the terms of this Agreement.



19









 






       (b) Notwithstanding anything to the contrary set forth in this
Agreement, none of the General Partner or the Company nor any of their
officers, directors, agents or employees shall be liable or accountable
in damages or otherwise to the Partnership, any Partners or any
assignees, or any of their successors or assigns, for any losses
sustained, liabilities incurred or benefits not derived as a result of
errors in judgment or mistakes of fact or law or any act or omission if
the General Partner acted in good faith. The General Partner shall not
be responsible for any misconduct or negligence on the part on any agent
appointed by it in good faith pursuant to Section 6.2 hereof. The
Limited Partners expressly acknowledge that the General Partner is acting
on behalf of the Partnership, the General Partner, the General Partner’s
members and the Company’s shareholders collectively, and 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 or their assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions.
In the event of a conflict between the interests of the members of
the General Partner or shareholders of the Company on one hand and the
Limited Partners on the other, the General Partner shall endeavor in good
faith to resolve the conflict in a manner not adverse to either the
shareholders of the Company or the Limited Partners; provided, however,
that for so long as the Company owns a controlling interest, directly or
indirectly, in the Partnership, any such conflict that cannot be resolved
in a manner not adverse to either the shareholders of the Company or the
Limited Partners shall be resolved in favor of the shareholders of the
Company. 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.




       (c) The Partnership shall indemnify an Indemnitee to the fullest
extent permitted by law and save and hold it harmless from and against,
and in respect of, any and all losses, claims, damages, liabilities
(joint or several), expenses (including 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;
provided, however, that this indemnification shall not apply if: (A) 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; (B) the Indemnitee actually received
an improper personal benefit in money, property or services; or (C) 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 6.4(c). The termination of any proceeding by
conviction or



20









 






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 6.4(c). Any indemnification pursuant to this
Section 6.4 shall be made only out of the assets of the Partnership, and
any insurance proceeds from the liability policy covering the General
Partner and any Indemnitee.




       (d) 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 6.4 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 been met.




       (e) The indemnification provided by this Section 6.4 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.




       (f) 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.




       (g) For purposes of this Section 6.4, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by the Indemnitee of its
duties to the Partnership also imposes duties on, or otherwise involves
services by, the Indemnitee 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 6.4; 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 the
Indemnitee 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.




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




       (i) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.4 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.



21









 







       (j) Any amendment, modification or repeal of this Section 6.4 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 6.4 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. The provisions of this Section 6.4 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.




       (k) 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
the Company to continue to qualify
as a REIT, or (ii) to prevent the Company from incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited
Partners. Further, any provision of this Agreement that might jeopardize
the Company’s REIT status shall be (i) void and of no effect, or (ii)
reformed, as necessary, to avoid the Company’s loss of REIT status.



     Section 6.5 COMPENSATION OF GENERAL PARTNER; REIMBURSEMENT. The General
Partner, as such, shall not receive any compensation for services rendered to
the Partnership. Notwithstanding the preceding sentence, the General Partner
shall be entitled, in accordance with the provisions of Section 6.7 below, to
pay reasonable compensation to its Affiliates and other entities in which it
may be associated for services performed. The General Partner shall be
reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all REIT Expenses.



     Section 6.6 RELIANCE ON ACT OF GENERAL PARTNER. No financial institution
or any other person, firm or corporation dealing with the General Partner or
the Partnership shall be required to ascertain whether the General Partner is
acting in accordance with this Agreement, but such financial institution or
such other person, firm or corporation shall be protected in relying solely
upon the assurance of and the execution of any instrument or instruments by the
General Partner.



     Section 6.7 OUTSIDE SERVICES; DEALINGS WITH AFFILIATES; OUTSIDE
ACTIVITIES.




       (a) Notwithstanding any provision of this Article VI to the
contrary, the General Partner may employ such agents, accountants,
attorneys and others as it shall deem advisable, including its directors,
officers, shareholders, and its



22









 






Affiliates and entities with which the
General Partner, any Limited Partner or their respective Affiliates may
be associated, the Company’s directors, officers and shareholders, and
may pay them reasonable compensation from Partnership funds for services
performed, which compensation shall be reasonably believed by the General
Partner to be comparable to and competitive with fees charged by
unrelated Persons who render comparable services which could reasonably
be made available to the Partnership. The General Partner shall not be
liable for the neglect, omission or wrongdoing of any such Person so long
as it appointed such Person in good faith.




       (b) The Partnership may lend or contribute to its Subsidiaries or
other Persons in which it has an equity investment Partnership funds 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 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 nor any Limited Partner 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.




       (e) Subject to the Articles of Organization and any agreements
entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent,
trustee, 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
business ventures of such person.




       (f) In the event the Company exercises its rights under its Articles
of Incorporation to redeem REIT Common Shares, then the General Partner
shall cause the Partnership to purchase from the Company a number of
Common Partnership Units determined based on the application of the
Conversion Factor on the same terms as those on which the Company
redeemed such REIT Common Shares.



     Section 6.8 ADDITIONAL LOANS TO THE PARTNERSHIP. If additional funds are
required by the Partnership for any purpose relating to the business of the
Partnership or for any of its obligations, expenses, costs, or expenditures,
including operating deficits, the Partnership may borrow such funds as are
needed from time to



23









 







time from any Person (including, without limitation, the
General Partner or any Affiliate of the General Partner; provided, however,
that the terms of any loan from the General Partner or any Affiliate of the
General Partner shall be substantially equivalent to the terms that could be
obtained from a third party on an arm’s-length basis) on such terms as the
General Partner and such other Person may agree.



     Section 6.9 CONTRIBUTION OF ASSETS. The Company, directly or through one
or more of its Affiliates, shall contribute to the capital of the Partnership
from time to time each asset it owns from time to time during the existence of
the Partnership, but it is not required to so contribute:




       (a) its interests in the General Partner or Ashford OP Limited
Partner, LLC;




       (b) its direct or indirect interest in any entity in a chain of
entities of which the Company is the sole beneficial owner, so long as
all of the assets or other ownership interests in the entity in that
chain furthest removed from the General Partner are contributed directly
or indirectly to the Partnership; or




       (c) any equity interest in any entity of which the Company is the
sole beneficial owner that is created or used solely by the General
Partner in connection with any borrowing transaction in whole or in part
for the benefit of the Partnership.



ARTICLE VII

RIGHTS, PROHIBITIONS AND REPRESENTATIONS WITH RESPECT TO

LIMITED PARTNERS




     Section 7.1 RIGHTS OF LIMITED PARTNERS.




       (a) The Partnership may engage the Limited Partners or persons or
firms associated with them for specific purposes and may otherwise deal
with such Partners on terms and for compensation to be agreed upon by any
such Partner and the Partnership; provided, however, that no Limited
Partner shall be entitled to participate in the management or control of
the business of the Partnership.




       (b) Each Limited Partner shall be entitled to have the Partnership
books kept at the principal place of business of the Partnership and at
all times, during reasonable business hours and at such Partner’s sole
expense, shall be entitled to inspect and copy any of them and have on
demand true and full information of all things affecting the Partnership
and a formal accounting of Partnership affairs whenever circumstances
render it just and reasonable; provided, however, for such period of time
as the General Partner determines in its sole and absolute discretion to
be reasonable, the General Partner may keep confidential from the Limited
Partners any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best



24









 






interests of the Partnership or (ii) the Partnership or the General Partner is
required by law or by agreements with unaffiliated third parties to keep
confidential.




       (c) 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 its Capital
Contribution, if any, as and when due hereunder. After its Capital
Contribution is fully paid, no Limited Partner shall, except as otherwise
required by the Act, be required to make any
further Capital Contributions or other payments or lend any funds to
the Partnership.



     Section 7.2 PROHIBITIONS WITH RESPECT TO THE LIMITED PARTNERS. No Limited
Partner shall have the right:




       (a) To take part in the control or management of the Partnership
business, to transact business for or on behalf of the Partnership or to
sign for or to bind the Partnership, such powers being vested solely in
the General Partner as set forth herein;




       (b) To have such Partner’s Capital Contributions repaid except to
the extent provided in this Agreement;




       (c) To require partition of Partnership property or to compel any
sale or appraisement of Partnership assets or sale of a deceased
Partner’s interests therein, notwithstanding any provisions of law to the
contrary; or




       (d) To sell or assign all or any portion of such Partner’s Limited
Partnership Interest in the Partnership or to constitute the vendee or
assignee thereunder a Substitute Limited Partner, except as provided in
Article IX hereof.



     Section 7.3 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or indirectly,
own any shares or other interest in the General Partner or in any Affiliate
thereof if such ownership by itself or in conjunction with other shares 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 or the Company as a REIT 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 7.3 and the Limited Partners shall promptly
and fully respond to such inquiries.



     Section 7.4 REDEMPTION RIGHT.




       (a) Subject to Section 7.4(b) and Section 7.4(c), and the provisions
of any agreements between the Partnership and one or more Limited
Partners, each Limited Partner, other than Ashford OP Limited Partner,
LLC, shall have the right (the “Redemption Right”) to require the
Partnership to redeem on a



25









 






Specified Redemption Date all or a portion of
the Common Partnership 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 Partnership shall have up to one (1)
year (the “Payout Period”) following exercise of a Redemption Right
to pay the Cash Amount to the Limited Partner who is exercising the
redemption right (the “Redeeming Partner”). From and after the Specified
Redemption Date, the Cash Amount (or portion thereof) due and payable to
a Redeeming Partner with respect to such Redeeming Partner’s exercise of
its Redemption Right shall bear interest at the rate equal to the lower
of (i) the Company’s annual dividend rate on REIT Common Shares for the
prior twelve (12) month period, or (ii) eight percent (8%) per annum,
until the Cash Amount (or portion thereof) shall be paid in full 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) by the Redeeming Partner. A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Common Partnership
Units or, if such Limited Partner holds less than one thousand (1,000)
Common Partnership Units, all of the Common Partnership Units held by
such Partner. Neither the Redeeming Partner nor any permitted or
purported assignee of any Limited Partner shall have any right with
respect to any Common Partnership Units so redeemed to receive any
distributions paid after the Specified Redemption Date. Neither the
Redeeming Partner nor any permitted or purported assignee of any Limited
Partner shall have any right, with respect to any Common Partnership
Units so redeemed, to receive any distributions paid after the Specified
Redemption Date. Each Redeeming Partner agrees to provide such
representations and related indemnities regarding good and unencumbered
title, and to execute such documents, as the General Partner may
reasonably require in connection with any redemption.




       (b) Notwithstanding the provisions of Section 7.4(a), in the event a
Limited Partner elects to exercise the Redemption Right, the General
Partner at the direction of the Company, directly or indirectly through
one or more Affiliates, may, in its sole and absolute discretion, elect
to assume directly and satisfy a Redemption Right by paying to the
Redeeming Partner either (i) the Cash Amount, as provided for in Section
7.4(a), or (ii) the REIT Common Shares Amount, as elected by the General
Partner, as directed by the Company (in its sole and absolute
discretion), on the Specified Redemption Date, provided that the Company
may defer payment of the Cash Amount until the end of the Payout Period
described in Section 7.4(a) (in which case the Cash Amount shall bear
interest as described in Section 7.4(a)), and provided, further, that the
Company may, if it has elected so to defer payment of the Cash Amount,
further elect at any time before the end of the Payout Period to pay all
or any portion of the unpaid Cash Amount with REIT Common Shares having a
Value equal to such portion of the Cash Amount plus any accrued but
unpaid interest thereon. On any such election, the Company, directly or
indirectly through one or more Affiliates, shall acquire the Common
Partnership Units offered for redemption by the Redeeming Partner and
shall be treated for all purposes of this Agreement as the owner of such
Common Partnership Units. Unless the General Partner, as directed by the



26









 






Company (in its sole and absolute discretion) shall exercise its right to
assume directly and satisfy the Redemption Right, neither the General
Partner nor the Company itself shall have any obligation to the Redeeming
Partner or to the
Partnership with respect to the Redeeming Partner’s exercise of the
Redemption Right. In the event the General Partner, as directed by the
Company shall exercise its right to satisfy the Redemption Right in the
manner described in the first sentence of this Section 7.4(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 Company shall treat the transaction between the Company and the
Redeeming Partner for federal income tax purposes as a sale of the
Redeeming Partner’s Common Partnership Units to the Company or its
Affiliates. Each Redeeming Partner agrees to provide such representations
and related indemnities regarding good title, and to execute such
documents, as the Company may reasonably require in connection with the
issuance of REIT Common Shares upon exercise of the Redemption Right. If
the Redemption Right is satisfied by the delivery of REIT Common Shares,
the Redeeming Partner shall be deemed to become a holder of REIT Common
Shares as of the close of business on the Specified Redemption Date or on
such later date permitted by this Section 7.4(b) that the Company
delivers REIT Common Shares in satisfaction of a deferred payment of the
Cash Amount, as the case may be.



Notwithstanding anything to the contrary in Section 7.4(a) or this Section
7.4(b), and in addition to the right of the Company to deliver REIT Common
Shares in satisfaction of a deferred payment of the Cash Amount, as provided
above, should the General Partner, as directed by the Company elect to satisfy
a Redemption Right by paying the Redeeming Partner the REIT Common Shares
Amount, and it is necessary to obtain Company shareholder approval in order for
it to issue sufficient REIT Common Shares to satisfy such Redemption Right in
full, then the Company shall have one hundred twenty (120) days beyond the
Specified Redemption Date in which to obtain such shareholder approval and to
pay the REIT Common Shares Amount, and the redemption date shall be required to
occur by the earliest of: (i) ten (10) days after shareholder approval of the
issuance of the REIT Common Shares has been obtained, if it is obtained; (ii)
the date on which the General Partner, as directed by the Company elects to pay
such Redeeming Partner the Cash Amount; or (iii) one hundred and thirty (130)
days after such Common Partnership Units are presented for redemption. If such
shareholder approval is not obtained, the Partnership shall pay to the
Redeeming Partner the Cash Amount no later than the end of what the Payout
Period would have been had the General Partner, as directed by the Company not
elected to pay the REIT Common Share Amount upon the redemption, together with
interest on such Cash Amount as specified in Section 7.4(a) hereof.




       (c) Notwithstanding the provisions of Section 7.4(a) and Section
7.4(b), a Limited Partner shall not be entitled to receive REIT Common
Shares if the delivery of REIT Common Shares to such Partner on the
Specified Redemption Date (or such later date permitted by Section
7.4(b), as applicable) by the Company pursuant to Section 7.4(b) would be
prohibited under the Articles of



27









 






Incorporation of the Company, as amended
or restated from time to time. Without limiting the effect of the
preceding sentence, no Person shall be permitted to receive REIT Common
Shares if as a result of, and after giving effect
to, such exercise any Person would Beneficially Own (as defined in
the Articles of Incorporation of the Company, as amended or restated from
time to time) more than 9.8% of the total number of issued and
outstanding REIT Common Shares, unless waived by the board of directors
of the Company in its sole discretion. To the extent any attempted
redemption for REIT Common Shares would be a violation of this Section
7.4(c), it shall be null and void ab initio. The Cash Amount shall be
paid in such instances, in accordance with the terms set forth in Section
7.4(a) or 7.4(b).




       (d) Each Limited Partner covenants and agrees with the General
Partner that all Common Partnership Units delivered for redemption shall
be delivered to the Partnership, the Company or its Affiliates, as the
case may be, free and clear of all liens and, notwithstanding anything
herein contained to the contrary, neither the General Partner, the
Company (nor any of its Affiliates) nor the Partnership shall be under
any obligation to acquire Common Partnership Units which are or may be
subject to any liens. Each Limited Partner further agrees that, in the
event any state or local property transfer tax is payable as a result of
the transfer of its Common Partnership Units to the General Partner,
Partnership or the Company, such Limited Partner shall assume and pay
such transfer tax.




       (e) REIT Common Shares issued pursuant to Section 7.4(b) may contain
such legends regarding restrictions on transfer as the Company in good
faith determines to be necessary or advisable in order to (1) comply with
restrictions on transfer under the Securities Act and applicable state
securities laws and (2) protect the ability of the Company to continue to
qualify as a REIT.



     Section 7.5 WARRANTIES AND REPRESENTATIONS OF THE LIMITED PARTNERS. Each
Limited Partner contributing Initial Contributed Assets hereby warrants and
represents to and for the benefit of the General Partner and the Partnership
that, as of August 29, 2003 such Limited Partner owned good, valid and
marketable title to the ownership interests in the Initial Contributed Assets
being contributed to the capital of the Partnership by such Limited Partner
(the “Ownership Interests”) and that such Ownership Interests were free and
clear of all mortgages, pledges, liens, security interests, encumbrances and
restrictions of any nature whatsoever. Each Limited Partner further warrants
and represents to and for the benefit of the General Partner and the
Partnership that such Limited Partner had all necessary power and authority to
transfer the Ownership Interests to the Partnership without the consent or
authorization of, or notice to, any third party, except those third parties
from whom such consents or authorizations were obtained.



     Section 7.6 INDEMNIFICATION BY LIMITED PARTNERS. Each Limited Partner
contributing Initial Contributed Assets hereby agrees to indemnify the General
Partner and the Partnership and hold the General Partner, its
officers and directors and the



28









 







Partnership and its partners and each of
their respective representatives, successors and assigns harmless from and
against any and all claims, demands, losses, liabilities, damages and expenses
(including reasonable attorneys’ fees) arising out of or in connection with (i)
the inaccuracy of the warranties and representations made by such Limited
Partner under Section 7.5 above, or (ii) the ownership of the Ownership
Interests by such Limited Partner and any activities, obligations or
liabilities of, or related to, the Initial Contributed Assets to which such
Ownership Interest relates for all periods prior to the date of this Agreement.



     Section 7.7 NOTICE OF SALE OR REFINANCING. The General Partner shall
notify the Limited Partners no less than thirty (30) days prior to any sale,
refinancing, reduction (other than scheduled periodic amortization of
principal) of debt or other event that will reduce the amount of any
nonrecourse liabilities of the Partnership that a Limited Partner may include
in the tax basis of his or its Partnership Interests.



     Section 7.8 BASIS ANALYSIS AND LIMITED PARTNER GUARANTEES.




       (a) Upon the request of any Limited Partner but subject to the
General Partner’s agreement, which may be withheld in the General
Partner’s sole discretion, the General Partner may, prior to the end of
each calendar year, beginning in 2003, cause accountants to prepare and
provide to the Limited Partners a study analyzing each refinancing,
reduction (other than scheduled periodic amortization of principal) of
debt or other event that occurred during that year that reduced the
amount of any nonrecourse liabilities of the Partnership that a Limited
Partner may include in the tax basis of its Partnership Interests.




       (b) Upon the request of the General Partner, or upon a Limited
Partner’s own election but subject to the General Partner’s agreement,
which may be withheld in the General Partner’s sole discretion, a Limited
Partner (the “Initiating Limited Partner”) from time to time, may, but
shall not be required to, guarantee or otherwise provide credit support
for Partnership indebtedness as such Limited Partner may elect; provided,
however, that the Limited Partner shall be entitled to take such action
only if the General Partner determines that any such action would not
have a material adverse effect on the tax position of the General
Partner. All Partners are entitled to notice of any such guarantee or
credit support, and shall have the right to provide guarantees or credit
support on the same terms and conditions as the Initiating Limited
Partner does, and all Limited Partners interested in providing such
guarantee or credit support shall cooperate with the General Partner and
each other in considering any guarantee or credit support proposal, and
the General Partner will cooperate in permitting or obtaining any
consents for such guarantees or credit support.



29









 





ARTICLE VIII

DISTRIBUTIONS AND PAYMENTS TO PARTNERS




     Section 8.1 DISTRIBUTIONS OF CASH FLOW.




       (a) The General Partner shall cause the Partnership to distribute on
a quarterly basis such portion of the Cash Flow of the Partnership as the
General Partner shall determine in its sole discretion. Except as
provided in Section 10.4, such distributions shall be made to the
Partners who are Partners on the applicable record date in accordance
with their respective Common Percentage Interests. In the event the
Partnership issues additional Partnership Units pursuant to the
provisions of this Agreement, the General Partner is hereby authorized to
make such revisions to this Article 8 as it determines are necessary or
desirable to reflect the issuance of such additional Partnership units,
including without limitation, making preferential distributions to
certain classes of Partnership Units.




       (b) In no event may a Partner receive a distribution of Cash Flow
with respect to a Partnership Unit if such Partner is entitled to receive
a dividend out of the Company’s share of such Cash Flow with respect to a
REIT Share for which all or part of such Partnership Unit has been
exchanged.



     Section 8.2 REIT DISTRIBUTION REQUIREMENTS. Unless the General Partner
determines that such a distribution would not be in the best interests of the
Partnership, the General Partner shall cause the Partnership to distribute
sufficient amounts to enable the Company (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 the excise tax imposed by Section 4981 of the Code.



     Section 8.3 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be
entitled to demand property other than cash in connection with any distribution
by the Partnership.



     Section 8.4 DISPOSITION PROCEEDS. Disposition Proceeds (less reasonable
reserves set aside by the General Partner for reasonably anticipated expenses
or needs of the Partnership) shall be distributed to the holders of Common
Partnership Interests in accordance with their respective Common Percentage
Interests in the Partnership.



     Section 8.5 WITHDRAWALS. No Partner shall be entitled to make withdrawals
from its Capital Account, or withdraw as a Limited Partner, except as expressly
provided herein.



ARTICLE IX

TRANSFERS OF INTERESTS




     Section 9.1 GENERAL PARTNER.



30









 






       (a) Other than to an Affiliate of the General Partner, the General
Partner may not transfer any of its General Partnership Interest or
Limited Partnership Interests or withdraw as General Partner except as
provided in Section 9.1(b) or in connection with a transaction described
in Section 9.1(c).




       (b) Except as otherwise provided in Section 6.7 or Section 9.1(c),
the General Partner, the Company or their Subsidiaries shall not engage
in any merger, consolidation or other combination with or into another
Person or in any sale of all or substantially all of its assets, or any
reclassification, or recapitalization or change of outstanding REIT
Common 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 as described in
the definition of “Conversion Factor”) (each of the foregoing being
herein referred to as a “Transaction”), unless the Transaction also
includes a merger of the Partnership or sale of substantially all of the
assets of the Partnership or other transaction as a result of which all
Limited Partners will receive for each Common 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 or other
property paid to a holder of one REIT Common Share in consideration of
one REIT Common Share as a result of the Transaction; provided, however,
that if, in connection with the Transaction, a purchase, tender or
exchange offer shall have been made to and accepted by the holders of
more than fifty percent (50%) of the outstanding REIT Common Shares, the
holders of Common Partnership Units shall receive the greatest amount of
cash, securities or other property which a Limited Partner would have
received had it exercised the Redemption Right and the General Partner at
the direction of the Company had exercised its election to satisfy the
Redemption Right by the issuance of REIT Common Shares immediately prior
to the expiration of such purchase, tender or exchange offer.




       (c) Notwithstanding Section 9.1(b), the General Partner, the Company
or their Subsidiaries may merge 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
Partner”), other than Partnership Units held by the General Partner, the
Company or their Subsidiaries, are contributed 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 Partner in good faith and (ii) the Surviving Partner or one
of its Subsidiaries expressly agrees to assume all obligations of the
General Partner hereunder. Upon such contribution and assumption, the
Surviving Partner shall have the right and duty to amend this
Agreement as set forth in this Section 9.1(c). The Surviving Partner
shall in good faith arrive at a new method for the calculation of the
Cash Amount and Conversion Factor for a Common Partnership Unit after any
such merger or consolidation so as to approximate the existing method 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



31









 






options, warrants or other
rights relating thereto, and which a holder of Common Partnership Units
could have acquired had such Common Partnership Units been redeemed
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 above
provisions of this Section 9.1(c) shall similarly apply to successive
mergers or consolidations permitted hereunder.



     Section 9.2 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER. A
Person shall be admitted as a Substitute or Additional General Partner of the
Partnership only if the transaction giving rise to such substitution or
admission is otherwise permitted under this Agreement and the following terms
and conditions are satisfied:




       (a) the Person to be admitted as a Substitute or Additional General
Partner shall have accepted and agreed to be bound by all the 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
the Act in connection with such admission shall have been performed;




       (b) 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




       (c) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from counsel of 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 and that none of the actions taken in connection with the
admission of such Person as a Substitute or Additional General Partner
will cause the termination of the Partnership under Section 708 of the
Code, or will cause it to be classified as other than a partnership for
federal income tax purposes, or will result in the loss of any Limited
Partner’s limited liability status.



     Section 9.3 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 automatic removal pursuant to Section 9.4(a) hereof) or
the withdrawal 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



32









 






deemed not to be a dissolution of
such General Partner if the business of such General Partner is continued
within ninety (90) days by the remaining general partners or all
remaining members of such partnership), the Partnership shall be
dissolved and terminated unless the Partnership is continued pursuant to
Section 9.3(b).




       (b) Following the occurrence of an Event of Bankruptcy as to a
General Partner or the withdrawal 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 be a
dissolution of such General Partner if the business of such General
Partner is continued within ninety (90) days by all remaining general
partners or all remaining members of such partnership), persons holding
at least a majority of the Limited Partnership interests, within ninety
(90) days after such occurrence, may elect to continue the business of
the Partnership for the balance of the term specified in Section 3.2 by
selecting, subject to Section 9.2 and any other applicable provisions of
this Agreement, a Substitute General Partner by majority consent of the
Limited Partners. If the Limited Partners elect to reconstitute the
Partnership and admit a Substitute General Partner, the relationship
between the Partners and any Person who has acquired an interest of a
Partner in the Partnership shall be governed by this Agreement.



     Section 9.4 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 within
ninety (90) days by the remaining general partners or all remaining
members of such Partnership.




       (b) If a General Partner has been removed pursuant to this Section
9.4(a) and the Partnership is not continued pursuant to Section 9.3(b),
the partnership shall be dissolved.




       (c) A General Partner may not be removed by the Limited Partners
with or without cause.



     Section 9.5 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.



       (a) Except as otherwise provided in this Article IX, no Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer its Limited Partnership Interest, in whole or in part, whether
voluntarily or by operation of



33









 






law or at judicial sale or otherwise
(collectively, a “Transfer”), without the written consent of the General
Partner, which consent may be withheld in the sole and absolute
discretion of the General Partner; provided, however, the consent
required by this Section 9.5(a) shall not be required in the event of a
Transfer on or after the first anniversary of the date of this Agreement
by a Limited Partner that was a limited partner as of the date of this
Agreement to any of its partners. 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 its Limited
Partnership Interest if, (i) 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)
or (ii) the assignee is not an Accredited Investor within the meaning of
Rule 501 of the Securities Act of 1933, as amended.




       (c) No Transfer by a Limited Partner of its Partnership Units 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), (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, (iii) the Transfer would create a
risk that the Company would not be taxed as a REIT for federal income tax
purposes or (iv) assuming the Partnership Units subject to the Transfer
were redeemed for REIT Shares, the redemption would create a risk that
the Company would not be taxed as a REIT for federal income tax purposes.




       (d) Section 9.5(a) shall not prevent 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, one hundred
percent (100%) of the beneficial interests, provided that the
transferor assumes all costs of the Partnership in connection therewith
and any such transferee shall not have the rights of a Substitute Limited
Partner (unless and until admitted as a Substitute Limited Partner
pursuant to this Section 9.5 and Section 9.6 of this Agreement).




       (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.



     Section 9.6 ADMISSION OF SUBSTITUTE LIMITED PARTNER.




       (a) Subject to the other provisions of this Article IX (including,
without limitation, the provisions of Section 9.5(a) regarding consent of
the General Partner), an assignee of the Limited Partnership Interest of
a Limited



34









 






Partner (including, without limitation, 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:




        (i) the assignee has obtained the prior written consent of
the General Partner as to its admission as a Substitute Limited
Partner, which consent may be given or denied in the exercise of
the General Partner’s sole and absolute discretion; provided,
however, that this Section 9.6(a)(i) shall not apply in the case
of assignee resulting from a Transfer by a Limited Partner that
was a partner as of the date of this Agreement to any of its
partners;




        (ii) 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 revised 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;




        (iii) to the extent required, an amended certificate of
limited partnership evidencing the admission of such Person as a
Limited Partner shall have been signed, acknowledged and filed for
record in accordance with the Act;




        (iv) the assignee shall have delivered a letter containing
the representation and warranty set forth in Section 9.12 and the
agreement set forth in Section 9.12;




        (v) if the assignee is a corporation, partnership 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;




        (vi) the assignee shall have executed a power of attorney
containing the terms and provisions set forth in Article XII; and




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




       (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 9.6(a)(ii) 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.



35









 






       (c) The General Partner shall as promptly as practicable take all
action required to effectuate the admission of the Person seeking to
become a Substitute Limited Partner, including preparing the
documentation required by this Section and making all official filings
and publications.



     Section 9.7 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.




       (a) Subject to the provisions of Sections 9.5 and 9.6 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. If the General Partner, in its sole and absolute
discretion, does not consent (subject to the proviso in Section
9.6(a)(i)) to the admission of any transferee of any Partnership Interest
as a Substitute Limited Partner in connection with a Transfer permitted
by Section 9.5, such transferee shall be considered an assignee for the
purposes of this Agreement. An assignee shall be entitled to all the
rights of an assignee of a limited partnership interest under the Act,
including the right to receive distributions attributable to the
Partnership Units assigned, but such assignee shall not be entitled to
effect a consent or vote or effect a Redemption Right with respect to
such Partnership Units on any matter presented to the Limited Partners
for approval (such right to consent or vote or effect a Redemption Right,
to the extent provided in this Agreement or under the Act, fully
remaining with the transferor Limited Partner).




       (b) Any Person who is the assignee of all or any portion of a
Limited Partner’s Limited 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 of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to
make an assignment of its Limited Partnership Interest.



     Section 9.8 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 an individual 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.



     Section 9.9 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be
acquired by two (2) individuals as joint tenants with right of survivorship
(but not



36









 







as tenants in common), 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
(1) joint owner will be required if the Partnership has been provided with
evidence satisfactory to 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 (1) 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 (1) 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 that the tenancy satisfying the first sentence of this Section 9.9
has been destroyed, the General Partner shall cause the Partnership Interest to
be divided into two (2) equal Partnership Interests, which shall thereafter be
owned separately by each of the former owners.



     Section 9.10 TRANSFEREES. Any Partnership Interests owned by the Partners
and transferred pursuant to this Article IX shall be and remain subject to all
of the provisions of this Agreement.



     Section 9.11 ABSOLUTE RESTRICTION. Notwithstanding any provision of this
Agreement to the contrary, the sale or exchange of any interest in the
Partnership will not be permitted if the interest sought to be sold or
exchanged, when added to the total of all other interests sold or exchanged
within the period of twelve (12) consecutive months ending with the
proposed date of the sale or exchange, would result in the termination of the
Partnership under Section 708 of the Code, if such termination would materially
and adversely affect the Partnership or any Partner.



     Section 9.12 INVESTMENT REPRESENTATION. 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. 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 similarly represent and warrant 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.



ARTICLE X

TERMINATION OF THE PARTNERSHIP




     Section 10.1 TERMINATION. The Partnership shall be dissolved upon (i) an
Event of Bankruptcy as to the General Partner or the dissolution or withdrawal
of the General Partner (unless within ninety (90) days thereafter Limited
Partners holding more than fifty percent (50%) of the Limited Partnership
Interests in the Partnership elect to



37









 







continue the Partnership and to elect one
or more persons to serve as the General Partner or General Partners of the
Partnership), (ii) ninety (90) days following the sale of all or substantially
all of the Partnership’s assets (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 obligation is paid in full), (iii) the
expiration of the term specified in Section 3.2, (iv) the redemption of all
Limited Partnership Interests (other than any of such interests held by the
General Partner or Ashford OP Limited Partner, LLC), or (v) the election by the
General Partner (but only in accordance with and as permitted by applicable
law) that the Partnership should be dissolved. Upon dissolution of the
Partnership (unless the business of the Partnership is continued as set forth
above), the General Partner (or its trustee, receiver, successor or legal
representative) shall proceed with the winding up of the Partnership, and its
assets shall be applied and distributed as herein provided.



     Section 10.2 PAYMENT OF DEBTS. The assets shall first be applied to the
payment of the liabilities of the Partnership (other than any loans or advances
that may have been made by Partners to the Partnership) and the expenses of
liquidation. A reasonable time shall be allowed for the orderly liquidation of
the assets of the Partnership and the discharge of liabilities to
creditors so as to enable the General Partner to minimize any losses
resulting from liquidation.



     Section 10.3 DEBTS TO PARTNERS. The remaining assets shall next be applied
to the repayment of any loans made by any Partner to the Partnership.



     Section 10.4 REMAINING DISTRIBUTION. The remaining assets shall then be
distributed to the Partners in accordance with their positive Capital Account
balances, determined after taking into account all Capital Account adjustments
for all prior periods and the Partnership taxable year during which the
liquidation occurs.



     Section 10.5 RESERVE. Notwithstanding the provisions of Sections 10.3 and
10.4, the General Partner may retain such amount as it deems necessary as a
reserve for any contingent liabilities or obligations of the Partnership, which
reserve, after the passage of a reasonable period of time, shall be distributed
pursuant to the provisions of this Article X.



     Section 10.6 FINAL ACCOUNTING. Each of the Partners shall be furnished
with a statement examined by the Partnership’s independent accountants, which
shall set forth the assets and liabilities of the Partnership as of the date of
the complete liquidation. Upon the compliance by the General Partner with the
foregoing distribution plan, the Limited Partners shall cease to be such, and
the General Partner, as the sole remaining Partner of the Partnership, shall
execute and cause to be filed a Certificate of Cancellation of the Partnership
and any and all other documents necessary with respect to termination and
cancellation of the Partnership.



38









 





ARTICLE XI

AMENDMENTS




     Section 11.1 AUTHORITY TO AMEND.




       (a) This Agreement may be amended by the General Partner without the
approval of any other Partner if such amendment (i) is solely for the
purpose of clarification or is of an inconsequential nature and (ii) does
not change the substance hereof and the Partnership has obtained an
opinion of counsel to that effect.




       (b) This Agreement may be amended by the General Partner without the
approval of any other Partner if such amendment is to reflect the
admission,
substitution or withdrawal of Limited Partners; to reflect the
issuance of additional Partnership Interests or to amend the calculation
of the Cash Amount and the Conversion Factor pursuant to a transaction
described in Section 9.1(c).




       (c) This Agreement may be amended by the General Partner without the
approval of any other Partner if such amendment is, in the opinion of
counsel for the Partnership, necessary or appropriate to satisfy
requirements of the Code with respect to partnerships or REITs or of any
federal or state securities laws or regulations. Any amendment made
pursuant to this Section 11.1(c) may be made effective as of the date of
this Agreement.




       (d) Notwithstanding any contrary provision of this Agreement, any
amendment to this Agreement or other act which would (i) adversely affect
the limited liabilities of the Limited Partners, (ii) impose on the
Limited Partners any obligation to make additional Capital Contributions
to the Partnership, (iii) change the method of allocation of profit and
loss as provided in Article V or the distribution provisions of Articles
VIII and X hereof, (iv) seek to impose personal liability on the Limited
Partners, or (v) affect the operation of the Conversion Factor of the
Redemption Right shall require the consent and approval of Limited
Partners holding more than sixty-six and two-thirds percent (66 2/3%) of
the Common Percentage Interests of the Limited Partners.




       (e) Except as otherwise specifically provided in this Section 11.1,
amendments to this Agreement shall require the approval of the General
Partner and Limited Partners holding more than fifty percent (50%) of the
Common Percentage Interests of the Limited Partners.



     Section 11.2 NOTICE OF AMENDMENTS. A copy of any amendment to be approved
by the Partners pursuant to Sections 11.1(d) or 11.1(e) shall be mailed in
advance to such Partners. Partners shall be notified as to the substance of any
amendment pursuant to Sections 11.1(a), (b) or (c), and upon request shall be
furnished a copy thereof.



39









 





ARTICLE XII

POWER OF ATTORNEY




     Section 12.1 POWER. Each of the Limited Partners irrevocably constitutes
and appoints the General Partner as such Limited Partner’s true and lawful
attorney in such Limited Partner’s name, place and stead to make, execute,
swear to, acknowledge, deliver and file:




       (a) Any certificates or other instruments which may be required to
be filed by the Partnership under the laws of the State of Delaware or of
any other state or jurisdiction in which the General Partner shall deem
it advisable to file;




       (b) Any documents, certificates or other instruments, including, but
not limited to, (i) any and all amendments and modifications of this
Agreement or of the instruments described in Section 12.1(a) which may be
required or deemed desirable by the General Partner to effectuate the
provisions of any part of this Agreement, (ii) all instruments relating
to the admission, withdrawal, removal or substitution of any Partner, and
(iii) by way of extension and not limitation, to do all such other things
as shall be necessary to continue and to carry on the business of the
Partnership; and




       (c) All documents, certificates or other instruments that may be
required to effectuate the dissolution and termination of the
Partnership, to the extent such dissolution and termination is authorized
hereby. The power of attorney granted hereby shall not constitute a
waiver of, or be used to avoid, the rights of the Partners to approve
certain amendments to this Agreement pursuant to Sections 11.1(d) and
11.1(e) or be used in any other manner inconsistent with the status of
the Partnership as a limited partnership or inconsistent with the
provisions of this Agreement. Each such Limited Partner hereby agrees to
be bound by any representation made by the General Partner, acting in
good faith pursuant to such power of attorney; and each such Limited
Partner hereby waives any and all defenses which may be available to
contest, negate or disaffirm the action of the General Partner taken in
good faith under such power of attorney.



     Section 12.2 SURVIVAL OF POWER. It is expressly intended by each of the
Partners that the foregoing power of attorney is coupled with an interest, is
irrevocable and shall survive the death, incompetence, dissolution, liquidation
or adjudication of insanity or bankruptcy or insolvency of each such Partner.
The foregoing power of attorney shall survive the delivery of an assignment by
any of the Partners of such Partner’s entire interest in the Partnership,
except that where an assignee of such entire interest has become a substitute
Limited Partner, then the foregoing power of attorney of the assignor Partner
shall survive the delivery of such assignment for the sole purpose of enabling
the General Partner to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.



40









 





ARTICLE XIII

CONSENTS, APPROVALS, VOTING AND MEETINGS




     Section 13.1 METHOD OF GIVING CONSENT OR APPROVAL. Any consent or approval
required by this Agreement may be given as follows:




       (a) by a written consent given by the consenting Partner and
received by the General Partner at or prior to the doing of the act or
thing for which the consent is solicited, provided that such consent
shall not have been nullified by:




        (i) Notice to the General Partner of such nullification by
the consenting Partner prior to the doing of any act or thing, the
doing of
which is not subject to approval at a meeting called pursuant
to Section 13.2, or




        (ii) Notice to the General Partner of such nullification by
the consenting Partner prior to the time of any meeting called
pursuant to Section 13.2 to consider the doing of such act or
thing, or




        (iii) The negative vote by such consenting Partner at any
meeting called pursuant to Section 13.2 to consider the doing of
such act or thing;




       (b) by the affirmative vote by the consenting Partner for the doing
of the act or thing for which the consent is solicited at any meeting
called pursuant to Section 13.2 to consider the doing of such act or
thing; or




       (c) by the failure of the Partner to respond or object to a request
from the General Partner for such Partner’s consent within thirty (30)
days from its receipt of such request (or such shorter period of time as
the General Partner may indicate in such request in order to ensure that
the General Partner has sufficient time to respond, if required, to any
third party with respect to the subject matter of such request).



     Section 13.2 MEETINGS OF LIMITED PARTNERS. Any matter requiring the
consent or vote of all or any of the Partners may be considered at a meeting of
the Partners held not less than five (5) nor more than sixty (60) days after
notice thereof shall have been given by the General Partner to all Partners.
Such notice (i) may be given by the General Partner, in its discretion, at any
time, or (ii) shall be given by the General Partner within fifteen (15) days
after receipt from Limited Partners holding more than fifty percent (50%) of
the Common Percentage Interests of the Limited Partners of a request for such
meeting.



     Section 13.3 OPINION. Except for Consents obtained pursuant to Sections
13.1 or 13.2, no Limited Partner shall exercise any consent or voting rights
unless either (a) at the time of the giving of consent or casting of any vote
by the Partners hereunder, counsel for the Partnership or counsel employed by
the Limited Partners shall have delivered to the Partnership an opinion
satisfactory to the Partners to the effect that such conduct (i) is



41









 







permitted
by the Act, (ii) will not impair the limited liability of the Limited Partners,
and (iii) will not adversely affect the classification of the Partnership as a
partnership for federal income tax purposes, or (b) irrespective of the
delivery or nondelivery of such opinion of counsel, Limited Partners holding
more than seventy-five percent (75%) of the Common Percentage Interests of the
Limited Partners determine to exercise their consent or voting rights.



     Section 13.4 SUBMISSIONS TO PARTNERS. The General Partner shall give the Partners notice of any proposal or
other matter required by any provision of this Agreement, or by law, to be
submitted for consideration and approval of the Partners. Such notice shall
include any information required by the relevant provision or by law.



ARTICLE XIV

MISCELLANEOUS




     Section 14.1 GOVERNING LAW. The Partnership and this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.



     Section 14.2 AGREEMENT FOR FURTHER EXECUTION. At any time or times upon
the request of the General Partner, the Limited Partners hereby agree to sign,
swear to, acknowledge and deliver all further documents and certificates
required by the laws of Delaware, or any other jurisdiction in which the
Partnership does, or proposes to do, business, or which may be reasonable,
necessary, appropriate or desirable to carry out the provisions of this
Agreement or the Act. This Section 14.2 shall not prejudice or affect the
rights of the Limited Partners to approve certain amendments to this Agreement
pursuant to Sections 11.1(d) and 11.1(e).



     Section 14.3 ENTIRE AGREEMENT. This Agreement and the exhibits attached
hereto contain the entire understanding among the parties and supersede any
prior understandings or agreements among them respecting the within subject
matter. There are no representations, agreements, arrangements or
understandings, oral or written, between or among the parties hereto relating
to the subject matter of this Agreement which are not fully expressed herein.



     Section 14.4 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of the jurisdictions in which the Partnership
does business. If any provision of this Agreement, or the application thereof
to any person or circumstance, shall, for any reason and to any extent, be
invalid or unenforceable, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.



     Section 14.5 NOTICES. Notices to Partners or to the Partnership shall be
deemed to have been given when personally delivered or mailed, by prepaid
registered or certified mail, addressed as set forth in Exhibit A attached
hereto, unless a notice of change of address has previously been given in
writing by the addressee to the addressor, in which case such notice shall be
addressed to the address set forth in such notice of change of address.



42









 





     Section 14.6 TITLES AND CAPTIONS. All titles and captions are for
convenience only, do not form a substantive part of this Agreement, and shall
not restrict or enlarge any substantive provisions of this Agreement.



     Section 14.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each one of which shall constitute an original executed copy of
this Agreement.



     Section 14.8 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the person or persons may require.



     Section 14.9 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.



43










 





IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day and
year first above written.

	 	 	 	 	 
	 	GENERAL PARTNER:





Ashford OP General Partner LLC,

a Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Montgomery J. Bennett, President 	 
	 	 	 	 
	 


	 	 	 	 	 
	 	LIMITED PARTNERS:





ASHFORD OP LIMITED PARTNER, LLC,

a Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Montgomery J. Bennett, President 	 
	 	 	 	 
	 




	 	 	 	 	 
	

	 	 	REMINGTON SUITES AUSTIN, L.P.,
	

	 	 	a Delaware limited partnership
	
	 	 	 	 
	

	 	 	By:	REMINGTON SUITES AUSTIN, INC.,
	

	 	 	 	a Delaware corporation, its General Partner







	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David A Brooks, Vice President







	 	 	 	 	 
	

	 	 	REMINGTON SUITES DALLAS, L.P.,
	

	 	 	a Delaware limited partnership
	

	 	 	 	 
	

	 	 	By:	REMINGTON SUITES DALLAS, INC.,
	

	 	 	 	a Delaware corporation, its General Partner





	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David A Brooks, Vice President







 









 






	 	 	 	 	 
	

	 	 	REMINGTON SUITES DULLES, L.P.,
	

	 	 	a Delaware limited partnership
	

	 	 	 	 
	

	 	 	By:	REMINGTON SUITES DULLES, INC.,
	

	 	 	 	a Delaware corporation, its General Partner





	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David A Brooks, Vice President








	 	 	 
	

	REMINGTON SUITES LAS VEGAS, L.P.,
	

	a Delaware limited partnership
	 	 	 
	 	By:
	REMINGTON SUITES LAS VEGAS, INC.,
	

	 	a Delaware corporation, its General Partner






	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David A Brooks, Vice President







	 	 	 	 	 
	

	 	 	CHICAGO ILLINOIS HOTEL LIMITED PARTNERSHIP,
	

	 	 	a Delaware limited partnership
	

	 	 	 	 
	

	 	 	By:	ILLINOIS HOTEL II CORP.,
	

	 	 	 	a Delaware corporation, its General Partner





	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David A Brooks, Vice President








	 	 
	 	ASHFORD FINANCIAL CORPORATION,

	 	a Texas corporation






	 	 	 
	By:
	 	 
	

	 	
 
	

	 	David Kimichik, President











 









 





	 	 	 	 	 




The undersigned has executed this Agreement not as a Partner of the Partnership
but to agree to the provisions of this Agreement imposing obligations on,
granting rights to, the Company.

	 	 	 	 	 
	 	ASHFORD HOSPITALITY TRUST, INC.

 	 
	 	By:  	 	 
	 	 	Montgomery J. Bennett, President 	 
	 	 	 	 




 









 





EXHIBIT A

LIST OF PARTNERS AND CONTRIBUTED ASSETS




AS OF APRIL 6, 2004




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Common	 	Common
	 	 	 	 	Cash	 	Agreed Value of	 	Partnership	 	Percentage
	 	 	Initial Contributed Asset
	 	Contribution
	 	Contribued Asset
	 	Units
	 	Interest

	Partners:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	General Partner:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ashford OP General Partner LLC

	 	None
	 	None
	 	 	N/A	 	 	None
	 	None

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Limited Partners:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ashford OP Limited Partner LLC

	 	Cash, hotel asset, services	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Public Shares 22,336,478 @$9.00
	 	$	201,028,302	 	 	$	201,028,302	 	 	 	22,336,478	 	 	 	 	 
	OVERALLOTMENT-Public Shares 1,734,072 @$9.00
	 	$	15,606,648	 	 	$	15,606,648	 	 	 	1,734,072	 	 	 	 	 
	Friends/Family Shares 163,522 @$8.37
	 	 	1,368,679	 	 	 	1,368,679	 	 	 	163,522	 	 	 	 	 
	Bennett Shares 500,000@ $8.37
	 	 	4,185,000	 	 	 	4,185,000	 	 	 	500,000	 	 	 	 	 
	Holtsville Shares 216,634 @ $9.00
	 	 	 	 	 	 	1,949,706	 	 	 	216,634	 	 	 	 	 
	Underwriter Shares 65,024 @ $9.00
	 	 	 	 	 	 	585,216	 	 	 	65,024	 	 	 	 	 
	Director Shares 25,000 @ $9.00
	 	 	 	 	 	 	225,000	 	 	 	25,000	 	 	 	 	 
	Employee Shares 650,300 @ $9.00
	 	 	 	 	 	 	5,852,700	 	 	 	650,300	 	 	 	 	 
	OVERALLOTMENT-Employee Shares 39,017 @ $9.00
	 	 	 	 	 	 	351,153	 	 	 	39,017	 	 	 	 	 
	Bonus share grants 3/15/04 - 70,400 @ $10.41
	 	 	 	 	 	 	732,864	 	 	 	70,400	 	 	 	 	 
	 	 	 	 	 	
 	 	 	 	
 	 	 	 	
 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SHARES
	 	$	222,188,629	 	 	$	231,152,404	 	 	 	25,800,447	 	 	 	81.7374	%
	

	 	 	 	 	
 	 	 	 	
 	 	 	 	
 	 	 	 	
 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Remington Suites Austin, L.P.

	 	Embassy Suties Austin

9505 Stone Lake Blvd

Austin, TX
	 	None
	 	$	8,673,750	 	 	 	963,750	 	 	 	3.0532	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Remington Suites Dallas, L.P.

	 	Embassy Suites Dallas

14021 Noel Road

Dallas, TX
	 	None
	 	$	5,956,875	 	 	 	661,875	 	 	 	2.0969	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Remington Suites Dulles, L.P.

	 	Embassy Suites Dulles

2339 Centreville Road

Herndon, VA
	 	None
	 	$	12,076,875	 	 	 	1,341,875	 	 	 	4.2511	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Remington Suites Las Vegas, L.P.

	 	Embassy Suites Las Vegas

4315 Swenson Street

Las Vegas, NV
	 	None
	 	$	13,008,753	 	 	 	1,445,417	 	 	 	4.5792	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chicago Illinois Hotel L.P.

	 	Radisson Hotel Covington

668 West Fifth Street

Covington, KY
	 	None
	 	$	1,980,000	 	 	 	220,000	 	 	 	0.6969	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ashford Financial Corporation

	 	Asset Management and
Consulting Agreements *
	 	None
	 	$	9,225,000	 	 	 	1,025,000	 	 	 	3.2473	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Huron Jacksonville L.P

	 	Sea Turtle Inn
Atlantic Beach, FL
	 	None
	 	$	1,073,364	 	 	 	106,675	 	 	 	0.3380	%
	

	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	
 	 
	UNITS
	 	 	 	 	 	 	 	 	 	 	5,764,592	 	 	 	18.2626	%
	

	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	
 	 
	TOTAL
	 	 	 	 	 	 	 	 	 	 	31,565,039	 	 	 	100.0000	%
	

	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	
 	 


















 





     * There are eight Asset Management and Consulting Agreements, each between
Ashford Financial Corporation and a hotel management company. Under these
eight agreements, Ashford Financial Corporation provides asset management and
consulting services to 27 hotels managed under contract with the eight
management companies. Each of the Asset Management and Consulting Agreements
is described below:



	 	 	 	 	 	 	 	 	 
	 	 	Expiration Date of	 	 	 	 	 	 
	Manager	 	Management Agreement1	 	Property	 	 	 	 
	Remington Hospitality, Inc
	 	October 26, 2020	 	Alexandria Sheraton	 	 	 	 
	 
	 	October 11, 2009	 	Annapolis Historic	 	 	 	 
	 
	 	October 26, 2020	 	Beverly Hills Ramada	 	 	 	 
	 
	 	June 3, 2011	 	Coral Gables Holiday Inn	 	 	 	 
	 
	 	October 26, 2020	 	Ft. Worth Radisson	 	 	 	 
	 
	 	May 31, 2011	 	Key West — Crowne Plaza	 	 	 	 
	 
	 	October 26, 2020	 	Woburn Radisson	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Indianapolis Employers Corporation
	 	October 26, 2020	 	Indy Airport — Radisson	 	 	 	 
	 
	 	October 26, 2020	 	Indy Circle — Radisson	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Milford Hotel Employers Corporation
	 	April 26, 2008	 	Hyannis Ramada	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Suites Hotel Corporation
	 	October 25, 2020	 	Houston Embassy	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Employers Corporation
	 	May 6, 2009	 	Commack Howard Johnson	 	 	 	 
	 
	 	October 6, 2008	 	Dallas Best Western	 	 	 	 
	 
	 	March 3, 2008	 	Falmouth Square Inn	 	 	 	 
	 
	 	March 1, 2009	 	Gull Wings Suites	 	 	 	 
	 
	 	October 26, 2020	 	Milford Radisson	 	 	 	 
	 
	 	March 17, 2008	 	Rockland Radisson	 	 	 	 
	 
	 	May 16, 2009	 	Saddlebrook Radisson	 	 	 	 
	 
	 	September 1, 2009	 	St. Petersburg Hilton	 	 	 	 
	 
	 	November 30, 2007	 	Warner Robins Ramada	 	 	 	 
	 
	 	May 13, 2009	 	Westbury Howard Johnson	 	 	 	 
	 
	 	May 2, 2009	 	Woburn Four Points	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Employers Management Corporation
	 	May 31, 2010	 	West Palm Beach Embassy	 	 	 	 
	 
	 	 	 	Suites	 	 	 	 
	 
	 	July 13, 2008	 	Minnetonka Sheraton	 	 	 	 
	 
	 	October 26, 2020	 	Nassau Bay Hilton	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Orlando Management Corporation
	 	January 31, 2008	 	Sheraton Orlando	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Remington Ventura Employers Corporation
	 	December 31, 2008	 	Ventura Marriott	 	 	 	 













	1	 	These expiration dates represent the initial expiration dates without giving effect to any extensions.
















 








EXHIBIT B




FEDERAL INCOME TAX MATTERS





For purposes of interpreting and implementing Article V of the Partnership
Agreement, the following rules shall apply and shall be treated as part of the
terms of the Partnership Agreement:



A. SPECIAL ALLOCATION PROVISIONS.



     1. For purposes of determining the amount of gain or loss to be allocated
pursuant to Article V of the Partnership Agreement, any basis adjustments
permitted pursuant to Section 743 of the Code shall be disregarded.



     2. When Partnership Interests are transferred during any taxable year,
the General Partner intends to allocate Partnership income, loss, deductions
and credits using the closing of the books method.



     3. Notwithstanding any other provision of the Partnership Agreement, to
the extent required by law, income, gain, loss and deduction attributable to
property contributed to the Partnership by a Partner shall be shared among the
Partners so as to take into account any variation between the basis of the
property and the fair market value of the property at the time of contribution
in accordance with the requirements of Section 704(c) of the Code and the
applicable regulations thereunder as more fully described in Part B hereof.
Treasury regulations under Section 704(c) of the Code allow partnerships to use
any reasonable method for accounting for Book-Tax Differences for contributions
of property so that a contributing partner receives the tax benefits and
burdens of any built-in gain or loss associated with contributed property. The
Operating Partnership shall account for Book-Tax Differences using a method
specifically approved in the regulations, the traditional method. An allocation
of remaining built-in gain under Section 704(c) will be made when Section
704(c) property is sold.



     4. Notwithstanding any other provision of the Partnership Agreement, in
the event the Partnership is entitled to a deduction for interest imputed under
any provision of the Code on any loan or advance from a Partner (whether such
interest is currently deducted, capitalized or amortized), such deduction shall
be allocated solely to such Partner.



     5. Notwithstanding any provision of the Partnership Agreement to the
contrary, to the extent any payments in the nature of fees made to a Partner or
reimbursements of expenses to any Partner are finally determined by the
Internal Revenue Service to be distributions to a Partner for federal income
tax purposes, there will be a gross income allocation to such Partner in the
amount of such distribution.



     6. (a) Notwithstanding any provision of the Partnership Agreement to the
contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5)
of the Treasury Regulations, if there is a net decrease in Partnership Minimum
Gain during any Partnership fiscal year, each Partner shall be specially
allocated items of Partnership



 









 







income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner’s share of the net decrease in Partnership Minimum
Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph
6(a) is intended to comply with the minimum gain chargeback requirement in such
Section of the Treasury Regulations and shall be interpreted consistently
therewith. To the extent permitted by such Section of the Treasury Regulations
and for purposes of this paragraph 6(a) only, each Partner’s Adjusted Capital
Account Balance shall be determined prior to any other allocations pursuant to
Article V of the Partnership Agreement with respect to such fiscal year and
without regard to any net decrease in Partner Minimum Gain during such fiscal
year.



     (b) Notwithstanding any provision of the Partnership Agreement to the
contrary, except paragraph 6(a) of this Exhibit and subject to the exceptions
set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a
net decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership
fiscal year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the
Treasury Regulations, shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Partner’s share of the net decrease in Partner Nonrecourse Debt Minimum
Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This
paragraph 6(b) is intended to comply with the minimum gain chargeback
requirement in such Section of the Treasury Regulations and shall be
interpreted consistently therewith. Solely for purposes of this paragraph 6(b),
each Partner’s Adjusted Capital Account Balance shall be determined prior to
any other allocations pursuant to Article V of the Partnership Agreement with
respect to such fiscal year, other than allocations pursuant to paragraph 6(a)
hereof.



     7. Notwithstanding any provision of the Partnership Agreement to the
contrary, in the event any Partners unexpectedly receive any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6),
items of Partnership income and gain shall be specially allocated to such
Partners in an amount and manner sufficient to eliminate the deficits in their
Adjusted Capital Account Balances created by such adjustments, allocations or
distributions as quickly as possible.



     8. No loss shall be allocated to any Partner to the extent that such
allocation would result in a deficit in its Adjusted Capital Account Balance
while any other Partner continues to have a positive Adjusted Capital Account
Balance; in such event, losses shall first be allocated to any Partners with
positive Adjusted Capital Account Balances, and in proportion to such balances,
to the extent necessary to reduce their positive
Adjusted Capital Account Balances to zero. Any excess shall be allocated
to the General Partner.



 









 





     9. Any special allocations of items pursuant to this Part A shall be
taken into account in computing subsequent allocations so that the net amount
of any items so allocated and the profits, losses and all other items allocated
to each such Partner pursuant to Article V of the Partnership Agreement shall,
to the extent possible, be equal to the net amount that would have been
allocated to each such Partner pursuant to the provisions of Article V of the
Partnership Agreement if such special allocations had not occurred.



     10. Notwithstanding any provision of the Partnership Agreement to the
contrary, Nonrecourse Deductions for any fiscal year or other period shall be
specially allocated to the Partners in the manner and in accordance with the
percentages set forth in Section 5.1 of the Partnership Agreement.



     11. Notwithstanding any provision of the Partnership Agreement to the
contrary, any Partner Nonrecourse Deduction for any fiscal year or other period
shall be specially allocated to the Partner who bears the economic risk of loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i) of the
Treasury Regulations.



B. CAPITAL ACCOUNT ADJUSTMENTS AND 704(c) TAX ALLOCATIONS.



     1. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners’ Capital Accounts, the
determination, recognition and classification of any such item shall be the
same as its determination, recognition and classification for federal income
tax purposes; provided, however, that:



     (a) Any income, gain or loss attributable to the taxable disposition of
any property shall be determined by the Partnership as if the adjusted basis of
such property as of such date of disposition was equal in amount to (i) the
Agreed Value in the case of the Initial Contributed Assets or other contributed
properties, or (ii) the Carrying Value with respect to property subsequently
purchased.



     (b) The computation of all items of income, gain, loss and deduction shall
be made by the Partnership and, as to those items described in Section
705(a)(1)(B) or Section 705(a)(2)(B) of the Code, without regard to the fact
that such items are not includable in gross income or are neither currently
deductible nor capitalizable for federal income tax purposes.



     2. A transferee of a Partnership Interest will succeed to the Capital
Account relating to the Partnership Interest transferred.



     3. Upon an issuance of additional Partnership Interests, the Capital
Accounts of all Partners (and the Agreed Values of all Partnership properties)
shall, immediately prior to such issuance, be adjusted (consistent with the
provisions hereof) upward or downward to reflect any unrealized gain or
unrealized loss attributable to each Partnership property



 









 







(as if such unrealized gain or unrealized loss had been recognized upon an
actual sale of such property at the fair market value thereof, immediately
prior to such issuance, and had been allocated to the Partners, at such time,
pursuant to Article V of the Partnership Agreement). In determining such
unrealized gain or unrealized loss attributable to the properties, the fair
market value of Partnership properties shall be determined by the General
Partner using such reasonable methods of valuation as it may adopt.



     4. Immediately prior to the distribution of any Partnership property in
liquidation of the Partnership, the Capital Accounts of all Partners shall be
adjusted (consistent with the provisions hereof and Section 704 of the Code)
upward or downward to reflect any unrealized gain or unrealized loss
attributable to the Partnership property (as if such unrealized gain or
unrealized loss had been recognized upon an actual sale of each such property,
immediately prior to such distribution, and had been allocated to the Partners,
at such time, pursuant to Article V of the Partnership Agreement). In
determining such unrealized gain or unrealized loss attributable to property,
the fair market value of Partnership property shall be determined by the
General Partner using such reasonable methods of valuation as it may adopt.



     5. In accordance with Section 704(c) of the Code and the regulations
thereunder, income, gain, loss and deduction with respect to any property
shall, solely for tax purposes, and not for Capital Account purposes, be
allocated among the Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for federal income tax
purposes.



     6. In the event the Agreed Value of any Partnership asset is adjusted as
described in paragraph 3 above, subsequent allocations of income, gain, loss
and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and
its Agreed Value in the same manner as under Section 704(c) of the Code and the
regulations thereunder.



     7. Any elections or other decisions relating to such allocations shall be
made by the General Partner in any manner that reasonably reflects the purpose
and intention of this Agreement.



     C. DEFINITIONS. For the purposes of this Exhibit, the following terms
shall have the meanings indicated unless the context clearly indicates
otherwise:



     “ADJUSTED CAPITAL ACCOUNT BALANCE”: means the balance in the Capital
Account of a Partner as of the end of the relevant fiscal year of the
Partnership, after giving effect to the following: (i) credit to such Capital
Account any amounts the Partner is obligated to restore, pursuant to the terms
of this Agreement or otherwise, or is deemed obligated to restore pursuant to
the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations, and (ii) debit to such capital account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury
Regulations.



 









 





     “AGREED VALUE”: means the net fair market value of Contributed Property as
agreed to by the Contributing Partner and the Partnership (or other property
subsequently adjusted to reflect contributions), using such reasonable method
of valuation as they may adopt.



     “CARRYING VALUE”: means the adjusted basis of such property for federal
income tax purposes as of the time of determination.



     “NONRECOURSE DEDUCTIONS”: shall have the meaning set forth in Section
1.704-2(b)(1) of the Treasury Regulations. The amount of Nonrecourse Deductions
for a Partnership fiscal year equals the excess, if any, of the net increase,
if any, in the amount of Partnership Minimum Gain during that fiscal year over
the aggregate amount of any distributions during that fiscal year of proceeds
of a Nonrecourse Liability, that are allocable to an increase in Partnership
Minimum Gain, determined according to the provisions of Section 1.704-2(c) of
the Treasury Regulations.



     “NONRECOURSE LIABILITY”: shall have the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.



     “PARTNER NONRECOURSE DEBT MINIMUM GAIN”: means an amount, with respect to
each Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)
of the Treasury Regulations.



     “PARTNER NONRECOURSE DEBT”: shall have the meaning set forth in Section
1.704-2(b)(4) of the Treasury Regulations.



     “PARTNER NONRECOURSE DEDUCTIONS”: shall have the meaning set forth in
Section 1.704-2(i)(2) of the Treasury Regulations. For any Partnership taxable
year, the amount of Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt equal the net increase during the year, if any, in the amount
of Partner Nonrecourse Debt Minimum Gain reduced (but not below zero) by
proceeds of the liability that are both attributable to the liability and
allocable to an increase in the Partner Nonrecourse Debt Minimum Gain.



     “PARTNERSHIP AGREEMENT”: shall mean this Amended and Restated Limited
Partnership Agreement of Ashford Hospitality Limited Partnership.



     “PARTNERSHIP MINIMUM GAIN”: shall have the meaning set forth in Sections
1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.



For purposes of this Exhibit, all other capitalized terms will have the same
definition as in the Partnership Agreement.



 









 





EXHIBIT C




NOTICE OF EXERCISE OF REDEMPTION RIGHT




The undersigned hereby irrevocably (i) presents for redemption                    
Partnership Units (as defined in the Partnership Agreement defined below) in
Ashford Hospitality Limited Partnership, in accordance with the terms of the
Agreement of Limited Partnership of Ashford Hospitality Limited Partnership
(the “Partnership Agreement”), and the Redemption Right (as defined in the
Partnership Agreement) referred to therein, (ii) surrenders such Partnership
Units and all right, title and interest therein, and (iii) directs that the
Cash Amount or REIT Shares (both as defined in the Partnership Agreement)
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if REIT Shares are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the addresses specified below.



Dated: ____________________________________

Name of Limited Partner:



_________________________________________

(Signature of Limited Partner)



_________________________________________

(Street Address)



_________________________________________

_________________________________________

(City State Zip Code)



IF REIT Shares are to be issued, issue to:



_________________________________________

(Name)



_________________________________________

(Social Security or Identifying Number)



 









 





EXHIBIT D




DESIGNATION OF INTERESTS ISSUED TO SEA TURTLE INN LIMITED

PARTNERS




     Pursuant to Section 4.3(a)(i) of the Agreement, the General Partner has
caused the Partnership to issued additional Partnership Interests in the form
of 106,675 Common Partnership Units to Huron Jacksonville Limited Partnership.
The Common Partnership Interests issued to Huron Jacksonville Limited
Partnership shall be governed by the terms of the Agreement subject to the
following:




	1.	 	Additional Definition:





        “Sea Turtle Inn Limited Partners” means Huron/Jax Investment Limited
Partnership, a Florida limited partnership, PW/Jacksonville Limited
Partnership, an Illinois limited partnership, CN/Jacksonville Limited
Partnership, an Illinois limited partnership, Christopher Q. Stephan,
Helmut Horn and Graham Hershman.




	2.	 	Amendment to Section 7.4(b). Section 7.4(b) is amended and by adding the
following provision to the end of Section 7.4(b):





        “Notwithstanding anything in Section 7.4(a) or Section 7.4(b) to the
contrary, with respect to the exercise of a Redemption Right by Huron
Jacksonville Limited Partnership or any of the Sea Turtle Inn Limited
Partners, in the event of an election by the Company to satisfy such
Redemption Right by payment of the Cash Amount, then the Payout Period
applicable to such payment shall be no more than 120 days, and the
Company may not, after making such election, pay any portion of such Cash
Amount with REIT Common Shares.”




	3.	 	Amendment to Section 9.5





        The consent required by Section 9.5(a) shall not be required in the
event of a Transfer on or after April 1, 2005 by Huron Jacksonville
Limited Partnership to any Sea Turtle Inn Limited Partners.




	4.	 	Amendment to Section 9.6(a)(i)





        Section 9.6(a)(i) shall not apply in the case of an assignee resulting
from a Transfer by Huron Jacksonville Limited Partnership to any Sea Turtle Inn
Limited Partners.




	5.	 	Amendment to Exhibit B. The following terms shall be added to Exhibit B:





D. ALLOCATION OF NONRECOURSE LIABILITIES



 









 






        “Effective on the date of acquisition by the Partnership of the Sea
Turtle Inn, Atlantic Beach, Florida, the Nonrecourse Liability allocable
to the Sea Turtle Inn, shall be allocated to the Sea Turtle Inn Limited
Partners, in the aggregate, for federal income tax purposes as follows:




        (i) first, as provided in Section 1.752-3(a)(2) of the Treasury
Regulations, plus




        (ii) second, as provided in the fifth sentence of Section
1.752-3(a)(3) of the Treasury Regulations.




        If there is more than one Sea Turtle Inn Limited Partner, the amount
of such Nonrecourse Liability so allocated to the Sea Turtle Inn Limited
Partners, in the aggregate, will be allocated to each, as determined with
respect to each Sea Turtle Inn Limited Partner separately.




        In addition, the remaining Nonrecourse Liabilities of the
Partnership not allocated to any Partner pursuant to Sections
1.752-3(a)(1) or 1.752-3(a)(2) of the Treasury Regulations or any
sentence of Section 1.752-3(a)(3) of the Treasury Regulations other than
the first, from time to time, shall be allocated in accordance with the
Common Percentage Interests, as defined in the Partnership Agreement,
owned by the Limited Partners, as provided in the first sentence of
Section 1.752-3(a)(3) of the Treasury Regulations.




        The Sea Turtle Inn Limited Partners and the General Partner shall
agree within 60 days of the date of acquisition of the Sea Turtle Inn by
the Partnership as to the amounts in clause first and clause second and
the aggregate amount of Nonrecourse Liability allocable to the Sea Turtle
Inn.”




	6.	 	This Exhibit D is incorporated into and has become a part of the Agreement
effective as of April 1, 2004.