Exhibit 10.3





Exhibit 10.3




AGREEMENT OF LIMITED PARTNERSHIP




OF




DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP




 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1 — DEFINED TERMS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 — ORGANIZATIONAL MATTERS
	 	 	13	 
	Section 2.1 Formation and Continuation
	 	 	13	 
	Section 2.2 Name
	 	 	13	 
	Section 2.3 Registered Office and Agent; Principal Office
	 	 	13	 
	Section 2.4 Power of Attorney
	 	 	13	 
	Section 2.5 Term
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 3 — PURPOSE
	 	 	15	 
	Section 3.1 Purpose and Business
	 	 	15	 
	Section 3.2 Powers
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 4 — CAPITAL CONTRIBUTIONS
	 	 	15	 
	Section 4.1 Capital Contributions of the Partners
	 	 	15	 
	Section 4.2 Future Issuances of Additional Partnership Interests
	 	 	16	 
	Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
	 	 	18	 
	Section 4.4 Other Contribution Provisions
	 	 	18	 
	Section 4.5 No Preemptive Rights
	 	 	18	 
	Section 4.6 No Interest on Capital
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 5 — DISTRIBUTIONS
	 	 	19	 
	Section 5.1 Requirement and Characterization of Distributions
	 	 	19	 
	Section 5.2 Amounts Withheld
	 	 	20	 
	Section 5.3 Distributions Upon Liquidation
	 	 	20	 
	Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 6 — ALLOCATIONS
	 	 	20	 
	Section 6.1 Allocations For Capital Account Purposes
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 7 — MANAGEMENT AND OPERATIONS OF BUSINESS
	 	 	21	 
	Section 7.1 Management
	 	 	21	 
	Section 7.2 Certificate of Limited Partnership
	 	 	25	 
	Section 7.3 Restrictions on General Partner Authority
	 	 	26	 
	Section 7.4 Reimbursement of the General Partner and the Company; DRIPs and
Repurchase Programs
	 	 	26	 
	Section 7.5 Outside Activities of the General Partner
	 	 	28	 
	Section 7.6 Contracts with Affiliates
	 	 	28	 
	Section 7.7 Indemnification
	 	 	29	 
	Section 7.8 Liability of the General Partner
	 	 	30	 
	Section 7.9 Other Matters Concerning the General Partner
	 	 	31	 
	Section 7.10 Title to Partnership Assets
	 	 	32	 
	Section 7.11 Reliance by Third Parties
	 	 	32	 






 


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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 8 — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
	 	 	33	 
	Section 8.1 Limitation of Liability
	 	 	33	 
	Section 8.2 Management of Business
	 	 	33	 
	Section 8.3 Outside Activities of Limited Partners
	 	 	33	 
	Section 8.4 Return of Capital
	 	 	33	 
	Section 8.5 Rights of Limited Partners Relating to the Partnership
	 	 	34	 
	Section 8.6 Redemption Right
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 9 — BOOKS, RECORDS, ACCOUNTING AND REPORTS
	 	 	36	 
	Section 9.1 Records and Accounting
	 	 	36	 
	Section 9.2 Taxable Year and Fiscal Year
	 	 	37	 
	Section 9.3 Reports
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 10 — TAX MATTERS
	 	 	37	 
	Section 10.1 Preparation of Tax Returns
	 	 	37	 
	Section 10.2 Tax Elections
	 	 	37	 
	Section 10.3 Tax Matters Partner
	 	 	37	 
	Section 10.4 Organizational Expenses
	 	 	39	 
	Section 10.5 Withholding
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 11 — TRANSFERS AND WITHDRAWALS
	 	 	40	 
	Section 11.1 Transfer
	 	 	40	 
	Section 11.2 Transfer of the Company’s General Partner Interest and Limited Partner
Interest; Extraordinary Transactions
	 	 	40	 
	Section 11.3 Limited Partners’ Rights to Transfer
	 	 	41	 
	Section 11.4 Substituted Limited Partners
	 	 	43	 
	Section 11.5 Assignees
	 	 	43	 
	Section 11.6 General Provisions
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 12 — ADMISSION OF PARTNERS
	 	 	44	 
	Section 12.1 Admission of Successor General Partner
	 	 	44	 
	Section 12.2 Admission of Additional Limited Partners
	 	 	44	 
	Section 12.3 Amendment of Agreement and Certificate of Limited Partnership
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 13 — DISSOLUTION, LIQUIDATION AND TERMINATION
	 	 	45	 
	Section 13.1 Dissolution
	 	 	45	 
	Section 13.2 Winding Up
	 	 	46	 
	Section 13.3 Compliance with Timing Requirements of Regulations
	 	 	48	 
	Section 13.4 Rights of Limited Partners
	 	 	48	 
	Section 13.5 Notice of Dissolution
	 	 	48	 
	Section 13.6 Termination of Partnership and Cancellation of Certificate of Limited
Partnership
	 	 	49	 
	Section 13.7 Reasonable Time for Winding-Up
	 	 	49	 
	Section 13.8 Waiver of Partition
	 	 	49	 
	Section 13.9 Liability of Liquidator
	 	 	49	 






 


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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 14 — AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
	 	 	49	 
	Section 14.1 Amendments
	 	 	49	 
	Section 14.2 Meetings of the Partners
	 	 	51	 
	 
	 	 	 	 
	ARTICLE 15 — ARBITRATION OF DISPUTES
	 	 	51	 
	 
	 	 	 	 
	ARTICLE 16 — GENERAL PROVISIONS
	 	 	52	 
	Section 16.1 Addresses and Notice
	 	 	52	 
	Section 16.2 Titles and Captions
	 	 	52	 
	Section 16.3 Pronouns and Plurals
	 	 	53	 
	Section 16.4 Further Action
	 	 	53	 
	Section 16.5 Binding Effect
	 	 	53	 
	Section 16.6 Creditors
	 	 	53	 
	Section 16.7 Waiver
	 	 	53	 
	Section 16.8 Counterparts
	 	 	53	 
	Section 16.9 Applicable Law
	 	 	53	 
	Section 16.10 Invalidity of Provisions
	 	 	54	 
	Section 16.11 No Rights as Shareholders
	 	 	54	 
	Section 16.12 Entire Agreement
	 	 	54	 






 


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EXHIBITS




	 	 	 	 	 
	Exhibit A

	 	—
	 	Partners Contributions and Partnership Interests
	Exhibit B

	 	—
	 	Capital Account Maintenance
	Exhibit C

	 	—
	 	Special Allocation Rules
	Exhibit D

	 	—
	 	Notice of Redemption







 


iv









 







AGREEMENT OF LIMITED PARTNERSHIP

OF

DIAMONDROCK HOSPITALITY LIMITED PARTNERSHIP




THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of June 4, 2004 (this “Agreement”), is
entered into by and between DiamondRock Hospitality Company (the “Company”), a Maryland
corporation, as the General Partner of DiamondRock Hospitality Limited Partnership, a Delaware
limited partnership (the “Partnership”), and DiamondRock Hospitality, LLC, a Delaware
limited liability company, as the initial Limited Partner of the Partnership (the “Initial
Limited Partner”), together with any other Persons who become Partners of the Partnership as
provided herein.



WHEREAS, the Partnership was formed as a limited partnership under the laws of the State of
Delaware pursuant to a Certificate of Limited Partnership filed on May 26, 2004;



WHEREAS, effective as of the date of admission of any other Persons who become Partners of the
Partnership as provided herein, DiamondRock Hospitality, LLC as the Initial Limited Partner intends
to withdraw as a limited partner of the Partnership and the Partnership intends to redeem the
Limited Partner Interests held by such Initial Limited Partner for nominal consideration;



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



ARTICLE 1 — DEFINED TERMS




The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.



“Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended, supplemented or restated from time to time, and any successor to such statute.



“Additional Limited Partner” means a Person admitted to the Partnership as a Limited
Partner pursuant to Sections 4.2 and 12.2 hereof and who is shown as such on the books and records
of the Partnership.



“Adjusted Capital Account” means the Capital Account maintained for each Partner as of
the end of each Partnership taxable year (i) increased by any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.


 


1









 





“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit
balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant
Partnership taxable year.



“Adjusted Property” means any property, the Carrying Value of which has been adjusted
pursuant to Exhibit B hereof. Once an Adjusted Property is deemed contributed to the
Partnership for federal income tax purposes upon a termination thereof pursuant to Section 708 of
the Code, such property shall thereafter constitute a Contributed Property until the Carrying Value
of such property is further adjusted pursuant to Exhibit B hereof.



“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For purposes of this
definition, “control,” when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing. No officer, director or shareholder of the General Partner
shall be considered an Affiliate of the General Partner solely as a result of serving in such
capacity or being a shareholder of the General Partner.



“Agreed Value” means (i) in the case of any Contributed Property as of the time of its
contribution to the Partnership, the 704(c) Value of such property, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such property is subject when
contributed, and (ii) in the case of any property distributed to a Partner by the Partnership, the
Partnership’s Carrying Value of such property at the time such property is distributed, reduced by
any indebtedness either assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of the Code and the Regulations
thereunder. The aggregate Agreed Value of any Contributed Property contributed or deemed
contributed by each Partner is as set forth on Exhibit A.



“Agreement” means this Agreement of Limited Partnership, as it may be amended,
supplemented or restated from time to time, including by way of adoption of a Certificate of
Designations, including any exhibits attached hereto.




“Arbitrator” has the meaning set forth in Article 15 hereof.



“Articles of Incorporation” means the Articles of Incorporation of the Company filed
with the Maryland State Department of Assessments and Taxation, as amended or restated from time to
time.



“Assignee” means a Person to whom one or more Partnership Units have been transferred
in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner,
and who has the rights set forth in Section 11.5.


 


2









 





“Available Cash” means, with respect to any period for which such calculation is being
made, (i) the sum of:




(a) the Partnership’s Net Income or Net Loss, as the case may be, for such period
(without regard to adjustments resulting from allocations described in Sections 1.A through
1.E of Exhibit C);




(b) Depreciation and all other noncash charges deducted in determining Net Income or
Net Loss for such period;




(c) the amount of any reduction in the reserves of the Partnership referred to in
clause (ii)(f) below (including, without limitation, reductions resulting because the
General Partner determines such amounts are no longer necessary);




(d) the excess of proceeds from the sale, exchange, disposition, or refinancing of
Partnership property for such period over the gain recognized from such sale, exchange,
disposition, or refinancing during such period (excluding Terminating Capital Transactions);
and




(e) all other cash received by the Partnership for such period that was not included in
determining Net Income or Net Loss for such period.




(ii) less the sum of:




(a) all interest, principal and other debt payments made by the Partnership during such
period but not included in determining Net Income or Net Loss for such period;




(b) capital expenditures made by the Partnership during such period;




(c) investments made by the Partnership during such period in any entity (including
loans made thereto) to the extent that such investments are not otherwise described in
clause (ii)(a) or (ii)(b);




(d) all other expenditures and payments not deducted in determining Net Income or Net
Loss for such period;




(e) any amount included in determining Net Income or Net Loss for such period that was
not received by the Partnership during such period;




(f) the amount of any increase in reserves of the Partnership during such period which
the General Partner determines to be necessary or appropriate in its sole and absolute
discretion; and




(g) the amount of any working capital accounts and other cash or similar balances which
the General Partner determines to be necessary or appropriate, in its sole and absolute
discretion.



Notwithstanding the foregoing, Available Cash shall not include any cash received or
reductions in reserves, or take into account any disbursements made or reserves established, after
commencement of the dissolution and liquidation of the Partnership.


 


3









 





“Book-Tax Disparities” means, with respect to any item of Contributed Property or
Adjusted Property, as of the date of any determination, the difference between the Carrying Value
of such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income
tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the difference between such
Partner’s Capital Account balance as maintained pursuant to Exhibit B and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.



“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in Bethesda, Maryland are authorized or required by law to close.



“Capital Account” means the Capital Account maintained for a Partner pursuant to
Exhibit B hereof.



“Capital Contribution” means, with respect to any Partner, any cash, cash equivalents
and the Agreed Value of Contributed Property which such Partner contributes or is deemed to
contribute to the Partnership pursuant to Sections 4.1, 4.2, 4.3 or 4.4 hereof.



“Carrying Value” means (i) with respect to a Contributed Property or Adjusted
Property, the 704(c) Value of such property, reduced (but not below zero) by all Depreciation with
respect to such Contributed Property or Adjusted Property, as the case may be, charged to the
Partners’ Capital Accounts following the contribution of or adjustment with respect to such
property; and (ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination. The Carrying Value
of any property shall be adjusted from time to time in accordance with Exhibit B hereof,
and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General Partner.



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



“Certificate of Designations” means an amendment to this Agreement that sets forth the
designations, rights, powers, duties and preferences of holders of any Partnership Interests issued
pursuant to Section 4.2.A, which amendment is in the form of a certificate signed by the General
Partner and appended to this Agreement. A Certificate of Designations is not the exclusive manner
in which such an amendment may be effected. The General Partner may adopt a Certificate of
Designations without the consent of the Limited Partners to the extent permitted pursuant to
Section 14.1.B hereof.



“Certificate of Limited Partnership” means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Secretary of State of the State of Delaware,
as amended from time to time in accordance with the terms hereof and the Act.



“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time, as interpreted by the applicable regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any corresponding
provision of any succeeding law.


 


4









 




“Common Unit” means a Partnership Unit which is designated as a Common Unit and which
has the rights, preferences and other privileges designated herein in respect of Common
Unitholders. The allocation of Common Units among the Partners shall be set forth on Exhibit
A, as may be amended from time to time.




“Common Unitholder” means a Partner that holds Common Units.



“Company” means DiamondRock Hospitality Company, a Maryland corporation, or its
successor, as the case may be.



“Company Debt Securities” has the meaning set forth in Section 4.2.C of this
Agreement.



“Consent” means the consent or approval of a proposed action by a Partner given in
accordance with Section 14.2 hereof.



“Contributed Property” means each property or other asset, in such form as may be
permitted by the Act (but excluding cash), contributed or deemed contributed to the Partnership
(including deemed contributions to the Partnership on reconstitution thereof pursuant to Section
708 of the Code). Once the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B hereof, such property shall no longer constitute a Contributed Property for
purposes of Exhibit B hereof, but shall be deemed an Adjusted Property for such purposes.



“Conversion Factor” means 1.0, provided that in the event that the
Company (i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all holders of its outstanding REIT Shares in REIT Shares; (ii) subdivides its
outstanding REIT Shares or (iii) combines its outstanding REIT Shares into a smaller number of REIT
Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which shall be the number of REIT Shares issued and outstanding on the record date
for such dividend, distribution, subdivision or combination (assuming for such purpose that such
dividend, distribution, subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on 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, if a Notice of Redemption is given prior to such a record date
and the Specified Redemption Date is after such a record date, then the adjustment to the
Conversion Factor shall, with respect to such Redeeming Partner, be retroactive to the date of such
Notice of Redemption, provided that such dividend, distribution, subdivision or
combination occurs as of the effective date of such event). It is intended that adjustments to the
Conversion Factor are to be made in order to avoid unintended dilution or anti-dilution as a result
of transactions in which REIT Shares are issued, redeemed or exchanged without a corresponding
issuance, redemption or exchange of Common Units or of Preferred Units that are convertible into
Common Units. If, prior to a Specified Redemption Date, Rights (other than Rights issued pursuant
to an employee benefit plan or other compensation arrangement) were issued and have expired, and
such Rights were issued with an exercise price that, together with the purchase price for such
Rights, was below fair market value in relation to the security or other property to be



 


5









 





acquired upon the exercise of such Rights, and such Rights were issued to all holders of outstanding REIT
Shares or the General Partner cannot in good faith represent that the issuance of such Rights
benefited the Limited Partners, then the Conversion Factor applicable upon a Notice of Redemption
shall be equitably adjusted in a manner consistent with anti-dilution provisions in warrants and
other instruments in the case of such a below market issuance or exercise price. A similar
equitable adjustment to protect the value of Common Units shall be made in all events if any Rights
issued under a “Shareholder Rights Plan” became exercisable and expired prior to a Specified
Redemption Date.



“Depreciation” means, for each taxable year or other period, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such year or other period, except that if the Carrying Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to such beginning Carrying
Value as the federal income tax depreciation, amortization, or other cost recovery deduction for
such year or other period bears to such beginning adjusted tax basis; provided,
however, that if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference to such beginning
Carrying Value using any reasonable method selected by the General Partner.




“Distribution Period” has the meaning set forth in Section 5.1.B hereof.



“Extraordinary Transaction” means, with respect to the Company, the occurrence of one
or more of the following events: (i) a merger (including a triangular merger), consolidation or
other combination with or into another Person (other than in connection with a change in the
Company’s state of incorporation or organizational form); (ii) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of its assets in one transaction or a series
of related transactions; (iii) any reclassification, recapitalization or change of its outstanding
equity interests (other than a change in par value, or from par value to no par value, or as a
result of a split, dividend or similar subdivision); or (iv) the adoption of any plan of
liquidation or dissolution of the Company (whether or not in compliance with the provisions of this
Agreement).




“Filing Date” has the meaning set forth in Article 15 hereof.




“Full Distribution Period” has the meaning set forth in Section 5.1.B hereof.



“General Partner” means the Company, in its capacity as the general partner of the
Partnership, or any Person who becomes a successor general partner of the Partnership.



“General Partner Interest” means a Partnership Interest held by the General Partner,
in its capacity as general partner. A General Partner Interest may be expressed as a number of
Partnership Units.



“IRS” means the Internal Revenue Service, which administers the internal revenue laws
of the United States.


 


6









 





“Incapacity” or “Incapacitated” means, (i) as to any natural person which is a
Partner, death, total physical disability or entry by a court of competent jurisdiction of an order
adjudicating him or her incompetent to manage his or her Person or estate; (ii) as to any
corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for
the corporation or the revocation of its certificate of incorporation; (iii) as to any partnership
or limited liability company which is a Partner, the dissolution and commencement of winding up of
the partnership or the limited liability company; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a
new trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences
a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner; (c) the Partner
executes and delivers a general assignment for the benefit of the Partner’s creditors; (d) the
Partner files an answer or other pleading admitting or failing to contest the material allegations
of a petition filed against the Partner in any proceeding of the nature described in clause (b)
above; (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator for the Partner or for all or any substantial part of the Partner’s properties; (f)
any proceeding seeking liquidation, reorganization or other relief of or against such Partner under
any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed
within one hundred twenty (120) days after the commencement thereof; (g) the appointment without
the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or
stayed within ninety (90) days of such appointment; or (h) an appointment referred to in clause (g)
which has been stayed is not vacated within ninety (90) days after the expiration of any such stay.



“Indemnitee” means (i) any Person made a party to a proceeding by reason of his, her
or its status as (a) the Company (b) the General Partner or (c) a director or officer of the
Company, the General Partner or the Partnership and (ii) such other Persons (including Affiliates
of the Company, 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.



“Independent Director” means a person who is not an officer or employee of the Company
or an affiliate or a lessee or manger of any Property.



“IPO Event” means an initial public offering of equity interests in the Company
pursuant to an effective registration statement under the Securities Act of 1933, as amended,
involving the sale of an aggregate of [$50,000,000] or more of equity interests in the Company,
whether involving a primary offering or a combined primary and secondary offering, pursuant to
which such equity interests become listed on a U.S. national securities exchange or any national
securities association or any national exchange.



“Limited Partner” means any Person (including the Company) named as a Limited Partner
on Exhibit A attached hereto, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a Limited
Partner of the Partnership.


 


7









 





“Limited Partner Interest” means a Partnership Interest of a Limited Partner in the
Partnership representing a fractional part of the Partnership Interests of all Partners and
includes any and all benefits to which the holder of such a Partnership Interest may be entitled,
as provided in this Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units.




“Liquidating Event” has the meaning set forth in Section 13.1.A hereof.




“Liquidator” has the meaning set forth in Section 13.2.A hereof.



“Net Income” means, for any taxable period, the excess, if any, of the Partnership’s
items of income and gain for such taxable period over the Partnership’s items of loss and deduction
for such taxable period. The items included in the calculation of Net Income shall be determined
in accordance with federal income tax accounting principles, subject to the specific adjustments
provided for on Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special allocation rules in
Exhibit C, Net Income or the resulting Net Loss, whichever the case may be, shall be
recomputed without regard to such item.



“Net Loss” means, for any taxable period, the excess, if any, of the Partnership’s
items of loss and deduction for such taxable period over the Partnership’s items of income and gain
for such taxable period. The items included in the calculation of Net Loss shall be determined in
accordance with federal income tax accounting principles, subject to the specific adjustments
provided for on Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special allocation rules in
Exhibit C, Net Loss or the resulting Net Income, whichever the case may be, shall be
recomputed without regard to such item.




“Newly Issued Unit” has the meaning set forth in Section 5.1 hereof.




“New Securities” has the meaning set forth in Section 4.2.B hereof.



“Nonrecourse Built-in Gain” means, with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a Nonrecourse
Liability, the amount of any taxable gain that would be allocated to the Partners pursuant to
Section 2.B of Exhibit C if such properties were disposed of in a taxable transaction in
full satisfaction of such liabilities and for no other consideration.



“Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership taxable year shall be
determined in accordance with the rules of Regulations Section 1.704-2(c).



“Nonrecourse Liability” has the meaning set forth in Regulations
Section 1.752-1(a)(2).



“Notice of Redemption” means the Notice of Redemption substantially in the form of
Exhibit D to this Agreement.


 


8









 





“Partner” means a General Partner or a Limited Partner, and “Partners” means
the General Partner and the Limited Partners collectively.



“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt,
equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(3).



“Partner Nonrecourse Debt” has the meaning set forth in Regulations
Section 1.704-2(b)(4).



“Partner Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner
Nonrecourse Debt for a Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).



“Partnership Debt Securities” has the meaning set forth in Section 4.2.C of this
Agreement.



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



“Partnership Minimum Gain” has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or
decrease in a Partnership Minimum Gain, for a Partnership taxable year shall be determined in
accordance with the rules of Regulations Section 1.704-2(d).



“Partnership Record Date” means the record date established by the General Partner for
(i) the distribution of Available Cash with respect to Common Units pursuant to Section 5.1 hereof,
which record date shall, unless otherwise determined by the General Partner, be the same as the
record date established by the Company for a distribution to its common shareholders of some of all
of its portion of such distribution, or (ii) if applicable, determining the Partners entitled to
vote on or consent to any proposed action for which the consent or approval of the Partners is
sought pursuant to Section 14.2 hereof.



“Partnership Unit” or “Unit” means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2, 4.3 and 4.4 (and
includes any class or series of Preferred Units established after the date hereof). The number of
Partnership Units outstanding and (in the case of Common Units) the Percentage Interest in the
Partnership represented by such Partnership Units are set forth on Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The ownership of Partnership Units shall
be evidenced by such form of certificate for Units as the General Partner adopts from time to time
unless the General Partner determines that the Partnership Units shall be uncertificated
securities.


 


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“Partnership Year” means the fiscal year of the Partnership, which shall be the
calendar year.



“Percentage Interest” means, as to a Partner, its percentage interest as a Common
Unitholder determined by dividing the Common Units owned by such Partner by the total number of
Common Units then outstanding and as specified on Exhibit A attached hereto, as such
Exhibit may be amended from time to time.



“Person” means a natural person, corporation, partnership (whether general or
limited), limited liability company, trust, estate, unincorporated organization, association,
custodian, nominee or any other individual or entity in its own or any representative capacity.



“Preferred Unit” means a limited partnership interest (of any series), other than a
Common Unit, represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder and which is designated as a “Preferred Unit” (or as a particular class
or series of Preferred Units) herein and which has the rights, preferences and other privileges
designated herein (including by way of a Certificate of Designations) in respect of a Preferred
Unitholder. The allocation of Preferred Units among the Partners shall be set forth on Exhibit
A, as may be amended from time to time.



“Preferred Unitholder” means a Limited Partner that holds Preferred Units (of any
class or series).



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



“Qualified REIT Subsidiary” means any Subsidiary of the General Partner that is a
“qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.




“Redeeming Partner” has the meaning set forth in Section 8.6.A hereof.



“Redemption Amount” means either the Cash Amount or the REIT Shares Amount, as
determined by the Company, in its sole and absolute discretion. A Redeeming Partner shall have no
right, without the Company’s consent, which consent may be given or withheld in the Company’s sole
and absolute discretion, to receive the Redemption Amount in the form of the REIT Shares Amount.




“Redemption Right” has the meaning set forth in Section 8.6.A hereof.



“Regulations” means the Federal Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time (including any corresponding provisions of
succeeding regulations).



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



“REIT Share” means (i) a share of common stock of the Company or (ii) a common equity
security for which the Common Unitholders have the right to exchange their Common
Unit equivalent interests in the Surviving Partnership pursuant to an Extraordinary
Transaction permitted by Section 11.2B(2).


 


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“REIT Shares Amount” means a number of REIT Shares equal to the product of (x) the
number of Common Units offered for redemption by a Redeeming Partner multiplied by (y) the
Conversion Factor in effect on the date of receipt by the Partnership of a Notice of Redemption,
provided that, in the event the Company has previously issued to all holders of
REIT Shares rights, options, warrants or convertible or exchangeable securities entitling the
shareholders to subscribe for or purchase REIT Shares, or any other securities or property
(collectively, “Rights”), and the Rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include that number of Rights that were issuable to a holder
of the REIT Shares Amount or REIT Shares on the applicable record date relating to the issuance of
such Rights.



“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Partnership recognized for federal income tax purposes resulting from a sale,
exchange or other disposition of Contributed Property or Adjusted Property, to the extent such item
of gain or loss is not allocated pursuant to Section 2.B(1)(a) or 2.B(2)(a) of Exhibit C to
eliminate Book-Tax Disparities.




“Rights” has the meaning set forth in the definition of “REIT Shares Amount.”



“704(c) Value” of any Contributed Property means the fair market value of such
property or other consideration at the time of contribution, as determined by the General Partner
using such reasonable method of valuation as it may adopt. Subject to Exhibit B hereof,
the General Partner shall, in its sole and absolute discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate of the 704(c) Values of Contributed Properties
in a single or integrated transaction among the separate properties on a basis proportional to
their respective fair market values.



“Specified Redemption Date” means the tenth (10th) Business Day after receipt
by the Partnership (with a copy to the Company) of a Notice of Redemption; provided
that if the Company combines its outstanding REIT Shares, no Specified Redemption Date
shall occur after the record date of such combination of REIT Shares and prior to the effective
date of such combination.



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



“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to
the Partnership pursuant to Section 11.4 hereof.



“Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of transactions that, taken
together, result in the sale or other disposition of all or substantially all of the assets of the
Partnership.


 


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“Unrealized Gain” attributable to any item of Partnership property means, as of any
date of determination, the excess, if any, of (i) the fair market value of such property (as
determined under Exhibit B hereof) as of such date over (ii) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit B hereof) as of such date.



“Unrealized Loss” attributable to any item of Partnership property means, as of any
date of determination, the excess, if any, of (i) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B hereof) as of such date over (ii) the fair
market value of such property (as determined under Exhibit B hereof) as of such date.



“Valuation Date” means the date of receipt by the Partnership of a Notice of
Redemption or, if such date is not a Business Day, the first Business Day thereafter.



“Value” means, with respect to a REIT 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 Shares are listed or admitted to trading on any
national securities exchange or the NASDAQ National Market System, the closing price on such day as
reported by such national securities exchange or the NASDAQ National Market System, 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 Shares are not listed or admitted to trading on any national 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; (iii) if the REIT Shares are not listed or
admitted to trading on any national 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; or (iv) if
none of the conditions set forth in clauses (i), (ii), or (iii) is met then, unless the holder of
the REIT Shares or Units and the General Partner otherwise agree, with respect to a REIT Share per
Common Unit offered for redemption, the amount that a holder of one Common Unit would receive if
each of the assets of the Partnership were sold for its fair market value on the Specified
Redemption Date, the Partnership were to pay all of its outstanding liabilities, and the remaining
proceeds were to be distributed to the Partners in accordance with the terms of this Agreement.
Such Value shall be determined by the General Partner, acting in good faith and based upon a
commercially reasonable estimate of the amount that would be realized by the Partnership if each
asset of the Partnership (and each asset of each partnership, limited liability company, trust,
joint venture or other entity in which the Partnership owns a direct or indirect interest) were
sold to an unrelated purchaser in an arms’ length transaction where neither the purchaser nor the
seller were under any economic compulsion to enter into the transaction (without regard to any
discount in value as a result of the Partnership’s minority interest in any property or any
illiquidity of the Partnership’s interest in any property). In the event the REIT Shares Amount
includes Rights, 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, provided that the Value of any rights issued pursuant to a
“Shareholder Rights Plan” shall be
deemed to have no value unless a “triggering event” shall have occurred (i.e., if the
Rights issued pursuant thereto are no longer “attached” to the REIT Shares and are able to trade
independently).


 


12









 





ARTICLE 2 — ORGANIZATIONAL MATTERS





Section 2.1 Formation and Continuation



The Partnership was formed as a limited partnership organized pursuant to the provisions of
the Act by the filing of the Certificate of Limited Partnership with the Delaware Secretary of
State on May 26, 2004. Except as expressly provided herein to the contrary, 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 Name



The name of the Partnership is DiamondRock Hospitality Limited Partnership. The Partnership’s
business may be conducted under any other name or names deemed advisable by the General Partner,
including the name of the General Partner or any Affiliate thereof. The words “Limited
Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s
name where necessary for the purposes of complying with the laws of any jurisdiction that so
requires. The General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited Partners of such change
in the next regular communication to the Limited Partners.




Section 2.3 Registered Office and Agent; Principal Office



The address of the registered office of the Partnership in the State of Delaware and the name
and address of the registered agent for service of process on the Partnership in the State of
Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The principal business office of the Partnership shall be 10400
Fernwood Road, Bethesda, Maryland, 20817. The General Partner may from time to time designate in
its sole and absolute discretion another registered agent or another location for the registered
office or principal place of business, and shall provide the Limited Partners with notice of such
change promptly following its effective date. The Partnership may maintain offices at such other
place or places within or outside the State of Delaware as the General Partner deems advisable.




Section 2.4 Power of Attorney



A. Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner,
any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead to:




(1) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (a) all certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate of Limited Partnership and all
amendments or restatements thereof) that the General Partner or any Liquidator deems
appropriate or necessary to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the Limited Partners have
limited liability) in the State of Delaware and in all other jurisdictions in which the
Partnership



 


13









 






may or plans to conduct business or own property; (b) all instruments that the
General Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms; (c) all
conveyances and other instruments or documents that the General Partner or any Liquidator
deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner and (e) all certificates, documents and
other instruments relating to the determination of the rights, preferences and privileges of
Partnership Interests; and




(2) execute, swear to, seal, acknowledge and file all ballots, consents, approvals,
waivers, certificates and other instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner or any Liquidator,
to effectuate the terms or intent of this Agreement.



Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to
amend this Agreement except in accordance with Article 14 hereof or as may be otherwise expressly
provided for in this Agreement.



B. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, in recognition of the fact that each of the Partners will be relying upon the
power of the General Partner and any Liquidator to act as contemplated by this Agreement in any
filing or other action by it on behalf of the Partnership, and it shall survive and not be affected
by the subsequent Incapacity of any Limited Partner or Assignee or the transfer of all or any
portion of such Limited Partner’s or Assignee’s Partnership Units and shall extend to such Limited
Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney, and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power
of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or
any Liquidator, within fifteen (15) days after receipt of the General Partner’s or such
Liquidator’s request therefor, such further designation, powers of attorney and other instruments
as the General Partner or any Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Partnership.


 


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Section 2.5 Term



The term of the Partnership commenced on May 26, 2004 and shall continue until December 31,
2104, unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 or as
otherwise provided by law.



ARTICLE 3 — PURPOSE





Section 3.1 Purpose and Business



The purpose and nature of the business to be conducted by the Partnership is (i) to conduct
any business that may be lawfully conducted by a limited partnership organized pursuant to the Act;
provided, however, that such business shall be limited to and conducted in such a
manner as to permit the Company at all times to be qualified as a REIT, unless the Company is not
qualified or ceases to qualify as a REIT for any reason or reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint venture, limited liability
company or other similar arrangement to engage in any of the foregoing or to own interests in any
entity engaged, directly or indirectly, in any of the foregoing; and (iii) to do anything necessary
or incidental to the foregoing. In connection with the foregoing, and without limiting the
Company’s right, in its sole discretion, to cease qualifying as a REIT, the Partners acknowledge
that the Company’s status as a REIT inures to the benefit of all of the Partners and not solely the
General Partner or its Affiliates.




Section 3.2 Powers



The Partnership is empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest in other entities,
to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of
indebtedness whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own,
manage, improve and develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or omit to take, any action
which, in the judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the Company to achieve or maintain qualification as a REIT; (ii)
could subject the Company to any additional taxes under Section 857 or Section 4981 of the Code or
(iii) could violate any law or regulation of any governmental body or agency having jurisdiction
over the Company or its securities, unless any such action (or inaction) under the foregoing
clauses (i), (ii) or (iii) shall have been specifically consented to by the Company in writing.



ARTICLE 4 — CAPITAL CONTRIBUTIONS





Section 4.1 Capital Contributions of the Partners



A. The Partners shall make Capital Contributions to the Partnership, shall own Partnership
Units in the amounts set forth on Exhibit A, and have Percentage Interests as set forth on
Exhibit A, which number of Partnership Units and Percentage Interests shall be adjusted
from time to time on Exhibit A by the General Partner to the extent necessary to
accurately reflect the issuance of additional Partnership Units, the redemption of Partnership
Units, additional Capital Contributions and similar events having an effect on a Partner’s
Percentage Interest occurring after the date hereof in accordance with the terms of this Agreement.


 


15









 





B. A number of Common Units held by the General Partner equal to one percent (1%) of all
outstanding Common Units shall be deemed to be the General Partner Partnership Units and shall be
the General Partner Interest. All other Partnership Units held by the General Partner shall be
deemed to be Limited Partner Interests and shall be held by the General Partner in its capacity as
a Limited Partner in the Partnership.



C. To the extent the Partnership acquires any property (or an indirect interest therein) by
the merger of any other Person into the Partnership or with or into a Subsidiary of the Partnership
in a triangular merger, Persons who receive Partnership Interests in exchange for their interests
in the Person merging into the Partnership or with or into a Subsidiary of the Partnership shall
become Partners and shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement (or if not so provided, as determined by the General Partner in its
sole discretion) and as set forth on Exhibit A, as amended to reflect such deemed Capital
Contributions.



D. Except as provided in Sections 4.2, 4.3, 10.5, and 13.3, the Partners shall have no
obligation to make any additional Capital Contributions or loans to the Partnership.




Section 4.2 Future Issuances of Additional Partnership Interests



A. The General Partner is hereby authorized, in its sole and absolute discretion and without
the approval of the Limited Partners, to cause the Partnership from time to time to issue to the
Partners (including the General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of cash and other property to the Partnership)
additional Partnership Units or other Partnership Interests in one or more classes, or in one or
more series of any of such classes, with such designations, preferences, and relative,
participating, optional, or other special rights, powers and duties all as shall be determined by
the General Partner in its sole and absolute discretion subject to Delaware law, including, without
limitation, (i) rights, powers, and duties senior to one or more classes or series of Partnership
Interests and any other Common Units outstanding or thereafter issued; (ii) the rights to an
allocation of items of Partnership income, gain, loss, deduction, and credit to each such class or
series of Partnership Interests; (iii) the rights of each such class or series of Partnership
Interests to share in Partnership distributions; and (iv) the rights of each such class or series
of Partnership Interests upon dissolution and liquidation of the Partnership; provided
that no such additional Partnership Units or other Partnership Interests shall be issued to
the General Partner or the Company or any direct or indirect wholly-owned Subsidiary of the
Company, unless either (a)(1) the additional Partnership Interests are issued in connection with
the grant, award or issuance of REIT Shares or other equity interests in the Company, which REIT
Shares or other equity interests have designations, preferences and other rights such that the
economic interests attributable to such REIT Shares or other equity interests are substantially
identical to the designations, preferences and other rights of the additional Partnership Interests
issued to the General Partner or the Company or any direct or



 


16









 






indirect wholly-owned Subsidiary of the Company (as appropriate) in accordance with this Section 4.2.A, and (2) the Company shall,
directly or indirectly, make a Capital Contribution to the Partnership in an amount equal to any
net proceeds raised in connection with such issuance, (b) the additional Partnership Interests are
issued in exchange for property owned by the Company (or any direct or indirect wholly-owned
Subsidiary of the Company) with a fair market value, as determined by the General Partner, in good
faith, equal to the value of the Partnership Interests, or (c) the additional Partnership Interests
are issued to all Partners in proportion to their respective Percentage Interests. In addition,
the General Partner may acquire Partnership Units from other Partners pursuant to this Agreement.



B. From and after the date hereof, the Company shall not issue any additional REIT Shares
(other than REIT Shares issued pursuant to Section 8.6) or rights, options, warrants, or
convertible or exchangeable securities containing the right to subscribe for or purchase REIT
Shares (collectively “New Securities”) other than to all holders of REIT Shares unless (i)
the General Partner shall cause the Partnership to issue to the Company (directly or to the
Company’s wholly-owned Subsidiaries) 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 identical to those of the New
Securities and (ii) the Company directly or indirectly contributes to the Partnership the proceeds
from the issuance of such New Securities and from the exercise of rights contained in such New
Securities, provided, however, that the Company is allowed to issue New Securities
in connection with an acquisition of a property to be held directly by the Company (or through a
wholly-owned Subsidiary), but if and only if, such direct acquisition and issuance of New
Securities have been approved and determined to be in the best interests of the Company and the
Partnership by a majority of Independent Directors. Without limiting the foregoing, the Company is
expressly authorized to issue New Securities for no tangible value or for less than fair market
value, and the General Partner is expressly authorized to cause the Partnership to issue to the
Company corresponding Partnership Interests, so long as (a) the General Partner concludes in good
faith that such issuance is in the interests of the Company and the Partnership (for example, and
not by way of limitation, the issuance of REIT Shares and corresponding Units pursuant to an
employee stock purchase plan providing for employee grants or purchases of REIT Shares or employee
stock options that have an exercise price that is less than the fair market value of the REIT
Shares, either at the time of issuance or at the time of exercise) and (b) the Company contributes
all proceeds, if any, from such issuance and exercise to the Partnership.



C. In the event that the Company issues debt securities (“Company Debt Securities”),
the General Partner is hereby authorized (but is not required), in its sole and absolute discretion
and without the approval of the Limited Partners, to cause the Partnership to issue either debt
securities (“Partnership Debt Securities”) or Preferred Units to the General Partner or the
Company (or any wholly-owned Subsidiary of the Company) with substantially similar terms as the
Company Debt Securities, provided, however, that in the event that the Partnership
issues any such Partnership Debt Securities or Preferred Units, (a) the Company shall directly or
indirectly contribute to the Partnership the proceeds from the corresponding Company Debt
Securities and (b) any such Partnership Debt Securities shall contain such terms as the General
Partner determines are necessary or advisable for such Partnership Debt Securities to be treated as
“real estate assets” for purposes of Code Section 856(c)(4)(A).


 


17









 





D. In the event that the Partnership issues Partnership Interests pursuant to Section 4.2.A or
Section 4.2.C, the General Partner shall make such revisions to this Agreement (without any
requirement of receiving approval of the Limited Partners) including, but not limited to, the
revisions described in Section 5.4, Section 6.1 and Section 8.6 hereof, as it deems necessary to
reflect the issuance of such additional Partnership Interests and the special rights, powers, and
duties associated therewith.




Section 4.3 Contribution of Proceeds of Issuance of REIT Shares



In connection with any issuance of New Securities or Company Debt Securities as described in
Section 4.2, if the proceeds actually received by the Company 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 shall be deemed to have made a Capital Contribution
to the Partnership (directly or through wholly-owned Subsidiaries) in the amount equal to the sum
of the net proceeds of such issuance plus the amount of such underwriter’s discount and other
expenses paid by the Company (which discount and expense shall be treated as an expense for the
benefit of the Partnership for purposes of Section 7.4). In the case of employee acquisitions of
New Securities at a discount from fair market value or for no value in connection with a grant of
New Securities, the amount of such discount representing compensation to the employee, as
determined by the General Partner, shall be treated as an expense of the issuance of such New
Securities.




Section 4.4 Other Contribution Provisions



If any Partner is admitted to the Partnership and is given a positive Capital Account balance
in exchange for services rendered to the Partnership, such transaction shall be treated by the
Partnership as if the Partnership had compensated such Partner in cash, and such Partner had
contributed such cash to the capital of the Partnership.




Section 4.5 No Preemptive Rights



Except to the extent expressly granted by the Partnership pursuant to another agreement, no
Person shall have any preemptive, preferential or other similar right with respect to (i) Capital
Contributions or loans to the Partnership or (ii) the issuance or sale of any Partnership Units or
other Partnership Interests.




Section 4.6 No Interest on Capital



No Partner shall be entitled to interest on its Capital Contributions or its Capital Account.
Except as provided herein or by law, no Partner shall have any right to withdraw any part of its
Capital Account or to demand or receive the return of its Capital Contributions.


 


18









 





ARTICLE 5 — DISTRIBUTIONS





Section 5.1 Requirement and Characterization of Distributions



A. Subject to the rights and preferences of any outstanding class or series of Preferred Units
expressly provided for in an agreement (including a Certificate of Designations),
and except as provided in Section 5.1.B, the General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash, or such lesser amount as
the General Partner may in its sole and absolute discretion determine, generated by the Partnership
during such quarter or shorter period to the Common Unitholders who are Partners on the Partnership
Record Date with respect to such quarter or shorter period in accordance with their respective
Percentage Interests on such Partnership Record Date; provided that in no event may
a Partner receive a distribution of Available Cash with respect to a Common Unit if such Partner is
entitled to receive a distribution out of such Available Cash with respect to a REIT Share for
which such Common Unit has been exchanged or redeemed and such distribution shall instead be made
to the Company. The General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with the Company’s qualification as a REIT, to cause
the Partnership to distribute Available Cash (i) to permit the Company to satisfy the requirements
for qualifying as a REIT under the Code, including applicable shareholder distribution requirements
and (ii) except to the extent otherwise determined by the General Partner, to minimize any federal
income or excise tax liability of the Company. Unless otherwise expressly provided for herein or
in an agreement (including a Certificate of Designations) at the time a new class of Partnership
Interests is created in accordance with Article 4 hereof, no Partnership Interest shall be entitled
to a distribution in preference to any other Partnership Interest.



B. Notwithstanding the provisions of Section 5.1.A above or any other provision of this
Agreement, if for any quarter or shorter period with respect to which a distribution is to be made
(a “Distribution Period”), a “Newly Issued Unit” (as such term is defined below) is
outstanding on the Partnership Record Date for such Distribution Period, there shall not be
distributed in respect of such Newly Issued Unit the amount (the “Full Distribution
Amount”) that would otherwise be distributed in respect of such Newly Issued Unit in accordance
with Section 5.1.A. Rather, the General Partner shall cause to be distributed with respect to each
such Newly Issued Unit an amount equal to the Full Distribution Amount multiplied by a fraction,
the numerator of which equals the number of days such Newly Issued Unit has been outstanding during
the Distribution Period and the denominator of which equals the total number of days in such
Distribution Period. Any Available Cash not distributed to the holders of Units by operation of
this Section 5.1.B shall be retained by the Partnership and applied as the General Partner shall
determine. The General Partner may, in its sole discretion, with respect to any distribution,
waive the application of this Section 5.1.B such that a Newly Issued Unit shall receive the Full
Distribution Amount (or any greater amount than would otherwise be received under this Section
5.1.B but not in excess of the Full Distribution Amount). For purposes of this Section 5.1.B, the
term “Newly Issued Unit” shall mean, with respect to any Distribution Period, a Common Unit issued
during such Distribution Period, except that the term “Newly Issued Unit” shall not include (i) a
Common Unit issued to the Company as a result of the contribution by it of proceeds from the
issuance of New Securities (as contemplated by Sections 4.2 and 4.3) or (ii) (unless otherwise
provided by the General Partner) any Common Units issued in connection with a split on or unit
dividend of the Common Units.


 


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Section 5.2 Amounts Withheld



A. All amounts withheld pursuant to the Code or any provisions of any state or local tax law
and Section 10.5 hereof with respect to any allocation, payment or distribution to
the Partners or Assignees shall be treated as amounts distributed to the Partners or Assignees
pursuant to Section 5.1 for all purposes under this Agreement.



B. In the event that proceeds to the Partnership are reduced on account of taxes withheld at
the source or the Partnership incurs a tax liability and such taxes (or a portion thereof) are
imposed on or with respect to one or more, but not all, of the Partners in the Partnership or if
the rate of tax varies depending on the attributes of specific Partners or to whom the
corresponding income is allocated, the amount of the reduction in the Partnership’s net proceeds
shall be borne by and apportioned among the relevant Partners and treated as if it were paid by the
Partnership as a withholding obligation with respect to such Partners in accordance with such
apportionment.




Section 5.3 Distributions Upon Liquidation



Proceeds from a Terminating Capital Transaction and any other cash received or reductions in
reserves made after commencement of the liquidation of the Partnership shall be distributed to the
Partners in accordance with Section 13.2.




Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests



In the event that the Partnership issues additional Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article 4 hereof, the General Partner shall
make such revisions to this Article 5 as it deems necessary to reflect the issuance of such
additional Partnership Interests and any special rights, duties or powers with respect thereto.
Such revisions shall not require the consent or approval of any other Partner.



ARTICLE 6 — ALLOCATIONS





Section 6.1 Allocations For Capital Account Purposes



For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership’s items of income, gain, loss and deduction (computed in
accordance with Exhibit B hereof) shall be allocated among the Partners in each taxable
year (or portion thereof) as provided herein below.



A. After taking into account the provisions of Section 6.1.B below and subject to the special
allocations set forth in Section 1 of Exhibit C attached hereto, Net Income shall be
allocated:




(1) First, to the Partners in the same ratio and reverse order as Net Loss was
allocated to such Partners pursuant to Sections 6.1.B(2) and (3) for all fiscal years until
the aggregate amount allocated to such Partners pursuant to such provisions of Section 6.1.B
equals the aggregate amount allocated pursuant to this Section 6.1.A(1); and




(2) Thereafter, Net Income shall be allocated to the Partners in accordance with their
respective Percentage Interests.


 


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B. After giving effect to the special allocations set forth in Section 1 of Exhibit C
attached hereto, Net Losses shall be allocated to the Partners in the following order:




(1) First, in the same ratio and reverse order as Net Income was allocated to the
Partners pursuant to the provisions of Section 6.1.A(2) for all fiscal years until the
aggregate amount of Net Income previously allocated to such Partners pursuant to such
provisions of Section 6.1.A(2) equals the aggregate amount of Net Loss allocated to such
Partners pursuant to this Section 6.1.B(1);




(2) Second, to the Partners, in proportion to their Percentage Interests until each
Partner’s Adjusted Capital Account balance has been reduced to zero;




(3) Third, 100% to the General Partner.



C. The allocation provisions set forth in this Section 6.1 shall be adjusted as necessary to
give effect to the provisions of Section 5.2.B.



D. In the event that the Partnership issues additional Partnership Interests pursuant to
Article 4 hereof, the General Partner shall make such revisions to this Section 6.1 as it
determines are necessary to reflect the terms of the issuance of such additional Partnership
Interests, including making preferential allocations to certain classes of Partnership Interests.
Such revisions shall not require the consent or approval of any other Partner.



E. If any amounts are required to be deducted from, or are not included in, the Capital
Account of the Company (or any direct or indirect wholly-owned Subsidiary of the Company) pursuant
to Section 7.4.E, the General Partner may make such special allocations as it determines are
necessary or appropriate so that, to the maximum extent possible, the Capital Account of each
Partner equals the Capital Account it would have had if (i) the adjustments pursuant to Section
7.4.E had not been made and (ii) the expenses, fees or other costs giving rise to such adjustments
were properly treated for purposes of the Treasury Regulations under Code Section 704(b) as
expenses, fees or other costs of the Partnership.



ARTICLE 7 — MANAGEMENT AND OPERATIONS OF BUSINESS





Section 7.1 Management



A. Except as otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise control or management
power over the business and affairs of the Partnership. The General Partner may not be removed by
the Limited Partners with or without cause. In addition to the powers now or hereafter granted a
general partner of a limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3
hereof, shall have full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 hereof and
to effectuate the purposes set forth in Section 3.1 hereof (subject to the provisio in Section 3.2
hereof), including, without limitation:



(1) the making of any expenditures, the lending or borrowing of money (including,
without limitation, making prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in such amounts as will permit the Company
(so long as the Company qualifies as a REIT) to minimize the payment of any federal income
tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code and to
make distributions to its shareholders in amounts sufficient to permit the Company to
maintain REIT status), the assumption or guaranty of, or other contracting for, indebtedness
and other liabilities, the issuance of evidence of indebtedness (including the securing of
the same by deed, mortgage, deed of trust or other lien or encumbrance on the Partnership’s
assets) and the incurring of any other obligations it deems necessary for the conduct of the
activities of the Partnership;



 


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(2) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership, the registration of any class of securities of the Partnership under the
Securities Exchange Act of 1934, as amended, and the listing of any debt securities of the
Partnership on any exchange;




(3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership (including the exercise or grant of
any conversion, option, privilege, or subscription right or other right available in
connection with any assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity on such terms as the General
Partner deems proper (all of the foregoing subject to any prior approval only to the extent
required by Section 7.3 hereof);




(4) the use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement and on any terms the
General Partner deems proper, including, without limitation, the financing of the conduct of
the operations of the Company, the Partnership or any Subsidiary of the Company and/or the
Partnership, the lending of funds to other Persons (including, without limitation, the
Company or any Subsidiary of the Company and/or the Partnership) and the repayment of
obligations of the Partnership and its Subsidiaries and any other Person in which it has an
equity investment, and the making of capital contributions to any of its Subsidiaries;




(5) the management, operation, leasing, landscaping, repair, alteration, demolition or
improvement of any real property or improvements owned by the Partnership or any Subsidiary
of the Partnership or any Person in which the Partnership has made a direct or indirect
equity investment;




(6) the negotiation, execution, and performance of any contracts, conveyances or other
instruments that the General Partner considers useful or necessary to the conduct of the
Partnership’s operations or the implementation of the General Partner’s powers under this
Agreement, including contracting with contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other
agents and the payment of their expenses and compensation out of the Partnership’s
assets;


 


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(7) the distribution of Partnership cash or other Partnership assets in accordance with
this Agreement;




(8) the holding, managing, investing and reinvesting of cash and other assets of the
Partnership;




(9) the collection and receipt of revenues and income of the Partnership;




(10) the establishment of one or more divisions of the Partnership, the selection and
dismissal of employees of the Partnership (including, without limitation, employees having
titles such as “president,” “vice president,” “secretary” and “treasurer” of the
Partnership), and agents, outside attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation and other terms of employment or
hiring including waivers of conflicts of interest and the payment of their expenses and
compensation out of the Partnership’s assets;




(11) the maintenance of such insurance for the benefit of the Partnership, the Partners
and directors and officers thereof as it deems necessary or appropriate;




(12) the formation of, or acquisition of an interest in, and the contribution of
property to, any other corporations, limited or general partnerships, joint ventures or
other entities or 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 investment from time to time), provided
that, as long as the Company has determined to continue to qualify as a REIT, the
Partnership may not engage in any such formation, acquisition or contribution that would
cause the Company to fail to qualify as a REIT;




(13) the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to arbitration or any other
form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt
or damages, due or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitration or other forms of dispute
resolution, and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution, the incurring
of legal expense, and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;




(14) the undertaking of any action in connection with the Partnership’s direct or
indirect investment in its Subsidiaries or any other Person (including, without limitation,
the contribution or loan of funds by the Partnership to such Persons, incurring indebtedness
on behalf of, or guarantying the obligations of, any such Persons);


 


23









 






(15) the determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as the General Partner may adopt;




(16) the exercise, directly or indirectly, through any attorney-in-fact acting under a
general or limited power of attorney, of any right, including the right to vote, appurtenant
to any asset or investment held by the Partnership;




(17) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other
Person in which the Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;




(18) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of any Person in which the Partnership does not have an interest
pursuant to contractual or other arrangements with such Person;




(19) the making, execution and delivery of any and all deeds, leases, notes, mortgages,
deeds of trust, security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreements in writing necessary or
appropriate, in the judgment of the General Partner, for the accomplishment of any of the
powers of the General Partner enumerated in this Agreement;




(20) the maintenance of the Partnership’s books and records;




(21) the issuance of additional Partnership Units, as appropriate, in connection with
Capital Contributions by Additional Limited Partners and additional Capital Contributions by
Partners pursuant to Article 4 hereof;




(22) the distribution of cash to acquire Partnership Units held by a Limited Partner in
connection with a Limited Partner’s exercise of its Redemption Right under Section 8.6
hereof;




(23) 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, including but not limited to imposing restrictions on transfers
and restrictions on redemptions; and




(24) to take such other action, execute, acknowledge, swear to or deliver such other
documents and instruments, and perform any and all other acts that 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
allowing the Company at all times to qualify as a REIT unless the Company voluntarily
terminates its REIT status) and to possess and enjoy all the rights and powers of a general
partner as provided by the Act.


 


24









 





B. 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 provision of this Agreement (except as provided in Section 7.3), 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.



C. At all times from and after the date hereof, the General Partner may cause the Partnership
to establish and maintain at any and all times working capital accounts and other cash or similar
balances in such amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time, including upon liquidation of the Partnership under
Article 13.



D. At all times from and after the date hereof, the General Partner may cause the Partnership
to obtain and maintain (i) casualty, liability and other insurance on the properties of the
Partnership, (ii) liability insurance for the Indemnities hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be necessary.



E. In exercising its authority under this Agreement, the General Partner may, but shall be
under no obligation to, take into account the tax consequences to any Partner of any action taken
by it. The General Partner and the Partnership shall not have liability to a Limited Partner under
any circumstances, as a result of an income tax liability incurred by such Limited Partner as a
result of an action (or inaction) by the General Partner pursuant to its authority under this
Agreement.




Section 7.2 Certificate of Limited Partnership



The General Partner has previously filed the Certificate of Limited Partnership with the
Secretary of State of the State of Delaware as required by the Act. To the extent that such action
is determined by the General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do
all of the things to maintain the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) under the laws of the State of Delaware and each other
state, or the District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5.A(4) hereof, the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate of Limited
Partnership or any amendment thereto to any Limited Partner. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as may be reasonable
and necessary or appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited liability) in the
State of Delaware and any other state, or the District of Columbia, in which the Partnership may
elect to do business or own property.


 


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Section 7.3 Restrictions on General Partner Authority



A. The General Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement without the written Consent of Limited Partners holding a majority of
the Common Units of the Limited Partners (including Limited Partner Units held by the Company or
its Affiliates), or such other percentage of the Limited Partners as may be specifically provided
for under a provision of this Agreement.



B. Except as provided in Article 13, the General Partner may not directly or indirectly, cause
the Partnership to sell, exchange, transfer or otherwise dispose of all or substantially all of the
Partnership’s assets in a single transaction or a series of related transactions (including by way
of merger (including a triangular merger), consolidation or other combination with any other
Persons except (i) if such merger, sale or other transaction is in connection with an Extraordinary
Transaction permitted under Section 11.2.B hereof or (ii) with the Consent of the Limited Partners
holding a majority of the Common Units of the Limited Partners (excluding Limited Partner Units
held by the Company or its Affiliates).




Section 7.4 Reimbursement of the General Partner and the Company; DRIPs and Repurchase
Programs



A. Except as provided in this Section 7.4 and elsewhere in this Agreement (including the
provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may
be entitled), the General Partner shall not be compensated for its services as the General Partner
of the Partnership.



B. The Partnership shall be responsible for and shall pay all expenses relating to the
Partnership’s organization, the ownership of its assets and its operations. The General Partner
shall be reimbursed on a monthly basis, or such other basis as it may determine in its sole and
absolute discretion, for all expenses that it incurs relating to the ownership and operation of, or
for the benefit of, the Partnership (including, without limitation, (i) expenses relating to the
operation of the Company and to the management and administration of any Subsidiary of the Company,
the Partnership or Affiliates of the Partnership, such as auditing expenses and filing fees, (ii)
compensation of the Company’s officers and employees including, without limitation, payments under
the Company’s employee benefit plans that provide for stock units, or other phantom stock, pursuant
to which employees of the General Partner will receive payments based upon dividends on or the
value of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses of being a
public company, including costs of filings with the Securities and Exchange Commission, reports and
other distributions to its shareholders); provided that the amount of any such reimbursement shall
be reduced by any interest earned by the General Partner with respect to bank accounts or other
instruments or accounts held by it on behalf of the Partnership. The Partners acknowledge that all
such expenses of the General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of indemnification
pursuant to Section 7.7 hereof.


 


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C. In the event that the Company shall elect to purchase from its shareholders REIT Shares in
connection with a share repurchase or similar program or for the purpose of delivering such REIT
Shares to satisfy an obligation under any dividend reinvestment program
or equity purchase plan adopted by the Company, any employee stock purchase plan adopted by
the Company, or any similar obligation or arrangement undertaken by the Company in the future or
for the purpose of retiring such REIT Shares, the purchase price paid by the Company for such REIT
Shares and any other expenses incurred by the Company in connection with such purchase shall be
considered expenses of the Partnership and shall be advanced to the Company or reimbursed to the
Company, subject to the conditions that: (i) if such REIT Shares subsequently are sold by the
Company, the Company shall pay to the Partnership any proceeds received by the Company for such
REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any
dividend reinvestment or similar program, provided that a transfer of REIT Shares for Partnership
Units pursuant to Section 8.6 would not be considered a sale for such purposes) and (ii) if such
REIT Shares are not retransferred by the Company within thirty (30) days after the purchase
thereof, or the Company otherwise determines not to retransfer such REIT Shares, the Company, as
General Partner, shall cause the Partnership to redeem a number of Common Units held by the
Company, as a Limited Partner, equal to the quotient obtained by dividing the number of such REIT
Shares by the Conversion Factor (in which case such advancement or reimbursement of Partnership
expenses shall be treated as having been made as a distribution in redemption of such number of
Units held by the Company).



D. Subject to Section 7.4.E, if and to the extent any reimbursement made pursuant to this
Section 7.4 is determined for federal income tax purposes not to constitute a payment of expenses
to the Partnership, the amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners and shall not be treated as a distribution for purposes of
computing the Partners’ Capital Accounts.



E. Notwithstanding any provision in this Agreement to the contrary, if the Partnership pays or
reimburses (directly or indirectly, including by reason of giving the General Partner or the
Company or any direct or indirect wholly-owned Subsidiary of the Company Capital Account credit in
excess of actual Capital Contributions made by the General Partner or the Company or any direct or
indirect wholly-owned Subsidiary of the Company) fees, expenses or other costs pursuant to Section
7.4.B, Section 7.7 and/or Section 4.3, and if failure to treat such payment or reimbursement as a
distribution to the General Partner, the Company or any wholly-owned Subsidiary of the Company (as
appropriate) would cause the Company to recognize income that is not described in Code Section
856(c)(3) in excess of 5% of the Company’s gross income (excluding net income from prohibited
transactions within the meaning of Code Section 857(b)(6)) or would otherwise cause the Company to
fail to qualify as a REIT, then such payment or reimbursement (or portion thereof) shall be treated
as a distribution to the General Partner, the Company or direct or indirect wholly-owned Subsidiary
of the Company (as appropriate) for purposes of this Agreement. The Capital Account of the General
Partner, the Company or any direct or indirect wholly-owned Subsidiary of the Company (as
appropriate) shall be reduced by such direct or indirect payment or reimbursement (or a portion
thereof) in the same manner as an actual distribution to the General Partner, the Company, or any
direct or indirect wholly-owned Subsidiary of the Company (as appropriate). To the extent treated
as distributions, such fees, expenses or other costs shall not be taken into account as Partnership
fees, expenses or costs for the purposes of this Agreement. This 7.4.E, in conjunction with
Section 6.1.E, is intended to prevent direct or indirect reimbursements or payments under Section
7.4.B and/or Section 4.3 from giving rise to a violation of the Company’s REIT requirements
while at the same time preserving to the extent possible the parties’ intended economic
arrangement and shall be interpreted and applied consistent with such intent.


 


27









 






Section 7.5 Outside Activities of the General Partner



The General Partner shall not directly or indirectly enter into or conduct any business other
than in connection with the ownership, acquisition and disposition of Partnership Interests and the
management of the business of the Partnership, and such activities as are incidental thereto. The
General Partner and any Affiliates of the General Partner may acquire Limited Partner Interests and
shall be entitled to exercise all rights of a Limited Partner relating to such Limited Partner
Interests.




Section 7.6 Contracts with Affiliates



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



B. Except as provided in Section 7.5, 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 consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion, believes are advisable.



C. Except as expressly permitted by this Agreement, neither the General Partner nor any of its
Affiliates shall sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are determined by the
General Partner in good faith to be fair and reasonable.



D. The General Partner, in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt, on behalf of the Partnership, employee benefit plans,
stock option plans, and similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, any Subsidiary of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the Partnership, the
General Partner, or any Subsidiary of the Partnership.



E. The General Partner is expressly authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement and other conflict avoidance agreements with
various Affiliates of the Partnership and the General Partner, on such terms as the General
Partner, in its sole and absolute discretion, believes are advisable.


 


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Section 7.7 Indemnification



A. To the fullest extent permitted by Delaware law, the Partnership shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other 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 or the Company as set forth in this Agreement, in which
such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless
it is established that: (i) the act or omission of the Indemnitee was material to the matter giving
rise to the proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty
(except a guaranty by a Limited Partner of nonrecourse indebtedness of the Partnership or as
otherwise provided in any such loan guaranty) or otherwise for any indebtedness of the Partnership
or any Subsidiary of the Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more
indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. 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 7.7.A. The termination of any
proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, creates a
rebuttable presumption that such Indemnitee acted in a manner contrary to that specified in this
Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the General Partner nor any Limited Partner shall have any
obligation to contribute to the capital of the Partnership, or otherwise provide funds, to enable
the Partnership to fund its obligations under this Section 7.7.



B. Reasonable expenses incurred by an Indemnitee or expected to be incurred by an Indemnitee
shall be paid or reimbursed by the Partnership in advance of the final disposition of any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative
made or threatened against an Indemnitee 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 Section 7.7.A 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.



C. The indemnification provided by this Section 7.7 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 unless otherwise provided in a written agreement pursuant to
which such Indemnitee is indemnified.



D. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership’s activities, regardless of whether the Partnership
would have the power to indemnify such Person against such liability under the provisions of
this Agreement.


 


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E. For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of
Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by it to be in the interest
of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.



F. In no event may an Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.



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



H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their employees,
officers, directors, trustees, heirs, successors, assigns and administrators and shall not be
deemed to create any rights for the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any
way affect the Partnership’s liability to any Indemnitee under this Section 7.7, as in effect
immediately prior to such amendment, modification, or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.



I. Subject to Section 7.4.E, if and to the extent any payments to the General Partner pursuant
to this section 7.7 constitute gross income to the General Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the
Partnership and all Partners and shall not be treated as distributions for purposes of computing
the Partners’ Capital Accounts.




Section 7.8 Liability of the General Partner



A. Notwithstanding anything to the contrary set forth in this Agreement, none of the General
Partner, the Company, nor any of their directors, officers, agents or employees shall be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses sustained or
liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact
or law or of any act or omission unless the General Partner acted in bad faith and the act or
omission was material to the matter giving rise to the loss, liability or benefit not derived.


 


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B. The Limited Partners expressly acknowledge that, the General Partner is acting on behalf of
the Partnership and the shareholders of the Company collectively, that the General Partner is under
no obligation to consider the separate interests of the Limited Partners in deciding whether to
cause the Partnership to take (or decline to take) any actions (including, as stated in Section
7.1.E, the tax consequences to the Limited Partners or Assignees), and that the General Partner
shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits
not derived by Limited Partners in connection with such decisions, provided that the General
Partner has acted in good faith.



C. Subject to its obligations and duties as General Partner set forth in Section 7.1.A hereof,
the General Partner may exercise any of the powers granted to it by this Agreement and perform any
of the duties imposed upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.



D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the General Partner’s and its
officers’ and directors’ liability to the Partnership and the Limited Partners under this Section
7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.




Section 7.9 Other Matters Concerning the General Partner



A. The General Partner may rely and shall be protected in acting, or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it in good faith to be genuine and
to have been signed or presented by the proper party or parties.



B. The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers, architects, engineers, environmental consultants and other
consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon
the opinion of such Persons as to matters which such General Partner reasonably believes to be
within such Person’s professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.



C. The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and duly appointed
attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.



D. Notwithstanding any other provisions of this Agreement or the Act, any action of the
General Partner on behalf of the Partnership or any decision of the General Partner to refrain from
acting on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect the ability of the
Company to continue to qualify as a REIT, or (ii) to minimize taxes incurred by the Company 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.


 


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Section 7.10 Title to Partnership Assets



Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares and warrants that
any Partnership assets for which legal title is held in the name of the General Partner or any
nominee or Affiliate of the General Partner shall be held by the General Partner or such nominee or
Affiliate for the use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best efforts
to cause beneficial and record title to such assets to be vested in the Partnership as soon as
reasonably practicable if failure to so vest such title would have a material adverse effect on the
Partnership. All Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such Partnership assets is
held.




Section 7.11 Reliance by Third Parties



Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power and authority,
without consent or approval of any other Partner or Person, to encumber, sell or otherwise use in
any manner any and all assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such Person shall be
entitled to deal with the General Partner as if the General Partner were the Partnership’s sole
party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing. In no event shall
any Person dealing with the General Partner or its representatives be obligated to ascertain that
the terms of this Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of such certificate,
document or instrument, this Agreement was in full force and effect; (ii) the Person executing and
delivering such certificate, document or instrument was duly authorized and empowered to do so for
and on behalf of the Partnership and (iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.


 


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ARTICLE 8 — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS





Section 8.1 Limitation of Liability



The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement, including Section 10.5 hereof, or under the Act.




Section 8.2 Management of Business



No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the operation, management or
control (within the meaning of the Act) of the Partnership’s business, transact any business in the
Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.




Section 8.3 Outside Activities of Limited Partners



Subject to any agreements entered into pursuant to Section 7.6.E hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the Partnership or any of its
Subsidiaries, any Limited Partner (other than the Company) and any officer, director, employee,
agent, trustee, Affiliate or shareholder of any Limited 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 that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor
any Partners shall have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee. None of the Limited Partners (other than the Company) nor any other
Person shall have any rights by virtue of this Agreement or the Partnership relationship
established hereby in any business ventures of any other Person and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person.




Section 8.4 Return of Capital



Except pursuant to the Redemption Right set forth in Section 8.6, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the Partnership as provided
herein. Except to the extent provided by Exhibit C hereof or as otherwise expressly
provided in this Agreement, or any Certificate of Designations, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.


 


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Section 8.5 Rights of Limited Partners Relating to the Partnership



A. In addition to the other rights provided by this Agreement or by the Act, and except as
limited by Section 8.5.C hereof, each Limited Partner shall have the right, for a business purpose
reasonably related to such Limited Partner’s interest as a limited partner in the Partnership, upon
written demand with a statement of the purpose of such demand and at such Limited Partner’s own
expense (including such copying and administrative charges as the General Partner may establish
from time to time):




(1) to obtain a copy of the most recent annual and quarterly reports filed with the
Securities and Exchange Commission by the Company pursuant to the Securities Exchange Act of
1934, as amended;




(2) to obtain a copy of the Partnership’s federal, state and local income tax returns
for each Partnership Year;




(3) to obtain a current list of the name and last known business, residence or mailing
address of each Partner;




(4) to obtain a copy of this Agreement and the Certificate of Limited Partnership and
all amendments thereto, together with executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all amendments thereto have
been executed; and




(5) to obtain true and full information regarding the amount of cash and a description
and statement of any other property or services contributed by each Partner and which each
Partner has agreed to contribute in the future, and the date on which each became a Partner.



B. The Partnership shall notify each Limited Partner, upon request, of the then current
Conversion Factor and the REIT Shares Amount per Common Unit and, with reasonable detail, how the
same was determined.



C. Notwithstanding any other provision of this Section 8.5, the General Partner may keep
confidential from the Limited Partners, for such period of time as the General Partner determines
in its sole and absolute discretion to be reasonable, any information that (i) the General Partner
reasonably 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 interests of the Partnership or
could damage the Partnership or its business or (ii) the Partnership is required by law or by
agreements with an unaffiliated third party to keep confidential.




Section 8.6 Redemption Right



A. Subject to Sections 8.6.B and 8.6.C hereof and the provisions of any agreements between the
Partnership and one or more Limited Partners, at any time following an IPO Event and after the
first anniversary date of the issuance of a Partnership Unit to a Limited Partner pursuant to
Article 4 hereof (or such other date as may be mutually agreed upon by the General Partner and a
Limited Partner), each Limited Partner (other than the Company or its
wholly-owned Subsidiaries) shall have the right (the “Redemption Right”) to require
the Partnership to redeem on a Specified Redemption Date all or a portion of the Common Units held
by such Limited Partner at a redemption price per Common Unit equal to and in the form of the Cash
Amount to be paid by the Partnership. The Redemption Right shall be exercised pursuant to a Notice
of Redemption delivered to the Partnership (with a copy to the Company) by the Limited Partner who
is exercising the Redemption Right (the “Redeeming Partner”); provided,



 


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however, that the Partnership shall not be obligated to satisfy such Redemption Right if
the Company elects to purchase the Common Units subject to the Notice of Redemption pursuant to
Section 8.6.B. A Limited Partner may not exercise the Redemption Right for less than one thousand
(1,000) Common Units or, if such Limited Partner holds less than one thousand (1,000) Common Units,
all of the Common Units held by such Partner. The Redeeming Partner shall have no right, with
respect to any Common Units so redeemed, to receive any distributions paid on or after the
Specified Redemption Date. The Assignee of any Limited Partner may exercise the rights of such
Limited Partner pursuant to this Section 8.6, and such Limited Partner shall be deemed to have
assigned such rights to such Assignee and shall be bound by the exercise of such rights by such
Assignee. In connection with any exercise of such rights by an Assignee on behalf of a Limited
Partner, the Cash Amount shall be paid by the Partnership directly to such Assignee and not to such
Limited Partner.



B. Notwithstanding the provisions of Section 8.6.A, upon an election by a Limited Partner to
exercise the Redemption Right, the Company may, in its sole and absolute discretion (subject to the
limitations on ownership and transfer of REIT Shares set forth in the Articles of Incorporation of
the Company), elect to assume directly and satisfy a Redemption Right by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as the Company determines in its sole and
absolute discretion whereupon the Company shall acquire the Common Units offered for redemption by
the Redeeming Partner and shall be treated for all purposes of this Agreement as the owner of such
Common Units. If the Company shall elect to exercise its right to purchase Common Units under this
Section 8.6.B with respect to a Notice of Redemption, it shall so notify the Redeeming Partner
within five (5) Business Days after the receipt by it of such Notice of Redemption. Unless the
Company shall exercise its right to purchase Common Units from the Redeeming Partner pursuant to
this Section 8.6.B, the Company shall not have any obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner’s exercise of the Redemption Right. In the event
the Company shall exercise its right to purchase Common Units with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this Section 8.6.B, the
Partnership shall have no obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner’s exercise of such 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 Units to the
Company. Each Redeeming Partner agrees to execute such documents as the Company may reasonably
require in connection with the issuance of REIT Shares upon exercise of the Redemption Right.



C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a Partner shall not be
entitled to exercise the Redemption Right pursuant to Section 8.6.A if the delivery of REIT Shares
to such Partner on the Specified Redemption Date by the Company pursuant to Section 8.6.B
(regardless of whether or not the Company would in fact exercise its
rights under Section 8.6.B) would be prohibited under the Articles of Incorporation of the
Company or prohibited under applicable federal or state securities laws or regulations.


 


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D. If, pursuant to Section 8.6.B, the Company elects to pay the Redeeming Partner the
Redemption Amount in the form of REIT Shares, the total number of REIT Shares to be paid to the
Redeeming Partner in exchange for the Redeeming Partner’s Common Units shall be the applicable REIT
Shares Amount. If this amount is not a whole number of REIT Shares, the Redeeming Partner shall be
paid (i) that number of REIT Shares which equals the nearest whole number less than such amount
plus (ii) an amount of cash which the Company determines, in its reasonable discretion, to
represent the fair value of the remaining fractional REIT Share which would otherwise be payable to
the Redeeming Partner.



E. All Common Units delivered for redemption shall be delivered to the Partnership or the
Company, as the case may be, free and clear of all liens and encumbrances, and notwithstanding
anything contained herein to the contrary, neither the General Partner nor the Partnership shall be
under any obligation to acquire Common Units which are or may be subject to liens. If any state or
local property transfer tax is payable as a result of the transfer of Common Units to the
Partnership or the General Partner pursuant to the Redemption Right, the Redeeming Partner shall
assume and pay such transfer tax.



F. In the event that the Partnership issues additional Partnership Interests pursuant to
Section 4.2.A hereof, the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such additional Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption Right with respect to
such Partnership Interests).



ARTICLE 9 — BOOKS, RECORDS, ACCOUNTING AND REPORTS





Section 9.1 Records and Accounting



The General Partner shall keep or cause to be kept at the principal office of the Partnership
those records and documents required to be maintained by the Act and other books and records deemed
by the General Partner to be appropriate with respect to the Partnership’s business, including,
without limitation, all books and records necessary to provide to the Limited Partners any
information, lists and copies of documents required to be provided pursuant to Section 9.3 hereof.
Any records maintained by or on behalf of the Partnership in the regular course of its business may
be kept on, or be in the form of, punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of time. The books of the
Partnership shall be maintained for financial reporting purposes in accordance with generally
accepted accounting principles or such other basis as the General Partner determines to be
necessary or appropriate. Sufficient records shall be maintained to adjust the financial reporting
books to report taxable income to taxing authorities.


 


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Section 9.2 Taxable Year and Fiscal Year



The taxable year of the Partnership shall be the shall be the calendar year unless otherwise
required by the Code. The fiscal year of the Partnership shall be the same as its taxable year.




Section 9.3 Reports



A. As soon as practicable, but in no event later than the date on which the Company mails its
annual report to its shareholders, the General Partner shall cause to be mailed to each Limited
Partner, as of the close of the Partnership Year, an annual report containing financial statements
of the Partnership, or of the Company if such statements are prepared solely on a consolidated
basis with the Company, for such Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a nationally recognized firm of independent
public accountants selected by the General Partner.



B. As soon as practicable, the General Partner shall cause to be mailed to each Limited
Partner, a report containing unaudited financial statements of the Partnership, or of the Company,
if such statements are prepared solely on a consolidated basis with the Company, and such other
information as may be required by applicable law or regulation, or as the General Partner
determines to be appropriate.



ARTICLE 10 — TAX MATTERS





Section 10.1 Preparation of Tax Returns



The General Partner shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use reasonable efforts to furnish, within ninety
(90) days of the close of each Partnership Year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.




Section 10.2 Tax Elections



Except as otherwise provided herein, the General Partner shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to the Code. The General
Partner shall have the right to seek to revoke any tax election it makes upon the General Partner’s
determination, in its sole and absolute discretion, that such revocation is in the best interests
of the Partners.




Section 10.3 Tax Matters Partner



A. The General Partner shall be the “tax matters partner” of the Partnership for federal
income tax purposes. Pursuant to Section 6230(e) of the Code, upon receipt of notice from the IRS
of the beginning of an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification number, and profit
interest of each of the Limited Partners and the Assignees; provided,
however, that such information is provided to the Partnership by the Limited Partners and the
Assignees.


 


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B. The tax matters partner is authorized, but not required:




(1) to enter into any settlement with the IRS with respect to any administrative or
judicial proceedings for the adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such administrative proceedings being referred
to as a “tax audit” and such judicial proceedings being referred to as “judicial
review”), and in the settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such settlement agreement shall not
bind any Partner (a) who (within the time prescribed pursuant to the Code and Regulations)
files a statement with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner; or (b) who is a
“notice partner” (as defined in Section 6231(a)(8) of the Code) or a member of a “notice
group” (as defined in Section 6223(b)(2) of the Code);




(2) in the event that a notice of a final administrative adjustment at the Partnership
level of any item required to be taken into account by a Partner for tax purposes (a
“final adjustment”) is mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for readjustment with the Tax
Court or the filing of a complaint for refund with the United States Claims Court or the
District Court of the United States for the district in which the Partnership’s principal
place of business is located;




(3) to intervene in any action brought by any other Partner for judicial review of a
final adjustment;




(4) to file a request for an administrative adjustment with the IRS and, if any part of
such request is not allowed by the IRS, to file an appropriate pleading (petition or
complaint) for judicial review with respect to such request;




(5) to enter into an agreement with the IRS to extend the period for assessing any tax
which is attributable to any item required to be taken account of by a Partner for tax
purposes, or an item affected by such item; and




(6) to take any other action on behalf of the Partners or the Partnership in connection
with any tax audit or judicial review proceeding to the extent permitted by applicable law
or regulations.



The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in the sole
and absolute discretion of the tax matters partner and the provisions relating to indemnification
of the General Partner set forth in Section 7.7 of this Agreement shall be fully applicable to the
tax matters partner in its capacity as such.


 


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C. The tax matters partner shall receive no compensation for its services. All third-party
costs and expenses incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting or law firm to assist the tax
matters partner in discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.




Section 10.4 Organizational Expenses



The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the
Partnership ratably over a sixty (60) month period as provided in Section 709 of the Code.




Section 10.5 Withholding



Each Limited Partner hereby authorizes the Partnership to withhold from, or pay on behalf of
or with respect to, such Limited Partner any amount of federal, state, local, or foreign taxes that
the General Partner determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any amount paid on behalf of or with
respect to a Limited Partner shall constitute a loan by the Partnership to such Limited Partner,
which loan shall be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership withholds such payment
from a distribution which would otherwise be made to the Limited Partner, (ii) the General Partner
determines, in its sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be distributed to the Limited
Partner or (iii) treatment as a loan would jeopardize the Company’s status as a REIT (in which case
the payment shall be satisfied out of future distributions to the Limited Partner). Any amounts
withheld pursuant to the foregoing clauses (i), (ii) or (iii) shall be treated as having been
distributed to such Limited Partner. Each Limited Partner hereby unconditionally and irrevocably
grants to the Partnership a security interest in such Limited Partner’s Partnership Interest to
secure such Limited Partner’s obligation to pay to the Partnership any amounts required to be paid
pursuant to this Section 10.5. In the event that a Limited Partner fails to pay any amounts owed
to the Partnership pursuant to this Section 10.5 when due, the General Partner may, in its sole and
absolute discretion, elect to make the payment to the Partnership on behalf of such defaulting
Limited Partner, and in such event shall be deemed to have loaned such amount to such defaulting
Limited Partner and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. Without limitation, in such event the General Partner shall have the
right to receive distributions that would otherwise be distributable to such defaulting Limited
Partner until such time as such loan, together with all interest thereon, has been paid in full,
and any such distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the defaulting Limited
Partner to the General Partner in repayment of such loan. Any amounts payable by a Limited Partner
hereunder shall bear interest at the lesser of (A) the base rate on corporate loans at large United
States money center commercial banks, as published from time to time in The Wall Street
Journal, plus four (4) percentage points, or (B) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date
such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in
full. Each Limited Partner shall take such actions as the Partnership or the General Partner shall
request in order to (i) perfect or enforce the security interest created hereunder and (ii) cause
any loan arising hereunder to be treated as a real estate asset for purposes of Section
856(c)(4)(A) of the Code.


 


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ARTICLE 11 — TRANSFERS AND WITHDRAWALS





Section 11.1 Transfer



A. The term “transfer,” when used in this Article 11 with respect to a Partnership Unit, shall
be deemed to refer to a transaction by which the General Partner purports to assign all or any part
of its General Partner Interest to another Person or by which a Limited Partner purports to assign
all or any part of its Limited Partner Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by operation
of law or otherwise. The term “transfer” when used in this Article 11 does not include any
redemption of Partnership Interests by the Partnership from a Limited Partner or any acquisition of
Partnership Units from a Limited Partner by the Company pursuant to Section 8.6. No part of the
interest of a Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or
encumbered except as may be specifically provided for in this Agreement or consented to in writing
by the General Partner.



B. No Partnership Interest may be transferred, in whole or in part, except in accordance with
the terms and conditions set forth in this Article 11. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article 11 shall be null and void.




Section 11.2 Transfer of the Company’s General Partner Interest and Limited Partner
Interest; Extraordinary Transactions



A. The General Partner may not transfer any of its General Partner Interest or withdraw as
General Partner, and the Company may not, directly or through its wholly-owned Subsidiaries,
transfer any of its Limited Partner Interest or engage in an Extraordinary Transaction, except, in
any such case, (i) if such Extraordinary Transaction, or such withdrawal or transfer, is pursuant
to an Extraordinary Transaction that is permitted under Section 11.2.B, (ii) if Limited Partners
holding a majority of the Common Units of the Limited Partners (excluding Limited Partner Units
held by the Company or its Affiliates) Consent to such withdrawal or transfer or Extraordinary
Transaction or (iii) if such transfer is to an entity that is wholly-owned by the Company (directly
or indirectly) and is a Qualified REIT Subsidiary under Section 856(i) of the Code or disregarded
as an entity separate from the Company for federal income tax purposes.


 


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B. The General Partner and the Company are permitted to engage (and cause the Partnership to
participate) in the following transactions without the approval or vote of the Limited Partners:




(1) an Extraordinary Transaction in connection with which all Limited Partners either
will receive, or will have the right to elect to receive, for each Common Unit an amount of
cash, securities, or other property at least as equal in value to the product of (x) the
REIT Shares Amount multiplied by (y) the greatest amount of cash, securities or other
property paid to a holder of one REIT Share in consideration of one such REIT Share pursuant
to the terms of the Extraordinary Transaction during the period from and after the date on
which the Extraordinary Transaction is consummated; provided that, if, in
connection with the Extraordinary Transaction, a purchase, tender or exchange offer shall
have been made to and accepted by the holders of the outstanding REIT Shares, each holder of
Common Units shall receive, or shall have the right to elect to receive, the greatest amount
of cash, securities, or other property which such holder would have received had it
exercised its Redemption Right (as set forth in Section 8.6) and received REIT Shares in
exchange for its Common Units immediately prior to the expiration of such purchase, tender
or exchange offer and had thereupon accepted such purchase, tender or exchange offer and
then such Extraordinary Transaction shall have been consummated; and




(2) an Extraordinary Transaction if: (a) immediately after such Extraordinary
Transaction, substantially all of the assets directly or indirectly owned by the surviving
entity, other than Common Units held by the General Partner, are owned directly or
indirectly by the Partnership or another limited partnership or limited liability company
which is the survivor of a merger, consolidation or combination of assets with the
Partnership (in each case, the “Surviving Partnership”); (b) the rights, preferences
and privileges of the Common Unitholders in the Surviving Partnership are at least as
favorable as those in effect immediately prior to the consummation of such transaction and
as those applicable to any other limited partners or non-managing members of the Surviving
Partnership (who have, in either case, the rights of a “common” equity holder); and (c) such
rights of the Common Unitholders include the right to exchange their Common Unit equivalent
interests in the Surviving Partnership for at least one of: (x) the consideration available
to such Common Unitholders pursuant to Section 11.2.B(1) or (y) if the ultimate controlling
person of the Surviving Partnership has publicly traded common equity securities, such
common equity securities, with an exchange ratio based on the relative fair market value of
such securities (as determined pursuant to Section 11.2.C) and the REIT Shares.



C. In connection with any transaction permitted by Section 11.2.B, the relative fair market
values shall be reasonably determined by the General Partner as of the time of such transaction
and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative
values reflected in the terms of such transaction.




Section 11.3 Limited Partners’ Rights to Transfer



A. Subject to the provisions of Sections 11.3.B, 11.3.D, 11.3.E, and 11.4 or in connection
with the exercise of a Redemption Right pursuant to Section 8.6, a Limited Partner (other than the
Company) may not transfer, all or any portion of its Partnership Interest, or any of such Limited
Partner’s economic rights as a Limited Partner without the prior written consent of the General
Partner, which consent may be given or withheld in the General Partner’s sole and
absolute discretion. The General Partner may require, as a condition of any transfer to which
it consents, that the transferor assume all costs incurred by the Partnership in connection
therewith.


 


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B. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all of the
rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for
the purpose of settling or managing the estate and such power as the Incapacitated Limited Partner
possessed to transfer all or any part of his or its Partnership Interest. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.



C. Without limiting the foregoing, the General Partner may prohibit any transfer by a Limited
Partner of its Partnership Units if, in the opinion of legal counsel to the Partnership, such
transfer would require filing of a registration statement under the Securities Act of 1933, as
amended, or would otherwise violate any federal or state securities laws or regulations applicable
to the Partnership or the Partnership Units.



D. No transfer by a Limited Partner of its Partnership Units (including a redemption or
exchange pursuant to Section 8.6) may be made to any Person if (i) in the opinion of legal counsel
for the Partnership, it would result in the Partnership being treated as an association taxable as
a corporation; (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) such transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of
ERISA) or a “disqualified person” (as defined in Section 4975(c) of the Code); (iv) such transfer
would, in the opinion of legal counsel for the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor
Regulations Section 2510.2-101; (v) such transfer would subject the Partnership to be regulated
under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended; or (vi) in the opinion of legal counsel
for the Partnership, such transfer likely would jeopardize the Company’s ability to qualify as a
REIT currently or in the future or would subject the Company to any additional taxes under Section
857 or Section 4981 of the Code.



E. No transfer of any Partnership Units may be made to a lender to the Partnership or any
Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender
to the Partnership whose loan constitutes a Nonrecourse Liability, without the consent of the
General Partner, which consent may be given or withheld by the General Partner in its sole and
absolute discretion; provided that as a condition to such consent the lender may be
required to enter into an arrangement with the Partnership and the General Partner to redeem for
the Cash Amount any Partnership Units in which a security interest is held by such lender
simultaneously with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.


 


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Section 11.4 Substituted Limited Partners



A. No Limited Partner shall have the right to substitute a transferee as a Limited Partner in
his place. The General Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be given or withheld by the General Partner in its sole and
absolute discretion. The General Partner’s failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any cause of action
against the Partnership or any Partner.



B. A transferee who has been admitted as a Substituted Limited Partner in accordance with this
Article 11 shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any transferee as a
Substituted Limited Partner shall be conducted upon the transferee executing and delivering to the
Partnership an acceptance of all the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission.



C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend
Exhibit A to reflect the name, address, number of Partnership Units and Percentage Interest
of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and
interest of the predecessor of such Substituted Limited Partner.




Section 11.5 Assignees



If the General Partner, in its sole and absolute discretion, does not consent to the admission
of any permitted transferee as a Substituted Limited Partner, as described in Section 11.4, such
transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses and any other items, gain, loss deduction and
credit of the Partnership attributable to the Partnership Units assigned to such transferee, but
except as otherwise provided in Section 8.6.A hereof shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Units in any matter presented to the Limited Partners for a vote (such Partnership
Units being deemed to have been voted on such matter in the same proportion as all other
Partnership Units held by Limited Partners are voted). In the event any such transferee desires to
make a further assignment of any such Partnership Units, such transferee shall be subject to all of
the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.




Section 11.6 General Provisions



A. No Limited Partner may withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11 or
pursuant to redemption of all of its Partnership Units under Section 8.6.



B. Any Limited Partner who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article 11 shall cease to be a Limited Partner upon the admission of all Assignees
of such Partnership Units as Substitute Limited Partners. Similarly,
any Limited Partner who shall transfer all of its Partnership Units pursuant to a redemption
of all of its Partnership Units under Section 8.6 shall cease to be a Limited Partner.


 


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C. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter
of the Partnership, unless the General Partner otherwise agrees.



D. If any Partnership Interest is transferred or assigned during any quarterly segment of the
Partnership’s fiscal year in compliance with the provisions of this Article 11 or redeemed or
transferred pursuant to Section 8.6 on any day other than the first day of a Partnership Year, then
Net Income, Net Losses, each item thereof and all other items attributable to such interest for
such Partnership Year shall be divided and allocated between the transferor Partner and the
transferee Partner by taking into account their varying interests during the Partnership Year in
accordance with Section 706(d) of the Code, using the interim closing of the books method or such
other method (or combination of methods) selected by the General Partner. Solely for purposes of
making such allocations, each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such items for the
calendar month in which a redemption occurs shall be allocated to the Redeeming Partner;
provided, however, that the General Partner may adopt such other conventions
relating to allocations in connection with transfers, assignments or redemptions as it determines
are necessary or appropriate. All distributions of Available Cash attributable to such Partnership
Unit with respect to which the Partnership Record Date is before the date of such transfer,
assignment, or redemption shall be made to the transferor Partner or the Redeeming Partner, as the
case may be, and in the case of a transfer or assignment other than a redemption, all distributions
of Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.



ARTICLE 12 — ADMISSION OF PARTNERS





Section 12.1 Admission of Successor General Partner



A successor to all of the General Partner Interest pursuant to Section 11.2 hereof who is
proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the
General Partner, effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be subject to the successor
General Partner executing and delivering to the Partnership an acceptance of all of the terms and
conditions of this Agreement and such other documents or instruments as may be required to effect
the admission. In the case of such admission on any day other than the first day of a Partnership
Year, all items attributable to the General Partner Interest for such Partnership Year shall be
allocated between the transferring General Partner and such successor as provided in Section 11.6.D
hereof.




Section 12.2 Admission of Additional Limited Partners



A. After the date hereof, a Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an Additional Limited
Partner only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory
to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof
and (ii) such other documents or instruments as may be required in the discretion of the General
Partner in order to effect such Person’s admission as an Additional Limited Partner.


 


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B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted
as an Additional Limited Partner without the written consent of the General Partner, which consent
may be given or withheld in the General Partner’s sole and absolute discretion. The admission of
any Person as an Additional Limited Partner shall become effective on the date upon which the name
of such Person is recorded on the books and records of the Partnership, following the written
consent of the General Partner to such admission.



C. If any Additional Limited Partner is admitted to the Partnership on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items
allocable among Partners and Assignees for such Partnership Year shall be allocated among such
Additional Limited Partner and all other Partners and Assignees by taking into account their
varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using
any convention permitted by law and selected by the General Partner. Solely for purposes of making
such allocations, each such item for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all of the Partners and Assignees, including such
Additional Limited Partner; provided, however, that the General Partner may adopt
such other conventions relating to allocations to Additional Limited Partners as it determines are
necessary or appropriate. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be made solely to Partners and
Assignees, other than the Additional Limited Partner, and, subject to Section 5.2.B, all
distributions of Available Cash thereafter shall be made to all of the Partners and Assignees
pursuant to Section 5.1, including such Additional Limited Partner.




Section 12.3 Amendment of Agreement and Certificate of Limited Partnership



For the admission to the Partnership of any Partner, the General Partner shall take all steps
necessary and appropriate under the Act to amend the records of the Partnership and, if necessary,
to prepare as soon as practical an amendment of this Agreement (including an amendment of
Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate
of Limited Partnership and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.



ARTICLE 13 — DISSOLUTION, LIQUIDATION AND TERMINATION





Section 13.1 Dissolution



A. The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. The Partnership shall dissolve, and its
affairs shall be wound up, only upon the first to occur of any of the following (each, a
“Liquidating Event”):




(1) the expiration of its term as provided in Section 2.5 hereof;


 


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(2) an event of withdrawal of the General Partner, as defined in the Act (other than an
event of bankruptcy), unless, within ninety (90) days after such event of withdrawal a
“majority in interest” (as defined below) of the remaining Partners agree in writing to
continue the business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a successor General Partner;




(3) from and after the date of this Agreement through December 31, 2054, an election to
dissolve the Partnership made by the General Partner with the Consent of Partners holding
ninety percent (90%) of the outstanding Limited Partner Units (including Limited Partner
Units held by the Company);




(4) on or after January 1, 2055, an election to dissolve the Partnership made by the
General Partner, in its sole and absolute discretion;




(5) entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Act;




(6) the sale of all or substantially all of the assets and properties of the
Partnership; or




(7) a final and non-appealable judgment is entered by a court of competent jurisdiction
ruling that the General Partner is bankrupt or insolvent, or a final and non-appealable
order for relief is entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to the entry of such order or judgment all of the
remaining Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.



B. As used in this Article 13, a “majority in interest” shall refer to Partners (excluding the
General Partner) who hold more than fifty percent (50%) of the outstanding Percentage Interests not
held by the General Partner.




Section 13.2 Winding Up



A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is inconsistent with,
or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any Person elected by
a majority in interest of the Limited Partners (the General Partner or such other Person being
referred to herein as the “Liquidator”), shall be responsible for overseeing the winding up
and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and
property and the Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined
by the General Partner, include shares of common stock in the Company) shall be applied and
distributed in the following order:




(1) First, to the payment and discharge of all of the Partnership’s debts and
liabilities to creditors other than the Partners;


 


46









 






(2) Second, to the payment and discharge of all of the Partnership’s debts and
liabilities to the General Partner;




(3) Third, to the payment and discharge of all of the Partnership’s debts and
liabilities to the other Partners;




(4) Fourth, to the holders of Partnership Interests that are entitled to any preference
in distribution upon liquidation in accordance with the rights of any such class or series
of Partnership Interests (and, within each class or series, to each holder thereof pro rata
in proportion to its respective Percentage Interests in such class); and




(5) The balance, if any, to the General Partner and Limited Partners in accordance with
their Capital Accounts, after giving effect to all contributions, distributions, and
allocations for all periods.



The General Partner shall not receive any additional compensation for any services performed
pursuant to this Article 13.



B. Notwithstanding the provisions of Section 13.2.A hereof which require liquidation of the
assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or
upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership’s assets would be impractical or would cause undue loss to the Partners, the
Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of
any assets except those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall
be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable and equitable and
to any agreements governing the operation of such properties at such time. The Liquidator shall
determine the fair market value of any property distributed in kind using such reasonable method of
valuation as it may adopt.



C. In the discretion of the Liquidator, a pro rata portion of the distributions that would
otherwise be made to the General Partner and Limited Partners pursuant to this Article 13 may be:




(1) distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed
to the Partnership, and paying any contingent or unforeseen liabilities or obligations of
the Partnership or the General Partner arising out of or in connection with the Partnership.
The assets of any such trust shall be distributed to the General Partner and Limited
Partners from time to time, in the reasonable discretion of the Liquidator, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners pursuant to
this Agreement; or


 


47









 






(2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities
(contingent or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited Partners in the manner and order of
priority set forth in Section 13.2.A as soon as practicable.




Section 13.3 Compliance with Timing Requirements of Regulations



In the event the Partnership is “liquidated” within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 13 to the
General Partner and Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2).



If at such time as the Partnership (or the General Partner’s interest therein) is “liquidated”
within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), the General Partner has a
deficit balance in its Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years or portions thereof, including the year during which such
liquidation occurs), the General Partner shall contribute to the capital of the Partnership the
amount necessary to restore such deficit balance to zero in compliance with Treasury Regulations
Section 1.704-1(b)(2)(ii)(b)(3). If at such time as the Partnership (or any Limited Partner’s
interest therein) is “liquidated” within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g) any Limited Partner has a deficit balance in its Capital Account (after giving
effect to all contributions, distributions and allocations for all taxable years or portions
thereof, including the year during which such liquidation occurs), no such Limited Partner shall
have any obligation to make any contribution to the capital of the Partnership with respect to such
deficit and such deficit shall not be considered a debt owed to the Partnership or to any other
Person for any purposes whatsoever, except to the extent otherwise agreed to by such Partner and
the General Partner. Any contribution required of a Partner hereunder shall be made on or before
the later of (i) the end of the Partnership Year in which the interest of such Partner is
liquidated or (ii) the ninetieth (90th) day following the date of such liquidation.




Section 13.4 Rights of Limited Partners



Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contributions and shall have no right or
power to demand or receive property other than cash from the Partnership. Except as otherwise
provided in this Agreement, no Limited Partner shall have priority over any other Partner as to the
return of its Capital Contributions, distributions, or allocations.




Section 13.5 Notice of Dissolution



In the event a Liquidating Event occurs or an event occurs that would, but for the provisions
of an election or objection by one or more Partners pursuant to Section 13.1, result in a
dissolution of the Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners.


 


48









 





Section 13.6 Termination of Partnership and Cancellation of Certificate of Limited
Partnership



Upon the completion of the liquidation of the Partnership’s assets, as provided in
Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be
filed, and all qualifications of the Partnership as a foreign limited partnership in jurisdictions
other than the State of Delaware shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.




Section 13.7 Reasonable Time for Winding-Up



A reasonable time shall be allowed for the orderly winding-up of the business and affairs of
the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement
shall remain in effect between the Partners during the period of liquidation.




Section 13.8 Waiver of Partition



Each Partner hereby waives any right to partition of the Partnership property.



Section 13.9 Liability of Liquidator



Any Liquidator shall be indemnified and held harmless by the Partnership in the same manner
and to the same degree as an Indemnitee may be indemnified pursuant to Section 7.7 hereof.



ARTICLE 14 — AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS





Section 14.1 Amendments



A. Amendments to this Agreement may only be proposed by the General Partner. Following such
proposal, the General Partner shall submit any proposed amendment to the Limited Partners. The
General Partner shall seek the written consent of the Partners on the proposed amendment or shall
call a meeting to vote thereon and to transact any other business that it may deem appropriate.
For purposes of obtaining a written consent, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time
period shall constitute a vote which is consistent with the General Partner’s recommendation with
respect to the proposal. Except as provided in Section 13.1.C(3), 14.1.B, 14.1.C or 14.1.D, a
proposed amendment shall be adopted and be effective as an amendment hereto if it is approved by
the General Partner and it receives the Consent of Limited Partners holding a majority of the
Common Units held by Limited Partners (including Limited Partner Units held by the Company or its
Affiliates); provided that an action shall become effective at such time as the
requisite consents are received by the General Partner even if prior to such specified time.


 


49









 





B. Notwithstanding Section 14.1.A, the General Partner shall have the power, without the
consent of the Limited Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:




(1) to add to the obligations of the General Partner or surrender any right or power
granted to the General Partner or any Affiliate of the General Partner for the benefit of
the Limited Partners;




(2) to reflect the admission, substitution, termination, or withdrawal of Partners in
accordance with this Agreement (which may be effected through the replacement of
Exhibit A with an amended Exhibit A);




(3) to set forth and reflect in the Agreement the designations, rights, powers, duties,
and preferences of the holders of any additional Partnership Interests issued pursuant to
Section 4.2.A hereof;




(4) to reflect a change that is of an inconsequential nature and does not adversely
affect the Limited Partners in any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with law or with other
provisions, or make other changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this Agreement; and




(5) to satisfy any requirements, conditions, or guidelines contained in any order,
directive, opinion, ruling or regulation of a federal or state agency or contained in
federal or state law.



The General Partner shall provide written notice to the Limited Partners when any action under this
Section 14.1.B is taken in the next regular communication to the Limited Partners.



C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement shall not be amended
without the Consent of each Partner adversely affected if such amendment would (i) convert a
Limited Partner’s interest in the Partnership into a General Partner Interest; (ii) modify the
limited liability of a Limited Partner in a manner adverse to such Limited Partner; (iii) alter
rights of the Partner (except in connection with the issuance of additional Partnership Interests
and the relative rights, powers and duties incident thereto) to receive distributions pursuant to
Article 5 or Article 13 or the allocations specified in Article 6 (except as permitted pursuant to
Section 4.2 and Section 14.1.B(3) hereof); (iv) alter or modify the Redemption Right and REIT
Shares Amount as set forth in Sections 8.6 and 11.2.B, and the related definitions, in a manner
adverse to such Partner; (v) cause the termination of the Partnership prior to the time set forth
in Sections 2.5 or 13.1 or (vi) amend this Section 14.1.C. Further, no amendment may alter the
restrictions on the General Partner’s authority set forth in Section 7.3.B without the Consent
specified in that section.



D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General Partner shall not
(except in connection with amendments made to reflect the issuance of additional Partnership
Interests and the relative rights, powers and duties incident thereto) amend Sections 4.2.A, 7.5,
7.6, 11.2 or 14.2 without the Consent of Limited Partners holding a majority of the Common Units
held by Limited Partners, excluding Limited Partner Units held by the Company or its Affiliates.


 


50









 






Section 14.2 Meetings of the Partners



A. Meetings of the Partners may only be called by the General Partner. The request shall
state the nature of the business to be transacted. Notice of any such meeting shall be given to
all Partners not less than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of
the Partners is permitted or required under this Agreement, such vote or Consent may be given at a
meeting of the Partners or may be given in accordance with the procedure prescribed in
Section 14.1.A hereof. Except as otherwise expressly provided in this Agreement, the Consent of
holders of a majority of the Common Units held by Limited Partners (including Limited Partnership
Common Units held by the Company) shall control.



B. Any action required or permitted to be taken at a meeting of the Partners may be taken
without a meeting if a written consent setting forth the action so taken is signed by a majority of
the Common Units of the Partners (or such other percentage as is expressly required by this
Agreement). Such consent may be in one instrument or in several instruments, and shall have the
same force and effect as a vote of a majority of the Common Units of the Partners (or such other
percentage as is expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a meeting held on the
effective date so certified.



C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all
matters in which a Limited Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. A proxy may be granted in writing, by means of electronic
transmission or as otherwise permitted by applicable law. No proxy shall be valid after the
expiration of twelve (12) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership’s receipt of written notice of such revocation from the
Limited Partner executing such proxy.



D. Each meeting of the Partners shall be conducted by the General Partner or such other Person
as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate. Without limitation, meetings of Partners
may be conducted in the same manner as meetings of the shareholders of the Company and may be held
at the same time, and as part of, meetings of the shareholders of the Company.



ARTICLE 15 — ARBITRATION OF DISPUTES




Notwithstanding anything to the contrary contained in this Agreement, all claims, disputes and
controversies between the parties hereto (including, without limitation, any claims, disputes and
controversies between the Partnership and any one or more of the Partners and any claims, disputes
and controversies among any two or more Partners ) arising out of or in connection with this
Agreement or the Partnership created hereby, relating to the validity, construction, performance,
breach, enforcement or termination thereof, or otherwise arising out of or relating to this
Agreement, the management of the Partnership, or the acts or omissions of
the General Partner that are not resolved by mutual agreement shall be resolved solely and
exclusively by binding arbitration to be conducted before JAMS, Inc. in Bethesda, Maryland before a
single arbitrator (the “Arbitrator”).


 


51









 





The parties covenant and agree that the arbitration shall commence within ninety (90) days of
the date on which a written demand for arbitration is filed by any party hereto (the “Filing
Date”). The Arbitrator’s decision and award shall be made and delivered within one hundred and
eighty (180) days of the Filing Date. The Arbitrator’s decision shall be binding and conclusive on
all parties. The parties understand and agree that the Arbitrator shall not have power to award
damages in excess of actual compensatory damages and the Arbitrator shall not multiply actual
damages or award punitive damages or any other damages that are specifically excluded under this
Agreement, each party hereby irrevocably waiving any claim to such damages.



Each of the parties hereto irrevocably and unconditionally consents to the exclusive
jurisdiction of JAMS, Inc. to all matters within the scope of this Article 15 and that they will
participate in the arbitration in good faith. The parties hereto further consent to the
jurisdiction of the courts of the State of Delaware for the purposes of enforcing the arbitration
provisions of this Article 15. Each party further irrevocably waives any objection to proceeding
before JAMS, Inc. based upon lack of personal jurisdiction or to the laying of venue and further
irrevocably and unconditionally waives and agrees not to make a claim in any court that arbitration
before JAMS, Inc. has been brought in an inconvenient forum. Each of the parties hereto hereby
consents to service of process by registered mail at the address to which notices are to be given.
Each of the parties hereto agrees that its submission to jurisdiction and its consent to service of
process by mail is made for the express benefit of the other parties hereto. The provisions of
this Article 15 shall survive the dissolution of the Partnership. Nothing contained herein shall
be deemed to give the Arbitrator any authority, power, or right to alter, change, amend, modify,
add to, or subtract from any of the provisions of this Agreement.



ARTICLE 16 — GENERAL PROVISIONS





Section 16.1 Addresses and Notice



Any notice, demand, request or report required or permitted to be given or made to a Partner
or Assignee under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by certified first class United States mail, return receipt
requested, nationally recognized overnight delivery service or facsimile transmission (with receipt
confirmed) to the Partner or Assignee at the address set forth on Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.




Section 16.2 Titles and Captions



All article or section titles or captions in this Agreement are for convenience only. They
shall not be deemed part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof. Except as specifically provided otherwise, references to
“Articles” and “Sections” are to Articles and Sections of this Agreement.


 


52









 






Section 16.3 Pronouns and Plurals



Whenever the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.




Section 16.4 Further Action



The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.




Section 16.5 Binding Effect



Subject to the terms set forth herein, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.




Section 16.6 Creditors



Other than as expressly set forth herein with respect to the Indemnitees, none of the
provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor
of the Partnership.




Section 16.7 Waiver



No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.




Section 16.8 Counterparts



This Agreement may be executed in counterparts, all of which together shall constitute one
agreement binding on all of the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.




Section 16.9 Applicable Law



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


 


53









 






Section 16.10 Invalidity of Provisions



If any provision of this Agreement shall to any extent be held void or unenforceable (as to
duration, scope, activity, subject or otherwise) by a court of competent jurisdiction, such
provision shall be deemed to be modified so as to constitute a provision conforming as nearly as
possible to the original provision while still remaining valid and enforceable. In such
event, the remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or unenforceable) shall
not be affected thereby. Each other provision of this Agreement, unless specifically conditioned
upon the voided aspect of such provision, shall remain valid and enforceable to the fullest extent
permitted by law; any other provisions of this Agreement that are specifically conditioned on the
voided aspect of such invalid provision shall also be deemed to be modified so as to constitute a
provision conforming as nearly as possible to the original provision while still remaining valid
and enforceable to the fullest extent permitted by law.




Section 16.11 No Rights as Shareholders



Nothing contained in this Agreement shall be construed as conferring upon the holders of
Partnership Units any rights whatsoever as shareholders of the Company, including without
limitation, any right to receive dividends or other distributions made to shareholders or to vote
or consent or to receive notice as shareholders in respect of any meeting of shareholders for the
election of directors of the Company or any other matter.




Section 16.12 Entire Agreement



This Agreement contains the entire understanding and agreement among the Partners with respect
to the subject matter hereof and supersedes the Prior Agreement, any other prior written or oral
understandings or agreements among them with respect thereto.



[Signature Page Follows]



 


54









 





IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Limited Partnership as
of the date first written above.



	 	 	 	 	 	 	 
	 	 	GENERAL PARTNER:	 	 
	 
	 	 	 	 	 	 
	 	 	DiamondRock Hospitality Company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael D. Schecter
 

Name: Michael D. Schecter
	 	 
	 

	 	 	 	Title:   General Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	LIMITED PARTNER:	 	 
	 
	 	 	 	 	 	 
	 	 	DiamondRock Hospitality, LLC	 	 
	 

	 	By:
	 	DiamondRock Hospitality Company,	 	 
	 

	 	 	 	its sole Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael D. Schecter	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Michael D. Schecter	 	 
	 

	 	 	 	Title:   General Counsel	 	 






 


 









 





FORM OF LIMITED PARTNER SIGNATURE PAGE

FOR PARTNERS ADMITTED AFTER JUNE ___, 2004



 The undersigned, desiring to become one of the within named Limited Partners of DiamondRock
Hospitality Limited Partnership, hereby becomes a party to the Agreement of Limited Partnership of
DiamondRock Hospitality Limited Partnership by and among DiamondRock Hospitality Company and such
Limited Partners, dated as of June
 _____, 2004, as amended. The undersigned agrees that this
signature page may be attached to any counterpart of said Agreement of Limited Partnership.



	 	 	 	 	 	 	 
	 	 	Signature Line for Limited Partner:	 	[Name]
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 

	 	 	 	 	 	Title:
	 

	 	 	 	 	 	Date:
	 
	 	 	 	 	 	 
	 

	 	Address of Limited Partner:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 







 


 









 







Exhibit A




[Exhibit A, setting forth names of the Partners and interests owned,

is maintained separately with the books and records of the Partnership]




A-1






 


 









 







Exhibit B




Capital Account Maintenance




1. Capital Accounts of the Partners




A. The Partnership shall maintain for each Partner a separate Capital Account in accordance
with the rules of Regulations Section 1.704-1(b)(2)(iv), subject to any modifications to such rules
provided in this Agreement.



B. For purposes of computing the amount of any item of income, gain, deduction, or loss to be
reflected in the Partners’ Capital Accounts, unless otherwise specified in this Agreement, the
determination, recognition and classification of any such item shall be the same as its
determination, recognition, and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of income, gain, loss, or
deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be
included in taxable income or loss), with the following adjustments:




	 	(1)	 	Any income, gain, or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership’s Carrying Value with respect to such property as of such date.
	 
	 	(2)	 	In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
	 
	 	(3)	 	In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.





C. A transferee (including an Assignee) of a Partnership Unit shall succeed to a pro rata
portion of the Capital Account of the transferor.




	 	D. 	(1)	 	Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f),
the Carrying Value of all Partnership assets shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as of the times specified in such Regulation; provided,
however, that (other than in connection with a liquidation of the Partnership)
such adjustments shall be made only if the General Partner determines that they are
necessary or appropriate to reflect the relative economic interests of the Partners in
the Partnership.
	 
	 	 	(2)	 	In accordance with Regulations Section 1.704-1(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.




 


B-1









 





	 	 	(3)	 	In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash equivalents) shall be determined
by the General Partner using such reasonable method of valuation as it may
adopt, or in the case of a liquidating distribution pursuant to Article 13 of
the Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for individual
properties).





E. The provisions of this Agreement (including this Exhibit B and other Exhibits to
this Agreement) relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the General Partner shall determine that it is prudent to modify
(i) the manner in which the Capital Accounts, or any debits, or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Partnership, the General Partner, or the Limited
Partners) are computed; or (ii) the manner in which items are allocated among the Partners for
federal income tax purposes in order to comply with such Regulations or to comply with Section
704(c) of the Code, the General Partner may make such modification without regard to Article 14 of
the Agreement, provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 13 of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (1) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners and the amount of
Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q); and (2) make any appropriate
modifications in the event unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b). In addition, the General Partner may adopt and employ such
methods and procedures for (A) the maintenance of book and tax capital accounts; (B) the
determination and allocation of adjustments under Sections 704(c), 734, and 743 of the Code; (C)
the determination of Net Income, Net Loss, taxable income and loss and items thereof under this
Agreement and pursuant to the Code; (D) the adoption of reasonable conventions and methods for the
valuation of assets and the determination of tax basis; (E) the allocation of asset value and tax
basis; and (F) conventions for the determination of cost recovery, depreciation and amortization
deductions, as it determines in its sole discretion are necessary or appropriate to execute the
provisions of this Agreement, to comply with federal and state tax laws, and/or are in the best
interest of the Partners.



2. No Interest




No interest shall be paid by the Partnership on Capital Contributions or on balances in
Partners’ Capital Accounts.






 


B-2









 







Exhibit C




Special Allocation Rules




1. Special Allocation Rules




Notwithstanding any other provision of the Agreement or this Exhibit C, the following
special allocations shall be made in the following order:



A. Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1 of the
Agreement or any other provisions of this Exhibit C, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable 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, as
determined under Regulations Section 1.704-2(g). 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 Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 1.A is intended to comply with the minimum
gain chargeback requirements in Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith. Solely for purposes of this Section 1.A, each Partner’s Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to Section 6.1 of
Partner Minimum Gain during such Partnership taxable year.



B. Partner Minimum Gain Chargeback. Notwithstanding any other provision of Section
6.1 of this Agreement or any other provisions of this Exhibit C (except Section 1.A
hereof), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse
Debt during any Partnership taxable year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(i)(5), 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 Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). 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 Regulations
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 1.B is intended to comply with the minimum
gain chargeback requirement in Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith. Solely for purposes of the Section 1.B, each Partner’s Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to Section 6.1 of the
Agreement or this Exhibit with respect to such Partnership taxable year, other than allocations
pursuant to Section 1.A hereof.



C. Qualified Income Offset. In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Regulations Sections
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), and after giving
effect to the allocations required under Sections 1.A and 1.B hereof such Partner has an Adjusted
Capital Account Deficit, items of Partnership income and gain (consisting of a pro rata portion of
each item of Partnership income, including gross income and gain for the Partnership taxable
year) shall be specially allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, its Adjusted Capital Account Deficit created
by such adjustments, allocations or distributions as quickly as possible.


 


C-1









 





D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership taxable year
shall be allocated to the Partners in accordance with their respective Percentage Interests. If
the General Partner determines in its good faith discretion that the Partnership’s Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor requirements of the
Regulations promulgated under Section 704(b) of the Code, the General Partner is authorized, upon
notice to the Limited Partners, to revise the prescribed ratio to the numerically closest ratio for
such Partnership taxable year which would satisfy such requirements.



E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any
Partnership taxable year 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 Regulations Section 1.704-2(i).



F. Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases
such basis), and such item of gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to
such Section of the Regulations.



G. Curative Allocations. The allocations set forth in Section 1.A through 1.F of this
Exhibit C (the “Regulatory Allocations”) are intended to comply with certain
requirements of the Regulations under Section 704(b) of the Code. The Regulatory Allocations may
not be consistent with the manner in which the Partners intend to divide Partnership distributions.
Accordingly, the General Partner is hereby authorized to divide other allocations of income, gain,
deduction and loss among the Partners so as to prevent the Regulatory Allocations from distorting
the manner in which Partnership distributions will be divided among the Partners. In general, the
Partners anticipate that, if necessary, this will be accomplished by specially allocating other
items of income, gain, loss and deduction among the Partners so that the net amount of the
Regulatory Allocations and such special allocations to each person is zero. However, the General
Partner will have discretion to accomplish this result in any reasonable manner; provided,
however, that no allocation pursuant to this Section 1.G shall cause the Partnership to
fail to comply with the requirements of Regulations Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).



2. Allocations for Tax Purposes




A. Except as otherwise provided in this Section 2, Code Section 704(b), Code Section 704(c)
and the Regulations thereunder, Regulations Section 1.1245-1(e), Regulations Section 1250-1(f), or
any other provision of the Code or Regulations, for federal income tax purposes, each item of
income, gain, loss and deduction shall be allocated among the Partners in
the same manner as its correlative item of “book” income, gain, loss or deduction is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.


 


C-2









 





B. In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, and deduction with respect to such property shall
be allocated for federal income tax purposes among the Partners in accordance with Code Section
704(c) and the Regulations thereunder (or the principles thereof with respect to Adjusted
Property).



C. Consistent with the requirements of Code Section 704(c) and the Regulations thereunder, the
General Partner shall have the authority to elect the method or methods to be used by the
Partnership to eliminate any disparities between the Carrying Value of any Partnership property and
its adjusted basis for any particular period and such election shall be binding on all Partners.



3. No Withdrawal




No Partner shall be entitled to withdraw any part of his Capital Contribution or his Capital
Account or to receive any distribution from the Partnership, except as provided in Articles 4, 5, 8
and 13 of the Agreement.




 


C-3









 







Exhibit D




Notice of Redemption




The undersigned Limited Partner hereby irrevocably (i) redeems
 _____ 

Common Units in
DiamondRock Hospitality Limited Partnership in accordance with the terms of the Agreement of
Limited Partnership of DiamondRock Hospitality Limited Partnership and the Redemption Right
referred to therein; (ii) surrenders such Common Units and all right, title and interest therein;
and (iii) directs that the Cash Amount or REIT Shares Amount (as determined by the General Partner)
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 address(es) specified below. The undersigned hereby, represents, warrants, and certifies that
the undersigned (a) has marketable and unencumbered title to such Common Units, free and clear of
the rights or interests of any other person or entity; (b) has the full right, power, and authority
to redeem and surrender such Common Units as provided herein; and (c) has obtained the consent or
approval of all persons or entities, if any, having the right to consent or approve such redemption
and surrender.



	 	 	 	 	 
	Dated:

	 	 
 

	 	 






	 	 	 	 	 
	Name of Limited Partner:

	 	  

Please
Print
	 	 






	 	 	 	 	 
	 

	 	  

(Signature
of Limited Partner)
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Street Address)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(City)                         (State)                   (Zip Code)	 	 
	 
	 	 	 	 
	 

	 	Signature Guaranteed by:	 	 
	 
	 	 	 	 
	 

	 	 	 	 






If REIT Shares are to be issued, issue to:



	 	 	 	 	 
	Name:

	 	 
 

	 	 






	 	 	 	 	 
	Please insert social security or identifying number:

	 	 
 

	 	 







 


D-1