Moody National REIT II, Inc. 8-K


 


Exhibit 10.1


 


AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT


 


OF


 


MOODY NATIONAL
OPERATING PARTNERSHIP II, LP


 


A DELAWARE LIMITED
PARTNERSHIP


 


May 20, 2016


  






    	 



    	 



    

 


TABLE OF CONTENTS


 


	 	Page
	 	 
	ARTICLE 1 DEFINED TERMS	1
	 	 
	ARTICLE 2 PARTNERSHIP FORMATION AND IDENTIFICATION	12
	2.1	Formation	12
	2.2	Name, Office and Registered Agent	12
	2.3	Term and Dissolution	12
	2.4	Filing of Certificate and Perfection of Limited Partnership	13
	 	 	 
	ARTICLE 3 BUSINESS OF THE PARTNERSHIP	14
	 	 
	ARTICLE 4 CAPITAL CONTRIBUTIONS AND ACCOUNTS	14
	4.1	Capital Contributions	14
	4.2	Additional Capital Contributions and Issuances of Additional Partnership Units	14
	4.3	Additional Funding	16
	4.4	Capital Accounts	16
	4.5	No Interest on Contributions	16
	4.6	Return of Capital Contributions	17
	4.7	No Third-Party Beneficiary	17
	4.8	Redemption of REIT Shares.	17
	 	 	 
	ARTICLE 5 PROFITS AND LOSSES; DISTRIBUTIONS	17
	5.1	Allocation of Profit and Loss	17
	5.2	Distribution of Cash	20
	5.3	REIT Distribution Requirements	21
	5.4	No Right to Distributions in Kind.	22
	5.5	Limitations on Return of Capital Contributions.	22
	5.6	Distributions upon Liquidation	22
	5.7	Substantial Economic Effect	22
	 	 	 
	ARTICLE 6 RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER	22
	6.1	Management of the Partnership	22
	6.2	Delegation of Authority	25
	6.3	Indemnification and Exculpation of Indemnitees	25
	6.4	Liability of the General Partner	27
	6.5	Reimbursement of General Partner	28
	6.6	Outside Activities	28
	6.7	Employment or Retention of Affiliates	28
	6.8	Title to Partnership Assets	29
	 	 	 
	ARTICLE 7 CHANGES IN GENERAL PARTNER	29
	7.1	Transfer of the General Partner’s Partnership Units	29
	7.2	Admission of a Substitute or Additional General Partner	31
	7.3	Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General Partner	32
	7.4	Removal of a General Partner	32



 






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TABLE OF CONTENTS


 


	 	Page
	 	 
	ARTICLE 8 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS	33
	8.1 	Management of the Partnership	33
	8.2	Power of Attorney	33
	8.3	Limitation on Liability of Limited Partners	33
	8.4 	Redemption of Special Limited Partnership Interests	34
	8.5	Redemption Right.	35
	 	 	 
	ARTICLE 9 TRANSFERS OF LIMITED PARTNERSHIP INTERESTS AND SPECIAL LIMITED PARTNERSHIP INTERESTS	37
	9.1	Restrictions on Transfer of Limited Partnership Interests	37
	9.2	Admission of Substitute Limited Partner	38
	9.3 	Rights of Assignees of Partnership Units	39
	9.4  	Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner	39
	9.5 	Purchase for Investment.	39
	 	 	 
	ARTICLE 10 BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS	40
	10.1	Books and Records	40
	10.2	Custody of Partnership Funds; Bank Accounts	40
	10.3  	Fiscal and Taxable Year	40
	10.4  	Annual Tax Information and Report.	40
	10.5 	Tax Matters Partner; Partnership Representative; Tax Elections; Special Basis Adjustments.	40
	 	 	 
	ARTICLE 11 AMENDMENT OF AGREEMENT	41
	 	 
	ARTICLE 12 GENERAL PROVISIONS	41
	12.1	Notices	41
	12.2	Survival of Rights	42
	12.3	Additional Documents	42
	12.4	Severability	42
	12.5	Entire Agreement	42
	12.6	Pronouns and Plurals	42
	12.7	Headings	42
	12.8	Counterparts	42
	12.9	Governing Law	43
	 	 	 
	EXHIBIT A: CONTRIBUTIONS & INTEREST	A-1
	EXHIBIT B: NOTICE OF EXERCISE OF REDEMPTION RIGHT	B-1


 



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AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT


 


OF


 


MOODY NATIONAL
OPERATING PARTNERSHIP II, LP


 


This Amended and Restated
Limited Partnership Agreement is entered into this 20th day of May, 2016, between Moody National REIT II, Inc., a Maryland corporation,
as the General Partner, and the Limited Partners set forth on Exhibit A attached hereto. Capitalized terms used herein but
not otherwise defined shall have the meanings given to them in Article 1.


 


AGREEMENT


 


WHEREAS, the General Partner
intends to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended;


 


WHEREAS, Moody National
Operating Partnership II, LP was formed on July 29, 2014 as a limited partnership under the laws of the State of Delaware, pursuant
to a Certificate of Limited Partnership filed with the Office of the Secretary of State of the State of Delaware on July 29, 2014;


 


WHEREAS, the General Partner
desires to conduct its current and future business through the Partnership;


 


WHEREAS, the Partnership
was previously governed by that certain Limited Partnership Agreement of the Partnership, dated as of August 15, 2014 (the “Original
Agreement”);


 


WHEREAS, the parties hereto
wish to amend and restate the Original Agreement to establish herein their respective rights and obligations in connection with
all of the foregoing and certain other matters.


 


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


 


ARTICLE
1

DEFINED TERMS


 


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


 


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


 


“Additional Funds”
has the meaning set forth in Section 4.3 hereof.


 






    	 



    	 



    







 


“Adjusted Capital
Account” means, with respect any Partner, the Capital Account of such Partner as of the end of each Partnership taxable
year or other allocation period (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 Regulations Section 1.704-1(b)(2)(ii)(c) and the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(g)(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.


 


“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 or other allocation period.


 


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


 


“Advisor”
or “Advisors” means the Person or Persons, if any, appointed, employed or contracted by the General Partner
and responsible for directing or performing the day-to-day business affairs of the General Partner, including any Person to whom
such Advisor subcontracts substantially all of such functions.


 


“Advisory Agreement”
means the agreement between the General Partner, the Advisor and the partnership pursuant to which the Advisor will direct or perform
the day-to-day business affairs of the General Partner.


 


“Affiliate”
means, with respect to any Person, (i) any Person directly or indirectly, owning, controlling or holding with the power to vote
10% or more of the outstanding voting securities of such other Person; (ii) any Person 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person
directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director,
trustee or general partner of such other Person; and (v) any legal entity for which such Person acts an executive officer, director,
trustee or general partner.


 


“Agreement”
means this Amended and Restated Limited Partnership Agreement, as amended, modified supplemented or restated from time to time,
as the context requires.


 


“Aggregate Share
Ownership Limit” has the meaning provided in the Articles of Incorporation.


 


“Applicable Percentage”
has the meaning provided in Section 8.5(b) of this Agreement.


 






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


 


“Capital Account”
has the meaning provided in Section 4.4 hereof.


 


“Capital Contribution”
means, with respect to any Partner, any cash, cash equivalents or the fair market value of other property which such Partner contributes
or is deemed to contribute to the Partnership pursuant to Section 4.1 or 4.2 hereof. Any reference to the Capital Contribution
of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Interests of such Partner.


 


“Carrying Value”
means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:


 


(i)           The initial Carrying
Value of any asset contributed to the Partnership shall be the gross fair market value of such asset, as agreed by the Contributing
Partner and the General Partner.


 


(ii)          The Carrying Values
of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner
using such reasonable method of valuation as it may adopt immediately prior to the following events:


 


(a)         the acquisition
of an additional interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution
or the provision of services to or for the benefit of the Partnership, if the General Partner reasonably determines that such adjustment
is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;


 


(b)          the distribution
by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest in the Partnership,
if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;


 


(c)          the liquidation
of the Partnership within the meaning of Regulations Section 1.704- 1(b)(2)(ii)(g);


 


(d)          the grant of an
interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit
of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in
anticipation of becoming a Partner of the Partnership, if the General Partner reasonably determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Partners in the Partnership; and


 


(e)          at such other times
as the General Partner shall reasonably deem necessary or advisable if permitted by, or required to comply with, Regulations Sections
1.704-1(b) and 1.704-2.


 






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(iii)         The Carrying Value
of a Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution,
as agreed by the distributee and the General Partner.


 


(iv)         The Carrying Values
of Partnership assets shall be adjusted to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section
734(b) or 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Carrying Values shall not be adjusted pursuant to this clause
(iv) to the extent that the General Partner reasonably determines that an adjustment pursuant to clause (ii) above is necessary
or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv).


 


(v)          If the Carrying Values
of a Partnership asset has been determined or adjusted pursuant to clause (i), (ii), or (iv) above, such Carrying Values shall
thereafter be adjusted by Depreciation.


 


“Cash Amount”
means an amount of cash equal to the lesser of (i) the Value of the REIT Shares Amount on the date of receipt by the General Partner
of a Notice of Redemption or (ii) the applicable Redemption Price determined by the General Partner.


 


“Certificate”
means any instrument or document that is required under the laws of the State of Delaware, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of the Partnership (either by themselves or pursuant to
the power-of-attorney granted to the General Partner in Section 8.2 hereof) and filed for recording in the appropriate public offices
within the State of Delaware or such other jurisdiction to perfect or maintain the Partnership as a limited partnership, to effect
the admission, withdrawal, or substitution of any Partner of the Partnership, or to protect the limited liability of the Limited
Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.


 


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


 


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


 


“Common Share
Ownership Limit” has the meaning provided in the Articles of Incorporation.


 


“Common Unit”
means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Article 4 hereof, but does
not include, unless otherwise provided herein for specific purposes, any Preferred Unit, Special Limited Partnership Unit, or any
other Partnership Unit specified in a Partnership Unit Designation as being other than a Common Unit; provided, however, that the
General Partner Interest and the Limited Partner Interests shall have the differences in rights and privileges as specified in
this Agreement.


 






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“Conversion Factor”
means 1.0, provided that in the event that the General Partner (i) declares or pays a dividend on its outstanding REIT Shares wholly
or partially in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly or partially in REIT Shares,
(ii) subdivides its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the
number of REIT Shares issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming
for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time), and the denominator
of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on such date
and, provided further, that in the event that an entity other than an Affiliate of the General Partner shall become General Partner
pursuant to any merger, consolidation or combination of the General Partner with or into another entity (the “Successor Entity”),
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by the number of shares of the Successor Entity into
which one REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the date of such merger,
consolidation or combination. Any adjustment to the Conversion Factor shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event; provided, however, that if the General Partner receives a
Notice of Redemption after the record date, but prior to the effective date of such dividend, distribution, subdivision or combination,
the Conversion Factor shall be determined as if the General Partner had received the Notice of Redemption immediately prior to
the record date for such dividend, distribution, subdivision or combination.


 


“Defaulting Limited
Partner” has the meaning provided in Section 5.2(c) of this Agreement.


 


“Depreciation”
means, for each fiscal year, an amount equal to the federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, 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 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.


 


“Director”
means a member of the board of directors of the General Partner.


 


“Event of Bankruptcy”
means, as to any Person, the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code
of 1978 or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed
within 90 days); insolvency or bankruptcy of such Person as finally determined by a court proceeding; filing by such Person of
a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial
part of his assets; commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement,
insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either
by such Person or by another, provided that if such proceeding is commenced by another, such Person indicates his approval of such
proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed
within 90 days.


 






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“Excepted Holder
Limit” has the meaning provided in the Articles of Incorporation.


 


“General Partner”
means Moody National REIT II, Inc. and any Person who becomes a substitute or additional General Partner as provided herein, and
any of their successors as General Partner, until such Person ceases to be a General Partner pursuant to the terms of this Agreement.


 


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


 


“General Partner
Loan” has the meaning provided in Section 5.2(c) of this Agreement.


 


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


 


“Independent Director”
means a Director who is not on the date of determination, and within the last two years from the date of determination has not
been, directly or indirectly associated with the Sponsor of the General Partner or the Advisor by virtue of (i) ownership of an
interest in the Sponsor, the Advisor or any of their Affiliates, other than the General Partner, (ii) employment by the Sponsor,
the Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates,
other than as a Director, (iv) performance of services, other than as a Director, for the General Partner, (v) service as a director
or trustee of more than three real estate investment trusts organized by the Sponsor or advised by the Advisor or (vi) maintenance
of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. A business or professional
relationship is considered “material” if the aggregate gross revenue derived by the Director from the Sponsor, the
Advisor and their Affiliates (excluding fees for serving as an independent director of the General Partner or other real estate
investment trust or real estate program organized or advised or managed by the Sponsor or its Affiliates) exceeds five percent
of either the Director’s annual gross revenue during either of the last two years or the Director’s net worth on a
fair market value basis. An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director’s
spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law is or has been associated
with the Sponsor, the Advisor, any of their Affiliates or the General Partner.


 


“Junior Share”
means a share of capital stock of the General Partner now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are inferior or junior to the REIT Shares.


 


“Limited Partner”
means any Person named as a Limited Partner on Exhibit A attached hereto, as such exhibit may be amended and restated from
time to time, and any Person who becomes an additional Limited Partner or a Substitute Limited Partner, in such Person’s
capacity as a Limited Partner in the Partnership.


 


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


 






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“Limited Partnership
Unit” means a Limited Partnership Interest designated as a Common Unit.


 


“Listing”
means the listing of the REIT Shares on a national securities exchange or the receipt by holders of the REIT Shares of securities
that are listed on a national securities exchange in exchange for REIT Shares. Upon such Listing, the shares shall be deemed “Listed.”


 


“New Securities”
means (i) any rights, options, warrants, or convertible or exchangeable securities having the right to subscribe for or purchase
REIT Shares or Preferred Shares, excluding Preferred Shares and Junior Shares or (ii) any debt issued by the General Partner that
provides any of the rights described in (i).


 


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


 


“Nonrecourse Liability”
has the meaning provided in Regulations Section 1.704(b)(3).


 


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


 


“Offer”
has the meaning provided in Section 7.1(b) of this Agreement.


 


“Original Agreement”
has the meaning set forth in the recitals hereto.


 


“Partner”
means any General Partner or Limited Partner.


 


“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 provided in Regulations Section 1.704-2(b)(4).


 


“Partner Nonrecourse
Debt 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
Deductions” has the meaning provided in Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with
Regulations Sections 1.704-2(i)(2).


 






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“Partnership”
means Moody National Operating Partnership II, LP, a Delaware limited partnership.


 


“Partnership Interest”
means an ownership interest in the Partnership held by a Limited Partner, the Special 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 Common Units, Preferred Units or other Partnership Units.


 


“Partnership Loan”
has the meaning provided in Section 5.2(c) of this Agreement.


 


“Partnership Minimum
Gain” has the meaning provided in Regulations Sections 1.704-2(b)(2) and 1.704-2(d), and the amount of Partnership Minimum
Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership 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 the distribution of cash pursuant to Section 5.2 hereof.


 


“Partnership Representative”
has the meaning provided in Section 6223 of the Code.


 


“Partnership Unit”
means a Common Unit, a Preferred Unit, a Special Limited Partnership Unit or any other unit of a fractional, undivided share of
the Partnership Interests that the General Partner has authorized pursuant to Article 4 hereof; provided, however, that Partnership
Units comprising a General Partner Interest or a Limited Partner Interest shall have the differences in rights and privileges as
specified in this Agreement.


 


“Partnership Year”
shall mean the Partnership’s taxable year or any shorter period for which Partnership profits and losses are allocated.


 


“Percentage Interest”
means, with respect to any Partner other than a Special Limited Partner at any time, the percentage determined by dividing the
Common Units of such Partner by the sum of the Common Units of all Partners (other than Special Limited Partners).


 


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


 


“Preferred Shares”
means a share of capital stock of the General Partner now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior to REIT Shares.


 


“Preferred Unit”
means a fractional, undivided share of the Partnership Interests that has distribution rights, or rights upon liquidation, winding
up and dissolution, that are superior or prior to the Common Units that the General Partner has authorized pursuant to Section
4.2 hereof.


 






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“Profit”
and “Loss” means, for each Partnership Year or other applicable period, an amount equal to the Partnership’s
taxable income or loss for such Partnership Year, determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:


 


(i)          Any income of the
Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profit and Loss pursuant to
this definition of “Profit” and “Loss” shall be added to such taxable income or loss;


 


(ii)          Any expenditures
of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Profit or Loss pursuant to this definition of “Profit”
and “Loss” shall be subtracted from such taxable income or loss;


 


(iii)         In the event the
Carrying Value of any Partnership asset is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Carrying Value,
the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing
Profit and Loss;


 


(iv)         Gain or loss resulting
from any disposition of Partnership Property with respect to which gain or loss is recognized for federal income tax purposes shall
be computed by reference to the Carrying Value of the property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its Carrying Value;


 


(v)          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 Partnership Year or other period;


 


(vi)         To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant
to Regulations Section 1.704- 1(b)(2)(iv) to be taken into account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes of computing Profit or Loss; and


 


(vii)        Notwithstanding
any other provision of this definition of “Profit” and “Loss”, any items that are specially allocated pursuant
to Section 5.1(c), 5.1(d), or 5.1(e) hereof shall not be taken into account in computing Profits or Losses. The amounts of the
items of Partnership income, gain, loss, or deduction available to be specially allocated pursuant to Sections 5.1(c) and 5.1(d)
hereof shall be determined by applying rules analogous to those set forth in subparagraphs (i) through (vi) above. “Property”
means any Real Estate Asset or other investment in which the Partnership holds an ownership interest.


 


“Real Estate Asset”
means unimproved and improved real property, real estate related assets and any direct or indirect interest therein, including,
without limitation, fee or leasehold interests, options, leases, partnership and joint venture interests, equity and debt securities
of entities that own real estate, loans secured by real property including first or second mortgage loans, mezzanine loans and
participations in such loans, preferred equity interests secured by a property owner’s interest in real property and other
contractual rights in real estate.


 






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“Redemption Price”
means the Value of the REIT Shares Amount on the date of receipt by the General Partner of a Notice of Redemption multiplied by
any discount determined by the General Partner, including but not limited to, any discount based upon the combined number of years
that the applicable Partner has held the Partnership Units offered for redemption.


 


“Redemption Right”
has the meaning provided in Section 8.5(a) of this Agreement.


 


“Regulations”
means the Federal income tax regulations promulgated under the Code, as amended and as hereafter amended from time to time. Reference
to any particular provision of the Regulations shall mean that provision of the Regulations on the date hereof and any successor
provision of the Regulations.


 


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


 


“REIT Expenses”
means (i) costs and expenses relating to the formation and continuity of existence and operation of the General Partner and any
Subsidiaries thereof (which Subsidiaries shall, for purposes hereof, be included within the definition of General Partner), including
taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer, or employee
of the General Partner, (ii) costs and expenses relating to any public offering and registration of securities by the General Partner
and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling
commissions applicable to any such offering of securities, and any costs and expenses associated with any claims made by any holders
of such securities or any underwriters or placement agents thereof, (iii) costs and expenses associated with any repurchase of
any securities by the General Partner, (iv) costs and expenses associated with the preparation and filing of any periodic or other
reports and communications by the General Partner under federal, state or local laws or regulations, including filings with the
Commission, (v) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated
by any regulatory body, including the Commission and any securities exchange, (vi) costs and expenses associated with any 401(k)
plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the General Partner, (vii) costs
and expenses incurred by the General Partner relating to any issuing or redemption of Partnership Interests, and (viii) all other
operating or administrative costs of the General Partner incurred in the ordinary course of its business on behalf of or in connection
with the Partnership.


 


“REIT Share”
means ownership (including beneficial ownership) of a share of common stock in the General Partner (or successor entity, as the
case may be).


 


“REIT Shares Amount”
means a number of REIT Shares equal to the product of the number of Partnership Units offered for exchange by a Tendering Party,
multiplied by the Conversion Factor as adjusted to and including the Specified Redemption Date; provided that in the event the
General Partner issues to all holders of REIT Shares rights, options, warrants or convertible or exchangeable securities entitling
the stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the “rights”),
and the rights have not expired at the Specified Redemption Date, then the REIT Shares Amount shall also include the rights issuable
to a holder of the REIT Shares Amount of REIT Shares on the record date fixed for purposes of determining the holders of REIT Shares
entitled to rights.


 






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“Related Party”
means, with respect to any Person, any other Person whose ownership of shares of the General Partner’s capital stock would
be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).


 


“Restriction Notice”
has the meaning provided in Section 8.5(e) of this Agreement.


 


“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Special Limited
Partner” means the holder of a Special Limited Partnership Unit.


 


“Special Limited
Partnership Unit” means Partnership Units designated as Special Limited Partnership Units issued pursuant to Section
4.2(d) with the rights and obligations provided under this Agreement.


 


“Specified Redemption
Date” means the first business day of the month that is at least sixty (60) business days after the receipt by the General
Partner of the Notice of Redemption.


 


“Sponsor”
means any Person which (a) is directly or indirectly instrumental in organizing, wholly or in part, the General Partner, (b) will
control, manage or participate in the management of the General Partner, and any Affiliate of any such Person, (c) takes the initiative,
directly or indirectly, in founding or organizing the General Partner, either alone or in conjunction with one or more other Persons,
(d) receives a material participation in the General Partner in connection with the founding or organizing of the business of the
General Partner, in consideration of services or property, or both services and property, (e) has a substantial number of relationships
and contacts with the General Partner, (f) possesses significant rights to control Properties, (g) receives fees for providing
services to the General Partner which are paid on a basis that is not customary in the industry or (h) provides goods or services
to the General Partner on a basis which was not negotiated at arm’s-length with the General Partner. “Sponsor”
does not include any Person whose only relationship with the General Partner is that of an independent property manager and whose
only compensation is as such, or wholly independent third parties such as attorney, accountants and underwriters whose only compensation
is for professional services.


 


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


 


“Subsidiary Partnership”
means any partnership of which the partnership interests therein are owned by the General Partner or a direct or indirect subsidiary
of the General Partner.


 


“Substitute Limited
Partner” means any Person admitted to the Partnership as a Limited Partner pursuant to Section 9.2 hereof.


 


“Successor Entity”
has the meaning provided in the definition of Conversion Factor.


 






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“Survivor”
has the meaning provided in Section 7.1(d).


 


“Tax Matters Partner”
has the meaning provided in Section 6231(a)(7) of the Code.


 


“Tendered Units”
has the meaning provided in Section 8.5(b) of this Agreement.


 


“Tendering Party”
has the meaning provided in Section 8.5(a) of this Agreement.


 


“Termination Event”
means the termination or nonrenewal of the Advisory Agreement (i) in connection with a merger, sale of assets or transaction involving
the General Partner pursuant to which a majority of the Directors then in office are replaced or removed, (ii) by the Advisor for
“good reason” (as defined in the Advisory Agreement) or (iii) by the General Partner other than for “cause”
(as defined in the Advisory Agreement).


 


“Transfer”
has the meaning provided in Section 9.2(a) hereof.


 


“Value”
means the fair market value per share of REIT Shares which will equal: (i) if REIT Shares are Listed, the average closing price
per share for the previous thirty (30) business days, (ii) if REIT Shares are not Listed, the most recent offering price per share
or share equivalent of REIT Shares, until December 31st of the year following the year in which the most recently completed offering
of REIT Shares has expired, and (iii) thereafter, such price per REIT Share as the management of the General Partner determines
in good faith.


 


ARTICLE
2

PARTNERSHIP FORMATION AND IDENTIFICATION


 


2.1          Formation.


 


The
Partnership was formed as a limited partnership pursuant to the Act, and all other pertinent laws of the State of Delaware, for
the purposes and upon the terms and conditions set forth in this Agreement.


 


2.2          Name,
Office and Registered Agent.


 


The
name of the Partnership is Moody National Operating Partnership II, LP. The specified office and place of business of the Partnership
shall be 6363 Woodway Drive, Suite 110, Houston, Texas 77057. The General Partner may at any time change the location of such
office, provided the General Partner gives notice to the Partners of any such change. The name and address of the Partnership’s
registered agent is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware 19801.
The sole duty of the registered agent as such is to forward to the Partnership any notice that is served on him as registered
agent.


 


2.3          Term
and Dissolution.


 


(a)          The
term of the Partnership shall continue in full force and effect until dissolved upon the first to occur of any of the following
events:


 






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(i)          the
occurrence of an Event of Bankruptcy as to a General Partner or the dissolution, death, removal or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof; provided that if a General Partner is on
the date of such occurrence a partnership, the dissolution of such General Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such partnership shall not be an event of dissolution of the Partnership if the
business of such General Partner is continued by the remaining partner or partners, either alone or with additional partners,
and such General Partner and such partners comply with any other applicable requirements of this Agreement;


 


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


 


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


 


(b)          Upon
dissolution of the Partnership (unless the business of the Partnership is continued pursuant to Section 7.3(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall amend or cancel any Certificate(s) and liquidate the
Partnership’s assets and apply and distribute the proceeds thereof in accordance with Section 5.6 hereof. Notwithstanding
the foregoing, the liquidating General Partner may either (i) defer liquidation of, or withhold from distribution for a reasonable
time, any assets of the Partnership (including those necessary to satisfy the Partnership’s debts and obligations), or (ii)
distribute the assets to the Partners in kind.


 


2.4          Filing
of Certificate and Perfection of Limited Partnership.


 


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


 






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ARTICLE
3

BUSINESS OF THE PARTNERSHIP


 


The
purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted
by a limited partnership organized pursuant to the Act, provided, however, that such business shall be limited to and conducted
in such a manner as to permit the General Partner at all times to qualify as a REIT, unless the General Partner determines that
it no longer intends to qualify as a REIT, and in a manner such that the General Partner will not be subject to any taxes under
Section 857 or 4981 of the Code, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any
of the foregoing or the ownership of interests in any entity engaged in any of the foregoing and (iii) to do anything necessary
or incidental to the foregoing. In connection with the foregoing, and without limiting the General Partner’s right in its
sole and absolute discretion to qualify or cease qualifying as a REIT, the Partners acknowledge that the General Partner intends
to qualify as a REIT for federal income tax purposes and that such qualification and the avoidance of income and excise taxes
on the General Partner inures to the benefit of all the Partners and not solely to the General Partner. Notwithstanding the foregoing,
the Limited Partners agree that the General Partner may terminate its status as a REIT under the Code at any time to the full
extent permitted under the Articles of Incorporation. The General Partner on behalf of the Partnership shall also be empowered
to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly
traded partnership” under Section 7704 of the Code.


 


ARTICLE
4

CAPITAL CONTRIBUTIONS AND ACCOUNTS


 


4.1          Capital
Contributions.


 


The
Capital Contributions and Partnership Units of each Partner are set forth on Exhibit A, as the same shall be amended from
time to time by the General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions,
Capital Contributions, the issuance of additional Partnership Units, or similar events having an effect on a Partner’s ownership
of Partnership Units.


 


4.2          Additional
Capital Contributions and Issuances of Additional Partnership Units.


 


Except
as provided in this Section 4.2 or in Section 4.3, the Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership.


 


(a)          The
General Partner is hereby authorized to cause the Partnership to issue additional Partnership Units for any Partnership purpose
at any time or from time to time, including but not limited to Partnership Units issued in connection with acquisitions of properties,
to the Partners (including the General Partner) or to other Persons for such consideration and on such terms and conditions as
shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partner.
Any additional Partnership Units issued thereby may be issued in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or other special rights, powers and duties, all as shall
be determined by the General Partner in its sole and absolute discretion and without the approval of any Limited Partner, subject
to Delaware law, including, without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Units; (ii) the right of each such class or series of Partnership Units to
share in Partnership distributions; and (iii) the rights of each such class or series of Partnership Units upon dissolution and
liquidation of the Partnership. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership
to issue Partnership Units for less than fair market value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership. In the event that the Partnership issues additional Partnership
Units pursuant to this Section 4.2(a), the General Partner shall make such revisions to this Agreement as it deems necessary to
reflect the issuance of such additional Partnership Units.


 






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(b)          No
additional Partnership Units shall be issued to the General Partner unless (i) the additional Partnership Units are issued to
all Partners in proportion to their respective Percentage Interests with respect to the class of Partnership Units so issued;
(ii) (a) the additional Partnership Units are issued in connection with (x) an issuance of REIT Shares, or (y) an issuance of
Preferred Shares, New Securities or other interests in the General Partner (other than REIT Shares), which Preferred Shares, New
Securities or other interests have designations, preferences and other rights, terms and provisions that are substantially the
same as the designations, preferences and other rights, terms and provisions of the additional Partnership Units issued to the
General Partner, and (b) the General Partner contributes to the Partnership the cash proceeds or other consideration received
in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the General Partner,
or (iii) the Additional Partnership Units are issued upon the conversion, redemption or exchange of debt, Partnership Units or
other securities issued by the Partnership.


 


(c)          The
General Partner shall not issue any additional REIT Shares, Preferred Shares, Junior Shares or New Securities unless the General
Partner contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Preferred
shares, Junior Shares or New Securities, as the case may be, and from the exercise of the rights contained in any such additional
New Securities, to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Partnership Units, or (y) in
the case of an issuance of Preferred Shares, Junior Shares or New Securities, Partnership Units with designations, preferences
and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms
and provisions of such Preferred Shares, Junior Shares or New Securities; provided, however, that notwithstanding the foregoing,
the General Partner may issue REIT Shares, Preferred Shares, Junior Shares or New Securities (a) pursuant to Section 8.5(b) hereof,
(b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Preferred Shares, Junior Shares, or New
Securities to all of the holders of REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case may be, (c) upon
a conversion, redemption or exchange of Preferred Shares, (d) upon a conversion of Junior Shares into REIT Shares, (e) upon a
conversion, redemption, exchange or exercise of New Securities, or (f) in connection with an acquisition of a property or other
asset to be owned, directly or indirectly, by the General Partner if the General Partner determines that such acquisition is in
the best interest of the Partnership. In the event of any issuance of additional REIT Shares, Preferred Shares, Junior Shares,
or New Securities by the General Partner, and the contribution to the Partnership, by the General Partner, of the cash proceeds
or other consideration received from such issuance, if the cash proceeds actually received by the General Partner are less than
the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection
with such issuance, then the General Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount
equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s discount and other expenses
paid by the General Partner (which discount and expense shall be treated as an expense for the benefit of the Partnership).


 


(d)          The
Partnership issued Special Limited Partnership Units to Moody National LPOP II, LLC in exchange for the cash contribution reflected
on Exhibit A hereto and for services performed or to be performed for the Partnership and its Subsidiaries, and admitted
such Person as the Special Limited Partner. The Special Limited Partner shall be entitled to certain distributions as provided
in Section 5.2 and certain preferential allocations of items of income and gain under Section 5.1. The Special Limited Partnership
Units will be subject to the transfer restrictions set forth in Article 9 and will be subject to redemption pursuant to Section
8.6.


 






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4.3          Additional
Funding.


 


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


 


4.4          Capital
Accounts.


 


(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).
Each Partner’s Capital Account shall be increased by (i) the amount of such Partner’s Capital Contributions and (ii)
Profit allocated to such Partner and all items of Partnership income and gain allocated to such Partner pursuant to Sections 5.1(c),
5.1(d) and 5.1(e) and decreased by (x) the amount of cash or Agreed Value of all actual and deemed distributions of cash or property
made to such Partner pursuant to this Agreement and (y) Loss allocated to such Partner and all items of Partnership deduction
and loss allocated to such Partner pursuant to Section 5.1(c).


 


(b)          In
the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.


 


(c)         The
provisions of the 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 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 in order to comply with such Regulations, the General
Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any
Person upon the dissolution of the Partnership. The General Partner also shall (i) 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)(g)
and (ii) make appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b) or 1.704-2.


 


4.5          No
Interest on Contributions


 


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


 






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4.6          Return
of Capital Contributions


 


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


 


4.7          No
Third-Party Beneficiary.


 


No
creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of
any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it
being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set
forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by
any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged
or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition,
it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other
Property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of
this Agreement, any Limited Partner is obligated to return such money or Property, such obligation shall be the obligation of
such Limited Partner and not of the General Partner. Without limiting the generality of the foregoing, a deficit Capital Account
of a Partner shall not be deemed to be a liability of such Partner nor an asset or Property of the Partnership.


 


4.8         Redemption
of REIT Shares.


 


If,
at any time, any shares of capital stock of the General Partner are redeemed by the General Partner for cash, the Partnership
shall, immediately prior to such redemption, redeem an equal number of equivalent Partnership Units (taking into account any relevant
Conversion Factor) held by the General Partner upon the same terms and for the same price per Partnership Unit as such shares
are redeemed.


 


ARTICLE
5

PROFITS AND LOSSES; DISTRIBUTIONS


 


5.1          Allocation
of Profit and Loss.


 


Profit
and loss of the Partnership shall be determined in accordance with Section 704(b) of the Code and the Treasury Regulations thereunder
and shall be allocated in accordance with this Article 5.


 






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(a)          Profit.


 


After
giving effect to the special allocations in Sections 5.1(c) and 5.1(d), profit of the Partnership for each Partnership Year or
other applicable period of the Partnership shall be allocated to the Partners in the following order and priority:


 


(i)          Profit
shall be allocated to the General Partner until the cumulative Profit allocated to the General Partner pursuant to this Section
5.1(a)(i) equals the cumulative Loss allocated to the General Partner pursuant to Section 5.1(b)(ii).


 


(ii)         Profit
shall be allocated to the Partners (other than the Special Limited Partner) in accordance with their Percentage Interests.


 


(b)          Loss.


 


After
giving effect to the special allocations in Sections 5.1(c), 5.1(d) and 5.1(e), loss of the Partnership for each Partnership Year
or other applicable period of the Partnership shall be allocated to the Partners in the following order and priority:


 


(i)          Loss
shall be allocated to the Partners (other than the Special Limited Partner) in accordance with their Percentage Interests, provided
that loss shall not be allocated to a Partner pursuant to this Section 5.1(b)(i) to the extent that such allocation would cause
or increase an Adjusted Capital Account Deficit at the end of any fiscal year.


 


(ii)         Loss
shall be allocated to the General Partner.


 


(c)          Special
Allocations. The following regulatory allocations shall be made in the following order and priority:


 


(i)          Minimum
Gain Chargeback. Notwithstanding the provisions of this Section 5.1, if there is a net decrease in Partnership Minimum Gain during
any Partnership 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 Section 1.704-2(0(6). This Section 5.1(c)(i) is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.


 


(ii)         Partner
Minimum Gain Chargeback. Notwithstanding any other provision of this Section 5.1, if there is a net decrease in Partner Minimum
Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Partner who has a share of the Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(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)(5). 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 Section 1.704-2(i)(4). This Section 5,1(c)(ii) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.


 






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(iii)        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 1.7044(b)(2)(ii)(d)(6) and 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 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. This Section 5.1(c)(iii) is intended to constitute a “qualified income offset”
under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.


 


(iv)        No
Excess Deficit. To the extent that any Partner has or would have, as a result of an allocation of Net Loss (or item thereof),
an Adjusted Capital Account Deficit, such amount of Net Loss (or item thereof) shall be allocated to the other Partners in accordance
with Section 5.1(b), but in a manner which will not produce an Adjusted Capital Account Deficit as to such Partners. To the extent
such allocation would result in all Partners having Adjusted Capital Account Deficits, such Net Loss (or item thereof) shall be
allocated to the General Partner.


 


(v)         Nonrecourse
Deductions. Nonrecourse Deductions for any Partnership Year shall be allocated to the Partners (other than the Special Limited
Partner) 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 for such Partnership Year to the numerically closest ratio which would satisfy such requirements.


 


(vi)        Partner
Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any Partnership 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 Sections 1.704-2(6)(4) and 1.704-2(i).


 


(vii)       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.


 






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(d)          Priority
Allocations to the Special Limited Partner. Notwithstanding the provisions of Sections 5.1(a) and 5.1(b) above, the Special Limited
Partner shall be allocated on a priority basis items of income or gain, including, without limitation, items of gain from a sale
(including but not limited to net capital gain realized in connection with the adjustment to the tax book value of Partnership
assets under Section 704(b) of the Code) on a cumulative basis pursuant to this Section 5.1(d) in an amount equal to the amount
of distributions made (or in connection with a sale or winding up or liquidation of the Partnership, to be made) to such Partner.


 


(e)          Allocations
Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Interests or if Percentage Interests
vary during a Partnership Year, the General Partner, in its sole and absolute discretion, shall determine which method authorized
under the Code and the Regulations shall be used to allocate the distributive shares.


 


(f)           Allocations
for Tax Purposes. All allocations for federal income tax purposes shall be consistent with all allocations in this Section 5.1,
except as otherwise required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have
the authority to elect the method to be used by the Partnership for allocating items of income, gain, and expense as required
by Section 704(c) of the Code including a method that may result in a Partner receiving a disproportionately larger share of the
Partnership tax depreciation deductions, and such election shall be binding on all Partners.


 


(g)          Revisions
to Allocations to Reflect Issuance of Additional 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 Section 5.1 as it deems necessary to reflect the terms of the issuance of such additional Partnership Interests, including
making preferential allocations to classes of Partnership Interests that are entitled thereto. Such revisions shall not require
the consent or approval of any other Partner.


 


5.2          Distribution
of Cash.


 


(a)          The Partnership shall distribute cash on a quarterly (or, at the election of the General Partner, more frequent) basis, in an
amount determined by the General Partner in its sole and absolute discretion, to the Partners who are Partners on the Partnership
Record Date with respect to such quarter (or other distribution period) in accordance with Section 5.2(b).


 


(b)          Except
for distributions pursuant to Section 5.4 of this Agreement in connection with the dissolution and liquidation of the Partnership
and subject to the provisions of Section 5.2(c) and 5.3 of this Agreement, distributions shall be made (i) first, 100% to the
Partners (other than Special Limited Partner) in accordance with their respective Percentage Interests on the Partnership Record
Date until the Limited Partners (other than the Special Limited Partner) have received cumulative distributions under this Section
5.2(b) equal to the aggregate Capital Contributions made by the Limited Partners (other than the Special Limited Partner) to the
Partnership plus a cumulative, noncompounded pre-tax rate of return thereon of 6.0% per annum, determined by taking into account
the dates on which all such Capital Contributions and distributions were made and (ii) second, (A) 85% to the Partners (other
than the Special Limited Partner), in accordance with their respective Percentage Interests on the Partnership Record Date and
(B) 15% to the Special Limited Partner.


 






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(c)          Notwithstanding
any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary
or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal,
state or local law including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Partnership is required to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution
of income to any Partner or assignee (including by reason of Section 1446 of the Code), either (i) if the actual amount to be
distributed to the Partner equals or exceeds the amount required to be withheld by the Partnership, the amount withheld shall
be treated as a distribution of cash in the amount of such withholding to such Partner, or (ii) if the actual amount to be distributed
to the Partner is less than the amount required to be withheld by the Partnership, the actual amount shall be treated as a distribution
of cash in the amount of such withholding and the additional amount required to be withheld shall be treated as a loan (a “Partnership
Loan”) from the Partnership to the Partner on the day the Partnership pays over such amount to a taxing authority. A Partnership
Loan shall be repaid through withholding by the Partnership with respect to subsequent distributions to the applicable Partner
or assignee. In the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay any amount owed to
the Partnership with respect to the Partnership Loan within fifteen (15) days after demand for payment thereof is made by the
Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the payment to
the Partnership on behalf of such Defaulting Limited Partner. In such event, on the date of payment, the General Partner shall
be deemed to have extended a loan (a “General Partner Loan”) to the Defaulting Limited Partner in the amount of the
payment made by the General Partner and shall succeed to all rights and remedies of the Partnership against the Defaulting Limited
Partner as to that amount. Without limitation, the General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such time as the General Partner Loan has been paid in
full, and any such distributions so received by the General Partner shall be treated as having been received by the Defaulting
Limited Partner and immediately paid to the General Partner. Any amounts treated as a Partnership Loan or a General Partner Loan
pursuant to this Section 5.2(c) shall bear interest at the lesser of (i) the base rate on corporate loans at large United States
money center commercial banks, as published from time to time in The Wall Street Journal, or (ii) the maximum lawful rate of interest
on such obligation, such interest to accrue from the date the Partnership or the General Partner, as applicable, is deemed to
extend the loan until such loan is repaid in full.


 


(d)          In
no event may a Partner receive a distribution of cash with respect to a Partnership Unit if such Partner is entitled to receive
a cash distribution as the holder of record of a REIT Share for which all or part of such Partnership Unit has been or will be
exchanged.


 


5.3          REIT
Distribution Requirements.


 


The
General Partner shall use its commercially reasonable efforts to cause the Partnership to distribute amounts sufficient to enable
the General Partner to make stockholder distributions that will allow the General Partner to (i) meet its distribution requirement
for qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid any federal income or excise tax liability
imposed by the Code.


 






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5.4          No
Right to Distributions in Kind.


 


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


 


5.5          Limitations
on Return of Capital Contributions.


 


Notwithstanding
any of the provisions of this Article 5, no Partner shall have the right to receive, and the General Partner shall not have the
right to make, a distribution that includes a return of all or part of a Partner’s Capital Contributions, unless after giving
effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner
for the return of his Capital Contribution, does not exceed the fair market value of the Partnership’s assets.


 


5.6          Distributions
upon Liquidation.


 


Upon
liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including
any Partner loans, any remaining assets of the Partnership shall be distributed to all Partners in accordance with their Capital
Accounts. To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating
trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.


 


5.7          Substantial
Economic Effect.


 


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


 


ARTICLE
6

RIGHTS, OBLIGATIONS AND

POWERS OF THE GENERAL PARTNER


 


6.1          Management
of the Partnership.


 


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


 


 


(i)          to
acquire, purchase, own, operate, lease and dispose of any Real Estate Asset that the General Partner determines is necessary or
appropriate or in the best interests of the business of the Partnership;


 


(ii)         to
construct buildings and make other improvements on the Properties;


 


 






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


 


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


 


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


 


(vi)        to guarantee or become a co-maker of indebtedness of the General Partner or any Subsidiary thereof, refinance, increase the amount
of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure
such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;


 


(vii)       to
use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including,
without limitation, payment, either directly or by reimbursement, of all Administrative Expenses and REIT Expenses of the General
Partner, the Partnership or any Subsidiary of either, to third parties or to the General Partner as set forth in this Agreement;


 


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


 


(ix)        to
prosecute, defend, arbitrate, or compromise any and all claims or liabilities in favor of or against the Partnership, on such
terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation
with respect to the Partners, the Partnership, or the Partnership’s assets;


 






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


 


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


 


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


 


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


 


(xiv)      to
establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership,
and to retain legal counsel, accountants, consultants, real estate brokers, and such other persons, as the General Partner may
deem necessary or appropriate in connection with the Partnership business and to pay therefor such remuneration as the General
Partner may deem reasonable and proper;


 


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


 


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


 


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


 


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


 


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


 


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


 


(xxi)      to
merge, consolidate or combine the Partnership with or into another Person;


 


(xxii)     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” that is taxable as a corporation under Section 7704 of the Code; and


 






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(xxiii)    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 General Partner at all
times to qualify as a REIT unless the General Partner voluntarily terminates its REIT status) and to possess and enjoy all of
the rights and powers of a general partner as provided by the Act.


 


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


 


6.2          Delegation
of Authority.


 


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


 


6.3          Indemnification
and Exculpation of Indemnitees.


 


(a)          The
Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as
a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving
rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the Indemnitee
actually received an improper personal benefit in money, Property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Any indemnification pursuant to this Section
6.3 shall be made only out of the assets of the Partnership.


 


(b)          The
Partnership shall reimburse an Indemnitee for reasonable expenses incurred by an Indemnitee who is a party to a proceeding in
advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee
of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized
in this Section 6.3 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 6.3 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.


 






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


 


(e)          For
purposes of this Section 6.3, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 6.3; and actions taken or omitted
by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed
by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.


 


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


 


(g)          An
Indemnitee shall not be denied indemnification in whole or in part under this Section 6.3 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of
this Agreement.


 


(h)          The
provisions of this Section 6.3 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other Persons.


 


(i)           Notwithstanding
the foregoing, the Partnership may not indemnify or hold harmless an Indemnitee for any liability or loss unless all of the following
conditions are met: (i) the Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability
was in the best interests of the Partnership; (ii) the Indemnitee was acting on behalf of or performing services for the Partnership;
(iii) the liability or loss was not the result of (A) negligence or misconduct, in the case that the Indemnitee is a director
of the General Partner (other than an Independent Director), the Advisor or an Affiliate of the Advisor or (B) gross negligence
or willful misconduct, in the case that the Indemnitee is an Independent Director; and (iv) the indemnification or agreement to
hold harmless is recoverable only out of net assets of the Partnership. In addition, the Partnership shall not provide indemnification
for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count
involving alleged material securities law violations as to the Indemnitee; (ii) such claims have been dismissed with prejudice
on the merits by a court of competent jurisdiction as to the Indemnitee; or (iii) a court of competent jurisdiction approves a
settlement of the claims against the Indemnitee and finds that indemnification of the settlement and the related costs should
be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the
published position of any state securities regulatory authority in which securities of the General Partner or the Partnership
were offered or sold as to indemnification for violations of securities laws.


 






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6.4          Liability
of the General Partner.


 


(a)          Notwithstanding
anything to the contrary set forth in this Agreement, the General Partner shall not be liable for monetary damages to the Partnership
or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission if the
General Partner acted in good faith. The General Partner shall not be in breach of any duty that the General Partner may owe to
the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity
provided the General Partner, acting in good faith, abides by the terms of this Agreement.


 


(b)          The
Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, itself and its stockholders
collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including,
without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all, of the Limited Partners)
in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the
interests of its stockholders on one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith
to resolve the conflict in a manner not adverse to either its stockholders or the Limited Partners; provided, however, that for
so long as the General Partner directly owns a controlling interest in the Partnership, any such conflict that the General Partner,
in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either its stockholders or the Limited
Partner shall be resolved in favor of the stockholders. 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 6.1 hereof, the General Partner may exercise any of the
powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through
its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed
by it in good faith.


 


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


 


(e)          Any
amendment, modification or repeal of this Section 6.4 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner’s liability to the Partnership and the Limited Partners under this Section
6.4 as in effect immediately prior to such amendment, modification or repeal with respect to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.


 






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6.5          Reimbursement
of General Partner.


 


(a)         Except
as provided in this Section 6.5 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 general
partner of the Partnership.


 


(b)          The
General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and
absolute discretion, for all Administrative Expenses incurred by the General Partner. Reimbursement of Administrative Expenses
shall be treated as an expense of the Partnership and not as allocations of Partnership income or gain.


 


6.6          Outside
Activities.


 


Subject
to the Articles of Incorporation and any agreements entered into by the General Partner or its Affiliates with the Partnership
or a Subsidiary, any officer, director, employee, agent, trustee, Affiliate or stockholder of the General Partner, the General
Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. None
of the Partnership, Limited Partners or any other Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business ventures, interests or activities, and the General Partner shall have no
obligation pursuant to this Agreement to offer any interest in any such business ventures, interests and activities to the Partnership
or any Limited Partner, even if such opportunity is of a character which, if presented to the Partnership or any Limited Partner,
could be taken by such Person.


 


6.7          Employment
or Retention of Affiliates.


 


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


 


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


 






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


 


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


 


6.8          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 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. 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.


 


ARTICLE
7

CHANGES IN GENERAL PARTNER


 


7.1          Transfer
of the General Partner’s Partnership Units.


 


(a)          The
General Partner shall not transfer all or any portion of its Partnership Units (except as provided in Section 7.4) or withdraw
as General Partner except as provided in, or in connection with a transaction contemplated by, Section 7.1(e).


 


(b)          Except
as otherwise provided in Section 7.1(e) hereof, the General Partner shall not engage in any merger, consolidation or other combination
with or into another Person or the sale of all or substantially all of its assets (other than in connection with a change in the
General Partner’s state of incorporation or organizational form), in each case which results in a change of control of the
General Partner (a “Transaction”), unless:


 


(i)           the consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners is obtained;


 






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(ii)        
as a result of such Transaction all Limited Partners will receive (A) for each Partnership Unit an amount of cash, securities,
or other Property equal to the product of the Conversion Factor and the greatest amount of cash, securities or other Property
paid in the Transaction to a holder of one REIT Share in consideration of one REIT Share, provided that if, in connection with
the Transaction, a purchase, tender or exchange offer (“Offer”) shall have been made to and accepted by the holders
of more than 50% of the outstanding REIT Shares, each holder of Partnership Units shall be given the option to exchange its Partnership
Units for the greatest amount of cash, securities, or other Property which a Limited Partner holding Partnership Units would have
received had it (1) exercised its Redemption Right and (2) sold, tendered or exchanged pursuant to the Offer the REIT Shares received
upon exercise of the Redemption Right immediately prior to the expiration of the Offer and (B) for each Special Limited Partnership
Unit an amount of cash, securities or other Property (as applicable based upon the type of consideration and the proportions thereof
paid to holders of REIT Shares in the Transaction) equal to the fair market value of such Special Limited Partnership Unit at
such time as determined in good faith by the General Partner by reference to the value paid for the REIT Shares; or


 


(iii)         the General Partner is the surviving entity in the Transaction and either (A) the holders of REIT Shares do not receive cash,
securities, or other Property in the Transaction or (B) all Limited Partners (other than the General Partner or any Subsidiary)
receive (1) in exchange for their Partnership Units, an amount of cash, securities, or other Property (expressed as an amount
per REIT Share) that is no less than the product of the Conversion Factor and the greatest amount of cash, securities, or other
Property (expressed as an amount per REIT Share) received in the Transaction by any holder of REIT Shares and (2) in exchange
for their Special Limited Partnership Units, an amount of cash, securities or other Property (as applicable based upon the type
of consideration and the proportions thereof paid to holders of REIT Shares in the Transaction) equal to the fair market value
of such Special Limited Partnership Units at such time as determined in good faith by the General Partner by reference to the
value paid for the REIT Shares.


 


(d)          Notwithstanding
Section 7.1(c), the General Partner may merge with or into or consolidate with another entity if immediately after such merger
or consolidation (i) substantially all of the assets of the successor or surviving entity (the “Survivor”),
other than Partnership Units held by the General Partner, are contributed, directly or indirectly, to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair market value equal to the value of the assets so contributed as determined
by the Survivor in good faith and (ii) the Survivor expressly agrees to assume all obligations of the General Partner, as appropriate,
hereunder. Upon such contribution and assumption, the Survivor shall have the right and duty to amend this Agreement as set forth
in this Section 7.1(d). The Survivor shall in good faith arrive at a new method for the calculation of the Cash Amount, the REIT
Shares Amount and Conversion Factor for a Partnership Unit after any such merger or consolidation so as to approximate the existing
method for such calculation as closely as reasonably possible. Such calculation shall take into account, among other things, the
kind and amount of securities, cash and other Property that was receivable upon such merger or consolidation by a holder of REIT
Shares or options, warrants or other rights relating thereto, and which a holder of Partnership Units could have acquired had
such Partnership Units been exchanged immediately prior to such merger or consolidation. Such amendment to this Agreement shall
provide for adjustment to such method of calculation, which shall be as nearly equivalent as may be practicable to the adjustments
provided for with respect to the Conversion Factor. The Survivor also shall in good faith modify the definition of REIT Shares
and make such amendments to Sections 8.5 and 8.6 hereof so as to approximate the existing rights and obligations set forth in
Sections 8.5 and 8.6 as closely as reasonably possible. The above provisions of this Section 7.1(d) shall similarly apply to successive
mergers or consolidations permitted hereunder.


 






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In
respect of any transaction described in the preceding paragraph, the General Partner is required to use its commercially reasonable
efforts to structure such transaction to avoid causing the Limited Partners to recognize a gain for Federal income tax purposes
by virtue of the occurrence of or their participation in such transaction, provided such efforts are consistent with the exercise
of the General Partner’s board of directors’ fiduciary duties to the stockholders of the General Partner under applicable
law.


 


(e)          Notwithstanding
Section 7.1(a) or (b),


 


(i)          a
General Partner may transfer all or any portion of its Partnership Units to (A) a wholly owned Subsidiary of such General Partner
or (B) the owner of all of the ownership interests of such General Partner, and following a transfer of all of its General Partnership
Interests, may withdraw as General Partner; and


 


(ii)         the
General Partner may engage in a transaction not required by law or by the rules of any national securities exchange on which the
General Partner’s shares are listed to be submitted to the vote of the holders of the General Partner’s shares.


 


7.2          Admission
of a Substitute or Additional General Partner.


 


A
Person shall be admitted as a substitute or additional General Partner of the Partnership only if the following terms and conditions
are satisfied:


 


(a)          the
Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms
and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required
or appropriate in order to effect the admission of such Person as a General Partner, and a certificate evidencing the admission
of such Person as a General Partner shall have been filed for recordation and all other actions required by Section 2.4 hereof
in connection with such admission shall have been performed;


 


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


 


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


 






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


 


(a)          Upon
the occurrence of an Event of Bankruptcy as to a General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall
be deemed not to be a dissolution of such General Partner if the business of such General Partner is continued by the remaining
partner or partners), the Partnership shall be dissolved and terminated unless the Partnership is continued pursuant to Section
7.3(b) hereof. The merger of the General Partner with or into any entity that is admitted as a substitute or successor General
Partner pursuant to Section 7.2 hereof shall not be deemed to be the withdrawal, dissolution or removal of the General Partner.


 


(b)          Following
the occurrence of an Event of Bankruptcy as to a General Partner (and its removal pursuant to Section 7.4(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a General Partner is, on the date of such occurrence,
a partnership, the withdrawal of, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership
shall be deemed not to be a dissolution of such General Partner if the business of such General Partner is continued by the remaining
partner or partners), the Limited Partners, within 90 days after such occurrence, may elect to continue the business of the Partnership
for the balance of the term specified in Section 2.3 hereof by selecting, subject to Section 7.2 hereof and any other provisions
of this Agreement, a substitute General Partner by consent of a majority in interest of the Limited Partners. If the Limited Partners
elect to continue the business of the Partnership and admit a substitute General Partner, the relationship with the Partners and
of any Person who has acquired an interest of a Partner in the Partnership shall be governed by this Agreement.


 


7.4          Removal
of a General Partner.


 


(a)          Upon
the occurrence of an Event of Bankruptcy as to, or the dissolution of, a General Partner, such General Partner shall be deemed
to be removed automatically; provided, however, that if a General Partner is on the date of such occurrence a partnership, the
withdrawal, death or dissolution of, Event of Bankruptcy as to, or removal of, a partner in, such partnership shall be deemed
not to be a dissolution of the General Partner if the business of such General Partner is continued by the remaining partner or
partners. The Limited Partners may not remove the General Partner, with or without cause.


 


(b)          If
a General Partner has been removed pursuant to this Section 7.4 and the Partnership is continued pursuant to Section 7.3 hereof,
such General Partner shall promptly transfer and assign its Partnership Units to the substitute General Partner approved by a
majority in interest of the Limited Partners in accordance with Section 7.3(b) hereof and otherwise be admitted to the Partnership
in accordance with Section 7.2 hereof. At the time of assignment, the removed General Partner shall be entitled to receive from
the substitute General Partner the fair market value of the Partnership Units of such removed General Partner as reduced by any
damages caused to the Partnership by such General Partner. Such fair market value shall be determined by an appraiser mutually
agreed upon by the General Partner and a majority in interest of the Limited Partners within ten (10) days following the removal
of the General Partner. In the event that the parties are unable to agree upon an appraiser, the removed General Partner and a
majority in interest of the Limited Partners each shall select an appraiser. Each such appraiser shall complete an appraisal of
the fair market value of the removed General Partner’s Partnership Units within thirty (30) days of the General Partner’s
removal, and the fair market value of the removed General Partner’s Partnership Units shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by more than 20% of the amount of the lower appraisal,
the two appraisers, no later than forty (40) days after the removal of the General Partner, shall select a third appraiser who
shall complete an appraisal of the fair market value of the removed General Partner’s Partnership Units no later than sixty
(60) days after the removal of the General Partner. In such case, the fair market value of the removed General Partner’s
Partnership Units shall be the average of the two appraisals closest in value.


 






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(c)          The
Partnership Units of a removed General Partner, during the time after default until transfer under Section 7.4(b), shall be converted
to that of a Limited Partner; provided, however, such removed General Partner shall not have any rights to participate in the
management and affairs of the Partnership, and shall not be entitled to any portion of the income, expense, profit, gain or loss
allocations or cash distributions allocable or payable, as the case may be, to the Limited Partners. Instead, such removed General
Partner shall receive and be entitled only to retain distributions or allocations of such items that it would have been entitled
to receive in its capacity as General Partner, until the transfer is effective pursuant to Section 7.4(b).


 


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


 


ARTICLE
8

RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS


 


8.1          Management
of the Partnership.


 


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


 


8.2          Power
of Attorney.


 


Each
Limited Partner hereby irrevocably appoints the General Partner its true and lawful attorney-in-fact, who may act for each Limited
Partner and in its name, place and stead, and for its use and benefit, to sign, acknowledge, swear to, deliver, file or record,
at the appropriate public offices, any and all documents, certificates, and instruments as may be deemed necessary or desirable
by the General Partner to carry out fully the provisions of this Agreement and the Act in accordance with their terms, which power
of attorney is coupled with an interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or
the transfer by the Limited Partner of any part or all of its Partnership Interests, unless otherwise stated in this Agreement.


 


8.3          Limitation
on Liability of Limited Partners.


 


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


 






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8.4          Redemption
of Special Limited Partnership Interests.


 


Upon
the earliest to occur of (a) the termination or nonrenewal of the Advisory Agreement for “cause” (as defined in the
Advisory Agreement), (b) a Termination Event, or (c) the Listing, the Special Limited Partnership Units will be redeemed.


 


(a)          If
the Advisory Agreement is terminated or not renewed by the General Partner for “cause” (as defined in the Advisory
Agreement), all of the Special Limited Partnership Units shall be redeemed by the Partnership for $1 within thirty (30) days after
the termination or nonrenewal of the Advisory Agreement.


 


(b)          Upon
the occurrence of a Termination Event or the Listing, the Special Limited Partnership Units shall be redeemed for an aggregate
amount equal to the amount that would have been distributed to the Special Limited Partner under Section 5.2(b) if all assets
of the Partnership had been sold for their fair market value, all liabilities of the Partnership had been satisfied in full according
to their terms, and remaining proceeds were distributed to the Partners pursuant to Section 5.2. Such redemption shall occur no
later than thirty (30) days after the date of a Termination Event and no later than 240 days after the Listing. In determining
the fair market value of the assets of the Partnership, (i) in connection with a Termination Event, the General Partner shall
obtain an appraisal of the assets of the Partnership (excluding any assets which may be readily marked to market) and (ii) in
connection with the Listing, the General Partner shall make such determination (a) taking into account, in the event of a Listing
on a national securities exchange only, the market value of the General Partner’s listed shares based upon the average closing
price, or average of bid and asked prices, as the case may be, during a period of thirty (30) days during which such shares are
traded beginning one hundred and twenty (120) days after the Listing or (b) taking into account the value of the General Partner’s
shares based upon the initial public offering price in the event of an underwritten public offering. Payment to the Special Limited
Partner upon a Termination Event or a Listing shall be paid, at the Special Limited Partner’s discretion, in the form of
(a) shares of the General Partner’s common stock or (b) a non-interest bearing promissory note. In the event the Advisor
elects to receive shares of the General Partner’s common stock and the General Partner’s shares are not listed on
a national securities exchange, at the option of the Advisor, the Advisor and the General Partner shall enter into an agreement
whereby the General Partner shall register such shares of common stock with the Commission. However, any payments under a promissory
note may not be made in connection with a Termination Event until either (a) the closing of asset sales that result in aggregate,
cumulative distributions to the Partners (other than the Special Limited Partner) of the Partnership from operating income, sales
proceeds and other sources in an amount equal to their Capital Contributions to the Partnership plus a 6.0% cumulative non-compounded
annual pre-tax return thereon, or (b) a Listing (each a “Subsequent Liquidity Event”). In addition, the principal
amount of the promissory note issued in connection with a Termination Event will be subject to reduction as of the date of the
Subsequent Liquidity Event by an amount that will ensure that, in connection with the Subsequent Liquidity Event, the Special
Limited Partner does not receive in excess of 15% of the distributions that are made or are deemed to be made by the Partnership
after the Partners (other than the Special Limited Partner) have received or are deemed to have received aggregate, cumulative
distributions equal to their Capital Contributions to the Partnership plus a 6.0% cumulative non-compounded annual pre-tax return
thereon.


 






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8.5          Redemption
Right.


 


(a)          Subject to Sections 8.5(b), 8.5(c), 8.5(d), 8.5(e) and 8.5(f) and the provisions of any agreements between the Partnership and
one or more Limited Partners with respect to Partnership Units held by them, each Limited Partner shall have the right (subject
to the terms and conditions set forth herein) to require the Partnership to redeem (a “Redemption”) all or
a portion of the Partnership Units held by such Limited Partner (the “Tendered Units”) in exchange (a “Redemption
Right”) for REIT Shares issuable on, or the Cash Amount payable on, or a combination thereof having an equivalent value
to the REIT Shares issuable on, or the Cash Amount payable on, the Specified Redemption Date, as determined by the General Partner
in its sole discretion, provided that the Tendered Units shall have been outstanding and held by the Limited Partner for at least
one year. Any Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Partnership (with a copy
to the General Partner) by the Limited Partner exercising the Redemption Right (the “Tendering Party”). No
Limited Partner may deliver more than two Notices of Redemption during each calendar year. A Limited Partner may not exercise
the Redemption Right for fewer than 1,000 Partnership Units or, if such Limited Partner holds fewer than 1,000 Partnership Units,
all of the Partnership Units held by such Partner. The Tendering Party shall have no right, with respect to any Partnership Units
so redeemed, to receive any distribution paid with respect to Partnership Units if the record date for such distribution is on
or after the Specified Redemption Date.


 


(b)          If the General Partner elects to redeem Tendered Units for REIT Shares rather than cash, then the Partnership shall direct the
General Partner to issue and deliver such REIT Shares to the Tendering Party pursuant to the terms set forth in this Section 8.5(b),
in which case, (i) the General Partner, acting as a distinct legal entity, shall assume directly the obligation with respect thereto
and shall satisfy the Tendering Party’s exercise of its Redemption Right, and (ii) such transaction shall be treated, for
Federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the General Partner in exchange for
REIT Shares. The percentage of the Tendered Units tendered for Redemption by the Tendering Party for which the General Partner
elects to issue REIT Shares (rather than cash) is referred to as the “Applicable Percentage.” In making such
election to acquire Tendered Units, the Partnership shall act in a fair, equitable and reasonable manner that neither prefers
one group or class of Limited Partners over another nor discriminates against a group or class of Limited Partners. If the Partnership
elects to redeem any number of Tendered Units for REIT Shares, rather than cash, on the Specified Redemption Date, the Tendering
Party shall sell such number of the Tendered Units to the General Partner in exchange for a number of REIT Shares equal to the
product of the REIT Shares Amount and the Applicable Percentage. The product of the Applicable Percentage and the REIT Shares
Amount, if applicable, shall be delivered by the General Partner as duly authorized, validly issued, fully paid and accessible
REIT Shares free of any pledge, lien, encumbrance or restriction, other than the Aggregate Share Ownership Limit and other restrictions
provided in the Articles of Incorporation, the bylaws of the General Partner, the Securities Act and relevant state securities
or “blue sky” laws. Notwithstanding the provisions of Section 8.5(a) and this Section 8.5(b), the Tendering Parties
shall have no rights under this Agreement that would otherwise be prohibited under the Articles of Incorporation.


 






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(c)          In connection with an exercise of Redemption Rights pursuant to this Section 8.5, the Tendering Party shall submit the following
to the General Partner, in addition to the Notice of Redemption:


 


(1)          A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as
determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and (ii) any Related
Party and (b) representing that, after giving effect to the Redemption, and assuming that the General Partner elects to exchange
REIT Shares for the Tendered Units, neither the Tendering Party nor any Related Party will own REIT Shares in excess of the Aggregate
Share Ownership Limit (or, if applicable the Excepted Holder Limit);


 


(2)          A written representation that neither the Tendering Party nor any Related Party has any intention to acquire any additional REIT
Shares prior to the closing of the Redemption on the Specified Redemption Date;


 


(3)          An undertaking to certify, at and as a condition to the closing of the Redemption on the Specified Redemption Date, that either
(a) the actual and constructive ownership of REIT Shares by the Tendering Party and any Related Party remain unchanged from that
disclosed in the affidavit required by Section 8.5(c)(1) or (b) after giving effect to the Redemption, neither the Tendering Party
nor any Related Party shall own REIT Shares in violation of the Aggregate Share Ownership Limit (or, if applicable, the Excepted
Holder Limit); and


 


(4)          Any other documents as the General Partner may reasonably require in connection with the issuance of REIT Shares upon the exercise
of the Redemption Right.


 


(d)          Any Cash Amount to be paid to a Tendering Party pursuant to this Section 8.5 shall be paid on the Specified Redemption Date; provided,
however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 180 days
to the extent required for the General Partner to cause additional REIT Shares to be issued to provide financing to be used to
make such payment of the Cash Amount. Notwithstanding the foregoing, the General Partner agrees to use its best efforts to cause
the closing of the acquisition of Tendered Units hereunder to occur as quickly as reasonably possible.


 


(e)          Notwithstanding any other provision of this Agreement, the General Partner shall place appropriate restrictions on the ability
of the Limited Partners to exercise their Redemption Rights to prevent, among other things, (a) any person from owning shares
in excess of the Common Share Ownership Limit, the Aggregate Share Ownership Limit and the Excepted Holder Limit, (b) the General
Partner’s common stock from being owned by fewer than 100 persons, (c) the General Partner from being “closely held”
within the meaning of section 856(h) of the Code, and (d) to ensure that the Partnership does not constitute a “publicly
traded partnership” under Section 7704 of the Code. If and when the General Partner determines that imposing such restrictions
is necessary, the General Partner shall give prompt written notice thereof (a “Restriction Notice”) to each
of the Limited Partners holding Partnership Units.


 






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(f)           A redemption fee may be charged in connection with an exercise of Redemption Rights pursuant to this Section 8.5.


 


ARTICLE
9

TRANSFERS OF LIMITED PARTNERSHIP INTERESTS AND SPECIAL LIMITED

PARTNERSHIP INTERESTS


 


9.1          Restrictions
on Transfer of Limited Partnership Interests.


 


(a)          No
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of his Limited Partnership
Interests, or any of such Limited Partner’s economic rights as a Limited Partner, whether voluntarily or by operation of
law or at judicial sale or otherwise (collectively, a “Transfer”) without the consent of the General Partner,
which consent may be granted or withheld in its sole and absolute discretion. Any such purported transfer undertaken without such
consent shall be considered to be null and void ab initio and shall not be given effect. 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.


 


(b)          No
Limited Partner may withdraw from the Partnership other than as a result of a permitted Transfer of all of its Limited Partnership
Interest pursuant to this Article 9 or pursuant to a redemption of all of its Partnership Units pursuant to Section 8.5 or, with
respect to the Special Limited Partner, pursuant to the redemption of its Special Limited Partnership Interest pursuant to Section
8.4. Upon the permitted Transfer or redemption of all of a Limited Partner’s Limited Partnership Units, such Limited Partner
shall cease to be a Limited Partner.


 


(c)          No
Limited Partner may effect a Transfer of its Limited Partnership Units, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of the Limited Partnership Units under the Securities
Act or would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).


 


(d)          No
Transfer by a Limited Partner of its Limited Partnership Units, in whole or in part, may be made to any Person if (i) in the opinion
of the General Partner based on the advice of legal counsel for the Partnership, if appropriate, the transfer would result in
the Partnership’s being treated as an association taxable as a corporation (other than a qualified REIT subsidiary within
the meaning of Section 856(i) of the Code); (ii) in the opinion of the General Partner based on the advice of legal counsel for
the Partnership, if appropriate, it would adversely affect the ability of the General Partner to continue to qualify as a REIT
or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code; (iii) 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; (iv) such Transfer would cause the General Partner to own 10% or more of the ownership
interests of any tenant of a Property held by the partnership within the meaning of Section 856(d)(2)(B) of the Code; or (v) such
Transfer would result in the General Partner being “closely held” within the meaning of Section 856(h) of the Code.


 






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(e)          No
transfer by a Limited Partner of any Partnership Units may be made to a lender to the Partnership or any Person who is related
(within the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability,
without the consent of the General Partner, which may be withheld in its sole and absolute discretion, provided that as a condition
to such consent the lender will be required to enter into an arrangement with the Partnership and the General Partner to exchange
or redeem for the Cash Amount any Partnership Units in which a security interest is held 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.


 


(f)           Any
Transfer in contravention of any of the provisions of this Article 9 shall be void and ineffectual and shall not be binding upon,
or recognized by, the Partnership.


 


(g)          Prior
to the consummation of any Transfer under this Article 9, the transferor and/or the transferee shall deliver to the General Partner
such opinions, certificates and other documents as the General Partner shall request in connection with such Transfer.


 


9.2          Admission
of Substitute Limited Partner.


 


(a)         Subject
to the other provisions of this Article 9, an assignee of the Limited Partnership Units of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee, or other recipient of any disposition of such Limited Partnership Units) shall be
deemed admitted as a Limited Partner of the Partnership only with the consent of the General Partner and upon the satisfactory
completion of the following:


 


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


 


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


 


(iii)        The
assignee shall have delivered a letter containing the representation set forth in Section 9.1(a) hereof and the agreement set
forth in Section 9.1(b) hereof.


 


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


 


(v)         The
assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 8.2 hereof.


 






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


 


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


 


9.3          Rights
of Assignees of Partnership Units.


 


(a)          Subject
to the provisions of Sections 9.1 and 9.2 hereof, except as required by operation of law, the Partnership shall not be obligated
for any purposes whatsoever to recognize the assignment by any Limited Partner of its Partnership Units until the Partnership
has received notice thereof.


 


(b)          Any
Person who is the assignee of all or any portion of a Limited Partner’s Limited Partnership Units, but does not become a
Substitute Limited Partner and desires to make a further assignment of such Limited Partnership Units, shall be subject to all
the provisions of this Article 9 to the same extent and in the same manner as any Limited Partner desiring to make an assignment
of its Limited Partnership Units.


 


9.4          Effect
of Bankruptcy, Death, Incompetence or Termination of a Limited Partner.


 


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


 


9.5          Purchase
for Investment.


 


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


 


(b)          Each Limited Partner agrees that he will not sell, assign or otherwise transfer his Partnership Units or any fraction thereof,
whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations
and warranties to the General Partner set forth in Section 9.5(a) above and similarly agree not to sell, assign or transfer such
Partnership Units or fraction thereof to any Person who does not similarly represent, warrant and agree.


 






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ARTICLE
10

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS


 


10.1        Books
and Records.


 


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


 


10.2        Custody
of Partnership Funds; Bank Accounts.


 


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


 


(b)          All
deposits and other funds not needed in the operation of the business of the Partnership may be invested by the General Partner
in investment grade instruments (or investment companies whose portfolio consists primarily thereof), government obligations,
certificates of deposit, bankers’ acceptances and municipal notes and bonds. The funds of the Partnership shall not be commingled
with the funds of any other Person except for such commingling as may necessarily result from an investment in those investment
companies permitted by this Section 10.2(b).


 


10.3        Fiscal
and Taxable Year.


 


The
fiscal and taxable year of the Partnership shall be the calendar year.


 


10.4        Annual
Tax Information and Report.


 


Within
seventy-five (75) days after the end of each fiscal year of the Partnership, the General Partner shall furnish to each person
who was a Limited Partner at any time during such year the tax information necessary to file such Limited Partner’s individual
tax returns as shall be reasonably required by law.


 


10.5        Tax
Matters Partner; Partnership Representative; Tax Elections; Special Basis Adjustments.


 


(a)          The General Partner shall be the Tax Matters Partner and the Partnership Representative of the Partnership. The General Partner
shall have the right to retain professional assistance in respect of any audit of the Partnership by the Service, and all out-of-pocket
expenses and fees incurred by the General Partner on behalf of the Partnership as Tax Matters Partner or Partnership Representative
shall constitute Partnership expenses.


 






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(b)         All elections required or permitted to be made by the Partnership under the Code or any applicable state or local tax law
shall be made by the General Partner in its sole and absolute discretion.


 


(c)          In the event of a transfer of all or any part of the Partnership Interest of any Partner, the Partnership, at the option of
the General Partner, may elect pursuant to Section 754 of the Code to adjust the basis of the Partnership’s assets. Notwithstanding
anything contained in Article 5 of this Agreement, any adjustments made pursuant to Section 754 of the Code shall affect only
the successor in interest to the transferring Partner and in no event shall be taken into account in establishing, maintaining
or computing Capital Accounts for the other Partners for any purpose under this Agreement. Each Partner will furnish the Partnership
with all information necessary to give effect to such election.


 


ARTICLE
11

AMENDMENT OF AGREEMENT


 


The
General Partner’s consent shall be required for any amendment to this Agreement. The General Partner, without the consent
of the Limited Partners, may amend this Agreement in any respect; provided, however, that the following amendments shall require
the consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners:


 


(a)          any
amendment affecting the operation of the Conversion Factor or the Redemption Right (except as provided in Section 8.5(d) or 7.1(d)
hereof) in a manner adverse to the Limited Partners;


 


(b)          any
amendment that would adversely affect the rights of the Limited Partners to receive the distributions payable to them hereunder,
other than with respect to the issuance of additional Partnership Interests pursuant to Section 4.2 hereof;


 


(c)          any
amendment that would alter the Partnership’s allocations of profit and loss to the Limited Partners, other than with respect
to the issuance of additional Partnership Interests pursuant to Section 4.2 hereof; or


 


(d)          any
amendment that would impose on the Limited Partners any obligation to make additional Capital Contributions to the Partnership.


 


ARTICLE
12

GENERAL PROVISIONS


 


12.1        Notices.


 


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


 






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12.2        Survival
of Rights.


 


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


 


12.3        Additional
Documents.


 


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


 


12.4        Severability.


 


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


 


12.5        Entire
Agreement.


 


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


 


12.6        Pronouns
and Plurals.


 


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


 


12.7        Headings.


 


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


 


12.8        Counterparts.


 


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


 






    	 42



    	 



    

 


12.9        Governing
Law.


 


This
Agreement shall be governed by and construed in accordance with the laws of the State of Delaware; provided, however, that any
cause of action for violation of federal or state securities laws shall not be governed by this Section 12.9.


 






    	 43



    	 



    

 


IN
WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Agreement, all as of the 20th day of May,
2016.


 


	 	GENERAL PARTNER:
	 	 	 
	 	Moody National REIT II, Inc.
	 	 	 
	 	By:	/s/ Brett C. Moody
	 	 	Brett C. Moody
	 	 	Chief Executive Officer
	 	 	 
	 	SPECIAL
LIMITED PARTNER:
	 	 	 
	 	Moody National LPOP II, LLC
	 	 	 
	 	By:	Moody National Advisor II, LLC, Sole Member
	 	 	 
	 		By:	Moody National REIT Sponsor, LLC, Sole Member
	 	 	 
	 		 	By:	Moody National REIT Sponsor SM, LLC
	 	 	 
	 		 	 	By:	/s/ Brett C. Moody
	 	 	 	 	 	Brett C. Moody
	 	 	 	 	 	Member
	 	 
	 	LIMITED
PARTNERS:
	 	 	 
	 	Moody OP Holdings II, LLC
	 	 	 
	 	By:	Moody National REIT II, Inc., Sole Member 
	 	 	 
	 		By:	/s/ Brett C. Moody
	 	 	 	Brett C. Moody
	 	 	 	Member



 






    	 44



    	 



    




 


EXHIBIT
A

CONTRIBUTIONS & INTERESTS


  





	Partner	 	Address	 	Cash

    Contribution	 	Contributions	 	Partnership
    Units	 	Special
    Limited Partnership Units
	GENERAL
    PARTNER:																
	Moody
    National REIT II, Inc.		6363
    Woodway Drive

Suite 110

Houston, Texas 77057														 
																	 
	LIMITED
    PARTNERS:																 
	Moody
    National LPOP II, LLC		6363
    Woodway Drive

Suite 110

Houston, Texas 77057		$	1,000								100			 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Moody
    OP Holdings II, LLC																
			6363
    Woodway Drive

Suite 110

Houston, Texas 77057		$	1,000											100
	Totals				$	2,000											




 






    	 A-1



    	 



    

 


Exhibit
B

Notice of Exercise of Redemption Right


 


In
accordance with Section 8.5 of the Amended and Restated Limited Partnership Agreement (the “Agreement”) of Moody National
Operating Partnership II, LP, the undersigned hereby irrevocably (i) presents for redemption Partnership Units in Moody National
Operating Partnership II, LP in accordance with the terms of the Agreement and the Redemption Right referred to in Section 8.5
thereof, (ii) surrenders such Partnership Units and all right, title and interest therein, and (iii) directs that the Cash Amount
or REIT Shares Amount (as defined in the Agreement) as determined by the General Partner deliverable upon exercise of the Redemption
Right be delivered to the address specified below, and if REIT Shares (as defined in the Agreement) are to be delivered, such
REIT Shares be registered or placed in the name(s) and at the address(es) specified below.


 


	Dated:		,						 
	 	 	 	 	 	(Name of Limited Partner)	 	 	 
	 	 	 	 	 	 			 
	 	 	 	 	 	(Signature of Limited Partner)		 	 
	 	 	 	 	 				 
	 	 	 	 	 	(Mailing Address)	 	 	 
	 	 	 	 	 		 	 	 
	 	 	 	 	 	(City)	(State)	(Zip Code)	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Signature Guaranteed by:	 	 	 
	 	 	 	 	 				 






 





	If REIT Shares are to be issued, issue to:	 
	 	 	 
	Name:		 
	 	 	 
	Social Security

or Tax I.D.

Number:		 



 


B-1