Moody National REIT I, Inc. - 8-K


Exhibit
10.1


  





TERMINATION
AGREEMENT


 


THIS
TERMINATION AGREEMENT, dated as of November 16, 2016 (this “Agreement”), among Moody National REIT I, Inc.,
a Maryland corporation that has elected to be treated as a real estate investment trust for federal income tax purposes (“Company”),
Moody National Operating Partnership I, L.P., a Delaware limited partnership and the operating partnership of Company (“Company
Operating Partnership”), solely in connection with Articles I, III and IV hereof, Moody National Advisor I, LLC, a Delaware
limited liability company and the investment advisor to Company (“Advisor”), solely in connection with Articles
I, II and IV hereof, Moody National Realty Company, L.P., a Texas limited partnership (“Moody National”), solely
in connection with Articles III and IV hereof, Moody OP Holdings I, LLC, a Delaware limited liability company (“OP Holdings”),
and Moody National REIT II, Inc., a Maryland corporation that intends to elect to be treated as a real estate investment trust
for federal income tax purposes beginning with the taxable year ending December 31, 2016 (“REIT II”). Each
of Company, Company Operating Partnership, Advisor, Moody National, OP Holdings and REIT II is sometimes referred to herein as
a “Party” and collectively as the “Parties.” Capitalized terms used and not defined in this
Agreement shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).


 


WHEREAS,
Company, Company Operating Partnership, Merger Sub, REIT II and REIT II Operating Partnership have entered into that certain Agreement
and Plan of Merger dated as of the date hereof (as may be amended from time to time, the “Merger Agreement”),
which sets forth certain rights and obligations of the parties thereto;


 


WHEREAS,
upon the consummation of the Mergers, the Parties (excluding OP Holdings) desire to terminate the Amended and Restated Investment
Advisory Agreement, dated as of August 14, 2009, as amended, among Company, Company Operating Partnership, Advisor and Moody National
(as amended, the “Company Advisory Agreement”), upon the terms and subject to the conditions set forth herein;


 


WHEREAS,
as set forth in the REIT I Partnership Agreement, the Company is the general partner of, and OP Holdings is a limited partner
of and holds 100 REIT I Special Partnership Units in the Company Operating Partnership;


 


WHEREAS,
OP Holdings is entitled to certain distributions of Net Sales Proceeds (as such term is defined in the REIT I Partnership Agreement)
with respect to its REIT I Special Partnership Units; and


 


WHEREAS,
upon the consummation of the Partnership Merger (as defined in the Merger Agreement), the Parties desire that the REIT I Special
Partnership Units be automatically cancelled and retired and cease to exist, upon the terms and subject to the conditions set
forth herein.


 






    	 



    	 



    

 


NOW
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally
bound, agree as follows:


 


Article
I

TERMINATION OF COMPANY ADVISORY AGREEMENT


 


Section
1.1     Termination of Company Advisory Agreement.


 


(a)          Advisor,
Company, Company Operating Partnership and Moody National hereby agree that the Company Advisory Agreement shall be terminated,
without any further liability or obligation on the part of any party thereto, effective as of Merger Effective Time and upon receipt
of the Advisor Termination Payment payable pursuant to Section 1.1(b); provided, that, Sections 20 through 31 of
the Company Advisory Agreement shall survive termination.


 


(b)          The
Advisor Termination Payment shall be paid by Company on the Closing Date to the account of Advisor as set forth in Schedule
I, which Advisor Termination Payment shall supersede any and all obligations and payments of Company to Advisor pursuant to
the Company Advisory Agreement or any other agreement to which Company and any Party are a party, except as contemplated by Section
1.2 hereof. For the avoidance of doubt, no Termination Fee (as defined in the Company Advisory Agreement) or other payment
not contemplated by this Agreement (including, but not limited to, any Disposition Fees, as such term is defined in the Company
Advisory Agreement) shall be payable in connection with the termination of the Company Advisory Agreement.


 


Section
1.2     Waiver of
Notice; Calculation of Fees. Each Party waives any notice of termination requirement, whether set forth in the Company Advisory
Agreement, any other contract between Company and Advisor or any of its Affiliates or otherwise. Notwithstanding anything herein
or in the Company Advisory Agreement to the contrary, the Advisor shall also be entitled to all unpaid fees and unreimbursed expenses
under the Company Advisory Agreement, incurred in the ordinary course of business for the period up to the Closing as calculated
in accordance with the terms of the Company Advisory Agreement; provided, that Advisor shall have remitted invoices for
all such fees and expenses prior to the Closing Date.


 


Article
II

REPRESENTATIONS AND WARRANTIES OF ADVISOR


 


Advisor
hereby represents and warrants to Company, Company Operating Partnership, Moody National and REIT II as follows:


 


Section
2.1     Organization.
Advisor is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware and has
all limited liability company power required to carry on its business as now conducted.


 


Section
2.2     Authority.
Advisor has full limited liability company power and authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by Advisor and is legal, valid, binding and enforceable upon and against Advisor.


 


Section
2.3     No Conflict;
Required Filings and Consents. The execution, delivery and performance by Advisor of this Agreement and the consummation by
Advisor of the transactions contemplated hereby do not and will not (a) violate any provision of the organizational documents
of Advisor; (b) violate any federal, state or local statute, law, regulation, order, injunction or decree (“Law”);
or (c) require any consent or approval of any person, including any registration or filing with, or notice to any federal,
state or local governmental authority or any agency or instrumentality thereof.


 






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Section
2.4     Claims by
Advisor. Advisor has not made any claims against Company, Company Operating Partnership, Moody National or any subsidiaries
of the foregoing (“Company Parties”) and, to Advisor’s knowledge, there are no pending or threatened
claims or facts or circumstances which are reasonably likely to give rise to any claim by Advisor against any Company Party.


 


Section
2.5     Claims by
Company Parties. None of the Company Parties has made any claims against Advisor and, to Advisor’s knowledge, there
are no pending or threatened claims or facts or circumstances which are reasonably likely to give rise to any claim by any Company
Party against Advisor.


 


Section
2.6     Brokers.
Except as previously disclosed to REIT II pursuant to the REIT I Disclosure Letter or to REIT I pursuant to the REIT II Disclosure
Letter, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on behalf of Advisor or its Affiliates.


 


Article
III

CANCELLATION OF, AND PAYMENT FOR, REIT I SPECIAL PARTNERSHIP UNITS


 


Section
3.1     Cancellation
of REIT I Special Partnership Units; Payment Therefore. Company, Company Operating Partnership and OP Holdings hereby agree
that, effective as of the Partnership Merger Effective Time, the REIT I Special Partnership Units shall be cancelled, without
any further liability or obligation on the part of any party to the REIT I Partnership Agreement, including, but not limited to,
distributions of Net Sales Proceeds, and upon receipt by OP Holdings of an amount computed in accordance with Section 5.2(b)(i)
of the REIT I Partnership Agreement (such amount not to exceed $613,751) (the “Promote Payment”). The Promote
Payment shall be paid on the Closing Date to the account of OP Holdings as set forth in Schedule II. For the avoidance
of doubt, no other amounts shall be payable to OP Holdings with respect to its REIT I Special Partnership Units in connection
with the cancellation thereof or the Merger.


 


Section
3.2     Representations
and Warranties of OP Holdings. OP Holdings hereby represents and warrants to Company, Company Operating Partnership and REIT
II as follows:


 


(a)          OP
Holdings is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware and has
all limited liability company power required to carry on its business a now conducted.


 


(b)          OP
Holdings has full limited liability company power and authority to execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by OP Holdings and is legal, valid, binding and enforceable upon and against
OP Holdings.


 






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(c)          The
execution, delivery and performance by OP Holdings of this Agreement and the consummation by OP Holdings of the transactions contemplated
hereby do not and will not violate any provision of the organizational documents of OP Holdings; (b) violate any Law; or (c) require
any consent or approval of any person, including any registration or filing with, or notice to any federal, state or local governmental
authority or agency or instrumentality thereof.


 


(d)          OP
Holdings has not made any claims against Company or Company Operating Partnership and, to OP Holdings’ knowledge, there
are no pending or threatened claims or facts or circumstances which are reasonably likely to give rise to any claim by OP Holdings
against Company or Company Operating Partnership.


 


(e)          Neither
Company nor Company Operating Partnership has made any claims against OP Holdings and, to OP Holdings’ knowledge, there
are no pending or threatened claims or facts or circumstances which are reasonably likely to give rise to any claim by Company
or Company Operating Partnership against OP Holdings.


 


Article
IV

GENERAL PROVISIONS


 


Section
4.1     Fees and
Expenses. Each Party shall bear the costs of its own legal, financial, strategic, accounting and tax advisors.


 


Section
4.2     Revocation.
If the Merger Agreement is terminated, this Agreement shall automatically be deemed revoked and void ab initio.


 


Section
4.3     Amendment
and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct
or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each Party.


 


Section
4.4     Waiver.
No failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof. Any such waiver
by a Party shall be valid only if set forth in writing by such Party.


 


Section
4.5     Notices.
All notices, requests, claims, consents, demands and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, sent by overnight courier (providing proof of delivery) to the Parties or sent by facsimile
or e-mail of a pdf attachment (providing confirmation of transmission) at the following addresses or facsimile numbers (or at
such other address or facsimile number for a Party as shall be specified by like notice):


 






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(a)          if
to Advisor or, prior to Closing, a Company Party, to:


 


Moody
National Advisor I, LLC

6363 Woodway, Suite 110

Houston, TX 77057

Attn: Brett C. Moody

Fax: (713) 977-7505


 


(b)       if
to REIT II or, following Closing, a Company Party, to:


 


Moody
National REIT II, Inc.

6363 Woodway, Suite 110

Houston, TX 77057

Attn: Brett C. Moody

Fax: (713) 977-7505


 


(c)       if
to OP Holdings, to:


 


Moody
National OP Holdings I, LLC

6363 Woodway, Suite 110

Houston, TX 77057

Attn: Brett C. Moody

Fax: (713) 977-7505


 


Section
4.6     Entire Agreement.
This Agreement and any other agreement among the Parties entered into simultaneous to this Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the
subject matter of this Agreement and (b) are not intended to confer upon any Person other than the Parties hereto any rights or
remedies.


 


Section
4.7     Governing
Law; Venue.


 


(a)          This
Agreement, and all claims or causes of actions (whether at Law, in contract or in tort) that may be based upon, arise out of or
related to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed
in accordance with, the laws of the State of Maryland without giving effect to its conflicts of laws principles (whether the State
of Maryland or any other jurisdiction that would cause the application of the Laws of any jurisdiction other than the State of
Maryland).


 


(b)          All
disputes arising out of or relating to this Agreement shall be heard and determined exclusively in any Maryland state or federal
court. Each of the Parties hereby irrevocably and unconditionally (i) submits to the exclusive jurisdiction of any such Maryland
state or federal court, for the purpose of any dispute arising out of or relating to this Agreement brought by any Party, (ii)
agrees not to commence any such dispute except in such courts, (iii) agrees that any claim in respect of any such dispute may
be heard and determined in any such Maryland state or federal court, (iv) waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue of any such dispute, and (v) waives, to the fullest
extent permitted by Law, the defense of an inconvenient forum to the maintenance of such dispute. Each of the Parties agrees that
a final judgment in any such dispute shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law. Each Party irrevocably consents to service of process in the manner provided for notices
in Section 4.5. Nothing in this Agreement will affect the right of any Party to serve process in any other manner permitted
by Law.


 






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Section
4.8     Assignment.
Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned or delegated, in
whole or in part, by operation of Law or otherwise by any of the Parties without the prior written consent of the other Parties.
This Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors
and assigns.


 


Section
4.9     Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any present or future
Law, or public policy, (a) such term or other provision shall be fully separable, (b) this Agreement shall be construed and enforced
as if such invalid, illegal or unenforceable provision had never comprised a part hereof, and (c) all other conditions and provisions
of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term
or other provision or by its severance herefrom so long as the economic or legal substance of the transactions contemplated by
this Agreement is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that transactions contemplated
by this Agreement be consummated as originally contemplated to the fullest extent possible.


 


Section
4.10     Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed
one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and
delivered (by telecopy, electronic delivery or otherwise) to the other Parties. Signatures to this Agreement transmitted by facsimile
transmission, by electronic mail in “portable document form” (“pdf”), or by any other electronic
means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical
delivery of the paper document bearing the original signature.


 


Section
4.11     Waiver of
Jury Trial. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN
THIS SECTION 4.11.


 






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Section
4.12     Further
Assurances. The Parties undertake generally to execute all such agreements, documents and other instruments and to do all
such acts as are necessary to give full effect to, evidence and confirm the terms of this Agreement.


 


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remainder of this page is intentionally left blank.]


 




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IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.


 











	 	MOODY NATIONAL REIT I, INC.
	 	 	 
	 	By:	/s/
    Brett C. Moody
	 	Name:	Brett C. Moody
	 	Title:	Chief Executive Officer and President



 

	 	MOODY NATIONAL OPERATING PARTNERSHIP I, L.P.
	 	 
	 	By:	MOODY NATIONAL REIT I, INC., its general partner
	 	 	 
	 	 	By:	/s/
    Brett C. Moody
	 	 	Name:	Brett C. Moody
	 	 	Title:	Chief Executive Officer and President



 

	 

         
	MOODY NATIONAL ADVISOR I, INC. solely in connection
    with Articles I, II and IV hereof  
	 	 
	 	By:	MOODY NATIONAL REIT SPONSOR,
    LLC
	 	 	 
	 	By:	MOODY NATIONAL REIT SPONSOR
    SM, LLC
	 	 	 	 
	 	 	By:	/s/
    Brett C. Moody
	 	 	Name:	Brett C. Moody
	 	 	Title:	Member



 





[Signature Page to Termination Agreement]


 




    	 



    	 



    

 







		





MOODY NATIONAL REALTY COMPANY, L.P. solely in connection with Articles I, II and IV hereof



	 	 
	 	By:	MOODY REALTY CORP.
	 	 	 
	 	 	By:	/s/
    Brett C. Moody
	 	 	Name:	Brett C. Moody
	 	 	Title:	President



 

	 	MOODY NATIONAL REIT II, INC.
	 	 
	 	By:	/s/
    Brett C. Moody
	 	Name:	Brett C. Moody
	 	Title:	Chief Executive Officer and President



 

	 	MOODY NATIONAL OP HOLDINGS I, LLC solely in connection
    with Articles III and IV hereof
	 	 
	 	By:	Moody National REIT Sponsor, LLC its Sole
    Member
	 	 	 
	 	By:	Moody National REIT Sponsor, SM, LLC
	 	 	 
	 	By:	/s/
    Brett C. Moody
	 	Name:	Brett C. Moody
	 	Title:	Member










 





[Signature Page to Termination Agreement]


 




    	 



    	 



    

 


Schedule
I


 


Advisor
Wire Transfer Instructions


 


[to
be delivered prior to Closing]


 




    	 



    	 



    

 


Schedule
II


 


OP
Holdings Wire Transfer Instructions


 


[to
be delivered prior to Closing]