Moody National REIT II, Inc. - 8-K


Exhibit 10.2


 


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.


 






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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.


 


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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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]