Moody National REIT II, Inc. S-11


Exhibit 10.5


 


FORM OF 


MOODY
NATIONAL REIT II, INC.


 


INDEPENDENT DIRECTORS COMPENSATION PLAN


 


ARTICLE 1 


PURPOSE


 


1.1.  PURPOSE. 
The purpose of this Moody National REIT II, Inc. Independent Directors Compensation Plan (the “Plan”) is to attract,
retain and compensate highly-qualified individuals who are not employees of Moody National REIT II, Inc. (the “Company”)
or any of its subsidiaries or affiliates (the “Independent Directors”) for service as members of its Board of Directors
(the “Board”) by providing them with competitive compensation and an ownership interest in the stock of the Company
(the “Stock”).  The Company intends that the Plan will benefit the Company and its stockholders by allowing Independent
Directors to have a personal financial stake in the Company through an ownership interest in the Stock and will closely associate
the interests of Independent Directors with that of the Company’s stockholders.


 


1.2.  ELIGIBILITY. 
Independent Directors of the Company who are Eligible Participants, as defined below, shall automatically be participants in the
Plan.


 


ARTICLE 2 


DEFINITIONS


 


2.1.  DEFINITIONS. 
Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Incentive Plan.  Unless
the context clearly indicates otherwise, the following terms shall have the following meanings:


 


		(a)	“Base Annual Retainer” means the annual retainer (excluding Meeting Fees) payable by
the Company to an Independent Director pursuant to Section 5.1 hereof for service as a director of the Company (i.e., excluding
any Supplemental Annual Retainer), as such amount may be changed from time to time.



 


		(b)	“Eligible Participant” means any person who is an Independent Director on the Plan
Effective Date or becomes an Independent Director while this Plan is in effect; except that during any period a director is prohibited
from participating in the Plan by his or her employer or otherwise waives participation in the Plan, such director shall not be
an Eligible Participant.



 


		(c)	“Incentive Plan” means the Moody National REIT II, Inc. 2014 Incentive Plan, or any
subsequent equity compensation plan approved by the Board and designated as the Incentive Plan for purposes of this Plan.



 


		(d)	“Minimum Offering Date” has the meaning set forth in Section 6.1 of the Plan.



 


		(e)	“Meeting Fees” means fees for attending a meeting of the Board or one of its committees
as set forth in Section 5.3 hereof.



 


		(f)	“Plan” means this Moody National REIT II, Inc. Independent Directors Compensation Plan,
as amended from time to time.



 


		(g)	“Plan Effective Date” of the Plan has the meaning set forth in Section 8.4 of
the Plan.



 




    	 



    	 



    

  


		(h)	“Plan Year(s)” means the approximate twelve-month period beginning with the annual
stockholders meeting and ending at the next annual stockholders meeting; provided that the first Plan Year shall begin on the Plan
Effective Date and extend until the first annual stockholders meeting.



 


		(i)	“Supplemental Annual Retainer” means the annual retainer (excluding Meeting Fees)
payable by the Company to an Independent Director pursuant to Section 5.2 hereof for service as the chair of the Audit Committee
of the Board, as such amount may be changed from time to time.



 


ARTICLE 3 


ADMINISTRATION


 


3.1.  ADMINISTRATION. 
The Plan shall be administered by the Board.  Subject to the provisions of the Plan, the Board shall be authorized to interpret
the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.  The Board’s interpretation of the Plan, and all actions
taken and determinations made by the Board pursuant to the powers vested in it hereunder, shall be conclusive and binding upon
all parties concerned, including the Company, its stockholders and persons granted awards under the Plan.  The Board may appoint
a plan administrator to carry out the ministerial functions of the Plan, but the administrator shall have no other authority or
powers of the Board.


 


3.2.  RELIANCE. 
In administering the Plan, the Board may rely upon any information furnished by the Company, its public accountants and other experts. 
No individual will have personal liability by reason of anything done or omitted to be done by the Company or the Board in connection
with the Plan.  This limitation of liability shall not be exclusive of any other limitation of liability to which any such
person may be entitled under the Company’s Articles of Incorporation or otherwise.


 


ARTICLE 4 


SHARES


 


4.1.  SOURCE OF
SHARES FOR THE PLAN.  The shares of Stock that may be issued pursuant to the Plan shall be issued under the Incentive
Plan, subject to all of the terms and conditions of the Incentive Plan.  The terms contained in the Incentive Plan are incorporated
into and made a part of this Plan with respect to shares of Stock, Restricted Stock and any other equity granted pursuant hereto
and any such grant shall be governed by and construed in accordance with the Incentive Plan.  In the event of any actual or
alleged conflict between the provisions of the Incentive Plan and the provisions of this Plan, the provisions of the Incentive
Plan shall be controlling and determinative.  This Plan does not constitute a separate source of shares for the grant of Restricted
Stock or shares of Stock described herein.


 


ARTICLE 5 


RETAINERS, MEETING FEES AND EXPENSES


 


5.1.  BASE
ANNUAL RETAINER.  Each Eligible Participant shall be paid a Base Annual Retainer for service as a director during
each Plan Year.  The amount of the Base Annual Retainer shall be established from time to time by the Board.  Until
changed by the Board, the Base Annual Retainer for a full Plan Year shall be $50,000.  The Base Annual Retainer shall be
payable in approximately equal quarterly installments in advance, beginning on the date of the annual stockholders meeting; provided, however,
that for the first Plan Year, the first installment shall begin on the Plan Effective Date and be prorated based on the
number of full months in such quarter after the Plan Effective Date and, provided, further, that for
purposes of this Article 5, the month in which the Plan Effective Date occurs shall be considered a “full
month.”  Each person who first becomes an Eligible Participant on a date other than the Plan Effective Date or an
annual meeting date shall be paid a retainer equal to the quarterly installment of the Base Annual Retainer for the first
quarter of eligibility, based on the number of full months he or she serves as an Independent Director during such
quarter.  Payment of such prorated Base Annual Retainer shall begin on the date that the person first becomes an
Eligible Participant, and shall resume on a quarterly basis thereafter.  In no event shall any installment of the Base
Annual Retainer be paid later than March 15 of the year following the year to which such installment relates.


 






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5.2.  AUDIT COMMITTEE
CHAIRPERSON SUPPLEMENTAL ANNUAL RETAINER.  The chairperson of the Audit Committee of the Board shall be paid a Supplemental
Annual Retainer for his or her service as such chairperson during a Plan Year, payable at the same times as installments of the
Base Annual Retainer are paid.  The amount of the Supplemental Annual Retainer for the chairperson of the Audit Committee
shall be established from time to time by the Board.  Until changed by the Board, the Supplemental Annual Retainer for a full
Plan Year for the chairperson of the Audit Committee shall be $10,000.  A pro rata Supplemental Annual Retainer will be paid
to any Eligible Participant who becomes the chairperson of the Audit Committee of the Board on a date other than the beginning
of a Plan Year, based on the number of full months he or she serves as a chairperson of the Audit Committee of the Board during
the Plan Year.  Payment of such prorated Supplemental Annual Retainer shall begin on the date that the person first becomes
chairperson of the Audit Committee, and shall resume on a quarterly basis thereafter.  In no event shall any installment of
the Supplemental Annual Retainer be paid later than March 15 following the year to which such installment relates.


 


5.3.MEETING FEES.
 Each Independent Director shall be paid Meeting Fees for attending meetings of the Board or its committees. The amount of
the Meeting Fees shall be established from time to time by the Board. Until changed by the Board, the Meeting Fee for attending
a meeting of the Board in person shall be $2,000 and the Meeting Fee for attending a meeting of a committee of the Board in person
as a committee member shall be $1,500. Until changed by the Board, the Meeting Fee for participation in a telephonic meeting of
the Board or a committee of the Board as a committee member, provided that minutes are kept at such telephonic meeting, shall be
$1,000. Meeting Fees shall be payable on the date of the applicable meeting to which they relate.


 


5.4.  TRAVEL EXPENSE
REIMBURSEMENT.  All Eligible Participants shall be reimbursed for reasonable travel expenses in connection with attendance
at meetings of the Board and its committees, or other Company functions at which the Chief Executive Officer or Chair of the Board
requests the Independent Director to participate.  Notwithstanding the foregoing, the Company’s reimbursement obligations
pursuant to this Section 5.4 shall be limited to expenses incurred during such director’s service as an Independent
Director.  Such payments will be made within 30 days after delivery of the Independent Director’s written requests for
payment, accompanied by such evidence of expenses incurred as the Company may reasonably require, but in no event later than the
last day of the Independent Director’s tax year following the tax year in which the expense was incurred.  The amount
reimbursable in any one tax year shall not affect the amount reimbursable in any other tax year.  Independent Directors’
right to reimbursement pursuant to this Section 5.4 shall not be subject to liquidation or exchange for another benefit.


 






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ARTICLE 6 


EQUITY COMPENSATION


 


6.1.  INITIAL RESTRICTED
STOCK GRANT.  Provided that the Company has raised at least $2,000,000 in gross offering proceeds, on the first date that
an Independent Director is initially elected or appointed to the Board, he or she shall receive an award of 5,000 shares of Restricted
Stock, subject to share availability under the Incentive Plan and the terms of this Section 6.1.  Notwithstanding the
foregoing, each Independent Director elected or appointed to the Board prior to the date that the Company has raised $2,000,000
in gross offering proceeds (the “Minimum Offering Date”) or the Plan Effective Date, and who remains an Independent
Director as of the Minimum Offering Date, shall receive such initial Restricted Stock grant on the Minimum Offering Date. Such
shares of Restricted Stock shall be subject to the terms and restrictions described below in Section 6.3 and shall be in addition
to any otherwise applicable annual grant of Restricted Stock granted to such Independent Director under Section 6.2.


 


6.2.  SUBSEQUENT
RESTRICTED STOCK GRANT.  Subject to share availability under the Incentive Plan and the additional restrictions provided
in this Section 6.2, on the date following an Independent Director’s subsequent re-election to the Board at each of the first
four annual meetings of stockholders, such director shall receive 2,500 shares of Restricted Stock.  Such shares of Restricted
Stock shall be subject to the terms and restrictions described below in Section 6.3.


 


6.3.  TERMS AND
CONDITIONS OF RESTRICTED STOCK.  Shares of Restricted Stock shall be evidenced by a written Award Certificate, and shall
be subject to such restrictions and risk of forfeiture as determined by the Board, and shall be granted under and pursuant to the
terms of the Incentive Plan.  Unless and until provided otherwise by the Board, the Restricted Stock granted pursuant to Section 6.1
and Section 6.2 herein shall vest and become non-forfeitable in approximately equal quarterly installments beginning on the
first day of the first quarter following the Grant Date, provided that the Independent Director is providing services to the Company
as a director on each such date.  Notwithstanding the foregoing vesting schedule, the shares of Restricted Stock shall become
fully vested on the earlier occurrence of: (i) the termination of the Independent Director’s service as a director of
the Company due to his or her death or Disability; or (ii) a Change in Control of the Company.  If the Independent
Director’s service as a director of the Company terminates other than as described in clause (i) of the foregoing sentence,
then the Independent Director shall forfeit all of his or her right, title and interest in and to any unvested shares of Restricted
Stock as of the date of such termination from the Board and such Restricted Stock shall be reconveyed to the Company without further
consideration or any act or action by the Independent Director.


 


ARTICLE 7 


AMENDMENT, MODIFICATION AND TERMINATION


 


7.1.  AMENDMENT,
MODIFICATION AND TERMINATION.  The Board may, at any time and from time to time, amend, modify or terminate the Plan without
stockholder approval; provided, however, that if an amendment to the Plan would, in the reasonable opinion of the
Board, require stockholder approval under applicable laws, policies or regulations or the applicable listing or other requirements
of an Exchange, then such amendment shall be subject to stockholder approval; and provided, further, that the Board
may condition any other amendment or modification on the approval of stockholders of the Company for any reason.


 


ARTICLE 8 


GENERAL PROVISIONS


 


8.1.  ADJUSTMENTS. 
The adjustment provisions of the Incentive Plan shall apply with respect to Restricted Stock or other equity awards outstanding
or to be granted pursuant to this Plan.


 


8.2.  DURATION
OF THE PLAN.  The Plan shall remain in effect until terminated by the Board.


 






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8.3.  EXPENSES
OF THE PLAN.  The expenses of administering the Plan shall be borne by the Company.


 


8.4.  PLAN EFFECTIVE
DATE.  The Plan originally became effective on [__], 2014 (the “Plan Effective Date”).


 


*****


 


The foregoing is hereby
acknowledged as being the Moody National REIT II, Inc. Independent Directors Compensation Plan as adopted by the Board.


  


	 	Moody National REIT II, INC.
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:	 



 


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