Document:

EX-10.2 FORM OF ADVISORY AGREEMENT

EXHIBIT 10.2

FORM OF

ADVISORY AGREEMENT

AMONG

MOODY NATIONAL REIT I, INC.,

MOODY NATIONAL OPERATING PARTNERSHIP I, L.P.,

MOODY NATIONAL ADVISOR I, LLC

AND

MOODY NATIONAL REALTY COMPANY, L.P.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	Appointment
	 	 	7	 
	 
	 	 	 	 	 	 
	3.

	 	Duties Of The Advisor
	 	 	7	 
	 
	 	 	 	 	 	 
	4.

	 	Authority Of Advisor
	 	 	9	 
	 
	 	 	 	 	 	 
	5.

	 	Bank Accounts
	 	 	10	 
	 
	 	 	 	 	 	 
	6.

	 	Records; Access
	 	 	10	 
	 
	 	 	 	 	 	 
	7.

	 	Limitations On Activities
	 	 	10	 
	 
	 	 	 	 	 	 
	8.

	 	Relationship With Director
	 	 	11	 
	 
	 	 	 	 	 	 
	9.

	 	Fees
	 	 	11	 
	 
	 	 	 	 	 	 
	10.

	 	Expenses
	 	 	12	 
	 
	 	 	 	 	 	 
	11.

	 	Other Services
	 	 	14	 
	 
	 	 	 	 	 	 
	12.

	 	Reimbursement To The Advisor
	 	 	14	 
	 
	 	 	 	 	 	 
	13.

	 	Investment Opportunities
	 	 	14	 
	 
	 	 	 	 	 	 
	14.

	 	Business Combination
	 	 	15	 
	 
	 	 	 	 	 	 
	15.

	 	Other Activities Of The Advisor
	 	 	15	 
	 
	 	 	 	 	 	 
	16.

	 	Term; Termination Of Agreement
	 	 	16	 
	 
	 	 	 	 	 	 
	17.

	 	Termination By The Parties
	 	 	16	 
	 
	 	 	 	 	 	 
	18.

	 	Assignment To An Affiliate
	 	 	16	 
	 
	 	 	 	 	 	 
	19.

	 	Payments To And Duties Of Advisor Upon Termination
	 	 	17	 
	 
	 	 	 	 	 	 
	20.

	 	Indemnification By The Company And The Operating Partnership
	 	 	17	 
	 
	 	 	 	 	 	 
	21.

	 	Indemnification By Advisor
	 	 	19	 
	 
	 	 	 	 	 	 
	22.

	 	Notices
	 	 	19	 
	 
	 	 	 	 	 	 
	23.

	 	Modification
	 	 	19	 

 

 

	 	 	 	 	 	 	 
	24.

	 	Severability
	 	 	19	 
	 
	 	 	 	 	 	 
	25.

	 	Construction
	 	 	20	 
	 
	 	 	 	 	 	 
	26.

	 	Entire Agreement
	 	 	20	 
	 
	 	 	 	 	 	 
	27.

	 	Indulgences, Not Waivers
	 	 	20	 
	 
	 	 	 	 	 	 
	28.

	 	Gender
	 	 	20	 
	 
	 	 	 	 	 	 
	29.

	 	Titles Not To Affect Interpretation
	 	 	20	 
	 
	 	 	 	 	 	 
	30.

	 	Execution In Counterparts
	 	 	20	 
	 
	 	 	 	 	 	 
	31.

	 	Initial Investment
	 	 	20	 

-3-

 

ADVISORY AGREEMENT

 

     THIS ADVISORY AGREEMENT, dated as of the                      day of                     , 2008, is among Moody
National REIT I, Inc., a Maryland corporation (the “Company”), Moody National Operating
Partnership I, L.P., a Delaware limited partnership (the “Operating Partnership”), Moody
National Advisor I, LLC, a Delaware limited liability company (the “Advisor”), and, solely
in connection with the obligations set forth in Section 13, Moody National Realty Company, L.P., a
Texas limited partnership (“Moody National”). Capitalized terms used herein shall have the
meanings ascribed to them in Section 1 below.

WITNESSETH

     WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments
permitted by the terms of Sections 856 through 860 of the Code;

     WHEREAS, the Company is the general partner of the Operating Partnership and intends to
conduct all of its business and make all Investments through the Operating Partnership;

     WHEREAS, the Company and the Operating Partnership desire to avail themselves of the
experience, sources of information, advice, assistance and certain facilities of the Advisor and to
have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and
subject to the supervision, of the Board of Directors of the Company, all as provided herein;

     WHEREAS, the Advisor is willing to undertake to render such services, subject to the
supervision of the Board of Directors, on the terms and conditions hereinafter set forth; and

     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:

     1. DEFINITIONS. As used in this Advisory Agreement (the “Agreement”), the following
terms have the definitions hereinafter indicated:

     Acquisition Expenses. Any and all expenses, exclusive of Acquisition Fees, incurred
by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection
with the selection, acquisition, origination, making or development of any Investments, whether or
not acquired, including, without limitation, legal fees and expenses, travel and communications
expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting
fees and expenses, title insurance premiums, and the costs of performing due diligence.

     Acquisition Fees. Any and all fees and commissions, exclusive of Acquisition
Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to
any Affiliate of the Company, the Operating Partnership or the Advisor) in connection with making
or investing in Securities and Debt-related investments or the purchase, development or
construction of any Real Estate Asset, including real estate commissions, selection fees,

 

 

development fees, construction fees, nonrecurring management fees, loan fees, points or any
other fees of a similar nature. Excluded shall be (i) Origination Fees and (ii) development fees
and construction fees paid to any Person not affiliated with the Sponsor in connection with the
actual development and construction of a project.

     Advisor. Moody National Advisor I, LLC, a Delaware limited liability company, any
successor advisor to the Company, the Operating Partnership or any Person to which Moody National
Advisor I, LLC or any successor advisor subcontracts substantially all of its functions.
Notwithstanding the foregoing, a Person hired or retained by Moody National Advisor I, LLC to
perform property management and related services for the Company or the Operating Partnership that
is not hired or retained to perform substantially all of the functions of Moody National Advisor I,
LLC with respect to the Company or the Operating Partnership as a whole shall not be deemed to be
an Advisor.

     Affiliate or Affiliated. With respect to any Person, (i) any Person directly or
indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the
outstanding voting securities of such other Person; (ii) any Person ten percent (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 as an executive officer, director, trustee or general partner.

     Articles of Incorporation. The Articles of Incorporation of the Company, as amended
from time to time.

     Asset Management Fee. The term “Asset Management Fee” shall mean the fee payable to
the Advisor pursuant to Section 9(e).

     Average Invested Assets. For a specified period, the average of the aggregate book
value of the assets of the Company invested, directly or indirectly, in Investments before
deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of
such values at the end of each month during such period.

     Board of Directors or Board. The persons holding such office, as of any particular
time, under the Articles of Incorporation, whether they be the Directors named therein or
additional or successor Directors.

     Bylaws. The bylaws of the Company, as the same are in effect from time to time.

     Cause. With respect to the termination of this Agreement, fraud, criminal conduct,
willful misconduct or willful or negligent breach of fiduciary duty by the Advisor, or a material
breach of this Agreement by the Advisor.

     Code. Internal Revenue Code of 1986, as amended from time to time, or any successor
statute thereto. Reference to any provision of the Code shall mean such provision as in effect
from time to time, as the same may be amended, and any successor provision thereto, as interpreted
by any applicable regulations as in effect from time to time.

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     Company. Company shall have the meaning set forth in the preamble of this Agreement.

     Contract Sales Price. The total consideration received by the Company for the sale of
a Real Estate Asset or a Securities and Debt-related Investment.

     Dealer Manager. Moody National Securities, LLC, or such other Person or entity
selected by the Board of Directors to act as the dealer manager for the Offering. Moody National
Securities, LLC is a member of the Financial Industry Regulatory Authority.

     Dealer Manager Fee. 3.5% of Gross Proceeds from the sale of Shares in the Primary
Offering, payable to the Dealer Manager for serving as the dealer manager of such Offering.

     Director. A member of the Board of Directors of the Company.

     Disposition Fees. The term “Dispositions Fees” shall mean the fees payable to the
Advisor pursuant to Section 9(d).

     Distributions. Any distributions of money or other property by the Company to owners
of Shares, including distributions that may constitute a return of capital for federal income tax
purposes.

     Excess
Amount. Excess Amount shall have the meaning set forth in
Section 12.

     Expense
Year. Expense Year shall have the meaning set forth in
Section 12.

     GAAP. Generally accepted accounting principles as in effect in the United States of
America from time to time.

     Good Reason. With respect to the termination of this Agreement, (i) any failure to
obtain a satisfactory agreement from any successor to the Company or the Operating Partnership to
assume and agree to perform the Company’s or the Operating Partnership’s obligations under this
Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by the Company or
the Operating Partnership.

     Gross Proceeds. The aggregate purchase price of all Shares sold for the account of
the Company through all Offerings, without deduction for Sales Commissions, volume discounts, any
marketing support and due diligence expense reimbursement or Organization and Offering Expenses.
For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced
Sales Commissions are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the
Company are not reduced) shall be deemed to be the full amount of the offering price per Share
pursuant to the Prospectus for such Offering without reduction.

     Indemnitee. The terms “Indemnitee and “Indemnitees” shall have the meaning set forth
in Section 20 herein.

     Independent Director. Independent Director shall have the meaning set forth in the
Articles of Incorporation.

-3-

 

     Investments. Any investments by the Company or the Operating Partnership in Real
Estate Assets and Securities and Debt-related Investments.

     Joint Ventures. The joint venture or partnership arrangements (other than with the
Operating Partnership) in which the Company or any of its subsidiaries is a co-venturer or general
partner which are established to acquire Real Properties.

     Listing. The listing of the Shares on a national securities exchange or the receipt
by the Company’s Stockholders of securities that are listed on a national securities exchange in
exchange for the Company’s common stock. Upon such Listing, the Shares shall be deemed Listed.

     Loans. Any indebtedness or obligations in respect of borrowed money or evidenced by
bonds, notes, debentures, deeds of trust, letters of credit or similar instruments, including
mortgages and mezzanine loans.

     NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate Investment
Trusts published by the North American Securities Administrators Association on May 7, 2007, as may
be amended from time to time.

     Net Income. For any period, the Company’s total revenues applicable to such period,
less the total expenses applicable to such period other than additions to reserves for
depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of
the Company’s assets.

     Offering. The public offering of Shares pursuant to a Prospectus.

     Operating Partnership. Operating Partnership shall have the meaning set forth in the
preamble of this Agreement.

     Operating Partnership Agreement. The Operating Partnership Agreement among the
Company, Moody National LPOP I, LLC and Moody OP Holdings I, LLC.

     OP Unit. Units of limited partnership interest in the Operating Partnership.

     Organizational and Offering Expenses. Organizational and Offering Expenses means all
expenses incurred by or on behalf of the Company in connection with and in preparing the Company
for registration of and subsequently offering and distributing its Shares to the public, whether
incurred before or after the date of this Agreement, which may include but are not limited to,
total underwriting and brokerage discounts and commissions (including fees of the underwriters’
attorneys); any expense allowance granted by the Company to the underwriter or any reimbursement of
expenses of the underwriter by the Company; expenses for printing, engraving and mailing; salaries
of employees while engaged in sales activity; telephone and other telecommunications costs; all
advertising and marketing expenses (including the costs related to investor and broker-dealer sales
meetings); charges of transfer agents, registrars, trustees, escrow holders, depositaries and
experts; and expenses of qualification of the sale of the securities under Federal and State laws,
including taxes and fees, accountants’ and attorneys’ fees.

-4-

 

     Origination Fees. The term “Origination Fees” shall mean the fees payable to the
Advisor pursuant to Section 9(b).

     Person. An individual, corporation, partnership, trust, joint venture, limited
liability company or other entity.

     Primary Offering. The portion of an Offering other than the Shares offered pursuant
to the Company’s distribution reinvestment plan.

     Prospectus. A “Prospectus” under Section 2(10) of the Securities Act of 1933, as
amended (the “Securities Act”), including a preliminary Prospectus, an offering circular as
described in Rule 253 of the General Rules and Regulations under the Securities Act or, in the case
of an intrastate offering, any document by whatever name known, utilized for the purpose of
offering and selling securities to the public.

     Real Estate Assets. Any investments by the Company or the Operating Partnership in
unimproved and improved Real Property (including, without limitation, fee or leasehold interests,
options and leases) either directly or through a Joint Venture.

     Real Property. Real property owned from time to time by the Company or the Operating
Partnership, either directly or through joint venture arrangements or other partnerships which
consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only
or (iv) such investments the Board of Directors and the Advisor mutually designate as Real Property
to the extent such investments could be classified as Real Property.

     REIT. A “real estate investment trust” under Sections 856 through 860 of the Code or
as may be amended.

     Sale or Sales. Any transaction or series of transactions whereby: (A) the Company or
the Operating Partnership directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property
or portion thereof, including the lease of any Real Property consisting of a building only, and
including any event with respect to any Real Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Company or the Operating Partnership directly or
indirectly (except as described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of all or substantially all of the interest of the
Corporation or the Operating Partnership in any Joint Venture in which it is a co-venturer or
partner; (C) any Joint Venture directly or indirectly (except as described in other subsections of
this definition) in which the Company or the Operating Partnership as a co-venturer or partner
sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property or portion
thereof, including any event with respect to any Real Property which gives rise to insurance claims
or condemnation awards; or (D) the Company or the Operating Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants, conveys or
relinquishes its interest in any Securities and Debt-related Investment or portion thereof
(including with respect to any Loan, all payments thereunder or in satisfaction thereof other than
regularly scheduled interest payments) and any event which gives rise to a significant amount of
insurance proceeds or similar awards; or (E) the Company or the Operating Partnership directly

-5-

 

or indirectly (except as described in other subsections of this definition) sells, grants,
transfers, conveys, or relinquishes its ownership of any other asset not previously described in
this definition or any portion thereof, but not including any transaction or series of transactions
specified in clauses (A) through (E) above in which the proceeds of such transaction or series of
transactions are reinvested by the Company in one or more assets within 180 days thereafter.

     Sales Commission. 6.5% of Gross Proceeds from the sale of Shares in the Primary
Offering payable to the Dealer Manager and reallowable to Soliciting Dealers with respect to Shares
sold by them.

     Securities and Debt-related Investments. Any investments by the Company or the
Operating Partnership in (i) real estate securities such as common stocks, preferred stocks and
options to acquire stock in REITs and other real estate companies and (ii) debt-related investments
such as (a) mortgage, mezzanine, bridge and other loans and (b) debt and derivative securities
related to real estate assets including mortgage-backed securities, collateralized debt
obligations, debt securities issued by real estate companies and credit default swaps.

     Shares. The shares of the Company’s common stock, par value $0.01 per share.

     Soliciting Dealers. Broker-dealers who are members of the Financial Industry
Regulatory Authority, or that are exempt from broker-dealer registration, and who, in either case,
have executed participating broker or other agreements with the Dealer Manager to sell Shares.

     Special Committee. The term “Special Committee” shall have the meaning as provided in
Section 14(a).

     Special OP Units. The separate series of limited partnership interests to be issued
in accordance with Section 9(g).

     Sponsor. Any Person which (i) is directly or indirectly instrumental in organizing,
wholly or in part, the Company, (ii) will control, manage or participate in the management of the
Company, and any Affiliate of any such Person, (iii) takes the initiative, directly or indirectly,
in founding or organizing the Company, either alone or in conjunction with one or more other
Persons, (iv) receives a material participation in the Company in connection with the founding or
organizing of the business of the Company, in consideration of services or property, or both
services and property, (v) has a substantial number of relationships and contacts with the Company,
(vi) possesses significant rights to control the Company’s Investments, (vii) receives fees for
providing services to the Company which are paid on a basis that is not customary in the industry,
or (viii) provides goods or services to the Company on a basis which was not negotiated at
arm’s-length with the Company. “Sponsor” does not include wholly independent third parties such as
attorneys, accountants and underwriters whose only compensation is for professional services.

     Stockholders. The registered holders of the Shares.

     Termination Date. The date of termination of this Agreement.

-6-

 

     Termination Event. The termination or nonrenewal of this Agreement (i) in connection
with a merger, sale of assets or transaction involving the Company pursuant to which a majority of
the Directors then in office are replaced or removed, (ii) by the Advisor for Good Reason or (iii)
by the Company and the Operating Partnership other than for Cause.

     Total Operating Expenses. All costs and expenses paid or incurred by the Company, as
determined under GAAP, that are in any way related to the operation of the Company or its business,
including asset management fees and other fees paid to Advisors, but excluding (i) the expenses of
raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting,
brokerage, listing, registration, and other fees, printing and other such expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration and Listing, (ii)
interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and
bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines; (vi)
Acquisition Fees, Origination Fees and Acquisition Expenses, (vii) real estate commissions on the Sale of Real
Property, and (viii) other fees and expenses connected with the acquisition, disposition,
management and ownership of real estate interests, mortgages or other property (including the costs
of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of
property). The definition of “Total Operating Expenses” set forth above is intended to encompass
only those expenses which are required to be treated as Total Operating Expenses under the NASAA
REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of
the Company which is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not
be treated as part of Total Operating Expenses for purposes hereof.

     2%/25% Guidelines. 2%/25% Guidelines shall have the meaning set forth in Section 12.

     2. APPOINTMENT. The Company and the Operating Partnership hereby appoint the Advisor to serve
as their advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby
accepts such appointment.

     3. DUTIES OF THE ADVISOR. The Advisor undertakes to use its best efforts to present to the
Company and the Operating Partnership potential investment opportunities and to provide a
continuing and suitable investment program consistent with the investment objectives and policies
of the Company as determined and adopted by the Directors, and as amended from time to time with the approval of the Stockholders. In performance of
this undertaking, subject to the supervision of the Directors and consistent with the provisions of
the Articles of Incorporation and Bylaws of the Company and the Operating Partnership Agreement,
the Advisor shall, either directly or by engaging an Affiliate:

          (a) serve as the Company’s and the Operating Partnership’s investment and financial advisor;

          (b) provide the daily management for the Company and the Operating Partnership and perform and
supervise the various administrative functions reasonably necessary for the management of the
Company and the Operating Partnership;

-7-

 

          (c) investigate, select, and, on behalf of the Company and the Operating Partnership, engage
and conduct business with such Persons as the Advisor deems necessary to the proper performance of
its obligations hereunder, including but not limited to consultants, accountants, correspondents,
lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow
agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks,
builders, developers, property owners, real estate management companies, real estate operating
companies, securities investment advisors, mortgagors, and any and all agents for any of the
foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by
the Advisor necessary or desirable for the performance of any of the foregoing services, including,
but not limited to, entering into contracts in the name of the Company and the Operating
Partnership with any of the foregoing;

          (d) consult with the officers and Directors of the Company and assist the Directors in the
formulation and implementation of the Company’s financial policies, and, as necessary, furnish the
Directors with advice and recommendations with respect to the making of investments consistent with
the investment objectives and policies of the Company and in connection with any borrowings
proposed to be undertaken by the Company or the Operating Partnership;

          (e) subject to the provisions of Section 4 hereof, (i) participate in formulating an
investment strategy and asset allocation framework, (ii) locate, analyze and select potential
Investments, (iii) structure and negotiate the terms and conditions of transactions pursuant to
which acquisitions and dispositions of Investments will be made; (iv) research, identify, review
and recommend acquisitions and dispositions of Investments to the Board and make investments on
behalf of the Company and the Operating Partnership in compliance with the investment objectives
and policies of the Company; (v) arrange for financing and refinancing and make other changes in
the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or
otherwise deal with, Investments; (vi) enter into leases and service contracts for Real Estate
Assets and, to the extent necessary, perform all other operational functions for the maintenance
and administration of such Real Estate Assets; (vii) actively oversee and manage Investments for
purposes of meeting the Company’s investment objectives; (vii) select Joint Venture partners,
structure corresponding agreements and oversee and monitor these relationships; (viii) oversee
Affiliated and non-Affiliated property managers who perform services for the Company or the
Operating Partnership; (ix) oversee Affiliated and non-Affiliated Persons with whom the Advisor
contracts to perform certain of the services required to be performed under this Agreement; (x)
manage accounting and other record-keeping functions for the Company and the Operating Partnership;
and (xi) recommend various liquidity events to the Board of Directors when appropriate.

          (f) upon request, provide the Directors with periodic reports regarding prospective
investments;

          (g) make investments in, and dispositions of, Investments within the discretionary limits and
authority as granted by the Board;

-8-

 

          (h) negotiate on behalf of the Company and the Operating Partnership with banks or lenders for
Loans to be made to the Company and the Operating Partnership, and negotiate on behalf of the
Company and the Operating Partnership with investment banking firms and broker-dealers or negotiate
private sales of Shares or obtain Loans for the Company and the Operating Partnership, but in no
event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and
provided, further, that any fees and costs payable to third parties incurred by the Advisor in
connection with the foregoing shall be the responsibility of the Company or the Operating
Partnership;

          (i) obtain reports (which may, but are not required to, be prepared by the Advisor or its
Affiliates), where appropriate, concerning the value of Investments or contemplated investments of
the Company and the Operating Partnership;

          (j) from time to time, or at any time reasonably requested by the Directors, make reports to
the Directors of its performance of services to the Company and the Operating Partnership under
this Agreement, including reports with respect to potential conflicts of interest involving the
Advisor or any of its affiliates;

          (k) provide the Company and the Operating Partnership with all necessary cash management
services;

          (l) do all things necessary to assure its ability to render the services described in this
Agreement;

          (m) deliver to, or maintain on behalf of, the Company copies of all appraisals obtained in
connection with the investments in any Real Estate Assets as may be required to be obtained by the
Board;

          (n) notify the Board of Directors of all proposed material transactions before they are
completed; and

          (o) effect any private placement of OP Units, tenancy-in-common or other interests in
Investments as may be approved by the Board.

     Notwithstanding the foregoing, the Advisor may delegate any of the foregoing duties to any
Person so long as the Advisor or any Affiliate remains responsible for the performance of the
duties set forth in this Section 3.

     4. AUTHORITY OF ADVISOR.

          (a) Pursuant to the terms of this Agreement (including the restrictions included in this
Section 4 and in Section 7), and subject to the continuing and exclusive authority of the
Directors over the management of the Company, the Directors hereby delegate to the Advisor the
authority to perform the services described in Section 3.

-9-

 

          (b) Notwithstanding the foregoing, any investment in Investments, including any financing of
such Investment, will require the prior approval of the Board, any particular Directors specified
by the Board or any committee of the Board, as the case may be.

          (c) If a transaction requires approval by the Independent Directors, the Advisor will deliver
to the Independent Directors all documents and other information required by them to properly
evaluate the proposed transaction.

          (d) The prior approval of a majority of the Independent Directors not otherwise interested in
the transaction and a majority of the Directors not otherwise interested in the transaction will be
required for each transaction to which the Advisor or its Affiliates is a party.

          (e) The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the
authority set forth in this Section 4; provided, however, that such modification or revocation
shall be effective upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed the Company or the Operating Partnership prior to
the date of receipt by the Advisor of such notification.

     5. BANK ACCOUNTS. The Advisor may establish and maintain one or more bank accounts in its own
name for the account of the Company or the Operating Partnership or in the name of the Company and
the Operating Partnership and may collect and deposit into any such account or accounts, and
disburse from any such account or accounts, any money on behalf of the Company or the Operating
Partnership, under such terms and conditions as the Directors may approve, provided that no funds
shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render
appropriate accountings of such collections and payments to the Directors and to the auditors of
the Company.

     6. RECORDS; ACCESS. The Advisor shall maintain appropriate records of all its activities
hereunder and make such records available for inspection by the Directors and by counsel, auditors
and authorized agents of the Company, at any time or from time to time during normal business
hours. The Advisor shall at all reasonable times have access to the books and records of the
Company and the Operating Partnership.

     7. LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made
in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the
Company to regulation under the Investment Company Act of 1940, as amended, or (c) violate any law,
rule, regulation or statement of policy of any governmental body or agency having jurisdiction over
the Company or its Shares, or otherwise not be permitted by the Articles of Incorporation or Bylaws
of the Company, except if such action shall be ordered by the Directors, in which case the Advisor
shall notify promptly the Directors of the Advisor’s judgment of the potential impact of such
action and shall refrain from taking such action until it receives further clarification or
instructions from the Directors. In such event, the Advisor shall have no liability for acting in
accordance with the specific instructions of the Directors so given. Notwithstanding the
foregoing, the Advisor, its directors, officers, employees and members, and partners, directors,
officers, members and stockholders of the Advisor’s Affiliates shall not be liable to the
Company or to the Directors or Stockholders for any act or omission by the Advisor, its directors,
officers, employees, or members, and partners, directors, officers, members or

-10-

 

stockholders of the Advisor’s Affiliates taken or omitted to be taken in the performance of their duties under this
Agreement except as provided in Section 20 of this Agreement.

     8. RELATIONSHIP WITH DIRECTORS. Subject to Section 7 of this Agreement and to restrictions
advisable with respect to the qualification of the Company as a REIT, directors, officers and
employees of the Advisor or an Affiliate of the Advisor or any corporate parents of an Affiliate,
may serve as a Director and as officers of the Company, except that no director, officer or
employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall
receive any compensation from the Company for serving as a Director or officer other than
reasonable reimbursement for travel and related expenses incurred in attending meetings of the
Directors and no such Director shall be deemed an Independent Director for purposes of satisfying
the Director independence requirement set forth in the Articles of Incorporation.

     9. FEES.

          (a) Acquisition Fees. The Advisor shall receive an Acquisition Fee payable by the
Company as compensation for services rendered in connection with the investigation, selection and
acquisition (by purchase, investment or exchange) of Investments. The total Acquisition Fees
payable to the Advisor or its Affiliates shall equal 1.5% of the cost of all Investments, including
Acquisition Expenses and any debt attributed to such investments. With respect to investments in
and origination of Loans, the company will pay the Advisor an Origination Fee in lieu of the
Acquisition Fee. With respect to the acquisition of Real Estate Assets through a Joint Venture,
the Acquisition Fee payable by the Company to the Advisor shall equal 1.5% of the Company’s
allocable cost of such Real Estate Assets, including Acquisition Expenses and any debt attributed
to such Investments. The Advisor shall submit an invoice to the Company following the closing or
closings of each Investment, accompanied by a computation of the Acquisition Fee. The Acquisition
Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt of the
invoice by the Company. Notwithstanding the foregoing, the Advisor will not receive an Acquisition
Fee for any Investments the Company acquires from one of its Affiliates.

          (b) Origination Fees. As compensation for the investigation, selection, sourcing and
acquisition or origination of Loans, the Company shall pay an Origination Fee to the Advisor for
each such acquisition or origination equal to 1.5% of the amount funded by the Company to acquire
or originate the Loan, including any Acquisition Expenses related to such investment and any debt
used to fund the acquisition or origination of the Loan. The Company will not pay an Origination
Fee to the Advisor with respect to any transaction pursuant to which the Company is required to pay
the Advisor an Acquisition Fee. Notwithstanding anything herein to the contrary, the payment of
Origination Fees by the Company shall be subject to the limitations on Acquisition Fees contained
in the Company’s Articles of Incorporation. The Advisor shall submit an invoice to the Company
following the closing or closings of each Loan, accompanied by a computation of the Origination
Fee. The Origination Fee payable to the Advisor shall be paid at the closing of the transaction
upon receipt of the invoice by the Company. Notwithstanding the foregoing, the Advisor will not receive an Origination Fee for
any Investments the Company acquires from one of its Affiliates.

-11-

 

          (c) Limitation on Total Acquisition Fees, Origination Fees and Acquisition Expenses.
Pursuant to the NASAA REIT Guidelines, the total of all Acquisition Fees, Origination Fees, and
Acquisition Expenses shall not exceed 6.0% of the “Contract
Purchase Price,” as defined in the Articles of Incorporation, of
all Investments acquired.

          (d) Disposition Fees. In connection with a Sale, the Company shall pay a Disposition
Fee to the Advisor equal to 3.0% of the Contract Sales Price. Any Disposition Fee payable under
this Section 9(d) may be paid in addition to real estate commissions paid to non-Affiliates,
provided that the total real estate commissions (including such Disposition Fee) paid to all
Persons by the Company for each Investment shall not exceed 6.0% of the Contract Sales Price.

          (e) Asset Management Fee. The Advisor shall receive the Asset Management Fee as
compensation for services rendered in connection with the management of the Company’s assets. The
Asset Management Fee shall be calculated monthly and consists of a monthly fee of one-twelfth of
1.0% of the aggregate cost (before non-cash reserves and depreciation) of all Investments the
Company owns, including Acquisition Fees, origination fees, acquisition origination expenses and
any debt attributable to such Investments. With the exception of any portion of the Asset
Management Fee related to the disposition of Investments, which shall be payable at the time of
such disposition, the Asset Management Fee shall be payable on the first of each month.

          (f) Organizational and Offering Expenses. The cumulative Selling Commissions, Dealer
Manager Fee and Organizational and Offering Expenses paid by the Company will not exceed 15.0% of
Gross Proceeds from the sale of Shares in the Primary Offering.

          (g) Operating Partnership Interests. The Advisor has made a capital contribution of
$1,000 to the Operating Partnership in exchange for OP Units. In addition, an Affiliate of the
Advisor has received OP Units constituting a separate series of limited partnership interests (the
“Special OP Units”). Upon the earliest to occur of the termination of this Agreement for
Cause, a Termination Event or a Listing, all of the Special OP Units shall be redeemed by the
Operating Partnership in accordance with the terms of the Operating Partnership Agreement.

          (h) Exclusion of Certain Transactions. In the event the Company or the Operating
Partnership shall propose to enter into any transaction in which a Director or an officer of the
Company, and the Advisor, or any Affiliate of the Company, the Operating Partnership or the Advisor
has a direct or indirect interest, then such transaction shall be approved by a majority of the
Board of Directors and also by a majority of the Independent Directors.

     10. EXPENSES.

          (a) In addition to the compensation paid to the Advisor pursuant to Section 9 hereof, the
Company or the Operating Partnership shall pay directly or reimburse the Advisor for all of the
expenses paid or incurred by the Advisor in connection with the services it provides to the Company
and the Operating Partnership pursuant to this Agreement, including, but not limited to:

-12-

 

               (i) Organizational
and Offering Expenses only upon such time as the minimum offering
amount as described in the Prospectus for the Company’s current
Offering has been
achieved; provided, however, that within 60 days after the end
of the month in which the current Offering terminates, the Advisor
shall reimburse the Company to the extent the Organizational and
Offering Expenses borne by the Company exceed 15% of the Gross
Proceeds raised in the Completed Offering;

               (ii) Acquisition Expenses incurred in connection with the selection and acquisition of
Investments subject to the aggregate 6% cap on Acquisition Fees,
Origination Fees and Acquisition Expenses set forth in
Section 9(c);

               (iii) the actual cost of goods and services used by the Company and obtained from entities not
affiliated with the Advisor;

               (iv) interest and other costs for borrowed money, including discounts, points and other
similar fees;

               (v) taxes and assessments on income of the Company or Investments;

               (vi) costs associated with insurance required in connection with the business of the Company
or by the Directors;

               (vii) expenses of managing and operating Investments owned by the Company, whether payable to
an Affiliate of the Company or a non-affiliated Person;

               (viii) all expenses in connection with payments to the Directors for attending meetings of the
Directors and Stockholders;

               (ix) expenses associated with a Listing, if applicable, or with the issuance and distribution
of Shares, such as selling commissions and fees, advertising expenses, taxes, legal and accounting
fees, listing and registration fees, and other Organization and Offering Expenses;

               (x) expenses connected with payments of Distributions in cash or otherwise made or caused to
be made by the Company to the Stockholders;

               (xi) expenses of organizing, revising, amending, converting, modifying, or terminating the
Company or the Articles of Incorporation;

               (xii) expenses of maintaining communications with Stockholders, including the cost of
preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements
and other reports required by governmental entities;

-13-

 

               (xiii) administrative service expenses (including (a) personnel costs; provided, however, that
no reimbursement shall be made for costs of personnel to the extent that such personnel perform
services in transactions for which the Advisor receives Acquisition Fees, Origination Fees, Asset
Management Fees, property management fees or real estate sales commissions, and (b) the Company’s
allocable share of other overhead of the Advisor such as rent and utilities); and

               (xiv) audit, accounting and legal fees.

          (b) Expenses incurred by the Advisor on behalf of the Company and the Operating Partnership
and payable pursuant to this Section 10 shall be reimbursed no less than monthly to the Advisor.
The Advisor shall prepare a statement documenting the expenses of the Company and the Operating
Partnership and the calculation of the Asset Management Fee during each quarter, and shall deliver
such statement to the Company and the Operating Partnership within 45 days after the end of each
quarter.

     11. OTHER SERVICES. Should the Directors request that the Advisor or any director, officer or
employee thereof render services for the Company and the Operating Partnership other than set forth
in Section 3, such services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the Independent Directors, subject to the limitations
contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the
terms of this Agreement.

     12. REIMBURSEMENT TO THE ADVISOR. The Company shall not reimburse the Advisor at the end of
any fiscal quarter in which Total Operating Expenses for the four consecutive fiscal quarters then
ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of
Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such year. Any
Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company or, at the
option of the Company, subtracted from the Total Operating Expenses reimbursed during the
subsequent fiscal quarter. If there is an Excess Amount in any Expense Year and the Independent
Directors determine that such excess was justified based on unusual and nonrecurring factors which
they deem sufficient, then (i) the Excess Amount may be carried over and included in Total
Operating Expenses in subsequent Expense Years and reimbursed to the Advisor in one or more of such
years, provided that there shall be sent to the Stockholders a written disclosure of such fact,
together with an explanation of the factors the Independent Directors considered in determining
that such excess expenses were justified. Such determination shall be reflected in the minutes of
the meetings of the Board of Directors. The Company will not reimburse the Advisor or its
Affiliates for services for which the Advisor or its Affiliates are entitled to receive Acquisition
Fees, Origination Fees, Asset Management Fees, property management fees or real estate commissions.
All figures used in the foregoing computation shall be determined in accordance with generally
accepted accounting principles applied on a consistent basis.

     13. INVESTMENT OPPORTUNITIES. In the event that Moody National identifies an investment
opportunity that is a stabilized and income-producing commercial real property, for which the
Company has sufficient uninvested funds, the investment opportunity will first be offered to the
Company. Unless the Board of Directors determines not to proceed

-14-

 

with such investment, the investment opportunity will not be presented to any other real estate investment fund, program or Joint
Venture owned, managed, advised or sponsored by Moody National or its Affiliates; provided,
however, that any such investment opportunity shall not be required to be presented to the Company
during any period in which the Company does not have sufficient available funds, or a reasonable
opportunity of obtaining available funds, with which to make the investment.

     14. BUSINESS COMBINATION.

          (a) Business Combination with Advisor. The Company shall consider becoming a
self-administered REIT once the Company’s assets and income are, in the view of the Board of
Directors, of sufficient size such that internalizing the management functions performed by the
Advisor is in the best interests of the Company and the Stockholders. If the Board of Directors
should make this determination in the future, the Company shall pay one-half, and the Advisor shall
pay the other one-half, of the costs of an independent investment banking firm. This firm shall
jointly advise the Company and the Advisor on the value of the Advisor. After the investment
banking firm completes its analyses, the Company shall require it to prepare a written report and
make a formal presentation to the Board of Directors. Following the presentation by the investment
banking firm, the Board of Directors shall form a special committee (the “Special
Committee”) comprised entirely of Independent Directors to consider a possible business
combination with the Advisor. The Board of Directors shall, subject to applicable law, delegate
all of its decision-making power and authority to the Special Committee with respect to matters
relating to a possible business combination with the Advisor. The Special Committee also shall be
authorized to retain its own financial advisors and legal counsel to, among other things, negotiate
with representatives of the Advisor regarding a possible business combination with the Advisor.

          (b) Conditions to Completion of Business Combination with Advisor. Before the Company
may complete any business combination with the Advisor in accordance
with this Section 14, the
following three conditions shall be satisfied:

               (i) the
Special Committee formed in accordance with Section 14(a) hereof receives an opinion
from a qualified investment banking firm, separate and distinct from the firm jointly retained by
the Company and the Advisor to provide a valuation analysis in
accordance with Section 14(a)
hereof, concluding that the consideration to be paid to acquire the Advisor is fair to the
Stockholders from a financial point of view;

               (ii) the Board of Directors determines that such business combination is advisable and in the
best interests of the Company and the Stockholders; and

               (iii) Such business combination is approved by the Stockholders entitled to vote thereon in
accordance with the Company’s Articles of Incorporation and Bylaws.

     15. OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall prevent the Advisor or
any of its Affiliates from engaging in or earning fees from other activities, including, without
limitation, the rendering of advice to other Persons (including other REITs) and the management of
other programs advised, sponsored or organized by the Advisor or
its

-15-

 

Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, member, partner, employee, or
stockholder of the Advisor or its Affiliates to engage in or earn fees from any other business or
to render services of any kind to any other partnership, corporation, firm, individual, trust or
association and earn fees for rendering such services. The Advisor may, with respect to any
investment in which the Company is a participant, also render advice and service to each and every
other participant therein, and earn fees for rendering such advice and service. Specifically, it
is contemplated that the Company may enter into joint ventures or other similar co-investment
arrangements with certain Persons, and pursuant to the agreements governing such joint ventures or
arrangements, the Advisor may be engaged to provide advice and service to such Persons, in which
case the Advisor will earn fees for rendering such advice and service.

     The Advisor shall report to the Directors the existence of any condition or circumstance,
existing or anticipated, of which it has knowledge, which creates or could create a conflict of
interest between the Advisor’s obligations to the Company and its obligations to or its interest in
any other partnership, corporation, firm, individual, trust or association. The Advisor or its
Affiliates shall promptly disclose to the Directors knowledge of such condition or circumstance.
If the Advisor, Director or Affiliates thereof have sponsored other investment programs with
similar investment objectives which have investment funds available at the same time as the
Company, it shall be the duty of the Directors (including the Independent Directors) to ensure that
the Advisor and its Affiliates adopt the method approved by the Independent Directors, by which
investments are to be allocated to the competing investment entities and to use their best efforts
to ensure that such method is applied fairly to the Company.

     16. TERM OF AGREEMENT. This Agreement shall continue in force for a period of
one year from the date of the Prospectus pursuant to which the initial Offering is made, subject to
an unlimited number of successive one-year renewals upon mutual consent of the parties. It is the
duty of the Directors to evaluate the performance of the Advisor annually before renewing the
Agreement, and each such renewal shall be for a term of no more than one year.

     17. TERMINATION BY THE PARTIES. This Agreement may be terminated (i) immediately by the
Company or the Operating Partnership for Cause or upon the bankruptcy of the Advisor, (ii) upon 60
days written notice without Cause and without penalty by a majority of the Independent Directors of
the Company or (iii) upon 60 days written notice with Good
Reason by the Advisor. The provisions of Sections 18 through 31
survive termination of this Agreement.

     18. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Advisor to an Affiliate
with the approval of a majority of the Directors (including a majority of the Independent
Directors). The Advisor may assign any rights to receive fees or other payments under this
Agreement to any Person without obtaining the approval of the Directors. This Agreement shall not
be assigned by the Company or the Operating Partnership without the consent of the Advisor, except
in the case of an assignment by the Company or the Operating Partnership to a corporation, limited
partnership or other organization which is a successor to all of the assets, rights and obligations
of the Company or the Operating Partnership, in which case such successor organization shall be
bound hereunder and by the terms of said assignment in the same manner as the Company and the
Operating Partnership are bound by this Agreement.

-16-

 

     19. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

          (a) After the Termination Date, the Advisor shall not be entitled to compensation for further
services hereunder except it shall be entitled to receive from the Company or the Operating
Partnership within 30 days after the effective date of such termination all unpaid reimbursements
of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this
Agreement, subject to the 2%/25% Guidelines to the extent applicable.

          (b) The Advisor shall promptly upon termination:

               (i) pay over to the Company and the Operating Partnership all money collected and held for the
account of the Company and the Operating Partnership pursuant to this Agreement, after deducting
any accrued compensation and reimbursement for its expenses to which it is then entitled;

               (ii) deliver to the Board of Directors a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the period following the
date of the last accounting furnished to the Board of Directors;

               (iii) deliver to the Board of Directors all assets, including all Investments, and documents
of the Company and the Operating Partnership then in the custody of the Advisor; and

               (iv) cooperate with the Company and the Operating Partnership to provide an orderly management
transition.

     20. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the
Operating Partnership shall indemnify and hold harmless the Advisor and its Affiliates, including
their respective directors (the “Indemnitees,” and each an “Indemnitee”), from all
liability, claims, damages or losses arising in the performance of their duties hereunder, and
related expenses, including reasonable attorneys’ fees, to the extent such liability, claims,
damages or losses and related expenses are not fully reimbursed by insurance, and to the extent
that such indemnification would not be inconsistent with the laws of the State of Maryland, the
Articles of Incorporation or the provisions of Section II.G of the NASAA REIT Guidelines. In
addition, the Company and the Operating Partnership shall indemnify and hold harmless the officers
of the Company and the Advisor and its Affiliates from all liability, claims, damages or losses
arising in the performance of their duties hereunder, and related expenses, including reasonable
attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are
not fully reimbursed by insurance, and to the extent that such indemnification would not be
inconsistent with the laws of the State of Maryland or the Articles of Incorporation.
Notwithstanding the foregoing, the Company and the Operating Partnership shall not provide for indemnification of an Indemnitee for any loss or liability
suffered by such Indemnitee, nor shall they provide that an Indemnitee be held harmless for any
loss or liability suffered by the Company and the Operating Partnership, unless all of the
following conditions are met:

-17-

 

          (a) the Indemnitee has determined, in good faith, that the course of conduct that caused the
loss or liability was in the best interest of the Company and the Operating Partnership;

          (b) the Indemnitee was acting on behalf of, or performing services for, the Company or the
Operating Partnership;

          (c) such liability or loss was not the result of negligence or willful misconduct by the
Indemnitee; and

          (d) such indemnification or agreement to hold harmless is recoverable only out of the
Company’s net assets and not from the Stockholders.

     Notwithstanding the foregoing, an Indemnitee shall not be indemnified by the Company and the
Operating Partnership for any losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws by such Indemnitee unless one or more of the
following conditions are met:

          (a) there has been a successful adjudication on the merits of each count involving alleged
securities law violations as to the Indemnitee;

          (b) such claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the Indemnitee; or

          (c) 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
Securities and Exchange Commission and of the published position of any state securities regulatory
authority in which securities of the Company or the Operating Partnership were offered or sold as
to indemnification for violation of securities laws.

     In addition, the advancement of the Company’s or the Operating Partnership’s funds to an
Indemnitee for legal expenses and other costs incurred as a result of any legal action for which
indemnification is being sought is permissible only if all of the following conditions are
satisfied:

          (a) the legal action relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company or the Operating Partnership;

          (b) the legal action is initiated by a third party who is not a Stockholder or the legal
action is initiated by a stockholder acting in such stockholder’s capacity as such and a court of
competent jurisdiction specifically approves such advancement; and

          (c) the Indemnitee undertakes to repay the advanced funds to the Company or the Operating
Partnership, together with the applicable legal rate of interest thereon, in cases in which such
Indemnitee is found not to be entitled to indemnification.

-18-

 

     21. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless the Company and
the Operating Partnership from contract or other liability, claims, damages, taxes or losses and
related expenses including attorneys’ fees, to the extent that such liability, claims, damages,
taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by
reason of the Advisor’s bad faith, fraud, willful misfeasance, intentional misconduct, gross
negligence or reckless disregard of its duties;provided, however,
that the Advisor shall not be held
responsible for any action of the Board of Directors in following or declining to follow any advice
or recommendation given by the Advisor.

     22. NOTICES. Any notice, report or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice, report or other
communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to
whom it is given, and shall be given by being delivered by hand, by facsimile transmission, by
courier or overnight carrier or by registered or certified mail to the addresses set forth herein:

	 	 	 
	To the Directors and to the Company:

	 	Moody National REIT I, Inc.
	 

	 	6363 Woodway, Suite 110
	 

	 	Houston, Texas 77057
	 

	 	Facsimile: (713) 977-7505
	 

	 	Attention: Brett C. Moody
	 
	 	 
	To the Operating Partnership:

	 	Moody National Operating Partnership I, L.P.
	 

	 	6363 Woodway, Suite 110
	 

	 	Houston, Texas 77057
	 

	 	Facsimile: (713) 977-7505
	 

	 	Attention: Brett C. Moody
	 
	 	 
	To the Advisor:

	 	Moody National Advisor I, LLC
	 

	 	6363 Woodway, Suite 110
	 

	 	Houston, Texas 77057
	 

	 	Facsimile: (713) 977-7505
	 

	 	Attention: Brett C. Moody

     Any party may at any time give notice in writing to the other parties of a change in its
address for the purposes of this Section 22.

     23. MODIFICATION. This Agreement shall not be changed, modified, terminated, or discharged,
in whole or in part, except by an instrument in writing signed by the parties hereto, or their
respective successors or assignees.

     24. SEVERABILITY. The provisions of this Agreement are independent of and severable from each
other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the
fact that for any reason any other or others of them may be invalid or unenforceable in whole or in
part.

-19-

 

     25. CONSTRUCTION. The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of Maryland.

     26. ENTIRE AGREEMENT. This Agreement contains the entire agreement and understanding among
the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. This Agreement may not be modified or amended other than by an agreement in
writing.

     27. INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

     28. GENDER. Words used herein regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires.

     29. TITLES NOT TO AFFECT INTERPRETATION. The titles of Sections and Subsections contained in
this Agreement are for convenience only, and they neither form a part of this Agreement nor are
they to be used in the construction or interpretation hereof.

     30. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument. This Agreement
shall become binding when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the signatories.

     31. INITIAL INVESTMENT. The Advisor has made a capital contribution of $1,000 to the
Operating Partnership in exchange for OP Units. The Advisor may not sell any of the OP Units while
the Advisor acts in such advisory capacity to the Company, provided, that such OP Units may be
transferred to Affiliates of the Advisor. The restrictions included above shall not apply to any other securities acquired by
the Advisor or its Affiliates. The Advisor shall not vote any Shares it now owns, or hereafter
acquires, in any vote for the election of Directors or any vote regarding the approval or
termination of any contract with the Advisor or any of its Affiliates.

[Remainder of page intentionally left blank]

-20-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the date
and year first above written.

	 	 	 	 	 
	 	Moody National REIT I, Inc.

 	 
	 	By:  	
 	 
	 	 	Brett C. Moody 	 
	 	 	Chief Executive Officer and President 	 
	 
	 	Moody National Operating Partnership I, L.P.

 	 
	 	By:  	Moody National REIT I, Inc., 
Its General Partner
 	 
	 
	 	By:  	
 	 
	 	 	Brett C. Moody 	 
	 	 	Chief Executive Officer and President 	 
	 
	 	Moody National Advisor I, LLC

By: Moody National REIT Sponsor, LLC

By: Moody National REIT Sponsor SM, LLC

 	 
	 	By:  	
 	 
	 	 	Brett C. Moody 	 
	 	 	Member 	 
	 
	 	Moody National Realty Company, L.P. solely in
 connection with the obligations
set forth in Section 
13

By: Moody Realty Corporation

 	 
	 	By:  	
 	 
	 	 	Brett C. Moody 	 
	 	 	PresidentEX-10.1 EMPLOYMENT AGREEMENT

EXHIBIT 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is entered into as of July 3, 2008, between
Comprehensive Care Corporation, a Delaware Corporation (“CompCare”) and John M. Hill, an individual
(“Executive”).

Recitals

     A. CompCare—primarily through its wholly-owned subsidiary, Comprehensive Behavioral Care,
Inc.—manages the delivery of a continuum of psychiatric and substance abuse, and disease
management services to commercial, Medicare, Medicaid, and Children’s Health Insurance Program
members on behalf of employers, health plans, government organizations, third-party claims
administrators, and commercial and other group purchasers of behavioral healthcare services. The
managed care operations include administrative service agreements, fee-for-service agreements, and
capitation contracts.

     B. CompCare desires to employ the Executive as its Chief Executive Officer (“CEO”), and the
Executive desires to be so employed by CompCare, on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration thereof and of the covenants and conditions contained herein,
the parties agree as follows:

Agreement

1. Board Approval. CompCare and the Executive acknowledge that this entire Agreement is
subject to approval by CompCare’s Board of Directors (“CompCare’s Board”).

2. Employment. Commencing January 14, 2008 (the “Start Date”), CompCare hereby agrees to
employ the Executive, and the Executive hereby agrees to serve, in the full-time position of CEO.
As CEO, the Executive agrees to faithfully perform such lawful services customary to that office,
to use his best ability and skills to promote the interests of CompCare, and to devote his full
business time and energies to the business and affairs of the CompCare. The Executive and CompCare
acknowledge that the Executive will be reporting to CompCare’s Board, will be subject to
semi-annual performance reviews (at the discretion of CompCare’s Board), and will be evaluated
against criteria established by CompCare’s Board.

 

 

3. Term of Agreement. Subject to the terms of Section 9 of this Agreement, CompCare and
the Executive agree that the term of this Agreement will commence on the Start Date for a period of
36-months.

4. Relocation to Tampa, Florida. CompCare requires, and the Executive agrees, that he will
be permanently based out of CompCare’s corporate headquarters office in Tampa, Florida.
Accordingly, CompCare will provide assistance associated with the relocation of the Executive’s
residence from Pennsylvania. This includes temporary housing, closing costs on a new residence,
transfer of household goods to the Tampa area, and other reasonable relocation expenses for which
the Executive receives prior approval from CompCare’s Board. For a maximum of 6 months, CompCare
will provide the Executive an allowance of $1,000 per month for travel expenses as well as a
maximum of $1,500 per month for temporary housing allowance. The maximum relocation reimbursement
for the permanent relocation (to include closing costs on a new residence, transfer of household
goods, and other reasonable relocation expenses for which the Executive receives prior approval
from CompCare’s Board) will be $50,000. Original receipts will be required for reimbursement
expenses related to the relocation and CompCare agrees to reimburse Executive for actual taxes paid
on allowable relocation expenses, up to a maximum of $15,000.

     CompCare requires and the Executive agrees that he will complete his relocation to Tampa
within 6 months of the Start Date. CompCare reserves the right to terminate the Executive’s
employment if the permanent relocation to the Tampa area is not completed within 12 months of the
Start Date. If employment is terminated for this reason, the termination would be considered a
termination for Cause.

     If the Executive should voluntarily resign without Good Reason (as defined in Section 9(c)) or
is terminated for Cause (as defined in Section 9(b)) within twelve months after his permanent
relocation to the Tampa area, the Executive will repay CompCare 1/12 (one-twelfth) of the
relocation costs paid by CompCare for each of those twelve months not served by the Executive. If
the Executive’s employment is terminated without Cause during that twelve-month period then the
Executive will not be responsible for repaying any relocation costs to CompCare.

5. Salary. The Executive’s annual CEO salary will be $205,000, payable in equal
installments on a bi-weekly basis or other regular payroll period in accordance with CompCare’s
standard practices.

6. Stock Options. Subject to CompCare’s Board approval, the Executive will receive stock
options with an exercise price equal to Fair Market Value (as defined in Section 2 of CompCare’s
2002 Incentive Stock Option Plan, as amended) of CompCare’s stock on each grant date provided
below. Any approved grants will be issued in accordance with the CompCare’s 2002 Incentive Stock
Option Plan. Subject to CompCare’s Board approval, the Executive will be granted stock options,
and the options will vest, according to the following schedule, so long as the Executive is still
employed on the operative dates:

     (a) Upon the Start Date, grant of 100,000 stock options, 50,000 of
which will vest on the 1st anniversary of the Start Date, the other
50,000 options would vest on the 2nd anniversary of the Start Date;

 

 

     (b) Upon the 1st anniversary of the Start Date,
additional grant of 50,000 stock options, 25,000 of which will vest six
months later, and the remaining 25,000 options would vest on the 2nd
anniversary of the Start Date;

     (c) Upon the 2nd anniversary of the Start Date,
additional grant of 50,000 stock options, 25,000 of which will vest 6
months later and the remaining 25,000 options would vest on the 3rd
anniversary of the Start Date.

     Immediate vesting of all granted options would only occur upon a Change of Control. For
purposes of this Agreement, a “Change in Control” shall be defined as any transaction or series of
transactions that occur within a twelve (12) month period, as a result of which, any Third Party
(together with its Affiliates): (i) owns, directly or indirectly, in excess of fifty percent (50%)
of the Company’s then outstanding shares having the power to vote in the election of the Company’s
Board of Directors; (ii) acquires a substantial portion of the Company’s assets in excess of 75% of
the total gross fair market value of the Company immediately prior to such acquisition or
acquisitions.

7. Bonus. As CEO, the Executive will be eligible to earn an annual performance-based
incentive bonus of up to 150% of base salary for the achievement of CompCare’s corporate financial
objectives and the achievement of individual performance objectives (the “Annual Bonus”).
CompCare’s corporate financial objectives shall be defined and approved by the Board for each year
before the start of the calendar year. Individual performance objectives will be defined by
CompCare’s Board for each calendar year. For 2008 the financial and individual performance
objectives defined by the Board are identified in Schedule I, attached hereto. For 2008 the Annual
Bonus will be prorated based upon the actual time the Executive is employed during 2008. CompCare
will pay the Executive each Annual Bonus, if any, by March 14th of the following calendar year.

8. Benefits. As CEO, the Executive will be eligible to participate in group benefits
through CompCare with an eligible enrollment date of the first of the month following a full month
of employment. These benefits include group medical, vision and dental insurance, group life
insurance, group short-term and long-term disability insurance. After 1,000 hours of service, the
Executive may begin contributing to CompCare’s 401(k) retirement/savings plan. The Executive is
eligible for 4 weeks of vacation per year, accrued in equal installments based on the pay periods.

     CompCare shall pay or reimburse the Executive for all ordinary, reasonable, and documented
out-of-pocket expenses actually incurred (and, in case of reimbursement paid) by the Executive
during the term of this Agreement in the performance of his services under this Agreement, provided
that the Executive submits such expenses in

 

 

accordance with CompCare’s general policies and procedures.

     The Executive will also receive a car allowance of $250 per bi-weekly pay period to assist
with the costs associated with his commute. All car allowance payments will be subject to
deductions as required by federal and local laws for income or other taxes and voluntary deductions
as the Executive has elected in accordance with CompCare’s standard practices.

9. Termination or Resignation.

     (a) Employment At-Will. Between the Start Date and the
1st anniversary of the Start Date, CompCare may only
terminate the Executive’s employment for Cause (as defined in Section
9(b)). After the 1st anniversary of the Start Date, the
Executive’s employment with CompCare will be at-will, which means that
either the Executive or CompCare can terminate it at any time, with or
without cause, by providing 90 days’ notice to the other party.

     (b) Cause. For purposes of this Agreement, a termination
shall be for “Cause” if the Executive, in the good faith opinion of
CompCare’s Board:

          (i) Commits an act of fraud, moral turpitude, misappropriation of funds or embezzlement in
connection with his duties;

          (ii) Materially breaches the Executive’s fiduciary duty to CompCare, including, but not
limited to, acts of self-dealing (whether or not for personal profit);

          (iii) Materially breaches this Agreement;

          (iv) Materially breaches CompCare’s standard innovation, proprietary information, and
confidentiality agreement or CompCare’s written codes of ethics as adopted by CompCare’s Board;

          (v) Materially violates any provision of CompCare’s written employee handbook, or any
applicable state or federal law or regulation;

          (vi) Fails or refuses to comply with all relevant and material obligations, assumable and
chargeable to an executive of his corporate rank and responsibilities, under the Sarbanes-Oxley Act
and the regulations of the Securities and Exchange Commission promulgated thereunder;

          (vii) Fails or refuses to comply with the lawful directives of CompCare in the performance of
his duties under this Agreement;

          (viii) Engages in willful misconduct that is materially injurious to CompCare;

 

 

          (ix) Uses illegal substances, or excessively uses alcohol to a point of substantially
impairing his faculties, senses, or judgment, while on CompCare premises or performing CompCare
business;

          (x) Is convicted of, or enters a plea of guilty or no contest to, a felony or misdemeanor
under state or federal law, other than a traffic violation or misdemeanor not involving dishonesty
or moral turpitude; or

          (xi) Commits an act of gross neglect or gross misconduct which CompCare reasonably deems to be
good and sufficient cause.

     (c) Good Reason. For purposes of this Agreement, a resignation
shall be for “Good Reason” if (1) the Executive notifies CompCare in
writing of the act or omission giving rise to his resignation for Good
Reason within 30 days of such act or omission and CompCare fails to cure
such act or omission within 30 days of receiving the Executive’s written
notice and (2) such act or omission by CompCare consist of one or more
of the following:

          (i) Assignment to the Executive of duties materially inconsistent with the Executive’s status,
or a substantial reduction in the nature or status of the Executive’s responsibilities;

          (ii) Failure to cause any acquiring or successor entity following a Change in Control (as
defined in Section 6) to assume CompCare’s obligations under this Agreement, unless such assumption
occurs by operation of law;

          (iii) Material breach of this Agreement by CompCare including failure to timely pay to the
Executive any amount due under Section 5; or

          (iv) Demand by CompCare or CompCare’s Board that the Executive violate any relevant and
material obligations, assumable and chargeable to an executive of his corporate rank and
responsibilities, under the Sarbanes-Oxley Act and the regulations of the Securities and Exchange
Commission promulgated thereunder.

     (d) Long Term Disability. If the Executive becomes
Disabled, CompCare may terminate his employment upon 30 days’ prior
written notice to the Executive. “Disabled” means the Executive: (i)
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, as diagnosed by a
reputable, independent physician, which can be expected to result in
death or can be expected to last for a continuous period of not less
than 12 months; or (ii) has been collecting benefits under any
CompCare-sponsored disability plan for 3 months because of any medically
determinable physical or mental impairment, as diagnosed by a reputable,
independent physician, which can be expected to

 

 

result in death or can be expected to last for a continuous period
of not less than 12 months.

          (e) Death. The Executive’s employment shall terminate
immediately upon the death of the Executive.

10. Severance Upon Termination or Resignation.

          (a) Termination for Cause. If CompCare terminates the
Executive’s employment for Cause at any time after the Start Date,
CompCare shall continue to pay the Executive his then rate of salary,
without bonus, through the date of termination of the Executive’s
employment, together with any accrued benefits under this Agreement or
CompCare’s standard practice and policies through the date of
termination including, but not limited to, payment for accrued vacation
days and reimbursement for expenses (collectively, “Accrued
Obligations”). Thereafter, CompCare shall have no further obligation to
the Executive under this Agreement.

          (b) Termination Without Cause by CompCare. If after the
1st anniversary of the Start Date, CompCare terminates the Executive’s
employment without Cause as defined in Section 9(b) of this Agreement,
CompCare shall provide the Executive 90 days’ notice and, after
execution of a severance agreement documenting the respective
obligations of each party, pay the Executive no less than 8 months’
salary at his then current rate, without bonus, plus 1 month for every
year of service, up to a maximum of 12 months’ salary, plus all Accrued
Obligations. Thereafter, CompCare shall have no further obligation to
the Executive under this Agreement.

          (c) Resignation for Good Reason by the Executive. If,
after providing the required written notice and the opportunity to cure,
the Executive terminates his employment with Good Reason as defined in
Section 9(c) of this Agreement, then after execution of a severance
agreement documenting the respective obligations of each party CompCare
shall pay the Executive no less than 8 months’ salary at his then
current rate, without bonus, plus 1 month for every year of service, for
a maximum of 12 months’ salary, plus all Accrued Obligations.
Thereafter, CompCare shall have no further obligation to the Executive
under this Agreement.

          (d) Resignation Without Good Reason by the Executive.
Before resigning without Good Reason at any time after the Start Date,
the Executive will provide 90 days’ notice to

 

 

CompCare and CompCare shall continue to pay the Executive his then
rate of salary, without bonus, through the effective date of his
resignation, together with any Accrued Obligations. Thereafter,
CompCare shall have no further obligation to the Executive under this
Agreement.

     (e) Termination for Disability. During any period that the
Executive fails to perform his full-time duties with CompCare as a
result of becoming Disabled, the Executive shall continue to receive his
then current salary, without bonus, and all Accrued Obligations, less
any compensation payable to the Executive under the applicable
disability insurance plan of CompCare during such period until this
Agreement is terminated pursuant to Section 9(d). Thereafter, the
Executive’s benefits shall be determined under CompCare’s insurance and
other compensation programs then in effect in accordance with the terms
of such programs and CompCare shall have no further obligation to the
Executive under this Agreement.

     (f) Death. In the event of the Executive’s death, the
Executive’s beneficiary shall be entitled to receive the Executive’s
then current salary, without bonus, until the date of his death, plus
all Accrued Obligations. Thereafter, the Executive’s benefits shall be
determined under CompCare’s insurance and other compensation programs
then in effect in accordance with the terms of such programs and
CompCare shall have no further obligation to the Executive or the
Executive’s beneficiary under this Agreement.

     (g) Release of Employment Claims. The Executive agrees, as
a condition to receipt of any termination payments and benefits provided
for in Section 10 herein, that he will execute a severance agreement
containing a general release of employment claims.

     (h) Payment. Amounts payable under this Section 10
following the Executive’s termination of employment will be paid as
promptly as practicable after such termination of employment and, in any
event, within six months after date of termination.

 

 

11. Non-Compete, Non-Solicitation and Non-Disparagement Covenants. 

     (a) Non Competition. To the maximum extent permitted by
applicable law, Executive covenants and agrees that, in
consideration of the amounts to be paid Executive under this Agreement
and other good and valuable consideration, Executive shall not be
employed as an executive officer of, or control, manage, or otherwise
participate in the management of the business of a Direct Competitor of
CompCare during the Executive’s employment with CompCare, and for 24
months thereafter, in any geographic area where CompCare services
customers. For purposes of this Agreement, “Direct Competitor” shall be
defined as any person, business, company, or organization engaged in, or
about to become engaged in, a business or activity that is substantially
similar to, or would be deemed to compete with, the business of
CompCare, or where knowledge by such person, business, company, or
organization of CompCare’s confidential, proprietary, or trade secret
information would provide such person, business, company, or
organization with a financial or competitive benefit, or would be a
financial or business detriment to CompCare.

     (b) Non-Solicitation of Customers. To the maximum extent
permitted by applicable law, Executive covenants and agrees that, in
consideration of the amounts to be paid Executive under this Agreement
and other good and valuable consideration, the Executive will not
directly or indirectly, or by action in concert with others, call on,
solicit, or take away, or attempt to call on, solicit, or take away any
of CompCare’s Customers, either for the benefit of the Executive or any
other person, firm, or corporation, during the Executive’s employment
with CompCare and for 24 months thereafter. For purposes of this
Agreement, “Customer” shall be defined as (i) any person, business,
company, or organization for which CompCare renders services while the
Executive is employed by CompCare; (ii) any person, business, company,
or organization to which CompCare has made a new business presentation
(or similar offering of services) during the Executive’s employment with
CompCare; (iii) any entity, division, or operating unit—whether or not
separately incorporated—that shares contracting decision makers with
any person, business, company, or organization for which CompCare
renders services, or to which CompCare has made a new business
presentation (or similar offering of services).

     (c) Non-Solicitation of Employees. To the maximum extent
permitted by applicable law, Executive covenants and agrees that, in
consideration of the amounts to be paid Executive under this Agreement
and other good and valuable consideration, the Executive will not
directly or indirectly, or by action in

 

 

concert with others, induce or influence or seek to induce or
influence, any person who is engaged as an employee, consultant, agent,
independent contractor, or otherwise by CompCare to terminate his or her
employment or engagement, or hire, employ, or retain any person who was
engaged as an employee, consultant, agent, or independent contractor of
CompCare, during the Executive’s employment with CompCare and for 24
months thereafter. General advertisements and employment fairs shall not
be construed as solicitation for purposes of this section.

     (d) Non-Disparagement The Executive shall not, at any
time during the Term and thereafter make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly,
disparage or be damaging to CompCare, its subsidiaries or affiliates or
their respective officers, directors, employees, advisors, businesses or
reputations, nor shall members of the Board of Directors or the
Executive’s successor in office make any such statements or
representations regarding the Executive. Notwithstanding the foregoing,
nothing in this Agreement shall preclude the Executive or his successor
or members of the Board of Directors from making truthful statements
that are required by applicable law, regulation, or legal process.

12. Governing Law. Disputes.

     (a) Governing Law. This Agreement and the terms of the
Executive’s employment with CompCare shall be governed by the laws of
the State of Florida, without regard to the laws as to choice or
conflict of laws. If under the governing law, any portion of this
Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation, ordinance, or other principle of law, such
portion shall be deemed to be modified or altered to the extent
necessary to conform thereto or, if that is not possible, to be omitted
from this Agreement. The invalidity of any such portion shall not
affect the force, effect, and validity of the remainder of this
Agreement. If any court, arbitrator, or arbitration panel determines
that any provision of Section 11 is unenforceable because of the
duration or geographic scope of such provision, it is the parties’
intent that such court, arbitrator, or arbitration panel shall have the
power to modify the duration or geographic scope of such provision, as
the case may be, to the

 

 

extent necessary to render the provision enforceable and, in its
modified form, such provision shall be enforced.

     (b) Binding Arbitration. The Executive and CompCare will
arbitrate any and all controversies, claims, or disputes arising out of,
or relating to, this Agreement, or the Executive’s employment with
CompCare (“Claims”) before the American Arbitration Association (“AAA”)
in accordance with the AAA’s National Rules for the Resolution of
Employment Disputes. The Executive waives any right to a trial by jury
in any controversy, claim, or dispute with CompCare, including those
that arise under any federal, state, or local law, including without
limitation, claims of harassment, discrimination, or wrongful
termination under common law or under Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, the Older Workers’
Benefit Protection Act, or the Florida Civil Rights Act of 1992.

     (c) Injunctive Relief. Notwithstanding the agreement to
arbitrate, a breach by the Executive of his obligations under Section 11
of this Agreement would cause CompCare irreparable harm and no adequate
remedy at law would be available in respect thereof. Accordingly, if
any dispute arises between the parties under Section 11, CompCare shall
not be required to arbitrate such Claim under Section 12(a), but shall
have the right to institute judicial proceedings in any court of
competent jurisdiction with respect to such dispute or claim and shall
be entitled to relief enjoining such acts without the need to post a
bond. If such judicial proceedings are instituted, such proceedings
shall not be stayed or delayed pending the outcome of any arbitration
proceeding under Section 12(a) of this Agreement. The Executive and
CompCare consent to the jurisdiction of the United States District Court
for the Middle District of Florida (or if such court cannot exercise
jurisdiction for any reason, to the jurisdiction of the County Court In
and For Hillsborough County, Florida) for this purpose. Further, the
Executive and CompCare waive any objections to the jurisdiction of such
courts based on improper or inconvenient forum.

13. Other Conditions of Employment.

     (a) Confidentiality Agreement. As required of all CompCare
employees, the Executive agrees to sign CompCare’s standard innovation,
proprietary information, and confidentiality agreement.

 

 

     (b) Employee Handbook. As with all CompCare employees, the
Executive’s employment will be subject to and in accordance with
CompCare’s standard employment policies and practices as set forth in
its employee handbook

     (c) Form I-9. CompCare is required to comply with the U.S.
Immigration Reform and Control Act of 1986. Completion of the Form I-9
and submittal of all required documentation is a requirement of
employment with CompCare.

     (d) Background Check. The Executive acknowledges
CompCare’s requirement that a background check be completed for his
employment at CompCare and has granted his permission for CompCare to do
so. Successful completion of the background check process should be
completed prior to the Start Date. However, if it is not and a
background check results in the Executive being ineligible to work for
CompCare, the Executive’s employment will be terminated for Cause
without notice.

     (e) Non-Compete Issues. The Executive represents that he
is free and clear of any non-competition issues with any previous
employers. CompCare reserves the right to terminate the Executive’s
employment without notice at any time if it learns that one of the
Executive’s previous employers seeks to enforce a non-competition
agreement against him in connection with his employment by CompCare. If
employment is terminated for this reason, the termination would be
considered a termination for Cause.

     (f) Cooperation With Regard to Litigation.  The Executive
agrees to cooperate with CompCare, during his employment and thereafter,
by making himself available to testify on behalf of CompCare or any
subsidiary or affiliate of CompCare, in any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, and to assist
CompCare, or any subsidiary of CompCare, as may be reasonably requested,
and after taking into account the Executive’s post-termination
responsibilities and obligations. CompCare agrees to reimburse the
Executive for all reasonable expenses actually incurred in connection
with provision of testimony or assistance whether during his employment
or thereafter.

 

 

14. Miscellaneous.

     (a) Notice. All notices of termination and other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand or mailed
by United States registered mail, return receipt requested, addressed as
follows:

     If to CompCare:

Comprehensive Care Corporation

3405 W. Dr. Martin Luther King Jr. Blvd,

Suite 101,

Tampa, FL 33607

Attn: Robert J. Landis, Chairman of the Board

     With a copy to:

Dreier Stein Kahan Browne Woods George LLP

1620 26th Street, Sixth Floor, North Tower

Santa Monica, California 90404

Attn: John C. Kirkland, Esq.

     If to the Executive:

Mr. John M. Hill

Current address in Human Resources File

or to such other address as either party may designate by notice to the other, which notice shall
be deemed to have been given upon receipt.

     (b) Headings. The sections and other headings contained in
this Agreement are for reference purposes only and will not affect in
any way the meaning or interpretation of this Agreement.

     (c) Waiver. No waiver by either party of a breach of any
provision will be construed as a waiver of any subsequent or different
breach, and no forbearance by a party to seek a remedy for noncompliance
or breach by the other party will be construed as a waiver of any right
or remedy with respect to such noncompliance or breach. All waivers
shall be in writing and signed by the party to be charged therewith.

     (d) Amendment. This Agreement may be amended, modified or
supplemented only by a writing executed by

 

 

Executive and the Chairman of CompCare’s Board with approval by
CompCare’s Board.

     (e) Entire Agreement. This Agreement, along with Schedule
I attached hereto, CompCare’s 2002 Incentive Stock Option Plan,
CompCare’s standard innovation, proprietary information, and
confidentiality agreement, and any severance agreement constructed to
document terms associated with the Executive’s termination from the
company, constitute the entire and only agreement and understanding
between the parties, which supersedes all prior and contemporaneous
agreements, summaries of agreements, descriptions of compensation
packages, discussions, negotiations, understandings, representations or
warranties, whether verbal or written, between the parties pertaining to
such subject matter.

      

Agreed to:

	 	 	 	 	 
	Executive:	 	CompCare:
	/s/ John M. Hill
 

John M. Hill	 	
By:
	 	/s/ Robert J. Landis
 

Robert J. Landis

Chairman of the Board

BOARD APPROVAL DATE: June 16, 2008

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