Moody National Advisor I, LLC. 10-Q [mnrt-10q_033114.htm]

EXHIBIT 10.3

 

AGREEMENT OF PURCHASE AND SALE

 

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made as of the
Effective Date, by and among MOODY NATIONAL RI GRAPEVINE S, LLC, a Delaware
limited liability company (“Fee Owner”), MOODY NATIONAL RI GRAPEVINE MT, LLC, a
Delaware limited liability company (“Moody MT”), MOODY NATIONAL MANAGEMENT, LP,
a Texas limited partnership (“Interest Owner”, Fee Owner, Moody MT and Interest
Owner collectively referred to herein as “Seller”), and MOODY NATIONAL REIT I,
INC., a Maryland corporation (the “Purchaser”).

 

RECITALS:

 

A.        Fee Owner is the owner of that certain tract of land more particularly
described on Exhibit “A” attached hereto and made a part hereof, located at 2020
State Highway 26, Grapevine, Texas 76051, together with all rights, titles,
benefits, easements, privileges, remainders, tenements, hereditaments,
interests, reversions and appurtenances thereunto belonging or in any way
appertaining, and all of the estate, right, title, interest, claim or demand
whatsoever of Fee Owner therein, including in and to adjacent strips and gores,
if any, between the Land and abutting properties, and in and to adjacent
streets, highways, roads, alleys or rights-of-way, and the beds thereof, either
at law or in equity, in possession or expectancy, now or hereafter acquired, all
water and mineral rights, development rights and all easements, rights and other
interests appurtenant thereto, (the “Land”), and all buildings and improvements,
including a hotel known as the Residence Inn – Grapevine, Texas, located on the
Land (the “Improvements”). The Land and the Improvements, together with the
Personal Property are sometimes referred to hereinafter together as the “Hotel”.

 

B.         Moody MT leases the Hotel from the Fee Owner in accordance with the
terms of that certain Master Lease by and between Moody MT and Fee Owner dated
on or around January 24, 2007 (the “Master Lease”) and is the owner of all
Personal Property used in connection with the operation of the Hotel.

 

C.         Interest Owner is the owner of all of the limited liability company
membership interest of Moody MT (“Membership Interest”).

 

C.         Purchaser desires to purchase the above described property, including
the Hotel and the Membership Interest, from Seller, and Seller desires to sell
the above described property to Purchaser, for the Purchase Price (as defined
below) and upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of premises and in consideration of the mutual
covenants, promises and undertakings of the parties hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties, it is agreed:

 

ARTICLE I
DEFINITIONS

 

The following terms shall have the indicated meanings:

 

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1.1        “Affiliate” shall mean any Person that is directly or indirectly
(through one or more intermediaries) controlled by, under common control with,
or controlling another Person. For the purposes of this definition, “control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of any Person or the power to
veto major policy decisions of any Person, whether through the ownership of
voting securities, by contract or otherwise.

 

1.2        “Agreement” shall have the meaning ascribed to such term in the
Preamble.

 

1.3        “Assignment and Assumption Agreement” shall mean an assignment and
assumption agreement between Moody MT and Purchaser in a form mutually
acceptable to the parties, whereby Moody MT assigns and Purchaser assumes all of
the Moody MT’s rights, title and interest in and to the Hotel Agreements,
related to the applicable Property.

 

1.4        “Assignment of Membership Interest” shall mean an assignment between
Interest Owner and Purchaser in a form mutually acceptable to the parties,
conveying 100% of the Membership Interest from Interest Owner to Purchaser.

 

1.5        “Authorizations” shall mean all certificates of occupancy, licenses,
permits, authorizations and approvals required by any governmental or
quasi-governmental agency, body, department, commission, board, bureau,
instrumentality or officer, or otherwise appropriate with respect to the
construction, ownership, operation, leasing, maintenance, or use of the Property
or any part thereof.

 

1.6        “Bill of Sale and General Assignment” shall mean a bill of sale and
general assignment between the Moody MT and Purchaser in a form mutually
acceptable to the parties, conveying title to the Personal Property (other than
Leased Property) from Moody MT to Purchaser, together with any Warranties and
Guaranties related thereto.

 

1.7        “Closing” shall mean the consummation of the sale and purchase of the
Property pursuant to this Agreement.

 

1.8        “Closing Date” shall mean Friday, March 28, 2014.

 

1.9        “Closing Documents” shall mean the documents defined as such in
Article VI.

 

1.10      “Code” shall have the meaning ascribed to such term in Section 8.21.

 

1.11      “Deed” shall mean a special warranty deed in a form mutually
acceptable to the parties, conveying fee title to the Real Property from the Fee
Owner to Purchaser, subject to all permitted title exceptions and the Master
Lease.

 

1.12      “Earnest Money” shall have the meaning ascribed to such term in
Section 2.3.

 

1.13      “Effective Date” (or other similar phrases such as “date of this
Agreement” or “date hereof”) shall mean the first date on which the Escrow Agent
shall have acknowledged receipt of this Agreement fully executed by Seller and
Purchaser.

 

1.14      “Escrow Agent” shall mean the Title Company.

 

1.15      “FIRPTA Certificate” shall mean the affidavit of Fee Owner under
Section 1445 of the Internal Revenue Code, as amended.

 

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1.16      “Governmental Authority” shall mean any federal, state, county,
municipal or other government or governmental or quasi-governmental agency,
department, commission, board, bureau, office or instrumentality, foreign or
domestic, or any of the them.

 

1.17      “Hotel” shall have the definition ascribed to such term in the
Recitals.

 

1.18      “Hotel Agreements” shall mean collectively the Operating Agreements,
Leased Property Agreements, Off-Site Facility Agreements and the Occupancy
Agreements.

 

1.19      “Improvements” shall mean the Hotel and all other buildings,
structures, improvements, and all fixtures, systems, facilities and all other
items of real estate located on the Land.

 

1.20      “Independent Contract Consideration” shall mean One Hundred and No/100
Dollars ($100.00) of the Earnest Money which shall be paid by the Escrow Agent
to Seller in the event that Purchaser elects to terminate this Agreement.

 

1.21      “Insurance Policies” shall mean all policies of insurance maintained
by or on behalf of Seller pertaining to the Property, its operation, or any part
thereof.

 

1.22      “Intangible Personal Property” shall mean, to the extent assignable,
Seller’s right, title and interest in and to all intangible personal property
owned or possessed by Seller and used in connection with the ownership or
operation of the Property, including, without limitation, (1) Authorizations,
(2) utility and development rights and privileges, general intangibles, business
records, plans and specifications pertaining to the Real Property and the
Personal Property, and (3) any unpaid award for taking by condemnation or any
damage to the Land by reason of a change of grade or location of or access to
any street or highway.

 

1.23      “Inventory” shall mean all inventories of food, beverage and
consumable items in opened or unopened cases and all in-use reserve stock of
linens, towels, paper goods, soaps, cleaning supplies, office supplies,
engineering supplies, maintenance supplies, parts and tools and other
“inventories of merchandise” and “inventories of supplies” as such terms are
defined in the Uniform System of Accounts for Hotels used in connection with the
operation and maintenance of the Hotel.

 

1.24      “Knowledge” with respect to any Seller shall mean to the actual
knowledge of Brett C. Moody, without any duty of inquiry or investigation.

 

1.25      “Land” shall mean that certain parcel of real estate described on
Exhibit A, together with all rights, titles, benefits, easements, privileges,
remainders, tenements, hereditaments, interests, reversions and appurtenances
thereunto belonging or in any way appertaining, and all of the estate, right,
title, interest, claim or demand whatsoever of Seller therein, in and to
adjacent strips and gores, if any, between the Land and abutting properties, and
in and to adjacent streets, highways, roads, alleys or rights-of-way, and the
beds thereof, either at law or in equity, in possession or expectancy, now or
hereafter acquired.

 

1.26      “Leased Property” shall mean all leased items of Tangible Personal
Property, including items subject to any capital lease, operating lease,
financing lease, or any similar agreement (if any).

 

1.27      “Leased Property Agreements” shall mean all lease agreements
pertaining to the Leased Property (if any).

 

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1.28      “License Agreement” shall mean that certain Relicensing Franchise
Agreement between Licensor and Moody MT with respect to the Hotel, as amended,
restated or modified.

 

1.29      “Licensor” shall mean Marriott International, Inc.

 

1.30      “Management Agreement” shall mean that certain Hotel Management
Agreement between Moody MT and the Manager for the management or operation of
the Hotel, as amended, restated or modified.

 

1.31      “Manager” shall mean Moody National Hospitality Management, LLC.

 

1.32      “Master Lease” shall have the definition ascribed to such term in the
Recitals.

 

1.33      “Membership Interest” shall have the definition ascribed to such term
in the Recitals.

 

1.34      “Occupancy Agreements” shall mean all leases, concession or occupancy
agreements in effect with respect to the Real Property under which any tenants
(other than Hotel guests) or concessionaires have the right to occupy space upon
the Real Property.

 

1.35      “Off-Site Facility Agreements” shall mean any leases, contracts and
agreements, if any, pertaining to facilities not located on the Property but
which are required and presently used for the operation of the Hotel including,
without limitation, use agreements for local golf courses, and parking or garage
contracts or leases.

 

1.36      “Operating Agreements” shall mean all service, supply, maintenance and
repair, and other similar contracts in effect with respect to the Property
including the Management Agreement (other than the Occupancy Agreements, Leased
Property Agreements, Management Agreement, and Off-Site Facility Agreements)
related to construction, operation, or maintenance of the Property and the
business conducted thereon.

 

1.37      “Owner’s Title Policy” shall mean an owner’s policy of title insurance
issued to Purchaser by the Title Company, pursuant to which the Title Company
(or any applicable underwriter) insures Purchaser’s ownership of fee simple
title to the Real Property.

 

1.38      “Person” shall mean an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a Governmental Authority.

 

1.39      “Personal Property” shall mean collectively the Tangible Personal
Property and the Intangible Personal Property.

 

1.40      “Property” shall mean collectively the Real Property, Personal
Property and Membership Interest.

 

1.41      “Purchase Price” shall mean the amount of TWENTY MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($20,500,000.00).

 

1.42      “Purchaser Parties” shall mean Purchaser’s directors, officers,
lenders, employees, agents, counsel, consultants or representatives.

 

1.43      “Real Property” shall mean the Land and the Improvements.

 

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1.44      “Study Period” shall mean the period ending at 5:00 p.m. on Monday,
March 24, 2014.

 

1.45      “Submission Matters” shall mean all due diligence deliverables
provided by Seller to Purchaser.

 

1.46      “Tangible Personal Property” shall mean the items of tangible personal
property consisting of all furniture, fixtures, equipment, machinery, Inventory,
all vehicles used in operation of Property and the Hotel and other tangible
personal property of every kind and nature (which does not include cash-on-hand
and petty cash) located at the Hotel and owned or leased by the Moody MT,
including, without limitation, the Moody MT’s interest as lessee with respect to
any such leased Tangible Personal Property.

 

1.47      “Title Company” shall mean Moody National Title Company, L.P., 6363
Woodway, Suite 250, Houston, Texas 77057, or other title insurance underwriter
selected by Purchaser and reasonably acceptable to Seller.

 

1.48      “Warranties and Guaranties” shall mean, to the extent assignable, all
of Seller’s interest in any existing warranties and guaranties relating to the
development, construction, ownership and operation of the Improvements, the
Tangible Personal Property, the Hotel or any part thereof.

 

ARTICLE II
PURCHASE AND SALE; DEPOSIT; PAYMENT OF
PURCHASE PRICE; STUDY PERIOD

 

2.1        Purchase and Sale. Seller agrees to sell the Property, and Purchaser
agrees to purchase the Property, free and clear of all liens and encumbrances,
for the Purchase Price and in accordance with and subject to the other terms and
conditions set forth herein.

 

2.2        Payment of Purchase Price. Purchaser shall pay the Purchase Price, as
adjusted in the manner specified in Article VI and as set forth below, to Seller
(or other party designated by Seller) at Closing by making a wire transfer of
immediately available federal funds to the account of Seller (or other party
designated by Seller). Such wire transfer shall be sent by Purchaser to the
Escrow Agent for the account of Seller on the Closing Date. The Purchase Price
shall be allocated as follows: Real Property - $20,350,000.00; Personal Property
- $100,000.00; and Membership Interest - $50,000.00.

 

2.3        Earnest Money. Within one (1) business day following the Effective
Date, Purchaser will deliver to the Escrow Agent the sum of ONE HUNDRED THOUSAND
AND NO/100 DOLLARS ($100,000.00) (the “Earnest Money”). The Earnest Money shall
be invested by the Escrow Agent in short term interest bearing accounts at banks
or other financial institutions, which accounts must be insured by the Federal
Deposit Insurance Corporation. All interest earned on such deposits shall belong
to the party (as between Seller and Purchaser) who is entitled to receive the
Earnest Money under the applicable provisions of this Agreement. In the event
the transactions contemplated herein are not closed in accordance with the
provisions hereof, the Earnest Money shall be disbursed to either Seller or
Purchaser as provided in this Agreement.

 

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2.4        Due Diligence.

 

(a)         Purchaser shall have the right, until 5:00 p.m. the last day of the
Study Period, and thereafter if Purchaser does not notify Seller in writing
prior to the expiration of the Study Period that Purchaser has elected to
terminate this Agreement, to enter upon the Real Property upon not less than one
(1) business day prior notice to Seller, and to perform at Purchaser’s expense,
and subject to terms and conditions set forth in Section 2.5(c) below, such
economic, surveying, engineering, topographic, environmental, marketing and
other test, studies and investigations as Purchaser may deem appropriate. If
such tests, studies and investigations warrant, in Purchaser’s sole, absolute
and unreviewable discretion, the purchase of the Property for the purposes
contemplated by Purchaser, then Purchaser shall proceed with this transaction in
accordance with and subject to the terms of this Agreement; provided, however,
if, prior to the expiration of the Study Period, Purchaser provides written
notice to Seller and Escrow Agent that it has determined in its sole, absolute
and unreviewable discretion, to terminate this Agreement, this Agreement shall
automatically terminate, and Seller and Purchaser shall be released from all
further liability or obligation hereunder except those which expressly survive a
termination of this Agreement. In the event of such termination, the Earnest
Money, less the Independent Contract Consideration, shall be refunded by the
Escrow Agent to Purchaser without any further notice to Escrow Agent.

 

(b)         Seller hereby agrees and acknowledge that Moody MT may make
available to Purchaser any and all due diligence information related to the
Property.

 

(c)         Purchaser shall indemnify, hold harmless and defend Seller against
any loss, damage, liability or claim for personal injury or property damage and
any other loss, damage, liability, claim or lien to the extent arising from the
acts upon the Real Property by Purchaser or Purchaser Parties or any agents,
contractors or employees of Purchaser or Purchaser Parties, except for the
discovery of existing conditions of the Real Property the condition of which are
not exacerbated by the Purchaser. Purchaser understands and accepts that any
on-site inspections of the Property shall occur at reasonable times agreed upon
by Seller and Purchaser after not less than one (1) business day prior notice to
Seller and shall be conducted so as not to interfere unreasonably with the
operation of the Property and the use of the Property by the tenants and the
guests of the Hotel. Seller shall have the right to have a representative
present during any such inspections. If Purchaser desires to do any invasive
testing at the Property, Purchaser shall do so only after obtaining the prior
written consent of Seller, which approval may be subject to reasonable terms and
conditions as may be proposed by Seller. Purchaser shall not permit any liens to
attach to the Property by reason of such inspections. Purchaser shall
(i) restore the Property, at its own expense, to substantially the same
condition which existed prior to any inspections or other activities of
Purchaser thereon; and (ii) be responsible for and pay any and all liens by
contractors, subcontractors, materialmen, or laborers performing the inspections
or any work for Purchaser or Purchaser Parties on or related to the Property.
The provisions of this Section 2.4(c) shall survive any termination of this
Agreement and a closing of the transaction contemplated hereby and are not
subject to any liquidated damage limitation on remedies, notwithstanding
anything to the contrary in this Agreement.

 

(d)         Promptly following the Effective Date, Seller shall cause the Title
Company to furnish to Purchaser, a title insurance commitment bearing an
effective date not earlier than thirty (30) days prior to the Effective Date
issued by the Title Company covering the Real Property, binding the Title
Company to issue the Owner’s Title Policy together with legible copies (to the
extent such legible copies are available) of all documents identified in such
title insurance commitment as exceptions to title (collectively, the “Title
Commitment”) with respect to the state of title to the Property.

 

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(e)         At Purchaser’s sole cost and expense, Purchaser’s auditor may
conduct an audit as required of Purchaser pursuant to Rule 3-05 of Securities
and Exchange Commission Regulation S-X (the “3-05 Audit”) of the financial
statements of the Property for the three (3) complete fiscal years immediately
preceding the Closing Date and the stub period through the Closing Date (the
“Covered Audit Period”), and Seller shall reasonably cooperate (at no cost to
Seller) with Purchaser’s auditor in the conduct of such 3-05 Audit. Without
limiting the foregoing, (i) Purchaser or its designated independent or other
auditor may audit the financial statements of the Property, at Purchaser’s
expense and, upon Purchaser’s prior written request, Seller shall allow
Purchaser’s auditors reasonable access to such books and records maintained by
Seller in respect to the Property and pertaining to the Covered Audit Period as
necessary to conduct such 3-05 Audit, and (ii) Seller shall use reasonable
efforts to provide to Purchaser such existing financial information as may be
reasonably required by Purchaser and required for Purchaser’s auditors to
conduct such 3-05 Audit; provided, however, that the ongoing obligations of
Seller shall be limited to providing such information or documentation as may be
in the possession or control of Seller, Seller’s accountants or Manager, at no
cost to any of such parties, and in the format that Seller or its accountants or
Manager have maintained such information. Seller certifies and represents and
warrants to Purchaser that the materials delivered to Purchaser in connection
with the 3-05 Audit shall be true and accurate in all material respects and to
Seller’s knowledge there are no known fraud or material misrepresentations, or
material subsequent events not reflected in such materials. Notwithstanding
anything contained in this paragraph to the contrary, in no event shall Seller
or any of Seller’s Affiliates be obligated to disclose any confidential or
non-public financial information with respect to any of Seller’s Affiliates or
any property of any such Seller’s Affiliate. Seller shall also provide to
Purchaser’s representative a signed representation letter in form and substance
reasonably acceptable to Seller sufficient to enable an independent public
accountant to render an opinion on the financial statements related to the
Property. Seller shall maintain its records for use under this Section for a
period of not less than one (1) year after the Closing Date. The provisions of
this Section shall survive Closing or termination of this Agreement.

 

ARTICLE III
SELLERS’ REPRESENTATIONS AND WARRANTIES

 

3.1        Fee Owner Representations and Warranties. In order to induce
Purchaser to enter into this Agreement and to purchase the Property, and to pay
the Purchase Price therefore and except for and subject to the information
contained in the Submission Matters, Fee Owner hereby makes the representations
and warranties set forth below. Each such representation shall be materially
true and correct on the Effective Date and shall be materially true and correct
on the Closing Date.

 

(a)         Organization and Power. Fee Owner is a limited liability company
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to enter into and perform its
obligations hereunder and under any document or instrument required to be
executed and delivered on behalf of Fee Owner hereunder.

 

(b)         Authorization and Execution. This Agreement (and all documents
contemplated hereby) has been duly authorized by all necessary action on the
part of Fee Owner, has been duly executed and delivered by Fee Owner,
constitutes the valid and binding agreement of Fee Owner and is enforceable
against Fee Owner in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors’ rights generally or by the principles governing the availability of
equitable remedies. The Person executing this Agreement on behalf of Fee Owner,
for and on behalf of Fee Owner, has the authority to do so.

 

(c)         Litigation. There is no action, suit or proceeding, pending or, to
Fee Owner’s Knowledge, known to be threatened, against or affecting any Fee
Owner in any court or before any arbitrator or before any Governmental Authority
which would materially and adversely affect the ability of Fee Owner to perform
its obligations hereunder, or under any document to be delivered pursuant
hereto.

 

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(d)         Fee Owner Is Not a “Foreign Person”. Fee Owner is not a “foreign
person” or a “disregarded entity” within the meaning of Section 1445 of the
Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation,
foreign partnership, foreign trust, foreign estate or foreign person as those
terms are defined in the Internal Revenue code and regulations promulgated
thereunder).

 

(e)         Insurance. All insurance policies held with respect to the Property
by Fee Owner are valid and in full force and effect.

 

(f)         Right to Purchase. Fee Owner has not granted to any Person other
than Purchaser, any right to purchase the Property or any portion thereof or
interest therein.

 

(g)         Condemnation. There are no any pending or, to Fee Owner’s Knowledge,
threatened condemnation or similar proceedings affecting the Property.

 

3.2        Moody MT Representations and Warranties. In order to induce Purchaser
to enter into this Agreement and to purchase the Property, and to pay the
Purchase Price therefore and except for and subject to the information contained
in the Submission Matters, Moody MT hereby makes the representations and
warranties set forth below. Each such representation shall be materially true
and correct on the Effective Date and shall be materially true and correct on
the Closing Date.

 

(a)         Organization and Power. Moody MT is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite power and authority to enter into and perform its obligations
hereunder and under any document or instrument required to be executed and
delivered on behalf of Moody MT hereunder.

 

(b)         Authorization and Execution. This Agreement (and all documents
contemplated hereby) has been duly authorized by all necessary action on the
part of Moody MT, has been duly executed and delivered by Moody MT, constitutes
the valid and binding agreement of Moody MT and is enforceable against Moody MT
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting creditors’
rights generally or by the principles governing the availability of equitable
remedies. The Person executing this Agreement on behalf of Moody MT, for and on
behalf of Moody MT, has the authority to do so.

 

(c)         Litigation. There is no action, suit or proceeding, pending or, to
Moody MT’s Knowledge, known to be threatened, against or affecting Moody MT in
any court or before any arbitrator or before any Governmental Authority which
would materially and adversely affect the ability of Moody MT to perform its
obligations hereunder, or under any document to be delivered pursuant hereto.

 

(d)         Moody MT Is Not a “Foreign Person”. Moody MT is not a “foreign
person” or a “disregarded entity” within the meaning of Section 1445 of the
Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation,
foreign partnership, foreign trust, foreign estate or foreign person as those
terms are defined in the Internal Revenue code and regulations promulgated
thereunder).

 

3.3        Interest Owner Representations and Warranties. In order to induce
Purchaser to enter into this Agreement and to purchase the Property, and to pay
the Purchase Price therefore and except for and subject to the information
contained in the Submission Matters, Interest Owner hereby makes the
representations and warranties set forth below. Each such representation shall
be materially true and correct on the Effective Date and shall be materially
true and correct on the Closing Date.

 

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(a)         Organization and Power. Interest Owner is a limited liability
company duly organized, validly existing and in good standing under the laws of
Delaware and has all requisite power and authority to enter into and perform its
obligations hereunder and under any document or instrument required to be
executed and delivered on behalf of Interest Owner hereunder.

 

(b)         Authorization and Execution. This Agreement (and all documents
contemplated hereby) has been duly authorized by all necessary action on the
part of Interest Owner, has been duly executed and delivered by Interest Owner,
constitutes the valid and binding agreement of Interest Owner and is enforceable
against Interest Owner in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors’ rights generally or by the principles governing the
availability of equitable remedies. The Person executing this Agreement on
behalf of Interest Owner, for and on behalf of Interest Owner, has the authority
to do.

 

(c)         Ownership. Interest Owner owns 100% of the Membership Interest and
has the full and unrestricted power to sell, assign, transfer and deliver the
Membership Interest to Purchaser upon the terms and subject to the conditions of
this Agreement, free and clear of any encumbrances.

 

(d)         Litigation. There is no action, suit or proceeding, pending or, to
Interest Owner’s Knowledge, known to be threatened, against or affecting
Interest Owner in any court or before any arbitrator or before any Governmental
Authority which would materially and adversely affect the ability of Interest
Owner to perform its obligations hereunder, or under any document to be
delivered pursuant hereto.

 

The representations and warranties in this Article III shall survive the Closing
for a period of one (1) year following the Closing Date (“Survival Period”).

 

ARTICLE IV
PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

In order to induce Seller to enter into this Agreement and to sell the Property,
Purchaser hereby makes the following representations and warranties, each of
which is made to Purchaser’s knowledge:

 

4.1         Organization and Power. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and has all requisite power and authority to enter into and perform its
obligations under this Agreement and any document or instrument required to be
executed and delivered on behalf of Purchaser hereunder.

 

4.2         Authorization and Execution. This Agreement has been duly authorized
by all necessary action on the part of Purchaser, has been duly executed and
delivered by Purchaser, constitutes the valid and binding agreement of Purchaser
and is enforceable against Purchaser in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors’ rights generally or by the principles
governing the availability of equitable remedies. The Person executing this
Agreement on behalf of Purchaser has the authority to do so.

 

4.3         Non-contravention. The execution and delivery of this Agreement and
the performance by Purchaser of its obligations hereunder do not and will not
contravene, or constitute a default under, any provisions of applicable law or
regulation, Purchaser’s organizational documents, or any agreement, judgment,
injunction, order, decree or other instrument binding upon Purchaser or result
in the creation of any lien or other encumbrance on any asset of Purchaser.

 

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4.4         Litigation. There is no action, suit or proceeding, pending or known
to be threatened, against or affecting Purchaser in any court or before any
arbitrator or before any Governmental Authority which would materially and
adversely affect the ability of Purchaser to perform its obligations hereunder,
or under any document to be delivered pursuant hereto.

 

4.5         OFAC. Purchaser represents and warrants to Seller that neither
Purchaser nor any affiliate of Purchaser is subject to sanctions of the United
States government or in violation of any federal, state, municipal or local
laws, statutes, codes, ordinances, orders, decrees, rules or regulations
relating to terrorism or money laundering, including, without limitation,
Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 2001)
(the “Terrorism Executive Order”) or is similarly designated under any related
enabling legislation or any other similar Executive Orders (collectively with
the Terrorism Executive Order, the “Executive Orders”), the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”), any
sanctions and regulations promulgated under authority granted by the Trading
with the Enemy Act, 50 U.S.C. App. 1-44, as amended from time to time, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, as amended
from time to time, the Iraqi Sanctions Act, Publ. L. No. 101-513; United Nations
Participation Act, 22 U.S.C. § 287c, as amended from time to time, the
International Security and Development Cooperation Act, 22 U.S.C. § 2349 aa-9,
as amended from time to time, The Cuban Democracy Act, 22 U.S.C. §§ 6001-10, as
amended from time to time, The Cuban Liberty and Democratic Solidarity Act, 18
U.S.C. §§ 2332d and 2339b, as amended from time to time, and The Foreign
Narcotics Kingpin Designation Act, Publ. L. No. 106-120, as amended from time to
time.

 

4.6         Condition of the Property. Purchaser acknowledges the following: (i)
Purchaser has been been given a reasonable and adequate opportunity to inspect
and investigate the Property and all aspects relating thereto, including all of
the physical, environmental and operational aspects of the Property, either
independently or through agents and experts of Purchaser’s choosing, that (ii)
Purchaser is a sophisticated purchaser of Property, and (iii) Purchaser will
acquire the Property based upon Purchaser’s own investigation and inspection of
the Property. PURCHASER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT EXCEPT AS
EXPRESSLY SET FORTH HEREIN, (i) SELLER IS DISPOSING OF THE PROPERTY “AS IS,
WHERE IS AND WITH ALL FAULTS” AND (ii) NEITHER PURCHASER NOR ANY OTHER PERSON IS
RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER
ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER OR ANY
DIRECT OR INDIRECT PARTNER, OFFICER, DIRECTOR, TRUSTEE, MEMBER, EMPLOYEE,
AFFILIATE, ATTORNEY, AGENT OR BROKER OF SELLER, AS TO ANY MATTER CONCERNING THE
PROPERTY OR SET FORTH, CONTAINED OR ADDRESSED IN ANY MATERIALS RECEIVED BY
PURCHASER OR ANY OF PURCHASER’S AGENTS(INCLUDING, WITHOUT LIMITATION, THE
COMPLETENESS THEREOF).

 

ARTICLE V
CONDITIONS PRECEDENT

 

5.1         As to Purchaser’s Obligations. Subject to the provisions of
Section 8.1, Purchaser’s obligations hereunder are subject to the timely
satisfaction of the following conditions precedent on or before the Closing Date
or such earlier date as is set forth below.

 

(a)         Seller’s Deliveries. Seller shall have delivered to or for the
benefit of Purchaser, on or before the Closing Date, all of the documents
required of Seller pursuant to Sections 6.2 and 6.4 hereof.

 

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(b)         Representations, Warranties and Covenants; Obligations of Seller;
Certificate. All of Seller’s representations and warranties made in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date as if then made; and Seller shall have
performed in all material respects all of its covenants and other obligations
under this Agreement. Further, a duly authorized officer of Fee Owner and
Interest Owner shall have executed at Closing a “bring down certificate” with
respect to its representations and warranties.

 

(c)         Title. Title Company shall unconditionally be prepared to deliver to
Purchaser Owner’s Title Policy (subject to the premiums therefor and delivery of
the documents specified in Section 7.2 below and Purchaser’s authority
documents).

 

(d)         License Agreement. Licensor have delivered a comfort letter, or have
delivered some other acknowledgment, authorizing the transfer of the Real
Property, as well as all other transfers contemplated by this Agreement.

 

(e)         Management Agreement. Moody MT and Manager shall have mutually
agreed to the terms of an amended and restated Management Agreement.

 

(f)         Master Lease. Purchaser and Moody MT shall have mutually agreed to
the terms of an amended and restated Master Lease.

 

(g)         Litigation. There shall be no actions, suits, arbitrations,
governmental investigations or other proceedings pending or, threatened against
Seller or affecting the Property before any court or governmental authority, an
adverse determination of which might materially and adversely affect the
Property.

 

(h)         REIT Audit. Purchaser shall have completed the REIT Audit as
contemplated under Section 2.4(f).

 

Each of the conditions contained in this Section are intended for the benefit of
Purchaser and may be waived in whole or in part, by Purchaser. If the conditions
precedent set forth above are neither satisfied nor waived by Purchaser by the
Closing Date, Purchaser shall have the right to terminate this Agreement, obtain
a refund of the Earnest Money and Seller and Purchaser shall be released from
all further liability or obligation hereunder except those which expressly
survive the termination of this Agreement; provided however that if Seller is in
default hereof at the time of such termination, Section 8.1 shall additionally
apply.

 

5.2         As to Seller’s Obligations. Subject to the provisions of
Section 8.2, Seller’s obligations hereunder are subject to the satisfaction of
the following conditions precedent:

 

(a)         Purchaser’s Deliveries. Purchaser shall have delivered to or for the
benefit of Seller, on or before the Closing Date, all of the documents and
payments required of the Purchaser pursuant to Sections 6.3 and 6.4 hereof.

 

(b)         Representations, Warranties and Covenants; Obligations of Purchaser;
Certificate. All of Purchaser’s representations and warranties made in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing Date as if then made; and Purchaser shall have
performed in all material respects all of its covenants and other obligations
under this Agreement. Further, a duly authorized officer of Purchaser shall have
executed at Closing a “bring down certificate” with respect to the aforesaid
representations and warranties.

 

11

 

 

Each of the conditions contained in this Section are intended for the benefit of
Seller and may be waived in whole or in part, by Seller. If the conditions
precedent set forth above are neither satisfied nor waived by Seller by the
Closing Date, Seller shall have the right to terminate this Agreement, and
Seller and Purchaser shall be released from all further liability or obligation
hereunder except those which expressly survive the termination of this
Agreement; provided however that if Purchaser is in default hereof at the time
of such termination, Section 8.2 shall additionally apply.

 

ARTICLE VI
CLOSING

 

6.1         Closing. The Closing shall occur on the Closing Date. As more
particularly described below, at the Closing the parties hereto will (a) execute
or cause to be executed (and acknowledged where appropriate) all of the
documents required to be delivered in connection with the transactions
contemplated hereby (the “Closing Documents”), (b) deliver or cause to be
delivered the same to the Escrow Agent, and (c) take or cause to be taken all
other action required to be taken in respect of the transactions contemplated
hereby. The Closing will occur through escrow, at the Title Company, or at any
such other place as Seller and Purchaser may mutually agree. At the Closing,
Purchaser shall deliver the balance of the Purchase Price to Escrow Agent as
provided herein. As provided herein, the parties hereto will agree upon
adjustments and prorations to certain items which cannot be exactly determined
at the Closing and will make the appropriate adjustments with respect thereto.
Possession of the Property shall be delivered to Purchaser at the Closing,
subject to any permitted title exceptions, the Master Lease and guests in
possession.

 

6.2         Seller’s Deliveries. At the Closing, Seller shall deliver (or cause
to be delivered) to the Escrow Agent all of the following instruments, each of
which shall have been duly executed and, where applicable, acknowledged and/or
sworn, on behalf of Seller, and shall be dated to be effective as of the Closing
Date:

 

(a)         The Deed.

 

(b)         The Bill of Sale and General Assignment.

 

(c)         Assignment of Membership Interest.

 

(d)         The Assignment and Assumption Agreement.

 

(e)         A bills paid affidavit verifying that there are no unpaid bills or
claims for labor performed or materials furnished to the Property prior to the
Closing, and by which Seller indemnifies and holds Purchaser and Title Company
harmless from any loss, liability, cost or expense of Purchaser resulting from
or incident to claims against the Property.

 

(f)         Certificate(s)/Registration of Title for any vehicle owned by Seller
and used in connection with the Property (if any).

 

(g)        The FIRPTA Certificate.

 

(h)        The “bring-down certificate” specified in Section 5.1(b).

 

(i)         An owner’s title affidavit and gap indemnity (to the extent required
by the Title Company), each duly executed and acknowledged by Seller.

 

12

 

 

(j)         Any other document or instrument specifically required by this
Agreement.

 

Seller shall also cause the Manager to deliver to Purchaser or make available to
Purchaser at the Property:

 

(k)         all original Warranties, Guarantees, and Hotel Agreements to be
assigned to and assumed by Purchaser and in Seller’s or the Manager’s
possession,

 

6.3         Purchaser’s Deliveries. At the Closing, Purchaser shall deliver to
Escrow Agent the following, duly executed and, where applicable, acknowledged
and/or sworn on behalf of Purchaser, and dated as of the Closing Date:

 

(a)        The Assignment and Assumption Agreement.

 

(b)        The Bill of Sale and General Assignment.

 

(c)        Assignment of Membership Interest.

 

(d)        The “bring-down certificate” specified in Section 5.2(b).

 

(e)        Any other document or instrument specifically required by this
Agreement.

 

(f)         At the Closing, Purchaser shall deliver to Escrow Agent the Purchase
Price as described in Section 2.2 hereof.

 

6.4         Mutual Deliveries. At the Closing, Purchaser and Seller shall
mutually execute and deliver each to the other:

 

(a)         A closing statement reflecting the Purchase Price and the
adjustments and prorations required hereunder and the allocation of income and
expenses required hereby.

 

(b)         Such other documents, instruments and undertakings as may be
required by the authorities of the State where the Property is located.

 

(c)         Such other and further documents, papers and instruments as may be
reasonably required by the parties hereto or their respective counsel or the
Title Company to consummate the transactions contemplated by this Agreement and
which are not inconsistent with the Agreement or the other Closing Documents.

 

6.5         Closing Costs.

 

(a)         Seller and Purchaser shall equally divide any escrow fee other
expenses or similar charges charged by the Title Company. Seller shall pay for
the cost of the title search, the premium for a standard Owner’s Title Policy.
Purchaser shall pay for all endorsements to the Owner’s Title Policy, the cost
of any updated survey and all filing fees. Purchaser shall pay the costs of all
inspections or tests undertaken by Purchaser. Purchaser shall pay all costs
associated with financing the acquisition of the Property. Purchaser shall pay
all costs associated with obtain all required approvals from the Licensor and
Manager. Unless the payment of any other cost is specifically provided for in
this Agreement, all other costs shall be apportioned between the parties by the
Title Company in the manner customary in the location of the Hotel, for
properties of a similar nature. Except as otherwise provided in Section 8.3,
each party shall be responsible for the payment of its own attorney’s fees
incurred in connection with transaction which is the subject of this Agreement.

 

13

 

 

(b)        All revenues and expenses with respect to the Property, and
applicable to the period of time before and after Closing, determined in
accordance with sound accounting principles consistently applied, shall be
allocated between Seller and Purchaser as provided herein. Seller shall be
entitled to all revenue and shall be responsible for all expenses for the period
of time up to but not including the Closing Date, and Purchaser shall be
entitled to all revenue and shall be responsible for all expenses for the period
of time from, after and including the Closing Date.

 

(c)        If accurate allocations cannot be made at Closing because current
bills are not obtainable (as, for example, in the case of utility bills and/or
real estate or personal property taxes), the parties shall allocate such revenue
or expenses at Closing on the best available information, subject to adjustment
upon receipt of the final bill or other evidence of the applicable revenue or
expense. The obligation to make the adjustment shall survive the closing of the
transaction contemplated by this Agreement. Any revenue received or expense
incurred by Seller or by Purchaser with respect to the Property after the
Closing Date shall be promptly allocated in the manner described herein and the
parties shall promptly pay or reimburse any amount due. With respect to any
closing statements amounts or issues relating to prorations that are not agreed
upon at Closing, Seller and Purchaser shall thereafter work in good faith to
resolve such amounts or issues; provided that if such amounts or issues are not
fully agreed upon and paid within ten (10) days after the Closing, then, in such
event, such amounts or issues shall be submitted to an independent certified
public accountant with a hospitality practice reasonably acceptable to Seller
and Purchaser for final resolution, and Seller and Purchaser agree to be bound
by the determination of such accountant. The costs and expenses incurred in
connection with the services of such accountant shall be borne equally by Seller
and Purchaser. The provisions of this Section 6.5 shall survive the Closing.

 

ARTICLE VII
GENERAL PROVISIONS

 

7.1         Fire or Other Casualty. Seller agrees to give Purchaser prompt
notice of any fire or other casualty to the Property costing more than One
Hundred Thousand Dollars ($100,000.00) to repair and occurring between the
Effective Date and the Closing Date of which Seller has knowledge. If, prior to
Closing, the Property is damaged by fire or other casualty which is fully
insured (without regard to deductibles) and would cost less than Five Hundred
Thousand Dollars ($500,000.00) and require less than 180 days to repair, then
neither party shall have the right to terminate this Agreement by reason thereof
and the Closing shall take place without abatement of the Purchase Price, but
Seller shall assign to Purchaser at the Closing all of Seller’s interest in any
insurance proceeds (except use and occupancy insurance, rent loss and business
interruption insurance, and any similar insurance, attributable to the period
preceding the Closing Date) that may be payable to Seller on account of any such
fire or other casualty, to the extent such proceeds have not been previously
expended or are otherwise required to reimburse Seller for actual expenditures
of restoration made prior to the Closing Date, plus Seller shall credit the
amount of any deductibles under any policies related to such proceeds to the
Purchase Price together with any amount not covered by insurance. If any such
damage due to fire or other casualty is insured and would cost in excess of Five
Hundred Thousand Dollars ($500,000.00) or require more than 180 days to repair,
then Purchaser may terminate this Agreement by written notice given to Seller
within ten (10) days after Seller has given Purchaser the notice of damage or
casualty referred to in this Section 7.1, or on the Closing Date, whichever is
earlier, in which case the parties hereto shall be released of all further
obligations hereunder with respect to the Property except those which expressly
survive a termination of this Agreement. Should Purchaser elect to proceed to
Closing notwithstanding the amount of the insured loss or the time required for
repairs, the Closing shall take place without abatement of the Purchase Price
and at Closing Seller shall assign to Purchaser the insurance proceeds and grant
to Purchaser a credit against the Purchase Price equal to the amount of the
applicable deductible plus any amount not covered by insurance. If, prior to
Closing, any Property is damaged by fire or casualty which is uninsured and
would cost Five Hundred Thousand Dollars ($500,000.00) or more to repair, then
Purchaser may terminate this Agreement by written notice given to Seller within
ten (10) days after Seller has given Purchaser the notice of damage or casualty
or on the Closing Date, whichever is earlier, in which case the parties hereto
shall be released of all further obligations hereunder, except those which
expressly survive a termination of this Agreement. If Purchaser does not elect
to terminate its obligations under this Agreement pursuant to the immediately
preceding sentence, or if any uninsured fire or casualty would cost less than
Five Hundred Thousand Dollars ($500,000.00) to repair, then the Closing shall
take place as provided herein, and the Purchase Price shall be reduced by the
estimated amount to repair such casualty, not to exceed Five Hundred Thousand
Dollars ($500,000.00).

 

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7.2         Condemnation. After the Effective Date, Seller agrees to give
Purchaser prompt written notice of any knowledge of or notice of any taking by
condemnation of any part of or rights appurtenant to the Real Property. If
taking will materially interfere with the operation or use of any Hotel which
constitutes a part of such Real Property, Purchaser may terminate this Agreement
by written notice to Seller within ten (10) days after Seller has given
Purchaser the notice of taking referred to in this Section 7.2, or on the
Closing Date, whichever is earlier. If Purchaser exercises its option to
terminate its obligations to purchase the Property pursuant to this Section 7.2,
the parties hereto shall be released from all further obligations hereunder with
respect to the Property, except those which expressly survive a termination of
the Agreement. If Purchaser does not so elect to terminate this Agreement, then
the Closing shall take place as provided herein, and Seller shall assign to
Purchaser at the Closing all of Seller’s interest in any condemnation award
which may be payable to Seller on account of any such condemnation and, at
Closing, Seller shall credit to the amount of the Purchase Price payable by
Purchaser the amount, if any, of condemnation proceeds received by Seller
between the Effective Date and Closing less (a) any amounts reasonably expended
by Seller in collecting such sums and (b) any amounts reasonably used by Seller
to repair the Property as a result of such condemnation. If, prior to Closing,
there shall occur a taking by condemnation of any part of or rights appurtenant
to the Property that does not materially interfere with the operation or use of
the Hotel which constitutes a part of the Property, Purchaser shall not have the
right to terminate this Agreement by reason thereof and the Closing shall take
place without abatement of the Purchase Price, but Seller shall assign to
Purchaser at Closing all of Seller’s interest in any condemnation award which
may be payable to Seller on account of any such condemnation and, at Closing,
Seller shall credit to the amount of the Purchase Price payable by Purchaser the
amount, if any, of condemnation proceeds received by Seller between the
Effective Date and Closing less (a) any amounts reasonably expended by Seller in
collecting such sums and (b) any amounts reasonably used by Seller to repair the
Property as a result of such condemnation. Provided Purchaser has not exercised
its right to terminate this Agreement pursuant to Section 7.2, Seller shall
notify Purchaser in advance regarding any proceeding or negotiation with respect
to the condemnation and Purchaser shall have a reasonable right, at its own cost
and expense, to appear and participate in any such proceeding or negotiation.
For purposes of Sections 7.1 and 7.2 if this Agreement, estimates of costs and
time required for restoration or repair shall be made by an architect or
engineer, as appropriate, designated by Seller and reasonably acceptable to
Purchaser.

 

7.3         Broker. Seller and Purchaser each represents and warrants to the
other that it has not employed any real estate sales representatives or brokers
regarding the transaction contemplated by this Agreement. Seller shall
indemnify, defend and hold Purchaser harmless from any commission or fee claimed
to be owing due to the acts of Seller. Purchaser shall indemnify, defend and
hold Seller harmless from any commission or fee claimed to be owing due to the
acts of Purchaser. This Section relates solely to the transaction contemplated
by this Agreement between Seller and Purchaser and shall not create any third
party right or obligation in favor of either or any broker. The provisions of
this Section 7.3 shall survive the Closing and any termination of this
Agreement.

 

15

 

 

ARTICLE VIII
DEFAULT; TERMINATION RIGHTS; INDEMNIFICATION

 

8.1         Default by Seller. If the sale contemplated hereby is not
consummated because of a default by Seller in its obligation to sell the
Property in accordance with this Agreement after Purchaser has performed or
tendered performance of its obligations in accordance with this Agreement, then
Purchaser, as its sole and exclusive remedy shall elect (a) to terminate this
Agreement, in which event the Earnest Money Deposit shall be returned to
Purchaser and all other rights and obligations of Seller and Purchaser hereunder
(except those set forth herein which expressly survive a termination of this
Agreement) shall terminate immediately; or (b) to waive such matter or condition
and proceed to Closing, with no reduction in the Purchase Price; or (c) bring an
equitable action to enforce the Closing Obligations by specific performance;
provided, with respect to an action for specific performance, (i) Purchaser
shall provide written notice of Purchaser’s intention to enforce the Closing
Obligations by specific performance, and (ii) Purchaser’s suit for specific
performance shall be filed against Seller in a court having jurisdiction in the
county and state in which the Property is located, on or before sixty (60) days
following the Closing Date, failing which, Purchaser shall be barred from
enforcing the Closing Obligations by specific performance and shall be deemed to
have elected to terminate this Agreement as provided herein.

 

8.2         Default by Purchaser. If the sale contemplated hereby is not
consummated because of a default by Purchaser in its obligation to purchase the
Property in accordance with this Agreement after Seller has performed or
tendered performance of all of its obligations in accordance with this
Agreement, Seller, as its sole and exclusive remedy, shall be permitted to
terminate this Agreement in which event the parties hereto shall be released
from all further obligations hereunder except those which expressly survive a
termination of this Agreement. In the event of such termination, Seller shall be
entitled to receive the Earnest Money from the Escrow Agent as liquidated
damages and not as penalty, in full satisfaction of its claims against Purchaser
hereunder. SELLER AND PURCHASER AGREE THAT SELLER’S DAMAGES RESULTING FROM
PURCHASER’S DEFAULT ARE DIFFICULT, IF NOT IMPOSSIBLE, TO DETERMINE AND THE
EARNEST MONEY IS A FAIR ESTIMATE OF THOSE DAMAGES WHICH HAS BEEN AGREED TO IN AN
EFFORT TO CAUSE THE AMOUNT OF SAID DAMAGES TO BE CERTAIN.

 

8.3         Costs and Attorneys’ Fees. In the event of any litigation or dispute
between the parties arising out of or in any way connected with this Agreement,
resulting in any litigation, then the prevailing party in such shall be entitled
to recover its costs of prosecuting and/or defending same, including, without
limitation, reasonable attorneys’ fees at trial and all appellate levels. The
provisions of this Section 8.3 shall survive the termination of this Agreement.

 

8.4         Limitation of Liability. Notwithstanding anything herein to the
contrary, the liability of each party hereto resulting from the breach or
default by such party shall be limited to direct actual damages incurred by the
injured party and each party hereto hereby waives its rights to recover from the
other party consequential, punitive, exemplary, and speculative damages. The
provisions of this Section 8.4 shall survive the termination of this Agreement.

 

16

 

 

8.5         Indemnification by Purchaser. As of the Closing Date, Purchaser
shall indemnify, defend and hold Seller harmless from any and all claims
resulting from the following: (a) the breach by Purchaser of any representation,
warranty, covenant or obligation contained in this Agreement and (or) in any
other agreement, document, exhibit or instrument executed and delivered
hereunder; and (b) the operation, management and (or) use of the Property by
Purchaser on and after the Closing Date.

 

8.6         Indemnification by Seller. As of the Closing Date, Fee Owner and
Interest Owner (but specifically excluding Moody MT) shall indemnify, defend and
hold Purchaser harmless from any and all claims resulting from the following:
(a) the breach by Seller of any representation, warranty, covenant or obligation
contained in this Agreement and (or) in any other agreement, document, exhibit
or instrument executed and delivered hereunder; and (b) the operation,
management and (or) use of the Property by Seller before the Closing Date.
Notwithstanding anything in this Agreement to the contrary, the maximum
aggregate liability of Seller, and the maximum aggregate amount which may be
awarded to and collected by Purchaser shall under no circumstances whatsoever
exceed One Million and No/Dollars ($1,000,000.00) (“Liability Cap”); and no
claim by Purchaser may be made, and Seller shall not be liable for any judgment
in any action based upon any such claim, unless and until such claim, either
alone or together with any other claims by Purchaser for indemnification is for
an aggregate amount in excess of Twenty-Five Thousand and No/Dollars
($25,000.00) (“Floor Amount”), in which event Seller’s liability respecting any
final judgment concerning such claim or claims shall be for the entire amount
thereof, subject to the Liability Cap; provided, however, that if any such final
judgment is for an amount that is less than or equal to the Floor Amount, then
Seller shall have no liability with respect thereto.

 

ARTICLE IX
MISCELLANEOUS PROVISIONS

 

9.1         Completeness; Modification. This Agreement constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto. This Agreement may be
modified only by a written instrument duly executed by the parties hereto.

 

9.2         Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their permitted respective successors and
assigns.

 

9.3         Days. If any action is required to be performed, or if any notice,
consent or other communication is given, on a day that is a Saturday or Sunday
or a legal holiday in the jurisdiction in which the action is required to be
performed or in which is located the intended recipient of such notice, consent
or other communication, such performance shall be deemed to be required, and
such notice, consent or other communication shall be deemed to be given, on the
first business day following such Saturday, Sunday or legal holiday. Unless
otherwise specified herein, all references herein to a “day” or “days” shall
refer to calendar days and not business days.

 

9.4         Governing Law. This Agreement and all documents referred to herein
shall be governed by and construed and interpreted in accordance with the laws
of the state in which the Property is located without regard to its principle of
conflicts of law.

 

9.5         Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear on each counterpart
hereof. All counterparts hereto shall collectively constitute a single
agreement. Telecopied signatures shall have the same valid and binding effect as
original signatures.

 

17

 

 

9.6         Severability. If any term, covenant or condition of this Agreement,
or the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons or circumstances, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

 

9.7         Costs. Regardless of whether Closing occurs hereunder, and except as
otherwise expressly provided herein, each party hereto shall be responsible for
its own costs in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, fees of attorneys, engineers
and accountants.

 

9.8         Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, sent prepaid for
next-day delivery by Federal Express (or a comparable overnight delivery
service) or sent by the United States mail, certified, postage prepaid, return
receipt requested, at the addresses and with such copies as designated below.
Any notice, request, demand or other communication delivered or sent in the
manner aforesaid may be given by the party required to give such notice, etc.,
or its attorney, and shall be deemed given or made (as the case may be) when
actually delivered to or refused by the intended recipient.

 

If to Seller:   Moody National RI Grapevine S, LLC     6363 Woodway, Suite 110  
  Houston, Texas 77057     Attn: Brett Moody     Telephone: (713) 977-7500    
Facsimile: (713) 977-7505     bmoody@moodynational.com       If to Purchaser:  
Moody National REIT I, Inc.     6363 Woodway, Suite 110     Houston, Texas 77057
    Attn: Mary Smith     Telephone: (713) 977-7500     Facsimile: (713) 977-7505
    msmith@moodynational.com       If to Escrow Agent:   Moody National Title
Company, L. P.     6363 Woodway, Suite 250     Houston, Texas  77057    
Telephone:  (713)977-1700 (Main)     (713)273-6680 (Direct)    
Facsimile:  (713)977-0117(Fax)

 

or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or designate
different or other persons or entities to receive copies by notifying the other
party and Escrow Agent in a manner described in this Section.

 

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9.9         Escrow Agent. Escrow Agent has agreed to act as such for the
convenience of the parties without fee or other charges for such services as
Escrow Agent. Escrow Agent shall not be liable: (a) to any of the parties for
any act or omission to act except for its own willful misconduct; (b) for any
legal effect, insufficiency, or undesirability or any instrument deposited with
or delivered by Escrow Agent or exchanged by the parties hereunder, whether or
not Escrow Agent prepared such instrument; (c) for any loss or impairment of
funds that have been deposited in escrow while those funds are in the course of
collection, or while those funds are on deposit in a financial institution, if
such loss or impairment results from the failure, insolvency or suspension of a
financial institution; (d) for the expiration of any time limit or other
consequences of delay, unless a properly executed written instruction, accepted
by Escrow Agent, has instructed Escrow Agent to comply with said time limit;
(e) for the default, error, action or omission of either party to the escrow.
Escrow Agent, in its capacity as escrow agent, shall be entitled to rely on any
document or paper received by it, believed by such Escrow Agent, in good faith,
to be bona fide and genuine. In the event of any dispute as to the disposition
of any monies held in escrow, or of any documents held in escrow, Escrow Agent
may, if such Escrow Agent so elects, interplead the matter by filing an
interpleader action in a court of competent jurisdiction in the county or
circuit where the Real Property is located (to the jurisdiction of which both
parties do hereby consent), and pay into the registry of the court such monies
held by Escrow Agent, or deposit any such documents with respect to which there
is a dispute in the registry of such court, whereupon such Escrow Agent shall be
relieved and released from any further liability as Escrow Agent hereunder.
Escrow Agent shall not be liable for Escrow Agent’s compliance with any legal
process, subpoena, writ, order, judgment and decree of any court, whether issued
with or without jurisdiction, and whether or not subsequently vacated, modified,
set aside or reversed.

 

9.10       Incorporation by Reference. All of the exhibits and schedules
attached hereto are by this reference incorporated and made a part hereof.

 

9.11       Further Assurances. Seller and Purchaser each covenant and agree to
sign, execute and deliver, or cause to be signed, executed and delivered, and to
do or make, or cause to be done or made, upon the written request of the other
party, any and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may be reasonably required by either
party hereto for the purpose of or in connection with consummating the
transactions described herein provided that compliance with the provision of
this Section shall not increase the liability of the complying party.

 

9.12       No Partnership. This Agreement does not and shall not be construed to
create a partnership, joint venture or any other relationship between the
parties hereto except the relationship of seller and purchaser specifically
established hereby.

 

9.13       Time of Essence. Time is of the essence with respect to every
provision hereof.

 

9.14       Signatory Exculpation. The signatory(ies) for Seller and Purchaser
is/are executing this Agreement in his/their capacity as representative of such
party and not individually and, therefore, shall have no personal or individual
liability of any kind in connection with this Agreement and the transactions
contemplated by it.

 

9.15       Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:

 

(a)         Singular words shall connote the plural number as well as the
singular and vice versa, and the masculine shall include the feminine and the
neuter.

 

(b)        All references herein to particular articles, sections, subsections,
clauses or exhibits are references to articles, sections, subsections, clauses
or exhibits of this Agreement.

 

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(c)        The headings contained herein are solely for convenience of reference
and shall not constitute a part of this Agreement nor shall they affect its
meaning, construction or effect.

 

(d)        Each party hereto and its counsel have reviewed and revised (or
requested revisions of) this Agreement and have participated in the preparation
of this Agreement, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Agreement or any
exhibits hereto.

 

9.16       No Recording. Neither this Agreement nor any memorandum hereof, or
any other instrument intended to give notice hereof (or which actually gives
notice hereof) shall be recorded.

 

9.17       Facsimile Signatures. The execution of this Agreement and all notices
given hereunder and all amendments hereto, may be effected by facsimile
signatures, all of which shall be treated as originals; provided, however, that
the party receiving a document with a facsimile signature may, by notice to the
other, require the prompt delivery of an original signature to evidence and
confirm the delivery of the facsimile signature.

 

9.18       Assignment by the Parties. Neither party shall assign or transfer or
permit the assignment or transfer of its rights or obligations under this
Agreement without the prior written consent of the other, any such assignment or
transfer without such prior consent being hereby declared to be null and void;
provided, however, that Purchaser shall have the right to either nominate one or
more Affiliates to take title to the Property or to certain components of the
Property or to assign this Agreement to one or more Affiliates without Seller’s
consent.

 

9.19       Waiver. The excuse or waiver of the performance by a party of any
obligation of the other party under this Agreement shall only be effective if
evidenced by a written statement signed by the party so excusing or waiving. No
delay in exercising any right or remedy shall constitute a waiver thereof, and
no waiver by Seller or Purchaser of the breach of any covenant of this Agreement
shall be construed as a waiver of any preceding or succeeding breach of the same
or any other covenant or condition of this Agreement.

 

9.20       Exclusivity. After the Effective Date, Seller and its respective
agents, representatives and employees shall immediately cease all marketing of
the Property until such time as this Agreement is terminated and Seller shall
not directly or indirectly make, accept, negotiate, entertain or otherwise
pursue any offers for the sale of the Property.

 

9.21       Section 1031 Exchange. Either party may consummate the purchase or
sale of the Property as part of a so-called like kind exchange (an “Exchange”)
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the
“Code”), provided that (i) the Closing shall not be delayed or affected by
reason of an Exchange nor shall the consummation or accomplishment of any
Exchange be a condition precedent or condition subsequent to a party’s
obligations under this Agreement; (ii) any party desiring an Exchange shall
effect its Exchange through an assignment of this Agreement, or its rights under
this Agreement, to a qualified intermediary and the other party shall not be
required to take an assignment of the purchase agreement for the relinquished or
replacement property or be required to acquire or hold title to any real
property for purposes of consummating such Exchange; and (iii) the party
desiring an Exchange shall pay any additional costs that would not otherwise
have been incurred by Purchaser or Seller had such party not consummated its
purchase or sale through an Exchange. Neither party shall by this agreement or
acquiescence to an Exchange desired by the other party (1) have its rights under
this Agreement affected or diminished in any manner or (2) be responsible for
compliance with or be deemed to have warranted to the other party that such
party’s Exchange in fact complies with Section 1031 of the Code. In connection
with such cooperation, Seller agrees, upon request of Purchaser to “direct deed”
for actual interests in the property to designees of Purchaser.

 

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9.22       Public Announcements. Except as otherwise expressly provided herein,
neither Seller nor Purchaser shall make any public statement or issue any press
release prior to the Closing with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party. Seller
hereby expressly acknowledges that Purchaser is a wholly-owned subsidiary of a
publicly-traded company and that Seller is aware and will advise its owners,
employees and agents that federal and state securities laws prohibit any person
who has material, non-public information about a company from purchasing or
selling securities of such a company or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities. Seller further agrees
that Purchaser shall have the right to disclose the fact that it is
contemplating the purchase of the Property and such other details of the
transaction to the extent Purchaser reasonably deems necessary to comply with
applicable federal or state securities laws, rules or regulations.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

 

  FEE OWNER:         MOODY NATIONAL RI GRAPEVINE S, LLC,   a Delaware limited
liability company         By: /s/ Brett C. Moody   Name:     Title:  

 

 

 

 

IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

 

  MOODY MT:         Moody National TPS Newark MT, LLC, a Delaware limited
liability company         By: Moody National Management, L.P., a Texas limited
partnership, its sole member         By: Moody Management Corporation, a Texas
corporation, it general partner         By: /s/ Brett C. Moody     Brett C.
Moody, President

 

 

 

 

IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

 

  INTEREST OWNER:         MOODY NATIONAL MANAGEMENT, L.P.         By: Moody
Management Corporation, a Texas corporation, it general partner         /s/
Brett C. Moody   Brett C. Moody, President

 

 

 

 

IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

 

  PURCHASER:         MOODY NATIONAL REIT I INC., a Maryland corporation        
By: /s/ Brett C. Moody     Brett Moody, President

 

 

 

 

RECEIPT OF THIS AGREEMENT IS ACKNOWLEDGED BY PARTNERS TITLE COMPANY, EFFECTIVE
AS OF                   , 2014.

 

  MOODY NATIONAL TITLE COMPANY, L.P.       By:     Name:     Title:  

 

 

 

 

EXHIBIT A