EXHIBIT 2.3
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT (this "Agreement") dated as of January
29, 2002 (the "Effective Date") is entered into by and among SUBURBAN LODGES OF
AMERICA, INC., a Georgia corporation (the "Secured Party"), INTOWN SUITES
MANAGEMENT, INC., a Georgia corporation (the "Depositor"), and SOUTHTRUST BANK,
a state banking corporation organized and existing under the laws of the State
of Alabama, as escrow agent (the "Escrow Agent").
WHEREAS, Intown Holding Company, LLC, the Depositor, Intown Sub, Inc.
("Sub") and the Secured Party have entered into an Agreement and Plan of Merger
(the "Merger Agreement") dated as of the date hereof, which provides for, among
other things, the merger of Sub with and into the Secured Party (the "Merger")
on the terms and conditions contained in the Merger Agreement (all capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement);
WHEREAS, the Depositor has agreed to deliver, or cause to be delivered,
to the Escrow Agent, funds in the amount of $5,000,000 as a deposit (the
"Deposit") for the payment of liquidated damages, if any are payable, to the
Secured Party pursuant to Section 7.2(e) of the Merger Agreement, to be held,
administered and disbursed by the Escrow Agent in accordance with the terms and
provisions of this Agreement.
NOW THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. APPOINTMENT OF ESCROW AGENT. The Secured Party and the
Depositor do hereby appoint the Escrow Agent as escrow agent for the purposes
described herein.
2. ACCEPTANCE OF APPOINTMENT BY ESCROW AGENT. The Escrow Agent
does hereby accept the appointment as escrow agent and agrees to act in
accordance with the terms and conditions described herein.
3. ESCROW FUND. The Depositor has delivered to, or caused to be
delivered to, Escrow Agent the Deposit as contemplated by Section 1.8 of the
Merger Agreement, and Escrow Agent hereby acknowledges receipt of the Deposit.
The Deposit shall be held, maintained, invested and secured by the Escrow Agent
in accordance with the terms, conditions and restrictions herein described (the
Deposit and any earnings thereon, if any, shall be collectively herein referred
to as the "Escrow Fund"). The Escrow Agent shall release the Escrow Fund only in
accordance with (a) the instructions set forth in Exhibit A or (b) a final
order, decree or judgment of a court of competent jurisdiction in the United
States of America from which no
appeal may be taken, whether because of lapsed time or otherwise, in an action
initiated by any of the parties hereto.
4. INVESTMENT AND MAINTENANCE OF ESCROW FUND. The Escrow Agent
shall invest and reinvest the Escrow Fund in investments of the type specified
on Exhibit B, as directed in written instructions signed by both the Secured
Party and the Depositor and which shall be considered acceptable in the sole
discretion of the Escrow Agent. The Escrow Agent shall have sole discretion to
select the brokers, dealers or other traders of securities in connection with
the investment of the Escrow Fund. During the term of this Agreement, the Escrow
Agent shall provide the Secured Party and the Depositor with written monthly
statements containing the beginning balance of the Escrow Fund, as well as all
principal and income transactions for the statement period. The Escrow Agent
shall have the express authority to liquidate any and all investments consisting
in whole or in part of the Escrow Fund to make any and all payments under this
Agreement. In the event that any or all of the Escrow Fund is of the type which
cannot be invested or each of the Secured Party and the Depositor sign and
deliver written instructions to the Escrow Agent expressly requesting that the
Escrow Fund not be invested, the Escrow Agent shall securely hold and maintain
the Escrow Fund in the escrow account.
5. LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be
liable for any loss to the Escrow Fund resulting from the investment(s)
enumerated in Exhibit B or any investment(s) requested in written instructions
signed by the Depositor and the Secured Party, except as provided below. The
Escrow Agent shall not be liable for any: (i) actions taken pursuant to written
instructions signed by the Depositor and the Secured Party; (ii) inaction
resulting from the failure of either the Depositor or the Secured Party to
provide the Escrow Agent with written instructions as to investment directives;
(iii) inaction resulting from the exercise of the Escrow Agent's sole discretion
in the choice of requested investments; or, (iv) any loss resulting from the
liquidation of any investment(s) prior to such investment's maturity date for
the purpose of making required payments under this Agreement. The Escrow Agent
shall not be held liable for any actions taken in good faith reliance upon
written instructions signed by the Depositor and the Secured Party. The Escrow
Agent shall not be held liable for any action or inaction taken in good faith,
except that it may be held liable for its own gross negligence or willful
misconduct, if so determined by a court of competent jurisdiction. Under no
circumstances shall the Escrow Agent be held liable for any special, indirect or
consequential damages of any kind, even though the Escrow Agent may have been
placed on notice of the likelihood of such loss.
6. RIGHTS AND DUTIES OF ESCROW AGENT. The Escrow Agent shall only
be required to perform the duties expressly described herein. No further duties
shall be implied from this Agreement or any other written or oral agreement by
and between the Escrow Agent, the Depositor and the Secured Party made previous
or subsequent to this Agreement, unless such written amendment to this Agreement
is executed by all parties to this Agreement. The Escrow Agent may rely upon any
written instructions believed in good faith to be genuine when signed and
presented by the requesting parties and shall not have a duty to inquire or
investigate the validity of any such written instruction. The Escrow Agent shall
not be required to solicit funds
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from either the Depositor or the Secured Party in connection with this
Agreement. The Escrow Agent shall be permitted to execute any and all powers
under this Agreement directly or through its agents and/or attorneys, and shall
be allowed to seek counsel from any professional regarding the performance of
this Agreement, which professionals shall be selected at the sole discretion of
the Escrow Agent. Should the Escrow Agent become uncertain as to its duties
under this Agreement, it shall be permitted to immediately abstain from further
action until such duties are expressly defined in a writing signed by all of the
parties hereto, and shall only be required to protect and keep the Escrow Fund
in its current investment(s) until such time as a written agreement among the
parties is executed or a court of competent jurisdiction shall render an order
directing further action. Upon release of the Escrow Fund as set forth in
Exhibit A hereto, the Escrow Agent shall be fully released from any and all
further obligations, except for the provision of written notice to the other
parties to this Agreement, setting forth in such notice the date of release of
the Escrow Fund, the party to whom released and the amount released, such
notification to be in the form of the Escrow Agent's final monthly statement.
Upon the above referenced notification, the Escrow Agent shall be released from
further obligations to any other party to this Agreement.
7. RESIGNATION AND SUCCESSION OF ESCROW AGENT. The Escrow Agent
may resign and be discharged of all duties and obligations under this Agreement
by providing ten (10) calendar days written notice of such resignation to both
the Depositor and the Secured Party. Such resignation shall take effect upon the
appointment of a successor escrow agent as provided herein. Upon any such notice
of resignation, the Depositor and the Secured Party, acting jointly, shall
appoint a successor escrow agent hereunder, which shall be a commercial bank,
trust company or other financial institution with a combined capital and surplus
in excess of $100,000,000, unless otherwise agreed by the Depositor and the
Secured Party. Upon the acceptance in writing of any appointment as the Escrow
Agent hereunder by a successor escrow agent, such successor escrow agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Escrow Agent, and the retiring Escrow Agent shall
promptly deliver the Escrow Fund and all materials and instruments in its
possession which relate to the Escrow Fund to such successor and be discharged
from its duties and obligations under this Agreement, but shall not be
discharged from any liability for actions taken as Escrow Agent hereunder prior
to such succession in accordance with this Section 7. The Escrow Agent shall
have the right to withhold an amount equal to any amount due and owing the
Escrow Agent, plus any costs and fees incurred by the Escrow Agent in connection
with the termination of this Agreement. Any merger, consolidation or the
purchase of all or substantially all of the Escrow Agent's corporate assets
resulting in a new corporate entity shall not be considered a successor for the
purposes of this Section 7, and, subject to the obligations of the Escrow Agent
under Section 12 hereof the Escrow Fund shall be transferred to such entity
without written consent under this Agreement.
8. TERMINATION OF ESCROW AGENT. The Escrow Agent may be
discharged from its duties under this Agreement, with or without cause, by the
Depositor and the Secured Party, acting jointly, upon ten (10) calendar days
written notice from the Depositor and the Secured Party and upon the payment of
any and all costs and fees due to Escrow Agent. In such event, the Escrow Agent
shall be entitled to rely upon written instructions signed by the
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Depositor and the Secured Party as to the disposition and delivery of the Escrow
Fund. Upon thirty (30) calendar days after receipt of such written notice of
termination, if no successor has been named, the Escrow Agent shall immediately
cease further action under this Agreement and shall have no further obligations
hereunder except to hold the Escrow Fund as a depository.
9. TAXES AND FEES. The Depositor and the Secured Party each
represent that its Federal Employer Identification Number listed in Section 11
is true and correct, and that each will notify the Escrow Agent in writing
immediately upon any change to such number. The Depositor and the Secured Party
shall, jointly and severally, indemnify and hold harmless the Escrow Agent
against and in respect to liability for taxes and/or any penalties or interest
attributable to the investment of the Escrow Fund by Escrow Agent pursuant to
this Agreement. Depositor and Secured Party also agree to pay 50% of the
compensation for the services rendered by the Escrow Agent under this Agreement.
Compensation for services rendered by the Escrow Agent shall be paid per the
instructions set forth on Exhibit C, and Depositor and Secured Party agree to
jointly pay or reimburse the Escrow Agent for all reasonable expenses and
disbursements, including reasonable attorney's fees, incurred in connection with
the preparation, execution, performance, delivery, modification or termination
of this Agreement (with each party paying 50% of such expenses and
disbursements).
10. INDEMNIFICATION OF ESCROW AGENT. Depositor and the Secured
Party shall jointly and severally indemnify, defend and hold harmless the Escrow
Agent and its directors, officers, agents and employees from all loss, liability
or expense arising from the execution and/or performance of this Agreement or
the undertaking of any instructions from the Depositor or the Secured Party,
except for those acts by the Escrow Agent which shall constitute gross
negligence or willful misconduct, and such indemnification shall include
reasonable attorney's fees. The Escrow Agent's right of indemnification shall
survive the resignation or termination of the Escrow Agent and the termination
of the duties described in this Agreement.
11. NOTICES. All communications, notices and instructions required
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand or first class, registered mail, return receipt requested,
postage prepaid, or by facsimile transmission if followed by letter and
affirmative confirmation of receipt is received (such facsimile notice to be
effective on the date such affirmative confirmation of receipt is received), or
by overnight courier (such notice to be effective the following business day if
instructions to deliver such notice on the next business day are given) and
addressed as follows:
If to the Escrow Agent: SouthTrust Bank
Corporate Trust Department
79 West Paces Ferry Road, N.W.
Atlanta, Georgia 30305
Attn: Virginia Petty
404-841-4670 - Direct
404-841-4766 - Facsimile
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If to the Secured Party: Suburban Lodges of America, Inc.
300 Galleria Parkway - Suite 1200
Atlanta, Georgia 30339
Attn: Kevin R. Pfannes
Facsimile: (770) 951-1021
With a copy to: Kilpatrick Stockton, LLP
1100 Peachtree Street, NE, Suite 2800
Atlanta, Georgia 30309-4530
Attn: Michael H. Trotter, Esq.
Daniel T. Falstad, Esq.
Facsimile: (404) 815-6555
If to the Depositor: Intown Suites Management, Inc.
2102 Piedmont Road
Atlanta, Georgia 30324
Attn: David M. Vickers
Facsimile: (404) 875-7534
With a copy to: King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: Alan J. Prince, Esq.
Susan J. Kolodkin, Esq.
Facsimile: (404) 572-5100
In the event the Escrow Agent shall receive such written instructions and shall
determine pursuant to its sole discretion that verification of such instructions
shall be required, then the Escrow Agent shall be permitted to seek confirmation
of such instructions by way of telephone contact to the author of such written
instructions. Verification of the instructions by the purported author of the
instructions called at the telephone number placed on the instructions shall
serve to verify such instructions.
12. ASSIGNMENT. This Agreement shall not be assignable absent
written consent of the parties hereto. Any assignment absent written consent
shall be deemed void ab initio, except that the merger or acquisition of all or
substantially all the assets of the parties shall not require written consent,
but shall require written notice to all the parties hereto. Notwithstanding the
foregoing, all covenants contained in this Agreement by or on behalf of the
parties hereto shall bind and inure to the benefit of such parties and their
respective heirs, administrators, legal representatives, successors and assigns.
13. MODIFICATION OF AGREEMENT. This Agreement shall constitute the
complete and entire understanding of the parties hereto regarding the escrow
transactions contemplated hereby, and shall supersede any and all prior
agreements between or among them.
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The provisions of this Agreement shall not be waived, modified, amended, altered
or supplemented, in whole or in part, except by a writing signed by all the
parties hereto.
14. PERFORMANCE ON HOLIDAYS. Should the performance date pursuant
to any provision of this Agreement fall upon a bank holiday or on a day on which
banks are not generally open for business, the performance by the Escrow Agent
on the succeeding business day shall be deemed to be in full compliance with the
terms hereof.
15. CHOICE OF LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Georgia. The parties further waive
any right to a trial by jury with respect to any judicial proceeding arising out
of occurrences related to this Agreement.
16. FORCE MAJEURE. No party to this Agreement shall be liable to
any other party for losses arising out of, or the inability to perform its
obligations under the terms of this Agreement, due to acts of God, which shall
include, but shall not be limited to, fire, floods, strikes, mechanical failure,
war, riot, nuclear accident, earthquake, terrorist attack, computer piracy,
cyber-terrorism or other acts beyond the control of the parties hereto.
17. EXECUTION. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SOUTHTRUST BANK
By: /s/ Virginia Petty
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Name: Virginia Petty
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Title: Vice President and Trust
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Officer
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SUBURBAN LODGES OF AMERICA, INC.
By: /s/ David Krischer
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Name: David Krischer
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Title: CEO
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INTOWN SUITES MANAGEMENT, INC.
By: /s/ David M. Vickers
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Name: David M. Vickers
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Title: CEO
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EXHIBIT A
DISBURSEMENT INSTRUCTIONS
1. If (a) either (i) the Depositor or Sub exercises its right to
terminate the Merger Agreement pursuant to Section 7.1(i) thereof or (ii) the
conditions precedent to the obligations of the Depositor and Sub as set forth in
Sections 6.1 and 6.2 of the Merger Agreement shall have been satisfied or waived
and the Depositor or Sub nonetheless fail to consummate the Closing as and when
required under the Merger Agreement, and (b) each of the Secured Party and the
Depositor sign and deliver to the Escrow Agent written instructions directing
release of the Deposit to the Secured Party and any remaining portion of the
Escrow Fund not paid to the Secured Party to the Depositor (the "Release
Notice"), then as soon as practicable (but in no event more than three business
days) after receipt of the Release Notice, the Escrow Agent shall release (i)
the Deposit to the Secured Party and (ii) any remaining portion of the Escrow
Fund not paid to the Secured Party to the Depositor, by wire transfer of
immediately available funds to the bank accounts specified by the Secured Party
and the Depositor (as applicable) in the Release Notice.
2. If (a) (i) the Merger Agreement is terminated by the Depositor
for any reason other than as described in subsection (a)(i) of the immediately
preceding paragraph, (ii) the Merger Agreement is terminated by the Secured
Party for any reason other than because the conditions precedent to the
obligations of Depositor and Sub as set forth in Sections 6.1 and 6.2 of the
Merger Agreement shall have been satisfied or waived and the Depositor or Sub
nonetheless fails to consummate the Closing as and when required under the
Merger Agreement, or (iii) the transactions contemplated by the Merger Agreement
are consummated in accordance with the terms of the Merger Agreement, and (b)
each of the Secured Party and the Depositor sign and deliver to the Escrow Agent
written instructions directing return of the Escrow Fund to the Depositor (the
"Return Notice"), then as soon as practicable (but in no event more than three
business days) after receipt of the Return Notice, the Escrow Agent shall return
the Escrow Fund to the Depositor, by wire transfer of immediately available
funds to the bank account specified by the Depositor in the Return Notice.
3. If the Depositor refuses to sign the Release Notice, or the
Secured Party refuses to sign the Return Notice, then either such refusing party
shall provide prompt written notice of its refusal to the Escrow Agent and the
other party hereto, specifying in reasonable detail the basis for its refusal
(the "Dispute Notice"). If the Depositor and the Secured Party cannot agree upon
a resolution of the dispute within fifteen (15) calendar days of the receipt of
the relevant Dispute Notice, any of the parties hereto, including the Escrow
Agent, may institute legal proceedings in the United States District Court for
the Northern District of Georgia with respect to the Escrow Fund, and the Escrow
Agent may tender the Escrow Fund into the registry and custody of the court, and
in such instance, the Escrow Agent shall thereupon be discharged from further
duties or liabilities with respect to such Escrow Fund to the extent permitted
by applicable law; provided, however, the Escrow Agent shall still be bound by
the terms of the Escrow Agreement until its termination.
EXHIBIT B
INVESTMENTS
The Escrow Agent shall administer the Escrow Fund under the terms of
this Agreement and shall from time to time invest and reinvest the Escrow Fund
in any one or more of the following:
(a) obligations of the United States of America;
(b) general obligations of any State of the United States
of America;
(c) general obligations of any political subdivision of a
State of the United States of America, if such
obligations are related by at least two recognized
rating services as at least "AA";
(d) certificates of deposit of the Escrow Agent and any
national bank or banks insured by the Federal Deposit
Insurance Corporation with a net worth in excess of
$100,000,000;
(e) obligations of state or municipal public housing
authorities chartered by the United States of America
and guaranteed by the United States of America;
(f) demand interest bearing accounts of the Escrow Agent;
and
(g) money market funds of the Escrow Agent which invest
in any of the preceding (a) through (f), or rated not
less than AAAM by Standard & Poors.
In the absence of joint written instructions as provided in Section 4, the
Escrow Agent shall invest the Escrow Fund in money market funds of the type
described in the preceding clause (g).
EXHIBIT C
FEES
As compensation for services rendered under this Agreement, the Escrow
Agent shall receive an Acceptance Fee of $500.00 to be paid 50% by the Depositor
and 50% by the Secured Party upon the execution and delivery of this Agreement,
and an Annual Administration Fee of $1,500.00, which shall be paid and 50% by
the Depositor and 50% by the Secured Party, annually thereafter, in advance.
There will be an additional annual charge of $500.00 if the Escrow Fund is not
invested in J. P. Morgan Cash Management Money Market Fund. As set forth in
Section 9 of the Agreement, compensation shall be paid to the Escrow Agent 50%
by the Depositor and 50% by the Secured Party.