Exhibit 10.21
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of April 1, 2003 by and
among BRIAD LODGING GROUP SOMERSET, LLC, a New Jersey limited liability company,
BRIAD LODGING GROUP WALLINGFORD, LLC, a New Jersey limited liability company,
BRIAD DEVELOPMENT WEST, LLC, a New Jersey limited liability company, BRIAD
DEVELOPMENT EAST, LLC, a New Jersey limited liability company, and BRIAD
RESTAURANT GROUP, LLC, a New Jersey limited liability company (collectively,
"Sellers"); BRIAD RESTAURANT GROUP, LLC, a New Jersey limited liability company
("BRG"); APPLE HOSPITALITY FIVE, INC., a Virginia corporation ("Buyer";
collectively with Sellers and BRG, the "Parties"); and LANDAMERICA - DALLAS
NATIONAL DIVISION ("Escrow Agent").
R E C I T A L S
WHEREAS, pursuant to the Purchase Contract dated as of April 1, 2003 (the
"Original Contract") among Briad Lodging Group Hauppauge, LLC, Briad Lodging
Group Franklin, LLC and Briad Lodging Group Cranbury, LLC (the "Original
Sellers"), BRG and Buyer, the Original Sellers agreed to sell and Buyer agreed
to purchase certain hotel properties, more particularly described therein;
WHEREAS, as contemplated by the Original Contract, Sellers and Buyer agreed
to enter into this Agreement, pursuant to which Sellers will grant to Buyer an
exclusive right to negotiate with Sellers for the purchase of certain additional
hotel properties, more particularly described hereinafter, and Buyer will
deposit with Escrow Agent the sum of $500,000 to be held in escrow upon the
terms and conditions of this Agreement; and
WHEREAS, Escrow Agent has agreed to act as escrow agent in accordance with
the provisions, upon the terms, and subject to the conditions, of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Parties and Escrow Agent agree as follows:
1. Appointment of Escrow Agent. Sellers and Buyer hereby appoint Escrow
Agent to serve as escrow agent hereunder, and the Escrow Agent agrees to act as
escrow agent hereunder in accordance with the provisions, upon the terms and
subject to the conditions of this Agreement.
2. The Deposit. Upon the closing of the transactions contemplated by the
Original Contract, Buyer shall deliver the sum of $500,000 (the "Deposit") to
Escrow Agent. Subject to the rights and obligations of the Parties to direct the
investment, transfer, delivery or otherwise disposition of the Deposit pursuant
to this Agreement, Escrow Agent shall keep the Deposit in Escrow Agent's
possession, in escrow, pursuant to this Agreement. Escrow Agent shall invest the
Deposit as directed by Buyer. Any interest or other sums earned on investments
of the Deposit shall belong solely to Buyer.
3. Term. The term of this Agreement (the "Term") shall commence on the date
hereof and shall expire six (6) months thereafter; provided, however, that (i)
if the Original Contract is terminated on account of the failure of the Parties
to close the transactions contemplated thereby, the Term shall expire on the
date of such termination and (ii) if the closing occurs under the Original
Contract but the Parties fail to enter into the "Initial Purchase Contract"
within the "Initial Purchase Period" (as such terms are defined hereinafter),
the Term of this Agreement shall expire upon the expiration of the Initial
Purchase Period. However, the expiration of the Term shall not affect any rights
or obligations of the Parties that may have accrued hereunder before the date of
such expiration or the rights or obligations of the Parties under any provisions
of this Agreement other than Section 4 below.
4. Exclusive Right of Negotiation. Sellers hereby grant to Buyer an
exclusive right during the Term to negotiate with Sellers for the purchase of
the six (6) properties described in Exhibit A attached hereto (collectively, the
"Properties"; individually, a "Property"). During the Term, each of the Parties
will use all commercially reasonable, diligent and good faith efforts to
negotiate the terms and conditions under which Sellers will sell and Buyer will
purchase the Properties, such terms and conditions to be set forth in one or
more definitive contracts of purchase as the Parties may agree, substantially
upon the same terms and conditions as set forth in the Original Contract, except
for matters specific to each of the Properties and except as otherwise noted
herein. In addition, during the Term, Sellers will use all commercially
reasonable, diligent and good faith efforts (i) to keep all outstanding purchase
or option contracts for any of the Properties in full force and effect, in each
case so as to enable Sellers to comply with their obligations under this
Agreement, (ii) to consummate the purchase of the three Properties designated on
Exhibit A as "Homewood Suites-Somerset, NJ," "Homewood Suites-Wallingford, CT"
and "Residence Inn-Mount Olive, NJ," respectively (collectively, the "Initial
Properties"), (iii) upon execution by Buyer and Sellers of the Initial Purchase
Contract, to construct the hotels on the Initial Properties as indicated in
Exhibit A, (iv) to keep any franchise agreements with any of the hotel chains
indicated on Exhibit A, which Sellers may enter into in advance of closing the
sale of any of the Properties, in full force and effect and (v) to obtain all
permits, approvals and authorizations as may be required to develop each of the
remaining Properties and to construct thereon the hotels indicated in Exhibit A.
Notwithstanding anything contained in this Agreement to the contrary, the
Parties agree that (a) the purchase price for any Property shall not exceed the
product of $120,000 times the number of rooms in the hotel constructed on the
Property, (b) in the event that Sellers enter into any franchise agreements
before closing on the sale of the Properties to Buyer, Buyer shall pay for any
transfer or assumption fee charged by the franchisor and (c) Sellers shall pay
for any prepayment or similar fee in connection with the payoff of any mortgage
loan on the Properties and shall pay any real estate transfer and recordation
taxes and fees. During the Term, Sellers shall not solicit, entertain or accept
any offers from third parties to purchase or lease any of the Properties or
negotiate with any third party for the purchase and sale or lease of any of the
Properties, nor shall Sellers list any of the Properties with a real estate
broker or agent or otherwise advertise the same for sale.
5. Initial Purchase Contract.
(a) If, within the period beginning on the date hereof and ending four
(4) months thereafter (the "Initial Purchase Period"), the Parties enter into a
definitive, written contract (the "Initial Purchase Contract") to sell and
purchase not less than all of the Initial
2
Properties, then the Deposit shall be disbursed to Escrow Agent to be held as an
xxxxxxx money deposit under the Initial Purchase Contract and to be applied to
the purchase price of the Initial Properties, or disbursed to Sellers or Buyer,
in accordance with the terms and conditions of the Initial Purchase Contract.
(b) If, before the expiration of the Initial Purchase Period, the
Parties fail to enter into a definitive, written contract to sell and purchase
the Initial Properties and such failure is not on account of a default by any of
Sellers of its obligations under this Agreement, then the Deposit shall be
disbursed to Sellers upon its request, and thereafter neither Party shall have
any further obligation under this Agreement with respect to the sale or purchase
of the Properties.
(c) If, before the expiration of the Initial Purchase Period, the
Parties fail to enter into a definitive, written contract to sell and purchase
the Initial Properties and such failure is on account of a default by any of
Sellers of its obligations under this Agreement, then the Deposit shall be
disbursed to Buyer upon its request, and thereafter neither Party shall have any
further obligation under this Agreement with respect to the sale or purchase of
the Properties.
6. Procedure for Claiming Deposit.
(a) If, at any time after the Initial Purchase Period, Sellers claim
entitlement to the Deposit, Sellers shall give written notice to Escrow Agent
stating that it is entitled to the Deposit in accordance with the terms of this
Agreement, and shall direct Escrow Agent to release the Deposit to Sellers (the
"Seller's Notice"). Escrow Agent shall promptly deliver a copy of Seller's
Notice to Buyer. Buyer shall have three (3) days after receipt of the copy of
Seller's Notice to deliver written notice to Escrow Agent and Sellers objecting
to the release of the Deposit to Sellers ("Buyer's Objection Notice"). If Escrow
Agent does not receive a timely Buyer's Objection Notice, Escrow Agent shall
release the Deposit or applicable portion thereof to Sellers. If Escrow Agent
does receive a timely Seller's Objection Notice, Escrow Agent shall release the
Deposit only upon receipt of, and in accordance with, written instructions
signed by Buyer and Sellers, or the final order of a court of competent
jurisdiction.
(b) If, at any time after the Initial Purchase Period, Buyer claims
entitlement to the Deposit, Buyer shall give written notice to Escrow Agent
stating that Buyer is entitled to the return of the Deposit in accordance with
the terms of this Agreement and shall direct Escrow Agent to return the Deposit
to Buyer (the "Buyer's Notice"). Escrow Agent shall promptly deliver a copy of
Buyer's Notice to Sellers. Sellers shall have three (3) days after receipt of
the copy of Buyer's Notice to deliver written notice to Escrow Agent and Buyer
objecting to the release of the Deposit to Buyer ("Seller's Objection Notice").
If Escrow Agent does not receive a timely Seller's Objection Notice, Escrow
Agent shall release the Deposit to Buyer. If Escrow Agent does receive a timely
Seller's Objection Notice, Escrow Agent shall release the Deposit only upon
receipt of, and in accordance with, written instructions signed by Sellers and
Buyer, or the final order of a court of competent jurisdiction.
7. Limitations on Liability and Duties of Escrow Agent.
(a) In the performance of its duties hereunder, Escrow Agent shall be
entitled to rely upon any document, instrument or signature purporting to be
genuine and purporting to be
3
signed by the Parties or their successors unless Escrow Agent has actual
knowledge to the contrary. Escrow Agent may assume that any person purporting to
give any notice or instructions in accordance with the provisions hereof has
been duly authorized to do so.
(b) Escrow Agent shall not be liable for any error of judgment, or any
action taken or omitted to be taken hereunder, except in the case of Escrow
Agent's willful, bad faith misconduct or negligence, nor shall Escrow Agent be
liable for the conduct or misconduct of any employee, agent or attorney thereof.
Escrow Agent shall be entitled to consult with counsel of its choosing and shall
not be liable for any action suffered or omitted in accordance with the advice
of such counsel.
(c) In addition to the indemnities provided below, Escrow Agent shall
not be liable for, and each of the Parties jointly and severally hereby
indemnify and agree to save harmless and reimburse Escrow Agent from and against
all loss, cost, liability, damage and expense, including outside counsel fees in
connection with its acceptance of, or the performance of its duties and
obligations under, this Agreement, including the costs and expenses of defending
against any claim arising hereunder unless the same are caused by the willful,
bad faith misconduct or negligence of Escrow Agent.
(d) Escrow Agent shall not be bound or in any way affected by any
notice of any modification or cancellation of this Agreement, or of any fact or
circumstance affecting or alleged to affect rights or liabilities hereunder
other than as is herein set forth, or affecting or alleged to affect the rights
and liabilities of any other person, unless notice of the same is delivered to
Escrow Agent in writing, signed by the proper parties to Escrow Agent's
satisfaction and, in the case of modification, unless such modification shall be
approved by Escrow Agent in writing.
(e) Escrow Agent and any successor escrow agent, as the case may be,
may resign his or its duties and be discharged from all obligations hereunder at
any time upon giving five (5) days' prior written notice to each of the Parties
hereto. The Parties hereto will thereupon jointly designate a successor escrow
agent hereunder within said five (5) day period to whom the Deposit shall be
delivered. In default of such a joint designation of a successor escrow agent,
Escrow Agent shall retain the Deposit as custodian thereof until otherwise
directed by the Parties hereto, jointly, or until the Deposit is released in
accordance with subsection (f) below, in each case, without liability or
responsibility.
(f) Anything in this Agreement to the contrary notwithstanding, (i)
Escrow Agent, on notice to the Parties hereto, may take such other steps as the
Escrow Agent may elect in order to terminate its duties as Escrow Agent
hereunder, including, but not limited to, the deposit of the Deposit with a
court of competent jurisdiction in the Commonwealth of Virginia and the
commencement of an action of interpleaders, and (ii) in the event of litigation
between any of the Parties with respect to the Deposit, Escrow Agent may deposit
the Deposit with the court in which said litigation is pending and, in any such
event, Escrow Agent shall be relieved and discharged from any liability or
responsibility to the Parties hereto. Escrow Agent shall not be under any
obligation to take any legal action in connection with this Agreement or its
enforcement or to appear in, prosecute or defend any action or legal proceeding
which, in the opinion of Escrow Agent, would or might involve Escrow Agent in
any cost, expense, loss,
4
damage or liability, unless and as often as requested, Escrow Agent shall be
furnished with security and indemnity satisfactory to Escrow Agent against all
such costs, expenses (including attorney's fees), losses, damages and
liabilities.
8. Notices. All notices required herein shall be deemed to have been
validly given, as applicable: (i) if given by telecopy, when the telecopy is
transmitted to the party's telecopy number specified below and confirmation of
complete receipt is received by the transmitting party during normal business
hours or on the next business day if not confirmed during normal business hours,
(ii) if hand delivered to a party against receipted copy, when the copy of the
notice is receipted or rejected, (iii) if given by certified mail, return
receipt requested, postage prepaid, two (2) business days after it is posted
with the U.S. Postal Service at the address of the party specified below or (iv)
on the next delivery day after such notices are sent by recognized and reputable
commercial overnight delivery service marked for next day delivery, return
receipt requested or similarly acknowledged:
(i) If addressed to Sellers, to:
c/o The Briad Group
00X Xxxxxxxx Xxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxxx, President
Fax No.: 000-000-0000
(ii) If addressed to Buyer, to:
Apple Suites Realty Group, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
(iii) If addressed to Escrow Agent, to:
LandAmerica - Dallas National Division
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxx
Fax No.: (000) 000-0000 or (000) 000-0000
or such other address or addresses as may be expressly designated by any party
by notice given in accordance with the foregoing provisions and actually
received by the party to whom addressed.
9. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original and all of which,
together, shall constitute one and the same Agreement.
5
10. Successors and Assigns. The covenants, conditions and agreements
contained in this Agreement shall bind and inure to the benefit of each of the
Parties hereto and their respective successors and assigns. Buyer acknowledges
that certain of the Sellers may assign existing purchase contracts for the
Properties to affiliates of such Sellers, but any assignee shall assume the
assigning Seller's obligations under this Agreement and any such assignment
shall not relieve BRG from any of its obligations under Section 11 of this
Agreement.
11. Joinder by BRG. BRG joins in this Agreement and hereby covenants
and agrees that (i) BRG is and shall be jointly and severally liable with
Sellers for the performance of all of Sellers' obligations and liabilities under
this Agreement, (ii) BRG's obligations hereunder shall not be limited,
diminished or impaired in any way by virtue of any right or remedy Buyer may
have against Sellers under this Agreement or any other provision of this
Agreement, (iii) Buyer shall not be obligated to proceed first against Sellers
before resorting to BRG for payment or performance and (iv) BRG shall not be
entitled to assert as a defense to the enforceability of its covenants and
agreements hereunder any defense of Sellers with respect to any liabilities or
obligations of Sellers to Buyer. BRG shall also join in the Initial Contracts
and any other contracts of sale for the Properties for the same purpose that BRG
has joined in this Agreement.
6
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day
and year first above written.
SELLERS:
BRIAD LODGING GROUP SOMERSET, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BRIAD LODGING GROUP WALLINGFORD, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BRIAD DEVELOPMENT WEST, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BRIAD DEVELOPMENT EAST, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BRIAD RESTAURANT GROUP, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BRG:
BRIAD RESTAURANT GROUP, LLC
7
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: Sole Member
BUYER:
APPLE HOSPITALITY FIVE, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx,
President
ESCROW AGENT:
LANDAMERICA - DALLAS NATIONAL DIVISION
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
Title: VP/Sr. Commercial Counsel
8
EXHIBIT A
Properties
Owner/Contract
Property Rooms Purchaser Location
-------------------------------------- ----- ----------------------- ---------------------------------------------
Homewood Suites - Somerset, NJ 123 Briad Lodging Group Located at the SW quadrant of I-287
Somerset, LLC (Exit 00, Xxxxx 000 Xxxxxx Xxxxxx) and Worlds
Fair Drive on Xxxxxx Street
Homewood Suites - Wallingford, CT 104 Briad Lodging Group Located at the SW quadrant of I-91
Wallingford, LLC and Xxxxx 00 (Xxxxxx Xxxx, Xxxx 00)
Residence Inn - Rocky Hill, CT 96 Briad Development West, Located at the NW quadrant of I-91
LLC and West Street (Exit 23) at Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxx - Xxxxx Xxxxx, XX 123 Briad Development East, Located at the NW quadrant of I-80
LLC and Xxxxx 000 (Xxxx 00)
Xxxxxxxxx Xxx - Xxxxxxxxxxx, XX 120 Briad Development East, Located at the SW quadrant of I-287
LLC and Route 22
Courtyard by Marriott - Xxxxxxxxxx, XX 000 Briad Restaurant Group, Located at the SE quadrant of I-84 and
LLC Route 71 (Exit 40)
9
