SAME INSTITUTION DEBT REFINANCING
ESCROW AGREEMENT
SBA Loan #SBA Loan Name
SBA Loan Approval Date
Borrower and Borrower’s Address
Operating Company
Refinanced Loan Amount / $
CDCand CDC’s Address
504 Loan Amount / $
Third Party Lender and Third Party Lender’s Address
Third Party Loan Amount / $
Escrow Agent and Escrow Agent’s Address
Date
THIS ESCROW AGREEMENT (the “Agreement”) is made as of the date set forth above by and among Borrower, Third Party Lender, CDC and Escrow Agent.
RECITALS
WHEREAS, Borrower has certain debt which it desires to refinance (the “Refinanced Loan”) in the current principal amount of $______; and
WHEREAS, the Refinanced Loan is Same Institution Debt of the Third Party Lender (i.e., the Refinanced Loan is debt of the Third Party Lender or its affiliates); and
WHEREAS, Third Party Lender is willing to fund a loan to Borrower (the “Third Party Loan”) for the purpose of refinancing part of the Refinanced Loan; and
WHEREAS, pursuant to that certain Authorization for Debenture Guarantee (SBA 504 Loan) as amended, SBA Loan No. ______(the “Authorization”), CDC will sell a debenture, guaranteed by the U.S. Small Business Administration (“SBA”), to fund a loan to Borrower (the “504 Loan”) for the purpose of refinancing part of the Refinanced Loan; and
WHEREAS, the Authorization provides for an escrow account to be established rather than interim financing; and
WHEREAS, Borrower, Third Party Lender and CDC have agreed to establish an escrow account (the “Escrow Account”) with the Escrow Agent.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the mutual covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
I.APPOINTMENT OF ESCROW AGENT
Borrower, Third Party Lender and CDC hereby appoint ______as the Escrow Agent. Escrow Agent hereby agrees to serve as Escrow Agent in accordance with this Agreement. Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against Escrow Agent.
II.ESCROW ACCOUNT
[Check the following paragraph if all or part of Borrower’s Contribution is cash; otherwise, mark this paragraph as N/A]
_____Borrower’s Contribution. If all or part of Borrower’s Contribution is cash, Borrower hereby delivers or has delivered the sum of ______and 00/__ Dollars ($______.00) (the “Borrower’s Contribution”) to Escrow Agent, and Escrow Agent accepts and agrees to hold the Borrower’s Contribution in escrow. The Borrower’s Contribution shall be placed in Escrow Agent's trust account or such other account as Escrow Agent may select (the “Escrow Account”) and may be commingled with other monies being held in escrow by Escrow Agent.
Net Debenture Proceeds and Notice of Funding 504 Loan. On the date that CDC’s debenture funds the 504 Loan, CDC will cause the Net Debenture Proceeds (as defined in the Authorization) to be wired to Escrow Agent and Escrow Agent will place the Net Debenture Proceeds in the Escrow Account. CDC will give prior notice to Escrow Agent, Borrower and Third Party Lender of the date that the CDC debenture and 504 Loan will fund.
Escrowed Funds. The Borrower’s Contribution and the Net Debenture Proceeds collectively shall be the “Escrowed Funds.”
III.DISBURSEMENT BY ESCROW AGENT; APPLICATION OF ESCROWED FUNDS
NADCO Sample Debt Refinancing EscrowAgreement (05/06/11)1
Approval to Release Escrowed Funds. SBA will give its approval to release the Escrowed Funds through SBA District Counsel’s written approval of CDC’s closing package, including but not limited to, the SBA Form 2416, Lender Certification for Refinanced Loan. CDC will give notice, on or before the date of the funding of the CDC debenture and 504 Loan, to Escrow Agent and Third Party Lender that the release of the Escrowed Funds to Third Party Lender has been approved by CDC, provided that: (1) CDC has determined that the liens on collateral securing the 504 Loan are in the lien positions required by the Authorization, (2) SBA District Counsel has approved CDC’s closing package, and (3) CDC has determined that there is no unremedied substantial adverse change in the condition of Borrower and Operating Company.
Disbursement of Escrowed Funds to Third Party Lender. Upon receipt of CDC’s notice of approval to release the Escrowed Funds and receipt of the Net Debenture Proceeds, Escrow Agent shall disburse the Escrowed Funds from the Escrow Account to Third Party Lender. Disbursement may be by wire or checksigned by Escrow Agent or, if Third Party Lender is the Escrow Agent, transfer of the Escrowed Funds internally.
Payoff of Refinanced Loan. Upon receipt of the Escrowed Funds, Third Party Lender shall promptly apply the Escrowed Funds and the proceeds of the Third Party Loan to payment of the Refinanced Loan. Third Party Lender also shall collect payment for any accrued but outstanding interest, fees and other charges on the Refinanced Loan from Borrower and promptly apply those monies so that, upon application of the Escrowed Funds, the Refinanced Loan is satisfied in full.
Escrowed Funds Must Be Disbursed Within Six Months After Loan Approval. The Escrowed Funds must be disbursed within six (6) months after the Loan Approval Date, unless the Director, Office of Financial Assistance, has approved an extension for good cause in advance and in writing. In the event that the Escrowed Funds are not disbursed within six months after the Loan Approval Date, Escrow Agent must notify CDC and return the Net Debenture Proceeds to SBA as instructed by CDC and disburse the Borrower’s Contribution, if any, to Borrower.
Use of Escrowed Funds. The Escrowed Funds may be used for no purpose other than as set forth in this Agreement.
No Duty of Escrow Agent to Follow Distribution of Escrowed Funds. Upon release of the Escrowed Funds pursuant to this Section, this Agreement shall have no further force and effect, and it is expressly understood that Escrow Agent shall have no duty to inquire into or follow the distribution of the Escrowed Funds once released.
Escrow Agent’s Attorney. Escrow Agent may perform its duties hereunder either directly or by and through its attorneys and hereby covenants and agrees that it shall be responsible for any misconduct or negligence on its part or on the part of any attorney appointed by it hereunder.
IV.NOTICES
Any and all notices which shall or may be given under this Agreement shall be deemed to have been given only if in writing and sent either by (1)hand-delivery, (2) United States mail, postage paid, (3) telefacsimile, electronic mail or similar electronic means, or (4) overnight U.S. Express mail or overnight letter (commercial courier) to the party's address as set forth above, or to such other address as the party to receive any such notice may have designated by notice to the other parties.
V.MISCELLANEOUS
NADCO Sample Debt Refinancing EscrowAgreement (05/06/11)1
This Agreement shall be governed by and construed in accordance with the laws of the State of ______, exclusive of ______choice of law provisions; may be amended only by a written instrument executed by all the parties hereto; shall be binding upon and inure to the benefit of the heirs, executors, administrators, personal representatives, successors and/or assigns of the parties hereto; and may be executed in separate counterparts, each of which shall be deemed to be an original, but all of which together shall constitute the same instrument.
VI.INDEMNITY
Borrower agrees to indemnify and hold harmless Escrow Agent and CDC and their respective directors, officers, members, managers, agents and employees from any and all costs, expenses, claims or damages arising from this Agreement or the performance of Escrow Agent and/or CDC's duties hereunder, excepting such costs, expenses, claims or damages arising from the gross negligence or willful misconduct of Escrow Agent or CDC and/or their respective directors, officers, members, managers, agents and employees.
IN WITNESS WHEREOF, the parties hereto have caused to be executed this Agreement as of the date above.
INSERT ENFORCEABLE SIGNATURE BLOCKS FOR
BORROWER
THIRD PARTY LENDER
CDC
AND ESCROW AGENT
NADCO Sample Debt Refinancing EscrowAgreement (05/06/11)1