ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") dated as of December 18, 1996, is
made by and among XXXXX X. XXXXXXXXX, XXXXX X. XXXXXXXXX, and BOY X.X. XXX XXXX,
trustees of the Charterhouse of Cambridge Trust, and not individually, under a
Declaration of Trust dated December 27, 1963 and recorded at Middlesex South
Deeds Book 11160, Page 340, as amended by Amendment of Declaration of Trust
dated July 8, 1966 and recorded at Middlesex South Deeds Book 11160, Page 359
("Charterhouse"), and SONESTA OF MASSACHUSETTS, INC., a Massachusetts
corporation ("Sonesta," and, together with Charterhouse, collectively,
"Borrower"), SUNAMERICA LIFE INSURANCE COMPANY, an Arizona corporation
("Lender"), and FOWLER, GOEDECKE, XXXXX & X'XXXXXX, INC., a Massachusetts
corporation ("Escrow Agent").
RECITALS
A. Lender has agreed to make a loan to Borrower in the principal amount of
$22,880,000.00 (the "Loan"). The Loan is evidenced by a Promissory Note made by
Borrower to Lender of even date herewith (the "Note") and is secured by a
Mortgage, Security Agreement, Fixture Filing, Financing Statement and Assignment
of Leases and Rents granted by Borrower to Lender of even date herewith (the
"Mortgage"). Capitalized terms not otherwise defined herein shall bear the
definitions set forth in the Mortgage.
B. As a condition precedent to making the Loan, Lender has required that
Borrower deliver the sum of $1,880,000.00 to Escrow Agent to be held by Escrow
Agent on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, Lender and Escrow Agent
agree as follows:
1. Deposit of Funds. Contemporaneously with the execution and delivery
of this Agreement, Borrower has deposited with Escrow Agent the amount of
$1,880,000.00 by wire transfer to Escrow Agent (the "Funds"). By executing
and delivering this Agreement, Escrow Agent acknowledges receipt of the
Funds.
2. Investment of Funds. Escrow Agent shall hold and invest the Funds
in either an interest-bearing, money-market account or accounts at United
States Trust Company in Boston, Massachusetts (or at another financial
institution reasonably acceptable to Borrower and Lender) or United States
government obligations (or both), with Borrower assuming all risk of
investment loss.
3. Borrower to Pay Interest on Funds. The Funds shall constitute
proceeds of the Loan, and Borrower shall pay interest on the Funds from the
date of this Agreement at the rate and in the manner provided in the Note.
4. Instructions for Disbursement.
(a) The Funds, or any portion thereof, shall be delivered to
Borrower upon Escrow Agent's receipt of written instructions from
Lender instructing Escrow Agent to deliver such Funds to Borrower.
(b) The Funds, or any portion thereof, shall be delivered to
Lender upon Escrow Agent's receipt of written instructions from Lender
instructing Escrow Agent to deliver such Funds to Lender.
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(c) If Escrow Agent shall continue to have the Funds, or any
portion thereof, other than the Capital Reserve (as hereinafter
defined), on deposit on or after December 18, 1998 (the "Termination
Date"), Escrow Agent shall deliver such Funds to Lender, promptly upon
notice or demand given or made by Lender.
5. Acquisition of Personal Property and Completion of Work Items. For
each of the two hundred (200) rooms comprising what is commonly referred to
as the East Wing of the Property (each, a "Room"), Borrower shall acquire
all of the personal property (the "Personal Property"), and shall complete
all of the capital improvement work (the "Work Items"), described in
Exhibit A attached hereto on or before the Termination Date. If Borrower's
completion of the Work Items is delayed by inclement weather conditions,
strikes, lock-outs, acts of God, or fire or other casualty, the Termination
Date shall be extended for the period of the delay.
6. Lender's Notices. Lender shall give to Escrow Agent the notice
referred to in Section 4(a) and 4(b) hereof to cause Escrow Agent to
deliver the Funds in accordance with the following terms and conditions:
(a) Upon acquiring all of the Personal Property and performing
all of the Work Items for any Room or Rooms, Borrower may request a
disbursement of Funds (a "Disbursement") in the amount of $8,400.00
for each completed Room; provided, however, that Lender shall not be
obligated to authorize (i) any Disbursement to Borrower more
frequently than monthly (each such date being referred to herein as a
"Disbursement Date"), or (ii) Disbursements of more than a total of
$1,680,000.00 of the Funds, it being the intent of the parties hereto
that Escrow Agent retain $200,000.00 of the Funds (the "Capital
Reserve") under this Agreement for the entire term of the Loan as a
reserve for capital improvements to the Property, and from which
Capital Reserve Lender may, from time to time, in its sole discretion,
authorize Disbursements of all or any portion thereof to Borrower;
(b) Lender shall have no obligation to authorize any Disbursement
to Borrower unless and until Borrower has delivered to Lender a
capital expenditure budget and projected construction schedule
concerning the Personal Property and the Work Items acceptable to
Lender in its reasonable discretion,
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Lender hereby acknowledging that such budget attached hereto as
Exhibit A is acceptable to Lender;
(c) Lender shall have no obligation to authorize any Disbursement
to Borrower if a Default or an Event of Default has occurred and is
continuing under the terms of the Note, Mortgage or any other Loan
Document;
(d) Lender shall have no obligation to authorize any Disbursement
to Borrower unless, for each Room for which Borrower seeks a
Disbursement, Borrower has acquired all of the applicable Personal
Property and all applicable Work Items have been completed in a good
and workmanlike manner on or before the applicable Disbursement Date,
and Lender shall have received all of the following in form
satisfactory to Lender, at Borrower's sole cost and expense, to
evidence such acquisition and completion:
(i) Invoices from all vendors, contractors, subcontractors,
and materialmen relating to or prepared in connection with the
acquisition of the applicable Personal Property and completion of
the applicable Work Items;
(ii) A certificate, signed by Borrower, stating that
Borrower has acquired all applicable Personal Property and all
applicable Work Items have been fully completed;
(iii) Evidence reasonably satisfactory to Lender that all
amounts owed to third parties in connection with the acquisition
of the applicable Personal Property and completion of the
applicable Work Items have been paid (including, without
limitation, a certification signed by Borrower and final lien
waivers from any general contractor and other potential lienor
under Massachusetts law); and
(iv) A favorable report based on an inspection of the
Property by an employee or representative of Escrow Agent, acting
on behalf of Lender, that Borrower has acquired and installed all
applicable Personal Property and all applicable Work Items have
been satisfactorily completed. Escrow Agent
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shall cause its employee or representative to so inspect the
Property reasonably promptly after Escrow Agent's receipt of any
written request for a Disbursement under Section 4(f) below.
(e) Each Disbursement (other than any Disbursement of the Capital
Reserve) shall be in an amount equal to the product derived by
multiplying the number of Rooms completed to the satisfaction of
Lender (as evidenced by the items and inspections required by this
Section 6) by $8,400.00.
(f) Borrower shall make any request for Disbursement of Funds in
writing delivered to both Lender and Escrow Agent, which request shall
include Borrower's certification that it has delivered to Lender, or
Lender has otherwise received, all of the documents and information
required in Sections 6(d)(i)-(iv).
(g) Lender shall have no obligation to make any Disbursement
after the Termination Date.
(h) Lender may authorize Disbursement of all or any portion of
the Capital Reserve in its sole discretion. In connection with any
Disbursement of the Capital Reserve, Lender may require Borrower to
deliver to Lender such information, lien waivers and reports as Lender
may reasonably require, including, without limitation, those items
required by Section 6(d)(i)-(iv) in connection with Disbursements for
Personal Property and Work Items.
(i) Lender shall not deliver the notice referred to in
Section 4(b) hereof to cause Escrow Agent to disburse any Funds
to Lender until the earlier to occur of the following, but upon
the occurrence of any of the following, Lender may, at its
election, deliver to Escrow Agent such notice:
(i) the occurrence of an Event of Default under any Loan
Document; or
(ii) Borrower's failure to satisfy all conditions for any
Disbursement of the Funds (excluding the Capital Reserve) as set
forth in this Section 6 on or before the Termination Date.
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7. Application by Lender. If Escrow Agent delivers the Funds, or any
portion thereof, to Lender, Lender shall (a) apply the Funds to payment of
Borrower's obligations under, and in the manner set forth in, the Note and
the Mortgage, and (b) re-amortize the principal balance of the Note
(following the application of the Funds), at the interest rate set forth in
the Note, over a period equal to the number of months comprising the
original amortization period set forth in the Note minus the number of
regular monthly payments that have been made on the Note prior to the date
of such application of Funds. Borrower shall not be liable for the payment
of any prepayment premium or penalty in connection with the application of
the Funds to the balance of the Note.
8. Interest on Funds. All interest earned on the Funds shall be paid
to Borrower on a quarterly basis on or before fifteen days following the
end of each calendar quarter of each year; provided, however, if Escrow
Agent has received from Lender the notice referred to in Section 4(b) or
4(c) hereof, then all interest theretofore earned that has not been paid to
Borrower shall be paid to Lender. Borrower shall supply to Escrow Agent all
documents and information requested by Escrow Agent, including, without
limitation, W-9 forms and Borrower's taxpayer identification numbers.
9. Grant of Security Interest. As security for the repayment of the
Loan and the performance of all other Secured Obligations (as defined in
the Mortgage), Borrower hereby assigns, pledges, conveys, delivers,
transfers and grants to Lender a first priority security interest in and to
all Borrower's right, title and interest in and to the Funds and any and
all bank or other accounts holding such Funds (the "Accounts"); all rights
to payment from the Accounts and the money deposited therein or credited
thereto (whether now due or in the future due and whether now or in the
future on deposit); all interest thereon; any certificates, instruments and
securities, if any, representing the Funds or the Accounts; all claims,
demands, general intangibles, choses in action and other rights or
interests of Borrower in respect of the Funds and the Accounts; any monies
now or at any time hereafter deposited therein; any increases, renewals,
extensions, substitutions and replacements thereof; and all proceeds of the
foregoing (collectively, the "Collateral").
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10. Default and Remedies. Upon the occurrence of any Event of Default
(as defined in the Mortgage), (a) Borrower shall not be entitled to any
further Disbursement, (b) Lender may declare all Secured Obligations to be
immediately due and payable, and (c) Lender shall be entitled to take
immediate possession and control of the Funds, the Accounts and all other
Collateral, and to pursue all of its rights and remedies under the Loan
Documents, and the remedies to which it is entitled at law and in equity.
11. Interpleader. If any dispute shall develop with respect to the
duties of Escrow Agent under this Agreement, Escrow Agent may deposit the
Funds into a court of competent jurisdiction in Middlesex County,
Massachusetts, and may interplead Lender and Borrower.
12. Indemnification. Borrower shall indemnify Escrow Agent for, and
hold Escrow Agent harmless from, liability incurred by Escrow Agent as a
result of Escrow Agent's having undertaken the obligations contained in
this Agreement (excluding, however, Escrow Agent's gross negligence or
willful misconduct), and shall reimburse Escrow Agent for all of its
reasonable expenses incurred in connection with this Agreement, including,
among other things, reasonable attorneys' fees and court costs.
13. Notice. All notices or instructions required or permitted to be
given under this Agreement shall be in writing, and sent certified or
registered mail, return receipt requested, to the parties at their
addresses set forth below:
If to Borrower:
Charterhouse of Cambridge Trust
Sonesta of Massachusetts, Inc.
c/o Sonesta International Hotels Corporation
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Office of the Treasurer
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If to Lender:
SunAmerica Life Insurance Company
0 XxxXxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Director-Mortgage Lending and
Real Estate
If to Escrow Agent:
Fowler, Goedecke, Xxxxx & X'Xxxxxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
15. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which taken together
shall constitute the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
BORROWER:
/s/
-----------------------------------
Xxxxx X. Xxxxxxxxx, Trustee of
the Charterhouse of Cambridge
Trust, and not individually
/s/
-----------------------------------
Xxxxx X. Xxxxxxxxx, Trustee under
a Grant of Trustee Power,
Authority and Discretion dated
December 5, 1996 from Boy X.X.
xxx Xxxx, Trustee of the
Charterhouse of Cambridge Trust,
and not individually
SONESTA OF MASSACHUSETTS, INC.,
a Massachusetts corporation
By:/s/
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Xxxxx X. Xxxxxxxxx
Vice President
LENDER:
SUNAMERICA LIFE INSURANCE
COMPANY, an Arizona corporation
By:/s/
------------------------------
Name:
---------------------------
Title:
---------------------------
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ESCROW AGENT:
FOWLER, GOEDECKE, XXXXX
& X'XXXXXX, INC., a Massachusetts
corporation
By:/s/
------------------------------
Name:
---------------------------
Title:
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EXHIBIT A
[DESCRIBE PERSONAL PROPERTY / WORK ITEMS]
A-1
