Escrow Agreement Template

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XAMPLE OF
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46 CFR 540.5(b)
NDER
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made as of this __ day of (month & year), by and
between (Customer), a corporation/company having a place of business at
(“Customer”)
__________ and (Banking Institution name & address)
a banking corporation, having a place of business at (“Escrow Agent”).
Witnesseth:
WHEREAS, Customer wishes to establish an escrow account in order to provide
for the indemnification of passengers in the event of non-performance of water
transportation to which such passengers would be entitled, and to establish Customer’s
financial responsibility therefore; and
WHEREAS, Escrow Agent wishes to act as Escrow Agent of the escrow account
established hereunder;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Customer has established on (month, & year) (the “Commencement Date”)an
escrow account with the Escrow Agent which escrow account shall hereafter be
governed by the terms of this Agreement (the “Escrow Account”). Escrow Agent shall
maintain the Escrow Account in its name, in its capacity as Escrow Agent.
2. Customer will determine, as of the date prior to the Commencement Date, the
amount of unearned passenger revenue, including any funds to be transferred from any
predecessor Escrow Agent. Escrow Agent shall have no duty to calculate the amount of
unearned passenger revenue. Unearned Passenger Revenues are defined as that
passenger revenue received for water transportation and all other accommodations,
services and facilities relating thereto not yet performed. 46 C.F.R. 540.2 (i).
3. Customer will deposit on the Commencement Date into the Escrow Account cash
in an amount equal to the amount of Unearned Passenger Revenue determined under
Paragraph 2 above plus a cash amount (“the Fixed Amount”) equal to (10 percent of the
Customer’s highest Unearned Passenger Revenue for the prior two fiscal years. For
periods on or after (year of agreement (2009)), the Fixed Amount shall be determined
by the Commission on an annual basis, in accordance with 46 CFR Part 540.
A
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540—E
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PPENDIX
TO
UBPART
OF
ART
XAMPLE OF
SCROW
GREEMENT FOR
SE
U
46 CFR 540.5(b)
NDER
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made as of this __ day of (month & year), by and
between (Customer), a corporation/company having a place of business at
(“Customer”)
__________ and (Banking Institution name & address)
a banking corporation, having a place of business at (“Escrow Agent”).
Witnesseth:
WHEREAS, Customer wishes to establish an escrow account in order to provide
for the indemnification of passengers in the event of non-performance of water
transportation to which such passengers would be entitled, and to establish Customer’s
financial responsibility therefore; and
WHEREAS, Escrow Agent wishes to act as Escrow Agent of the escrow account
established hereunder;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Customer has established on (month, & year) (the “Commencement Date”)an
escrow account with the Escrow Agent which escrow account shall hereafter be
governed by the terms of this Agreement (the “Escrow Account”). Escrow Agent shall
maintain the Escrow Account in its name, in its capacity as Escrow Agent.
2. Customer will determine, as of the date prior to the Commencement Date, the
amount of unearned passenger revenue, including any funds to be transferred from any
predecessor Escrow Agent. Escrow Agent shall have no duty to calculate the amount of
unearned passenger revenue. Unearned Passenger Revenues are defined as that
passenger revenue received for water transportation and all other accommodations,
services and facilities relating thereto not yet performed. 46 C.F.R. 540.2 (i).
3. Customer will deposit on the Commencement Date into the Escrow Account cash
in an amount equal to the amount of Unearned Passenger Revenue determined under
Paragraph 2 above plus a cash amount (“the Fixed Amount”) equal to (10 percent of the
Customer’s highest Unearned Passenger Revenue for the prior two fiscal years. For
periods on or after (year of agreement (2009)), the Fixed Amount shall be determined
by the Commission on an annual basis, in accordance with 46 CFR Part 540.
4. Customer acknowledges and agrees that until such time as a cruise has been
completed and Customer has taken the actions described herein, Customer shall not be
entitled, nor shall it have any interest in any funds deposited with Escrow Agent to the
extent such funds represent Unearned Passenger Revenue.
5. Customer may, at any time, deposit additional funds consisting exclusively of
Unearned Passenger Revenue and the Fixed Amount, into the Escrow Account and
Escrow Agent shall accept all such funds for deposit and shall manage all such funds
pursuant to the terms of this Agreement.
6. After the establishment of the Escrow Account, as provided in Paragraph 1,
Customer shall on a weekly basis on each (identify day of week), or if Customer or
Escrow Agent is not open for business on (identify day of week) then on the next
business day that Customer and Escrow Agent are open for business recompute the
amount of Unearned Passenger Revenue as of the close of business on the preceding
business day (hereinafter referred to as the “Determination Date”) and deliver a
Recomputation Certificate to Escrow Agent on such date.
In each such weekly
recomputation Customer shall calculate the amount by which Unearned Passenger
Revenue has decreased due to (i) the cancellation of reservations and the
corresponding refund of monies from Customer to the persons or entities canceling
such reservations; (ii) the amount which Customer has earned as revenue as a result of
any cancellation fee charged upon the cancellation of any reservations; (iii) the amount
which Customer has earned due to the completion of cruises; and (iv) the amount by
which Unearned Passenger Revenue has increased due to receipts from passengers
for future water transportation and all other accommodations, services and facilities
relating thereto and not yet performed.
The amount of Unearned Passenger Revenue as recomputed shall be compared
with the amount of Unearned Passenger Revenue for the immediately preceding period
to determine whether there has been a net increase or decrease in Unearned
Passenger Revenue. If the balance of the Escrow Account as of the Determination
Date exceeds the sum of the amount of Unearned Passenger Revenue, as recomputed,
plus the Fixed Amount then applicable, then Escrow Agent shall make any excess funds
in the Escrow Account available to Customer. If the balance in the Escrow Account as
of the Determination Date is less than the sum of the amount of Unearned Passenger
Revenue, as recomputed, plus an amount equal to the Fixed Amount, Customer shall
deposit an amount equal to such deficiency with the Escrow Agent. Such deposit shall
be made in immediately available funds via wire transfer or by direct transfer from the
Customer’s U.S. Bank checking account before the close of business on the next
business day following the day on which the Recomputation Certificate is received by
Escrow Agent. The Escrow Agent shall promptly notify the Commission within two
business days any time a deposit required by a Recomputation Certificate delivered to
the Escrow Agent is not timely made.
7. Customer shall furnish a Recomputation Certificate, in substantially the form
attached hereto as Annex 1, to the Federal Maritime Commission (the “Commission”)
and to the Escrow Agent setting forth the weekly recomputation of Unearned Passenger
Revenue required by the terms of Paragraph 6 above. Customer shall mail or fax to the
Commission and deliver to the Escrow Agent the required Recomputation Certificate
before the close of business on the business day on which Customer recomputes the
amount of Unearned Passenger Revenue. Notwithstanding any other provision herein
to the contrary, Escrow Agent shall not make any funds available to Customer out of the
Escrow Account because of a decrease in the amount of Unearned Passenger
Revenue or otherwise, until such time as Escrow Agent receives the above described
Recomputation Certificate from Customer, which Recomputation Certificate shall
include the Customer’s verification certification in the form attached hereto as Annex 1.
The copies of each Recomputation Certificate to be furnished to the Commission shall
be mailed to the Commission at the address provided in Paragraph 25 herein. If copies
are not mailed to the Commission, faxed or e-mailed copies shall be treated with the
same legal effect as if an original signature was furnished. No repayment of the Fixed
Amount may be made except upon approval of the Commission.
Within fifteen (15) days after the end of each calendar month, Escrow Agent shall
provide to Customer and to the Commission at the addresses provided in Paragraph 25
below, a comprehensive statement of the Escrow Account.
Such statement shall
provide a list of assets in the Escrow Account, the balance thereof as of the beginning
and end of the month together with the original cost and current market value thereof,
and shall detail all transactions that took place with respect to the assets and
investments in the Escrow Account during the preceding month.
8. At the end of each quarter of Customer’s fiscal year, Customer shall cause the
independent auditors then acting for it to conduct an examination in accordance with
generally accepted auditing standards with respect to the weekly Recomputation
Certificates furnished by Customer of the Unearned Passenger Revenues and the
amounts to be deposited in the Escrow Account and to express their opinion within
forty-five (45) days after the end of such quarter as to whether the calculations at the
end of each fiscal quarter are in accordance with the provisions of Paragraph 6 of this
Agreement. The determination of Unearned Passenger Revenue of such independent
auditors shall have control over any computation of Unearned Passenger Revenue by
Customer in the event of any difference between such determinations. To the extent
that the actual amount of the Escrow Account is less than the amount determined by
such independent auditors to be required to be on deposit in the Escrow Account,
Customer shall immediately deposit an amount of cash into the Escrow Account
sufficient to cause the balance of the Escrow Account to equal the amount determined
to be so required. Such deposit shall be completed no later than the business day after
receipt by the Escrow Agent of the auditor’s opinion containing the amount of such
deficiency.
The opinion of such independent auditors shall be furnished by such auditors directly
to Customer, to the Commission and to the Escrow Agent at their addresses contained
in this Agreement. In the event that a required deposit to the Escrow Agent is not made
within one Business Day after receipt of an auditor’s report or a Recomputation
Certificate, Escrow Agent shall send notification to the Commission within the next two
Business Days.
9.
Escrow Agent shall invest the funds in the Escrow Account in Qualified
Investments as directed by Customer in its sole and absolute discretion. “Qualified
Investments” means, to the extent permitted by applicable law:
(a) Government obligations or obligations of any agency or instrumentality of the
United States of America;
(b) Commercial paper issued by a United States company rated in the two highest
numerical “A” categories (without regard to further gradation or refinement of such rating
category) by Standard & Poor’s Corporation, or in the two highest numerical “Prime”
categories (without regard to further gradation or refinement of such rating) by Moody’s
Investor Services, Inc.;
(c) Certificates of deposit and money market accounts issued by any United States
bank, savings institution or trust company, including the Escrow Agent, and time
deposits of any bank, savings institution or trust company, including the Escrow Agent,
which are fully insured by the Federal Deposit Insurance Corporation;
(d)
Corporate bonds or obligations which are rated by Standard & Poor’s
Corporation or Moody’s Investors Service, Inc. in one of their three highest rating
categories (without regard to any gradation or refinement of such rating category by a
numerical or other modifier); and
(e) Money market funds registered under the Federal Investment Company Act of
1940, as amended, and whose shares are registered under the Securities Act of 1933,
as amended, and whose shares are rated “AAA”, “AA+” or “AA” by Standard & Poor’s
Corporation.
10. All interest and other profits earned on the amounts placed in the Escrow
Account shall be credited to Escrow Account.
11. This Agreement has been entered into by the parties hereto, and the Escrow
Account has been established hereunder by Customer, to establish the financial
responsibility of Customer as
the owner, operator or charterer of the passenger
th
vessel(s) (see Exhibit A), in accordance with Section 3 of Public Law 89-777, 89
Congress, approved November 6, 1966 (the “Act”). The Escrow Account shall be held
by Escrow Agent in accordance with the terms hereof, to be utilized to discharge
Customer’s legal liability to indemnify the passengers of the named vessel(s) for non-
performance of transportation within the meaning of Paragraph 3 of the Act.
The
Escrow Agent shall make indemnification payments pursuant to written instructions from
Customer, on which the Escrow Agent may rely, or in the event that such legal liability
has not been discharged by Customer within twenty-one (21) days after any such
passenger has obtained a final judgment (after appeal, if any) against Customer from a
United States Federal or State Court of competent jurisdiction the Escrow Agent is
authorized to pay funds out of the Escrow Account, after such twenty-one day period, in
accordance with and pursuant to the terms of an appropriate order of a court of
competent jurisdiction on receipt of a certified copy of such order.
As further security for Customer’s obligation to provide water transportation to
passengers holding tickets for transportation on the passenger vessel(s) (see Exhibit A)
Customer will pledge to each passenger who has made full or partial payment for future
passage on the named vessel(s) an interest in the Escrow Account equal to such
payment.
Escrow Agent is hereby notified of and acknowledges such pledges.
Customers’ instructions to Escrow Agent to release funds from the Escrow Account as
described in this Agreement shall constitute a certification by Customer of the release of
pledge with respect to such funds due to completed, canceled or terminated cruises.
Furthermore, Escrow Agent agrees to hold funds in the Escrow Account until directed
by Customer or a court order to release such funds as described in this Agreement.
Escrow Agent shall accept instructions only from Customer, acting on its own behalf or
as agent for its passengers, and shall not have any obligations at any time to act
pursuant to instructions of Customer’s passengers or any other third parties except as
expressly described herein. Escrow Agent hereby waives any right of offset to which it
is or may become entitled with regard to the funds on deposit in the Escrow Account
which constitute Unearned Passenger Revenue.
12. Customer agrees to provide to the Escrow Agent all information necessary to
facilitate the administration of this Agreement and the Escrow Agent may rely upon any
information so provided.
13.
Customer hereby warrants and represents that it is a corporation in good
standing in its State of organization and that is qualified to do business in the State of
. Customer further warrants and represents that (i) it possesses full power and authority
to enter into this Agreement and fulfill its obligations hereunder and (ii) that the
execution, delivery and performance of this Agreement have been authorized and
approved by all required corporate actions.
14. Escrow Agent hereby warrants and represents that it is a national banking
association in good standing. Escrow Agent further warrants and represents that (i) it
has full power and authority to enter into this Agreement and fulfill its obligations
hereunder and (ii) that the execution, delivery and performance of this Agreement have
been authorized and approved by all required corporate actions.
15. This Agreement shall have a term of one (1) year and shall be automatically
renewed for successive one (1) year terms unless notice of intent not to renew is
delivered to the other party to this Agreement and to the Commission at least 90 days
prior to the expiration of the current term of this Agreement. Notice shall be given by
certified mail to the parties at the addresses provided in Paragraph 25 below. Notice
shall be given by certified mail to the Commission at the address specified in this
Agreement.

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