Escrow Agreement for Share Options

The Escrow Agreement for Share Options is a legal document that outlines the terms and conditions for the escrow of certain documents related to a share option agreement. This agreement is entered into between three parties: the grantee, the grantor, and the escrow agent. The purpose of this agreement is to ensure that the documents required under the share option agreement are securely held by the escrow agent until certain conditions are met.

 

The document begins with an introduction that highlights the importance of the agreement. It states that the grantor and the grantee have agreed to appoint the escrow agent to hold the documents and that the documents have been signed but not yet delivered to the relevant counterparties. The agreement then proceeds to define various terms used throughout the document, such as 'anti-money laundering and anti-bribery laws,' 'authorisation,' 'board,' 'business day,' and 'company.'

 

Section 2 of the agreement covers the deposit of documents. It states that the grantor shall deposit or procure to be deposited with the escrow agent the original share certificate, statutory records of the company, printed copies of the memorandum and articles of association, original share certificate book, written undated resignation letter as directors of the company, and undated written resolutions of the board. These documents are essential for the completion of the share option agreement.

 

Section 3 outlines the authority and duties of the escrow agent. It states that the escrow agent shall keep and release the escrow documents in accordance with the instructions provided by the grantee. If the escrow agent receives a release notice and a call option notice from the grantee by the long stop date, it shall bring the escrow documents to the specified location for completion of the sale and purchase of the option shares and release the documents to the grantee. If the escrow agent does not receive the required notices by the long stop date, it shall release the documents to the grantor.

 

Section 4 disclaims the escrow agent's liabilities. It states that the escrow agent shall not be liable for any action taken or omitted by it according to the terms of the agreement and at the direction of the grantor or the grantee. The grantor and the grantee shall indemnify the escrow agent against all expenses, liabilities, claims, and demands arising from or in connection with the agreement, except for gross negligence, fraud, or wilful misconduct.

 

Section 5 addresses anti-money laundering laws. It confirms that each party is not a restricted person and has complied with applicable anti-money laundering and anti-corruption laws.

 

Section 6 covers the costs and expenses of the escrow agent, stating that all costs and expenses incurred by the escrow agent in the performance of its obligations under the agreement shall be borne by the grantee.

 

Section 7 provides indemnity to the escrow agent. It states that each party waives its rights to claim against the escrow agent and undertakes to indemnify and hold the escrow agent harmless against all claims, actions, proceedings, liabilities, losses, damages, costs, and expenses incurred in respect of the agreement, except for fraud, negligence, or wilful misconduct.

 

Section 8 prohibits the assignment of rights under the agreement without the prior written consent of the other parties.

 

Section 9 allows the agreement to be executed in counterparts, with each counterpart constituting one and the same instrument.

 

Section 10 contains general provisions, including further assurance, entire agreement, remedies cumulative, waivers, severability, variation, assignment, counterparts, legal relationship, punctual performance, and waiver of immunity.

 

Section 11 states that the agreement shall be governed by the laws of a specific jurisdiction and any disputes shall be subject to the jurisdiction of the courts of that jurisdiction.

 

Section 12 outlines the notice and service provisions, including the addresses of the parties and the methods of service.

 

Section 13 states that no rights under the agreement can be enforced by a third party.

 

The agreement concludes with the signatures of the duly authorized representatives of the parties and the date of execution.

How to use this document?

To use the Escrow Agreement for Share Options, follow these steps:

1. Deposit the required documents: The grantor should deposit or procure to be deposited with the escrow agent the original share certificate, statutory records of the company, printed copies of the memorandum and articles of association, original share certificate book, written undated resignation letter as directors of the company, and undated written resolutions of the board.

2. Provide release notice and call option notice: If the grantee wishes to exercise the call option under the share option agreement, they should send a release notice to the escrow agent, accompanied by a call option notice duly executed by the grantee. These notices should be sent before the long stop date.

3. Complete the sale and purchase of option shares: If the escrow agent receives the required notices from the grantee by the long stop date, they should bring the escrow documents to the specified location for completion of the sale and purchase of the option shares. The documents will be released to the grantee upon completion.

4. Release documents to the grantor: If the escrow agent does not receive the required notices from the grantee by the long stop date, they should release the documents to the grantor.

5. Indemnify the escrow agent: The grantor and the grantee should indemnify the escrow agent against all expenses, liabilities, claims, and demands arising from or in connection with the agreement, except for gross negligence, fraud, or wilful misconduct.

6. Comply with anti-money laundering laws: Each party should ensure that they are not a restricted person and have complied with applicable anti-money laundering and anti-corruption laws.

7. Bear the costs and expenses: The grantee should bear all costs and expenses incurred by the escrow agent in the performance of its obligations under the agreement.

8. Waive rights against the escrow agent: Each party should waive its rights to claim against the escrow agent and indemnify and hold the escrow agent harmless, except for fraud, negligence, or wilful misconduct.

9. Obtain consent for assignment: No party should assign, transfer, charge, or otherwise deal with its rights under the agreement without the prior written consent of the other parties.

10. Execute counterparts: The agreement may be executed in any number of counterparts, with each counterpart constituting one and the same instrument.

11. Follow the general provisions: Parties should perform all further acts and things, execute and deliver further documents, and comply with the general provisions of the agreement.

12. Govern the agreement: The agreement shall be governed by the laws of a specific jurisdiction, and any disputes shall be subject to the jurisdiction of the courts of that jurisdiction.

Please note that this guidance is a summary and does not constitute legal advice. It is recommended to consult with a legal professional for a comprehensive understanding of the agreement and its implications.