Escrow Agreement

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This Escrow Agreement is between a seller and purchaser of a business and an escrow agent who will hold funds for the parties until the business purchase has been concluded. This agreement sets out the specific terms of the arrangement including how the escrow funds will be disbursed. This form is for use in all states.

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This Escrow Agreement is between the seller of a business, the buyer of the business and an escrow agent. Under this agreement, the escrow agent agrees to hold a certain sum of money in an escrow account until the buyer and seller agree to release these funds once all terms regarding the business purchase are concluded. The escrow agent agrees to invest the escrow funds in an interest bearing account and to disburse these funds only upon explicit written directions to do so. This agreement sets out the terms of this arrangement including the amount of the funds and how the escrow funds will be delivered to the agent. It is crucial this type of agreement be set forth in writing. A written Escrow Agreement will prove invaluable in the event there are disagreements between the parties regarding the funds in escrow.

This Escrow Agreement includes the following provisions:
  • Parties: Sets forth the name of the seller, the buyer and the escrow agent;
  • Funds in Escrow/Delivery: The set amount of funds to be deposited into the escrow account and how the funds will be delivered to escrow agent (certified check, wire transfer);
  • Investment of Escrow Funds: Sets forth that escrow agent will invest the funds in an interest bearing account selected by the seller and that interest earned on these funds will be held or reinvested until disbursed;
  • Disbursement of Funds: Scenarios under which funds will be disbursed (through direction of seller to buyer, at request of buyer, joint direction of both buyer and seller, and disbursement of funds after first anniversary date);
  • Duties and Responsibilities: Sets out that escrow agent shall have no duties or responsibilities regarding the account other than those set forth in this agreement;
  • Resignation or Removal: Sets forth that escrow agent may resign or be discharged from its duties under this agreement by giving sixty days written notice to buyer and seller at which time a successor escrow agent will be appointed;
  • Signatures: The seller, buyer and escrow agent must sign the agreement in the presence of witnesses;
  • Schedules/Disbursement of Funds: Schedules A, B and C set out the specific directions regarding disbursement of the escrow funds.

Protect your Rights and your Business by using our attorney-prepared forms.

This attorney-prepared packet contains:
  1. General Instructions
  2. Escrow Agreement
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Escrow Agreement

 

 

THIS AGREEMENT made as of [Date of Agreement]
A M O N G:
[NAME OF SELLER], of [Address of Seller]
(the Seller”)
- and -
[NAME OF BUYER], of [Address of Buyer]
(the "Buyer")
- and -
[NAME OF ESCROW AGENT], [Address of Escrow Agent]
(the "Escrow Agent")
WHEREAS:
(A)   Concurrently with the execution and delivery of this Agreement, the Buyer is acquiring from the Seller all of the issued and outstanding shares in the capital of [Name of Corporation's Shares Being Acquired] (the "Corporation”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) dated concurrently herewith made among the Seller, the Buyer and the Corporation;
(B)   Pursuant to the terms of the Purchase Agreement, the sum of (US) $[Amount to be held in Escrow (ie. $500,000)] is to be delivered to the Escrow Agent and held in accordance with the terms of the Escrow Agreement; and
(C)   The Escrow Agent has agreed to act as escrow agent for the purpose of holding and disbursing the Escrow Funds (as hereinafter defined) pursuant to the terms of this Agreement.
NOW THEREFORE in consideration of the entering into of the Purchase Agreement, the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:
Article 1    - Interpretation
1.1   Definitions. For the purposes of this Agreement, capitalized terms used in this Agreement and not otherwise defined have the meanings specified in the Purchase Agreement, and the following words and phrases shall have the following respective meanings:
(a)   Business Day” means any day of the year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)];
(b)   Term” has the meaning given to it in section 4.1.
Article 2    - Receipt of Escrow Funds
2.1   Delivery of Escrow Funds. The Escrow Agent acknowledges receipt from the Buyer of a certified check payable to it or a wire transfer in the sum of (US) $[Amount to be held in Escrow (ie. $500,000)] (the “Escrow Funds”) which amount, together with all interest earned thereon, shall be held and dealt with by the Escrow Agent in accordance with the terms of this Agreement.
2.2   Investment of Escrow Funds. Until such time as the Escrow Funds are distributed by the Escrow Agent as provided herein, the Escrow Agent shall invest the Escrow Funds in an interest bearing account (or other interest bearing instruments or deposits) of a federally-insured state or national bank selected in writing by the Seller, and in default of such selection, the [Name of Default Bank]. The interest earned on the investment of the Escrow Funds shall be held and reinvested from time to time in accordance with the forgoing provisions, and a separate account shall be maintained by the Escrow Agent in its books for the Escrow Funds.
2.3   Additional Instructions.  The Seller and the Buyer shall, promptly upon request by the Escrow Agent, execute such additional escrow instructions as may be reasonably required by the Escrow Agent, including the Escrow Agents standard printed conditions and stipulations with respect to escrows concerning the disbursement of funds; provided, however, that if there is any conflict between the provisions of this Agreement and the provisions of any such additional instructions, the provisions of this Agreement shall control and prevail.
Article 3    - Disbursement of Escrow Funds
3.1   Disbursement to Buyer at the Direction of Seller. Upon receipt of a written irrevocable direction in the form of Schedule “A” hereto (a “Sellers Direction”), signed by the Seller, the Escrow Agent shall, within five (5) Business Days after receipt of the Sellers Direction, deliver to the Buyer the amount from the Escrow Funds specifically referred to in the Sellers Direction.
3.2   Disbursement at Joint Direction of Seller and Buyer. Upon receipt of a written irrevocable direction in the form of Schedule “B” hereto (a “Joint Direction”), signed by all the Seller and the Buyer, the Escrow Agent shall, within five (5) Business Days after receipt of the Joint Direction, deliver the amount from the Escrow Funds specifically referred to in the Joint Direction as per the instructions on the Joint Direction.
3.3   Disbursement at Request of Buyer. Upon receipt of a written request in the form of Schedule “C” hereto (an “Escrow Release Request”) at any time prior to the first (1st) anniversary date of the date of this Agreement, signed by the Buyer, certifying that the Buyer is making a claim for indemnification pursuant to the Purchase Agreement and briefly describing the nature of the claim for indemnification, the Escrow Agent shall, within five (5) Business Days after receipt of the Escrow Release Request, send by certified mail to the Seller a photostatic copy of the Escrow Release Request. The Seller shall have fifteen (15) days from the date on which Seller receive the Escrow Release Request (the “Objection Period”) to notify the Escrow Agent of their objection (an “Objection Notice”) to the release of the Escrow Funds referred to in the Escrow Release Request to the Buyer and to request that the issue of Buyers entitlement to the said Escrow Funds be submitted to arbitration in accordance with the following provisions:
(a)   If Seller shall send an Objection Notice to the Escrow Agent during the Objection Period, the matter shall be submitted to, and settled by arbitration under the Commercial Rules of the American Arbitration Association. One arbitrator shall be selected by mutual agreement of the parties. If the parties are unable to mutually agree upon the sole arbitrator within fifteen (15) days after the end of the Objection Period, then three (3) arbitrators shall be selected, and the Buyer and Seller shall each select one arbitrator and the two chosen arbitrators shall select the third arbitrator, or failing agreement on the selection of the third arbitrator, the American Arbitration Association shall select the third arbitrator. Unless otherwise agreed by the Buyer and the Seller, arbitration will take place in [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)], U.S.A.  Any court having jurisdiction over the matter may enter judgment on the award of the arbitrator(s). Service of a petition to confirm the arbitration award may be made by First Class mail or by commercial express mail, to the attorney for the party or, if unrepresented, to the party at the last known business address. The decision of the arbitrator(s) shall be binding and conclusive on all parties involved, and judgment upon their decision may be entered in a court of competent jurisdiction. All costs of the arbitration incurred by the Escrow Agent, including reasonable attorney's fees and costs, shall be paid as directed by the arbitrator(s), provided however that if the arbitration is settled prior to a decision by the arbitrators, the Seller and the Buyer shall each pay 50% of all such costs.
(b)   The Seller may, at any time prior to the commencement of arbitration proceedings, notify the Escrow Agent that the Seller has withdrawn the Objection Notice. Upon receipt of any such notice from the Seller, the Escrow Agent shall reasonably promptly deliver the Escrow Funds referred to in the Escrow Release Request to the Buyer in accordance with the instructions specified in the Escrow Release Request.
If, at the end of the Objection Period, the Escrow Agent has not received an Objection Notice from Seller, then the Escrow Agent shall reasonably promptly deliver the Escrow Funds to the Buyer in accordance with the instructions specified in the Escrow Release Request.
3.4   Disbursement following First Anniversary Date. If, on the first (1st) anniversary date of the date of this Agreement, the Escrow Funds (inclusive of interest thereon) have not been fully disbursed by the Escrow Agent, then the Escrow Agent shall, following settlement of any outstanding Escrow Release Request in accordance with the procedures outlined in section 3.3, and after payment of any amount from the Escrow Funds which is required to satisfy any Escrow Release Request in accordance with the procedures outlined in section 3.3, remit the balance of the Escrow Funds (inclusive of interest thereon), if any, to the Seller.
3.5   Reporting. The Escrow Agent shall, from time to time, at the request of the Seller or the Buyer, advise the requesting party as to the balance of the Escrow Funds then being held by the Escrow Agent (inclusive of interest). Upon the close of escrow, the Escrow Agent shall prepare an accounting or settlement setting forth, among other things, the disbursement of the Escrow Funds and interest thereon and the payment of the Escrow Agents fees and costs.
3.6   No Limitation on Liability.  Nothing in this Agreement will be construed as limiting the liability of the Seller under the Purchase Agreement to the amount of the Escrow Funds, nor will that amount be considered as liquidated damages for any breach by the Seller under the Purchase Agreement.
Article 4    - Term
4.1   Term of Agreement. This Agreement shall commence on the date first above written and shall continue thereafter until all Escrow Funds have been disbursed by the Escrow Agent in accordance with the terms and conditions hereof (the “Term”).
Article 5    - Escrow Agent
5.1   Duties and Responsibilities. The Escrow Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall have no duty to enforce any obligation of any person, other than as provided herein.
5.2   No Liability. The Escrow Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith, and in the exercise of its own best judgment, and shall not be held liable for any error in judgment made in good faith, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts or acted intentionally in bad faith.
5.3   Reliance. The Escrow Agent may rely, and shall be protected in acting, upon any judgment, order, notice, demand, direction, certificate, or other instrument, paper or document which may be submitted to it in connection with its duties hereunder and which is believed by the Escrow Agent to be genuine and signed or presented by the proper person(s), and may accept the same as sufficient evidence of the facts stated therein. The Escrow Agent shall in no way be bound to call for further evidence (whether as to due execution, validity or effectiveness, or the jurisdiction of any court, or as to the truth of any fact), and shall not be responsible for any loss that may be occasioned by its failing to do so.
5.4   Compliance with Judgments and Orders. In the event that the Escrow Agent shall become involved in any arbitration or litigation relating to the Escrowed Funds, the Escrow Agent is authorized to comply with any decision reached through such arbitration or litigation.
5.5   Non-Action. If the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto or from a third person with respect to any matter arising pursuant to this Agreement which, in its opinion, are in conflict with any provision of this Agreement, it shall be entitled to refrain from taking any action authorized and directed hereunder until it shall be authorized or directed otherwise in writing by both the Seller and the Buyer, or by an order of a court of competent jurisdiction from which no further appeal may be taken.
5.6   Escrow Agent's Fees, Costs and Expenses. The Seller and the Buyer hereby irrevocably authorize and direct the Escrow Agent to withhold and pay to itself, from the Escrow Funds, the Escrow Agents reasonable fees, expenses and disbursements incurred by it in connection with the performance of its obligations hereunder, prior to any disbursement made under this Agreement.
5.7   Indemnification. The Seller and the Buyer will jointly and severally keep the Escrow Agent indemnified at all times against all actions, proceedings, losses, liabilities, costs, claims and demands incurred or sustained by the Escrow Agent in respect of any matter or thing done by it under, pursuant to or in connection with this Agreement, or otherwise arising in connection with its office as Escrow Agent hereunder, except in so far as the same arose through the negligence or willful misconduct on the part of the Escrow Agent or otherwise arose from any breach by it of its obligations under this Agreement. Without limiting the generality of the foregoing, the Seller and the Buyer will indemnify the Escrow Agent against all legal or other fees arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including without limitation the costs and expenses of defending itself against any claim of liability or any action for interpleader. This indemnity shall survive the termination or discharge of this Agreement or resignation of the Escrow Agent.
5.8   Resignation, Removal. The Escrow Agent may resign its trust and be discharged from all further duties and liabilities hereunder after giving sixty (60) days' written notice to the Seller and the Buyer or such shorter notice as the Seller and the Buyer may accept as sufficient, and may be removed from its office as such Escrow Agent by the Seller and the Buyer jointly at any time by written notice given to the Escrow Agent.
5.9   Appointment of Successor Escrow Agent. In the event of the resignation of the Escrow Agent or its removal from office, the Seller and the Buyer shall jointly and in good faith appoint a successor, which shall be another escrow company having an office in the City of [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)].
5.10   Further Assurances. The Escrow Agent which resigns or is removed shall execute such further assurances or documents as, in the opinion of the Seller and the Buyer, may be necessary or desirable to vest in the new Escrow Agent the same powers, rights, duties and responsibilities as if the new Escrow Agent had been originally named as Escrow Agent.
Article 6    - General
6.1   Notices. Any notice, direction or other communication to be given under this Agreement shall be in writing and given by delivering it or sending it by facsimile or other similar form of recorded communication addressed:
to the Buyer at:
[Address of Buyer]
to the Seller at:
[Address of Seller]
to the Escrow Agent at:
[Address of Escrow Agent]
Any such communication shall be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery, if such date is a Business Day and such delivery was made prior to 4:00 p.m. ([City of Corporation's Main Office (ie. Los Angeles)] time), otherwise on the next Business Day, and (ii) if transmitted by facsimile or similar means of recorded communication, on the Business Day following the date of transmission (provided that any communication sent by facsimile is followed up with a copy sent by registered mail with acknowledgement of receipt no later than the fifth (5th) day thereafter). Any party may change its address for service from time to time by notice given in accordance with the foregoing, and any subsequent notice shall be sent to such party at its changed address.
6.2   Entire Agreement. This Agreement, together with the Purchase Agreement, set forth the entire agreement among the parties hereto with respect to the matters contained herein. In the event of any conflict, the provisions of this Agreement shall prevail.
6.3   Enurement and Assignment. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, provided that neither of the Seller and the Buyer may assign its rights under this Agreement without the prior written consent of the other parties. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
6.4   Severability. If any provision of this Agreement is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect.
6.5   Waiver. No failure or delay of the Escrow Agent in exercising any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power or remedy preclude any other or further exercise of any right, power or remedy.
6.6   Further Assurance. Each of the parties shall, at the request of the other party, deliver to the requesting party all further documents or other assurances as may reasonably be necessary or desirable to give effect to this Agreement.
6.7   Time. Time shall be of the essence in respect of this Agreement.
6.8   Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of [State of Corporation's Main Office (ie. California)], without regard to its conflict of law provisions. All of the Parties to this Agreement hereby irrevocably attorn to the jurisdiction of the courts of [State of Corporation's Main Office (ie. California)].
6.9   Attorneys Fees.  In the event of any dispute, arbitration or litigation related to this Agreement, or any of the matters contained herein, the prevailing party in any such dispute, arbitration or litigation shall be entitled to recover from the other party its attorneys fees and costs incurred.
6.10   Counterparts. This Agreement may be executed in several counterparts, each of which so executed shall be deemed an original, and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.
 
 
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
 
 
 
 
Witness
 
[NAME OF BUYER]
 
 
 
 
 
 
Witness
 
[NAME OF ESCROW AGENT]
 
 
Schedule “AForm of Sellers Direction
 
Direction
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Purchaser] the sum of $_____________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.1 of the Escrow Agreement.
 
Dated:                
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
Schedule “BForm of Joint Direction
 
Direction
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Recipient of Escrow Funds] the sum of $______________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.2 of the Escrow Agreement.
 
Dated:                
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
 
 
Witness
 
[NAME OF BUYER]
 
Schedule “CForm of Escrow Release Request
 
Escrow Release Request
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Purchaser] the sum of $________________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.3 of the Escrow Agreement. The undersigned hereby certifies that this Escrow Release Request relates specifically to a claim for indemnification made by the Buyer pursuant to the terms and conditions of the Purchase Agreement the brief particulars of which are set out below:
[Set out brief particulars of Indemnification Claim. If space is insufficient, attache a schedule]
 
Dated:                
 
 
 
 
Witness
 
[NAME OF BUYER]
 
Number of Pages13
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#28833
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Escrow Agreement

 

 

THIS AGREEMENT made as of [Date of Agreement]
A M O N G:
[NAME OF SELLER], of [Address of Seller]
(the Seller”)
- and -
[NAME OF BUYER], of [Address of Buyer]
(the "Buyer")
- and -
[NAME OF ESCROW AGENT], [Address of Escrow Agent]
(the "Escrow Agent")
WHEREAS:
(A)   Concurrently with the execution and delivery of this Agreement, the Buyer is acquiring from the Seller all of the issued and outstanding shares in the capital of [Name of Corporation's Shares Being Acquired] (the "Corporation”) pursuant to a Share Purchase Agreement (the “Purchase Agreement”) dated concurrently herewith made among the Seller, the Buyer and the Corporation;
(B)   Pursuant to the terms of the Purchase Agreement, the sum of (US) $[Amount to be held in Escrow (ie. $500,000)] is to be delivered to the Escrow Agent and held in accordance with the terms of the Escrow Agreement; and
(C)   The Escrow Agent has agreed to act as escrow agent for the purpose of holding and disbursing the Escrow Funds (as hereinafter defined) pursuant to the terms of this Agreement.
NOW THEREFORE in consideration of the entering into of the Purchase Agreement, the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:
Article 1    - Interpretation
1.1   Definitions. For the purposes of this Agreement, capitalized terms used in this Agreement and not otherwise defined have the meanings specified in the Purchase Agreement, and the following words and phrases shall have the following respective meanings:
(a)   Business Day” means any day of the year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)];
(b)   Term” has the meaning given to it in section 4.1.
Article 2    - Receipt of Escrow Funds
2.1   Delivery of Escrow Funds. The Escrow Agent acknowledges receipt from the Buyer of a certified check payable to it or a wire transfer in the sum of (US) $[Amount to be held in Escrow (ie. $500,000)] (the “Escrow Funds”) which amount, together with all interest earned thereon, shall be held and dealt with by the Escrow Agent in accordance with the terms of this Agreement.
2.2   Investment of Escrow Funds. Until such time as the Escrow Funds are distributed by the Escrow Agent as provided herein, the Escrow Agent shall invest the Escrow Funds in an interest bearing account (or other interest bearing instruments or deposits) of a federally-insured state or national bank selected in writing by the Seller, and in default of such selection, the [Name of Default Bank]. The interest earned on the investment of the Escrow Funds shall be held and reinvested from time to time in accordance with the forgoing provisions, and a separate account shall be maintained by the Escrow Agent in its books for the Escrow Funds.
2.3   Additional Instructions.  The Seller and the Buyer shall, promptly upon request by the Escrow Agent, execute such additional escrow instructions as may be reasonably required by the Escrow Agent, including the Escrow Agents standard printed conditions and stipulations with respect to escrows concerning the disbursement of funds; provided, however, that if there is any conflict between the provisions of this Agreement and the provisions of any such additional instructions, the provisions of this Agreement shall control and prevail.
Article 3    - Disbursement of Escrow Funds
3.1   Disbursement to Buyer at the Direction of Seller. Upon receipt of a written irrevocable direction in the form of Schedule “A” hereto (a “Sellers Direction”), signed by the Seller, the Escrow Agent shall, within five (5) Business Days after receipt of the Sellers Direction, deliver to the Buyer the amount from the Escrow Funds specifically referred to in the Sellers Direction.
3.2   Disbursement at Joint Direction of Seller and Buyer. Upon receipt of a written irrevocable direction in the form of Schedule “B” hereto (a “Joint Direction”), signed by all the Seller and the Buyer, the Escrow Agent shall, within five (5) Business Days after receipt of the Joint Direction, deliver the amount from the Escrow Funds specifically referred to in the Joint Direction as per the instructions on the Joint Direction.
3.3   Disbursement at Request of Buyer. Upon receipt of a written request in the form of Schedule “C” hereto (an “Escrow Release Request”) at any time prior to the first (1st) anniversary date of the date of this Agreement, signed by the Buyer, certifying that the Buyer is making a claim for indemnification pursuant to the Purchase Agreement and briefly describing the nature of the claim for indemnification, the Escrow Agent shall, within five (5) Business Days after receipt of the Escrow Release Request, send by certified mail to the Seller a photostatic copy of the Escrow Release Request. The Seller shall have fifteen (15) days from the date on which Seller receive the Escrow Release Request (the “Objection Period”) to notify the Escrow Agent of their objection (an “Objection Notice”) to the release of the Escrow Funds referred to in the Escrow Release Request to the Buyer and to request that the issue of Buyers entitlement to the said Escrow Funds be submitted to arbitration in accordance with the following provisions:
(a)   If Seller shall send an Objection Notice to the Escrow Agent during the Objection Period, the matter shall be submitted to, and settled by arbitration under the Commercial Rules of the American Arbitration Association. One arbitrator shall be selected by mutual agreement of the parties. If the parties are unable to mutually agree upon the sole arbitrator within fifteen (15) days after the end of the Objection Period, then three (3) arbitrators shall be selected, and the Buyer and Seller shall each select one arbitrator and the two chosen arbitrators shall select the third arbitrator, or failing agreement on the selection of the third arbitrator, the American Arbitration Association shall select the third arbitrator. Unless otherwise agreed by the Buyer and the Seller, arbitration will take place in [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)], U.S.A.  Any court having jurisdiction over the matter may enter judgment on the award of the arbitrator(s). Service of a petition to confirm the arbitration award may be made by First Class mail or by commercial express mail, to the attorney for the party or, if unrepresented, to the party at the last known business address. The decision of the arbitrator(s) shall be binding and conclusive on all parties involved, and judgment upon their decision may be entered in a court of competent jurisdiction. All costs of the arbitration incurred by the Escrow Agent, including reasonable attorney's fees and costs, shall be paid as directed by the arbitrator(s), provided however that if the arbitration is settled prior to a decision by the arbitrators, the Seller and the Buyer shall each pay 50% of all such costs.
(b)   The Seller may, at any time prior to the commencement of arbitration proceedings, notify the Escrow Agent that the Seller has withdrawn the Objection Notice. Upon receipt of any such notice from the Seller, the Escrow Agent shall reasonably promptly deliver the Escrow Funds referred to in the Escrow Release Request to the Buyer in accordance with the instructions specified in the Escrow Release Request.
If, at the end of the Objection Period, the Escrow Agent has not received an Objection Notice from Seller, then the Escrow Agent shall reasonably promptly deliver the Escrow Funds to the Buyer in accordance with the instructions specified in the Escrow Release Request.
3.4   Disbursement following First Anniversary Date. If, on the first (1st) anniversary date of the date of this Agreement, the Escrow Funds (inclusive of interest thereon) have not been fully disbursed by the Escrow Agent, then the Escrow Agent shall, following settlement of any outstanding Escrow Release Request in accordance with the procedures outlined in section 3.3, and after payment of any amount from the Escrow Funds which is required to satisfy any Escrow Release Request in accordance with the procedures outlined in section 3.3, remit the balance of the Escrow Funds (inclusive of interest thereon), if any, to the Seller.
3.5   Reporting. The Escrow Agent shall, from time to time, at the request of the Seller or the Buyer, advise the requesting party as to the balance of the Escrow Funds then being held by the Escrow Agent (inclusive of interest). Upon the close of escrow, the Escrow Agent shall prepare an accounting or settlement setting forth, among other things, the disbursement of the Escrow Funds and interest thereon and the payment of the Escrow Agents fees and costs.
3.6   No Limitation on Liability.  Nothing in this Agreement will be construed as limiting the liability of the Seller under the Purchase Agreement to the amount of the Escrow Funds, nor will that amount be considered as liquidated damages for any breach by the Seller under the Purchase Agreement.
Article 4    - Term
4.1   Term of Agreement. This Agreement shall commence on the date first above written and shall continue thereafter until all Escrow Funds have been disbursed by the Escrow Agent in accordance with the terms and conditions hereof (the “Term”).
Article 5    - Escrow Agent
5.1   Duties and Responsibilities. The Escrow Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall have no duty to enforce any obligation of any person, other than as provided herein.
5.2   No Liability. The Escrow Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith, and in the exercise of its own best judgment, and shall not be held liable for any error in judgment made in good faith, unless it shall be proved that the Escrow Agent was negligent in ascertaining the pertinent facts or acted intentionally in bad faith.
5.3   Reliance. The Escrow Agent may rely, and shall be protected in acting, upon any judgment, order, notice, demand, direction, certificate, or other instrument, paper or document which may be submitted to it in connection with its duties hereunder and which is believed by the Escrow Agent to be genuine and signed or presented by the proper person(s), and may accept the same as sufficient evidence of the facts stated therein. The Escrow Agent shall in no way be bound to call for further evidence (whether as to due execution, validity or effectiveness, or the jurisdiction of any court, or as to the truth of any fact), and shall not be responsible for any loss that may be occasioned by its failing to do so.
5.4   Compliance with Judgments and Orders. In the event that the Escrow Agent shall become involved in any arbitration or litigation relating to the Escrowed Funds, the Escrow Agent is authorized to comply with any decision reached through such arbitration or litigation.
5.5   Non-Action. If the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto or from a third person with respect to any matter arising pursuant to this Agreement which, in its opinion, are in conflict with any provision of this Agreement, it shall be entitled to refrain from taking any action authorized and directed hereunder until it shall be authorized or directed otherwise in writing by both the Seller and the Buyer, or by an order of a court of competent jurisdiction from which no further appeal may be taken.
5.6   Escrow Agent's Fees, Costs and Expenses. The Seller and the Buyer hereby irrevocably authorize and direct the Escrow Agent to withhold and pay to itself, from the Escrow Funds, the Escrow Agents reasonable fees, expenses and disbursements incurred by it in connection with the performance of its obligations hereunder, prior to any disbursement made under this Agreement.
5.7   Indemnification. The Seller and the Buyer will jointly and severally keep the Escrow Agent indemnified at all times against all actions, proceedings, losses, liabilities, costs, claims and demands incurred or sustained by the Escrow Agent in respect of any matter or thing done by it under, pursuant to or in connection with this Agreement, or otherwise arising in connection with its office as Escrow Agent hereunder, except in so far as the same arose through the negligence or willful misconduct on the part of the Escrow Agent or otherwise arose from any breach by it of its obligations under this Agreement. Without limiting the generality of the foregoing, the Seller and the Buyer will indemnify the Escrow Agent against all legal or other fees arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including without limitation the costs and expenses of defending itself against any claim of liability or any action for interpleader. This indemnity shall survive the termination or discharge of this Agreement or resignation of the Escrow Agent.
5.8   Resignation, Removal. The Escrow Agent may resign its trust and be discharged from all further duties and liabilities hereunder after giving sixty (60) days' written notice to the Seller and the Buyer or such shorter notice as the Seller and the Buyer may accept as sufficient, and may be removed from its office as such Escrow Agent by the Seller and the Buyer jointly at any time by written notice given to the Escrow Agent.
5.9   Appointment of Successor Escrow Agent. In the event of the resignation of the Escrow Agent or its removal from office, the Seller and the Buyer shall jointly and in good faith appoint a successor, which shall be another escrow company having an office in the City of [City of Corporation's Main Office (ie. Los Angeles)], [State of Corporation's Main Office (ie. California)].
5.10   Further Assurances. The Escrow Agent which resigns or is removed shall execute such further assurances or documents as, in the opinion of the Seller and the Buyer, may be necessary or desirable to vest in the new Escrow Agent the same powers, rights, duties and responsibilities as if the new Escrow Agent had been originally named as Escrow Agent.
Article 6    - General
6.1   Notices. Any notice, direction or other communication to be given under this Agreement shall be in writing and given by delivering it or sending it by facsimile or other similar form of recorded communication addressed:
to the Buyer at:
[Address of Buyer]
to the Seller at:
[Address of Seller]
to the Escrow Agent at:
[Address of Escrow Agent]
Any such communication shall be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery, if such date is a Business Day and such delivery was made prior to 4:00 p.m. ([City of Corporation's Main Office (ie. Los Angeles)] time), otherwise on the next Business Day, and (ii) if transmitted by facsimile or similar means of recorded communication, on the Business Day following the date of transmission (provided that any communication sent by facsimile is followed up with a copy sent by registered mail with acknowledgement of receipt no later than the fifth (5th) day thereafter). Any party may change its address for service from time to time by notice given in accordance with the foregoing, and any subsequent notice shall be sent to such party at its changed address.
6.2   Entire Agreement. This Agreement, together with the Purchase Agreement, set forth the entire agreement among the parties hereto with respect to the matters contained herein. In the event of any conflict, the provisions of this Agreement shall prevail.
6.3   Enurement and Assignment. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns, provided that neither of the Seller and the Buyer may assign its rights under this Agreement without the prior written consent of the other parties. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
6.4   Severability. If any provision of this Agreement is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect.
6.5   Waiver. No failure or delay of the Escrow Agent in exercising any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power or remedy preclude any other or further exercise of any right, power or remedy.
6.6   Further Assurance. Each of the parties shall, at the request of the other party, deliver to the requesting party all further documents or other assurances as may reasonably be necessary or desirable to give effect to this Agreement.
6.7   Time. Time shall be of the essence in respect of this Agreement.
6.8   Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of [State of Corporation's Main Office (ie. California)], without regard to its conflict of law provisions. All of the Parties to this Agreement hereby irrevocably attorn to the jurisdiction of the courts of [State of Corporation's Main Office (ie. California)].
6.9   Attorneys Fees.  In the event of any dispute, arbitration or litigation related to this Agreement, or any of the matters contained herein, the prevailing party in any such dispute, arbitration or litigation shall be entitled to recover from the other party its attorneys fees and costs incurred.
6.10   Counterparts. This Agreement may be executed in several counterparts, each of which so executed shall be deemed an original, and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.
 
 
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
 
 
 
 
Witness
 
[NAME OF BUYER]
 
 
 
 
 
 
Witness
 
[NAME OF ESCROW AGENT]
 
 
Schedule “AForm of Sellers Direction
 
Direction
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Purchaser] the sum of $_____________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.1 of the Escrow Agreement.
 
Dated:                
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
Schedule “BForm of Joint Direction
 
Direction
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Recipient of Escrow Funds] the sum of $______________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.2 of the Escrow Agreement.
 
Dated:                
 
 
 
 
Witness
 
[NAME OF SELLER]
 
 
 
 
Witness
 
[NAME OF BUYER]
 
Schedule “CForm of Escrow Release Request
 
Escrow Release Request
 
TO:   [Name of Escrow Agent]
 
Reference is made to the Escrow Agreement among [Name of Seller], [Name of Purchaser] and [Name of Escrow Agent] dated as of [Date of Escrow Agreement] (the “Escrow Agreement”). All capitalized words and phrases used herein shall have the same meaning as in the Escrow Agreement unless the context otherwise requires.
In accordance with the terms of the Escrow Agreement, you are hereby irrevocably authorized and directed to pay to [Name of Purchaser] the sum of $________________ from the Escrow Funds.
Let this be your good and sufficient authority for so doing.
This Direction is made in accordance with section 3.3 of the Escrow Agreement. The undersigned hereby certifies that this Escrow Release Request relates specifically to a claim for indemnification made by the Buyer pursuant to the terms and conditions of the Purchase Agreement the brief particulars of which are set out below:
[Set out brief particulars of Indemnification Claim. If space is insufficient, attache a schedule]
 
Dated:                
 
 
 
 
Witness
 
[NAME OF BUYER]
 
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