Escrow Agreement Template (Asset Purchase Transaction)

Escrow agreements are used to reduce risk when money or assets should only change hands after certain conditions are met. They are especially important in transactions involving multiple parties, delayed payments, or post closing obligations.

With fynk, you can set up an escrow agreement that fits your transaction without starting from scratch. The template is customizable, supports e signatures, and includes AI powered review to help you move faster. Start drafting now and keep control over your deal.

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Full Text Template

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Escrow Agreement (Asset Purchase Transaction)

TURNSTONE BIOLOGICS CORP.

Escrow Agreement

This Escrow Agreement (this “Agreement”) is made and entered into as of , by and between , a (“Seller”) and , a (“Buyer” and together with Seller, the “Parties” and each, a “Party”), and , as escrow agent (the “Escrow Agent”). Capitalized terms used and not defined herein shall have the meanings assigned to them in that certain Asset Purchase Agreement, dated as of the date hereof, by and among Seller and Buyer (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”).


Recitals

Whereas, the Parties have entered into the Purchase Agreement providing for the purchase by Buyer of the Purchased Assets from the Seller;

Whereas, the Purchase Agreement contemplates, among other things, the execution and delivery of this Agreement and deposit by Buyer with the Escrow Agent of (the “Escrow Amount”), which amount shall provide a source of funding to satisfy certain payment obligations under the Purchase Agreement, if applicable, or shall be released to the Seller, if such payment obligations are inapplicable, and which deposit the Parties wish to be subject to the terms and conditions set forth herein and in the Purchase Agreement; provided, that in the event of an inconsistency between this Agreement and the Purchase Agreement, this Agreement shall control; and

Whereas, the Escrow Agent agrees to hold and distribute the Escrow Fund (as defined in Section (2.a)) in accordance with the terms of this Agreement.

Now Therefore, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

Appointment.

The Parties hereby appoint the Escrow Agent as their escrow agent to perform the duties of an escrow agent set forth herein, and the Escrow Agent hereby accepts such appointment and agrees to act as escrow agent in accordance with the terms and conditions set forth herein.

Escrow Fund.

On the date of this Agreement, Seller shall deposit or cause to be deposited with the Escrow Agent, in accordance with the Purchase Agreement, the Escrow Amount by wire transfer of immediately available funds. The Escrow Agent will promptly acknowledge receipt of, and hereby agrees to hold the Escrow Amount, together with all products and proceeds thereof, including all interest, dividends, gains and other income earned thereon (the “Escrow Earnings”, and together with the Escrow Amount, the “Escrow Fund”) in a separate and distinct account (the “Escrow Account”) upon the terms and subject to the conditions of this Agreement.

The Escrow Fund is referred to herein as the “Escrow Fund.” The Escrow Earnings are collectively referred to herein as the “Escrow Earnings.” The Escrow Account is referred to herein as the “Escrow Account.”

For greater certainty, all Escrow Earnings shall be retained by the Escrow Agent and reinvested in the Escrow Fund and shall become part of the Escrow Fund, and shall be disbursed as part of the Escrow Fund, in accordance with the terms and conditions of this Agreement.

Investment of Escrow Fund.

During the term of this Agreement, the Escrow Agent shall hold, invest and reinvest the Escrow Fund in an interest-bearing deposit account of . The Parties acknowledge that the initial interest rate is subject to change from time to time and shall be reflected in the monthly statement provided to the Parties. The Escrow Fund shall at all times remain available for distribution in accordance with Section 4.. Except as expressly provided herein, the Escrow Fund shall not, in any manner, directly or indirectly, be assigned, hypothecated, pledged, alienated, released from escrow or transferred within escrow (or otherwise dealt with in any manner which has the economic effect of any of the foregoing acts, on a current or prospective basis).

The Escrow Agent shall send an account statement to each of the Parties on a monthly basis reflecting activity in the Escrow Account for the preceding month.

Disposition and Termination of the Escrow Fund.

Escrow Fund.

The Parties shall act in accordance with, and the Escrow Agent shall hold and release the Escrow Fund solely as provided in, this Section 4(a) as follows:

Joint Release Instruction. Upon receipt by the Escrow Agent of a Joint Release Instruction, the Escrow Agent shall promptly, but in any event within Business Days after its receipt of such Joint Release Instruction, disburse all or part of the Escrow Fund in accordance with such Joint Release Instruction, which may be to Buyer or Seller as set forth in the Joint Release Instruction.

Termination. If at any time either of the Parties receives a written notice of termination of the Purchase Agreement per the provisions of the Purchase Agreement sent from one Party to the other Party, then upon receipt by the Escrow Agent of a Joint Release Instruction, the Escrow Agent shall promptly, but in any event within Business Day after its receipt of such Joint Release Instruction, disburse to Buyer all of the Escrow Fund as directed in accordance with such Joint Release Instruction.

Consummation. If either of the Parties delivers a copy of (x) the Certificate of Merger filed with the State of or (y) a form filed with the relevant Securities and Exchange authority, in either case evidencing the consummation of the merger contemplated by that certain Agreement and Plan of Merger, contemplated to be entered into on or after the date hereof, by and among Seller and the other parties thereto (“Notice of Consummation”), then upon receipt by the Escrow Agent of such Notice of Consummation, the Escrow Agent shall promptly, but in any event within Business Day after its receipt of such Notice of Consummation, disburse to Seller all of the Escrow Fund.

Final Determination. If at any time either of the Parties receives a Final Determination expressly stating that such Party is owed all or a portion of the Escrow Fund, then upon receipt by the Escrow Agent of a copy of such Final Determination from any Party, the Escrow Agent shall (A) promptly forward a copy of such Final Determination to the other Party and (B) promptly, but in any event within Business Day after its receipt of such Final Determination, disburse to Buyer or Seller, as applicable, all or part of the Escrow Fund as directed in accordance with such Final Determination. The Escrow Agent will act in good faith on such Final Determination without further inquiry.

Release to Buyer Anniversary. In the event that the Escrow Agent has not released the Escrow Fund in accordance with Section 4(a)(i), (ii), (iii) or (iv) prior to (a) the anniversary of the date hereof, or (b) Seller filing a Form with the relevant Securities and Exchange authority that contains notice of Seller’s intent to seek bankruptcy protection or that voluntary or involuntary bankruptcy proceedings have been commenced, Buyer may submit to Escrow Agent a written notice and a copy to the Seller requesting disbursal of the Escrow Fund (a “Request”) to Buyer and upon receipt by the Escrow Agent of a copy of such Request from Buyer, the Escrow Agent shall promptly, but in any event within Business Days after its receipt of such Request, disburse to Buyer all of the Escrow Fund as directed in accordance with such Request.

No Other Releases. Except pursuant to Section 14., the Escrow Agent shall not release all, or any portion of, the Escrow Fund, or make any reductions from the Escrow Account in the absence of a Joint Release Instruction, a Notice of Consummation, or Request.

Method of Payment. All payments of any part of the Escrow Fund shall be made by wire transfer of immediately available funds as set forth in a Joint Release Instruction, a Notice of Consummation, Final Determination, or Request, as applicable.

Call Back Authorized Individuals.

Any instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution of the Escrow Fund under the terms of this Agreement must be in writing, executed by an authorized signer of the appropriate Party or Parties as evidenced by the signatures of the person or persons set forth on Exhibit A-1 and Exhibit A-2 (each an “Authorized Representative”) and delivered to the Escrow Agent either by confirmed facsimile or attached to an e-mail sent to the email address set forth in Section 11.. In the event a Joint Release Instruction, a Notice of Consummation, Final Determination, or Request is delivered to the Escrow Agent, whether in writing, by facsimile, by e-mail or otherwise, the Escrow Agent is required to seek confirmation of any such instruction given to the Escrow Agent by telephone call back to the person or persons designated in Exhibit A-1 and/or Exhibit A-2 attached hereto (the “Call Back Authorized Individuals”), as applicable, and the Escrow Agent may in good faith rely upon the confirmations of anyone purporting to be a Call Back Authorized Individual. To ensure the accuracy of the instructions it receives, the Escrow Agent may record such call backs. If the Escrow Agent is unable to verify the instructions, or is not reasonably satisfied with the verification it receives, it will not execute the instruction until such verification has been resolved in the Escrow Agent’s reasonable discretion. The persons and telephone numbers for call backs may be changed only in writing, executed by an Authorized Representative of the applicable Party set forth on Exhibit A-1 or Exhibit A-2, actually received and acknowledged by the Escrow Agent.

Certain Definitions.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are not required or authorized by law to be closed in the State of .

“Final Determination” means a final non-appealable judgment or award rendered by a court of competent jurisdiction together with (a) a certificate of the prevailing Party to the effect that such judgment or award is final and non-appealable and from a court of competent jurisdiction, and (b) the written payment instructions of the prevailing Party to effectuate such judgment, award or determination, and in each case, executed by an Authorized Representative of the prevailing Party.

“Termination” means the termination of the Purchase Agreement in accordance with the Purchase Agreement.

“Joint Release Instruction” means a joint written instruction substantially in the form of Exhibit B attached hereto, executed by an Authorized Representative of each of Buyer and Seller directing the Escrow Agent to disburse all or a portion of the Escrow Fund from the Escrow Account pursuant to the instructions therein and in accordance with the terms and conditions of this Agreement and the Purchase Agreement.

“Person” means any individual, corporation (including any nonprofit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, governmental entity or other entity.

Escrow Agent.

The Escrow Agent undertakes to perform only such duties as are expressly set forth herein, which shall be deemed purely ministerial in nature, and no other duties, including but not limited to any fiduciary duties, shall be implied. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements to comply with, the terms and conditions of any other agreement, instrument or document between the Parties (other than a Joint Release Instruction, a Notice of Consummation, Final Determination, or Request), in connection herewith, if any, including, without limitation, the Purchase Agreement, nor shall the Escrow Agent be required to determine if any Person has complied with any such agreements, nor shall any additional obligations of the Escrow Agent be inferred from the terms of such agreements.

Notwithstanding the terms of any other agreement between the Parties, the terms and conditions of this Agreement will control the actions of the Escrow Agent. The Escrow Agent may rely in good faith upon and shall not be liable in the absence of its fraud, gross negligence or willful misconduct for acting or refraining from acting upon any Joint Release Instruction, a Notice of Consummation, Final Determination, or Request furnished to it in accordance with the terms hereof and reasonably believed by it in good faith to be genuine and to have been signed by an Authorized Representative of the proper Party or Parties. Concurrent with the execution of this Agreement, the Parties shall deliver to the Escrow Agent Authorized Representatives’ forms in the form of Exhibit A-1 and Exhibit A-2 attached hereto.

Other than as set forth herein, the Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document, notice, instruction or request. The Escrow Agent shall have no duty to solicit any payments which may be due to it or to the Escrow Fund. In the event that the Escrow Agent is uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any Party which, in its reasonable opinion, conflict with any of the provisions of this Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in a Joint Release Instruction, a Notice of Consummation, Final Determination, or Request; provided that the Escrow Agent shall promptly notify the Parties of such uncertainty or apparent conflict.

In the event of a dispute pursuant to this Agreement, the Escrow Agent may interplead all of the assets held hereunder into a court of competent jurisdiction or may seek a declaratory judgment with respect to certain circumstances, and thereafter be fully relieved from any and all liability or obligation with respect to such interpleaded assets or any action or nonaction based on such declaratory judgment. The Escrow Agent may consult with legal counsel of its selection in the event of any dispute or question as to the meaning or construction of any of the provisions hereof or its duties hereunder. The Escrow Agent shall have no liability for any action taken, suffered or omitted to be taken by it in good faith except in the event that the Escrow Agent’s fraud, gross negligence or willful misconduct was the cause of any direct loss to either Party.

To the extent reasonably practicable, each Party agrees to pursue any redress or recourse in connection with any dispute (other than with respect to a dispute involving the Escrow Agent) without making the Escrow Agent a party to the same. Notwithstanding anything in this Agreement to the contrary, in no event shall the Escrow Agent be liable for any special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such losses or damages and regardless of the form of action.

Resignation and Removal of the Escrow Agent.

The Escrow Agent

may resign and be discharged from its duties or obligations hereunder by giving 0 days advance notice in writing of such resignation to the Parties specifying a date when such resignation shall take effect or

may be removed, with or without cause, by Buyer and the Seller acting jointly at any time by providing written notice executed by the Parties to the Escrow Agent.

Any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any corporation or association to which all or substantially all of the escrow business of the Escrow Agent’s line of business may be transferred, shall be the Escrow Agent under this Agreement without further action. The Escrow Agent’s sole responsibility after such 0 days notice period expires or after receipt of written notice of removal shall be to hold and safeguard the Escrow Fund (without any obligation to reinvest the same) and to deliver the same (i) to a substitute or successor escrow agent pursuant to a joint written instruction executed by the Parties, or (ii) as set forth in a Joint Release Instruction, a Notice of Consummation, Final Determination, or Request, and, at the time of such delivery, the Escrow Agent’s obligations hereunder shall cease and terminate. In the event the Escrow Agent resigns, if the Parties have failed to appoint a successor escrow agent prior to the expiration of 0 days following receipt of the notice of resignation, the Escrow Agent may, petition any court of competent jurisdiction for the appointment of such a successor escrow agent or for other appropriate relief, and any such resulting appointment shall be binding upon the Parties.

Fees and Expenses.

All fees and expenses of the Escrow Agent are described in Schedule 1 attached hereto and shall be borne by Buyer. The fees agreed upon for the services to be rendered hereunder are intended as full compensation for the Escrow Agent’s services as contemplated by this Agreement.

Indemnity.

Each Party shall jointly and severally indemnify, defend and hold harmless the Escrow Agent and its affiliates and their respective successors, assigns, directors, officers, agents and employees (the “Indemnitees”) from and against any and all actual losses, damages, claims, liabilities, penalties, judgments, settlements, actions, suits, proceedings, litigation, investigations, reasonable and documented out-of-pocket costs or expenses (including the reasonable and documented out-of-pocket fees and expenses of one outside counsel and experts and their staffs and expense of document location, duplication and shipment actually incurred, but excluding for the avoidance of doubt, any income taxes imposed on the payment of fees hereunder) (collectively, “Escrow Agent Losses”) arising out of or in connection with

the Escrow Agent’s execution and performance of this Agreement, tax reporting or withholding, the enforcement of any rights or remedies under or in connection with this Agreement, except to the extent that such Escrow Agent Losses, as adjudicated by a court of competent jurisdiction, have been caused by the fraud, gross negligence or willful misconduct of the Escrow Agent or any such Indemnitee, or

the Escrow Agent’s following any Joint Release Instruction, a Notice of Consummation, Final Determination, or Request unless explicitly prohibited under the terms hereof that the Escrow Agent in good faith believed to be genuine and, to the extent applicable, to have been signed by an Authorized Representative of the Party or Parties.

Notwithstanding anything to the contrary herein, Buyer and Seller agree, solely as between themselves, that any obligation for indemnification under this Section 8 shall be borne by the Party or Parties determined by a court of competent jurisdiction to be responsible for causing the loss, damage, liability, cost or expense against which the Escrow Agent is entitled to indemnification or, if no such determination is made, then one-half by Buyer and one-half by Seller, and each Party shall indemnify the other Party in the event that such other party pays the indemnifying Party’s portion of any such amount. The provisions of this Section 8 (and the obligations hereunder) shall survive the resignation or removal of the Escrow Agent and the termination of this Agreement.

Tax Matters.

The Buyer shall be responsible for and the taxpayer on all taxes due on the interest or income earned, if any, on the Escrow Fund for the calendar year in which such interest or income is earned. The Escrow Agent shall report any interest or income earned on the Escrow Fund to the relevant tax authority. Prior to the date hereof, the Parties shall provide the Escrow Agent with certified tax identification numbers by furnishing such other forms and documents that the Escrow Agent may request.

The Escrow Agent shall report to the IRS with respect to income earned on the Escrow Fund. The Escrow Agent shall withhold any taxes required to be withheld by applicable law, including but not limited to required withholding in the absence of proper tax documentation, and shall remit such taxes to the appropriate authorities.

Covenant of Escrow Agent.

The Escrow Agent hereby agrees and covenants with Buyer and the Seller that it shall perform all of its obligations under this Agreement and shall not deliver custody or possession of the Escrow Fund to anyone except pursuant to the express terms of this Agreement or as otherwise required by law.

Notices.

All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement must be in writing and will be deemed to have been duly given: (a) on the day of delivery, if delivered by hand; (b) on the day of delivery, if sent by facsimile or electronic mail (with confirmation of receipt) at or prior to on a Business Day; (c) on the first (1st) Business Day following delivery, if sent by facsimile or electronic mail on a day that is not a Business Day or after on a Business Day; (d) on the first (1st) Business Day following deposit with a nationallyrecognized overnight delivery service; or (e) upon the earlier of actual receipt and the Business Day following first class mailing, with first class postage prepaid:

If to Buyer, then to:

with a copy (which shall not constitute notice) to:

or, if to Seller, then to:

with a copy (which shall not constitute notice) to:

or, if to the Escrow Agent, then to:

Notwithstanding the above, in the case of communications delivered to the Escrow Agent pursuant to the foregoing clauses (a) through (e) of this Section 11, such communications shall be deemed to have been given on the date received by the Escrow Agent.

Termination.

This Agreement shall terminate on the first to occur of (a) the distribution of all of the amounts in the Escrow Fund in accordance with this Agreement, or (b) delivery to the Escrow Agent of a written notice of termination executed jointly by Buyer and Seller after which this Agreement shall be of no further force and effect except that the provisions of Section 8. hereof shall survive termination.

Miscellaneous.

The provisions of this Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto. Except as provided in Sections 6. or 16., neither this Agreement nor any right or interest hereunder may be assigned in whole or in part by any party, without the prior written consent of the other parties hereto, as applicable, and any such attempted or purported assignment will be null and void; provided, however, that Buyer may, without consent, assign this Agreement or all or part of its rights under this Agreement in connection with a permitted assignment per the Purchase Agreement.

This Agreement shall be governed by and construed under the laws of the State of , without regard to choice of law principles of any jurisdiction. Each party irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts of the State of . The parties hereto hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising from or relating to this Agreement.

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All signatures of the parties hereto may be transmitted by facsimile or electronic transmission in portable document format (.pdf), and such facsimile or .pdf will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such party.

If any provision of this Agreement is determined to be prohibited or unenforceable by reason of any applicable law of a jurisdiction, then such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction.

Each Party represents, warrants and covenants that each document, notice, instruction or request provided by such Party to the Escrow Agent shall comply with applicable laws and regulations. Where, however, the conflicting provisions of any such applicable law may be waived, they are hereby irrevocably waived by the parties hereto to the fullest extent permitted by law, to the end that this Agreement shall be enforced as written.

Except as expressly provided in Sections 8. and 16., nothing in this Agreement, whether express or implied, shall be construed to give to any person or entity other than the Escrow Agent and the Parties any legal or equitable right, remedy, interest or claim under or in respect of this Agreement or any funds escrowed hereunder.

Compliance with Court Orders.

In the event that the Escrow Fund is attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court or any order, judgment or decree shall be made or entered by any court order affecting the property deposited under this Agreement, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised in good faith by legal counsel of its own choosing are binding upon it, whether with or without jurisdiction, and in the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the Parties or to any other Person, by reason of such compliance notwithstanding that such writ, order or decree is subsequently reversed, modified, annulled, set aside or vacated.

Further Assurances.

Following the date hereof, each party hereto shall deliver to the other parties hereto such further information and documents and shall execute and deliver to the other parties hereto such further instruments and agreements as any other party hereto shall reasonably request to consummate or confirm the transactions provided for herein, to accomplish the purpose hereof or to assure to any other party hereto the benefits hereof.

Assignment.

No assignment of the interest of either of the Parties shall be binding upon the Escrow Agent unless and until written notice of such assignment shall be filed with and acknowledged by the Escrow Agent. Any transfer or assignment of the rights, interests or obligations hereunder in violation of the terms hereof shall be void and of no force or effect.

Force Majeure.

The Escrow Agent shall not incur any liability for not performing any act or fulfilling any obligation hereunder by reason of any occurrence beyond its control (including, but not limited to, any provision of any present or future law or regulation or any act of any governmental authority, any act of God or war or terrorism, or the unavailability of the Federal Reserve Bank wire services or any electronic communication facility), it being understood that the Escrow Agent shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as reasonably practicable under the circumstances.

Compliance with Law.

In accordance with the law, the Parties agree to provide the Escrow Agent with the name, address, taxpayer identification number, and remitting bank for all Persons depositing funds with the Escrow Agent pursuant to this Agreement. For a non-individual Person such as a business entity, a charity, a trust or other legal entity, the Escrow Agent may ask for documentation to verify its formation and existence as a legal entity. The Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

Use of Escrow Agent Name.

No publicly distributed printed or other material in any language, including prospectuses, notices, reports, and promotional materials that mention the escrow agent by name or the rights, powers, or duties of the Escrow Agent under this Agreement shall be issued by the Parties, or on either Party’s behalf, without the prior written consent of the Escrow Agent, except to the extent such disclosure is required by applicable law.

Use of Electronic Records and Signatures.

As used in this Agreement, the terms “writing” and “written” include electronic records, and the terms “execute,” “signed” and “signature” include the use of electronic signatures. Notwithstanding any other provision of this Agreement or the attached Exhibits and Schedules, any electronic signature that is presented as the signature of the purported signer, regardless of the appearance or form of such electronic signature, may be deemed genuine by Escrow Agent in Escrow Agent’s sole discretion, and such electronic signature shall be of the same legal effect, validity and enforceability as a manually executed, original, wet-ink signature; provided, however, that any such electronic signature must be an actual and not a typed signature.

In accordance with Section 8., Escrow Agent shall be indemnified and held harmless from any losses or damages it incurs as a result of its acceptance of and reliance on electronic signatures that it deems to be genuine. Any electronically signed agreement, instruction or other document shall be an “electronic record” established in the ordinary course of business and any copy shall constitute an original for all purposes. This Agreement and any instruction or other document furnished hereunder may be transmitted by facsimile or as a PDF file attached to an email.

Return of Funds.

If the Escrow Agent releases any funds, including but not limited to the Escrow Amount or any portion of it, to a Party and subsequently determines, in its sole discretion, that the payment or any portion of it was made in error, the Party shall, upon notice, promptly refund the erroneous payment. Any such erroneous payment by the Escrow Agent, and the Party’s return thereof to the Escrow Agent, shall not affect any obligation or right of either the Escrow Agent or the Parties. Each of the Parties agrees not to assert discharge for value, bona fide payee, or any similar doctrine as a defense to the Escrow Agent’s recovery of any erroneous payment.

Sanctions.

None of the Parties or any of their parents or subsidiaries, or any of their respective directors, officers, or employees, or to the knowledge of any Party, the affiliates of the Parties or any of their subsidiaries, will, directly or indirectly, use any part of any proceeds or lend, contribute, or otherwise make available the Escrow Fund in any manner that would result in a violation by any person of economic, trade, or financial sanctions, requirements, or embargoes imposed, administered, or enforced from time to time by the the European Union and any EU member state, the United Nations Security Council, and any other relevant sanctions authority.


In Witness Whereof, the parties hereto have executed this Agreement as of the date set forth above.

Pending

Pending

Pending


Schedule 1

Escrow Agent Fee and Schedule


Exhibit A-1

Certificate as to Buyer’s Authorized Signatures


Exhibit A-2

Certificate as to Seller’s Authorized Signatures


Exhibit B

Form of Joint Release Instruction

Use this template

Disclaimer: The original creator, the author of this template, and fynk GmbH are not responsible for any damages or liabilities that may result from using this template. This template should not be considered a substitute for legal advice, and consulting with a legal professional is recommended before use. fynk GmbH, the original creator, and the author do not provide legal advice and will not be held accountable for any legal consequences arising from its use.

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Background Information

Escrow agreement explained in simple terms

Learn everything there is about escrow agreements for asset purchase transactions.

What is an escrow agreement?

An escrow agreement incorporates a third-party (called an escrow agent) into a contract, who is responsible for holding:

  • Assets, documents, or funds relating to the agreement’s terms
  • Releasing the funds in escrow once certain triggers are met

For example, if a company wants to purchase the assets of another company, the seller may request that the funds be put in escrow. The deposit of the funds shows a serious intent to buy assets, but it equally safeguards the purchasing company since funds are only released at the time of the asset transfer.

Assets may also be put in escrow, not just money.

Escrow agents have a duty to ensure that the exchange happens in accordance with the agreement. Funds, assets, and documents can only be released once the conditions of the contract are fulfilled.

Who needs an escrow agreement?

Uncertainty, timing, and performance are all reasons to create an escrow agreement. Two main parties, not including the escrow agent, are part of the agreement:

  • Buyer: Company depositing or funding escrow.
  • Seller: Party with conditional rights to the funds in escrow.

Escrow is a contractual tool that is often used in asset purchase agreements and M&A transactions. Common uses for a commercial escrow agreement include:

  • Real estate transactions where funds are held until certain triggers are met, such as inspections or closing.
  • Business sales or mergers where post-closing obligations must be met before escrow funds are released.

Cross-border deals may also require escrow since enforcement and trust are more complex. You can customize an agreement to meet your unique needs with the right clauses.

What should be included in an escrow agreement?

Your escrow agreement template is a starting point for the contract, which you can adapt to meet your unique needs. Common clauses that are found in escrow agreements include but are not limited to:

Appointment

A clause that both parties agree to, stating that the parties appoint an escrow agent. Terminology also includes that the agent accepts the appointment and will act in accordance with the terms and conditions of the contract.

Escrow fund

An escrow clause specifies which assets, documents, or funds are to be held by the escrow agent until specific contractual agreements are fulfilled. Escrow funds are what the parties agree to exchange for the contract to be fulfilled.

Investment of escrow fund

A clause that allows the funds to be invested in interest-bearing accounts. As part of this clause, parties agree that the interest rate may change and will be reflected in a statement that the escrow agent provides.

Disposition and termination of the escrow fund

A crucial provision that outlines the circumstances under which the funds will be released.

Escrow agent

This provision defines the escrow agent’s responsibilities and duties in full detail.

Fees and expenses

The fees and expenses clause outlines who is responsible for the escrow agent’s services. All fees and expenses are clearly defined in the attached schedule.

Indemnity

Under the indemnity clause, one party agrees to compensate the other if something goes wrong. This provision helps protect the party from lawsuits caused by the other and clarifies responsibility before problems happen.

Termination

Outlines the specific circumstances under which the agreement can be terminated. For example, this agreement will be terminated upon the distribution of funds in the Escrow Fund in accordance with the agreement.

Force majeure

The force majeure clause exempts the party from meeting its obligations if something truly outside of its control happens and prevents performance. Common force majeure events include natural disasters, war, extreme weather, pandemics, and strikes.

Escrow agreement template

Purchase agreements often involve large transactions. Agreements must be clear and detailed to minimize risk and ensure all parties are on the same page. For this reason, escrow agreements must be detailed and comprehensive to ensure that both parties are protected.

But here’s the thing: writing an agreement from scratch takes time.

Templates streamline the process while ensuring your agreement meets industry standards.

Here’s what sets our escrow agreement template apart:

  • Integration with a purchase agreement.
  • Clear definitions of escrow amount, earnings, account, and reinvestment of interest.
  • Detailed release triggers, such as joint release instructions, non-appealable court decisions, termination of the transaction, and other specific circumstances.
  • Clearly defined role of the escrow agent. No fiduciary duties. Limited liability, apart from fraud, willful misconduct, and negligence.
  • Allocation of tax responsibility for IRS reporting and escrow earnings.

Our detailed, customizable template meets industry standards and includes key provisions that protect both parties.

Plus, our platform makes it easy to manage contracts across departments. With fynk, you can:

  • Track provisions with metadata. Keep tabs on escrow status, termination dates, governing law, release conditions, and more across transactions right from the fynk platform.
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  • Create reusable document templates. Save time by creating reusable document templates that align with transaction workflows.
  • Use dynamic fields to streamline contract management. Customize key data points like release dates, escrow amounts, and trigger events without changing the entire agreement.
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  • Create a verifiable audit trail. With fynk, it’s easy to create a verifiable record of instructions, amendments, releases, and other activity.
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Protect transaction funds and reduce closing risk with a comprehensive escrow agreement that protects both parties.

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FAQs

Is this escrow agreement template legally binding?
Yes. This agreement becomes legally binding once all parties sign it. Along with industry-standard contracts, the fynk platform also offers e-signature capabilities that comply with regulations like eIDAS.
Can the template be modified?
Absolutely. With fynk, you can collaborate in real-time and customize templates, all while tracking changes and setting approval workflows.
What are the specific release conditions of this agreement?
There are several specific triggers that allow the money to be released under this agreement, including: a joint agreement between both parties, one party cancels the purchase agreement, the purchase is successfully completed, a court orders the funds to be released under a non-appealable ruling, or a 6-month deadline passes with no resolution.

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Clause Library: learn more about the clauses in this template

Learn more about the clauses appearing in this template and find other clauses that are used in real contracts.

Escrow

An escrow clause in a contract specifies that certain assets, funds, or documents will be held by a neutral third party until specific conditions of the contract are fulfilled. This ensures that each party complies with the agreed-upon terms, providing security and trust for both parties involved.

17 example clauses

Fees And Expenses

The "Fees And Expenses" clause outlines the obligations of each party regarding the payment of fees and expenses incurred during the execution of a contract. It typically specifies what costs will be covered, who is responsible for them, and the timelines for payment.

3 example clauses

Indemnity

An indemnity clause is a contractual provision where one party agrees to compensate the other for certain costs and liabilities that may arise due to specified events or actions. This clause is designed to allocate risk by holding one party responsible for losses incurred by the other, providing financial protection in situations such as breaches of contract, negligence, or legal claims.

20 example clauses

Termination

A termination clause outlines the conditions under which a contract may be legally ended by either party. It typically specifies acceptable grounds for termination, necessary notice periods, and any associated penalties or procedures to be followed.

16 example clauses

Force majeure

A force majeure clause relieves parties from fulfilling contractual obligations when extraordinary events or circumstances beyond their control, such as natural disasters, war, or pandemics, occur, making performance impracticable or impossible. This provision typically outlines the specific events covered, the procedure for invoking the clause, and the consequences for both parties.

29 example clauses

Governing law and jurisdiction

The "Governing Law and Jurisdiction" clause specifies which region's legal framework will be applied in interpreting and enforcing the terms of a contract and designates the location where any legal disputes will be resolved. This clause is crucial for determining procedural and substantive legal matters, ensuring both parties are aware of the legal standards and courts that will have authority in case of conflicts.

14 example clauses

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