CORPORATE STOCK ESCROW AGREEMENT
A well-drafted Escrow Agreement will:
Provision Information & Benefits:
The Escrow Agent holds the borrower's stock certificates as security (collateral) pending the satisfaction of payment on a promissory note. One party (Lender) lends the corporation or shareholder (Borrower) money pursuant to a promissory note and the borrower's stock is held in escrow as collateral against the loan. Upon satisfaction of the note, the stock returns to the borrower. However, if there is a default on the note, the escrow agent releases the stock to the lender.
Unless and until default under the note, the shareholders of the certificates held in escrow, shall be able to vote such shares through the Escrow Agent as Proxy.
Other Important Provisions
ust include provisions appointing an Escrow Agent. Must include the conditions under which the the rights are deposited and under which the Escrow Agent may release such right(s). Must include who will open the escrow account, where the escrow account will exist, and if, and to what extent, compensation will be given for the services of the Escrow Agent.
Mediation and Arbitration
Mediation and Arbitration should always specify a location in Client's jurisdiction (preferably, in the same county where they run their business). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available).
Always stipulate that the contract will be governed under whatever law the Client ordinarily conducts business. Always make sure that venue and jurisdiction are as convenient to client (Buyer) as possible.
No Modification or Waiver
No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision.
Notices should always list the current and best addresses where each party may contact the other for whatever reason.
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