Escrow Agreement Template

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ESCROW AGREEMENT
This Escrow Agreement (“Escrow Agreement”) dated this _______day of ________ by and
between:
1.
__________________________, a company incorporated under the provisions of
Companies
Act,
1956,
with
its
corporate
office
at
______________________________________ (hereinafter referred to as the “Buyer”
which expression shall, unless repugnant to or inconsistent with the context, mean and
include their successors and permitted assigns) of the FIRST PART.
AND
2.
______________________________, a company incorporated under the provisions of the
Companies
Act,
1956
with
its
registered
office
at
______________________________________ (hereinafter referred to as “Seller”, which
expression shall unless repugnant to the context or meaning thereof, be deemed to mean
and include its successor or successors and permitted assigns) of the SECOND PART.
AND
3.
_________________________________,
a
banking
company
incorporated
in
England
by
Royal
Charter
in
1853,
having
its
principal
office
at
_________________________________,
and
having
its
branch
office
at
____________________________________________, (hereinafter referred to as the
“Escrow Agent”, which expression shall, unless repugnant to the context or meaning
thereof, be deemed to mean and include, its legal heirs, administrators, successors and
permitted assigns) of the THIRD PART.
(The Buyer, Seller and the Escrow Agent are hereinafter collectively referred to as the “Parties”
and individually as a “Party”)
WHEREAS:
A.
The Seller and the Buyer have executed an agreement to sell of even date pursuant to
which the Buyer has agreed to acquire ___________ acres of land from the Seller at a rate
of Rs _____________/- (Rupees ________________ only) per acre. (“Agreement to
Sell”)
C.
Pursuant to the Agreement to Sell, Buyer and the Seller have entered into certain
arrangements in terms of which the Buyer has agreed to deposit the sale consideration of
Rs
__________________/-
(Rupees
_______________________
only)
(“Escrow
Amount” or “Escrowed Amount”) in the Escrow Account with the Escrow Agent.
D.
It is in this connection that the Buyer and the Seller have agreed to appoint the Escrow
Agent upon the terms and conditions of this Escrow Agreement.
E.
The Escrow Agent has agreed to its appointment in terms of this Escrow Agreement.
Accordingly, in consideration of the foregoing and other consideration, the sufficiency and
adequacy of which is hereby acknowledged, and intending to be legally bound hereby, the Parties
agree as follows:
Article 1
Definitions and Interpretation
1.1
Definitions
ESCROW AGREEMENT
This Escrow Agreement (“Escrow Agreement”) dated this _______day of ________ by and
between:
1.
__________________________, a company incorporated under the provisions of
Companies
Act,
1956,
with
its
corporate
office
at
______________________________________ (hereinafter referred to as the “Buyer”
which expression shall, unless repugnant to or inconsistent with the context, mean and
include their successors and permitted assigns) of the FIRST PART.
AND
2.
______________________________, a company incorporated under the provisions of the
Companies
Act,
1956
with
its
registered
office
at
______________________________________ (hereinafter referred to as “Seller”, which
expression shall unless repugnant to the context or meaning thereof, be deemed to mean
and include its successor or successors and permitted assigns) of the SECOND PART.
AND
3.
_________________________________,
a
banking
company
incorporated
in
England
by
Royal
Charter
in
1853,
having
its
principal
office
at
_________________________________,
and
having
its
branch
office
at
____________________________________________, (hereinafter referred to as the
“Escrow Agent”, which expression shall, unless repugnant to the context or meaning
thereof, be deemed to mean and include, its legal heirs, administrators, successors and
permitted assigns) of the THIRD PART.
(The Buyer, Seller and the Escrow Agent are hereinafter collectively referred to as the “Parties”
and individually as a “Party”)
WHEREAS:
A.
The Seller and the Buyer have executed an agreement to sell of even date pursuant to
which the Buyer has agreed to acquire ___________ acres of land from the Seller at a rate
of Rs _____________/- (Rupees ________________ only) per acre. (“Agreement to
Sell”)
C.
Pursuant to the Agreement to Sell, Buyer and the Seller have entered into certain
arrangements in terms of which the Buyer has agreed to deposit the sale consideration of
Rs
__________________/-
(Rupees
_______________________
only)
(“Escrow
Amount” or “Escrowed Amount”) in the Escrow Account with the Escrow Agent.
D.
It is in this connection that the Buyer and the Seller have agreed to appoint the Escrow
Agent upon the terms and conditions of this Escrow Agreement.
E.
The Escrow Agent has agreed to its appointment in terms of this Escrow Agreement.
Accordingly, in consideration of the foregoing and other consideration, the sufficiency and
adequacy of which is hereby acknowledged, and intending to be legally bound hereby, the Parties
agree as follows:
Article 1
Definitions and Interpretation
1.1
Definitions
In this Escrow Agreement the following capitalized words and expressions have the following
meanings:
“Business Day” means a day (excluding Saturdays and Sundays) on which banks generally are
open in Delhi, India for the transaction of normal banking business;
“Escrow Account” has the meaning assigned to it in Article 3.2.1 hereof;
“Buyer’s Instruction” has the meaning assigned to it in Article 3.3.1 (a) hereof;
“Award” means any order, judgement, direction etc. given by any court of law or award passed by
any arbitration tribunal or sole arbitrator during any arbitration proceeding;
1.2
Interpretation
Except where the context requires otherwise, in this Escrow Agreement:
(i)
any reference to a statutory provision, rule, ordinance or other law shall include any
amendment or replacement thereof;
(ii)
references to Articles,
Schedules
and Annexures are, unless otherwise stated, to
articles of and schedules and annexures to this Escrow Agreement;
(iii)
words importing the singular include the plural and vice versa, words importing a gender
include
every
gender
and
references
to
persons
include
bodies,
corporate
or
unincorporated;
(iv)
the headings to the articles , schedules and annexures are for convenience only and shall
not affect the construction or interpretation of this Escrow Agreement;
(v)
the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to
this entire Escrow Agreement or specified articles of this Escrow Agreement, as the case
may be;
(vi)
reference to the word “include” shall be construed without limitation; and
(vii)
any word or phrase defined in the body of this Escrow Agreement shall have the meaning
assigned to it in such definition throughout this Escrow Agreement, unless the contrary is
expressly stated or the contrary clearly appears from the context.
Article 2
APPOINTMENT OF ESCROW AGENT
2.1
The Seller and the Buyer hereby designate and appoint the Escrow Agent as an escrow
agent for the purposes of operating and maintaining the Escrow Account and the Escrow
Agent hereby accepts such designation and appointment in accordance with the terms of
this Escrow Agreement. The term “Escrow Agent” shall include the Escrow Agent for the
time being and all its Successors further to the provisions of Article 10.
Article 3
Establishment of Escrow
3.1
Delivery of the Escrowed Amount
Simultaneously with execution of agreement to sell dated __________, the Buyer shall
deliver to the Escrow Agent an amount equal to the Escrowed Amount by transferring the
same into the Escrow Account.
3.2
Escrow Account
3.2.1
As soon as practicable, but no later than 3 Business Days from execution of this Escrow
Agreement, the Escrow Agent shall open the escrow account in the name of
___________________________________
Branch
_______________________
(the
“Escrow Account”). The Escrow Agent undertakes to the other Parties that it shall
operate the Escrow Account strictly in accordance with the provisions of this Escrow
Agreement.
3.2.2
The Escrow Agent shall accept deposit of the Escrowed Amount in the Escrow Account
upon delivery of the same by the Buyer in accordance with Article 3.1. The Escrow Agent
hereby confirms that it shall not claim any right or lien over the Escrowed Amount. The
Escrow Agent shall hold the Escrowed Amount for the benefit of the Buyer and the Seller.
The Escrow Agent shall place the Escrowed Amount or any part thereof into interest
bearing term deposits of __________________________ (“Fixed Deposit”), provided
such deposits are made on a full liquidity basis and shall be available for withdrawal or
disbursements as contemplated by this Escrow Agreement and within the time frame
prescribed hereunder. The Escrowed Amount shall be deposited in the Fixed Deposit for 7
(seven) days each on an automatic rollover basis along with the interest accrued on the
earlier
deposit
till
the
Escrow
Agent
receives
the
Buyer’s
Instructions
or
____________________ whichever is earlier and the withdrawal shall be subject to break
cost as applicable.
3.3
Instructions to Escrow Agent
3.3.1
The Escrow Agent shall release the Escrowed Amount only,
(a)
Forthwith also with interest accrued on the escrowed amount to the account of the
Seller by way of wire transfer, on receipt of the written instruction of the Buyer
from the Seller in form set out in Schedule A (“Buyer’s Instruction”) ; or
(b)
If the Escrow Agent receives a copy of an Award, in which event the Escrow Agent
shall act as per the instructions set forth in such Award; or
(c)
On the Buyer intimating the Escrow Agent in writing of the non registration of the
sale deed as on _____________________, in which event the Escrow Agent shall
forth with release the Escrowed Amount lying in the Escrow Account to the Buyer
together with applicable interest which shall be competitively determined by the
Escrow Agent at its sole discretion as per the market conditions and shall issue a
written intimation of such release to the Sellers.
3.3.2 No notice, instruction or document shall be sent by any of the other Parties to the Escrow
Agent via a facsimile.
Article 4
Representation and Warranties
4.1
The Parties have the necessary power, authority and the legal right to agree to these
terms and have taken all necessary actions required for the validity, enforceability and
performance of their respective obligations / duties in terms hereof;
4.2
This Escrow Agreement constitutes a legally, valid and binding obligations of the Parties,
enforceable against the Parties in accordance with applicable law;
4.3
The entry into and performance by the Parties of its obligations / duties under this Escrow
Agreement and any other document related hereto does not and will not violate, in any
respect:
(a)
any law, regulation, judgement, decree or order of any
legislative, executive,
judicial, quasi – judicial or regulatory authority (hereinafter referred to as
“Government Authority”) having jurisdiction or control over the Parties ;
(b)
the organizational documents of the Parties; or
(c)
any document, contract or other undertaking to which any of the Parties is a party
or which is binding on the either of them or any of its assets;
4.4
All consents, licenses, approvals or authorisations of or declarations to or registrations or
filings with any Government Authority and the payment of all stamp and other transaction
related duties, taxes and fees in India, and elsewhere, required to make the arrangements
contemplated herein, legal, valid and enforceable have been obtained or made and are in
full force and effect and shall continue to remain in full force and effect till the
arrangements are terminated in accordance with the terms in this Escrow Agreement;
4.5
The role of the Escrow Agent shall be limited to such functions as expressly laid out in this
Escrow Agreement or required by the written instructions of the Parties (or such of them
as may properly provide the instructions in accordance with terms in this Escrow
Agreement);
4.6
The Escrow Agent shall not be obliged to make available any sum which the other Parties
are expecting to receive from the Escrow Account unless clear funds have been credited
into and are available in the Escrow Account.
Article 5
Terms and Conditions
The following terms and conditions shall govern the escrow arrangement under this Escrow
Agreement:
5.1
Any interest that may accrue on the Escrowed Amount deposited with the Escrow Agent
shall be paid to the Seller upon occurrence of the sale pursuant to the Agreement to Sell
and the receipt of confirmation of such sale from the Seller.
5.2
The interest shall be payable by the Escrow Agent on the Escrow Amount only from the
date of deposit upto the date of withdrawal of the Escrow Amount.
5.3
However if the sale is not completed for whatever reason, the monies lying in the Escrow
Account shall automatically revert to the Buyer along with the interest accrued thereon.
The Escrow Agent shall transfer monies to the account of the Buyer on the close of
business on _______________________.
5.4
The Escrow Agent shall have the obligation to keep and maintain the Escrow Account held
by it hereunder with the same degree of care which it gives its own property or goods.
5.5
The Escrow Agent shall act in strict accordance with the terms and conditions set out in
this Escrow Agreement and agree to hold the Escrowed Amount in trust for the Buyer and
the Seller in its capacity as an agent.
5.6
The Escrow Agent shall not hand over the Escrowed Amount to any third party without
obtaining the prior written consent of the Buyer.
5.7
The Escrow Agent will hold the Escrowed Amount as a custodian and in case of insolvency,
liquidation or winding-up of the Escrow Agent, the Escrowed Amount will not be treated as
a property of the Escrow Agent.
Article 6
Fees, expenses and Costs
6.1
In consideration of the Escrow Agent agreeing to perform the obligations hereunder, the
Escrow Agent shall be paid an amount of INR ____________/- (Rupees _____________
only) at the time of execution of this Escrow Agreement for the term of this Agreement
(exclusive of service tax and other applicable statutory levies) as its professional fees.
6.2
All amounts payable to the Escrow Agent under this Escrow Agreement shall be borne by
the Buyer.
6.3
In the event the Escrow Agent apprehends that it would incur any costs or expenses
attributed to any act, omission and or negligence of the Seller or of the Buyer, in the
performance of its obligation, it shall first intimate the Buyer and Seller of such an
occurrence. In the event that either the Buyer or the Seller fail to remedy the event, the
Escrow Agent shall be entitled to recover from the other Parties all reasonable expenses
and costs actually incurred by the Escrow Agent in the performance of its obligations under
this Escrow Agreement, except costs and/or expenses incurred by the Escrow Agent due to
its own wilful negligence, fraud, misconduct or breach of this Escrow Agreement. The other
Parties shall within ____________Business Days of a written notice by the Escrow Agent
pay, the reasonable expenses and costs claimed by the Escrow Agent. The Escrow Agent
shall not be authorised under any circumstance to debit and appropriate from the money
lying in the Escrow Account..
Article 7
Term and Termination
7.1
This Escrow Agreement shall remain in force until terminated as set out in this Escrow
Agreement and the Agreement to Sell.
7.2
This Escrow Agreement shall automatically terminate once the Escrowed Amount has been
released by the Escrow Agent in accordance with the provisions of this Escrow Agreement.
7.3
Termination of this Escrow Agreement shall be without prejudice to rights that have
already accrued in favour of a Party.
Article 8
Miscellaneous
8.1
The Escrow Agent shall not be obliged to supervise, control or perform any acts or
responsibilities of the Parties or any other third party.
8.2
The Escrow Agent shall not be under any duty or obligation to:
(a)
Exercise any greater degree of care in respect of moneys standing to the credit of
the Escrow Account than it gives to its own account.
(b)
Verify or ascertain whether the Seller and Buyer have fulfilled their obligations
under the Agreement to Sell or any other agreements relating to the Escrow
Account or any moneys standing to the credit thereof, other than this Escrow
Agreement.
8.3
The Escrow Agent is acting in a purely administrative capacity and this Escrow Agreement
expressly sets forth all the duties and obligations of the Escrow Agent. The Escrow Agent
shall not be bound by (and shall be deemed not to have notice of) the provisions of any
agreement
between
the
Seller/Seller’s
Representative
and/or
the
Buyer/Buyer’s
Representatives except this Escrow Agreement and any implied duties or obligations of the
Escrow Agent are excluded to the fullest extent permitted by law.
8.4
The Seller / Seller’s Representative and the Buyer / Buyer's Representative hereby
represent and warrant to the Escrow Agent as follows for the duration of this Escrow
Agreement:
(a)
that the entry into and performance by it of, and the underlying transaction
referred to in the recitals above to which it is a Party, and any instructions issued
hereunder do not and will not conflict with any rules binding upon it or applicable
to the underlying transaction; and
(b)
it and its assets are not entitled to any immunity (whether on the grounds of
sovereignty or otherwise) from any legal or other proceedings or from attachment

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