Draft Sample Escrow Agreement This Escrow Agreement: Fill & Download for Free

→ TLDR ANSWER ←If you read your grant documents they will tell you how to exercise your options. Usually that's sending in a grant notice along with payment for the option price, and then executing a bunch of agreements relating to the stock. The company then sends you a certificate and records the stock certificate and your contact information in its ledgers.These days, the agreements and signatures are moving online, the ledgers are all in a spreadsheet or database, and the certificates themselves may be online / electronic or there may be no certificates at all. The whole thing can be on the cloud with a service like eShares.→ LONG BACKGROUND ←Options are issued under an option plan, a program managed by a plan administrator designated by the company. The plan is governed by plan documents drafted by the firm's lawyers and approved by the company's stockholders, board of directors, and typically also approved by the company's investors. A number of the company's common shares are reserved (set aside) for use by the plan, generally by a board resolution that has also been approved by company investors. Nothing tangible happens when the shares are reserved, it's just that the company keeps track of those shares and promises not to issue or reserve them for any other purpose.Once the option plan is in place company executives may grant options to various people, and the company records those grants in its records, generally keeping an option table, typically in a spreadsheet or database (these used to be in paper ledgers). Companies issue grant notices to inform each grantee of the terms of their option: exercise price (also known as "strike" price), grant date, number of shares, vesting and vesting acceleration terms, exercise procedures, and so on. There is often a grant agreement by which the employee acknowledges and approves all of the terms and conditions with respect to the options they receive. The grant package also typically includes a copy of the option plan documents, and a set of documents to use in the event they decide to exercise: an exercise notice and a sample stock purchase agreement (a "SPA") together with all of the attachments associated with the SPA: a stockholder agreement, spousal consent, and in cases of "early exercise" a share escrow agreement, assignment in lieu of certificate, and 83(b) form.Ideally, the option plan documents and option grant agreements specify that the form of exercise notice and procedure is only an illustration for the grantee's convenience, and that the company may establish new agreements and procedures as technology advances and as the company's structure evolves, for example a new stockholder agreement put in place in connection with a funding round.When the optionee decides to exercise, they sign the grant agreement and all of the stock purchase documents necessary for them to hold shares. Depending on the company and how it is running its stock plan they may sign paper or online documents or else sign through a hosted service. Exercising also requires paying the exercise price by cash, check, etc. Some cashless exercise options may be available for well-regarded employees: the company may loan the money to cover the exercise, or else allow for a "net issuance" exercise where the optionee turns in some option shares as payment for exercising the others.The company first verifies that the optionee is eligible to exercise, for example due to vesting, and making sure the options have not expired. If all looks good it becomes a standard stock purchase at that point: they record the transaction in their books and if they are using stock certificates they send one to the new shareholder. Sometimes companies permit "early exercise" of unvested options, and the whole structure for dealing with unvested shares comes into play: the share certificate is held in escrow by the company rather than issued (generally a filing cabinet, or simply not printing the certificate until needed), and there are vesting terms and additional documents to sign.All of this is moving online, so it may be just a matter of clicking on a website until the website tells you that you have clicked enough.If the optionee is exercising in connection with an acquisition of the company, or an IPO, the procedure is often abbreviated with intermediate steps skipped. The optionee just signs a few documents and then gets their payment of the merger consideration (a wire transfer and possibly new share certificates or a brokerage account record in the acquiring company)* * *Whew, I did this all from memory, which means I've seen a few too many stock plans!

Due diligence is an investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material. It refers to the care a reasonable person should take before entering into an agreement or a financial transaction with another party. Due diligence can also refer to the investigation a seller does of a buyer; items that may be considered are whether the buyer has adequate resources to complete the purchase, as well as other elements that would affect the acquired entity or the seller after the sale has been completed.As you may know you can hire companies like #KPMG, #Deloitte, #BDO. They do due diligences but they aren't cheap.I would suggest hire your own team ( Corporate Accountant / Corporate Lawyer)Checklist Due Diligence:1.Introduction1.1.Teaser/Expose1.2.Information Memorandum1.3.Management Presentation1.4.Vendor Due Diligence Report1.5.Draft SPA2.Business2.1.General Information2.1.1.Company Structure2.1.2.Overview Products / Services2.1.3.Overview Global Activities2.1.4.Corporate Vision and Mission2.1.5. CVs of Key Personel2.1.6. Market Definition and Segmentation2.1.7. Memberships in Associations2.1.8. Intercompany Relationships2.1.9. List of Participations2.2. Strategy2.2.1. Strategic Plan2.2.2. Competition Analysis2.2.3. Market Research and Marketing Studies2.2.4. List of Acquisitions and Disposals2.3. Sales and Marketing2.3.1. Description Sales Organization2.3.2. Description Marketing Organization2.3.3. Sales Literature and Forms2.3.4. Standard Customer Contracts2.3.5. List of 20 largest Customers/Channels2.3.6. Sales Alliances2.3.7. Backlog Development2.3.8. Company Publications2.3.9. Customer Complaint Reports and Management2.3.10. Customer Satisfaction Surveys2.4. Operations2.4.1. Facilities and Manufacturing Sites2.4.2. Capacity Management2.4.3. Procurement Organization and Process2.4.4. Major suppliers2.4.5. Form of Standard Purchase Order2.4.6. Quality Management2.4.7. EHS Management System2.4.8. Desaster Recovery Plans2.5. R&D2.5.1. Description R&D Organization2.5.2. R&D Strategy and Roadmap2.6. IT2.6.1. Overview IT Organization2.6.2. List of pending IT Projects2.6.3. Overview of Software used2.7. Environmental2.7.1. Environmental Reports2.7.2. List of Hazardous Materials handled2.7.3. Schedule of Incidents3. Legal3.1. Corporation3.1.1. Legal Company Structure3.1.2. Corporate History3.1.3. Ownership3.1.3.1. Lists of all current Shareholders3.1.3.2. Cap Table3.1.3.3. Samples of Common and Preferred Stock Certificates3.1.3.4. Stock Option Plans3.1.3.5. Convertible Debt Agreements3.1.3.6. Copies of any Voting Trust Agreements3.1.4. Corporate Documents3.1.4.1. Trade Register Excerpts3.1.4.2. Business Registration3.1.4.3. Licenses, Permits and Certificates3.1.4.4. Shareholders' Agreement3.1.4.5. Articles of Incorporation3.1.4.6. By-laws3.1.4.7. Partnership or JV Agreements3.1.4.8. Securities Issuances3.1.5. Governance3.1.5.1. List of all Officers and Directors3.1.5.2. Reporting to the BOD and Shareholders3.1.5.3. Minutes of Meetings3.2. Contracts3.2.1. Material Supplier Agreements3.2.2. Material Customer Agreements3.2.3. Licensing and Reseller Agreements3.2.4. List of outstanding Leases3.2.5. Guarantees given by the Company3.2.6. Credit Agreements3.2.7. Contracts with Change of Control Clauses3.2.8.Other Material Contract3.3.Disputes3.3.1.Current Litigations3.3.2.Threatened Litigation3.3.3.Litigation Settlement Documents3.3.4.Warranty Claims3.4.Compliance3.4.1.Description of Risk Management System3.4.2.Overview Compliance Program3.4.3.Restrictions of doing Business3.4.4.Compliance with Licences, Permits and Certificates3.4.5.Business with Embargo Countries3.4.6.Notices received from goverment organizations3.5.Intellectual Property3.5.1.Patents, Trademarks, Copyrights, Domaines & Social Media acc.3.5.2.Out-licensing Technology Agreements3.5.3.In-licensing Technology Agreements3.5.4.Software Escrow Agreements3.5.5.Sponsored Research Agreements3.5.6.Correspondence from 3rd Parties regarding Infringements3.6.Insurance3.6.1.List and details of Insurance Policies3.6.2.List of past material Insurance Claims3.7.Real Estate3.7.1.Deeds3.7.2.Leases of Real Property3.7.3.Copies of Appraisals4.Financials4.1.Financial System4.1.1.Overview Accounting System4.1.2.Accounting Principles4.1.3.Overview of Reporting Structures, Departments, etc4.1.4.Annual Planning and Forecasting Procedures4.1.5.Treasury4.2.Financial Statements4.2.1.Annual Financial Statements - consolidated4.2.2.Annual Financial Statements - Companies4.2.3.Managements Correspondence with Auditors4.2.4.Off-Balance-Sheet Items4.2.5.Top 20 Accounts Payable4.2.6.Top 20 Accounts Receivable4.2.7.List of fixed Assets4.2.8.List of other Assets and other Liabilities4.2.9.List of financial Investments and Securities4.2.10.Documentation Impairment Tests4.2.11.Bad Debt Development4.2.12.Details on Year-End Provision and Accruals4.3.Management Reporting4.3.1.Current Management Reporting4.3.2.Interim financial Statements4.3.3.Current Budget and Forecast4.3.4.Historic Budget vs. Actuals4.4.Business Plan4.4.1.Current Business Plan4.4.2.Details planned Capital Expenditures4.5.Financing4.5.1.Bank Accounts and short-term Investments4.5.2.Loan Agreements and other Debt Instruments4.5.3.Finance and Operating Lease Agreements4.5.4.Shareholder Loans4.6.Taxation4.6.1.Tax Accounts4.6.2.Tax Returns4.6.3.Notifications by Tax Authorities4.6.4.Private Tax MattersFuture home of 5.hr5.1.Overview5.1.1.List and Details on Employees5.1.2.Employee Handbook5.1.3.Overview Workers Representation5.1.4.Union and Collective Workers Agreements5.1.5.List of HR Litigations5.1.6.Invention Assignment Agreements5.1.7.Non Compete Agreements5.2.Compensation5.2.1.List and Details of Compensation5.2.2.Bonus Plans, Retirement Plans, Pension Plans, Deferred Compensation Plans5.2.3.Owners Compensation5.2.4.Valuation Report Pensions5.3.Contracts5.3.1.Contracts of Key Employees5.3.2.Standard Working Contracts

You're describing a complex strategic relationship between two companies involving an ongoing intellectual property transfer. These are always unique transactions that involve negotiation by the parties and custom-drafted agreements from their lawyers. You could call them anything you want but they often go by the name of strategic partnerships, IP licenses, technology transfer agreements, or something more descriptive like "Random Number Provisioning Agreement".It's also a little bit like what's known as a "supply contract" where one company promises to be a supplier to the other, but the exact volume isn't known in advance. Imagine company A hires company B to supply hot dogs for its hot dog stand. They'll sign a contract to that effect, but the actual number of hot dogs depends on how many customers Company A can attract. These sorts of contracts are quite common. Some of the issues there are quality, timeliness, minimum and maximum amounts, price tiers, exclusivity and territories.Yes, it makes a lot of sense to distinguish between good and bad leavers in a supply contract. Specifically you would distinguish between contracts that are terminated: (a) due to breach by one party or the other, in which case the other party is entitled to the benefit of the contract, either cash damages or "specific performance" of obtaining the things they contracted for, or (b) due to the expiration of the term, or if specified in the contract, upon appropriate notice, in which case the contract winds down and everybody goes home. You could also provide for other reasons the contract might be suspended or terminated such as bankruptcy, government order, natural disaster (or civil unrest, or hacker attack), or one party simply terminating without required notice (which is usually a breach but could be called out specifically as a "termination for convenience" or "without cause").If the parties don't want source code escrow they might be out of luck because that's probably the simplest and most foolproof way to ensure that the licensee continues to receive the services of the licensor in the event the licensor breaches, goes out of busines, or is otherwise unwiling or unable to continue. You could escrow the technology in many ways, not just a repository of source code. You could escrow an entire working installation complete with the technology stack, and have it running idle in the hands of a trusted third party, probably one of those big consulting companies. In this particular example, because random numbers never expire, you could have the provider generate a year's worth of numbers in advance and escrow the numbers themselves with somebody, to be released only if escrow conditions are met.Alternatives to source code escrow would be a "specific performance" clause, mentioned above, that would allow the receiving party to get a court order to the other party to continue to supply random numbers. That would be nearly impossible to enforce if they simply refuse but it would up the ante because a court might for example order a transfer of the code, servers, bank account, etc. There are probably other approaches, this is the sort of thing where you and your lawyers need to brainstorm.The meta-question about dealing with possible complex scenarios is a great one. Think of the contract as a sort of code that maps the real world events and decisions of the parties on the one side as inputs, to desired outcomes, legal rights and responsibilities on the other as outputs. For example, if the input is that one party refuses to continue because it is bankrupt, the outcome is that the other party has a right to go to court to get ownership of the source code. In designing the contract, and in testing the contract, it makes a lot of sense to spend time designing a sample set of scenarios. As a businessperson, you know the scenarious that are most important: those you want to happen, you think are likely, and those you are afraid of. Your lawyer probably has a lot more experience than you do spotting things that can go wrong, because that's usually where they come in — nobody calls the lawyer about a contract when everything is going as planned. So they'll plan for situations you may not have dreamed of, for example one of the companies being acquired by a competitor, a third party filing a patent lawsuit, or the passage of a new law. You have to keep the lawyer from becoming a complete nay-sayer, and the lawyer has to keep you grounded and aware of real world risks. Once you have those scenarios in mind, you and the lawyer try to draft terms that are simple, elegant, efficient, understandable, scalable, and everythign else, just like code artchitecture. It's very bad practice to write a contract as a giant switch statement that says "in case 1, do A; in case 2, do B, etc." because the number of things that could happen in the world is nearly infinite and the more you try to be specific the more likely you're going to end up in a situation that the contract did not anticipate.