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Employee Shareholder Escrow Agreement

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EMPLOYEE/SHAREHOLDER ESCROW AGREEMENT

This Employee/Shareholder Escrow Agreement (the "AGREEMENT") is entered into as of by and among

("PARENTCO"), (the "COMPANY"), the holders of all of the issued and outstanding shares of ("INLOGIC") identified on Exhibit A hereto as such (collectively, the "EMPLOYEE/SHAREHOLDERS"), as representative of the Employee/Shareholders (the "ESCROW REPRESENTATIVE") and , as escrow agent (the "ESCROW AGENT").

WHEREAS, pursuant to a Share Purchase Agreement (the "PURCHASE AGREEMENT") dated as of the date hereof, by and among ParentCo, the Company, Inlogic, the Employee/Shareholders and the other shareholders of Inlogic, the Company is purchasing all of the issued and outstanding shares in Inlogic in consideration for the issuance of either exchangeable shares of the Company (the "EXCHANGEABLE SHARES") or shares of common stock, $0.01 par value per share, of ParentCo ("PARENTCO COMMON STOCK");

AND WHEREAS, the Employee/Shareholders have agreed to have a portion of the Exchangeable Shares or ParentCo Common Stock, as the case may be, which they will receive in consideration for their shares in Inlogic, placed in escrow for a period of time, as specified in Article 7 of the Purchase Agreement;

AND WHEREAS, Exchangeable Shares of the Company and Shares of ParentCo Common Stock are being deposited in escrow to be held as hereinafter provided;

AND WHEREAS the foregoing recitals are made as representations and statements of fact by the parties hereto other than the escrow Agent;

NOW, THEREFORE, in consideration of the foregoing and the mutual promises of the parties herein contained, and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. Escrow and Escrow Shares.

Pursuant to the Purchase Agreement, the Company shall deposit in escrow with the Escrow Agent, as escrow agent, a stock certificate or certificates representing Exchangeable Shares issued and initially shares of ParentCo Common Stock issued and, within 60 days, an additional shares of ParentCo Common Stock issued (together, the "ESCROW SHARES" and together with additions to or earnings on the same, the "ESCROW DEPOSIT") which shall be registered in the name of the Escrow Agent, or its nominee, as agent for the beneficial owners of such shares. The Escrow Shares shall be held and distributed by the Escrow Agent in accordance with the terms and conditions hereof.

2. Investment of Escrow.

The Escrow Agent shall invest all cash, if any, held as part of the Escrow Deposit only in such specific investments as the Employee/Shareholders and the Escrow Representative shall from time to time jointly direct in writing to the Escrow Agent. If the amount of cash is insufficient to invest the cash will be deposited into an interest bearing trust account of the Escrow Agent.

Until further written notice, cash in the Escrow Deposit shall be invested in an interest bearing trust account of the Escrow Agent secured by federal regulators, money market funds, guaranteed investment certificates, treasury bills, or any debtor bond obligations rated AAA by Standard & Poor's or Dominion Bond Rating Service or the equivalent rating by such other rating agency as the Escrow Representative and the Employee/Shareholders may direct.

3. Exchange and Permitted Transfers.

The Exchangeable Shares may be exchanged into ParentCo Common Stock (or any other securities) during the Escrow Period and the Exchangeable Shares may be transferred within escrow solely in favour of Daleen Callco Corporation, if required to effect such exchange.

The Employee/Shareholder desiring such exchange shall deliver to the Escrow Agent a notice stating the number of Exchangeable Shares (such number not to exceed the total number of Exchangeable Shares that the Escrow Agent is holding on behalf of such Employee/Shareholder) he or she wishes to exchange.

The Company shall return to the Escrow Agent the ParentCo Common Stock into which the Exchangeable Shares have been exchanged and any other consideration resulting from such exchange as well as a new Exchangeable Share certificate representing the balance of any Exchangeable Shares not exchanged all of which shall form part of the Escrow Deposit.

The ParentCo Common Stock may be transferred within the Escrow Period, provided that the transfer is effected pursuant to the registration rights agreement dated the date hereof or pursuant to a valid exemption under Rule 144 of the Securities Act of 1933, as amended, and the Employee/Shareholder returns the pre-tax net proceeds received from such transfer.

4. Rights and Obligations of the Parties.

The Escrow Agent shall be entitled to such rights and shall perform such duties of the escrow agent as set forth herein (collectively, the "DUTIES"), in accordance with the terms and conditions of this Agreement.

5. Escrow Period.

(a) Subject to Section 5(b) herein, the Escrow Period shall terminate with respect to 41.67% of the Escrow Shares held on behalf of each Employee/Shareholder at the expiration of six (6) months after the date of this Agreement; 41.67% at the expiration of twelve (12) months; and the remainder at the expiration of eighteen (18) months after the date of this Agreement. Any fractional shares shall be rounded up to the next whole share.

(b) Notwithstanding Section 5(a), if the Escrow Agent and the Company receive a written notice from the Employee/Shareholder to the effect that due to a material breach by the Company of such Employee/Shareholder's employment agreement, all the Escrow Shares of such Employee/Shareholder shall be released from escrow, subject to dispute resolution conditions.

6. Delivery of Escrow Shares

(a) Promptly following the termination of each Escrow Period, the Escrow Agent shall deliver to the Employee/Shareholders that number of Escrow Shares which bears the same relationship to the total number of Escrow Shares in the Escrow Deposit and available for distribution as the number of Escrow Shares set forth opposite the name of each such Employee/Shareholder on Exhibit A hereto bears to the total number of Escrow Shares on Exhibit A.

(b) MOHAMMED AAMIR - In the event that the Escrow Agent and Mr. Mohammed Aamir receive written notice from the Company that Mr. Mohammed Aamir has been terminated "for cause" under the terms of his employment agreement, 50% of the Escrow Deposit beneficially held on his behalf shall be released from escrow and delivered to the Company; and the remaining 50% shall be released from escrow and transferred to a charitable organization designated on the date hereof or such other organization as designated in writing.

(c) TERMINATION FOR CAUSE OR RESIGNATION - In the event that the Escrow Agent and the Employee/Shareholder receives notice by the Company that such Employee/Shareholder has been terminated for cause or has resigned, 100% of the Escrow Deposit beneficially held on his or her behalf shall be transferred and reallocated within escrow to all the other Employee/Shareholders hereunder on a pro rata basis.

7. Amounts Earned on Escrow Deposit: Tax Matters.

All amounts earned, paid or distributed with respect to the Escrow Deposit, if any, shall become a part of the Escrow Deposit, shall be held hereunder upon the same terms as the original Escrow Deposit and shall be distributed together with the underlying portion of the original Escrow Deposit pursuant to the terms of this Agreement.

8. The Escrow Agent.

(a) Direction from ParentCo and Escrow Representative. Notwithstanding anything herein to the contrary, the Escrow Agent shall promptly dispose of all or any part of the Escrow Deposit as directed by a notice in writing signed by the Company, ParentCo and Escrow Representative.

(b) Reliance by Escrow Agent; Liability of Escrow Agent. The Escrow Agent will not be subject to, or be obliged to recognize, any other agreement between the parties hereto or directions or instructions not specifically set forth as provided for herein. The Escrow Agent shall perform only such duties as are expressly set forth herein.

The Company, ParentCo and the Employee/Shareholders jointly and severally agree to indemnify and hold the Escrow Agent harmless from and against any and all claims, liabilities, losses, damages, fines, penalties, and expenses. The provisions of this Section 8(b) shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent for any reason.

(c) Fees and Expenses of the Escrow Agent. All fees of the Escrow Agent for its services hereunder, together with any expenses reasonably incurred by the Escrow Agent in connection with this Agreement, shall be paid by the Company.

(d) Resignation and Removal of Escrow Agent; Successor Escrow Agent.

(i) The Escrow Agent may resign from its duties hereunder by giving each of the parties hereto not less than thirty (30) days prior written notice of the effective date of such resignation. Upon the effective date of such resignation or removal, the Escrow Agent shall deliver the property comprising the Escrow Deposit to such successor escrow agent, together with an accounting of the investments held by it and all transactions related to this Agreement.

(ii) Any corporation or other entity into which the Escrow Agent may be converted, merged, consolidated, or to which it may transfer all or substantially all of its corporate trust business, shall become successor Escrow Agent hereunder.

(e) The Escrow Agent shall have the right to consult with and obtain advice from legal counsel employed or appointed by it.

(f) The Escrow Agent shall disburse monies hereunder only to the extent that monies have been deposited with it.

(g) The Escrow Agent shall retain the right not to act and shall not be held liable for refusing to act unless it has received clear documentation which complies with the terms of this Agreement.

(h) The Escrow Agent shall incur no liability with respect to the delivery or non-delivery of any certificate or certificates whether delivered by hand, mail or any other means.

(i) The forwarding of a cheque by the Escrow Agent will satisfy and discharge the liability for any amounts due to the extent of the sum represented thereby.

(j) None of the provisions contained in this Agreement require the Escrow Agent to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.

9. Voting of Escrow Shares.

So long as any Escrow Shares are retained by the Escrow Agent, the Employee/Shareholders in accordance with their respective ownership percentages as set forth on Exhibit A hereto, shall be entitled to exercise the voting power, if any, with respect to the Escrow Shares. The Escrow Agent shall not exercise the voting power of the Employee/Shareholders.

10. Termination.

This Agreement shall terminate on the date that the Escrow Deposit is reduced to zero as the result of releases by the Escrow Agent to Employee/Shareholders in accordance with this Agreement.

11. Governing Law.

IT IS THE PARTIES' INTENT THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS APPLICABLE THEREIN.

12. Counterparts.

This Escrow Agreement may be executed in one or more counterparts, all of which documents shall be considered one and the same document.

13. Notices.

Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given when received, if personally delivered or delivered by overnight delivery service or sent by facsimile transmission.

TO PARENTCO:

TO THE COMPANY:

TO THE EMPLOYEE/SHAREHOLDERS: See Exhibit B

TO THE ESCROW REPRESENTATIVE:

TO THE ESCROW AGENT:

Addresses may be changed by written notice given pursuant to this Section. Any notice given hereunder may be given on behalf of any party by his counsel or other authorized representatives.

14. Force Majeure.

Neither the Company, ParentCo, the Escrow Representative, the Employee/Shareholders nor the Escrow Agent shall be responsible for delays or failures in performance under this Agreement resulting from acts beyond its control.

15. Modifications.

This Agreement may not be altered or modified nor may any condition or covenant set forth herein be waived, without the express written consent of the parties hereto and the consent of the Escrow Representative shall bind each of the Employee/Shareholders.

16. Reproduction of Documents.

This Agreement and all documents relating thereto, including consents, waivers and modifications, may be reproduced by photographic, photostatic, microfilm, optical disk, micro-card, miniature photographic or other similar process. Any such reproduction shall be admissible in evidence as the original itself.

IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed as of the date first written above.

DALEEN CANADA CORPORATION

By:

Name:

Title:

DALEEN TECHNOLOGIES, INC.

By:

Name:

Title:

Mohammed Aamir, as Escrow Representative

MONTREAL TRUST COMPANY OF CANADA

By:

By:

Name:

EMPLOYEE/SHAREHOLDERS:

The Vengrowth Investment Fund Inc.

By:

Name:

Title:

01303949 Ontario Inc.

By:

Name:

Title:

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What an Employee Shareholder Escrow Agreement Is

An Employee Shareholder Escrow Agreement is a contract that places stock or equity certificates into the custody of a neutral escrow agent until specified conditions are met. Typical conditions include vesting schedules, performance milestones, repurchase rights, or closing events. The agreement sets out the parties, escrow agent duties, instructions for release, handling of dividends and voting rights while escrowed, and procedures for dispute resolution and transfer. It is commonly used in equity compensation, early-stage financings, and certain M&A holdbacks to protect both the issuing company and the recipient shareholder.

Why this agreement matters for employers and shareholders

The Employee Shareholder Escrow Agreement creates clear, enforceable conditions for share transfer, reduces post-closing disputes, and protects corporate governance interests. When executed electronically, e-signatures are recognized under the ESIGN Act (15 U.S.C. ch. 96, 2000) and UETA, subject to statutory exceptions.

Why this agreement matters for employers and shareholders

Typical users and stakeholders

These agreements are used by organizations issuing equity and the people who administer, review, or secure those grants.

  • Founders and private-company executives who issue restricted shares or holdbacks.
  • HR, payroll and equity administration teams who manage vesting, withholding, and reporting.
  • Corporate counsel and escrow agents who draft instructions and supervise releases.

Use involves coordination among legal, finance, and the designated escrow agent to ensure release conditions are tracked and documented.

Signatory roles and authority

Employee Signatory

The employee or shareholder signs to accept the escrow terms and acknowledge transfer restrictions. Their signature confirms consent to vesting, repurchase rights, and tax withholding obligations; name and taxpayer identification must match employer records.

Company Signatory

An authorized corporate officer signs for the company to confirm issuance and any conditions. Corporate signatories should be authorized in writing and act within board-approved equity plans or resolutions.

Core elements to include in a professional agreement

A complete Employee Shareholder Escrow Agreement combines commercial terms, escrow mechanics, and legal protections. Ensure each element below is present and unambiguous to reduce later disputes.

Parties & Recitals

Identify the company, the shareholder, and the escrow agent; state the purpose and context such as equity issuance or M&A holdback.

Escrow Agent Duties

Define custody, recordkeeping, fee responsibility, instructions for release, and liability limitations for the escrow agent.

Escrowed Securities

Describe securities type, number of shares, certificate numbers (if applicable), and any legends or restrictions needed for transfer.

Release Conditions

Specify vesting events, performance thresholds, time-based milestones, or closing conditions that trigger release to the shareholder.

Tax & Repurchase Terms

Include withholding obligations, repurchase price formulas, right of first refusal, and treatment on termination or departure.

Governing Law & Disputes

Choose a governing state law and dispute resolution mechanism; include indemnities and attorney fee provisions where appropriate.

Required identification and core data fields

Employee Name: Full legal name
Company Name: Legal entity name
Security Type: Common or preferred
Share Count: Number of shares
Vesting Terms: Schedule summary
Escrow Agent: Agent name and contact

Step-by-step: completing and executing the agreement

Follow these ordered steps to prepare, authorize, and finalize an Employee Shareholder Escrow Agreement.

  • 01
    Prepare draft: Collect equity plan, board resolution, and required terms.
  • 02
    Review legal: Have corporate counsel confirm transfer and tax language.
  • 03
    Upload for signature: Place fields and assign signers in your eSignature platform.
  • 04
    Execute and archive: Obtain signatures, deliver to escrow agent, and retain records.

Configuring the digital workflow for online completion

Set up the signing flow to capture required data, secure signer identity, and ensure a complete audit trail.

Field mapping Map form fields to your HR or equity system for automated recordkeeping.
Conditional fields Use conditional logic for repurchase formulas and variant clauses.
Signer authentication Choose email, SMS code, or stronger methods for high-assurance signers.
Bulk send options Enable bulk distribution for multiple grants with template variables.
Retention rules Automate archival and exports in PDF/A or DOCX formats.

Where to send documents and how they flow

The typical delivery path ensures the escrow agent receives the executed agreement and copies are stored with relevant parties.

  • To Escrow Agent: Send the fully executed agreement and share certificates, if applicable.
  • Company Records: File a copy with corporate minute books and equity ledgers.
  • Employee Copy: Provide the shareholder a signed copy with release schedule.
  • Transfer Agent: If public, instruct the transfer agent to record the restricted status.

Technical requirements for digital execution and storage

Use a platform that supports secure PDFs, audit trails, and configurable signer authentication for legal certainty.

  • File formats: PDF, DOCX supported for upload and download
  • Integrations: Connectors for Salesforce, NetSuite, Google Workspace
  • Authentication: Email, SMS, KBA, or SSO per risk profile

Key dates and timing to track

Identify contractual and administrative dates to avoid missed vesting events, withholding obligations, or release delays.

Effective Date:

Date the agreement becomes binding and custody starts.

Vesting Milestones:

Specific dates or service milestones for share release.

Release Trigger:

Event-based conditions that permit transfer from escrow.

Tax Reporting Deadlines:

Employer must track withholding and report per IRS deadlines.

Record Retention:

Maintain executed documents per federal and state rules.

Milestone timeline from negotiation to release

A sequential view of major process milestones and typical timing from execution through final release.

01

Draft & Negotiate

Finalize terms, escrow agent selection, and board approvals.

02

Board Authorization

Obtain resolutions approving issuance and escrow mechanics.

03

Execution & Deposit

Sign, deliver copies, and deposit certificates or instructions.

04

Condition Monitoring

Track vesting or performance and instruct escrow agent for release.

Common mistakes to avoid when preparing the agreement

  • Vague release language that leaves the escrow agent without clear instructions and causes inconsistent application of conditions.
  • Mismatched names or taxpayer identifiers that cause withholding errors or delays in transferring shares to the employee.
  • Failure to address tax withholding and repurchase pricing, which can create unexpected liabilities for the company or shareholder.
  • Not coordinating corporate record updates or transfer agent notices, leaving the share register inconsistent with escrow status.

Potential risks and consequences of incomplete or incorrect agreements

Securities Liability: Exposure under state and federal securities laws
Tax Problems: Incorrect withholding or reporting
Enforcement Delay: Disputes slow release or transfers
Contract Invalidity: Ambiguities may void terms
Escrow Agent Exposure: Unclear duties increase agent risk
Recordkeeping Failures: Noncompliance with retention rules

Real-world examples of digital execution and document control

Two examples show how organizations used secure e-signing and escrow workflows to manage equity transfers without paper delays.

Optica Ventures LLC

The team streamlined execution for investor and employee agreements using an online workflow.

  • Implementation reduced turnaround for signature collection.
  • The result improved coordination among counsel, treasury, and escrow agent while maintaining consistent audit records for each grant.

Martin Properties

Management executed complex sponsor equity holdbacks online to close deals remotely.

  • Digital workflows preserved chain-of-custody for securities instructions.
  • This allowed timely releases once closing conditions were satisfied and eliminated courier delays that previously held up closings.

How this agreement compares with similar documents

A brief comparison highlights differences between an Employee Shareholder Escrow Agreement and related equity documents.

Criteria Employee Escrow Other Agreement
Notarization not typical not typical
Escrow Agent required optional
Vesting often included rarely included
Tax Withholding addressed may be separate

Comparing eSignature vendors for executing escrow agreements

Vendor pricing and core features vary. signNow is listed first for comparison; confirm the vendor plan details that match your volume and compliance needs.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial, no card Limited trial Limited trial Limited trial Limited trial
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about completion and enforceability

Answers to common operational and legal questions about Employee Shareholder Escrow Agreements and online execution.


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