Contract analysis

Section 1.1 Definitions. As used in this Agreement, the following capitalized terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the APA. "Accepted Claim" has the meaning set forth in Section 4.2(a). "APA" means the Asset Purchase Agreement, dated as of May 11, 2023, by and between Seller and Buyer, as may

Section 1.2 Interpretation. (a) All references herein to "Articles," "Sections," and "Exhibits" refer to Articles, Sections, and Exhibits of this Agreement unless otherwise specified. (b) The words "hereof," "herein," "hereto," "hereby," and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. (c) The word

ARTICLE 2 — ESTABLISHMENT OF ESCROW; DEPOSIT

Section 2.1 Establishment of Escrow Account. The Escrow Agent hereby agrees to establish and maintain a segregated escrow account, designated as Account No. 8841-7023-5500, at Ashgrove Equity Partners Escrow Services, Inc.'s offices located at 101 California Street, Suite 1250, San Francisco, California 94111 (the "Escrow Account"). The Escrow Account shall be established in the name of "Ashgrove Equity Partners Escr

Section 2.2 Deposit of Escrow Amount. On the Closing Date (August 8, 2023), Buyer shall deposit, or cause to be deposited, the Escrow Amount of Fourteen Million Dollars ($14,000,000) by wire transfer of immediately available funds into the Escrow Account in accordance with the wire transfer instructions set forth on Exhibit A attached hereto and incorporated herein by reference. The Escrow Amount constitutes a portio

Section 2.3 Confirmation of Receipt. The Escrow Agent shall promptly (and in no event later than one (1) Business Day after receipt) confirm receipt of the Escrow Amount in writing (which may be by email) to both Seller and Buyer upon receipt of the wire transfer into the Escrow Account. Such confirmation shall specify the date and time of receipt and the amount received. If the Escrow Agent does not receive the full

Section 2.4 Title to Escrow Fund. The Escrow Fund shall be the property of Buyer until released to Seller in accordance with the terms of this Agreement; provided, however, that upon release to Seller pursuant to Article 5 or otherwise in accordance with this Agreement, such released amounts shall immediately become the property of Seller. Notwithstanding the foregoing, for United States federal, state, and local inc

ARTICLE 3 — INVESTMENT OF ESCROW FUND

Section 3.1 Permitted Investments. The Escrow Agent shall invest and reinvest the Escrow Fund, including any income earned thereon, in one or more of the following categories of investments (collectively, "Permitted Investments"), as directed by Joint Written Instruction of Seller and Buyer (or, in the absence of such direction, as provided in Section 3.2): (a) Direct obligations of, or obligations the timely payment

Section 3.2 Joint Written Instruction. For purposes of this Agreement, a "Joint Written Instruction" shall mean a written instruction signed by an authorized representative of both Seller and Buyer, directing the Escrow Agent to take a specified action with respect to the Escrow Fund, including with respect to investment direction, disbursement, or any other matter contemplated hereby. In the absence of a Joint Writt

Section 3.3 Income and Earnings. All interest, dividends, capital gains, and other income earned on the Escrow Fund (collectively, "Escrow Earnings") shall be added to and become part of the Escrow Fund. Escrow Earnings shall be subject to release and distribution on the same terms and in the same proportions as the principal Escrow Amount. For the avoidance of doubt, all references in this Agreement to the "Escrow F

Section 3.4 Risk of Loss. Neither the Escrow Agent nor any Party shall be liable for any losses, declines in value, or other diminution in the Escrow Fund resulting from Permitted Investments made in accordance with this Article 3, including any losses arising from fluctuations in the market value of any such investments, absent the Escrow Agent's gross negligence or willful misconduct. The Escrow Agent shall not be

Section 4.1 Claim Notice. If Buyer believes in good faith that it is entitled to indemnification from the Escrow Fund pursuant to Article IX of the APA, Buyer shall deliver a written notice (a "Claim Notice") to the Escrow Agent and to Seller, which Claim Notice shall specify each of the following: (a) A description of the nature and factual basis of the claim in reasonable detail, including the events, circumstances

Section 4.2 Response Period. Seller shall have thirty (30) Business Days following receipt of a Claim Notice (the "Response Period") to deliver to the Escrow Agent and to Buyer a written response (a "Response Notice"). The Response Notice shall indicate either: (a) That Seller accepts the claim in whole or in part (an "Accepted Claim"), specifying the dollar amount accepted by Seller and consenting to disbursement of

Section 4.3 Disbursement on Accepted Claims. Upon receipt of a Response Notice constituting an Accepted Claim (whether in whole or in part) or upon the deemed acceptance of a claim as provided in Section 4.2, the Escrow Agent shall promptly (and in no event later than five (5) Business Days after receipt of the Response Notice or the expiration of the Response Period, as applicable) disburse the accepted amount (or,

Section 4.4 Disputed Claims; Resolution. (a) Resolution Process. If Seller disputes a claim in whole or in part in accordance with Section 4.2(b), the Disputed Claim shall be resolved in accordance with the dispute resolution provisions set forth in the APA, which may include good faith negotiation between the Parties, non-binding mediation, and, if necessary, litigation before a court of competent jurisdiction. The

Section 4.5 Aggregate Basket Requirement. No disbursement from the Escrow Fund shall be made to Buyer unless and until the aggregate amount of all claims for which valid Claim Notices have been delivered (each of which individually exceeds the De Minimis Threshold of $75,000) equals or exceeds the Basket amount of One Million Four Hundred Thousand Dollars ($1,400,000). In accordance with the tipping basket structure

Section 4.6 Indemnification Cap. Total disbursements from the Escrow Fund to Buyer, together with all other indemnification payments made to Buyer under Article IX of the APA (whether from the Escrow Fund or otherwise), shall not exceed the Indemnification Cap of Twenty-Eight Million Dollars ($28,000,000) (representing twenty percent (20%) of the Total Consideration of One Hundred Forty Million Dollars ($140,000,000)

ARTICLE 5 — RELEASE OF ESCROW FUND

Section 5.1 First Scheduled Release (12 Months Post-Closing). On August 8, 2024 (the "First Release Date"), the Escrow Agent shall release to Seller, by wire transfer of immediately available funds to the account designated by Seller in Exhibit B attached hereto (or such other account as Seller may designate by written notice to the Escrow Agent at least five (5) Business Days prior to the First Release Date), an amo

Section 5.2 Final Release (Survival Period Expiration). On February 8, 2025 (the "Final Release Date"), which corresponds to the expiration of the eighteen (18)-month Survival Period for general representations and warranties under the APA, the Escrow Agent shall release to Seller, by wire transfer of immediately available funds to the account designated on Exhibit B (or such other account as Seller may designate by

Section 5.3 Fundamental Representations Claims. Notwithstanding anything to the contrary in Section 5.2 or elsewhere in this Agreement, the Escrow Fund shall not serve as the exclusive source of recovery for indemnification claims based on breaches of Fundamental Representations, which survive for sixty (60) months from the Closing Date (i.e., through August 8, 2028). To the extent any claim based on a Fundamental Re

Section 5.4 Termination of Escrow. This Agreement shall terminate upon the later of (a) the Final Release Date and (b) the final resolution and disbursement of all Pending Claims and the complete distribution of the entire Escrow Fund (including all Escrow Earnings) in accordance with the terms hereof. Upon termination of this Agreement, the Escrow Agent's duties, obligations, and responsibilities hereunder shall cea

Section 6.1 Tax Treatment. For United States federal, state, and local income tax purposes, the Escrow Fund (including all investment income, interest, dividends, capital gains, and other earnings accruing thereon) shall be treated as owned by Seller from and after the Closing Date. Seller shall report all income earned on the Escrow Fund on its federal, state, and local income tax returns for each taxable period dur

Section 6.2 Tax Reporting. The Escrow Agent shall report all income earned on the Escrow Fund under Seller's name and taxpayer identification number (Employer Identification Number: 47-3892061). The Escrow Agent shall prepare and deliver to Seller, within the time periods required by applicable law, all applicable tax information statements, including IRS Form 1099 (or any successor or equivalent form), reflecting th

Section 6.3 Withholding. The Escrow Agent shall be entitled to deduct and withhold from any amount payable or distributable pursuant to this Agreement such amounts as the Escrow Agent may be required to deduct and withhold under any provision of federal, state, local, or foreign tax law. To the extent that amounts are so withheld and paid over to the applicable taxing authority, such amounts shall be treated for all

Section 6.4 Tax Indemnity by Seller. Seller shall indemnify, defend, and hold harmless the Escrow Agent from and against any and all taxes, penalties, interest, additions to tax, and related costs and expenses (including reasonable attorneys' fees) arising from or related to Seller's failure to report or pay any taxes attributable to income earned on the Escrow Fund as required by applicable law and this Article 6. T

ARTICLE 7 — ESCROW AGENT PROVISIONS

Section 7.1 Duties and Responsibilities. The Escrow Agent's duties and responsibilities under this Agreement are limited solely and exclusively to those expressly set forth in this Agreement. The Escrow Agent shall act as a stakeholder only and shall have no fiduciary duties or obligations to any Party beyond those expressly specified herein. Without limiting the generality of the foregoing: (a) The Escrow Agent shal

Section 7.2 Standard of Care. The Escrow Agent shall perform its duties hereunder with reasonable care consistent with the standards applicable to professional escrow agents. The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith and in accordance with the terms of this Agreement, except to the extent that such action or omission constitutes gross negligence or willful mi

Section 7.3 Reliance on Documents. The Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting upon, any notice, instruction, request, consent, certificate, direction, agreement, court order, or other document or communication that it believes in good faith to be genuine and to have been signed, presented, or transmitted by the proper party or parties. The Escrow Agent shall have

Section 7.4 Resignation or Removal. (a) Resignation. The Escrow Agent may resign at any time upon thirty (30) days' prior written notice to Seller and Buyer. Such resignation shall take effect upon the appointment of a successor escrow agent and the transfer of the Escrow Fund to such successor, or, if no successor has been appointed within such thirty (30)-day period, upon the expiration of such period. (b) Removal.

Section 7.5 Conflicting Instructions. If, at any time, the Escrow Agent receives instructions, claims, demands, or other communications from Seller and Buyer that, in the Escrow Agent's reasonable judgment, are conflicting or inconsistent with each other or with the terms of this Agreement, the Escrow Agent may refrain from taking any action (other than maintaining the Escrow Fund in accordance with this Agreement) u

Section 7.6 Interpleader. If any dispute arises with respect to the Escrow Fund, the interpretation of this Agreement, or the rights, obligations, or duties of the Escrow Agent hereunder, or if the Escrow Agent receives conflicting instructions that cannot be resolved in accordance with Section 7.5, the Escrow Agent may, at any time, in its sole discretion, commence an interpleader action or similar proceeding in any

ARTICLE 8 — FEES AND EXPENSES OF ESCROW AGENT

Section 8.1 Escrow Agent Fees. The fees payable to the Escrow Agent for the performance of its services under this Agreement shall be as set forth in the fee schedule attached as Exhibit C hereto and incorporated herein by reference. Such fees shall be paid fifty percent (50%) by Seller and fifty percent (50%) by Buyer. The initial setup and acceptance fee shall be due and payable upon execution of this Agreement, an

Section 8.2 Expense Reimbursement. Seller and Buyer shall reimburse the Escrow Agent for all reasonable and documented out-of-pocket expenses incurred by the Escrow Agent in connection with the performance of its duties under this Agreement, including without limitation postage, courier charges, wire transfer fees, and legal fees and expenses incurred by the Escrow Agent in connection with any dispute, interpleader a

Section 8.3 Priority of Payment. If any fees or expenses payable to the Escrow Agent under this Agreement remain unpaid for more than sixty (60) days after the date of the Escrow Agent's invoice therefor, the Escrow Agent shall be entitled, upon not less than ten (10) days' prior written notice to Seller and Buyer, to deduct the amount of such unpaid fees and expenses from the Escrow Fund. Any amounts so deducted sha

ARTICLE 9 — INDEMNIFICATION OF ESCROW AGENT

Section 9.1 Indemnification. Seller and Buyer shall, jointly and severally, indemnify, defend, and hold harmless the Escrow Agent, and its officers, directors, employees, agents, and representatives (collectively, the "Escrow Agent Indemnitees"), from and against any and all losses, liabilities, claims, actions, suits, proceedings, demands, damages, costs, and expenses (including reasonable attorneys' fees and costs

Section 9.2 Lien. The Escrow Agent shall have a first-priority lien on the Escrow Fund for any and all fees, expenses, and indemnification amounts owed to the Escrow Agent under this Agreement (collectively, "Escrow Agent Obligations"). Such lien shall attach to the Escrow Fund upon the accrual of any Escrow Agent Obligation and shall remain in effect until all Escrow Agent Obligations have been paid in full. The Esc

ARTICLE 10 — REPRESENTATIONS AND WARRANTIES

Section 10.1 Representations and Warranties of Seller. Seller hereby represents and warrants to each of Buyer and Escrow Agent, as of the date hereof and as of the Closing Date, as follows: (a) Organization and Good Standing. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with Employer Identification Number 47-3892061. (b) Power and Authority. S

Section 10.2 Representations and Warranties of Buyer. Buyer hereby represents and warrants to each of Seller and Escrow Agent, as of the date hereof and as of the Closing Date, as follows: (a) Organization and Good Standing. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with Employer Identification Number 56-4210783. (b) Power and Authority. Buy

Section 10.3 Representations and Warranties of Escrow Agent. The Escrow Agent hereby represents and warrants to each of Seller and Buyer, as of the date hereof and as of the Closing Date, as follows: (a) Organization and Good Standing. The Escrow Agent is a corporation duly organized, validly existing, and in good standing under the laws of the State of California. (b) Power and Authority. The Escrow Agent has full c

Section 11.1 Notices. All notices, instructions, Claim Notices, Response Notices, Joint Written Instructions, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered by hand (with written confirmation of receipt), (b) when sent by a nationally recognized overnight courier service (such as Seve

Section 11.2 Change of Address. Any Party may change its address for purposes of notices under this Agreement by giving written notice of such change to each of the other Parties in accordance with this Article 11. Such change of address shall be effective upon receipt of such notice by the other Parties.

ARTICLE 12 — GENERAL PROVISIONS

Section 12.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice-of-law or conflict-of-law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Party hereby irrevocably wai

Section 12.2 Jurisdiction and Venue. Any dispute, claim, or controversy arising out of or relating to this Agreement, or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Agreement, shall be subject to the exclusive jurisdiction of the state and federal courts located in the State of Delaware. Each Party hereby irrevocably subm

Section 12.3 Entire Agreement. This Agreement, together with the APA and all exhibits, schedules, and annexes hereto and thereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, representations, and warranties, both written and oral, among the Parties with respect to the escrow arrangeme

Section 12.4 Amendment and Waiver. This Agreement may not be amended, modified, or supplemented except by a writt