ESCROW AGREEMENT
Dated as of March 22, 2024
among
LUMOS ANALYTICS INC. a Delaware corporation
MERIDIAN DATA SOLUTIONS GmbH a Gesellschaft mit beschränkter Haftung organized under the laws of Germany
and
EVERGREEN TRUST COMPANY, N.A. a national banking association organized under the laws of the United States
Calderwood & Harkness LLP — C&H Matter No. 1008-00010
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This ESCROW AGREEMENT (this "Agreement") is entered into as of March 22, 2024, by and among:
LUMOS ANALYTICS INC., a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4700 Sandhill Road, Suite 300, Palo Alto, California 94304 (the "Licensor");
MERIDIAN DATA SOLUTIONS GmbH, a Gesellschaft mit beschränkter Haftung organized and existing under the laws of the Federal Republic of Germany, with its registered office at Leopoldstraße 78, 80802 München, Germany, registered with the Amtsgericht München under HRB 274581 (the "Reseller"); and
EVERGREEN TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States, with its principal office at 400 South Hope Street, Suite 1100, Los Angeles, California 90071 (the "Escrow Agent").
The Licensor and the Reseller are referred to herein collectively as the "Parties" and each individually as a "Party." The Licensor, the Reseller, and the Escrow Agent are referred to herein collectively as the "Agreement Parties."
RECITALS
WHEREAS:
A. The Licensor and the Reseller have entered into that certain Channel Reseller Program Agreement, dated as of March 22, 2024 (the "Reseller Agreement"), pursuant to which the Licensor has granted the Reseller a non-exclusive right to market, promote, and resell subscriptions to the Lumos Prism™ AI-powered financial analytics and risk-modeling SaaS platform (the "Platform") to end-user customers located within the EMEA Territory (as defined in the Reseller Agreement);
B. The Reseller Agreement has an aggregate Total Contract Value of Thirty Million United States Dollars ($30,000,000) over a five-year initial term commencing on April 1, 2024 and expiring on March 31, 2029, with Minimum Annual Commitments for each contract year as more particularly set forth in Exhibit F to the Reseller Agreement;
C. Pursuant to Section 8.4 of the Reseller Agreement, the Reseller is required to deposit into escrow an amount equal to five percent (5%) of each quarterly payment due under the Minimum Annual Commitment schedule (each such deposit, an "Escrow Deposit") to secure the indemnification obligations of the Reseller and certain other obligations of the Reseller under the Reseller Agreement, including without limitation the Reseller's obligations with respect to compliance with applicable export-control and sanctions laws and regulations;
D. The Parties desire to appoint Evergreen Trust Company, N.A. as escrow agent to hold, administer, invest, and disburse such Escrow Deposits in accordance with the terms and conditions set forth in this Agreement; and
E. The Escrow Agent has agreed to accept such appointment and to act as escrow agent upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, agreements, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agreement Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Business Day" means any day other than a Saturday, Sunday, or a day on which banking institutions in Los Angeles, California are authorized or obligated by applicable law or executive order to close. For purposes of calculating any period of Business Days under this Agreement, the day of the act, event, or default from which the designated period of time begins to run shall not be included, and the last day of the period so computed shall be included.
"Claimed Amount" means the aggregate dollar amount specified in a Claims Notice as the amount claimed by the Licensor against the Escrow Fund with respect to a particular indemnification claim.
"Claims Notice" means a written notice of an indemnification claim delivered by the Licensor to the Escrow Agent and the Reseller pursuant to Section 4.2 of this Agreement, setting forth the nature, basis, and amount of such indemnification claim.
"Disputed Amount" means the portion of a Claimed Amount that is disputed by the Reseller in its written response to a Claims Notice delivered pursuant to Section 4.3 of this Agreement.
"Escrow Account" means the segregated, interest-bearing escrow account established and maintained by the Escrow Agent at Evergreen Trust Company, N.A., 400 South Hope Street, Suite 1100, Los Angeles, California 90071, in accordance with Section 2.2 of this Agreement.
"Escrow Deposit" means each deposit into the Escrow Account by the Reseller in an amount equal to five percent (5%) of the applicable quarterly Minimum Annual Commitment payment, as more particularly described in Section 3.1 of this Agreement.
"Escrow Fund" means the aggregate amount held in the Escrow Account at any given time, including all Escrow Deposits and any interest, earnings, income, or other proceeds thereon, less any amounts disbursed or deducted in accordance with the terms of this Agreement.
"Indemnification Cap" means Fifteen Million United States Dollars ($15,000,000), being fifty percent (50%) of the Total Contract Value of Thirty Million United States Dollars ($30,000,000), subject to the exceptions for willful misconduct, fraud, breaches of the confidentiality provisions of the Reseller Agreement, and intellectual property infringement (which exceptions are uncapped), each as set forth in Article XII of the Reseller Agreement.
"Joint Written Instructions" means written instructions signed by both the Licensor and the Reseller (or their respective authorized representatives as designated in writing to the Escrow Agent from time to time), directing the Escrow Agent to take specified action with respect to the Escrow Fund.
"MAC" or "Minimum Annual Commitment" means the minimum annual purchase commitment of the Reseller as set forth in the Reseller Agreement and the MAC Schedule.
"MAC Schedule" means the Minimum Annual Commitment schedule set forth below, which corresponds to Exhibit F of the Reseller Agreement:
"Permitted Investments" means any of the following: (a) money market funds that invest exclusively in direct obligations of the United States of America or obligations the principal and interest of which are unconditionally guaranteed by the United States of America; (b) direct obligations of the United States of America (including United States Treasury bills, notes, and bonds) with maturities of no more than ninety (90) days from the date of purchase; or (c) demand deposit accounts insured by the Federal Deposit Insurance Corporation ("FDIC") at a depository institution with combined capital and surplus of not less than Five Hundred Million Dollars ($500,000,000), as further described in Section 3.4 of this Agreement.
"Release Date" means the date that is twelve (12) months after the expiration or earlier termination of the Reseller Agreement, as determined in accordance with Section 5.1 of this Agreement.
"Reseller Agreement" means the Channel Reseller Program Agreement, dated as of March 22, 2024, by and between the Licensor and the Reseller, as the same may be amended, supplemented, restated, or otherwise modified from time to time in accordance with its terms.
"Response Period" has the meaning set forth in Section 4.3 of this Agreement.
"Total Contract Value" or "TCV" means Thirty Million United States Dollars ($30,000,000), being the aggregate Minimum Annual Commitments under the Reseller Agreement over the five-year initial term thereof.
"Accepted Amount" means the portion of a Claimed Amount accepted by the Reseller (in whole or in part) in its written response to a Claims Notice delivered pursuant to Section 4.3 of this Agreement.
Section 1.2 — Interpretation
(a) Unless the context otherwise requires, (i) words in the singular include the plural and vice versa, (ii) references to any gender include the other genders and the neuter, (iii) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation," (iv) the words "herein," "hereof," "hereby," "hereto," and "hereunder" refer to this Agreement as a whole, and (v) references to Articles, Sections, Exhibits, and Schedules are to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless otherwise specified.
(b) References to any statute, law, regulation, or rule shall include all amendments, modifications, codifications, replacements, and successor provisions thereto.
(c) References to "$" or "Dollars" are to United States Dollars unless otherwise specified.
(d) The headings and captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(e) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Reseller Agreement.
(f) This Agreement has been negotiated by the Agreement Parties and their respective counsel, and no rule of strict construction shall be applied against any Agreement Party.
ARTICLE II — APPOINTMENT OF ESCROW AGENT
Section 2.1 — Appointment
The Licensor and the Reseller hereby appoint Evergreen Trust Company, N.A. as escrow agent to hold, administer, invest, and disburse the Escrow Fund in accordance with and subject to the terms and conditions of this Agreement, and the Escrow Agent hereby accepts such appointment. Maria Gutierrez shall serve as the designated Escrow Officer of the Escrow Agent for purposes of administering this Agreement. In the event that Ms. Gutierrez is unable to serve in such capacity for any reason, the Escrow Agent shall promptly designate a replacement Escrow Officer and provide written notice thereof to the Licensor and the Reseller. The appointment of the Escrow Agent hereunder shall continue until the earlier of (i) the termination of this Agreement in accordance with its terms, (ii) the resignation of the Escrow Agent pursuant to Section 6.6, or (iii) the removal of the Escrow Agent pursuant to Section 6.6.
Section 2.2 — Escrow Account
Promptly following the execution and delivery of this Agreement (and in any event within five (5) Business Days thereof), the Escrow Agent shall establish a segregated, interest-bearing escrow account (the "Escrow Account") at its offices located at 400 South Hope Street, Suite 1100, Los Angeles, California 90071. The Escrow Account shall be titled:
"Evergreen Trust Company, N.A., as Escrow Agent for Lumos Analytics Inc. / Meridian Data Solutions GmbH Indemnification Escrow"
The Escrow Agent shall hold the Escrow Fund in the Escrow Account separate and apart from all other funds and accounts held by the Escrow Agent. The Escrow Agent shall not commingle the Escrow Fund with any other funds or assets of the Escrow Agent or any other person or entity. The Escrow Fund shall not be subject to any lien, attachment, trustee process, or any other judicial process of any creditor of the Escrow Agent, the Licensor, or the Reseller, except as may be required by applicable law or court order. The Escrow Agent shall maintain accurate books and records with respect to the Escrow Account, including a complete record of all deposits, disbursements, investments, interest, earnings, and fees charged.
Section 2.3 — Independent Contractor Status
The Escrow Agent acts hereunder as an independent contractor and stakeholder and not as the agent, fiduciary, or trustee of or for either Party, except to the limited extent expressly set forth in this Agreement. The Escrow Agent shall have no duty or obligation other than those expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement. The Escrow Agent shall have no interest in the Escrow Fund and shall hold the Escrow Fund solely for the purposes set forth in this Agreement.
ARTICLE III — ESCROW DEPOSITS AND INVESTMENT
Section 3.1 — Deposit Schedule
The Reseller shall deposit into the Escrow Account an amount equal to five percent (5%) of each quarterly Minimum Annual Commitment payment (each such amount, an "Escrow Deposit") concurrently with the Reseller's payment of such quarterly installment to the Licensor under the Reseller Agreement. Quarterly MAC payments are due under the Reseller Agreement on a Net 45 basis from the applicable invoice date, with the first quarterly MAC payment due on June 15, 2024. Subsequent quarterly MAC payments shall be due on the fifteenth (15th) day of the third month following the end of each fiscal quarter (or, if such day is not a Business Day, on the next succeeding Business Day).
The illustrative quarterly Escrow Deposit calculation for each contract year is set forth in the following table:
The foregoing table is provided for illustrative purposes only and does not account for interest, earnings, disbursements, or fee deductions. The aggregate principal amount of Escrow Deposits over the five-year initial term, absent any disbursements, is expected to be One Million Five Hundred Thousand United States Dollars ($1,500,000). The Reseller's obligation to make Escrow Deposits shall survive any assignment or novation of the Reseller Agreement, and any assignee or successor of the Reseller shall assume all obligations of the Reseller under this Agreement, subject to Section 7.8.
Section 3.2 — Method of Deposit
All Escrow Deposits shall be made by wire transfer of immediately available funds in United States Dollars to the Escrow Account in accordance with the wire transfer instructions set forth in Exhibit A hereto. The Escrow Agent shall provide the Licensor and the Reseller with written confirmation of each Escrow Deposit within two (2) Business Days of receipt of such deposit. In the event that any Escrow Deposit is not received by the Escrow Agent within five (5) Business Days of the due date therefor, the Escrow Agent shall promptly notify both the Licensor and the Reseller in writing of such non-receipt. The Reseller shall bear all bank fees, wire transfer charges, and other costs associated with the transmission of Escrow Deposits to the Escrow Account.
Section 3.3 — Currency
All Escrow Deposits, disbursements, investments, and other transactions under this Agreement shall be denominated in United States Dollars (USD). The Reseller bears all foreign exchange risk and currency conversion costs in connection with its obligation to make Escrow Deposits hereunder. The Escrow Agent shall have no obligation to convert any funds into or out of any currency other than United States Dollars and shall not be liable for any loss arising from fluctuations in foreign exchange rates.
Section 3.4 — Investment of Escrow Fund
The Escrow Agent shall invest and reinvest the Escrow Fund in Permitted Investments as jointly directed by the Licensor and the Reseller in Joint Written Instructions delivered to the Escrow Agent from time to time. Such Joint Written Instructions shall specify the type and amount of Permitted Investment to be made.
In the absence of Joint Written Instructions regarding investment, the Escrow Agent shall invest and reinvest the Escrow Fund in a money market fund composed exclusively of direct obligations of the United States of America or obligations the principal and interest of which are unconditionally guaranteed by the United States of America, as selected by the Escrow Agent in its reasonable discretion.
All interest, earnings, income, and other proceeds on the Escrow Fund shall be added to and become part of the Escrow Fund and shall be held, invested, and disbursed in accordance with the terms of this Agreement. The Escrow Agent shall not be liable for any loss arising from the investment or reinvestment of the Escrow Fund in Permitted Investments in accordance with this Section 3.4, including without limitation any loss of principal or interest resulting from market conditions, changes in interest rates, or the default or insolvency of any issuer, depository institution, or fund in which the Escrow Fund is invested, provided that such investment was a Permitted Investment at the time it was made and was made in accordance with Joint Written Instructions (or, in the absence thereof, in accordance with the default investment provision of this Section 3.4).
The Escrow Agent shall provide the Licensor and the Reseller with quarterly statements reflecting the balance of the Escrow Account, all deposits, disbursements, investment activity, interest and earnings accrued, and fees deducted. Such quarterly statements shall be delivered within fifteen (15) Business Days following the end of each calendar quarter.
Section 3.5 — Tax Reporting
For United States federal income tax purposes, all interest, earnings, income, and other proceeds on the Escrow Fund shall be treated as and reported as income of the Reseller, regardless of whether such amounts have been disbursed to the Reseller. The Escrow Agent shall issue Internal Revenue Service Form 1099 (or such other applicable tax information reporting form as may be required under applicable law) to the Reseller with respect to any such interest, earnings, income, or other proceeds for each calendar year (or portion thereof) during the term of this Agreement. The Reseller shall be solely responsible for the payment of any taxes, penalties, or interest arising from such income.
Promptly following execution of this Agreement, and in any event within ten (10) Business Days thereof, the Reseller shall provide the Escrow Agent with a properly completed and executed Internal Revenue Service Form W-8BEN-E (Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)) or such successor form as may be prescribed by the Internal Revenue Service. The Reseller shall provide updated or replacement forms as reasonably requested by the Escrow Agent or as required by changes in applicable law or the Reseller's circumstances. If the Reseller fails to provide the required tax forms, the Escrow Agent shall be entitled to withhold from the Escrow Fund such amounts as may be required by applicable law and to remit such withheld amounts to the appropriate taxing authority.
ARTICLE IV — INDEMNIFICATION CLAIMS AND DISBURSEMENTS
Section 4.1 — Claims Against the Escrow Fund
The Escrow Fund shall be available to satisfy indemnification claims of the Licensor against the Reseller arising under or pursuant to the indemnification provisions of the Reseller Agreement (including without limitation Article XII thereof). The Licensor's indemnification claims may include, without limitation, claims arising from:
(a) the Reseller's marketing, promotion, advertising, or misrepresentation of the Lumos Prism™ Platform, including any unauthorized claims regarding the capabilities, performance, or regulatory status of the Platform;
(b) the Reseller's breach of any representation, warranty, covenant, or other obligation under the Reseller Agreement or any applicable law, regulation, or governmental order, including without limitation applicable data protection laws (including the General Data Protection Regulation (EU) 2016/679 and the German Federal Data Protection Act (Bundesdatenschutzgesetz));
(c) the Reseller's unauthorized modifications, alterations, reverse engineering, decompilation, or disassembly of the Platform or any component thereof, including any unauthorized integration of the Platform with third-party software or systems;
(d) the Reseller's failure to comply with applicable export-control laws and regulations, including without limitation the U.S. Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), and the economic sanctions programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), as well as applicable European Union sanctions regulations; and
(e) any other indemnification obligation of the Reseller under the Reseller Agreement for which the Licensor is entitled to seek recourse against the Escrow Fund.
Nothing in this Section 4.1 shall be construed to limit or expand the scope of the Reseller's indemnification obligations as set forth in the Reseller Agreement.
Section 4.2 — Claims Notice
To make a claim against the Escrow Fund, the Licensor shall deliver a written Claims Notice simultaneously to the Escrow Agent and the Reseller in accordance with Section 7.3 of this Agreement. Each Claims Notice shall specify:
(i) the nature and factual basis of the indemnification claim, including a reasonable description of the events, circumstances, or conduct giving rise to the claim;
(ii) the specific provision(s) of the Reseller Agreement under which the indemnification claim is asserted;
(iii) the aggregate dollar amount claimed (the "Claimed Amount"); and
(iv) copies of, or reasonable references to, supporting documentation then reasonably available to the Licensor that evidences or substantiates the claim, including without limitation correspondence, reports, notices from governmental authorities, or third-party claims.
The Claims Notice must be delivered within thirty (30) days of the Licensor first becoming aware of the facts or circumstances giving rise to the indemnification claim, consistent with the indemnification notice procedures set forth in Article XII of the Reseller Agreement. The failure of the Licensor to deliver a Claims Notice within such thirty (30)-day period shall not relieve the Reseller of its indemnification obligations under the Reseller Agreement, except to the extent that the Reseller demonstrates that it has been materially prejudiced by such delay.
Section 4.3 — Response Period
The Reseller shall have thirty (30) Business Days following receipt of a Claims Notice (the "Response Period") to deliver to the Escrow Agent and the Licensor a written response to the Claims Notice. In its written response, the Reseller shall either:
(a) accept the claim in whole or in part, specifying the accepted amount (the "Accepted Amount") and, if the claim is accepted only in part, specifying the basis for any partial rejection; or
(b) dispute the claim in whole or in part, specifying the disputed amount (the "Disputed Amount"), the factual and legal basis for the dispute, and any supporting documentation reasonably available to the Reseller.
For the avoidance of doubt, the Reseller may accept a portion of the Claimed Amount and dispute the remainder, in which case the Accepted Amount and the Disputed Amount shall together equal the Claimed Amount.
Section 4.4 — Disbursement Upon Acceptance
If the Reseller accepts a claim in whole or in part pursuant to Section 4.3(a), the Escrow Agent shall, within five (5) Business Days following receipt of the Reseller's written acceptance, disburse the Accepted Amount from the Escrow Fund to the Licensor by wire transfer of immediately available funds to the account designated by the Licensor in Exhibit B hereto (or such other account as the Licensor may designate in writing to the Escrow Agent from time to time, provided that any change in wire instructions shall be verified by the Escrow Agent by telephone callback to an authorized representative of the Licensor prior to execution of the wire transfer). The Licensor's designated bank account for disbursements is maintained at Pinnacle National Bank, N.A., 555 California Street, San Francisco, California 94104, and the Licensor's relationship manager at such institution is David Okonkwo. The Escrow Agent shall provide written confirmation to both the Licensor and the Reseller of any disbursement made pursuant to this Section 4.4 within two (2) Business Days of such disbursement.
Section 4.5 — Disbursement Upon Failure to Respond
If the Reseller fails to deliver a written response to a Claims Notice within the Response Period, the Reseller shall be deemed to have accepted the claim in full for the entire Claimed Amount, and the Escrow Agent shall disburse the full Claimed Amount to the Licensor within five (5) Business Days following the expiration of the Response Period, in accordance with the wire transfer instructions set forth in Exhibit B hereto (or as otherwise designated by the Licensor in writing to the Escrow Agent). The Escrow Agent shall provide written confirmation of such disbursement to both the Licensor and the Reseller within two (2) Business Days thereof. The deemed acceptance of a claim pursuant to this Section 4.5 shall be without prejudice to any right of the Reseller to seek recovery of the disbursed amount from the Licensor through the dispute resolution procedures set forth in the Reseller Agreement, provided that the Escrow Agent shall have no obligation or liability with respect to any such subsequent dispute between the Parties.
Section 4.6 — Disputed Claims
If the Reseller disputes all or any portion of a Claimed Amount in accordance with Section 4.3(b), the following provisions shall apply:
(a) The Disputed Amount shall remain in the Escrow Account pending final resolution of the dispute. The Escrow Agent shall not disburse any portion of the Disputed Amount except in accordance with this Section 4.6.
(b) The Parties shall first attempt to resolve the dispute through good-faith negotiations for a period of thirty (30) days following the Escrow Agent's receipt of the Reseller's dispute notice.
(c) If the dispute is not resolved through negotiation within such thirty (30)-day period, the dispute shall be resolved in accordance with the dispute resolution provisions of Section 7.2 of this Agreement and the applicable dispute resolution provisions of the Reseller Agreement, which provide for binding arbitration administered by JAMS in Los Angeles, California, in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then in effect.
(d) Upon receipt by the Escrow Agent of (i) Joint Written Instructions directing the disbursement of all or any portion of the Disputed Amount, or (ii) a certified copy of a final, non-appealable arbitration award or court order directing the disbursement of all or any portion of the Disputed Amount, the Escrow Agent shall disburse the Disputed Amount (or the portion thereof so directed) to the Party or Parties specified in such Joint Written Instructions, arbitration award, or court order within five (5) Business Days of receipt thereof.
For the avoidance of doubt, in the case of a partial dispute (where the Reseller accepts part of a claim and disputes the remainder), the Escrow Agent shall (x) disburse the Accepted Amount to the Licensor in accordance with Section 4.4 and (y) retain the Disputed Amount in the Escrow Account in accordance with this Section 4.6.
Section 4.7 — Limitation
Disbursements from the Escrow Fund pursuant to this Article IV shall not exceed the then-available balance of the Escrow Fund at the time of disbursement. If the Claimed Amount or the Accepted Amount exceeds the then-available balance of the Escrow Fund, the Escrow Agent shall disburse only the amount then available in the Escrow Fund, and the Licensor shall have recourse against the Reseller directly for the deficiency in accordance with the indemnification provisions of the Reseller Agreement.
The existence of the Escrow Fund and the escrow mechanics set forth in this Agreement do not limit, restrict, or otherwise cap either Party's indemnification obligations or rights under the Reseller Agreement, including without limitation the Indemnification Cap of Fifteen Million United States Dollars ($15,000,000) in the aggregate, subject to the uncapped exceptions for (a) willful misconduct, (b) fraud, (c) breaches of the confidentiality provisions of the Reseller Agreement, and (d) intellectual property infringement, each as more particularly set forth in Article XII of the Reseller Agreement. The Escrow Fund constitutes a source of readily available funds for the satisfaction of the Reseller's indemnification obligations but does not constitute the sole or exclusive remedy available to the Licensor.
ARTICLE V — RELEASE OF ESCROW FUND
Section 5.1 — Release Upon Expiration or Termination
Subject to Section 5.2, all amounts remaining in the Escrow Fund (including accrued interest and earnings thereon, less any amounts previously disbursed, any fees and expenses deducted by the Escrow Agent, and any amounts retained pursuant to Section 5.2) shall be released and disbursed to the Reseller on the Release Date. The Release Date is the date that is twelve (12) months after the expiration or earlier termination of the Reseller Agreement.
For purposes of determining the Release Date:
(a) Expiration at End of Initial Term. The initial term of the Reseller Agreement expires on March 31, 2029. The Reseller Agreement is subject to automatic renewal for successive one (1)-year periods unless either the Licensor or the Reseller provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current term. Accordingly, the non-renewal notice deadline for the initial term is December 31, 2028. If the Reseller Agreement expires at the end of the initial term (i.e., March 31, 2029), the Release Date shall be March 31, 2030. If the Reseller Agreement is renewed for one or more additional one-year terms, the Release Date shall be twelve (12) months after the expiration of the last such renewal term.
(b) Termination for Convenience. If the Reseller Agreement is terminated by either Party for convenience upon one hundred eighty (180) days' prior written notice in accordance with Section 14.2 of the Reseller Agreement, the Release Date shall be twelve (12) months after the effective date of such termination.
(c) Termination for Cause. If the Reseller Agreement is terminated by either Party for cause following a material breach by the other Party that remains uncured after a thirty (30)-day cure period (or, in the case of a material breach that is not reasonably susceptible of cure within such thirty (30)-day period, such longer period as the non-breaching Party may agree in writing, not to exceed ninety (90) days), the Release Date shall be twelve (12) months after the effective date of such termination. In the case of termination for cause based upon the Reseller's insolvency, bankruptcy, or similar proceeding, or the Reseller's violation of applicable sanctions laws or export-control regulations, termination shall be effective immediately upon delivery of written notice by the Licensor, and the Release Date shall be twelve (12) months after the effective date of such immediate termination.
Upon the Release Date, the Escrow Agent shall disburse all amounts remaining in the Escrow Fund to the Reseller in accordance with the wire transfer instructions set forth in Exhibit C hereto (or as otherwise designated by the Reseller in writing to the Escrow Agent), within ten (10) Business Days of the Release Date, unless an amount is required to be retained pursuant to Section 5.2.
Section 5.2 — Holdback for Pending Claims
Notwithstanding Section 5.1, if on the Release Date any indemnification claims are pending (i.e., Claims Notices have been delivered to the Escrow Agent and the Reseller pursuant to Section 4.2 but have not yet been finally resolved in accordance with Article IV), the Escrow Agent shall retain in the Escrow Account an amount equal to the aggregate Claimed Amounts of all such pending claims (the "Retained Amount"), or such lesser amount as then remains in the Escrow Fund if the aggregate Claimed Amounts exceed the balance of the Escrow Fund. The Retained Amount shall continue to be invested in Permitted Investments in accordance with Section 3.4.
Upon the final resolution of each pending claim (whether by acceptance, deemed acceptance, Joint Written Instructions, final arbitration award, or court order), the Escrow Agent shall disburse the applicable portion of the Retained Amount in accordance with the applicable provisions of Article IV. Any portion of the Retained Amount that is not required to satisfy a resolved claim shall be released to the Reseller within ten (10) Business Days of such final resolution. Any amounts of the Retained Amount remaining in the Escrow Fund after the final resolution of all pending claims shall be released to the Reseller in full within ten (10) Business Days of the date on which the last pending claim is finally resolved, together with all accrued interest and earnings thereon (less fees and expenses of the Escrow Agent).
Section 5.3 — Partial Releases
At any time during the term of this Agreement, the Licensor and the Reseller may deliver Joint Written Instructions to the Escrow Agent directing the Escrow Agent to release specified amounts from the Escrow Fund to the Reseller. Upon receipt of such Joint Written Instructions, the Escrow Agent shall effect such release by wire transfer of immediately available funds to the Reseller's designated account within five (5) Business Days. The Escrow Agent shall have no duty to inquire into the reasons for any partial release requested by Joint Written Instructions and shall not be liable for any disbursement made in good faith in accordance with such Joint Written Instructions.
Section 5.4 — Wire Instructions for Release to Reseller
All amounts released or disbursed to the Reseller under this Agreement shall be disbursed by wire transfer of immediately available funds to the account designated by the Reseller in Exhibit C hereto, or to such other account as the Reseller may designate in writing to the Escrow Agent from time to time, subject to verification by the Escrow Agent by telephone callback to an authorized representative of the Reseller. The Reseller's designated bank account is maintained at Zarvenische Handelsbank AG, Promenadeplatz 12, 80333 München, Germany, and the Reseller's relationship manager at such institution is Thomas Weidner. The Reseller shall bear all bank fees, wire transfer charges, intermediary bank fees, and other costs associated with any wire transfer to the Reseller's account, including any correspondent or intermediary bank charges incurred in connection with international wire transfers.
ARTICLE VI — ESCROW AGENT PROVISIONS
Section 6.1 — Duties and Responsibilities
The Escrow Agent's duties and responsibilities are limited to and determined solely by the express provisions of this Agreement. The Escrow Agent shall act in accordance with the written instructions, Joint Written Instructions, Claims Notices, and other written directions delivered to it pursuant to this Agreement. The Escrow Agent shall have no duty to inquire into or interpret the terms, conditions, or provisions of the Reseller Agreement or any other agreement, document, or instrument between the Licensor and the Reseller or any other person or entity. The Escrow Agent shall have no responsibility or liability for the genuineness, validity, sufficiency, or enforceability of the Reseller Agreement or any document, instrument, or instruction delivered to it hereunder. The Escrow Agent's duties under this Agreement are purely ministerial in nature and shall not be deemed to confer upon the Escrow Agent any fiduciary, trust, or similar duties or obligations, except to the limited extent expressly set forth herein.
Section 6.2 — Reliance
The Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, certificate, statement, request, consent, agreement, waiver, direction, or other instrument or communication (including Joint Written Instructions, Claims Notices, arbitration awards, court orders, and tax forms) that the Escrow Agent in good faith believes to be genuine, to have been signed or presented by the proper Party or Parties, and to conform to the requirements of this Agreement. The Escrow Agent may assume that any person purporting to give any notice, instruction, or direction pursuant to the provisions of this Agreement has been duly authorized to do so unless the Escrow Agent has received prior written notice to the contrary from the applicable Party. The Escrow Agent may consult with legal counsel of its own selection (including in-house counsel) and shall incur no liability for any action taken, suffered, or omitted by it in good faith in accordance with the advice of such counsel.
Section 6.3 — Liability
The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the rights, powers, or discretion conferred upon it by this Agreement. In no event shall the Escrow Agent be liable for any loss or damage arising out of or in connection with this Agreement, including but not limited to any loss of principal, interest, or earnings on the Escrow Fund, except to the extent that such loss or damage is directly caused by the Escrow Agent's own gross negligence, willful misconduct, or fraud, as finally determined by a court of competent jurisdiction or an arbitrator in a final, non-appealable award. The Escrow Agent shall not be liable for:
(a) any loss arising from the investment of the Escrow Fund in Permitted Investments in accordance with this Agreement, including without limitation any loss of principal or interest resulting from market conditions, changes in interest rates, credit deterioration, or the default or insolvency of any depository institution, fund, or obligor;
(b) any delay in the performance of its obligations hereunder caused by acts of God, war, terrorism, civil unrest, epidemics, pandemics, governmental actions, failures of communication networks, power outages, or other events or circumstances beyond the Escrow Agent's reasonable control (each, a "Force Majeure Event");
(c) any loss or liability arising from the Escrow Agent's compliance with any legal process, subpoena, court order, writ of attachment or execution, garnishment, tax levy, or other similar governmental order; or
(d) any indirect, consequential, special, incidental, or punitive damages, regardless of whether such damages are foreseeable or whether the Escrow Agent has been advised of the possibility of such damages.
Section 6.4 — Indemnification of Escrow Agent
The Licensor and the Reseller, jointly and severally, shall indemnify, defend, and hold harmless the Escrow Agent and its officers, directors, employees, agents, and affiliates (collectively, the "Escrow Agent Indemnified Parties") from and against any and all losses, claims, damages, liabilities, penalties, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and expenses, court costs, and costs of investigation) incurred by any Escrow Agent Indemnified Party arising out of or in connection with the Escrow Agent's acceptance of appointment or the performance or non-performance of its duties under this Agreement, except to the extent that such losses, claims, damages, liabilities, penalties, judgments, settlements, costs, or expenses are directly caused by the Escrow Agent's own gross negligence, willful misconduct, or fraud, as finally determined by a court of competent jurisdiction or an arbitrator in a final, non-appealable award.
The Licensor and the Reseller shall contribute equally (on a 50/50 basis) to the indemnification obligations set forth in this Section 6.4, unless the underlying loss or claim is primarily attributable to the actions or omissions of one Party, in which case such Party shall bear the entirety of the indemnification obligation. The indemnification obligations set forth in this Section 6.4 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.
Section 6.5 — Compensation of Escrow Agent
The Escrow Agent shall be entitled to reasonable compensation for its services under this Agreement in accordance with the fee schedule set forth in Exhibit D hereto (the "Fee Schedule"). Such fees shall include an annual administration fee, per-disbursement fees, and fees for extraordinary services, each as set forth in the Fee Schedule. All fees and expenses of the Escrow Agent shall be shared equally (50% Licensor / 50% Reseller) by the Licensor and the Reseller unless otherwise agreed in writing by the Parties and the Escrow Agent.
The Escrow Agent is hereby authorized to deduct its fees and reasonable out-of-pocket expenses (including legal fees incurred in connection with the administration of the Escrow Account) from the interest, earnings, and income accrued on the Escrow Fund; provided, however, that the Escrow Agent shall not deduct any fees or expenses from the principal amount of the Escrow Fund (i.e., the aggregate Escrow Deposits exclusive of interest and earnings) without the prior written consent of both the Licensor and the Reseller, which consent may be given by Joint Written Instructions. In the event that the interest, earnings, and income accrued on the Escrow Fund are insufficient to cover the Escrow Agent's fees and expenses, the Escrow Agent shall invoice the Licensor and the Reseller (in equal shares) for the shortfall, and such invoiced amounts shall be due and payable within thirty (30) days of the date of invoice.
Section 6.6 — Resignation or Removal
(a) Resignation. The Escrow Agent may resign from its duties hereunder at any time by giving not less than thirty (30) days' prior written notice of resignation to each of the Licensor and the Reseller. Such resignation shall take effect on the date specified in the notice of resignation (which date shall not be earlier than thirty (30) days after delivery of such notice) or upon the appointment of a successor escrow agent and the transfer of the Escrow Fund to such successor, whichever occurs first.
(b) Removal. The Licensor and the Reseller may jointly remove the Escrow Agent at any time by delivering Joint Written Instructions to the Escrow Agent providing not less than thirty (30) days' prior written notice of removal. Such removal shall take effect on the date specified in the Joint Written Instructions (which date shall not be earlier than thirty (30) days after delivery of such notice) or upon the appointment of a successor escrow agent and the transfer of the Escrow Fund to such successor, whichever occurs first.
(c) Appointment of Successor. Upon the resignation or removal of the Escrow Agent, the Licensor and the Reseller shall jointly appoint a successor escrow agent, which shall be a bank, trust company, or other financial institution organized under the laws of the United States or any state thereof, having combined capital and surplus of not less than Five Hundred Million Dollars ($500,000,000). If the Licensor and the Reseller are unable to agree upon a successor escrow agent within thirty (30) days of the effective date of the resigning or removed Escrow Agent's resignation or removal, the Escrow Agent may petition any court of competent jurisdiction sitting in Los Angeles County, California for the appointment of a successor escrow agent, or may deposit the Escrow Fund with such court, and thereupon the Escrow Agent shall be discharged from all obligations hereunder and shall have no further duties, responsibilities, or liabilities under this Agreement, other than the obligation to account for the Escrow Fund up to the date of deposit with such court.
(d) Transfer to Successor. Upon the appointment of a successor escrow agent, the resigning or removed Escrow Agent shall transfer and deliver the Escrow Fund, together with all records, documents, and instruments relating to the Escrow Account, to the successor escrow agent, and the successor escrow agent shall thereupon succeed to all of the rights, duties, and obligations of the Escrow Agent under this Agreement.
Section 6.7 — Interpleader
If at any time the Escrow Agent is uncertain as to its duties or rights hereunder, or if the Escrow Agent receives conflicting instructions, claims, or demands from the Parties or any other person or entity with respect to the Escrow Fund, the Escrow Agent may, in its sole discretion and without liability to any Party:
(a) refrain from taking any action (other than to continue to hold the Escrow Fund and invest it in Permitted Investments) until the Escrow Agent receives Joint Written Instructions from the Licensor and the Reseller, or a final, non-appealable court order or arbitration award, directing the Escrow Agent as to the disposition of the Escrow Fund; or
(b) file an interpleader action or other appropriate legal proceeding in any court of competent jurisdiction sitting in Los Angeles County, California, naming the Licensor, the Reseller, and any other relevant party as defendants, and deposit the Escrow Fund (or any portion thereof that is the subject of such uncertainty or conflicting instructions) with such court. Upon the filing of any such interpleader action and the deposit of the Escrow Fund with the court, the Escrow Agent shall be relieved and discharged from all obligations hereunder with respect to the deposited funds and shall be entitled to recover its reasonable costs and expenses (including reasonable attorneys' fees) incurred in connection with such interpleader action from the Escrow Fund or from the Parties.
ARTICLE VII — GENERAL PROVISIONS
Section 7.1 — Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of California, without giving effect to any choice-of-law or conflict-of-laws provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. Each of the Agreement Parties hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the federal and state courts sitting in Los Angeles County, California for any action, suit, or proceeding arising out of or relating to this Agreement (including any interpleader action filed by the Escrow Agent pursuant to Section 6.7), and each Agreement Party hereby waives any objection to the laying of venue of any such action, suit, or proceeding in such courts, including any objection based on the doctrine of forum non conveniens.
Section 7.2 — Dispute Resolution
(a) Disputes Between the Parties. Any dispute, controversy, or claim arising out of or relating to this Agreement that is solely between the Licensor and the Reseller (and does not involve the Escrow Agent's duties, obligations, or liabilities under this Agreement) shall be resolved in accordance with the dispute resolution provisions of the Reseller Agreement, which provide for binding arbitration administered by JAMS in Los Angeles, California, in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then in effect.
(b) Disputes Involving the Escrow Agent. Any dispute, controversy, or claim arising out of or relating to this Agreement that involves the Escrow Agent (including, without limitation, any dispute regarding the Escrow Agent's performance or non-performance of its duties, the interpretation of this Agreement as it relates to the Escrow Agent's obligations, or the Escrow Agent's compensation or indemnification rights) shall be resolved by binding arbitration administered by JAMS in Los Angeles, California, in accordance with the JAMS Comprehensive Arbitration Rules and Procedures then in effect. The arbitration shall be conducted by a single arbitrator selected in accordance with the JAMS rules. The arbitrator's award shall be final and binding upon the Agreement Parties and may be entered and enforced in any court of competent jurisdiction.
(c) Equitable Relief. Notwithstanding the foregoing, any Agreement Party may seek temporary, preliminary, or permanent injunctive relief or other equitable relief in any state or federal court located in Santa Clara County, California, or Los Angeles County, California, without first submitting the matter to arbitration, in order to prevent irreparable harm or to preserve the status quo pending resolution of any dispute.
(d) Costs. The prevailing party in any arbitration or litigation arising under this Agreement shall be entitled to recover its reasonable attorneys' fees, costs, and expenses from the non-prevailing party, unless the arbitrator or court determines otherwise.
Section 7.3 — Notices
All notices, instructions, requests, consents, Claims Notices, Joint Written Instructions, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given and received: (a) upon delivery, if delivered by hand or by recognized overnight courier (such as Severin Partners LLC, Tarrant & Co., or ups), (b) upon transmission, if sent by email with electronic confirmation of receipt (including read receipt or reply confirmation), or (c) three (3) Business Days after deposit in the United States mail, postage prepaid, certified or registered, return receipt requested. All such notices shall be addressed as follows:
If to the Licensor:
Lumos Analytics Inc. 4700 Sandhill Road, Suite 300 Palo Alto, California 94304
Attn: Daniel Ostroff, Vice President, Legal & Compliance
Email: d.ostroff@lumosanalytics.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 801 South Figueroa Street, Suite 4200 Los Angeles, California 90017
Attn: Howard Bellamy
Email: hbellamy@calderwoodharkness.com
If to the Reseller:
Meridian Data Solutions GmbH Leopoldstraße 78 80802 München, Germany
Attn: Dr. Anneliese Brandt, General Counsel
Email: a.brandt@meridian-data.de
with a copy (which shall not constitute notice) to:
Kessler Hartmann Rechtsanwälte PartG mbB Maximilianstraße 35 80539 München, Germany
Attn: Dr. Stefan Kessler
Email: s.kessler@kh-law.de
If to the Escrow Agent:
Evergreen Trust Company, N.A. 400 South Hope Street, Suite 1100 Los Angeles, California 90071
Attn: Maria Gutierrez, Escrow Officer
Email: m.gutierrez@evergreentrust.com
Any Agreement Party may change its address, email address, or designated representative for notices by providing written notice thereof to the other Agreement Parties in accordance with this Section 7.3. Such change shall be effective upon receipt of the notice of change.
Section 7.4 — Amendments and Waivers
This Agreement may be amended, modified, or supplemented only by a written instrument duly executed by all three Agreement Parties (i.e., the Licensor, the Reseller, and the Escrow Agent). No amendment or modification of this Agreement shall be effective unless it is in writing and signed by all Agreement Parties. No waiver of any provision of this Agreement, and no consent to any departure therefrom, shall be effective unless in writing and signed by the Agreement Party entitled to the benefit of such provision. No waiver by any Agreement Party of any breach or default hereunder shall be deemed a waiver of any subsequent or other breach or default. No failure or delay by any Agreement Party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
Section 7.5 — Entire Agreement
This Agreement, together with the Reseller Agreement and all exhibits, schedules, and annexes hereto and thereto, constitutes the entire agreement among the Agreement Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, correspondence, representations, warranties, agreements, and understandings, whether oral or written, among the Agreement Parties relating to the subject matter hereof. No Agreement Party has relied on any representation or warranty of any other Agreement Party in entering into this Agreement, except as expressly set forth herein.
Section 7.6 — Severability
If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction or an arbitrator, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. The Agreement Parties shall negotiate in good faith to replace any such invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that, to the extent possible, achieves the economic, business, and other purposes of the invalid, illegal, or unenforceable provision.
Section 7.7 — Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by portable document format (PDF) transmission, electronic signature (including Brightwater Software or similar electronic signature platform), or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement. Each Agreement Party agrees that electronic signatures and PDF or other electronic transmissions of signed counterparts shall have the same legal effect, validity, and enforceability as manually executed originals, and no Agreement Party shall raise any defense or objection based on the use of electronic signatures or electronic transmission.
Section 7.8 — Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the Agreement Parties and their respective successors, heirs, administrators, and permitted assigns. No Agreement Party may assign, transfer, or delegate its rights, interests, or obligations under this Agreement, in whole or in part, without the prior written consent of the other Agreement Parties (which consent shall not be unreasonably withheld, conditioned, or delayed), and any attempted assignment, transfer, or delegation without such consent shall be null and void and of no force or effect. Notwithstanding the foregoing, the Licensor may assign its rights under this Agreement to a successor entity in connection with a merger, consolidation, sale of all or substantially all of its assets, or other similar corporate transaction, upon written notice to the Reseller and the Escrow Agent.
Section 7.9 — No Third-Party Beneficiaries
This Agreement is entered into solely for the benefit of the Agreement Parties and their respective permitted successors and assigns. Nothing in this Agreement, whether express or implied, shall confer upon any person or entity (other than the Agreement Parties and their respective permitted successors and assigns) any legal or equitable right, benefit, remedy, or claim under or by reason of this Agreement or any provision hereof.
Section 7.10 — Relationship to Reseller Agreement
This Agreement supplements and is ancillary to the Reseller Agreement. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Reseller Agreement with respect to the escrow deposit mechanics, the investment and administration of the Escrow Fund, the indemnification holdback and claims procedures relating to the Escrow Fund, or the release and disbursement of amounts held in the Escrow Account, the terms of this Agreement shall control and govern. For all other purposes, including without limitation the substantive indemnification obligations of the Parties, the scope and calculation of the Indemnification Cap, the Minimum Annual Commitments, the termination provisions, and all other rights and obligations of the Licensor and the Reseller, the Reseller Agreement shall govern and control.
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SIGNATURE PAGE TO ESCROW AGREEMENT
IN WITNESS WHEREOF, the Agreement Parties have caused this Escrow Agreement to be duly executed and delivered as of the date first written above.