ESCROW AGREEMENT
Execution Version
dated as of
November 15, 2024
among
AURELIUS MEDIA HOLDINGS INC.
as Seller,
RIDGELINE PUBLISHING ACQUISITION CORP.
as Buyer,
and
GRANITE TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
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ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of November 15, 2024 (the "Closing Date"), by and among:
(1) AURELIUS MEDIA HOLDINGS INC., a Delaware corporation (file no. 5987324) ("Seller");
(2) RIDGELINE PUBLISHING ACQUISITION CORP., a Delaware corporation (file no. 6501982) ("Buyer"); and
(3) GRANITE TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States ("Escrow Agent").
Each of Seller, Buyer, and Escrow Agent is referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Seller and Buyer have entered into that certain Membership Interest Purchase Agreement, dated as of July 19, 2024 (as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "MIPA"), by and among Seller, Buyer, and solely for purposes of certain provisions therein, Aurelius Global Media Group PLC, a public limited company organized and existing under the laws of England and Wales, and Pinnacle Ridge Capital Partners Fund IV, L.P., a Delaware limited partnership, pursuant to which Seller has agreed to sell, and Buyer has agreed to purchase, one hundred percent (100%) of the issued and outstanding membership interests (the "Membership Interests") in Meridian Press Holdings LLC, a Delaware limited liability company (file no. 4521889) (the "Company"), at an enterprise value of Four Hundred Eighty Million Dollars ($480,000,000);
WHEREAS, pursuant to Section 2.3(b) of the MIPA, Buyer is required to deposit, or cause to be deposited, at the Closing (as defined in the MIPA) an amount equal to Seventy-Two Million Dollars ($72,000,000) (the "Escrow Amount"), representing fifteen percent (15%) of the enterprise value, with Escrow Agent to secure Seller's indemnification obligations under Article IX of the MIPA;
WHEREAS, Escrow Agent has agreed to act as escrow agent and to hold, invest, and disburse the Escrow Amount in accordance with the terms and conditions set forth in this Agreement;
WHEREAS, Escrow Agent has established a segregated escrow account designated as GT-ESC-2024-11150048 (the "Escrow Account") for the purpose of holding the Escrow Amount and all Investment Earnings thereon; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the MIPA.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties 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:
"Buyer" means Ridgeline Publishing Acquisition Corp., a Delaware corporation (file no. 6501982), with its registered agent at Crowne Albany Corporation, 1209 Orange Street, Wilmington, Delaware 19801, and its successors and permitted assigns.
"Buyer's Counsel" means Hathaway, Locke & Barnett LLP, 51 West 52nd Street, New York, New York 10019, Attention: Graham Ashworth, or such other counsel as Buyer may designate in writing to Seller and Escrow Agent from time to time in accordance with Section 10.1.
"Claim Notice" means a written notice delivered by Buyer to Seller and Escrow Agent in accordance with Section 5.1, setting forth a claim for indemnification under the MIPA against the Escrow Funds, including the specific basis for such claim and the estimated amount of Losses associated therewith, substantially in the form attached hereto as Exhibit D.
"Closing Date" means November 15, 2024.
"De Minimis Threshold" means Two Hundred Fifty Thousand Dollars ($250,000) per individual claim, being the minimum amount of Losses that must be alleged with respect to any single claim in order for such claim to be asserted against the Escrow Funds, as provided in Section 9.4(a) of the MIPA.
"Dispute Notice" means a written notice delivered by Seller to Buyer and Escrow Agent within the Response Period, in which Seller disputes, in whole or in part, a claim set forth in a Claim Notice, including the basis for such dispute.
"Disputed Claim" means any claim asserted by Buyer in a Claim Notice for which Seller delivers a timely Dispute Notice within the Response Period disputing such claim in whole or in part.
"Escrow Account" means the segregated escrow account designated as account number GT-ESC-2024-11150048, maintained by Escrow Agent at Granite Trust Company, National Association, 100 Federal Street, Boston, Massachusetts 02110.
"Escrow Amount" means Seventy-Two Million Dollars ($72,000,000) deposited, or caused to be deposited, by Buyer with Escrow Agent on the Closing Date pursuant to Section 2.1 hereof.
"Escrow Agent" means Granite Trust Company, National Association, a national banking association organized and existing under the laws of the United States, and any successor escrow agent appointed in accordance with Section 6.5 or Section 6.6.
"Escrow Funds" means, at any time, the Escrow Amount then on deposit in the Escrow Account, together with all Investment Earnings thereon.
"Final Release Date" means November 15, 2027, being the date that is thirty-six (36) months from the Closing Date and the expiration of the Fundamental Representations Survival Period.
"Fundamental Representations" means the representations and warranties set forth in Sections 3.1 (Organization and Good Standing), 3.2 (Authority; Enforceability), 3.3 (Capitalization), 3.15 (Tax Matters), and 3.22 (Brokers and Finders) of the MIPA.
"Fundamental Representations Survival Period" means the period commencing on the Closing Date and ending at 11:59 p.m. (Eastern time) on November 15, 2027, being thirty-six (36) months from the Closing Date.
"General Survival Period" means the period commencing on the Closing Date and ending at 11:59 p.m. (Eastern time) on May 15, 2026, being eighteen (18) months from the Closing Date.
"Indemnification Cap" means Seventy-Two Million Dollars ($72,000,000), equal to fifteen percent (15%) of the Four Hundred Eighty Million Dollar ($480,000,000) enterprise value, which amount is coextensive with the Escrow Amount and represents the maximum aggregate liability of Seller for indemnification obligations under Article IX of the MIPA (other than with respect to breaches of Fundamental Representations, fraud, or willful misconduct, which are subject to separate caps as set forth in the MIPA).
"Investment Earnings" means all interest, dividends, and other income earned on the Escrow Funds from the investment thereof in Permitted Investments in accordance with Article IV.
"Joint Written Instructions" means written instructions signed by both Buyer and Seller (or their respective authorized representatives designated on Exhibit E) directing Escrow Agent to release all or a specified portion of the Escrow Funds, substantially in the form attached hereto as Exhibit C.
"Losses" has the meaning ascribed to such term in the MIPA.
"MIPA" means the Membership Interest Purchase Agreement, dated as of July 19, 2024, by and among Seller, Buyer, and solely for purposes of certain provisions therein, Aurelius Global Media Group PLC and Pinnacle Ridge Capital Partners Fund IV, L.P., as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Pending Claims" means, as of any date of determination, any claims for which a Claim Notice has been delivered to Escrow Agent prior to the applicable release date and which have not been finally resolved as of such date (whether by Joint Written Instructions, a final non-appealable order of a court of competent jurisdiction, an arbitration award, or a determination by the neutral accountant pursuant to Section 5.4).
"Permitted Investments" has the meaning set forth in Section 4.1.
"Response Period" means the period of thirty (30) calendar days following Seller's receipt of a Claim Notice.
"Seller" means Aurelius Media Holdings Inc., a Delaware corporation (file no. 5987324), with its registered agent at Crowne Albany Corporation, 1209 Orange Street, Wilmington, Delaware 19801, and its successors and permitted assigns.
"Seller's Counsel" means Calderwood & Harkness LLP, 425 Park Avenue, New York, New York 10022, Attention: Beatrice Holloway, or such other counsel as Seller may designate in writing to Buyer and Escrow Agent from time to time in accordance with Section 10.1.
"Tipping Basket" means Four Million Eight Hundred Thousand Dollars ($4,800,000), equal to one percent (1%) of the Four Hundred Eighty Million Dollar ($480,000,000) enterprise value. Once aggregate indemnifiable Losses properly asserted by Buyer under the MIPA exceed the Tipping Basket amount, Buyer shall be entitled to recovery from dollar one (i.e., the Tipping Basket operates as a "tipping" or "first dollar" basket rather than a true deductible), as provided in Section 9.4(b) of the MIPA.
"Trust Officer" means Margaret Huang, or such other officer of Escrow Agent as may be designated by Escrow Agent in writing to Buyer and Seller from time to time.
Section 1.2 — Interpretation.
(a) Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits, and Schedules are references to Articles and Sections of, and Exhibits and Schedules to, this Agreement.
(b) Words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(c) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(d) The word "or" is not exclusive and shall be interpreted in the inclusive sense of "and/or."
(e) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
(f) References to "dollars" or "$" are references to the lawful currency of the United States of America.
(g) The term "business day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in New York, New York or Boston, Massachusetts are authorized or required by applicable law or executive order to close.
(h) The terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement.
(i) References to any statute, law, or regulation shall be deemed to include all rules and regulations promulgated thereunder and any successor statute, law, or regulation, unless the context otherwise requires.
(j) References to any agreement, instrument, or document shall mean such agreement, instrument, or document as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, unless otherwise expressly provided.
ARTICLE II — ESTABLISHMENT OF ESCROW
Section 2.1 — Deposit of Escrow Amount.
(a) On the Closing Date, Buyer shall deposit, or cause to be deposited, with Escrow Agent, by wire transfer of immediately available funds to the Escrow Account in accordance with the wire instructions set forth on Exhibit A, the Escrow Amount of Seventy-Two Million Dollars ($72,000,000).
(b) The Escrow Amount is being deducted from the estimated equity purchase price of Four Hundred Eighteen Million Dollars ($418,000,000) otherwise payable to Seller at Closing under Section 2.3(a) of the MIPA, resulting in net cash consideration payable directly to Seller at Closing of Three Hundred Forty-Six Million Dollars ($346,000,000), subject to the post-closing adjustments set forth in the MIPA.
(c) Escrow Agent hereby acknowledges receipt of the Escrow Amount on the Closing Date, confirms that such funds have been deposited into the Escrow Account (GT-ESC-2024-11150048), and agrees to hold, invest, and disburse such funds solely in accordance with the terms and conditions of this Agreement.
(d) For the avoidance of doubt, the Escrow Amount equals fifteen percent (15%) of the enterprise value of Four Hundred Eighty Million Dollars ($480,000,000) and is coextensive with the Indemnification Cap under Article IX of the MIPA. The Escrow Funds shall constitute the sole and exclusive source of recovery for Buyer's indemnification claims under the MIPA, subject to the exceptions set forth therein with respect to Fundamental Representations, fraud, and willful misconduct.
Section 2.2 — Escrow Account.
(a) The Escrow Amount and all Investment Earnings thereon (collectively, the "Escrow Funds") shall be held by Escrow Agent in the Escrow Account at all times during the term of this Agreement.
(b) Escrow Agent shall maintain the Escrow Account as a segregated account, separate and apart from Escrow Agent's own funds, proprietary accounts, and all accounts of other clients and customers of Escrow Agent. Escrow Agent shall maintain books and records with respect to the Escrow Account sufficient to identify the Escrow Funds and all transactions with respect thereto.
(c) Escrow Agent shall not commingle the Escrow Funds with any other funds held by or on behalf of Escrow Agent or any other person. The Escrow Funds shall not be subject to any lien, attachment, trustee process, or any other judicial process of any creditor of Escrow Agent, Buyer, or Seller except as otherwise provided herein or as required by applicable law.
(d) Escrow Agent shall provide monthly statements to Buyer and Seller reflecting the balance of the Escrow Funds (including a breakdown of principal and Investment Earnings), all deposits and disbursements, and all investment activity during the immediately preceding month. Such statements shall be delivered electronically to the addresses set forth in Section 10.2 within ten (10) business days following the end of each calendar month.
Section 2.3 — Purpose.
The Escrow Funds shall serve as security for Seller's indemnification obligations under Article IX of the MIPA, subject in all respects to the following limitations and conditions, as more fully set forth in the MIPA:
(a) the Indemnification Cap of Seventy-Two Million Dollars ($72,000,000), which represents the maximum aggregate amount of Losses recoverable by Buyer from the Escrow Funds (except with respect to breaches of Fundamental Representations, fraud, or willful misconduct, which are subject to the separate caps set forth in the MIPA);
(b) the Tipping Basket of Four Million Eight Hundred Thousand Dollars ($4,800,000), such that no amounts shall be payable from the Escrow Funds unless and until the aggregate amount of indemnifiable Losses properly claimed by Buyer exceeds the Tipping Basket, at which point Buyer shall be entitled to recovery from dollar one of such aggregate Losses; and
(c) the De Minimis Threshold of Two Hundred Fifty Thousand Dollars ($250,000) per individual claim, such that no individual claim for Losses shall be counted toward the Tipping Basket or otherwise be recoverable from the Escrow Funds unless the amount of Losses attributable to such individual claim equals or exceeds the De Minimis Threshold.
ARTICLE III — RELEASE OF ESCROW FUNDS
Section 3.1 — Release Upon Joint Written Instructions.
(a) Escrow Agent shall release all or any portion of the Escrow Funds upon receipt of Joint Written Instructions signed by both Buyer and Seller (or their respective authorized representatives designated on Exhibit E attached hereto), substantially in the form attached hereto as Exhibit C. Each set of Joint Written Instructions shall specify (i) the amount of Escrow Funds to be released, (ii) the identity of the payee (Buyer, Seller, or a third party designated by a Party), (iii) the wire transfer instructions for such payee, and (iv) a brief description of the reason for such release (e.g., resolved claim, scheduled release, mutual agreement, or other).
(b) Escrow Agent shall make disbursement of any amounts specified in conforming Joint Written Instructions within two (2) business days of Escrow Agent's receipt thereof by wire transfer of immediately available funds to the account designated in such Joint Written Instructions.
(c) Escrow Agent shall be entitled to rely conclusively on any Joint Written Instructions that appear on their face to have been signed by authorized representatives of both Buyer and Seller as identified on Exhibit E (or as subsequently updated in accordance with the procedures set forth therein) and shall have no duty to inquire into the underlying basis for such instructions or the propriety of the release directed thereby.
Section 3.2 — Scheduled Release — General Survival Period.
(a) On the date that is five (5) business days after May 15, 2026 (which date is the expiration of the General Survival Period, being eighteen (18) months from the Closing Date) (the "General Release Date"), Escrow Agent shall release to Seller, by wire transfer of immediately available funds to the account designated by Seller on Exhibit A (or as otherwise directed by Seller in writing), an amount equal to:
(i) the then-remaining Escrow Funds,
minus
(ii) the aggregate amount of all Pending Claims that have been asserted by Buyer in Claim Notices delivered to Escrow Agent on or prior to May 15, 2026 and that remain unresolved as of the General Release Date (the "General Holdback Amount"),
minus
(iii) the Fundamental Representations Reserve Amount (as defined in Section 3.3(c) below).
(b) For the avoidance of doubt, "Pending Claims" as used in this Section 3.2 means any claims for which a Claim Notice has been delivered to Escrow Agent prior to May 15, 2026 and which have not been finally resolved (whether by Joint Written Instructions, a final non-appealable order of a court of competent jurisdiction, an arbitration award, or a determination by the neutral accountant) as of the General Release Date. For purposes of calculating the General Holdback Amount, the amount attributable to each Pending Claim shall be the estimated amount of Losses set forth in the applicable Claim Notice (or, if such amount has been partially resolved, the remaining unresolved portion thereof).
(c) Escrow Agent shall provide Buyer and Seller with a written statement, at least three (3) business days prior to the General Release Date, setting forth Escrow Agent's calculation of the amount to be released to Seller and the amounts to be retained, including a list of all Pending Claims and the amounts reserved with respect thereto. Buyer and Seller shall promptly notify Escrow Agent if they dispute any aspect of such calculation.
Section 3.3 — Scheduled Release — Fundamental Representations Survival Period.
(a) On the date that is five (5) business days after November 15, 2027 (which date is the expiration of the Fundamental Representations Survival Period, being thirty-six (36) months from the Closing Date, the "Final Release Date"), Escrow Agent shall release to Seller, by wire transfer of immediately available funds to the account designated by Seller on Exhibit A (or as otherwise directed by Seller in writing), all then-remaining Escrow Funds, less the aggregate amount of all Pending Claims asserted by Buyer in Claim Notices delivered to Escrow Agent on or prior to November 15, 2027 and remaining unresolved as of such date.
(b) For the avoidance of doubt, the Fundamental Representations (relating to title, authority, capitalization, tax, and brokers) survive for thirty-six (36) months from the Closing Date (i.e., until November 15, 2027), and claims related thereto may be asserted by Buyer in Claim Notices delivered to Escrow Agent on or prior to November 15, 2027 and shall remain secured by the Escrow Funds until final resolution of all such claims.
(c) For purposes of the scheduled release under Section 3.2, the "Fundamental Representations Reserve Amount" shall mean an amount equal to Twenty-Four Million Dollars ($24,000,000) (representing five percent (5%) of the enterprise value), or such lesser amount as Buyer and Seller may agree in writing; provided that if, at the time of the General Release Date, Buyer has asserted claims relating to breaches of Fundamental Representations in Claim Notices delivered to Escrow Agent, the Fundamental Representations Reserve Amount shall be the greater of (i) Twenty-Four Million Dollars ($24,000,000) and (ii) the aggregate amount of such Fundamental Representations-related Pending Claims. Unless otherwise agreed by Buyer and Seller in Joint Written Instructions, the Fundamental Representations Reserve Amount shall be retained in the Escrow Account through and including the Final Release Date.
(d) It is acknowledged by the Parties that breaches of Fundamental Representations are subject to a separate indemnification cap under Section 9.4(d) of the MIPA equal to the total enterprise value of Four Hundred Eighty Million Dollars ($480,000,000); provided, however, that recovery from the Escrow Funds with respect to any claims (whether relating to Fundamental Representations or otherwise) shall not exceed the Escrow Amount of Seventy-Two Million Dollars ($72,000,000). Nothing in this Agreement shall limit Buyer's right to pursue claims in excess of the Escrow Amount directly against Seller in accordance with the MIPA, to the extent the MIPA so provides.
(e) Escrow Agent shall provide Buyer and Seller with a written statement, at least three (3) business days prior to the Final Release Date, setting forth Escrow Agent's calculation of the amount to be released to Seller and the amounts to be retained on account of Pending Claims, including a detailed list thereof.
Section 3.4 — Release Upon Final Resolution of Pending Claims.
(a) Promptly (and in any event within five (5) business days) following the final resolution of any Pending Claim, Escrow Agent shall release Escrow Funds in respect of such Pending Claim as follows:
(i) If such Pending Claim is resolved in favor of Buyer (in whole or in part), Escrow Agent shall release to Buyer, by wire transfer of immediately available funds, an amount equal to the Losses determined to be payable to Buyer with respect to such claim (up to the amount previously reserved for such claim in the Escrow Account), and shall release any excess reserved amount (i.e., the amount by which the reserved amount exceeds the Losses determined to be payable) to Seller by wire transfer of immediately available funds.
(ii) If such Pending Claim is resolved in favor of Seller (i.e., the claim is denied in its entirety, withdrawn by Buyer, or otherwise determined to be without merit), Escrow Agent shall release to Seller, by wire transfer of immediately available funds, the full amount previously reserved for such Pending Claim.
(b) For purposes of this Section 3.4, "final resolution" of a Pending Claim shall be deemed to have occurred upon the earliest of: (i) delivery to Escrow Agent of Joint Written Instructions reflecting the agreed resolution of such claim; (ii) a final, non-appealable order or judgment of a court of competent jurisdiction (including the Court of Chancery of the State of Delaware or the United States District Court for the District of Delaware) directing the release of Escrow Funds with respect to such claim; or (iii) with respect to claims relating to the amount or calculation of net working capital, closing indebtedness, closing cash, or transaction expenses, a final determination by Kensington Forensic Advisors LLP, 90 Park Avenue, New York, New York 10016 (the "Neutral Accountant"), designated as the neutral accountant under Section 2.5 of the MIPA.
(c) Escrow Agent shall be entitled to rely conclusively on any Joint Written Instructions, court order, arbitral award, or determination of the Neutral Accountant presented to it in connection with the resolution of a Pending Claim and shall have no duty to investigate or verify the validity, accuracy, or propriety thereof.
Section 3.5 — Tax Indemnity Claims.
Notwithstanding anything herein to the contrary, Escrow Funds may be retained in the Escrow Account to secure tax-related indemnification claims asserted by Buyer under Section 9.2(e) of the MIPA beyond the Fundamental Representations Survival Period, to the extent that such tax-related claims arise from or relate to (a) Pre-Closing Tax Periods (as defined in the MIPA), (b) Straddle Periods (as defined in the MIPA), or (c) Tax matters for which the applicable statute of limitations extends beyond the Final Release Date. Any such tax-related claims must be timely asserted by Buyer in a Claim Notice delivered to Seller and Escrow Agent within sixty (60) calendar days after the expiration of the applicable statute of limitations (including any extensions or waivers thereof). To the extent a Claim Notice with respect to any such tax-related claim is delivered within such sixty (60)-day period, Escrow Agent shall continue to hold in the Escrow Account an amount equal to the estimated Losses set forth in such Claim Notice, pending final resolution of such claim in accordance with Section 3.4.
Section 3.6 — No Release to Buyer Absent Proper Claim.
Escrow Agent shall not release any portion of the Escrow Funds to Buyer except:
(a) upon receipt of Joint Written Instructions directing such release;
(b) pursuant to a final, non-appealable order or judgment of a court of competent jurisdiction, or a final arbitration award, directing such release; or
(c) in accordance with the claim procedures set forth in Article V (including, without limitation, the deemed acceptance provisions of Section 5.2(b)).
In no event shall Escrow Agent release any Escrow Funds to Buyer based solely upon Buyer's unilateral instruction or demand. This Section 3.6 is without prejudice to Escrow Agent's rights and protections under Article VI.
ARTICLE IV — INVESTMENT OF ESCROW FUNDS
Section 4.1 — Permitted Investments.
Escrow Agent shall invest and reinvest the Escrow Funds in one or more of the following instruments or accounts (each, a "Permitted Investment"), as jointly directed by Buyer and Seller in writing:
(a) Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (including United States Treasury bills, notes, and bonds), in each case maturing within ninety (90) days of the date of investment;
(b) Money market deposit accounts or certificates of deposit issued by Granite Trust Company, N.A. or any other nationally recognized banking institution organized under the laws of the United States or any state thereof, having combined capital and surplus in excess of One Billion Dollars ($1,000,000,000);
(c) Money market mutual funds rated "AAA" (or the equivalent rating) by at least one nationally recognized statistical rating organization (as defined under the Securities Exchange Act of 1934, as amended), including, without limitation, funds managed by Granite Trust Company, N.A. or its affiliates; and
(d) Such other investments as Buyer and Seller may jointly direct Escrow Agent in writing from time to time, provided that Escrow Agent shall have no obligation to accept any investment direction that it determines in good faith to be imprudent, impractical, or inconsistent with applicable law or its internal policies.
In the absence of joint investment instructions from Buyer and Seller, or pending receipt of such instructions, Escrow Agent shall invest and hold the Escrow Funds in a money market deposit account at Granite Trust Company, N.A. Escrow Agent shall not be required to invest the Escrow Funds unless and until it has received the Escrow Amount, applicable taxpayer identification numbers, and completed IRS Forms W-9 (or applicable successor forms) from the appropriate party.
Section 4.2 — Investment Earnings.
(a) All interest, dividends, and other income earned on the Escrow Funds ("Investment Earnings") shall be added to and become a part of the Escrow Funds and shall be held, invested, and disbursed in accordance with the terms of this Agreement, including Article III.
(b) Investment Earnings shall be allocated for federal, state, and local income tax reporting purposes entirely to Seller, as beneficial owner of the Escrow Funds pending release, unless Buyer and Seller jointly direct Escrow Agent in writing to allocate such Investment Earnings otherwise. Seller shall be responsible for the payment of all taxes attributable to Investment Earnings, regardless of whether such amounts are disbursed to Seller during the applicable tax period.
Section 4.3 — Tax Reporting.
(a) Escrow Agent shall report all Investment Earnings to the Internal Revenue Service under the taxpayer identification number of Seller (Aurelius Media Holdings Inc., EIN [to be provided on IRS Form W-9]), unless Buyer and Seller otherwise jointly direct Escrow Agent in writing.
(b) Seller shall, promptly following execution of this Agreement (and in any event within five (5) business days of the Closing Date), provide Escrow Agent with a completed and duly executed IRS Form W-9 (Request for Taxpayer Identification Number and Certification), or applicable successor form, together with any additional tax documentation reasonably requested by Escrow Agent.
(c) Escrow Agent shall issue IRS Forms 1099 (or any applicable equivalent or successor form) to Seller with respect to all Investment Earnings, in accordance with applicable law and the Internal Revenue Code of 1986, as amended.
(d) Escrow Agent shall have no responsibility for the tax consequences to any Party resulting from any investment of the Escrow Funds or distribution thereof. Each Party acknowledges that it has been advised to seek independent tax counsel regarding the federal, state, and local tax consequences arising from the escrow arrangement and the investment of the Escrow Funds.
Section 4.4 — Investment Risk.
Buyer and Seller acknowledge and agree that:
(a) Escrow Agent shall not be liable for any loss of principal or income resulting from any Permitted Investment made in accordance with this Agreement, including any loss resulting from the decline in value of any investment, the default of any issuer, or any market fluctuations, except to the extent such loss is directly caused by Escrow Agent's gross negligence, willful misconduct, or fraud;
(b) Escrow Agent shall have no obligation to maximize the rate of return on the Escrow Funds and shall have no liability for any failure to obtain the highest available yield;
(c) Escrow Agent is hereby authorized and directed to sell or liquidate any Permitted Investments as and when necessary to make disbursements from the Escrow Account in accordance with this Agreement, and Escrow Agent shall not be liable for any loss, cost, or penalty resulting from the premature sale or liquidation of any such investment; and
(d) Permitted Investments may not be insured by the Federal Deposit Insurance Corporation or any other governmental agency, and Buyer and Seller assume all risk of loss with respect to such investments, subject to the foregoing limitations.
ARTICLE V — CLAIM PROCEDURES
Section 5.1 — Claim Notices.
(a) To make a claim against the Escrow Funds for indemnification under the MIPA, Buyer shall deliver a written Claim Notice simultaneously to Seller (with a copy to Seller's Counsel, Calderwood & Harkness LLP, 425 Park Avenue, New York, New York 10022, Attention: Beatrice Holloway) and Escrow Agent (Attention: Margaret Huang, Trust Officer, 100 Federal Street, Boston, Massachusetts 02110, Reference: Escrow Account GT-ESC-2024-11150048), in each case in accordance with Section 10.1. Each Claim Notice shall be substantially in the form attached hereto as Exhibit D.
(b) Each Claim Notice shall set forth the following information in reasonable detail:
(i) the specific representation, warranty, covenant, or agreement under the MIPA alleged to have been breached or with respect to which indemnification is sought, including a reference to the applicable Section of the MIPA;
(ii) the factual basis for the claim in reasonable detail, including a description of the facts and circumstances giving rise to the claim and, to the extent known, the relevant documentary support therefor;
(iii) the estimated amount of Losses claimed by Buyer with respect to such claim (which estimated amount must equal or exceed the De Minimis Threshold of Two Hundred Fifty Thousand Dollars ($250,000) per individual claim in order for such claim to be counted toward the Tipping Basket or otherwise recoverable from the Escrow Funds); and
(iv) a statement indicating whether, as of the date of such Claim Notice, the aggregate of such claim and all prior claims asserted by Buyer under the MIPA exceeds the Tipping Basket of Four Million Eight Hundred Thousand Dollars ($4,800,000), or if the Tipping Basket has not yet been exceeded, a statement of the cumulative aggregate amount of all claims asserted to date.
(c) Each Claim Notice shall be accompanied by a certification of an authorized officer of Buyer (as identified on Exhibit E) that the information set forth in such Claim Notice is true and correct to the best of such officer's knowledge, information, and belief after reasonable inquiry.
(d) Escrow Agent shall not be obligated to review, evaluate, or verify the substance, accuracy, or validity of any Claim Notice and shall be entitled to rely on the face of such notice for all purposes, including for the purpose of reserving funds in accordance with Section 5.5.
Section 5.2 — Response Period; Dispute Notice.
(a) Seller shall have thirty (30) calendar days following Seller's receipt of a Claim Notice (the "Response Period") to deliver a written response to Buyer (with a copy to Buyer's Counsel, Hathaway, Locke & Barnett LLP, 51 West 52nd Street, New York, New York 10019, Attention: Graham Ashworth) and Escrow Agent, in the form of either:
(i) an acceptance of the claim in whole or in part (a "Claim Acceptance"), in which case Buyer and Seller shall promptly deliver Joint Written Instructions to Escrow Agent directing the release of the accepted amount to Buyer (and, if applicable, the release of any excess reserved amount to Seller); or
(ii) a written notice disputing the claim in whole or in part (a "Dispute Notice"), setting forth in reasonable detail the basis for Seller's dispute, including the specific grounds on which Seller contests the claim, the facts and circumstances supporting Seller's position, and, if Seller disputes only a portion of the claim, the amount Seller concedes (if any) and the amount Seller disputes.
(b) If Seller does not deliver a Dispute Notice (or a Claim Acceptance) within the Response Period, Seller shall be deemed to have accepted the claim in its entirety. In such event, Escrow Agent shall release the claimed amount set forth in the Claim Notice to Buyer within five (5) business days following receipt from Buyer of a certificate, signed by an authorized representative of Buyer as identified on Exhibit E, confirming that (A) the Response Period has expired, (B) Seller has not delivered a Dispute Notice or Claim Acceptance within the Response Period, and (C) Buyer requests release of the claimed amount. Escrow Agent shall be entitled to rely conclusively on such certificate without further inquiry.
Section 5.3 — Disputed Claims.
(a) If Seller delivers a timely Dispute Notice within the Response Period, the disputed amount (or the entire claimed amount, if Seller disputes the claim in its entirety) shall become a "Disputed Claim."
(b) Escrow Agent shall continue to hold the amount of any Disputed Claim in the Escrow Account pending final resolution of such Disputed Claim in accordance with this Article V. Escrow Agent shall take no action with respect to any Disputed Claim except as directed by Joint Written Instructions, a final non-appealable court order, an arbitration award, or a determination of the Neutral Accountant.
(c) If Seller's Dispute Notice concedes a portion of the claim, Buyer and Seller shall promptly deliver Joint Written Instructions directing Escrow Agent to release the conceded amount to Buyer, and the remainder shall constitute the Disputed Claim.
(d) Buyer and Seller shall attempt in good faith to resolve any Disputed Claim through negotiation within thirty (30) calendar days following Escrow Agent's receipt of the Dispute Notice (the "Negotiation Period"). During the Negotiation Period, the senior representatives designated by Buyer and Seller shall meet (in person or by videoconference) at least once to discuss the Disputed Claim and attempt to reach a mutually acceptable resolution. If the Parties are able to resolve a Disputed Claim during the Negotiation Period, they shall promptly deliver Joint Written Instructions to Escrow Agent reflecting such resolution.
(e) If Buyer and Seller are unable to resolve a Disputed Claim within the thirty (30)-day Negotiation Period, either Party may pursue resolution of such Disputed Claim through the dispute resolution mechanisms set forth in Section 5.4.
Section 5.4 — Dispute Resolution.
(a) Net Working Capital and Related Disputes. Any dispute relating to the amount or calculation of net working capital, closing indebtedness, closing cash, or transaction expenses (in each case, as defined and used in the MIPA) shall be submitted to Kensington Forensic Advisors LLP, 90 Park Avenue, New York, New York 10016 (the "Neutral Accountant"), in accordance with the procedures set forth in Section 2.5 of the MIPA. The determination of the Neutral Accountant with respect to any such dispute shall be final, binding, and non-appealable on Buyer, Seller, and Escrow Agent. Each of Buyer and Seller shall bear one-half of the fees and expenses of the Neutral Accountant, unless the Neutral Accountant determines otherwise in accordance with Section 2.5 of the MIPA.
(b) All Other Disputes. All disputes arising under or relating to this Agreement, the indemnification provisions of Article IX of the MIPA, or any claims against the Escrow Funds (other than disputes described in Section 5.4(a) above) shall be resolved in accordance with Section 11.8 of the MIPA, which provides for exclusive jurisdiction and venue in the Court of Chancery of the State of Delaware or, if such court declines to exercise jurisdiction, the United States District Court for the District of Delaware. Each of Buyer and Seller irrevocably submits to the exclusive jurisdiction and venue of such courts for the purpose of any such action or proceeding and waives any objection based on inconvenient forum or lack of personal jurisdiction.
(c) Release Upon Resolution. Escrow Agent shall release Escrow Funds in accordance with any final, non-appealable order or judgment of a court of competent jurisdiction, any final arbitral award, or any determination by the Neutral Accountant, in each case without further consent, instruction, or authorization from either Buyer or Seller. Escrow Agent shall be entitled to receive a certified copy of any such order, judgment, award, or determination before making any disbursement pursuant to this Section 5.4(c).
Section 5.5 — Reservation of Funds for Pending Claims.
(a) Upon Escrow Agent's receipt of a Claim Notice delivered in accordance with Section 5.1, Escrow Agent shall promptly reserve (i.e., set aside and not release) from the Escrow Funds an amount equal to the estimated amount of Losses specified in such Claim Notice, pending resolution of such claim. Such reservation shall be reflected in Escrow Agent's records and in the monthly statements delivered pursuant to Section 2.2(d).
(b) Such reservation shall reduce the amount of Escrow Funds available for scheduled releases under Sections 3.2 and 3.3. For the avoidance of doubt, the aggregate amount reserved for all outstanding Pending Claims at any time shall not exceed the total Escrow Funds then on deposit in the Escrow Account.
(c) Upon final resolution of a Pending Claim in accordance with Section 3.4, the applicable reservation shall be released and Escrow Funds shall be disbursed as provided therein.
ARTICLE VI — ESCROW AGENT
Section 6.1 — Duties and Responsibilities.
(a) Escrow Agent's duties and obligations under this Agreement shall be entirely ministerial in nature and shall be limited solely to those expressly set forth in this Agreement. Escrow Agent shall act in accordance with Joint Written Instructions, Claim Notices, Dispute Notices, final court orders, arbitral awards, and determinations of the Neutral Accountant, in each case received in accordance with the provisions of this Agreement.
(b) Escrow Agent shall have no duty to investigate, verify, or independently determine the validity, accuracy, or completeness of any claim, notice, instruction, certificate, document, or other communication received by it in connection with this Agreement. Escrow Agent shall not be required to interpret or enforce the terms of the MIPA or any other Transaction Document to which it is not a party.
(c) Escrow Agent shall not be required to take or refrain from taking any action that Escrow Agent believes in good faith to be in violation of, or inconsistent with, any applicable federal, state, or local law, rule, or regulation, or any order of any court or governmental authority.
(d) Escrow Agent shall not be deemed to have knowledge of any event, condition, or circumstance affecting the rights of Buyer or Seller under this Agreement or the MIPA unless and until Escrow Agent has received written notice thereof in accordance with the terms of this Agreement.
Section 6.2 — Standard of Care; Limitation of Liability.
(a) Escrow Agent shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and believed by it to be authorized or within its rights or powers conferred upon it by this Agreement, except to the extent that any such action, omission, or forbearance is finally determined by a court of competent jurisdiction to have resulted from Escrow Agent's gross negligence, willful misconduct, or fraud.
(b) In no event shall Escrow Agent be liable for any indirect, consequential, special, incidental, exemplary, or punitive damages (including lost profits, lost revenue, or loss of business opportunity), regardless of the form of action, whether in contract, tort (including negligence), strict liability, or otherwise, and regardless of whether Escrow Agent has been advised of the possibility of such damages.
(c) Escrow Agent shall not be liable for any loss, damage, delay, or failure in performance arising from or relating to force majeure events, including, without limitation, natural disasters, floods, earthquakes, hurricanes, epidemics, pandemics, acts of God, acts of war (whether declared or undeclared), acts of terrorism, insurrection, civil unrest, government sanctions, failures or disruptions of communication or computer systems (including cyberattacks), power outages, or any other circumstances beyond Escrow Agent's reasonable control.
(d) The aggregate liability of Escrow Agent under this Agreement for all claims, losses, and damages of every kind shall in no event exceed the amount of fees paid by Buyer and Seller to Escrow Agent under this Agreement during the twelve (12)-month period immediately preceding the event giving rise to such claim.
Section 6.3 — Reliance on Instructions.
(a) Escrow Agent shall be entitled to rely upon, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, certificate, request, direction, consent, statement, confirmation, order, judgment, award, determination, or other document or instrument furnished to it under this Agreement that Escrow Agent believes in good faith to be genuine and to have been signed, presented, or delivered by the proper person or persons.
(b) Escrow Agent may consult with and obtain advice from legal counsel of its own choosing (which may include in-house counsel) at any time and from time to time, and any action taken, omitted, or suffered by Escrow Agent in good faith in accordance with the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, omitted, or suffered by Escrow Agent hereunder.
(c) Escrow Agent shall not be obligated to take any legal action or institute any proceedings in connection with this Agreement or the Escrow Funds, or to appear in, prosecute, or defend any such legal action or proceedings. Escrow Agent may require, as a condition to the taking of any action (other than the disbursement of Escrow Funds in accordance with the express terms hereof), that it be indemnified to its reasonable satisfaction by Buyer and Seller against any and all losses, costs, and expenses that may be incurred in connection therewith.
Section 6.4 — Conflicting Instructions.
(a) If at any time Escrow Agent receives or is presented with conflicting, inconsistent, or ambiguous instructions, notices, or demands from Buyer and Seller (or their respective authorized representatives or counsel), Escrow Agent shall be entitled to refrain from taking any action with respect to the Escrow Funds (or the disputed portion thereof) until such conflict, inconsistency, or ambiguity is resolved to Escrow Agent's reasonable satisfaction by (i) Joint Written Instructions, (ii) a final, non-appealable order or judgment of a court of competent jurisdiction, or (iii) a final arbitral award or determination of the Neutral Accountant, as applicable, without any liability of Escrow Agent to either Buyer or Seller for such inaction.
(b) In the event of conflicting instructions, Escrow Agent may, at its sole discretion and without any obligation to do so, deposit or interplead the Escrow Funds (or the disputed portion thereof) with the Court of Chancery of the State of Delaware, the United States District Court for the District of Delaware, or any other court of competent jurisdiction, by way of an action in interpleader or otherwise. Upon such deposit or interpleader, Escrow Agent shall be relieved and discharged of all further obligations and liabilities under this Agreement with respect to the Escrow Funds (or the interpleaded portion thereof), and the Parties shall look solely to such court for the resolution of their respective claims.
(c) Any costs, expenses, and reasonable attorneys' fees incurred by Escrow Agent in connection with any interpleader action or other legal proceeding arising from conflicting instructions shall be reimbursed by Buyer and Seller jointly and severally in accordance with Section 7.2.
Section 6.5 — Resignation and Removal.
(a) Resignation. Escrow Agent may resign at any time by giving thirty (30) calendar days' prior written notice of its resignation to Buyer and Seller. Such resignation shall take effect upon the earlier of (i) the appointment of a successor escrow agent in accordance with this Section 6.5 and the transfer of the Escrow Funds to such successor, or (ii) the expiration of such thirty (30)-day notice period (or such longer period as Buyer and Seller may request in writing, not to exceed sixty (60) days).
(b) Removal. Escrow Agent may be removed at any time upon thirty (30) calendar days' prior written notice from Buyer and Seller acting jointly. Such removal shall take effect upon the appointment of a successor escrow agent and the transfer of the Escrow Funds to such successor.
(c) Appointment of Successor. Upon the resignation or removal of Escrow Agent, Buyer and Seller, acting jointly, shall appoint a successor escrow agent meeting the qualifications set forth in Section 6.6. If Buyer and Seller fail to appoint a successor escrow agent within thirty (30) calendar days after the date of Escrow Agent's notice of resignation or Buyer's and Seller's notice of removal, as applicable, then Escrow Agent may (i) petition the Court of Chancery of the State of Delaware (or any other court of competent jurisdiction) to appoint a successor escrow agent, or (ii) deposit the Escrow Funds with such court pending appointment of a successor, and upon such deposit, Escrow Agent shall be relieved and discharged of all further obligations under this Agreement.
(d) Discharge. Upon the transfer of the Escrow Funds (and all records relating thereto) to a duly appointed successor escrow agent, the departing Escrow Agent shall be fully discharged from all further obligations, duties, and liabilities under this Agreement (other than the surviving obligations under Article VII, Article VIII, and Section 6.2, which shall survive such discharge).
Section 6.6 — Successor Escrow Agent.
(a) Any successor escrow agent appointed pursuant to Section 6.5 shall be a national banking association or trust company organized and existing under the laws of the United States, with combined capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
(b) The successor escrow agent shall execute a written instrument in form and substance reasonably satisfactory to Buyer and Seller, accepting such appointment and agreeing to be bound by all of the terms and conditions of this Agreement applicable to Escrow Agent.
(c) Upon acceptance of appointment by a successor escrow agent, the departing Escrow Agent shall promptly transfer the Escrow Funds, together with all records, documents, and other materials in its possession relating to the Escrow Account, to such successor escrow agent.
ARTICLE VII — COMPENSATION AND EXPENSES OF ESCROW AGENT
Section 7.1 — Fees.
Buyer and Seller shall each pay fifty percent (50%) of Escrow Agent's fees in connection with the establishment and administration of the Escrow Account, as set forth in the fee schedule attached hereto as Exhibit B (the "Fee Schedule"). Escrow Agent's fees shall include (a) a one-time setup fee payable upon execution of this Agreement and (b) an annual administration fee payable upon execution of this Agreement for the initial year and on each anniversary of the Closing Date thereafter for so long as any Escrow Funds remain on deposit in the Escrow Account. In the event that Escrow Agent's services are terminated prior to the end of any annual period, the annual administration fee for such partial year shall be prorated based on the number of days in such partial year.
Section 7.2 — Expenses; Reimbursement.