ESCROW AGREEMENT

ESCROW AGREEMENT
Dated as of June 10, 2024
among
PENTERRA PHARMACEUTICALS CORP., a Delaware corporation, as Buyer,
DAVID NG, as Stockholder Representative,
and
FIDELIS NATIONAL ESCROW CORP., a Florida corporation, as Escrow Agent
In connection with that certain Stock Purchase Agreement dated as of June 10, 2024, among Penterra Pharmaceuticals Corp., Veridian Biosciences, Inc., the Sellers identified therein, and David Ng as Stockholder Representative
Right-click to update Table of Contents
This ESCROW AGREEMENT (this "Agreement") is made and entered into as of June 10, 2024, by and among Penterra Pharmaceuticals Corp., a Delaware corporation ("Buyer"), David Ng, in his capacity as Stockholder Representative (as defined below) of the Sellers (as defined below) (the "Stockholder Representative"), and Fidelis National Escrow Corp., a Florida corporation (the "Escrow Agent"). Buyer, the Stockholder Representative, and the Escrow Agent are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Buyer, Veridian Biosciences, Inc., a Delaware corporation (the "Company"), the stockholders of the Company listed on Exhibit A to the Purchase Agreement (as defined below) (collectively, the "Sellers"), and the Stockholder Representative have entered into that certain Stock Purchase Agreement dated as of June 10, 2024 (as it may be amended, supplemented, or modified from time to time in accordance with its terms, the "Purchase Agreement"), pursuant to which Buyer will acquire one hundred percent (100%) of the issued and outstanding capital stock of the Company for an aggregate purchase price of Nine Hundred Million Dollars ($900,000,000) in cash (the "Purchase Price"), on the terms and subject to the conditions set forth therein;
WHEREAS, the Purchase Agreement provides that, at the Closing (as defined below), a portion of the Purchase Price equal to One Hundred Eighty Million Dollars ($180,000,000) (the "Indemnification Escrow Amount") shall be deposited with the Escrow Agent in a segregated escrow account to secure the indemnification obligations of the Sellers under Article IX of the Purchase Agreement, such amount constituting twenty percent (20%) of the Purchase Price;
WHEREAS, the Purchase Agreement further provides that, at the Closing, Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Expense Fund Amount") shall be deposited with the Escrow Agent in a separate segregated escrow account to fund the reasonable out-of-pocket costs and expenses incurred by the Stockholder Representative in connection with the performance of his duties under the Purchase Agreement and the Stockholder Representative Agreement (as defined in the Purchase Agreement);
WHEREAS, the Parties wish to establish the terms and conditions governing the Escrow Agent's receipt, holding, investment, and disbursement of the Indemnification Escrow Amount and the Expense Fund Amount in accordance with this Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, 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, a Sunday, or a day on which banking institutions in New York, New York or Jacksonville, Florida are authorized or required by applicable law, regulation, or executive order to close.
"Buyer" means Penterra Pharmaceuticals Corp., a Delaware corporation, with its principal executive office located at 1100 Meridian Boulevard, Suite 400, Princeton, New Jersey 08540, and its successors and permitted assigns.
"Claim Notice" has the meaning set forth in Section 4.2(a).
"Closing" means the closing of the transactions contemplated by the Purchase Agreement, as such term is defined therein.
"Closing Date" means the date on which the Closing occurs in accordance with the terms and conditions of the Purchase Agreement.
"Disputed Amount" has the meaning set forth in Section 4.2(c).
"Escrow Agent" means Fidelis National Escrow Corp., a Florida corporation, with its principal office located at 601 Riverside Avenue, Jacksonville, Florida 32204, and any successor escrow agent appointed pursuant to this Agreement.
"Escrow Funds" means, collectively, the Indemnification Escrow Fund and the Expense Fund, as each may exist from time to time.
"Escrow Period" has the meaning set forth in Section 5.1.
"Escrow Termination Date" has the meaning set forth in Section 5.1.
"Expense Fund" means the Expense Fund Amount, together with any interest, dividends, or other income earned thereon, less any amounts disbursed or released therefrom in accordance with this Agreement.
"Expense Fund Account" has the meaning set forth in Section 2.3.
"Expense Fund Amount" means Two Million Five Hundred Thousand Dollars ($2,500,000).
"Expense Request" has the meaning set forth in Section 6.2.
"Indemnification Cap" means One Hundred Eighty Million Dollars ($180,000,000), an amount equal to twenty percent (20%) of the Purchase Price.
"Indemnification Escrow Account" has the meaning set forth in Section 2.2.
"Indemnification Escrow Fund" means the Indemnification Escrow Amount, together with any interest, dividends, or other income earned thereon, less any amounts disbursed or released therefrom in accordance with this Agreement.
"Indemnification Escrow Amount" means One Hundred Eighty Million Dollars ($180,000,000).
"Joint Written Direction" means a written instruction executed by both the Buyer and the Stockholder Representative directing the Escrow Agent to take certain specified actions with respect to the Escrow Funds, including the disbursement, release, or investment thereof.
"Pending Claims" has the meaning set forth in Section 5.2.
"Permitted Investments" has the meaning set forth in Section 3.1.
"Purchase Agreement" means that certain Stock Purchase Agreement, dated as of June 10, 2024, by and among Buyer, the Company, the Sellers, and the Stockholder Representative, as it may be amended, supplemented, or modified from time to time in accordance with its terms.
"Purchase Price" means Nine Hundred Million Dollars ($900,000,000).
"Response Notice" has the meaning set forth in Section 4.2(b).
"Response Period" has the meaning set forth in Section 4.2(b).
"Resolved Amount" has the meaning set forth in Section 4.2(d).
"Seller Percentages" means the respective percentage interests of each Seller as set forth in the Purchase Agreement.
"Stockholder Representative" means David Ng, Managing Partner of Crestline Ventures, LP, acting in his capacity as representative of the Sellers pursuant to Section 11.15 of the Purchase Agreement and the Stockholder Representative Agreement.
"Tax" or "Taxes" has the meaning ascribed to such term in the Purchase Agreement.
Section 1.2 — Rules of Construction
(a) The headings and captions in this Agreement are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of any provision hereof.
(b) Unless the context otherwise requires, words importing the singular shall include the plural and vice versa, and words importing any gender shall include all genders.
(c) The word "including" (and all variations thereof) means "including, without limitation" and shall not be construed to limit any general statement to the specific or similar items or matters immediately following such word.
(d) Unless otherwise expressly provided, all references in this Agreement to Sections, Articles, Exhibits, and Schedules are to the Sections, Articles, Exhibits, and Schedules of this Agreement.
(e) All dollar amounts referenced herein are in United States Dollars unless otherwise specified.
(f) References to any agreement, document, or instrument mean such agreement, document, or instrument as amended, supplemented, or modified from time to time in accordance with the terms thereof and, where applicable, the terms hereof.
(g) The words "hereof," "herein," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision hereof.
(h) References to any statute, rule, or regulation shall include any successor statute, rule, or regulation and any regulations or guidance promulgated thereunder.
ARTICLE II — ESTABLISHMENT OF ESCROW; DEPOSITS
Section 2.1 — Appointment of Escrow Agent
Buyer and the Stockholder Representative hereby appoint Fidelis National Escrow Corp. as escrow agent under this Agreement, and the Escrow Agent hereby accepts such appointment and agrees to hold, invest, and disburse the Escrow Funds in accordance with the terms and conditions of this Agreement. The Escrow Agent's primary contact for purposes of this Agreement shall be Brian Mulcahy, Senior Vice President, Fidelis National Escrow Corp., 601 Riverside Avenue, Jacksonville, Florida 32204, or such other individual as the Escrow Agent may designate from time to time by written notice to Buyer and the Stockholder Representative. The Escrow Agent agrees to act as escrow agent solely in accordance with the express terms of this Agreement and shall have no implied duties or obligations whatsoever.
Section 2.2 — Deposit of Indemnification Escrow Amount
At the Closing, Buyer shall (or shall cause to be) deposited with the Escrow Agent, by wire transfer of immediately available funds to the account designated by the Escrow Agent on Exhibit A hereto, the Indemnification Escrow Amount of One Hundred Eighty Million Dollars ($180,000,000). This amount is derived from the aggregate Purchase Price of Nine Hundred Million Dollars ($900,000,000) and constitutes twenty percent (20%) thereof, consistent with Section 2.3(a) of the Purchase Agreement. The Indemnification Escrow Amount shall be held by the Escrow Agent in a segregated escrow account established by the Escrow Agent for such purpose (the "Indemnification Escrow Account") for the purpose of securing the indemnification obligations of the Sellers under Article IX of the Purchase Agreement. The Escrow Agent shall acknowledge receipt of the Indemnification Escrow Amount in writing to Buyer and the Stockholder Representative promptly (and in any event within one (1) Business Day) following receipt thereof.
Section 2.3 — Deposit of Expense Fund Amount
At the Closing, Buyer shall (or shall cause to be) deposited with the Escrow Agent, by wire transfer of immediately available funds to the account designated by the Escrow Agent on Exhibit A hereto, the Expense Fund Amount of Two Million Five Hundred Thousand Dollars ($2,500,000). The Expense Fund Amount shall be held by the Escrow Agent in a separate segregated escrow account established by the Escrow Agent for such purpose (the "Expense Fund Account") for the purpose of funding the Stockholder Representative's reasonable out-of-pocket costs and expenses incurred in connection with the performance of his duties under the Purchase Agreement and the Stockholder Representative Agreement. The Escrow Agent shall acknowledge receipt of the Expense Fund Amount in writing to Buyer and the Stockholder Representative promptly (and in any event within one (1) Business Day) following receipt thereof.
Section 2.4 — Escrow Accounts
(a) The Escrow Agent shall maintain two (2) separate escrow accounts: (i) the Indemnification Escrow Account; and (ii) the Expense Fund Account. Each account shall be maintained separately and distinct from the other, and no transfers shall be made between the accounts except as expressly directed by a Joint Written Direction.
(b) The Escrow Funds shall not be commingled with the Escrow Agent's own funds or with the funds of any other person or entity. The Escrow Agent shall maintain accurate and complete books and records with respect to each escrow account, including all deposits, disbursements, and investment income, and shall provide quarterly statements to Buyer and the Stockholder Representative reflecting all activity in such accounts.
(c) The Escrow Funds deposited in the Indemnification Escrow Account shall be deemed the property of the Sellers until disbursed to Buyer in satisfaction of indemnification claims in accordance with this Agreement or until released to the Sellers upon the terms set forth in Article V. The Escrow Funds deposited in the Expense Fund Account shall be deemed the property of the Sellers until disbursed to the Stockholder Representative for expenses in accordance with Article VI or until released to the Sellers upon the terms set forth in Section 6.3.
Section 2.5 — Wire Transfer Instructions
The Escrow Agent's wire transfer instructions for the initial deposits of the Indemnification Escrow Amount and the Expense Fund Amount shall be as set forth on Exhibit A attached hereto and incorporated herein by reference. For informational purposes only, the aggregate Purchase Price of Nine Hundred Million Dollars ($900,000,000) is being funded at the Closing as follows: (i) Five Hundred Million Dollars ($500,000,000) from the proceeds of a term loan facility provided by a syndicate of lenders with Ironclad Trust Company, N.A. acting as administrative agent (pursuant to that certain Commitment Letter dated as of June 7, 2024, Ref. CL-2024-PPCA-0607); and (ii) Four Hundred Million Dollars ($400,000,000) from Penterra's available cash on hand. From the aggregate Purchase Price, the following amounts are to be deposited into escrow: One Hundred Eighty Million Dollars ($180,000,000) to the Indemnification Escrow Account; and Two Million Five Hundred Thousand Dollars ($2,500,000) to the Expense Fund Account. The net closing payment to the Sellers (or their designees) is Seven Hundred Seventeen Million Five Hundred Thousand Dollars ($717,500,000), all as more fully described in the Payoff and Funds Flow Memorandum prepared in connection with the Closing. The Escrow Agent shall have no responsibility for confirming the source of funds or the accuracy of any funds flow memorandum.
ARTICLE III — INVESTMENT OF ESCROW FUNDS
Section 3.1 — Permitted Investments
The Escrow Agent shall invest and reinvest the Escrow Funds (including any interest, dividends, or other income earned thereon) in accordance with Joint Written Direction delivered by Buyer and the Stockholder Representative, or, in the absence of such direction, in the following investments (the "Permitted Investments"):
(a) Direct obligations of, or obligations the timely payment of principal and interest on which are fully and unconditionally guaranteed by, the United States of America, in each case having maturities not exceeding ninety (90) days from the date of acquisition;
(b) Certificates of deposit issued by commercial banks 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), in each case having maturities not exceeding ninety (90) days from the date of acquisition;
(c) Money market funds that invest exclusively in obligations described in clause (a) or clause (b) above and that are rated AAA (or the equivalent thereof) by at least one nationally recognized statistical rating organization (as defined in Section 3(a)(62) of the Securities Exchange Act of 1934, as amended); or
(d) Such other investments as the Buyer and the Stockholder Representative may jointly direct in writing from time to time.
In the absence of a Joint Written Direction or other written investment instructions, the Escrow Agent shall invest the Escrow Funds in Permitted Investments described in clause (c) above. The Escrow Agent shall have no liability for any loss of principal or income resulting from any investment made in accordance with this Section 3.1. The Escrow Agent may liquidate any investment as necessary to make any disbursement or release required by this Agreement, and the Escrow Agent shall not be liable for any loss, penalty, or charge incurred in connection with any such liquidation.
Section 3.2 — Income on Escrow Funds
All interest, dividends, and other income earned on the Indemnification Escrow Fund shall be added to, and become a part of, the Indemnification Escrow Fund and shall be held, invested, and disbursed in accordance with this Agreement. All interest, dividends, and other income earned on the Expense Fund shall be added to, and become a part of, the Expense Fund and shall be held, invested, and disbursed in accordance with this Agreement. For the avoidance of doubt, any reference in this Agreement to the Indemnification Escrow Fund or the Expense Fund shall include any interest, dividends, or other income earned thereon unless the context clearly requires otherwise.
Section 3.3 — Tax Reporting and Allocation
(a) For all federal, state, and local income tax purposes, all interest and other income earned on the Indemnification Escrow Fund shall be allocable to the Sellers (or such portion thereof as may be directed by the Stockholder Representative in accordance with the Purchase Agreement), and the Escrow Agent shall report such income under the tax identification number provided by the Stockholder Representative on behalf of the Sellers. The Employer Identification Number of Veridian Biosciences, Inc. is 84-2193047. The Employer Identification Number of Crestline Ventures, LP (for purposes of reporting relating to the Stockholder Representative) is 83-1567842.
(b) All interest and other income earned on the Expense Fund shall be allocable to the Stockholder Representative and shall be reported by the Escrow Agent under the tax identification number of the Stockholder Representative (EIN: 83-1567842).
(c) For informational purposes, Buyer's Employer Identification Number is 22-3847561.
(d) The Escrow Agent shall file or cause to be filed all required IRS Forms 1099 or other applicable tax information returns with respect to income earned on the Escrow Funds, and shall deliver copies of such filings to the Stockholder Representative and Buyer in a timely manner. The Escrow Agent shall withhold any taxes it determines are required to be withheld under applicable law with respect to the Escrow Funds. Each of Buyer and the Stockholder Representative shall provide the Escrow Agent with a properly completed and executed IRS Form W-9 (or applicable Form W-8, if applicable) prior to or at the time of execution of this Agreement, and shall promptly provide any updated forms as may be required.
Section 3.4 — Investment Risk
The parties acknowledge that the Escrow Agent shall not be liable for any loss of principal or income resulting from any investment of the Escrow Funds in Permitted Investments, provided that the Escrow Agent has acted in accordance with the investment directions provided by Buyer and the Stockholder Representative or, in the absence thereof, the default investment provisions set forth in Section 3.1. The Escrow Agent is authorized to execute purchases and sales of Permitted Investments through its own trading department or any affiliate, and may receive reasonable and customary compensation therefor. The parties further acknowledge that the Escrow Agent is not providing investment advice and shall not be deemed a fiduciary with respect to the investment of the Escrow Funds.
ARTICLE IV — DISBURSEMENT OF INDEMNIFICATION ESCROW FUND
Section 4.1 — Purpose of Indemnification Escrow Fund
The Indemnification Escrow Fund shall serve as the primary source of recovery for indemnification claims asserted by Buyer against the Sellers under Article IX of the Purchase Agreement, and specifically under Section 9.2 thereof (Indemnification by Sellers). The Indemnification Escrow Fund secures the general indemnification obligations of the Sellers with respect to breaches of the representations and warranties of the Company and the Sellers set forth in the Purchase Agreement (other than Fundamental Representations, as defined in the Purchase Agreement), subject to the following limitations as set forth in the Purchase Agreement:
(a) The aggregate liability of the Sellers for indemnification claims relating to General Representations (as defined in the Purchase Agreement) shall not exceed the Indemnification Cap of One Hundred Eighty Million Dollars ($180,000,000), which is equal to twenty percent (20%) of the Purchase Price;
(b) Buyer shall not be entitled to indemnification from the Indemnification Escrow Fund unless and until the aggregate amount of Losses (as defined in the Purchase Agreement) for which Buyer would otherwise be entitled to indemnification equals or exceeds Nine Million Dollars ($9,000,000) (the "Basket Amount"), which is equal to one percent (1%) of the Purchase Price; provided, however, that once such threshold is met, the Buyer shall be entitled to indemnification from the first dollar of Losses (i.e., the Basket Amount functions as a "tipping basket" and not as a true deductible), as provided in the Purchase Agreement; and
(c) For the avoidance of doubt, the indemnification cap applicable to Fundamental Representations (including, without limitation, representations regarding capitalization, authority, organization, and taxes) is one hundred percent (100%) of the Purchase Price (i.e., Nine Hundred Million Dollars ($900,000,000)), and claims relating to Fundamental Representations are not limited to the Indemnification Escrow Fund and may be satisfied from any assets of the Sellers, subject to the terms and conditions of the Purchase Agreement.
Section 4.2 — Claim Procedures
Section 4.2(a) — Claim Notice.  If Buyer is entitled to, or in good faith believes it is entitled to, indemnification from the Indemnification Escrow Fund pursuant to Article IX of the Purchase Agreement, Buyer shall deliver a written notice (a "Claim Notice") to the Escrow Agent and the Stockholder Representative. Each Claim Notice shall be substantially in the form of Exhibit C attached hereto and shall specify the following:
(i) a description of the nature and factual basis of the indemnification claim in reasonable detail;
(ii) the specific section(s) of the Purchase Agreement giving rise to the indemnification claim;
(iii) the aggregate amount of Losses claimed by Buyer in connection with such claim (the "Claimed Amount"), if then determinable, or, if not then determinable, a good faith estimate of the anticipated amount of such Losses, together with a statement that the Claimed Amount is an estimate and that Buyer reserves the right to supplement or amend the Claim Notice as additional information becomes available; and
(iv) a request that the Escrow Agent disburse the Claimed Amount (or such lesser amount as then remains in the Indemnification Escrow Fund) to Buyer from the Indemnification Escrow Account, together with wire transfer instructions for such disbursement.
Section 4.2(b) — Response Period.  The Stockholder Representative shall have thirty (30) calendar days following receipt of a Claim Notice (the "Response Period") within which to deliver a written response (a "Response Notice") to the Escrow Agent and Buyer. The Response Notice shall set forth the Stockholder Representative's position with respect to the Claim Notice, including whether the Stockholder Representative accepts, disputes, or partially disputes the Claimed Amount. If the Stockholder Representative fails to deliver a Response Notice to the Escrow Agent and Buyer within the Response Period, the Stockholder Representative shall be deemed to have irrevocably accepted the Claim Notice and the Claimed Amount in full, and the Escrow Agent shall, subject to Section 4.4, promptly disburse the Claimed Amount (or such lesser amount as then remains in the Indemnification Escrow Fund) to Buyer.
Section 4.2(c) — Dispute of Claim.  If the Stockholder Representative delivers a Response Notice within the Response Period disputing all or any portion of the Claimed Amount set forth in a Claim Notice, the Response Notice shall specify the following:
(i) the amount, if any, of the Claimed Amount that the Stockholder Representative agrees is payable to Buyer (the "Agreed Amount"), which Agreed Amount may be zero;
(ii) the amount of the Claimed Amount that the Stockholder Representative disputes (the "Disputed Amount"), which shall equal the Claimed Amount minus the Agreed Amount; and
(iii) a reasonably detailed description of the basis for the Stockholder Representative's dispute of the Disputed Amount, including any factual or legal grounds for such dispute.
Upon receipt of a Response Notice that includes an Agreed Amount greater than zero, the Escrow Agent shall promptly (and in any event within three (3) Business Days) disburse the Agreed Amount to Buyer from the Indemnification Escrow Account in accordance with Section 4.4. The Escrow Agent shall continue to hold the Disputed Amount in the Indemnification Escrow Account pending resolution of the dispute in accordance with Section 4.2(d).
Section 4.2(d) — Resolution of Disputes.  Following delivery of a Response Notice in which the Stockholder Representative disputes all or a portion of the Claimed Amount, Buyer and the Stockholder Representative shall negotiate in good faith for a period of thirty (30) calendar days following delivery of such Response Notice (the "Negotiation Period") to resolve the dispute regarding the Disputed Amount. During the Negotiation Period, the Escrow Agent shall take no action with respect to the Disputed Amount other than to continue to hold such amount in the Indemnification Escrow Account in accordance with the terms of this Agreement.
If the dispute is resolved during the Negotiation Period (whether in whole or in part), Buyer and the Stockholder Representative shall deliver a Joint Written Direction to the Escrow Agent specifying: (i) the amount to be disbursed to Buyer from the Indemnification Escrow Fund (the "Resolved Amount"); and (ii) the amount, if any, to be retained in or released from the Indemnification Escrow Fund. The Escrow Agent shall disburse and/or release amounts as directed in such Joint Written Direction within three (3) Business Days of receipt thereof.
If the dispute is not resolved within the Negotiation Period, either Buyer or the Stockholder Representative may submit the dispute to the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines to exercise jurisdiction, the Superior Court of the State of Delaware or the United States District Court for the District of Delaware) in accordance with Section 10.6 of the Purchase Agreement and Section 9.3 of this Agreement. The Escrow Agent shall continue to hold the Disputed Amount in the Indemnification Escrow Account pending receipt of either (A) a Joint Written Direction from Buyer and the Stockholder Representative, or (B) a final, non-appealable order or judgment of a court of competent jurisdiction directing the disposition of the Disputed Amount. Upon receipt of such Joint Written Direction or final order, the Escrow Agent shall disburse the Disputed Amount (or such portions thereof) as directed therein.
Section 4.2(e) — Third-Party Claims.  Indemnification claims arising from or relating to claims, actions, suits, or proceedings brought by any person or entity that is not a party to the Purchase Agreement (each, a "Third-Party Claim") shall be governed by the third-party claim procedures set forth in Section 9.4 of the Purchase Agreement, including the provisions relating to assumption of defense, settlement, and cooperation. The Escrow Agent shall disburse amounts from the Indemnification Escrow Fund in respect of Third-Party Claims only upon receipt of: (i) a Joint Written Direction from Buyer and the Stockholder Representative; or (ii) a final, non-appealable order or judgment of the Court of Chancery of the State of Delaware (or such other court of competent jurisdiction as provided in Section 9.3 of this Agreement), directing such disbursement.
Section 4.3 — Limitations
(a) The aggregate amount disbursed from the Indemnification Escrow Fund to Buyer shall not exceed the balance of the Indemnification Escrow Fund as it exists from time to time (including investment income thereon), which, at the time of initial deposit, equals the Indemnification Cap of One Hundred Eighty Million Dollars ($180,000,000). Nothing in this Section 4.3 shall limit Buyer's right to seek indemnification from the Sellers directly for amounts in excess of the Indemnification Escrow Fund to the extent permitted by the Purchase Agreement, including with respect to Fundamental Representations.
(b) The Escrow Agent shall not disburse any amounts from the Indemnification Escrow Fund in respect of any indemnification claim unless the Claim Notice delivered by Buyer includes a certification by an authorized officer of Buyer that the aggregate amount of Losses for which Buyer is seeking indemnification under Article IX of the Purchase Agreement (including the Claimed Amount set forth in such Claim Notice and the aggregate of all prior Claimed Amounts) equals or exceeds the Basket Amount of Nine Million Dollars ($9,000,000). The Escrow Agent shall have no duty or obligation to independently verify such certification or to determine whether the Basket Amount has been met.
(c) The Escrow Agent shall have no responsibility or liability for determining the validity, sufficiency, or merits of any indemnification claim or for interpreting any provision of the Purchase Agreement. The Escrow Agent's sole obligation is to hold and disburse the Indemnification Escrow Fund in accordance with the express terms of this Agreement.
Section 4.4 — Manner of Disbursement
All disbursements from the Indemnification Escrow Fund shall be made by wire transfer of immediately available funds to the account designated by the recipient in writing (which written designation may be included in the applicable Claim Notice, Joint Written Direction, or court order). The Escrow Agent shall make such disbursements within three (3) Business Days following receipt of: (a) a Joint Written Direction; (b) the expiration of the Response Period without delivery of a Response Notice (constituting a deemed acceptance under Section 4.2(b)); or (c) a final, non-appealable order or judgment of a court of competent jurisdiction, as applicable. In the event of any disbursement to Buyer, the Escrow Agent shall provide written confirmation of such disbursement (including the amount and date thereof) to both Buyer and the Stockholder Representative promptly following the completion of such wire transfer.
ARTICLE V — RELEASE OF INDEMNIFICATION ESCROW FUND
Section 5.1 — Escrow Period
The "Escrow Period" shall commence on the Closing Date and shall terminate on the date that is eighteen (18) months following the Closing Date (the "Escrow Termination Date"). The Escrow Period corresponds to the survival period for the General Representations of the Company and the Sellers under the Purchase Agreement, as set forth in Section 9.1 thereof. Notwithstanding the foregoing, amounts retained in the Indemnification Escrow Fund in respect of Pending Claims (as defined in Section 5.2) shall continue to be held by the Escrow Agent beyond the Escrow Termination Date until such Pending Claims are finally resolved in accordance with Section 5.3.
Section 5.2 — Release upon Expiration
Promptly following the Escrow Termination Date (but in no event later than five (5) Business Days thereafter), the Escrow Agent shall release to the Stockholder Representative (for distribution to the Sellers pro rata in accordance with their respective Seller Percentages as set forth in the Purchase Agreement) the entire balance of the Indemnification Escrow Fund as of such date, less:
(a) any amounts previously disbursed to Buyer from the Indemnification Escrow Fund in satisfaction of indemnification claims; and
(b) any amounts retained in the Indemnification Escrow Fund in respect of unresolved indemnification claims for which a Claim Notice was delivered to the Escrow Agent on or prior to the Escrow Termination Date and that have not been finally resolved as of such date ("Pending Claims").
The amount retained in the Indemnification Escrow Fund for Pending Claims shall equal the aggregate Claimed Amounts (or good faith estimates thereof) set forth in the applicable Claim Notices with respect to such Pending Claims, or such lesser amounts as Buyer and the Stockholder Representative may agree in a Joint Written Direction. Buyer shall deliver to the Escrow Agent and the Stockholder Representative, no later than two (2) Business Days prior to the Escrow Termination Date, a written certificate specifying all Pending Claims and the aggregate Claimed Amounts associated therewith. The Escrow Agent shall be entitled to rely on such certificate (or, in the event of a dispute regarding the amounts to be retained, on a Joint Written Direction or court order) in determining the amounts to be released and retained.
Section 5.3 — Release of Pending Claim Reserves
Upon the final resolution of each Pending Claim, whether by Joint Written Direction, deemed acceptance pursuant to Section 4.2(b), or a final, non-appealable order or judgment of a court of competent jurisdiction, the Escrow Agent shall:
(a) disburse the Resolved Amount (or such other amount as directed by the Joint Written Direction or court order) to Buyer from the Indemnification Escrow Account; and
(b) release the remainder of the amount that had been reserved in the Indemnification Escrow Account with respect to such Pending Claim (i.e., the difference between the reserved amount and the Resolved Amount) to the Stockholder Representative for distribution to the Sellers pro rata in accordance with their respective Seller Percentages.
Upon the final resolution of all Pending Claims and the disbursement and release of all amounts associated therewith, any remaining balance in the Indemnification Escrow Fund shall be released to the Stockholder Representative for distribution to the Sellers pro rata in accordance with their respective Seller Percentages.
Section 5.4 — Fundamental Representations and Special Indemnities
For the avoidance of doubt, claims relating to breaches of Fundamental Representations (including, without limitation, representations and warranties regarding capitalization, authority, due organization, and taxes, as defined in the Purchase Agreement) survive for the applicable statute of limitations plus sixty (60) days, and the Sellers' indemnification obligations in respect of such claims are not limited to the Indemnification Escrow Fund and are subject to a separate cap of one hundred percent (100%) of the Purchase Price (i.e., Nine Hundred Million Dollars ($900,000,000)). The Escrow Agent shall have no obligation to hold or retain any escrow amounts beyond the Escrow Period in respect of Fundamental Representation claims or Special Indemnity claims (as defined in the Purchase Agreement) unless a Claim Notice relating to such claims is delivered to the Escrow Agent on or prior to the Escrow Termination Date. Nothing in this Article V shall limit Buyer's right to pursue indemnification claims directly against the Sellers to the extent permitted by the Purchase Agreement with respect to matters not subject to the Indemnification Cap or not limited to the Indemnification Escrow Fund.
ARTICLE VI — EXPENSE FUND
Section 6.1 — Purpose
The Expense Fund shall be used solely to reimburse the Stockholder Representative for reasonable and documented out-of-pocket costs and expenses incurred by the Stockholder Representative in the performance of his duties and the exercise of his rights and powers under the Purchase Agreement and the Stockholder Representative Agreement, including, without limitation, legal fees and disbursements, accounting fees, consulting fees, fees and expenses of other professional advisors, travel expenses, and other costs and expenses reasonably incurred in connection with the administration and enforcement of the rights of the Sellers under the Purchase Agreement, this Agreement, and any related agreements or transactions. The Expense Fund shall not be used for any other purpose.
Section 6.2 — Disbursement from Expense Fund
The Escrow Agent shall disburse amounts from the Expense Fund upon receipt of a written request from the Stockholder Representative (an "Expense Request"), which shall be substantially in the form of Exhibit D attached hereto and shall include:
(i) the amount requested to be disbursed;
(ii) a reasonably detailed description of the nature of the expenses incurred or to be incurred for which reimbursement is sought; and
(iii) copies of supporting documentation, invoices, or receipts to the extent reasonably available; provided, that the Stockholder Representative may redact privileged or confidential information from such documentation to the extent the Stockholder Representative reasonably determines that disclosure thereof would be adverse to the interests of the Sellers.
The Stockholder Representative shall deliver a copy of each Expense Request to Buyer concurrently with (or promptly following) delivery to the Escrow Agent; provided, however, that the consent or approval of Buyer shall not be required for any disbursement from the Expense Fund, and the Escrow Agent shall be authorized and directed to make disbursements from the Expense Fund solely upon the written instruction of the Stockholder Representative without any requirement for Buyer's countersignature or approval. The Escrow Agent shall make disbursements from the Expense Fund by wire transfer of immediately available funds to the account designated by the Stockholder Representative within five (5) Business Days following receipt of a compliant Expense Request.
Section 6.3 — Release of Remaining Expense Fund
Any amounts remaining in the Expense Fund upon the earlier to occur of (a) the Escrow Termination Date and the final resolution of all Pending Claims (such that no further Stockholder Representative services are anticipated), or (b) the date on which the Escrow Agent receives written notice from the Stockholder Representative certifying that no further expenses are anticipated and that the Stockholder Representative elects to release the remaining Expense Fund balance, shall be released by the Escrow Agent to the Stockholder Representative for distribution to the Sellers pro rata in accordance with their respective Seller Percentages as set forth in the Purchase Agreement. Such release shall occur within five (5) Business Days following the applicable triggering event described in the preceding sentence.
Section 6.4 — Expense Fund Not Available for Indemnification Claims
The Expense Fund shall not be available to satisfy any indemnification claims by Buyer under the Purchase Agreement or this Agreement. Buyer shall have no right to make claims against, or receive any disbursement from, the Expense Fund. The Escrow Agent shall not disburse any amounts from the Expense Fund to Buyer under any circumstances, and any Claim Notice or Joint Written Direction that purports to direct disbursement from the Expense Fund to Buyer shall be of no force or effect.
ARTICLE VII — DUTIES AND OBLIGATIONS OF THE ESCROW AGENT
Section 7.1 — Standard of Care
The Escrow Agent shall hold and disburse the Escrow Funds solely in accordance with the express terms and conditions of this Agreement. The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith and in accordance with this Agreement or at the direction of any of the other Parties hereto, and the Escrow Agent shall in no event be liable for any indirect, incidental, consequential, special, or punitive damages, regardless of the form of action. The Escrow Agent shall act with reasonable care and diligence in the performance of its duties hereunder but shall have only such duties as are expressly set forth in this Agreement. No implied covenants, obligations, or duties shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be deemed to be a fiduciary of any Party to this Agreement or of any other person or entity and shall not be subject to any fiduciary obligations except as expressly provided herein.
Section 7.2 — Reliance on Instructions and Documents
The Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, direction, certificate, statement, request, consent, waiver, receipt, or other document or instrument (including a Joint Written Direction, Claim Notice, Response Notice, or Expense Request) that the Escrow Agent in good faith believes to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall not be required to investigate, determine, or verify the genuineness, accuracy, or validity of any signature, instruction, certificate, or document delivered to it, and may assume that any person purporting to give any notice, instruction, or direction on behalf of a Party in connection with this Agreement has been duly authorized to do so.
Section 7.3 — No Investigation
The Escrow Agent shall have no duty or obligation to:
(a) investigate or make any determination regarding the validity, accuracy, or merits of any indemnification claim, Claim Notice, Response Notice, or Expense Request;
(b) determine whether Losses have occurred, whether the Basket Amount has been met or exceeded, or whether the Indemnification Cap has been reached;
(c) interpret, construe, or enforce any provision of the Purchase Agreement, the Stockholder Representative Agreement, or any other agreement between or among the Parties (other than this Agreement);
(d) make any determination as to whether a material adverse effect has occurred, whether any representation or warranty is true, correct, or complete, or whether any condition to any obligation under the Purchase Agreement has been satisfied or waived; or
(e) monitor or verify the use by the Stockholder Representative of amounts disbursed from the Expense Fund.
The Escrow Agent may consult with legal counsel of its own choosing (including in-house counsel) in connection with any question or matter arising under this Agreement, and the advice or opinion of such counsel shall be full and complete authorization and protection to the Escrow Agent with respect to any action taken, suffered, or omitted by it hereunder in good faith and in accordance with such advice or opinion.
Section 7.4 — Conflicting Instructions
In the event that the Escrow Agent receives instructions, directions, or demands from Buyer and the Stockholder Representative that are conflicting or inconsistent with each other or with the terms of this Agreement, the Escrow Agent shall be entitled to refrain from taking any action (other than to continue to hold the Escrow Funds in accordance with this Agreement and to invest the same in Permitted Investments) until the Escrow Agent receives:
(a) a Joint Written Direction signed by both Buyer and the Stockholder Representative resolving the conflict;
(b) a final, non-appealable order or judgment of a court of competent jurisdiction directing the Escrow Agent to take specific action with respect to the Escrow Funds; or
(c) the Escrow Agent may, in its sole and absolute discretion, commence an interpleader action and deposit or interplead all or any portion of the Escrow Funds with the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines jurisdiction, the Superior Court of the State of Delaware or the United States District Court for the District of Delaware), and thereupon the Escrow Agent shall be relieved of all further obligations under this Agreement with respect to the amounts so deposited or interpleaded.
The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith pending resolution of any such conflict. The costs and expenses (including reasonable attorneys' fees) incurred by the Escrow Agent in connection with any interpleader action shall be borne by Buyer and the Sellers (through the Stockholder Representative) in equal shares and shall constitute a charge against the Escrow Funds to the extent not otherwise paid.
Section 7.5 — 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 such resignation to Buyer and the Stockholder Representative. Such resignation shall take effect upon the appointment of a successor escrow agent in accordance with Section 7.6 or, if no successor has been appointed by such date, on the thirtieth (30th) day following delivery of such notice.
(b) Removal. Buyer and the Stockholder Representative may jointly remove the Escrow Agent at any time by giving not less than thirty (30) days' prior written notice (signed by both Buyer and the Stockholder Representative) to the Escrow Agent. Such removal shall take effect upon the appointment of a successor escrow agent in accordance with Section 7.6 or, if no successor has been appointed by such date, on the thirtieth (30th) day following delivery of such notice.
(c) Transfer of Escrow Funds. Upon the effective date of any resignation or removal, the Escrow Agent shall transfer the Escrow Funds, together with all records relating thereto, to the successor escrow agent designated by Joint Written Direction of Buyer and the Stockholder Representative. If no successor escrow agent has been designated within thirty (30) days following delivery of the notice of resignation or removal, the Escrow Agent may deposit the Escrow Funds with the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines jurisdiction, the Superior Court of the State of Delaware) and shall thereupon be relieved of all further obligations under this Agreement.
Section 7.6 — Successor Escrow Agent
Any successor escrow agent appointed pursuant to this Agreement shall be a national banking association, a state-chartered bank, or a trust company that has a combined capital and surplus of at least Five Hundred Million Dollars ($500,000,000), or such other entity as Buyer and the Stockholder Representative may jointly approve in writing. Upon acceptance of its appointment, any successor escrow agent shall succeed to all of the rights, duties, and obligations of the Escrow Agent under this Agreement as if originally named herein. The predecessor Escrow Agent shall be discharged from its duties and obligations hereunder upon the transfer of the Escrow Funds and related records to the successor escrow agent.
ARTICLE VIII — COMPENSATION, EXPENSES, AND INDEMNIFICATION OF ESCROW AGENT
Section 8.1 — Fees and Expenses
The Escrow Agent shall be entitled to compensation for its services rendered hereunder in accordance with the fee schedule attached hereto as Exhibit B. All fees and expenses of the Escrow Agent (including, without limitation, the initial acceptance/setup fee, annual administration fees, transaction/disbursement fees, investment management fees, and fees for extraordinary services) shall be borne solely by Buyer. For the avoidance of doubt, such fees and expenses constitute part of Buyer's transaction costs and shall not be deducted from or charged against the Escrow Funds, except as provided in Section 8.3. The Escrow Agent shall invoice Buyer directly for all fees and expenses, and Buyer shall pay such invoices within thirty (30) days of receipt.
Section 8.2 — Indemnification of Escrow Agent
(a) Buyer and the Stockholder Representative (on behalf of the Sellers), jointly and severally, hereby agree to indemnify, defend, and hold harmless the Escrow Agent and its directors, officers, employees, agents, and representatives (collectively, the "Escrow Agent Indemnified Parties") from and against any and all losses, damages, claims, liabilities, penalties, judgments, settlements, costs, and expenses (including reasonable attorneys' fees and disbursements) incurred by any Escrow Agent Indemnified Party and arising out of or in connection with the Escrow Agent's acceptance of, or the performance of or failure to perform its duties and obligations under, this Agreement, including any litigation arising from this Agreement, except to the extent that such losses, damages, claims, liabilities, penalties, judgments, settlements, costs, or expenses are determined by a final, non-appealable order of a court of competent jurisdiction to have resulted directly from the Escrow Agent's gross negligence, bad faith, or willful misconduct.
(b) For purposes of the allocation of indemnification obligations under this Section 8.2 as between Buyer and the Sellers (through the Stockholder Representative), Buyer shall bear fifty percent (50%) and the Sellers (through the Stockholder Representative) shall bear fifty percent (50%) of any indemnification obligation arising hereunder, unless otherwise agreed in a Joint Written Direction or directed by a court of competent jurisdiction.
(c) The obligations of the parties under this Section 8.2 shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.
Section 8.3 — Lien on Escrow Funds
The Escrow Agent shall have a first priority lien on, and security interest in, the Escrow Funds (including any interest, dividends, or other income earned thereon) for any unpaid fees, expenses, or indemnification obligations owed to the Escrow Agent pursuant to this Article VIII. The Escrow Agent may deduct and set off from the Escrow Funds any amounts owed to it hereunder; provided, however, that prior to exercising any such right of deduction or set-off, the Escrow Agent shall provide at least ten (10) Business Days' prior written notice to Buyer and the Stockholder Representative specifying the amounts to be deducted and the basis therefor, and Buyer shall have the opportunity during such period to pay such amounts directly and thereby avoid any deduction from the Escrow Funds.
ARTICLE IX — MISCELLANEOUS
Section 9.1 — Notices
All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given or delivered: (a) when delivered personally; (b) when sent by email (with written confirmation of receipt by the recipient, which confirmation may be electronic); (c) one (1) Business Day after being sent by nationally recognized overnight courier service (with tracking confirmation); or (d) three (3) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as a Party may designate by written notice to the other Parties in accordance with this Section 9.1):
If to Buyer:
Penterra Pharmaceuticals Corp. 1100 Meridian Boulevard, Suite 400 Princeton, New Jersey 08540
Attention: Thomas F. Holbrook, General Counsel & Secretary
Email: t.holbrook@penterra.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 200 Park Avenue, 42nd Floor New York, New York 10166
Attention: Oliver Mackenzie
Email: omackenzie@calderwoodharkness.com
If to the Stockholder Representative:
David Ng, Stockholder Representative c/o Crestline Ventures, LP 400 Boylston Street, Suite 1200 Boston, Massachusetts 02116
Attention: David Ng, Managing Partner
Email: dng@crestlineventures.com
with a copy (which shall not constitute notice) to:
Zalcourt Archer & Cole LLP One Federal Street, 30th Floor Boston, Massachusetts 02110
Attention: Rebecca Whitmore
Email: rwhitmore@lathamarchercole.com
If to the Escrow Agent:
Fidelis National Escrow Corp. 601 Riverside Avenue Jacksonville, Florida 32204
Attention: Brian Mulcahy, Senior Vice President
Email: bmulcahy@fidelisescrow.com
Section 9.2 — Amendments and Waivers
This Agreement may be amended, supplemented, or modified only by a written instrument duly executed by Buyer, the Stockholder Representative, and the Escrow Agent. No provision of this Agreement may be waived except by a written instrument signed by the Party or Parties against whom enforcement of such waiver is sought. No failure or delay by any Party in exercising any right, power, or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy.
Section 9.3 — Governing Law; Jurisdiction
(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any other jurisdiction.
(b) Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof that cannot be resolved by the Parties through good faith negotiation shall be submitted to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to exercise jurisdiction, the Superior Court of the State of Delaware, sitting in New Castle County, or the United States District Court for the District of Delaware). Each Party hereby irrevocably submits to the personal jurisdiction of such courts and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any such court, and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) Each Party agrees that service of process may be made upon it in any manner permitted by applicable law or by delivery of such process in the manner specified for notices in Section 9.1, and each Party irrevocably waives any objection to such service of process.
Section 9.4 — Waiver of Jury Trial
EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER IN CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, OR ENFORCEMENT HEREOF. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.4.
Section 9.5 — Entire Agreement
This Agreement, together with the Purchase Agreement, the Stockholder Representative Agreement, and the Exhibits attached hereto, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations, representations, warranties, commitments, and understandings, whether oral or written, relating to the escrow arrangements contemplated hereby.
Section 9.6 — Severability
If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon any such determination of invalidity, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 9.7 — Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective heirs, personal representatives, successors, and permitted assigns. No Party may assign or transfer its rights or obligations under this Agreement, in whole or in part, without the prior written consent of each of the other Parties; provided, however, that Buyer may, without the consent of the Stockholder Representative or the Escrow Agent, assign its rights under this Agreement to (a) any direct or indirect wholly owned subsidiary of Buyer, or (b) any person or entity that succeeds to all or substantially all of the business of Buyer by way of merger, consolidation, reorganization, or acquisition of all or substantially all of the assets of Buyer; provided, further, that no such assignment shall relieve Buyer of its obligations hereunder.
Section 9.8 — Counterparts; Electronic Signatures
This Agreement may be executed in one 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 to this Agreement by electronic transmission (including portable document format (.pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the Uniform Electronic Transactions Act) shall be deemed to be, and shall be effective as, delivery of an original executed counterpart of this Agreement.
Section 9.9 — No Third-Party Beneficiaries
Except as expressly provided herein with respect to the Sellers (who are intended third-party beneficiaries of the release provisions of Article V and Article VI hereof, and whose rights thereunder may be enforced by the Stockholder Representative on their behalf), this Agreement is not intended to, and shall not, confer any rights, benefits, or remedies upon any person or entity other than the Parties hereto and their respective successors and permitted assigns. Without limiting the foregoing, the Escrow Agent Indemnified Parties are intended third-party beneficiaries of Section 8.2 hereof.
Section 9.10 — Termination of Agreement
(a) This Agreement shall terminate upon the earliest to occur of: (i) the complete distribution of all Escrow Funds in accordance with the terms hereof such that no Escrow Funds remain held by the Escrow Agent; (ii) delivery of a Joint Written Direction by Buyer and the Stockholder Representative directing the Escrow Agent to disburse all remaining Escrow Funds and expressly terminating this Agreement; or (iii) the entry of an order of a court of competent jurisdiction directing the disposition of all remaining Escrow Funds and the termination of this Agreement.
(b) Notwithstanding the foregoing, if the Purchase Agreement is terminated in accordance with its terms prior to the Closing and no deposits of the Indemnification Escrow Amount or the Expense Fund Amount have been made to the Escrow Agent, this Agreement shall automatically terminate and be of no further force or effect, without any further action by any Party.
(c) The termination of this Agreement shall not relieve any