ESCROW AGREEMENT
Dated as of June 9, 2023
among
NORTHGATE AMERICAS, INC. a Delaware corporation ("Customer" or "NAI")
CEDARPOINT SYSTEMS INTEGRATION, INC. a Delaware corporation ("Service Provider" or "CSI")
and
DRAVELLO NATIONAL BANK a nationally chartered banking association organized under the laws of the United States ("Escrow Agent")
Escrow Account Reference: FNB-ESC-2023-07742
TABLE OF CONTENTS
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ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of June 9, 2023, by and among Northgate Americas, Inc., a corporation organized and existing under the laws of the State of Delaware ("Customer" or "NAI"), Cedarpoint Systems Integration, Inc., a corporation organized and existing under the laws of the State of Delaware ("Service Provider" or "CSI"), and Dravello National Bank, a nationally chartered banking association organized under the laws of the United States ("Escrow Agent"). Customer, Service Provider, and Escrow Agent are each referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Customer and Service Provider have entered into that certain Master Services Agreement, dated as of June 9, 2023 (as may be amended, supplemented, or otherwise modified from time to time, the "MSA"), pursuant to which Service Provider will provide managed network services, ArcMesh platform licensing (version 4.2), and related professional services to Customer across three hundred forty (340) managed nodes located in twenty-eight (28) U.S. states and three (3) Canadian provinces, with a total contract value of Seventy-Five Million Dollars ($75,000,000) over a five-year initial term commencing June 9, 2023 and expiring June 8, 2028 (the "Initial Term");
WHEREAS, the MSA requires Customer and Service Provider to establish a transition and wind-down escrow deposit to secure Service Provider's transition assistance obligations upon certain termination events, including, without limitation, termination of the MSA following a Change of Control (as defined herein) of Service Provider or termination of the MSA for material breach by Service Provider;
WHEREAS, Customer is a wholly owned subsidiary of Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, whose ordinary shares are listed on the London Stock Exchange (ticker symbol: NTP.L);
WHEREAS, Dravello National Bank has agreed to act as Escrow Agent to hold, invest, and disburse the Escrow Funds (as defined herein) in accordance with the terms and conditions set forth in this Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the MSA.
NOW, THEREFORE, in consideration of 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 agree as follows:
ARTICLE 1 — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article 1 shall have the meanings ascribed to them elsewhere in this Agreement or, if not defined herein, in the MSA.
1.1 "Aggregate Escrow Cap" means Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000), representing the maximum aggregate amount to be deposited into the Escrow Account over the five-year Initial Term, calculated as Seven Hundred Fifty Thousand Dollars ($750,000) per year multiplied by five (5) years.
1.2 "Annual Deposit Amount" means Seven Hundred Fifty Thousand Dollars ($750,000), an amount equal to five percent (5%) of the Annual Contract Value (i.e., $15,000,000 × 0.05 = $750,000).
1.3 "Annual Contract Value" or "ACV" means Fifteen Million Dollars ($15,000,000), as defined in the MSA, being the total contract value of Seventy-Five Million Dollars ($75,000,000) divided by the five (5) years of the Initial Term.
1.4 "Change of Control" means, as defined in Section 2 of Schedule 2 to the MSA, the occurrence of any of the following events with respect to Service Provider:
(a) the acquisition, directly or indirectly, by any person, entity, or "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of more than fifty percent (50%) of the outstanding voting equity securities of Service Provider;
(b) any merger, consolidation, or reorganization involving Service Provider in which Service Provider is not the surviving or continuing entity;
(c) the sale, transfer, or other disposition of all or substantially all of the assets of Service Provider; or
(d) a change in a majority of Service Provider's board of directors within any twelve (12)-month period, other than changes in directors that are approved or recommended by a majority of the directors then in office who were directors at the beginning of such twelve (12)-month period.
1.5 "Depositing Party" means Cedarpoint Systems Integration, Inc. (Service Provider), which is solely responsible for making all deposits into the Escrow Account in accordance with the terms of this Agreement.
1.6 "Dispute Notice" means a written notice delivered by a Party objecting to the release of Escrow Funds as contemplated by Section 4.2 or Section 4.5, as applicable.
1.7 "Escrow Account" means the segregated escrow account established by Escrow Agent for the purposes of this Agreement, bearing account reference number FNB-ESC-2023-07742, maintained at Dravello National Bank, 401 South Tryon Street, Suite 1200, Charlotte, North Carolina 28202.
1.8 "Escrow Funds" means all amounts deposited in the Escrow Account from time to time, together with any and all interest, earnings, dividends, or investment income accrued or earned thereon, less any amounts properly disbursed or deducted in accordance with this Agreement.
1.9 "Initial Term" means the period commencing on June 9, 2023 and ending on June 8, 2028, being a period of five (5) years, as set forth in the MSA.
1.10 "Joint Written Instructions" means written instructions signed by both (a) an authorized representative of Customer and (b) an authorized representative of Service Provider, directing the Escrow Agent with respect to the release, disbursement, investment, or other disposition of the Escrow Funds. Joint Written Instructions may be delivered to the Escrow Agent by original, facsimile, or electronic transmission (including PDF), provided that the Escrow Agent may require original signatures or other verification as it deems reasonably necessary.
1.11 "Material Breach Termination" means a termination of the MSA by Customer for material breach by Service Provider, including, without limitation, any termination resulting from three (3) consecutive calendar months during which Service Provider's SLA performance falls below ninety-nine and one-half percent (99.50%) monthly uptime, as measured and reported in accordance with the service level agreement provisions of the MSA.
1.12 "MSA" means the Master Services Agreement dated as of June 9, 2023 between Customer and Service Provider, as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
1.13 "Natural Expiration" means the expiration of the MSA at the end of the Initial Term (June 8, 2028) or any renewal term thereof, in each case without termination for cause by either party.
1.14 "Permitted Investments" means the investments described in Section 5.1 of this Agreement.
1.15 "Release Event" means any of the events described in Article 4 of this Agreement that trigger the release of all or a portion of the Escrow Funds from the Escrow Account.
ARTICLE 2 — ESTABLISHMENT OF ESCROW ACCOUNT; DEPOSITS
2.1 Establishment. Escrow Agent shall establish and maintain a segregated escrow account, bearing reference number FNB-ESC-2023-07742 (the "Escrow Account"), at Dravello National Bank, 401 South Tryon Street, Suite 1200, Charlotte, North Carolina 28202, for the sole and exclusive purpose of holding the Escrow Funds in accordance with the terms and conditions of this Agreement. The Escrow Account shall be established promptly following execution of this Agreement, and Escrow Agent shall notify Customer and Service Provider in writing of the account details, including wire transfer instructions, within five (5) business days of the date hereof.
2.2 Initial Deposit. Within thirty (30) calendar days of the date hereof (i.e., no later than July 9, 2023), Service Provider shall deposit the first Annual Deposit Amount of Seven Hundred Fifty Thousand Dollars ($750,000) into the Escrow Account by wire transfer of immediately available funds in United States dollars to the account specified in Exhibit A attached hereto. Service Provider shall provide Escrow Agent and Customer with written notice of each wire transfer, including the date and amount thereof, promptly following initiation of the transfer.
2.3 Subsequent Annual Deposits. On each anniversary of the date hereof occurring during the Initial Term, Service Provider shall deposit an additional Annual Deposit Amount of Seven Hundred Fifty Thousand Dollars ($750,000) into the Escrow Account by wire transfer of immediately available funds in United States dollars. The dates for such subsequent deposits shall be as follows:
(a) June 9, 2024 — Second Annual Deposit ($750,000);
(b) June 9, 2025 — Third Annual Deposit ($750,000);
(c) June 9, 2026 — Fourth Annual Deposit ($750,000); and
(d) June 9, 2027 — Fifth Annual Deposit ($750,000).
If any deposit date falls on a day that is not a business day, the deposit shall be made on the next succeeding business day.
2.4 Aggregate Escrow Cap. The total aggregate amount of deposits into the Escrow Account shall not exceed the Aggregate Escrow Cap of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000), calculated as the Annual Deposit Amount of Seven Hundred Fifty Thousand Dollars ($750,000) multiplied by five (5) years. Upon deposit of the fifth and final Annual Deposit Amount, no further deposits shall be required of Service Provider under this Agreement, and the Escrow Account shall thereafter be maintained in accordance with the terms of this Agreement without additional funding obligations.
2.5 Confirmation of Deposit. Escrow Agent shall promptly confirm receipt of each deposit to both Customer and Service Provider in writing, which confirmation may be delivered by electronic communication (including email). Each confirmation shall specify the date of receipt, the amount received, and the cumulative balance of the Escrow Account following such deposit (exclusive of accrued but uncredited investment earnings).
2.6 Source of Funds. All deposits into the Escrow Account are the sole obligation of Service Provider. Customer shall have no obligation whatsoever to fund, contribute to, or make any deposit into the Escrow Account. Service Provider acknowledges and agrees that its obligation to make the deposits specified in this Article 2 is unconditional and is not subject to any right of set-off, counterclaim, or deduction, except as otherwise expressly provided in the MSA.
2.7 Late Deposits. If Service Provider fails to make any deposit required under this Article 2 within ten (10) business days of the applicable due date, Escrow Agent shall promptly notify Customer in writing of such failure. Nothing in this Section 2.7 shall limit Customer's remedies under the MSA with respect to Service Provider's failure to fund the Escrow Account.
ARTICLE 3 — HOLDING AND ADMINISTRATION OF ESCROW FUNDS
3.1 Segregation. Escrow Agent shall hold the Escrow Funds in the Escrow Account as a segregated account, separate and apart from (a) Escrow Agent's own funds and proprietary assets, (b) funds held by Escrow Agent on behalf of any other depositor, customer, or client, and (c) any other escrow account maintained by Escrow Agent. The Escrow Funds shall not be commingled with any other funds except as may be necessary in connection with the investment of the Escrow Funds in Permitted Investments in accordance with Article 5.
3.2 Title. Legal title to the Escrow Funds shall be held by the Escrow Agent for the benefit of Customer and Service Provider, in each case subject to release and disbursement in accordance with the terms and conditions of this Agreement. Neither Customer nor Service Provider shall have any right, title, or interest in or to the Escrow Funds except as expressly set forth in this Agreement, and neither party shall be entitled to withdraw, transfer, or otherwise access the Escrow Funds except pursuant to a Release Event as described in Article 4 or as otherwise expressly provided herein.
3.3 No Liens or Encumbrances. Neither Customer nor Service Provider shall grant, create, permit, or suffer to exist any lien, pledge, security interest, charge, encumbrance, or other adverse claim of any kind on or with respect to the Escrow Funds or any portion thereof. The Escrow Funds shall not be subject to attachment, garnishment, levy, execution, or other legal process by or on behalf of any creditor of Customer or Service Provider, except as may be required by applicable law, regulation, or valid order of a court of competent jurisdiction. Each of Customer and Service Provider represents and warrants that, as of the date hereof, no lien, security interest, or encumbrance exists with respect to such party's interest in the Escrow Funds.
3.4 Account Statements. Escrow Agent shall provide monthly account statements to both Customer and Service Provider, delivered no later than the fifteenth (15th) calendar day of each month for the immediately preceding calendar month. Each such statement shall set forth in reasonable detail: (a) the opening balance of the Escrow Account as of the first day of the reporting period, (b) all deposits received during the reporting period, (c) all investment earnings credited during the reporting period, (d) all fees deducted during the reporting period, (e) all disbursements made during the reporting period, and (f) the closing balance of the Escrow Account as of the last day of the reporting period. Escrow Agent shall deliver such statements by email to the authorized representatives of Customer and Service Provider specified in Section 6.3 or to such other recipients as may be designated in writing by Customer or Service Provider from time to time.
ARTICLE 4 — RELEASE OF ESCROW FUNDS
4.1 Release upon Change of Control Termination.
(a) If Customer terminates the MSA following a Change of Control of Service Provider, in accordance with the termination provisions set forth in Schedule 2 of the MSA (including the one hundred eighty (180)-day notice period specified therein), Customer shall deliver to Escrow Agent and Service Provider a written notice of such termination (a "Change of Control Termination Notice"). The Change of Control Termination Notice shall be accompanied by a copy of Customer's termination notice delivered to Service Provider under the MSA, and shall identify the specific Change of Control event giving rise to the termination.
(b) Upon receipt of a Change of Control Termination Notice conforming to the requirements of Section 4.1(a), Escrow Agent shall release all Escrow Funds then held in the Escrow Account to Customer within ten (10) business days of such receipt, by wire transfer of immediately available funds to the account designated by Customer in Exhibit A or in such other wire instructions as Customer may provide to Escrow Agent in writing.
(c) For the avoidance of doubt, Service Provider's obligations to provide transition assistance services at no additional cost to Customer and Customer's right to a pro-rata refund of prepaid fees, in each case as set forth in the MSA, shall be governed exclusively by the terms of the MSA and shall not be affected, limited, or diminished by the release of Escrow Funds pursuant to this Section 4.1. The release of Escrow Funds hereunder is intended to provide Customer with additional security for the orderly transition of services and shall be without prejudice to any other rights or remedies available to Customer under the MSA or at law or in equity.
4.2 Release upon Material Breach Termination.
(a) If Customer terminates the MSA for material breach by Service Provider (including, without limitation, a Material Breach Termination resulting from three (3) consecutive calendar months during which Service Provider's SLA performance falls below ninety-nine and one-half percent (99.50%) monthly uptime), Customer shall deliver to Escrow Agent and Service Provider a written notice of such termination (a "Material Breach Termination Notice"). The Material Breach Termination Notice shall be accompanied by a copy of Customer's termination notice delivered to Service Provider under the MSA, and shall describe in reasonable detail the material breach giving rise to the termination.
(b) Upon receipt of a Material Breach Termination Notice conforming to the requirements of Section 4.2(a), Escrow Agent shall release all Escrow Funds then held in the Escrow Account to Customer within ten (10) business days of such receipt, by wire transfer of immediately available funds to the account designated by Customer in Exhibit A or in such other wire instructions as Customer may provide to Escrow Agent in writing; provided, however, that if Service Provider delivers a written objection to such release (a "Dispute Notice") to Escrow Agent and Customer within such ten (10) business day period, the Escrow Agent shall not release the disputed Escrow Funds, and the dispute resolution procedures set forth in Section 4.6 shall apply.
(c) A Dispute Notice delivered by Service Provider under this Section 4.2 shall set forth in reasonable detail the basis for Service Provider's objection to the release, including the specific grounds upon which Service Provider disputes the occurrence of a material breach or the validity of Customer's termination of the MSA.
4.3 Release upon Natural Expiration.
(a) Upon the Natural Expiration of the MSA (including the expiration of any renewal term thereof), the Escrow Funds shall be released in accordance with this Section 4.3.
(b) Customer shall, within thirty (30) calendar days after the date of Natural Expiration, deliver to Escrow Agent and Service Provider either: (i) a written confirmation that no claims for transition assistance, indemnification, or other amounts are then pending or asserted by Customer under the MSA (a "No Claims Confirmation"), or (ii) a written notice specifying in reasonable detail any amounts that Customer claims are then owed or owing by Service Provider under the MSA (a "Claims Notice"), including the aggregate dollar amount of such claims.
(c) If Escrow Agent receives a No Claims Confirmation from Customer in accordance with Section 4.3(b)(i), Escrow Agent shall release all Escrow Funds then held in the Escrow Account to Service Provider within ten (10) business days of receipt of such No Claims Confirmation, by wire transfer of immediately available funds to the account designated by Service Provider in Exhibit A or in such other wire instructions as Service Provider may provide to Escrow Agent in writing.
(d) If Escrow Agent receives a Claims Notice from Customer in accordance with Section 4.3(b)(ii), Escrow Agent shall: (i) retain in the Escrow Account an amount equal to the aggregate dollar amount specified in the Claims Notice (the "Retained Amount"), and (ii) release the balance of the Escrow Funds (if any) exceeding the Retained Amount to Service Provider within ten (10) business days of receipt of the Claims Notice. The Retained Amount shall continue to be held by Escrow Agent in the Escrow Account and shall be subject to the dispute resolution procedures set forth in Section 4.6.
(e) If Customer fails to deliver either a No Claims Confirmation or a Claims Notice within the thirty (30)-day period specified in Section 4.3(b), Customer shall be deemed to have delivered a No Claims Confirmation, and Escrow Agent shall release all Escrow Funds to Service Provider in accordance with Section 4.3(c).
4.4 Release upon Mutual Agreement. Notwithstanding any other provision of this Agreement, the Escrow Funds may be released in whole or in part at any time and from time to time upon receipt by Escrow Agent of Joint Written Instructions from Customer and Service Provider specifying the amount to be released, the recipient(s) of such release, and the wire transfer instructions for payment. Escrow Agent shall effect any release directed by Joint Written Instructions within five (5) business days of receipt thereof.
4.5 Release upon Termination by Service Provider for Customer's Breach.
(a) If Service Provider terminates the MSA for Customer's material breach in accordance with the termination provisions set forth in the MSA, Service Provider shall deliver to Escrow Agent and Customer a written notice of such termination (a "Customer Breach Termination Notice"). The Customer Breach Termination Notice shall be accompanied by a copy of Service Provider's termination notice delivered to Customer under the MSA, and shall describe in reasonable detail the material breach giving rise to the termination.
(b) Upon receipt of a Customer Breach Termination Notice conforming to the requirements of Section 4.5(a), Escrow Agent shall release all Escrow Funds then held in the Escrow Account to Service Provider within ten (10) business days of such receipt, by wire transfer of immediately available funds to the account designated by Service Provider in Exhibit A or in such other wire instructions as Service Provider may provide to Escrow Agent in writing; provided, however, that if Customer delivers a Dispute Notice to Escrow Agent and Service Provider within such ten (10) business day period, the Escrow Agent shall not release the disputed Escrow Funds, and the dispute resolution procedures set forth in Section 4.6 shall apply.
4.6 Disputed Releases.
(a) If a Dispute Notice is timely delivered by either Customer or Service Provider in accordance with Section 4.2, Section 4.3(d), or Section 4.5, as applicable, Escrow Agent shall continue to hold the disputed Escrow Funds (or, in the case of a Retained Amount under Section 4.3(d), such Retained Amount) in the Escrow Account, and shall not release such funds except upon receipt of: (i) Joint Written Instructions from Customer and Service Provider directing the disposition of such funds, (ii) a final, non-appealable order or judgment of a court of competent jurisdiction directing the disposition of such funds, or (iii) a final and binding arbitration award directing the disposition of such funds, rendered by an arbitrator or arbitration panel having jurisdiction over the dispute in accordance with the dispute resolution provisions of the MSA.
(b) Escrow Agent shall not be required to determine the merits of any dispute between Customer and Service Provider regarding entitlement to the Escrow Funds. Escrow Agent's sole obligation with respect to any such dispute shall be to hold the disputed Escrow Funds in the Escrow Account pending receipt of Joint Written Instructions, a final court order, or an arbitration award as specified in Section 4.6(a).
(c) In the event of any dispute between Customer and Service Provider regarding the Escrow Funds, Escrow Agent shall have the right, in its sole discretion, to interplead the disputed Escrow Funds into a court of competent jurisdiction in the Borough of Manhattan, New York, New York, and upon such interpleader, Escrow Agent shall be discharged from all further liability or obligation with respect to such funds (except as otherwise provided in Article 8). The costs and expenses of any interpleader action (including Escrow Agent's reasonable attorneys' fees) shall be borne jointly and severally by Customer and Service Provider.
4.7 Partial Releases. Where Customer is entitled to a pro-rata refund of prepaid fees under the MSA upon a Change of Control termination or other termination event, the Parties may deliver Joint Written Instructions directing a partial release of the Escrow Funds in the amount of such pro-rata refund to Customer. Any balance of the Escrow Funds remaining in the Escrow Account following a partial release shall continue to be held by Escrow Agent in accordance with this Agreement, subject to release upon the occurrence of a subsequent Release Event or upon further Joint Written Instructions.
ARTICLE 5 — INVESTMENT OF ESCROW FUNDS
5.1 Permitted Investments. Escrow Agent shall invest and reinvest the Escrow Funds, at the joint written direction of Customer and Service Provider, in any one or more of the following categories of investments (collectively, "Permitted Investments"):
(a) Direct obligations of the United States of America, or obligations the timely payment of principal and interest on which are unconditionally guaranteed by the full faith and credit of the United States of America;
(b) Certificates of deposit issued by Dravello National Bank or any other nationally chartered bank or federally insured depository institution having total assets in excess of Ten Billion Dollars ($10,000,000,000);
(c) Money market mutual funds rated at least "AAA" (or the equivalent rating) 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), including, without limitation, Standard & Poor's, Moody's Investors Service, or Fitch Ratings; and
(d) Such other investments as Customer and Service Provider may jointly direct in writing, provided that Escrow Agent shall have no obligation to invest in any instrument or obligation that Escrow Agent reasonably determines to be imprudent, impractical, or inconsistent with its policies and procedures.
5.2 Default Investment. In the absence of joint written investment instructions from Customer and Service Provider, or pending receipt of such instructions, Escrow Agent shall invest the Escrow Funds in a Dravello National Bank interest-bearing money market deposit account. The Parties acknowledge that such money market deposit account is insured by the Federal Deposit Insurance Corporation ("FDIC") up to applicable FDIC limits and that amounts in excess of such limits are not insured. Escrow Agent shall have no liability for any loss of principal or interest resulting from FDIC limitations or the insolvency of any depository institution in which the Escrow Funds are invested.
5.3 Investment Earnings. All interest, dividends, and other investment income earned on the Escrow Funds shall be retained in the Escrow Account and shall constitute part of the Escrow Funds for all purposes of this Agreement. Investment earnings shall not be separately released but shall be disbursed to the same party or parties as the principal Escrow Funds upon the occurrence of a Release Event, in the same proportions and at the same time as the principal is released.
5.4 Investment Risk. Escrow Agent shall not be liable for any loss of principal or income resulting from the investment or reinvestment of Escrow Funds in accordance with the provisions of this Article 5, including, without limitation, any loss resulting from a decline in the market value of any Permitted Investment or any default by the issuer thereof, except for losses directly resulting from Escrow Agent's own gross negligence or willful misconduct. Customer and Service Provider acknowledge and agree that Escrow Agent does not guarantee the rate of return on, or the principal value of, any Permitted Investment.
5.5 Tax Reporting. For all federal, state, and local income tax purposes, all interest, dividends, and other investment income earned on the Escrow Funds shall be reported as income of Service Provider (Federal Employer Identification Number: 52-4178503), unless the Parties otherwise direct Escrow Agent by Joint Written Instructions. Escrow Agent shall file or cause to be filed such tax information returns as may be required by the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, including the issuance of IRS Form 1099 (or any successor form) to Service Provider with respect to all investment income earned on the Escrow Funds during each calendar year. For reference, Customer's Federal Employer Identification Number is 84-3291067. Service Provider shall be solely responsible for the payment of any taxes owed on such investment income, and Escrow Agent shall have no obligation to withhold any amounts from the Escrow Funds on account of taxes, except as may be required by applicable law.
ARTICLE 6 — ESCROW AGENT PROVISIONS
6.1 Duties of Escrow Agent. The duties, obligations, and responsibilities of Escrow Agent under this Agreement are limited solely and exclusively to those expressly set forth herein. Escrow Agent acts solely as a stakeholder and depository with respect to the Escrow Funds and shall not be deemed to be a fiduciary, trustee, or agent for Customer, Service Provider, or any other person or entity, except to the extent of the specific obligations expressly imposed upon Escrow Agent by the terms of this Agreement. Escrow Agent shall have no duty to enforce any obligation of any person to make any deposit or payment, or to determine whether a deposit or payment that has been made complies with the terms of the MSA or any other agreement between Customer and Service Provider. Escrow Agent shall have no implied duties or obligations and shall not be bound by any agreement between Customer and Service Provider (whether or not Escrow Agent has knowledge thereof) other than this Agreement.
6.2 Reliance on Documents. Escrow Agent may rely upon, and shall be fully protected in acting or refraining from acting upon, any written notice, instruction, direction, certificate, request, waiver, consent, receipt, statement, or other document or instrument (each, a "Document") that Escrow Agent believes in good faith to be genuine and to have been signed, delivered, or transmitted by or on behalf of the proper person or persons. Escrow Agent shall have no duty to investigate the authenticity or correctness of any Document or the authority of any person executing or delivering the same, provided that Escrow Agent acts in good faith and without gross negligence. Escrow Agent shall not be liable for any action taken or omitted in reliance on any such Document.
6.3 Authorized Representatives. The following individuals are hereby designated as authorized representatives of the respective Parties for purposes of delivering and receiving notices, instructions, and communications under this Agreement:
(a) For Customer (Northgate Americas, Inc.):
Warren Liang, President Deirdre Kwan, Vice President of Procurement, North America
Address for notices: 1700 Market Street, Suite 2400 Philadelphia, Pennsylvania 19103
Email: w.liang@northgateamericas.com / d.kwan@northgateamericas.com
(b) For Service Provider (Cedarpoint Systems Integration, Inc.):
Rajiv Sundaram, Chief Executive Officer Philip Hargreaves, Chief Financial Officer
Address for notices: 11400 Commerce Park Drive, Suite 600 Reston, Virginia 20191
Email: r.sundaram@cedarpointsi.com / p.hargreaves@cedarpointsi.com
(c) For Escrow Agent (Dravello National Bank):
Brian Caulfield, Relationship Manager
Address for notices: 401 South Tryon Street, Suite 1200 Charlotte, North Carolina 28202
Email: b.caulfield@fenwicknational.com
Any Party may change its authorized representatives or notice addresses by delivering written notice to the other Parties in accordance with Article 11.
6.4 Limitation of Liability. Escrow Agent shall not be liable for any act taken or omission made by it in good faith and believed by it to be authorized or within the scope of its rights and duties under this Agreement, except for any act or omission constituting Escrow Agent's gross negligence or willful misconduct. In no event shall Escrow Agent be liable for any indirect, incidental, consequential, special, punitive, or exemplary damages of any kind, regardless of whether Escrow Agent has been advised of the possibility of such damages. In no event shall the aggregate liability of Escrow Agent under this Agreement exceed the total fees actually paid to Escrow Agent for its services under this Agreement.
6.5 Right to Legal Counsel. Escrow Agent may, at any time and from time to time, consult with legal counsel of its own choosing (who may be counsel to Escrow Agent in other matters) with respect to any question arising under or in connection with this Agreement. Escrow Agent shall not be liable for any action taken, suffered, or omitted in good faith on the advice of such counsel.
6.6 Resignation and Removal.
(a) Resignation. Escrow Agent may resign at any time by delivering written notice of resignation to Customer and Service Provider at least thirty (30) days prior to the effective date of such resignation. Such resignation shall take effect on the date specified in the notice (which date shall not be earlier than thirty (30) days after delivery of the notice) or upon the appointment of a successor escrow agent, whichever occurs first.
(b) Removal. Customer and Service Provider may jointly remove Escrow Agent at any time by delivering Joint Written Instructions to Escrow Agent at least thirty (30) days prior to the effective date of such removal.
(c) Appointment of Successor. Upon any resignation or removal of Escrow Agent, a successor escrow agent shall be appointed by Joint Written Instructions of Customer and Service Provider. The resigning or removed Escrow Agent shall, upon the effective date of its resignation or removal and receipt of acknowledgment from the successor escrow agent, transfer and deliver the Escrow Funds and all records and documents relating thereto to the successor escrow agent.
(d) Failure to Appoint Successor. If Customer and Service Provider fail to appoint a successor escrow agent within sixty (60) days after the delivery of Escrow Agent's notice of resignation or the delivery of Joint Written Instructions for removal, Escrow Agent shall have the right to deposit the Escrow Funds with a court of competent jurisdiction in the Borough of Manhattan, New York, New York, and upon such deposit, Escrow Agent shall be relieved and discharged from all further obligations and liabilities under this Agreement (except as otherwise provided in Articles 7 and 8 with respect to accrued obligations).
6.7 Merger or Consolidation of Escrow Agent. Any corporation, banking association, or other entity into which Escrow Agent may be merged or consolidated, or any corporation, banking association, or other entity resulting from any merger, consolidation, or conversion to which Escrow Agent is a party, or any corporation, banking association, or other entity to which Escrow Agent may sell or transfer all or substantially all of its corporate trust or escrow business, shall become the successor Escrow Agent under this Agreement without the execution or filing of any document or any further act on the part of any Party, provided that such successor entity is eligible to serve as a national escrow agent.
ARTICLE 7 — ESCROW AGENT FEES AND EXPENSES
7.1 Fees. Escrow Agent shall be entitled to reasonable compensation for its services as Escrow Agent hereunder, as set forth in Schedule A attached hereto and incorporated herein by reference. The fee schedule set forth in Schedule A shall remain in effect for the initial three (3)-year period following the date hereof; thereafter, Escrow Agent may adjust its fees upon not less than sixty (60) days' prior written notice to Customer and Service Provider, provided that any such adjustment shall not exceed five percent (5%) of the then-current fee in any twelve (12)-month period.
7.2 Payment of Fees. All Escrow Agent fees and expenses under this Agreement shall be borne equally by Customer and Service Provider, with each party responsible for fifty percent (50%) of such fees and expenses, unless otherwise agreed in writing by Customer and Service Provider. Escrow Agent shall invoice Customer and Service Provider annually (with the first invoice to be delivered within thirty (30) days of the date hereof), and such invoices shall be payable within thirty (30) days of the date of invoice. Invoices shall be delivered to the addresses specified in Section 6.3 for each of Customer and Service Provider.
7.3 Expense Reimbursement. Customer and Service Provider shall jointly reimburse Escrow Agent for all reasonable, documented, out-of-pocket expenses incurred by Escrow Agent in connection with the performance of its duties under this Agreement, including, without limitation, (a) wire transfer fees, (b) postage and delivery charges, (c) account maintenance and reporting costs, and (d) legal fees and expenses incurred by Escrow Agent in connection with any dispute between Customer and Service Provider, any interpleader action, or any other legal proceeding involving the Escrow Funds or the Escrow Agent's duties hereunder. Reimbursement obligations under this Section 7.3 shall be borne equally by Customer and Service Provider (50%/50%) unless such expenses arise solely from the actions or inactions of one party, in which case such party shall bear the entire cost.
7.4 Deduction from Escrow Funds. If Customer and Service Provider fail to pay Escrow Agent's fees and expenses within sixty (60) days of the date of the applicable invoice, Escrow Agent shall have the right (but not the obligation) to deduct the amount of such unpaid fees and expenses directly from the Escrow Funds, upon not less than fifteen (15) days' prior written notice to both Customer and Service Provider. Any amounts deducted from the Escrow Funds pursuant to this Section 7.4 shall reduce the Escrow Funds available for release under Article 4. Escrow Agent shall provide a written accounting of any such deduction to Customer and Service Provider promptly following such deduction.
ARTICLE 8 — INDEMNIFICATION OF ESCROW AGENT
8.1 Joint Indemnification. Customer and Service Provider, jointly and severally, hereby agree to indemnify, defend, and hold harmless Escrow Agent and its directors, officers, employees, affiliates, agents, successors, and assigns (each, an "Indemnified Party") from and against any and all claims, demands, actions, suits, proceedings, losses, liabilities, damages, costs, and expenses of any kind or nature (including, without limitation, reasonable attorneys' fees, court costs, and other litigation expenses) (collectively, "Losses") arising out of, in connection with, or relating to: (a) Escrow Agent's acceptance of or performance under this Agreement, (b) any act or omission by Escrow Agent in carrying out its duties hereunder, or (c) any dispute between Customer and Service Provider regarding the Escrow Funds or the transactions contemplated hereby; provided, however, that the foregoing indemnification obligation shall not apply to the extent that any Losses are determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted directly from Escrow Agent's gross negligence or willful misconduct. The indemnification obligations set forth in this Section 8.1 shall survive the termination of this Agreement and the resignation or removal of Escrow Agent.
ARTICLE 9 — TERM AND TERMINATION
9.1 Term. This Agreement shall become effective as of the date hereof (June 9, 2023) and shall remain in full force and effect until the earliest to occur of the following:
(a) the release of all Escrow Funds held in the Escrow Account in accordance with Article 4, and written confirmation by Escrow Agent that the Escrow Account has a zero balance and has been closed;
(b) the appointment of a successor escrow agent and the transfer of all Escrow Funds and related records to such successor escrow agent, following the resignation or removal of Escrow Agent in accordance with Section 6.6; or
(c) the deposit of all Escrow Funds with a court of competent jurisdiction by Escrow Agent in accordance with Section 6.6(d) or Section 4.6(c).
9.2 Survival. The provisions of Article 6 (Escrow Agent Provisions), Article 7 (Escrow Agent Fees and Expenses), Article 8 (Indemnification of Escrow Agent), this Section 9.2, Article 12 (Miscellaneous), and Article 13 (Confidentiality) shall survive the termination or expiration of this Agreement.
9.3 Relationship to MSA. Notwithstanding any other provision of this Agreement, this Agreement shall terminate automatically upon the later of: (i) the expiration or termination of the MSA (including any renewal terms thereof — the MSA provides for two (2) automatic renewal terms of two (2) years each, unless either party delivers a non-renewal notice at least one hundred eighty (180) days prior to the expiration of the then-current term), and (ii) the final release or disposition of all Escrow Funds held in the Escrow Account in accordance with Article 4 (including resolution of any disputed amounts in accordance with Section 4.6). For the avoidance of doubt, this Agreement may continue in effect beyond the expiration or termination of the MSA to the extent necessary to complete the release or disposition of Escrow Funds in connection with any pending Release Event, Dispute Notice, or Claims Notice.
ARTICLE 10 — REPRESENTATIONS AND WARRANTIES
10.1 Customer Representations. Northgate Americas, Inc. hereby represents and warrants to each other Party, as of the date hereof, as follows:
(a) Organization and Good Standing. Customer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its registered office at c/o Calvert Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Customer is duly qualified and authorized to do business in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification.
(b) Authority. Customer has full corporate power and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by Customer have been duly authorized by all necessary corporate action, and no further corporate action on the part of Customer or its stockholders is required in connection herewith.
(c) Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of Customer, enforceable against Customer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(d) No Conflicts. The execution, delivery, and performance of this Agreement by Customer do not and will not (i) violate any provision of Customer's certificate of incorporation or bylaws, (ii) violate any applicable law, rule, regulation, order, judgment, or decree, or (iii) conflict with, result in a breach of, or constitute a default under any material agreement to which Customer is a party.
10.2 Service Provider Representations. Cedarpoint Systems Integration, Inc. hereby represents and warrants to each other Party, as of the date hereof, as follows:
(a) Organization and Good Standing. Service Provider is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its registered office at c/o Calvert Corporate Services, Inc., 1209 Orange Street, Wilmington, Delaware 19801. Service Provider is duly qualified and authorized to do business in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification.
(b) Authority. Service Provider has full corporate power and authority to enter into, execute, and deliver this Agreement and to perform its obligations hereunder, including, without limitation, its obligation to make the deposits required by Article 2. The execution, delivery, and performance of this Agreement by Service Provider have been duly authorized by all necessary corporate action, and no further corporate action on the part of Service Provider or its stockholders is required in connection herewith.
(c) Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of Service Provider, enforceable against Service Provider in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally and to general principles of equity.
(d) No Conflicts. The execution, delivery, and performance of this Agreement by Service Provider do not and will not (i) violate any provision of Service Provider's certificate of incorporation or bylaws, (ii) violate any applicable law, rule, regulation, order, judgment, or decree, or (iii) conflict with, result in a breach of, or constitute a default under any material agreement to which Service Provider is a party.
10.3 Escrow Agent Representations. Dravello National Bank hereby represents and warrants to each other Party, as of the date hereof, as follows:
(a) Organization and Good Standing. Escrow Agent is a national banking association duly chartered and validly existing under the laws of the United States, and is in good standing with the Office of the Comptroller of the Currency.
(b) Authority. Escrow Agent has full power and authority under its charter, bylaws, and applicable banking laws and regulations to enter into this Agreement, to perform its obligations hereunder, and to act as Escrow Agent as contemplated hereby. The execution, delivery, and performance of this Agreement by Escrow Agent have been duly authorized by all necessary corporate action.
(c) Escrow Account. The Escrow Account has been, or will be promptly following the execution of this Agreement, duly established and maintained at Dravello National Bank in accordance with the terms of this Agreement and all applicable laws and regulations.
ARTICLE 11 — NOTICES
11.1 Manner of Notice. All notices, requests, demands, consents, instructions, and other communications required or permitted under this Agreement shall be in writing and shall be delivered by any of the following methods:
(a) personal delivery (by hand or by messenger or courier service);
(b) delivery by a nationally recognized overnight courier service (such as FedEx, Halcyon Partners LLC, or Tarrant & Co.);
(c) United States certified mail, return receipt requested, postage prepaid; or
(d) electronic mail (email), provided that the sender receives confirmation of receipt from the intended recipient (which confirmation may be by reply email, read receipt, or other electronic acknowledgment).
11.2 Addresses for Notices. All notices and communications shall be directed to the Parties at the following addresses (or at such other addresses as a Party may designate by written notice to the other Parties in accordance with this Article 11):
If to Customer (Northgate Americas, Inc.):
Northgate Americas, Inc. 1700 Market Street, Suite 2400 Philadelphia, Pennsylvania 19103
Attention: Warren Liang, President
Email: w.liang@northgateamericas.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022
Attention: Colette Whitman
Email: c.whitman@calderwoodharkness.com
If to Service Provider (Cedarpoint Systems Integration, Inc.):
Cedarpoint Systems Integration, Inc. 11400 Commerce Park Drive, Suite 600 Reston, Virginia 20191
Attention: Rajiv Sundaram, Chief Executive Officer
Email: r.sundaram@cedarpointsi.com
with a copy (which shall not constitute notice) to:
Whitfield Graves & Morrow LLP 1875 K Street NW, Suite 800 Washington, DC 20006
Attention: Douglas Fenn
Email: d.fenn@wgmlaw.com
If to Escrow Agent (Dravello National Bank):
Dravello National Bank 401 South Tryon Street, Suite 1200 Charlotte, North Carolina 28202
Attention: Brian Caulfield, Relationship Manager
Email: b.caulfield@fenwicknational.com
11.3 Effectiveness. Notices delivered hereunder shall be deemed effective: (a) upon receipt, if delivered by personal delivery, overnight courier, or email with confirmed receipt; or (b) five (5) business days after the date of mailing, if delivered by United States certified mail, return receipt requested. Notwithstanding the foregoing, any notice or communication delivered to Escrow Agent shall be deemed effective only upon actual receipt by Escrow Agent.
ARTICLE 12 — MISCELLANEOUS
12.1 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
12.2 Dispute Resolution. Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach, termination, or invalidity thereof (other than disputes between Customer and Service Provider regarding their respective entitlement to the Escrow Funds, which disputes shall be resolved in accordance with the dispute resolution provisions of the MSA), shall be submitted to the exclusive jurisdiction of the federal and state courts located in the Borough of Manhattan, City of New York, State of New York. Each Party hereby irrevocably consents to the personal jurisdiction of such courts and waives any objection to venue in such courts, including any objection based on the doctrine of forum non conveniens. Each Party irrevocably waives, to the fullest extent permitted by applicable law, any right to a trial by jury in any action, proceeding, or counterclaim arising out of or relating to this Agreement.
12.3 Entire Agreement. This Agreement, together with the MSA (including all exhibits, schedules, and attachments thereto), the Schedules and Exhibits attached hereto, and any Joint Written Instructions delivered hereunder, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, relating to the escrow arrangements contemplated hereby. No amendment, modification, supplement, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument duly executed by all three Parties.
12.4 Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and the remaining provisions shall continue in full force and effect. The Parties shall negotiate in good faith to replace any invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that achieves, to the greatest extent possible, the economic, business, and other purposes of the original provision.
12.5 Counterparts. This Agreement may be executed in two (2) 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 facsimile or electronic transmission (including PDF) shall be effective as delivery of a manually executed counterpart of this Agreement.
12.6 Assignment. No Party may assign, transfer, or delegate its rights, interests, or obligations under this Agreement without the prior written consent of the other Parties, except that:
(a) Customer may assign its rights and interests under this Agreement to any successor entity of Northgate Americas, Inc. or to any direct or indirect affiliate of Northgate Telecommunications PLC without the consent of Service Provider or Escrow Agent, provided that Customer delivers written notice of such assignment to Service Provider and Escrow Agent within ten (10) business days of such assignment; and
(b) the anti-assignment provision set forth in the MSA (providing that any assignment without consent is void) is hereby acknowledged and incorporated herein by reference.
Any purported assignment in violation of this Section 12.6 shall be null and void and of no force or effect.
12.7 Waiver. No waiver of any provision of this Agreement, or of any right or remedy hereunder, shall be effective unless in writing and signed by the Party against whom enforcement of such waiver is sought. No waiver of any provision shall constitute a waiver of any other provision (whether or not similar), and no waiver shall constitute a continuing waiver unless otherwise expressly stated in such written waiver.
12.8 Headings. The headings of the Articles, Sections, and other subdivisions of this Agreement are for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Agreement.
12.9 Relationship of Parties. Nothing in this Agreement shall be construed to create a partnership, joint venture, agency relationship, or employer-employee relationship among any of the Parties. No Party shall have the power or authority to bind, obligate, or act on behalf of any other Party, except as expressly set forth in this Agreement.
ARTICLE 13 — CONFIDENTIALITY
13.1 Confidentiality Obligations of Escrow Agent. Escrow Agent shall treat as confidential all information regarding the Escrow Account, the Escrow Funds, the terms and conditions of this Agreement, and the transactions contemplated hereby, and shall not disclose any such information to any third party, except: (a) as required by applicable law, regulation, rule, or order of any governmental authority or self-regulatory organization; (b) as required by valid order, decree, subpoena, or other process of a court of competent jurisdiction or governmental agency; (c) as necessary to perform Escrow Agent's duties under this Agreement (including disclosure to Escrow Agent's officers, employees, agents, advisors, and legal counsel who have a need to know such information in connection with Escrow Agent's duties hereunder and who are bound by confidentiality obligations no less restrictive than those set forth in this Section 13.1); (d) to Escrow Agent's regulators, examiners, and auditors in connection with their supervisory or examination functions; or (e) with the prior written consent of both Customer and Service Provider. The obligations of Escrow Agent under this Section 13.1 shall be in addition to, and not in limitation of, any obligations of Escrow Agent under applicable banking laws and regulations regarding customer confidentiality.
13.2 Mutual Non-Disclosure Agreement. The Parties acknowledge that Customer and Service Provider have entered into a Mutual Non-Disclosure Agreement dated February 22, 2023 (the "NDA"), which governs the treatment of certain confidential information exchanged between Customer and Service Provider. The provisions of this Article 13 shall be in addition to, and shall not limit or supersede, the obligations of Customer and Service Provider under the NDA.
SCHEDULE A — ESCROW AGENT FEE SCHEDULE
The following fees shall be payable to Dravello National Bank for its services as Escrow Agent under this Agreement:
Notes: (1) All fees are subject to adjustment after the initial three (3)-year period in accordance with Section 7.1 of this Agreement. (2) All fees are exclusive of reasonable out-of-pocket expenses, which shall be reimbursed in accordance with Section 7.3 of this Agreement. (3) Fees for extraordinary services shall be invoiced monthly and shall include a detailed description of services rendered and time expended.
SIGNATURE PAGES
IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement as of the date first written above.
NORTHGATE AMERICAS, INC.
By: ________
Name: Warren Liang
Title: President
Date: June 9, 2023