Adjustments to the Purchase Price As soon as practicable (but not more than five business days) after the date on which the Final Closing Balance Sheet shall have been determined in accordance with this Section 2.5.3:
(a) the Escrow Agent shall:
(i) release from the ESOP Adjustments and Claims Escrow and pay to Federal an amount in immediately available funds equal to the product of (1) the amount, if any, by which the Net Worth (after the M Street Lease Adjustment) as set forth in the Final Closing Balance Sheet is less than the amount of Net Worth (after the M Street Lease Adjustment) as set forth in the Estimated Closing Balance Sheet and (2) the ESOP Percentage. The difference between any payment to Federal pursuant to this Section 2.5.3(a)(i) and the product of $2,000,000 (Two Million Dollars) and the ESOP Percentage, shall be released to the ESOP Stockholders’ Representative; and
(ii) release from the Non-ESOP Adjustments and Claims Escrow and pay to Federal an amount in immediately available funds equal to the product of (1) the amount, if any, by which the Net Worth (after the M Street Lease Adjustment) as set forth in the Final Closing Balance Sheet is less than the amount of Net Worth (after the M Street Lease Adjustment) as set forth in the Estimated Closing Balance Sheet and (2) the Non-ESOP Percentage. The difference between any payment to Federal pursuant to this Section 2.5.3(a)(ii) and the product of $2,000,000 (Two Million Dollars) and the Non-ESOP Percentage shall be released to the Non-ESOP Stockholders’ Representative as Paying Agent; and
(b) Federal shall pay to:
(i) the ESOP Stockholder an amount in immediately available funds equal to the product of (1) the amount, if any, by which the Net Worth (after the M Street Lease Adjustment) as set forth in the Final Closing Balance Sheet is greater than the Net Worth (after the M Street Lease Adjustment) as set forth in the Estimated Closing Balance Sheet and (2) the ESOP Percentage; and
(ii) the Non-ESOP Stockholders’ Representative, as Paying Agent, an amount in immediately available funds equal to the product of (1) the amount, if any, by which the Net Worth (after the M Street Lease Adjustment) as set forth in the Final Closing Balance Sheet is greater than the Net Worth (after the M Street Lease Adjustment) as set forth in the Estimated Closing Balance Sheet and (2) the Non-ESOP Percentage; and
(c) Pursuant to Section 2.5.3(b) following payment by Federal to the ESOP Shareholder’s Representative and the Non-ESOP Stockholder’s Representative, respectively, of any amount by which the Net Worth as set forth in the Final Closing Balance Sheet is greater than the Net Worth as set forth in the Estimated Closing Balance Sheet, the Escrow Agent shall:
(i) release from the ESOP Adjustments and Claims Escrow and pay to the ESOP Stockholder’s Representative an amount in immediately available funds equal to the product of (1) $2,000,000 (Two Million Dollars) and (2) the ESOP Percentage; and
(ii) release from the Non-ESOP Adjustments and Claims Escrow and pay to the Non-ESOP Stockholders’ Representative as paying agent an amount in immediately available funds equal to the product of (1) $2,000,000 (Two Million Dollars) and (2) the Non-ESOP Percentage. All payments made pursuant to this Section 2.5.3 shall constitute immediate adjustments of the Purchase Price in such amounts.
Transfer Price 4.1. With regard to the Equity Transfer Option, the total Transfer Price to be paid by the WFOE or any other entity or individual designated by the WFOE to each Company Shareholder at each Exercise of Option by the WFOE shall be the capital contribution mirrored by the corresponding Transferred Equity in the Company Registered Capital. But if the lowest price permitted by the then-effective PRC Law is higher than the above capital contribution, the Transfer Price shall be the lowest price permitted by the PRC Law.
4.2. With regard to the Asset Purchase Option, the Transfer Price to be paid by the WFOE or any other entity or individual designated by the WFOE to the Company at each Exercise of Option by the WFOE shall be the net book value of the relevant Transferred Assets. But if the lowest price permitted by the then-effective PRC Law is higher than the net book value of the Transferred Assets, the Transfer Price shall be the lowest price permitted by the PRC Law.
Adjustments to Purchase Price At Closing, the Purchase Price shall be adjusted (without duplication) in accordance with this Section 2.4.
(a) The Purchase Price shall be increased by the following amounts:
(i) the amount of all production expenses, operating expenses, third-party overhead expenses under applicable operating agreements, ad valorem and severance taxes, well bonds and capital expenditures actually paid by Seller in connection with the Assets, insofar and only insofar as the same are attributable to the period of time from and after the Effective Time, including, without limitation, (a) all operating costs and expenses paid by Seller, (b) all capital expenditures, including, without limitation, all drilling, completion, reworking, deepening, side-tracking, plugging and abandoning costs and expenses and paid by Seller, (c) all prepaid expenses and land related costs and expenses attributable to the Assets, including, without limitation, all bonus payments, royalty disbursements, delay rental payments, shut-in payments and other similar costs paid by Seller (provided, however, that the Purchase Price shall not be increased by land related expenses incurred by Seller in connection with Title Defect or Environmental Defect curative work), (d) excise, severance and production tax payments, and any other tax payments based upon or measured by the production of Sale Hydrocarbons or the proceeds of sale or other disposition therefrom paid by Seller and (e) expenses paid by Seller to any third party under applicable joint operating agreements or other contracts or agreements included in the Assets (with respect to which Seller shall provide Buyer with copies of the related invoices);
(ii) an amount equal to the value of all Stock Hydrocarbons (it being understood that such value shall be calculated based on the reference prices set forth in Schedule 2.4(a)(ii) determined as of the Effective Time, less transportation costs, quality adjustment, if any, applicable taxes and royalty payments);
(iii) the adjustment amount, if any, due Seller as determined pursuant to Section 11.1 with respect to Imbalances;
(iv) by Six Hundred Thousand Dollars ($600,000.00) if all of Seller’s right, title and interest in the RCVC Agreement are assigned to Buyer pursuant to the terms of this Agreement; and
(v) any other amount specified herein or otherwise agreed upon by Seller and Buyer in writing.
(b) The Purchase Price shall be decreased by the following amounts:
(i) an amount equal to the net proceeds (the price at which the Hydrocarbons are sold after the Effective Time, less transportation costs, quality adjustment, if any, applicable taxes and royalty payments) received by Seller from the sale or other disposition of Sale Hydrocarbons and Stock Hydrocarbons;
(ii) all actual production expenses, operating expenses, overhead under applicable operating agreements, taxes, and capital expenditures paid or incurred by Buyer in connection with the Assets (including, without limitation, royalties, minimum royalties, rentals, and prepaid charges, including, without limitation, prepaid taxes and prepaid insurance), to the extent they are attributable to the ownership or operation of the Assets (or to the Hydrocarbons produced and saved from, or allocable to, the Assets) before the Effective Time;
(iii) an amount equal to all proceeds received by Seller from whatever source that relate to the sale of Assets and are attributable to periods after the Effective Time;
(iv) the adjustment amount, if any, due Buyer as determined pursuant to Section 11.1 with respect to Imbalances;
(v) if reductions due to the aggregate Title Defect Value is greater than the aggregate Title Benefit Value, as provided in Section 6, an amount equal to such difference;
(vi) reductions due to Environmental Defects as provided in Section 7;
(vii) reductions due to the exercise of Preferential Rights as provided for in Section 9.2 or the time for the exercise of such right has not expired by Closing, or for the Allocated Value of Assets for which consents to assignment have not been obtained by Closing;
(viii) reductions due to Casualty Loss as provided in Section 11.3;
(ix) Seller’s pro rata share of taxes as determined pursuant to Section 4.1;
(x) reductions of the aggregate Allocated Values (without application of thresholds and deductibles) of Leases: (a) for which a consent for assignment has not been obtained by Closing and (b) which have an expiration date between execution of this Agreement and three (3) months after the Closing Date which have not been cured by an extension of such Lease for a period of time of not less than one (1) year; and
(xi) any other amount specified herein or otherwise agreed upon by Seller and Buyer in writing.
Adjustments to Number of Shares The number of shares of Common Stock subject to this Option shall be adjusted to take into account any stock splits, stock dividends, recapitalization of the Common Stock as provided in the Stock Option Plan.
Adjustments to Shares If at any time while this Agreement is in effect (or Shares granted hereunder shall be or remain unvested while Recipient’s Continuous Service continues and has not yet terminated or ceased for any reason), there shall be any increase or decrease in the number of issued and outstanding Shares of the Company through the declaration of a stock dividend or through any recapitalization resulting in a stock split-up, combination or exchange of such Shares, then and in that event, the Board or the Committee shall make any adjustments it deems fair and appropriate, in view of such change, in the number of shares of Restricted Stock then subject to this Agreement. If any such adjustment shall result in a fractional Share, such fraction shall be disregarded.
Purchase Price Adjustment (a) Within 90 days following the Closing, the Buyer shall prepare and deliver, or cause to be prepared and delivered, to the Seller a statement (the “Closing Schedule”) setting forth:
(i) the Buyer’s determination of the actual amounts of (A) the Adjustment Amount, including the Final Adjustment Amount Overage or the Final Adjustment Amount Underage (the “Final Adjustment Amount”), and (B) the Seller Indebtedness Amount, in each case as of 12:01 a.m. Eastern Time on the Closing Date without taking into account any of the transactions to be completed on the Closing Date in accordance with the terms of this Agreement;
(ii) a calculation of any adjustments to the Closing Payment based on such calculations (the adjusted Closing Payment as a result of such calculation being the “Final Closing Payment”); and
(iii) a calculation of the accounts receivable contained in the Preliminary Adjustment Amount that were not collected by Buyer within the thirty (30) days immediately following the Closing and the accounts receivable existing at the Closing but not taken into account in calculating the Adjustment Amount (the “Excluded AR”).
(b) Within fifteen (15) days after delivery of the Closing Schedule, the Seller may deliver a notice to Buyer either: (i) concurring with the Closing Schedule (a “Notice of Concurrence”); or (ii) disagreeing therewith (a “Notice of Disagreement”). If the Seller delivers a Notice of Disagreement, then it shall be accompanied by the Seller’s proposed revisions to the Closing Schedule. If the Seller fails to deliver any notice within such 15-day period, the Seller shall be deemed to have delivered a Notice of Concurrence.
(c) If a Notice of Concurrence is delivered or deemed delivered, and if the Final Closing Payment is less than the Closing Payment, the Buyer shall be entitled to payment out of the Royalty Consideration in the full amount of such shortfall. If a Notice of Concurrence is delivered or deemed delivered, and the Final Closing Payment is greater than the Closing Payment, Buyer shall pay to the Seller the full amount of such excess (with such payment being in shares of Buyer Common Stock priced at $1.50 per share) within thirty (30) days of the delivery of the Notice of Concurrence.
(d) If a Notice of Disagreement is delivered, then the Seller and the Buyer shall, during the 15-day period following such delivery (the “Negotiation Period”), use commercially reasonable efforts to agree on the Final Adjustment Amount. If, during such period, the Seller and the Buyer are unable to reach agreement, they promptly shall engage a nationally recognized certified public accounting firm reasonably acceptable to each such party (the “Independent Auditor”) to resolve the disagreement, and any such resolution shall be final, conclusive and binding upon the parties hereto, absent fraud or manifest error. To the extent the Final Closing Payment as determined by the Independent Auditor is less than the Closing Payment, the Buyer shall be entitled to payment out of the Royalty Consideration in the full amount of such shortfall. To the extent the Final Closing Payment as determined by the Independent Auditor is more than the Closing Payment, the Buyer shall pay to the Seller the full amount of such excess (with such payment being in shares of Buyer Common Stock priced at $1.50 per share) within thirty (30) days of such resolution.
(e) Each of the Seller and the Buyer shall pay fifty percent (50%) of the fees and expenses of the Independent Auditor.
Adjustments to Option The Option shall be subject to the adjustment provisions of Sections 8 and 9 of the Plan, provided, however, that in the event of the payment of an extraordinary dividend by the Company to its shareholders: the Exercise Price of the Option shall be reduced by the amount of the dividend paid, but only to the extent the Committee determines it to be permitted under applicable tax laws and to not have adverse tax consequences to the Optionee under Section 409A of the Code; and, if such reduction cannot be fully effected due to such tax laws and it will not have adverse tax consequences to the Optionee, then the Company shall pay to the Optionee a cash payment, on a per Share basis, equal to the balance of the amount of the dividend not permitted to be applied to reduce the Exercise Price of the applicable Option as follows: (a) for each Share subject to a vested Option, immediately upon the date of such dividend payment; and (b) for each Share subject to an unvested Option, on the date on which such Option becomes vested and exercisable with respect to such Share.
Equitable Adjustments to Prices Whenever any provision of this Indenture requires the Company to calculate the average of the Last Reported Sale Prices, or any function thereof, over a period of multiple days (including to calculate the Stock Price or an adjustment to the Conversion Rate), or to calculate Daily VWAPs over an Observation Period, the Company will make proportionate adjustments, if any, to such calculations to account for any adjustment to the Conversion Rate pursuant to Section 5.05(A)(i) that becomes effective, or any event requiring such an adjustment to the Conversion Rate where the Ex-Dividend Date or effective date, as applicable, of such event occurs, at any time during such period or Observation Period, as applicable.
Purchase Price Adjustments (a) Schedule 2.4 sets forth the Seller’s good faith estimate of the Net Working Capital (the “Estimated Net Working Capital”) as of September 30, 2013, together with a calculation of the Closing Purchase Price based on such estimate. The Estimated Net Working Capital shall be determined in accordance with Section 2.6 and the other terms of this Agreement.
(b) As promptly as possible, but in any event within forty five (45) days after the Closing Date, the Buyer will deliver to the Seller a balance sheet of the Company (the “Closing Balance Sheet”) and a statement showing the calculation of the Net Working Capital derived from the Closing Balance Sheet (together with the Closing Balance Sheet, the “Preliminary Closing Statement”), in each case as of the Reference Time. The Closing Balance Sheet shall be prepared, and the Net Working Capital and the Preliminary Closing Statement shall be determined, in accordance with Section 2.6 and the definitions and other terms set forth in this Agreement. The Preliminary Closing Statement shall contain line item detail comparable to the Balance Sheet with respect to the components of Net Working Capital of the Company as of the Reference Time. After delivery of the Preliminary Closing Statement, the Buyer shall give the Seller and its accountants and representatives reasonable access at reasonable times to review the Company’s books and records and work papers related to the preparation of the Preliminary Closing Statement subject to customary confidentiality restrictions. The Seller and its accountants and representatives may make inquiries of the Buyer and its accountants regarding questions concerning or disagreements with the Preliminary Closing Statement arising in the course of its review thereof, and the Buyer shall use its commercially reasonable efforts to cause any such accountants to cooperate with and respond to such inquiries. If the Seller has any objections to the Preliminary Closing Statement, the Seller shall deliver to the Buyer a statement setting forth its objections thereto (an “Objections Statement”). If an Objections Statement is not delivered by the Seller to the Buyer within twenty (20) days after delivery of the Preliminary Closing Statement, the Preliminary Closing Statement shall be final, binding and non-appealable by the Parties hereto. The Seller and the Buyer shall negotiate in good faith to resolve any such objections for fifteen (15) days after the delivery of the Objections Statement, but if they do not reach a final resolution, the Seller and the Buyer shall submit such dispute to PricewaterhouseCoopers, or if they are not independent pursuant to the rules and regulations of the Securities and Exchange Commission at the time, another nationally recognized independent accounting firm reasonably acceptable to the Buyer and the Seller (the “Dispute Resolution Firm”) within three (3) Business Days following the end of the fifteen (15)-day period from the date of the delivery of the Objections Statement. Any further submissions to the Dispute Resolution Firm must be written and delivered to each party to the dispute. The Dispute Resolution Firm shall consider work papers and other documents and information related to those items and amounts which are identified in the Objections Statement as being items which the Seller and the Buyer are unable to resolve. The Dispute Resolution Firm’s determination will be based on the definition of Net Working Capital and the other definitions and terms contained herein and shall be in amounts between the disputed amounts set forth in the Preliminary Closing Statement and the Objections Statement. The Seller and the Buyer shall use their commercially reasonable efforts to cause the Dispute Resolution Firm to resolve all disagreements as soon as practicable and in any event within thirty (30) days after the submission of any dispute. Further, the Dispute Resolution Firm’s determination shall be based solely on the presentations by the Buyer and the Seller which are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Firm shall be, absent manifest error, final, binding and non-appealable on the Parties hereto. The costs and expenses of the Dispute Resolution Firm shall be allocated fifty percent (50%) to the Buyer and fifty percent (50%) to the Seller.
(c) If the Net Working Capital as finally determined pursuant to Section 2.4(b) above is greater than the Target Working Capital, the Buyer shall promptly pay to the Seller the amount of such excess in cash. If the Net Working Capital as finally determined pursuant to Section 2.4(b) above is less than the Target Working Capital (such amount, the “Working Capital Deficiency”), the Seller and the Buyer shall promptly cause an amount equal to the Working Capital Deficiency to be paid to the Buyer from the Working Capital Escrow Amount; provided, however, that if the Working Capital Deficiency is in excess of the Working Capital Escrow Amount (such excess amount, the “Working Capital Indemnity Amount”), then the Buyer may elect to seek indemnification for the Working Capital Indemnity Amount either (i) from the Indemnity Escrow Amount or (ii) directly from the Seller. The net adjustment amount payable to the Seller or the Buyer under this Section 2.4(c) (such amount, the “Net Adjustment Amount”) shall be paid in accordance with Section 2.5.
Adjustments to Consideration The number of shares of the Company Series A Preferred Stock shall be adjusted to reflect fully the effect of any reclassification, combination, subdivision, stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into the Company Series A Preferred Stock), reorganization, recapitalization or other like change with respect to the Company Series A Preferred Stock occurring (or for which a record date is established) after the date hereof and prior to the Effective Time.
