Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner: (a) Within 60 days after the end of the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”). (b) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto. (c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes. (d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement. (e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree. (f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code. (g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 2 contracts
Samples: Purchase Agreement (Endo International PLC), Purchase Agreement (Boston Scientific Corp)
Earnout. The (a) Following the Closing, and as additional consideration for the Merger and the transactions contemplated hereby, within five (5) Business Days after the occurrence of a Triggering Event (or if a Triggering Event occurs prior to Closing, within twenty (20) Business Days after the Closing Date) or the Final Earnout Amount Distribution Date (in accordance with Section 3.4(a)(iv)), as applicable, Acquiror shall issue or cause to be issued to each Eligible Company Equityholder as of such date (in each case accordance with its respective Pro Rata Share) shares of Acquiror Common Stock (which shall be calculatedequitably adjusted for stock splits, determined reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Acquiror Common Stock occurring after the Closing) (such shares, the “Earnout Shares”), upon the terms and paid subject to the conditions set forth in this Agreement; provided, however, that any Earnout Shares issued in respect of a Company Restricted Stock Award exchanged for an Adjusted Restricted Stock Award that remains unvested as of the following mannerTriggering Event (each such Adjusted Restricted Stock Award, an “Unvested Adjusted Restricted Stock Award” and any such Earnout Shares issued in connection therewith pursuant to this Section 3.4, the “Unvested Restricted Stock Award Earnout Shares”) shall vest in equal amounts (or as close as possible, with any excess shares vesting on the last vesting date) over the remaining vesting schedule of the applicable Adjusted Restricted Stock Award, and shall be subject to the same vesting conditions as applied to such Unvested Adjusted Restricted Stock Award; provided, further, that any such issuance of Earnout Shares will not be made to any Eligible Company Equityholder for which a filing under the HSR Act is required in connection with the issuance of Earnout Shares, until the applicable waiting period under the HSR Act has expired or been terminated:
(ai) Within 60 days after Upon the end occurrence of Triggering Event I, a one-time issuance of one-third (1/3) of the Aggregate Earnout PeriodShares minus any Earnout RSUs issued pursuant to Section 3.4(b) in connection with Triggering Event I;
(ii) Upon the occurrence of Triggering Event II, Purchaser shall prepare a one-time issuance of one-third (1/3) of the Aggregate Earnout Shares, plus any Forfeited Earnout Shares since Triggering Event I, minus any Earnout RSUs that are issued in good faith connection with or otherwise remain outstanding as of Triggering Event II;
(iii) Upon the occurrence of Triggering Event III, a one-time issuance of one-third (1/3) of the Aggregate Earnout Shares, plus any Forfeited Earnout Shares since Triggering Event II, minus any Earnout RSUs that are issued in connection with or otherwise remain outstanding as of Triggering Event III; and
(iv) On the earlier of (A) the one-year anniversary of Triggering Event III and deliver to Sellers’ Representative a written statement showing in reasonable detail (B) the calculation five (5)-year anniversary of Net Sales for the Earnout Period and the Earnout Amount payable, if any Closing Date (the “Final Earnout StatementDetermination Date”), a one-time issuance of any Forfeited Earnout Shares since Triggering Event III.
(b) In Notwithstanding anything in Section 3.4(a) to the event contrary, to the extent that any portion of any objection by Sellers’ Representative Earnout Shares that would otherwise be issued to an Eligible Company Equityholder hereunder relates to a Company Option exchanged for an Acquiror Option that remains unvested as of such Triggering Event (each such Acquiror Option, an “Unvested Acquiror Option”) or a Company RSU Award exchanged for an Adjusted RSU Award that remains unvested as of such Triggering Event (each such Adjusted RSU Award, an “Unvested Adjusted RSU Award”), then in lieu of issuing the applicable Earnout Shares, Acquiror shall instead issue, as soon as practicable following the later of (i) the occurrence of such Triggering Event (or if such Triggering Event occurs prior to the Closing Date, no earlier than twenty (20) Business Days after the Closing Date) and (ii) Acquiror’s filing of a Form S-8 Registration Statement, to each holder of an Unvested Acquiror Option or an Unvested Adjusted RSU Award an award of restricted stock units of Acquiror for a number of shares of Acquiror Common Stock equal to such portion of the Earnout Shares issuable with respect to such Unvested Acquiror Option or Adjusted RSU Award, as applicable (the determination “Earnout RSUs”). Such Earnout RSUs shall vest in equal amounts (or as close as possible, with any excess shares vesting on the last vesting date) over the remaining vesting schedule of the Net Sales applicable Unvested Acquiror Option or Unvested Adjusted RSU Award, as applicable, and shall be subject to the same vesting conditions as applied to such Unvested Acquiror Option or Unvested Adjusted RSU Award, as applicable. A holder of an Unvested Acquiror Option or an Unvested Adjusted RSU Award shall only be granted Earnout Amount payable, Sellers’ Representative shall, within 60 days after RSUs if such holder remains in continuous service to Acquiror or one of its receipt subsidiaries as of the applicable Triggering Event and the applicable grant date of the Earnout StatementRSUs and such holder and any holder of Unvested Adjusted Restricted Stock Award Earnout Shares, give written notice shall forfeit any Earnout RSUs or Unvested Adjusted Restricted Stock Award Earnout Shares, as applicable, in the event such holder’s continuous service to Purchaser Acquiror or one of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt its subsidiaries terminates prior to amicably resolve any disputed items set forth in such Earnout Dispute NoticeRSUs or Unvested Adjusted Restricted Stock Award Earnout Shares, as applicable, becoming vested, in which case the Forfeited Earnout Shares with respect to such forfeited and/or cancelled Earnout RSUs or Unvested Adjusted Restricted Stock Award Earnout Shares, as applicable, shall be reallocated to Eligible Company Equityholders in connection with the subsequent Triggering Event or Final Earnout Distribution Date, as applicable. If Sellers’ Representative does not timely deliver an All Earnout Dispute Notice, then RSUs to be issued hereunder shall be issued under and pursuant to the calculation terms and conditions of the Net Sales Incentive Equity Plan and shall cover a number of shares in addition to the share reserve approved for all other awards under such Equity Incentive Plan. Notwithstanding anything to the contrary herein, any unvested Earnout Amount RSUs or Unvested Adjusted Restricted Stock Award Earnout Shares outstanding as set forth in of the Final Earnout Statement Determination Date shall be deemed to have been accepted and shall be final and binding on all parties heretoforfeited and/or cancelled without any consideration.
(c) IfFor the avoidance of doubt, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant the Eligible Company Equityholders shall be entitled to any resolutions receive Earnout Securities upon the occurrence of each Triggering Event; provided, however, that each Triggering Event shall only occur once, if at all, and in no event shall the Eligible Company Equityholders be entitled to objections agreed upon by Purchaser and Sellers’ Representative and receive more than the Aggregate Earnout Shares; (ii) pursuant to the Referee’s resolution extent that any Triggering Event does not occur in accordance with the terms of this Agreement, any Earnout Shares or Earnout RSUs that would otherwise be issued under this Agreement as a result of the unresolved objections. The Referee occurrence of such Triggering Event shall review only those matters specified instead be forfeited and cancelled without the payment of any consideration in respect thereof and (iii) until the unresolved objections and Closing occurs, Acquiror shall make have no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in obligations under this Section 2.06 for resolving disputes with respect 3.4, including any obligation to issue or cause to be issued any Earnout Shares or Earnout RSUs and the Eligible Company Equityholders shall have no right to receive any Earnout Statement shall be the sole and exclusive method for resolving any such disputesShares or Earnout RSUs.
(d) In connection with Following the preparation of Final Earnout Determination Date, the Eligible Company Equityholders shall have no further right to receive any Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout StatementSecurities.
(e) On If, after the fifth Business Day after Purchaser Closing and Sellers’ Representative agree during the Earnout Period, there is a Change of Control pursuant to which Acquiror or its stockholders have the right to receive consideration implying a value per share of Acquiror Common Stock (as agreed in good faith by the Sponsor and the Board of Directors of Acquiror) of:
(i) less than $14.00, then this Section 3.4 shall terminate and no Earnout Shares shall be issuable hereunder;
(ii) equal to or greater than $14.00 but less than $20.00, then, (A) immediately prior to such Change of Control, Acquiror shall issue one-third (1/3) of the Aggregate Earnout Shares to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable Eligible Company Equityholders (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided each Eligible Company Equityholder’s respective Pro Rata Share) and (B) thereafter, this Section 3.4 shall terminate and no further Earnout Securities shall be issuable hereunder;
(iii) equal to or greater than $20.00 but less than $25.00, then, (A) immediately prior to such Change of Control, Acquiror shall issue one-third (1/3) of the Aggregate Earnout Shares (such number of shares to be reduced by the Sellers’ Representative number of Earnout Securities issued prior thereto, if any) to Purchaser at least two Business Days the Eligible Company Equityholders (in accordance with each Eligible Company Equityholder’s respective Pro Rata Share) and (B) thereafter, this Section 3.4 shall terminate and no further Earnout Securities shall be issuable hereunder; or
(iv) equal to or greater than $25.00, then, (A) immediately prior to such Change of Control, Acquiror shall issue one-third (1/3) of the date Aggregate Earnout Shares (such payment is due or on such other date as Purchaser number of shares to be reduced by the number of Earnout Securities issued prior thereto, if any) to the Eligible Company Equityholders (in accordance with each Eligible Company Equityholder’s respective Pro Rata Share) and Sellers’ Representative (B) thereafter, this Section 3.4 shall agreeterminate and no further Earnout Securities shall be issuable hereunder.
(f) The Parties acknowledge Acquiror Common Stock price targets set forth in the definitions of Triggering Event I, Triggering Event II and agree thatTriggering Event III, and in clauses (i), (ii), (iii) and (iv) of Section 3.4(e) shall be equitably adjusted for Tax purposesstock splits, the payment reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of the Earnout Amount (if any) will be treated as an adjustment shares or other like change or transaction with respect to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After Acquiror Common Stock occurring after the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 2 contracts
Samples: Merger Agreement (Xos, Inc.), Merger Agreement (NextGen Acquisition Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after The Purchaser shall pay to the end Shareholders earnout payments, each in an amount equal to seventy percent (70%) of the Earnout Period Revenues generated in each Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payableaccordance with this Section 3.6 (each such payment, if any (the an “Earnout StatementPayment”). Notwithstanding the foregoing provisions of this Section 3.6(a), in no event shall the aggregate Earnout Payments payable hereunder be less than zero or greater than Nine Million Eight Hundred Thousand Dollars ($9,800,000).
(b) In Within ninety (90) days following the event end of the First Earnout Period and the Second Earnout Period, as the case may be, the Purchaser shall prepare and deliver to the Shareholders a report setting forth its calculation of the Earnout Payment for such applicable Earnout Period, including a statement of the Earnout Period Revenues for such applicable Earnout Period (the “Earnout Report”). The Purchaser shall provide a reasonable level of supporting documentation for the Earnout Payment and any additional information reasonably requested by the Shareholders related thereto together with the Earnout Report. The Earnout Payment for the applicable Earnout Period shall represent only a right to receive a cash payment from the Purchaser, subject to the terms set forth herein, and shall not be deemed an interest in any security or certificate or entitle the holders thereof to any rights of any objection by Sellers’ Representative kind other than as specifically set forth herein. No interest is payable with respect to any Earnout Payment to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 extent timely paid when due.
(c) The Shareholders shall have thirty (30) days after its following receipt of the applicable Earnout Statement, give written notice Report delivered pursuant to Section 3.6(b) during which to notify the Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative any dispute of any item contained therein or related thereto, which notice shall thereafter attempt to amicably resolve any disputed items set forth in detail the basis for such dispute. The Purchaser and the Shareholders shall cooperate in good faith to resolve any such dispute as promptly as possible. Upon such resolution, a Final Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then Report shall be prepared in accordance with the agreement of the Purchaser and the Shareholders and the calculation of the Net Sales applicable Earnout Payment, if any, based thereon, shall constitute the applicable Final Earnout Payment and be final and binding upon the Parties. In the event the Shareholders do not notify the Purchaser of any such dispute within such thirty (30)-day period or notify the Purchaser within such period that they do not dispute any item contained therein, the applicable Earnout Report delivered pursuant to Section 3.6(b) shall constitute the Final Earnout Report with respect to such Earnout Period and the Purchaser’s calculation of the applicable Earnout Payment, if any, based thereon shall be final and binding upon the Parties.
(d) In the event the Purchaser and the Shareholders are unable to resolve any dispute regarding an Earnout Report delivered pursuant to Section 3.6(b) within thirty (30) days following the Purchaser’s receipt of notice of such dispute, such dispute shall be submitted to, and all issues having a bearing on such dispute shall be resolved by, an Accounting Referee. In resolving any such dispute, the Accounting Referee shall consider only those items or amounts in or related to the Earnout Report as to which the Shareholder has disagreed. The Accounting Referee’s determination of the Earnout Report and the Earnout Amount as set forth in Payment, if any, based thereon shall constitute the applicable Final Earnout Statement shall be deemed to have been accepted Report and Final Earnout Payment and shall be final and binding on all parties heretothe Parties. The Parties shall direct the Accounting Referee to use commercially reasonable efforts to complete its work within thirty (30) days following its engagement. All fees and expenses of the Accounting Referee shall be shared equally by the Shareholders and the Purchaser.
(ce) If, for The Parties acknowledge that there is no assurance that the Shareholders will have the right to receive any reason, Earnout Payment and Purchaser and Sellers’ Representative canhas not resolve promised or projected any disputed items indicated in an particular Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified hereinPayment. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth earnout opportunity in this Section 2.06 3.6 is presented under the understanding that the Purchaser will have full control and direction over the Company and its business following the Closing, including decisions regarding strategic initiatives, management, legal structure, finance and accounting, marketing and branding and expenses. Notwithstanding the foregoing provisions of this Section 3.6(e), during the Earnout Period, the Purchaser shall not, nor shall it permit any of its Affiliates to, terminate the Earnout Contract and enter into a separate Contract with the Earnout Customer or any of its Affiliates for resolving disputes utilization management services for the purpose or effect of avoiding or reducing its obligations with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreePayments hereunder.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will All payments made pursuant to this Section 3.6 shall be treated by the Parties for tax purposes as an adjustment adjustments to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodePrice, unless otherwise required by applicable Law.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 2 contracts
Samples: Share Purchase Agreement, Share Purchase Agreement (ExamWorks Group, Inc.)
Earnout. The Earnout Amount parties acknowledge that the Purchase Price, as same may be modified by Section 3 herein, has been calculated generally by dividing the expected annual base rent from the Property (i.e. $2,386,109) by .082251 (the “Base Rent Divider”). In the event the Property is less than one hundred percent (100%) leased to tenants satisfying the Occupancy Conditions described upon Exhibit L attached hereto and made a part hereof as of the Closing Date, only a portion of the full Purchase Price shall be calculatedfunded at Closing and the balance of the Purchase Price (the “Unfunded Purchase Price”) shall be held by Purchaser pursuant to the terms of this Section 20. The Unfunded Purchase Price shall be calculated by dividing the aggregate pro forma annual base rent (per the attached Exhibit B) for the space within the Property for those tenants that do not then satisfy the Occupancy Conditions (the “Vacant Space”), determined by the Base Rent Divider. The balance of the Purchase Price shall be paid to Seller per the terms of this Agreement on the Closing Date (subject to Seller’s funding of the deposits described below). As of the date hereof, the Vacant Space totals 20,294 square feet. The parties agree to enter into a mutually agreeable “Earnout Agreement” (attached as Exhibit K) at Closing which sets forth the terms and conditions for the Earnout, some of which are as follows: The term of the earnout period shall commence on the Closing Date and shall continue until the first to occur of (i) a period of 36 months from the Closing Date, or (ii) the date the Vacant Space has been fully leased and is occupied by tenants then satisfying the Occupancy Conditions (the “Earnout Period”). During the term of the Earnout Period (and prior to the satisfaction of the Occupancy Conditions of any portion of the Vacant Space by a new tenant), Seller shall be responsible for the monthly pro rata share of taxes, insurance and common area expenses (collectively, the “Operating Expenses”) allocable to the Vacant Space. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to the estimated aggregate Operating Expenses for the Vacant Space payable during the Earnout Period (the “Operating Expense Escrow”). Purchaser shall draw down on the Operating Expense Escrow during the Earnout Period to pay any Operating Expenses allocable to the Vacant Space as same become due. Once any portion of the Vacant Space is leased to, and occupied by, a tenant then satisfying the Occupancy Conditions, Seller’s obligation to pay Purchaser the Operating Expenses allocable to that portion of the Vacant Space shall terminate and the balance of the Operating Expense Escrow allocable to said space shall be promptly paid in to Seller. Upon the following manner:
(a) Within 60 days after the end expiration of the Earnout Period, Purchaser the balance of the Operating Expense Escrow, if any, shall prepare in good faith and deliver be paid to Sellers’ Representative a written statement showing in reasonable detail Seller. Seller shall continue to serve as the calculation of Net Sales exclusive leasing agent for the Vacant Space during the Earnout Period and shall be responsible for all costs and expenses associated with leasing the Vacant Space, including without limitation, any brokerage commissions and tenant improvement allowances associated therewith. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to (i) $15.00 per square foot of the Vacant Space for anticipated tenant improvement allowances applicable to the Vacant Space, plus (ii) $3.00 per square foot of the Vacant Space for anticipated leasing commissions applicable to the Vacant Space (collectively, the “Leasing Escrow”). As any portion of the Vacant Space is leased to tenants during the Earnout Amount payablePeriod, Seller may draw down on the Leasing Escrow to pay any tenant improvement allowance and/or leasing commissions applicable to said lease, provided in no event shall the aggregate amount funded out of the Leasing Escrow for tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased, nor shall the aggregate amount funded from the Leasing Escrow for leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased. Upon the expiration of the Earnout Period, a portion of the Leasing Escrow in an amount equal to the collective sum of the improvement allowances for the then Vacant Space and the leasing commissions applicable to the then Vacant Space shall be either: (y) paid to Purchaser if the Vacant Space is not fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period; or (z) paid to Seller if the Vacant Space is fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period. Any amounts remaining in the Leasing Escrow after payment to Purchaser and/or Seller (as applicable), as provided immediately above shall be paid to Seller at the expiration of the Earnout Period. Additionally, if tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased or leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased (including for space which is being reconfigured for future leasing to a tenant) (e.g., relocation of walls and doorways), Seller shall be responsible for payment of such shortfall from Seller’s funds without contribution therefor from Purchaser. All leases for the Vacant Space shall comply with the Leasing Parameters attached hereto as Exhibit F or shall otherwise be approved in writing by Purchaser. At such time as Seller provides Purchaser with a new lease for any portion of the Vacant Space (and such new occupant has satisfied the “Occupancy Conditions), Purchaser shall, upon ten (10) days advance written notice from Seller, pay to Seller a portion of the Unfunded Purchase Price in an amount equal to the annual base rent payable under said new lease (such base rent in no event to exceed 110% of the pro forma annual base rent for such space per the attached Exhibit B) divided by the Base Rent Divider. Any portion of the Unfunded Purchase Price which remains unfunded as of the expiration of the Earnout Statement”).
(b) In Period shall then be deemed to be forfeited by Seller without any further act by Purchaser and shall be forever released from all obligations to fund any portion of the event Unfunded Purchase Price thereafter. Purchaser shall act in a commercially reasonable manner and in good faith during its review and approval of any objection by Sellers’ Representative with respect to the determination proposed new tenant and/or lease of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, Vacant Space. Purchaser agrees to respond to Seller deliveries of tenant information and/or leases within 60 five (5) business days after its receipt thereof by Purchaser, and in the event Purchaser fails to respond within an additional two (2) business days after a second notice, said proposed tenant and/or lease shall be deemed approved by Purchaser. In the event that any tenant and its new lease is approved (or deemed approved) and such lease is signed by the tenant and delivered to Purchaser but Purchaser fails to execute and deliver such lease within two (2) business days after receipt of the Earnout Statement, give written second notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticedescribed above, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement lease shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, executed by Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days as of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(csixth (6th) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, day following Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation receipt of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementsame.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 2 contracts
Samples: Purchase and Sale Agreement, Purchase and Sale Agreement (Inland Diversified Real Estate Trust, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Closing, promptly (but in any event no later than ten (10) Business Days) after the end occurrence of the Triggering Event, Holdco shall issue or cause to be issued to the Holdco Shareholders and Eligible Optionholders as of immediately prior to the Effective Date (after giving effect to the issuance of any Holdco Shares as a result of the exercise of any Company Issuance Rights in connection with the Company Share Exchange) their respective Earnout Pro Rata Share of the Earnout PeriodShares. For the avoidance of doubt, Purchaser the Triggering Event shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payableonly occur once, if any (the “Earnout Statement”)at all.
(b) In the event of any objection by Sellers’ Representative with respect Notwithstanding anything in this Agreement to the determination contrary, any Earnout Shares issuable under this Section 2.7 in respect of Rollover Company Options shall (i) be issued to the relevant Eligible Optionholder only if such Eligible Optionholder continues to provide services (whether as an employee, director or individual independent contractor) to Holdco or one of its Subsidiaries through the date of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt occurrence of the Triggering Event that causes such Earnout StatementShares to become issuable, give written notice to Purchaser and (ii) take the form of such objection showing in reasonable detail restricted stock units issued under the calculation thereof Holdco Equity Incentive Plan (an “Earnout Dispute NoticeRSUs”)) and pursuant to Holdco’s form of restricted stock unit grant agreement. Purchaser and Sellers’ Representative The Earnout RSUs shall thereafter attempt be subject to amicably resolve any disputed items set forth in such the same vesting schedule as the corresponding Rollover Company Options. Any Earnout Dispute Notice. If Sellers’ Representative does not timely deliver Shares that are forfeited as a result of an Earnout Dispute Notice, then Eligible Optionholder ceasing to provide services through the calculation date of the Net Sales and occurrence of the Earnout Amount as set forth in the Earnout Statement Triggering Event shall be deemed reallocated to have been accepted and shall be final and binding on all parties heretothe other recipients of Earnout Shares in accordance with their respective Earnout Pro Rata Shares.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of At all times during the Earnout Dispute NoticePeriod, then such unresolved items Holdco shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant maintain sufficient Holdco Shares available for issuance under its authorized share capital to any resolutions permit Holdco to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure satisfy its issuance obligations set forth in this Section 2.06 2.7 and shall exert its reasonable best efforts to take all actions required to increase the number of Holdco Shares available for resolving disputes with respect to the Earnout Statement issuance under its authorized share capital if at any time there shall be the sole and exclusive method for resolving any such disputesinsufficient Holdco Shares thereunder to satisfy its issuance obligations set forth in this Section 2.7.
(d) In Notwithstanding anything to the contrary contained herein, no fraction of an Earnout Share will be issued by virtue of the Triggering Event, and each Person who would otherwise be entitled to a fraction of an Earnout Share (after aggregating all fractional Earnout Shares that otherwise would be received by such holder in connection with the preparation occurrence of such Triggering Event) shall instead have the number of Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, Shares issued to such Person (Ai) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, rounded down to the relevant books and records, including nearest whole number in the Transferred Books and Records, for event that the purposes fractional Earnout Share that otherwise would be so paid is less than five-tenths (0.5) of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the an Earnout Statement as may reasonably be requested by Sellers’ Representative; Share and (Bii) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful rounded up to the nearest whole number in the determination event that the fractional Earnout Share that otherwise would be so paid is greater than or equal to five-tenths (0.5) of the calculations and amounts set forth in the an Earnout StatementShare.
(e) On Following the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and Closing but during the Earnout Period, Purchaser shall not, if (i) Holdco is purchased or acquired pursuant to a Change of Control Transaction and shall cause its Affiliates not to, take (ii) such Change of Control Transaction occurs at any action, nor fail time after Positive Phase 3 Data has been achieved with respect to take an action, with the purpose or intention Company’s BROADWAY trial of impeding obicetrapib (protocol number: TA-8995-302) but prior to the achievement occurrence of the Net Sales during Triggering Event, then any Earnout Shares that remain unissued as of immediately prior to the Earnout Period required for consummation of such Change of Control Transaction shall immediately become issuable and the Sellers holders of Holdco Shares as of immediately prior to the Effective Date and the Eligible Optionholders as of immediately prior to the Effective Date who continue to provide services (whether as an employee, director or individual independent contractor) to Holdco or one of its Subsidiaries through the date of the Change in Control shall be entitled to receive the their respective Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject Pro Rata Share of such Earnout Shares prior to the foregoingconsummation of such Change of Control Transaction. Any Earnout Shares shall be issuable to as specified on the Allocation Schedule, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this subject to any reallocation made pursuant to Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount2.7(b).
Appears in 2 contracts
Samples: Business Combination Agreement (NewAmsterdam Pharma Co N.V.), Business Combination Agreement (Frazier Lifesciences Acquisition Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after Subject to the end other terms of this Agreement, as additional consideration for the Merger, Parent shall pay to the Company Stockholders and Qualifying Option Holders and allocate to the Bonus Pool the amounts earned, if any, as set forth on Exhibit C (collectively, the “Earnout Payments”), subject to the satisfaction of the conditions set forth thereon and herein. The Earnout PeriodPayments shall be calculated by Parent in accordance with Exhibit C as of the close of business on March 30, Purchaser shall prepare in good faith 2012 and deliver to Sellers’ Representative a written statement showing in reasonable detail the March 29, 2013, respectively. The Earnout Payment calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout StatementPayment Calculation”).) shall be provided by Parent to Stockholder’s Agent on or before May 30, 2012 for the Earnout Payment set forth in Paragraph (a) of Exhibit C, and on or before May 29, 2013 for the Earnout Payment set forth in Paragraphs (b) and (c) of Exhibit C.
(b) In Stockholders’ Agent shall be entitled to review the event Earnout Payment Calculation, together with supporting work papers and books and records, in each case, of any objection by SellersParent and its representatives, accountants and other advisors, to be provided upon Stockholders’ Representative Agent’s reasonable request. During a period of thirty (30) days after the date Stockholders’ Agent receives the Earnout Payment Calculation (the “Objection Period”), if Stockholders’ Agent disagrees with respect the Earnout Payment Calculation, then Stockholders’ Agent shall give written notice (an “Objection Notice”) to the Parent within such thirty (30) day period specifying in reasonable detail Stockholders’ Agent’s disagreement with Parent’s determination of the Net Sales or the applicable Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount Payment as set forth in the Earnout Statement shall Payment Calculation. Any Objection Notice must specify those items or amounts as to which Stockholders’ Agent disagrees, and Stockholders’ Agent will be deemed to have been accepted agreed with all other items and shall amounts contained in the Earnout Payment Calculation. If Stockholders’ Agent does not deliver an Objection Notice within the Objection Period, then Stockholders’ Agent will be final and binding on all parties heretodeemed to have agreed entirely with the determination of the applicable Earnout Payment as set forth in the Earnout Payment Calculation.
(c) IfIf an Objection Notice is duly and timely delivered in accordance with the terms of Section 2.18(b), Parent and Stockholders’ Agent will, during the thirty (30) days following delivery of the Objection Notice, use commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine the Earnout Payment, which amount must be within the range of the amount thereof shown in the Earnout Payment Calculation and the amount thereof shown in the Objection Notice. If during such thirty (30) day period, Parent and Stockholders’ Agent are unable to reach agreement on the Earnout Payment, they will promptly thereafter cause an independent accounting firm of recognized national or regional standing to be mutually agreed upon by Parent and Stockholders’ Agent, acting reasonably and in good faith (the “Independent Accounting Firm”), to review this Agreement and the disputed items or amounts for any reasonthe purpose of calculating the Earnout Payment (it being understood that in making such determination, Purchaser the Independent Accounting Firm will be functioning as an expert and Sellersnot as an arbitrator). In making its calculation of the Earnout Payment, the Independent Accounting Firm may consider only those items or amounts in the Earnout Payment Calculation as to which Stockholders’ Representative cannot resolve Agent disagreed in the Objection Notice. The Independent Accounting Firm’s determination of any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery or amounts and its calculation of the Earnout Dispute Notice, then such unresolved items shall Payment must be resolved by within the Referee range of the amount thereof shown in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified hereinEarnout Payment Calculation and the amount thereof shown on the Objection Notice. The Referee shall issue Independent Accounting Firm will deliver to Parent and Stockholders’ Agent, as promptly as practicable, a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution setting forth, in reasonable detail, its determination of the unresolved objectionsdisputed items and the resulting Earnout Payment. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall Such report will be final and binding upon the Parties and the Company Stockholders, Qualifying Option Holders and Bonus Pool Recipients absent manifest error. The cost of the Independent Accounting Firm’s review and report will be borne by Parent, on all parties heretothe one hand, and may be enforced the Company Stockholders, Qualifying Option Holders and Bonus Pool Recipients on the other hand, in any court of competent jurisdiction. The parties agree the same proportion that the procedure dollar amount of the disputed items or amounts that are not resolved in favor of Parent, on the one hand, and the Company Stockholders, Qualifying Option Holders and Bonus Pool Recipients, on the other hand (as applicable), bears to the total dollar amount of items or amounts in dispute resolved by the Independent Accounting Firm. Each Party, the Stockholders’ Agent and each Company Stockholder, Qualifying Option Holder and Bonus Pool Recipient will bear all of its respective other expenses incurred in connection with matters contemplated by Section 2.18 (b) and this Section 2.18(c).
(d) Subject to the terms and conditions of this Agreement, including the last sentence of this section and Section 10.11 hereof, the Earnout Payments, if any, shall be paid by Parent to the Company Stockholders and Qualifying Option Holders and allocated to the Bonus Pool in accordance with their Pro Rata Portions and shall be due and payable or allocated, as applicable, as soon as reasonably practicable, but not more than ten (10) Business Days, following the final determination of the amount of such Earnout Payments in accordance with the procedures set forth in this Section 2.06 2.18, provided, however, that the amount of the Earnout Payments that would otherwise be required to be made pursuant to this Section 2.18(d) shall be reduced by the amount that may be required to satisfy the full amount of any Claims made prior to that date in accordance with Article X, but not yet finally adjudicated or otherwise finally resolved and paid. Any Earnout Payment not made as a result of pending Claims shall be made when all Claims made in accordance with Article X have been resolved by a final, non-appealable ruling. Each Principal Stockholder (on behalf of himself and each other Company Stockholder, Qualifying Option Holder and Bonus Pool Recipient) acknowledges and agrees that (i) the Company Stockholders’, Qualifying Option Holders’ and Bonus Pool Recipients’ sole and exclusive right under this Section 2.18 will be to receive, subject to the other terms of this Agreement, the Earnout Payments if the conditions set forth on Exhibit C are satisfied; (ii) except for resolving disputes its obligation to provide (A) the applicable level of aggregate funding in respect of the development, production, sales and support of Earnout Products by Parent and its subsidiaries on a consolidated basis as specified in the budget set forth on Exhibit D hereto, only at such times and only upon the satisfaction of the conditions set forth on such Exhibit D, and (B) the other support commitments of Parent expressly enumerated on Exhibit D, Parent (1) will have the right to operate its business and that of its subsidiaries (including the Surviving Corporation) as it chooses, in its sole discretion, and (2) Parent is not under any obligation to provide any specific level of investment or financial assistance to the Surviving Corporation or the development, production, sales and support of Earnout Products, nor is Parent required to undertake any specific actions (or to refrain from taking any specific actions) with respect to the operation of the Surviving Corporation or the development, production, sales and support of Earnout Statement shall Products; (iii) Parent is not representing or warranting that any specific revenue or products sale thresholds will be achieved nor will the sole and exclusive method Company Stockholders, Qualifying Option Holders or Bonus Pool Recipients have any claims against Parent arising from any failure to meet for resolving any such disputes.
reason (d) In connection other than its failure to comply with the preparation express terms of subsection (ii) above) any revenue or product sales thresholds; and (iv) all payments made under this Article II to Company Stockholders are being paid solely in exchange for the Earnout StatementMerger, and until and, except as otherwise required by Law, the final resolution of Parties will not take a Tax Return position inconsistent with the Earnout Statement, Purchaser shall, and shall cause foregoing. Notwithstanding any provision hereof to the Companies and their Subsidiaries tocontrary, (A) provide Sellers’ Representative each Company Stockholder acknowledges and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, agrees that he or she will immediately and irrevocably forfeit to the relevant books Parent his or her rights to receive any and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation all of the Earnout Statement as Payments, including his or her Pro Rata Portion of the Earnout Payments, hereunder if he or she breaches or violates the terms of his or her Non-Competition Agreement, provided that such forfeiture will not constitute an election of remedies or limit in any manner the enforcement of any other remedy that may reasonably be requested available to Parent, and provided further that the Pro Rata Portion of the other Company Stockholders, Qualifying Option Holders and Bonus Pool Recipients shall not be increased by Sellers’ Representative; operation of this provision and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in no event shall the determination aggregate of the calculations and amounts set forth in the all Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall Payments be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellersmore than $16,000,000. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties All parties hereto acknowledge and agree that, for Tax purposes, that the payment net effect of the operation of the preceding sentence is to reduce the total amount of any Earnout Amount (if any) will Payment that would otherwise be treated as an adjustment to earned hereunder by the Final Purchase Price subject to any portion amount of such amount being treated as interest under Section 483 payment that would have been the Pro Rata Portion of the Codeany party that breaches or violates his or her Non-Competition Agreement.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 2 contracts
Samples: Merger Agreement (M/a-Com Technology Solutions Holdings, Inc.), Merger Agreement (M/a-Com Technology Solutions Holdings, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after After the end Closing, subject to the terms and conditions set forth herein, the Company Equity Securityholders shall have the contingent right to receive additional shares of GigCapital5 Common Stock based on the Earnout Periodperformance of QTI Holdings if the requirements as set forth in this Section 3.07 are achieved. At the Closing and immediately prior to the Effective Time, Purchaser GigCapital5 shall prepare in good faith and deliver to Sellers’ Representative a written statement showing the Exchange Fund the Merger Consideration Earnout Share Pool. The Merger Consideration Earnout Shares shall be allocated among the Company Equity Securityholders in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”)accordance with this Section 3.07.
(b) In Promptly upon the event occurrence of any objection by Sellers’ Representative with respect to the determination triggering event described in Section 3.07(c) below, or as soon as practicable after QTI Holdings becomes aware of the Net Sales occurrence of such triggering event or the Earnout Amount payablereceives written notice of such triggering event, Sellers’ Representative shallQTI Holdings shall prepare and deliver, within 60 days after its receipt of the Earnout Statementor cause to be prepared and delivered, give a written notice to Purchaser of such objection showing the Exchange Agent (a “Release Notice”), which Release Notice shall set forth in reasonable detail the calculation thereof triggering event giving rise to the requested release and the specific release instructions with respect thereto (an “including the number of Merger Consideration Earnout Dispute Notice”Shares to be released from the Exchange Fund and the identity of the person to whom they should be released). Purchaser The Merger Consideration Earnout Shares that are to be released from the Exchange Fund and Sellers’ Representative distributed to the Company Equity Securityholders shall thereafter attempt be distributed to amicably resolve such Company Equity Securityholders in accordance with their respective Pro Rata Shares. For the avoidance of doubt, any disputed items set forth Merger Consideration Earnout Shares to be released and distributed pursuant to this Section 3.07 shall be distributed and released as shares of GigCapital5 Common Stock.
(c) The Merger Consideration Earnout Shares shall be released and delivered as follows:
(i) promptly following the date on which QTI Holdings files its annual report on Form 10-K with respect to its fiscal year ended December 31, 2023 (the “2023 Form 10-K”) with the SEC, an aggregate of 2,500,000 Merger Consideration Earnout Shares (the “2023 Earnout Shares”) will be released from the Exchange Fund and distributed to the Company Equity Securityholders in accordance with their respective Pro Rata Shares if, and only if, on or prior to such filing date, the Company has obtained a formal FDA clearance for breast cancer screening with respect to its breast scanning systems, which remains in full force and effect as of such filing date; provided, that the 2023 Earnout Dispute Notice. If Sellers’ Representative does not timely deliver Shares shall increase by 500,000 (to an aggregate of 3,000,000) Merger Consideration Earnout Dispute NoticeShares if, then in addition, during calendar year 2023, the calculation Company either (A) makes at least eight bona fide placements of the Net Sales and the Earnout Amount its breast scanning systems globally or (B) achieves annual revenue of at least $4,400,000 as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee financial statements included in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and 2023 Form 10-K;
(ii) pursuant promptly following the date on which QTI Holdings files its annual report on Form 10-K with respect to its fiscal year ended December 31, 2024 (the “2024 Form 10-K”) with the SEC, an aggregate of 2,500,000 Merger Consideration Earnout Shares (the “2024 Earnout Shares”) will be released from the Exchange Fund and distributed to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified Company Equity Securityholders in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties heretoaccordance with their respective Pro Rata Shares if, and may be enforced in any court only if, during calendar year 2024, (A) the Company achieves annual revenue of competent jurisdiction. The parties agree that the procedure at least $17,100,000 as set forth in this Section 2.06 the financial statements included in the 2024 Form 10-K, and (B) the Company makes at least four placements of its breast scanning systems in the United States; provided, that the 2024 Earnout Shares shall increase by 500,000 (to an aggregate of 3,000,000) Merger Consideration Earnout Shares if at least one of the following milestones is achieved: (x) on or prior to such filing date, the Company has obtained a formal FDA clearance for resolving disputes a new indication for use of its breast scanning systems (other than any indication obtained prior to calendar year 2024), which remains in full force and effect as of such filing date; or (y) the Company achieves clinical-quality patient images with the Company’s open angle scanner during the 2024 calendar year, as reported in the 2024 Form 10 K;
(iii) promptly following the date on which QTI Holdings files its annual report on Form 10-K with respect to its fiscal year ended December 31, 2025 (the “2025 Form 10-K”), an aggregate of 2,500,000 Merger Consideration Earnout Statement Shares (the “2025 Earnout Shares”) will be released from the Exchange Fund and distributed to the Company Equity Securityholders in accordance with their respective Pro Rata Shares if, and only if, during calendar year 2025, (A) the Company achieves annual revenue of at least $67,000,000 as set forth in the financial statements included in the 2025 Form 10-K, or (B) the VWAP of shares of GigCapital5 Common Stock equals or exceeds $15 per share for twenty (20) of any thirty (30) consecutive trading days on the Exchanges; provided, that the 2025 Earnout Shares shall increase by 500,000 (to an aggregate of 3,000,000) Merger Consideration Earnout Shares if at least one of the following milestones is achieved on or prior to such filing date: (x) the Company has obtained a formal FDA clearance of its open angle scanner, which remains in full force and effect as of such filing date; or (y) the Company receives net positive results in bona fide clinical trials, conducted in accordance with generally accepted industry standards, for its open angle scanner, as reported in the 2025 Form 10-K; and
(iv) if the conditions set forth in Section 3.07(c)(i), Section 3.07(c)(ii) or Section 3.07(c)(iii) for any Merger Consideration Earnout Shares to be released from the Exchange Fund and distributed to the Company Equity Securityholders have not been, and become incapable of being, satisfied, then promptly thereafter such Merger Consideration Earnout Shares shall be automatically released to QTI Holdings for cancellation and the sole and exclusive method for resolving Company Equity Securityholders shall not have any right to receive such disputesMerger Consideration Earnout Shares or any benefit therefrom.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts The GigCapital5 Common Stock price targets set forth in Section 3.07(c) and the Earnout Statementnumber of shares of GigCapital5 Common Stock to be issued and released pursuant to Section 3.07(c) shall be equitably adjusted for any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event affecting the GigCapital5 Common Stock after the date of this Agreement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to As used in this Section 2.06(c), as applicable (such date3.07, the term “Earnout Payment Deadline”)Pro Rata Share” means, Purchaser shall pay with respect to Sellers’ Representative an amount in cash equal to each Company Equity Securityholder, a ratio calculated by dividing (i) the Earnout Amount; provided, thatsum of, without limiting any other remedies available hereunder to duplication, (A) the Sellers to compel payment total number of the Earnout Amount, if the Earnout Amount or any portion thereof is not received shares of Company Common Stock held by Sellers on or such Company Equity Securityholder as of immediately prior to the Earnout Payment DeadlineEffective Time, Purchaser shall pay plus (B) the total number of In-the-Money Company Warrant Shares subject to the Sellers any unpaid portion of the Earnout Amount plus interest on In-the-Money Company Warrants held by such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate Company Equity Securityholder as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
Effective Time (f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion extent such In-the-Money Company Warrants are not exercised or deemed exercised as of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject immediately prior to the foregoingEffective Time), Purchaser by (ii) the sum of, without duplication, (A) the total number of shares of Company Common Stock held by all Company Equity Securityholders as of immediately prior to the Effective Time, plus (B) the total number of In-the-Money Warrant Shares (to the extent the applicable In-the-Money Company Warrants are not exercised or one or more deemed exercised as of its Affiliates will operate immediately prior to the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountEffective Time).
Appears in 2 contracts
Samples: Business Combination Agreement (Qt Imaging Holdings, Inc.), Business Combination Agreement (GigCapital5, Inc.)
Earnout. (a) The Persons set forth on Section 2.10(a) of the Company Disclosure Schedules (collectively, with their successors in interest the “Earnout Amount shall be calculatedGroup”) are entitled to receive a portion, determined and paid in as set forth opposite their name on Section 2.10(a) of the following mannerCompany Disclosure Schedules (the “Pro Rata Portion”), of up to 25,000,000 Company Shares (collectively, the “Earnout Shares”) as follows:
(ai) Within 60 days after the end Each member of the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation Group will receive their Pro Rata Portion of Net Sales for the 1,450,000 Earnout Period and the Earnout Amount payableShares and, if any applicable, Earnings thereon (the “Earnout Statement2024 Earnout”).
) as follows: (bA) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth each Pre-Closing Company Shareholder in the Earnout Statement shall Group, the Escrowed Earnout Shares and Earnings thereon comprising the 2024 Earnout will be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of released from the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(cEscrow Account within ten (10) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable Days following (such date, the “2024 Earnout Payment DeadlineRelease Date”)) the filing with the SEC by the Company of an Annual Report on Form 20-F for the fiscal year ended March 31, Purchaser shall pay 2024 (the “2024 20-F”) which reflects Vehicle Sales Revenue of the Company for the fiscal year 2024 of $39,000,000 or more, and (B) with respect to Sellers’ Representative an amount each Other SVM India Stockholder in cash equal to the Earnout Amount; providedGroup, that, without limiting any other remedies available hereunder the Company will issue or cause to the Sellers be issued to compel payment each such Stockholder their Pro Rata Portion of the Earnout AmountShares comprising the 2024 Earnout on such 2024 Earnout Release Date;
(ii) Each member of the Earnout Group will receive their Pro Rata Portion of 4,125,000 Earnout Shares and, if applicable, Earnings thereon (the “2025 Earnout”) as follows: (A) with respect to each Pre-Closing Company Shareholder in the Earnout Group, the Escrowed Earnout Shares and Earnings thereon comprising the 2025 Earnout will be released from the Earnout Escrow Account within ten (10) Business Days (such date, the “2025 Earnout Release Date”) following the filing with the SEC by the Company of an Annual Report on Form 20-F for the fiscal year ended March 31, 2025 (the “2025 20-F”) which reflects Vehicle Sales Revenue of the Company for the fiscal year 2025 of $117,000,000 or more, and (B) with respect to each Other SVM India Stockholder in the Earnout Group, the Company will issue or cause to be issued to each such Stockholder their Pro Rata Portion of the Earnout Shares comprising the 2025 Earnout on such 2025 Earnout Release Date;
(iii) Each member of the Earnout Group will receive their Pro Rata Portion of 19,425,000 Earnout Shares and, if applicable, Earnings thereon (the “2026 Earnout”) as follows: (A) with respect to each Pre-Closing Company Shareholder in the Earnout Group, the Escrowed Earnout Shares and Earnings thereon comprising the 2026 Earnout will be released from the Earnout Escrow Account within ten (10) Business Days (such date, the “2026 Earnout Release Date”) following the filing with the SEC by the Company of an Annual Report on Form 20-F for the fiscal year ended March 31, 2026 (the “2026 20-F”) which reflects Vehicle Sales Revenue of the Company for the fiscal year 2026 of $553,000,000 or more, and (B) with respect to each Other SVM India Stockholder in the Earnout Group, the Company will issue or cause to be issued to each such Stockholder their Pro Rata Portion of the Earnout Shares comprising the 2026 Earnout on such 2026 Earnout Release Date;
(iv) If either or both of the 2024 Earnout and the 2025 Earnout are not earned as set forth in Section 2.10(a)(i) and Section 2.10(a)(ii), respectively, each member of the Earnout Group will receive their Pro Rata Portion of the amount of the 2024 Earnout and the 2025 Earnout not so earned as follows: (A) the Escrowed Earnout Shares and Earnings thereon comprising either or both of the 2024 Earnout and the 2025 Earnout, as applicable, and in each case not earned as set forth in Section 2.10(a)(i) or Section 2.10(a)(ii), as applicable, will be released from the Earnout Escrow Account on the 2026 Earnout Release Date to the Pre-Closing Company Shareholders, and (B) the Company will issue or cause to be issued to the Other SVM India Stockholders on the 2026 Earnout Release Date their Earnout Shares comprising either or both of the 2024 Earnout and the 2025 Earnout, as applicable, and in each case not earned as set forth in Section 2.10(a)(i) or Section 2.10(a)(ii), as applicable, if the aggregate total Vehicle Sales Revenue for the fiscal years ended March 31, 2024, 2025 and 2026 is $709,000,000 or more; and
(v) In the event that any of the Vehicle Sales Revenue triggers set forth in Sections 2.10(a)(i) – (iv) above are not met on the applicable Earnout Amount Release Date, but Vehicle Sales Revenue is at least 50% of the stated trigger on or before the applicable period, then the Company Board shall have discretion to waive the applicable Vehicle Sales Revenue trigger and, in such case, (A) release all or any portion thereof is not received by Sellers on or prior of the applicable Escrowed Earnout Shares and Earnings thereon available to be released as of such Earnout Release Date to the Earnout Payment DeadlinePre-Closing Company Shareholders, Purchaser shall pay and (B) issue or cause to the Sellers be issued all or any unpaid portion of the applicable Earnout Amount plus interest on such unpaid portion Shares to Other SVM India Stockholders.
(b) The Company Shares that may be issued pursuant to this Section 2.10 shall be fully paid and free and clear of all Liens other than applicable securities Laws restrictions.
(c) Immediately before the Effective Time and in conjunction with the Stock Split, a total number of 23,503,979 of the Earnout Shares will be issued by the Company and placed in an escrow account with Continental (the “Earnout InterestEscrow Account” and such Earnout Shares placed in the Earnout Escrow Account, the “Escrowed Earnout Shares”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on benefit of the Earnout Payment Deadline Pre-Closing Company Shareholders pursuant to an Escrow Agreement between the Company and ending on the date the remaining portion Continental and Xxxxxxxx Xxxxxxxx as representative of the Earnout Amount Group (the “Earnout Escrow Agreement”); provided that Xxxxxxxx Xxxxxxxx shall only be a party to this Earnout Escrow Agreement in his capacity as a representative of the Earnout Group if duly appointed by the Earnout Group. Each Pre-Closing Company Shareholder in the Earnout Group shall be shown as the registered owner of its Pro Rata Portion of the Escrowed Earnout Shares on the books and records of the Company, and shall be entitled to exercise voting rights with respect to such Escrowed Earnout Shares, but any Earnings on the Escrowed Earnout Shares while in the Earnout Escrow Account shall be deposited into and retained in the Earnout Escrow Account until disbursed therefrom in accordance with the terms of this Section 2.10 and the Earnout Interest are received by Escrow Agreement. Any Escrowed Earnout Shares and Earnings thereon remaining in the Sellers. Such cash payment Earnout Escrow Account following the 2026 Earnout Release Date will be automatically returned to the Company and such Escrowed Earnout Shares shall be made by wire transfer of immediately available funds to an account or accounts specified surrendered and canceled in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeEarnout Escrow Agreement.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(gd) After the Closing, the Other SVM India Stockholders shall have the contingent right to receive their Pro Rata Portions of up to 1,496,021 Earnout Shares. Such Earnout Shares shall be authorized and during unissued by the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail Company to take an action, be issued to the Other SVM India Stockholders in accordance with the purpose or intention terms of impeding this Section 2.10. Following the achievement Closing and until after the 2026 Earnout Release Date, the Company shall keep available for issuance a sufficient number of shares of authorized and unissued Company Shares to permit the Net Sales during the Company to satisfy in full its issuance obligations of Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject Shares to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing Other SVM India Stockholders as set forth in this Section 2.06 requires Purchaser 2.10. For the avoidance of doubt, the Other SVM India Stockholders shall not be entitled to (i) exercise voting rights with respect to their Pro Rata Portions of the Earnout Shares unless and until such Earnout Shares are issued to such Other SVM India Stockholders pursuant to Section 2.10(a); or (ii) receive dividends or distributions or other income (if any) with respect to their Pro Rata Portions of Earnout Shares for any period during which such Earnout Shares remain unissued. In no event will any contingent right to receive Earnout Shares pursuant to this Section 2.10(d) be represented by any negotiable certificates of its Affiliates to any kind, and in no event will any Other SVM India Stockholders take any actions or refrain steps that would render such rights readily marketable. Notwithstanding the foregoing provisions of this Section 2.10, if so required by the applicable Law, the Company shall seek approval from taking any actions or expend any efforts Reserve Bank of India (“RBI”) prior to achieve the Net Sales required for the Sellers to receive issuance of the Earnout AmountShares to the Other SVM India Stockholders, and in the event such approval is denied or is not expected to be received within reasonable timeframe, the Company may, as directed by the applicable Other SVM India Stockholder, sell in the market the number of Earnout Shares that would have been received by such Stockholder on the applicable Earnout Release Date, and distribute the cash proceeds from the sale to such Stockholder.
(e) The Earnout Shares shall be adjusted appropriately to reflect the effect of any share split, reverse share split, share dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of Company Shares outstanding after the date hereof and prior to the time when such Earnout Shares are delivered to the Earnout Group in accordance with this Section 2.10, so as to provide the Earnout Group with the same number of shares as contemplated by this Agreement prior to such event and as so adjusted shall, from and after the date of such event, be the Earnout Shares.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after the end of the Earnout PeriodSeller shall be entitled to additional consideration from Purchaser (any such additional consideration due with respect to any Applicable EBIT Period (as defined below), Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the an “Earnout StatementAmount”).
(b) In the event of any objection by Sellers’ Representative determined as set forth on Schedule II. Purchaser’s obligation with respect to the determination payment of any Earnout Amount may be satisfied by the issuance to Seller of unregistered shares of Parent Common Stock to the extent set forth on Schedule II. Shares of Parent Common Stock issued in [***] Confidential treatment requested. Omitted portions have been filed separately with the Securities and Exchange Commission. satisfaction of any portion of an Earnout Amount are referred to as “Earnout Shares” and, together with the Initial Shares, as the “Shares”. [***] In no event will any Shares be issued hereunder if the issuance of such Shares would cause the total number of Shares issued pursuant to this Agreement to exceed 19.9% of the Net Sales or number of shares of Parent Common Stock outstanding on the Closing Date. Any Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt that would otherwise be satisfied by the issuance of the Earnout Statement, give written notice to Purchaser Shares in excess of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser amount, and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver other portion of an Earnout Dispute NoticeAmount that is not satisfied through the issuance of Earnout Shares, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall will be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount paid in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative delivered to Purchaser at least two Business Days prior by Seller. Seller acknowledges and agrees that neither Purchaser nor any other Person makes any guarantee or representation to Seller that any Earnout Amount will be realized. Any Earnout Amount that is paid in cash or Earnout Shares to Seller or its designees shall be treated as a component of the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreePurchase Price.
(fb) The Parties acknowledge Seller shall at its expense deliver to Purchaser within 65 days after the end of each Applicable EBIT Period its calculation of EBIT for such period (an “Initial EBIT Amount”) and agree thatthe Earnout Amount, if any, payable under Section 2.6(a) in respect thereof. Seller shall provide Purchaser and Purchaser’s accounting firm with reasonable access to all books and records and working papers to the extent reasonably necessary to enable Purchaser and such accounting firm to verify such calculations after the delivery thereof. Such calculations shall be binding on the parties unless Purchaser, within 30 days after the delivery of the calculations by Seller to Purchaser, notifies Seller in writing that it objects to any item or computation in connection with the calculations and specify in reasonable detail the basis for Tax purposessuch objection. (For the avoidance of doubt, Purchaser shall be required to notify Seller of any objection with respect to the payment calculation of EBIT or the Earnout Amount (for calendar year 2005 within such period even if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers Seller’s right to receive the Earnout Amount in accordance with Schedule II cannot be determined until financial results for calendar year 2006 are available.) If Seller and Purchaser are unable to agree upon the calculations within 20 days after any notice of objection has been given by Purchaser to Seller, then at the election of either Purchaser or otherwise fail to act in good faith in respect thereto. Subject Seller, the dispute shall be submitted to the foregoingNeutral Accountant for a final determination in accordance with the procedures set forth in Section 2.5(b), which determination shall be final and binding upon the parties, absent fraud or manifest error. In the event either Purchaser or Seller believes the determination of the Neutral Accountant reflects a manifest error, Purchaser or one or more Seller, as the case may be, shall be entitled to specify the error to the Neutral Accountant in writing, in reasonable detail (with a copy to the other) within five business days of its Affiliates will operate the Business date of delivery to the parties of the Neutral Accountant’s determination, and any correction made by the Neutral Accountant within ten business days after such date of delivery shall supersede the Neutral Accountant’s initial determination. Seller and Purchaser shall each bear one-half of the fees, costs and expenses of the Neutral Accountant in their sole discretion the event such an election is made. For purposes of this Agreement, with respect to any Applicable EBIT Period, (i) [***] Confidential treatment requested. Omitted portions have been filed separately with the Securities and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountExchange Commission.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after On the end Closing Date, Parent shall deposit all of the Escrowed Earnout PeriodShares with the Escrow Agent, Purchaser shall prepare to be held in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales an escrow account for the purpose of distributing such shares to the Company Stockholders upon the achievement of certain targets, as described in this Section 2.8, provided that 7.5% of such Escrowed Earnout Period Shares shall be part of the Escrowed Indemnity Shares and placed in a separate escrow account in satisfaction of the indemnity set forth in Article VII hereof in accordance with Section 2.10 hereof. The Escrowed Earnout Amount payableShares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) of the Company Disclosure Statement and in accordance with the terms and conditions of this Section 2.8 and an agreement to be entered into at the Closing between Parent, if any the Escrow Representative, and Continental Stock Transfer & Trust Company (the “Earnout StatementEscrow Agent”) (or another escrow agent mutually agreed to by Parent and the Company), in customary form and substance as reasonably agreed to by Parent and the Company (the “Escrow Agreement”).
(b) In Subject to Section 2.8(e) hereof, if between the event first and the third anniversary of the Closing Date, the Closing Price of Parent Common Stock equals or exceeds $20.00 per share (the “First Target”) for 20 trading days within any objection 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release one Tranche of Escrowed Earnout Shares (which amount may be reduced by Sellers’ Representative with respect up to 7.5% of such shares (the “First Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocated to the determination Company Stockholders in accordance with Section 2.6(c) hereof and Section 2.6(c) of the Net Sales or Company Disclosure Statement (the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute NoticeFirst Target Shares”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) IfSubject to Section 2.8(e) hereof, for any reason, Purchaser if between the second and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days the fourth anniversary of the date Closing Date, the Closing Price of delivery of Parent Common Stock equals or exceeds $24.50 per share (the Earnout Dispute Notice“Second Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such unresolved items target, Parent and the Escrow Representative shall be resolved by instruct the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted Escrow Agent to release (i) one Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “Second Target Indemnity Shares”) pursuant to any resolutions Article VII hereof and the Escrow Agreement), which shares shall be allocated to objections agreed upon by Purchaser the Company Stockholders in accordance with Section 2.6(c) hereof and Sellers’ Representative Section 2.6(c) of the Company Disclosure Statement (the “Second Target Shares”) and (ii) the First Target Shares, if such shares were not released pursuant to Section 2.8(b) . If the Referee’s resolution of First Target has not been achieved for such 20 trading days during the unresolved objections. The Referee shall review only those matters specified two-year period referenced in Section 2.8(b) and the unresolved objections and shall make no changes to Second Target has not been achieved for such 20 trading days during the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth two-year period referenced in this Section 2.06 for resolving disputes with respect to 2.8(c), the Earnout Statement First Target Shares shall no longer be outstanding and shall be the sole and exclusive method for resolving any such disputescancelled.
(d) In connection with Subject to Section 2.8(e) hereof, if between the preparation third and the fifth anniversary of the Closing Date, the Closing Price of Parent Common Stock equals or exceeds $30.50 per share (the “Third Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release (i) one Tranche of Escrowed Earnout StatementShares (which amount may be reduced by up to 7.5% of such shares (the “Third Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) hereof and until the final resolution Section 2.6(c) of the Earnout StatementCompany Disclosure Statement (the “Third Target Shares”) and (ii) the Second Target Shares, Purchaser shallif such shares were not released pursuant to Section 2.8(c) . If the Second Target has not been achieved for such 20 trading days during the two-year period referenced in Section 2.8(c) and the Third Target has not been achieved for such 20 trading days during the two-year period referenced in this Section 2.8(d), the Second Target Shares shall no longer be outstanding and shall cause be cancelled. If the Companies Third Target has not been achieved for such 20 trading days during the two-year period referenced in this Section 2.8(d), the Third Target Shares shall no longer be outstanding and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably shall be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementcancelled.
(e) On In the fifth Business Day after Purchaser event of a Change of Control or Reorganization Event, any Escrowed Earnout Shares remaining in the escrow account and Sellers’ Representative agree not theretofore cancelled shall be released or cancelled as follows: (i) to the Earnout Statement extent that the Change of Control or Purchaser Reorganization Event Consideration exceeds the First Target, any First Target Shares shall be released, (ii) to the extent that the Change of Control or Reorganization Event Consideration exceeds the Second Target, any Second Target Shares shall be released, and Sellers’ Representative receive from (iii) to the Referee its written report pursuant to Section 2.06(c)extent that the Change of Control or Reorganization Event Consideration exceeds the Third Target, as applicable (such dateany Third Target Shares shall be released. To the extent that the Change of Control or Reorganization Event Consideration does not exceed any given Target, the “Earnout Payment Deadline”), Purchaser Target Shares with respect to such Tranche shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as no longer be outstanding and shall be the maximum rate allowable under applicable Law)cancelled, for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion effective upon completion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer such Change of immediately available funds to an account Control or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeReorganization Event.
(f) The Parties acknowledge target closing price triggers listed in Sections 2.8(b), (c) and agree that(d) hereof (such dollar amounts, the “Closing Price Triggers”) and the Escrowed Earnout Shares to be distributed upon achievement of said targets shall be adjusted from time to time as follows:
(i) In the event the outstanding shares of Parent Common Stock shall be subdivided or reclassified into a greater number of shares of Parent Common Stock, the Closing Price Triggers in effect at the close of business on the day upon which such subdivision or reclassification becomes effective shall be equitably and proportionately reduced, and conversely, in case outstanding shares of Parent Common Stock shall each be combined or reclassified into a smaller number of shares of Parent Common Stock, the Closing Price Triggers in effect at the close of business on the day upon which such combination or reclassification becomes effective shall be equitably and proportionately increased, such reduction or increase, as the case may be, to become effective immediately prior to the opening of business on the day following the day upon which such subdivision or combination becomes effective.
(ii) Pursuant to the Escrow Agreement, in connection with any such subdivision or reclassification into a greater number of shares of Parent Common Stock, the Escrowed Earnout Shares distributable upon the achievement of the applicable milestones shall be equitably and proportionately increased and, conversely, in connection with any such combination or reclassification into a smaller number of shares of Parent Common Stock, the Escrowed Earnout Shares distributable upon the achievement of the applicable milestones shall be equitably and proportionately reduced. For example, for Tax purposespurposes of clarity, (x) in the case of a 2-for-1 stock split of Parent Common Stock, the payment Escrowed Earnout Shares distributable upon the achievement of the first milestone shall be increased from 9,666,667 to 19,333,334 and (y) in the case of a 1-for-2 reverse stock split of Parent Common Stock, the Escrowed Earnout Amount Shares distributable upon the achievement of the first milestone shall be reduced from 9,666,667 to 4,833,334 (if any) will be treated as an adjustment assuming for the purposes of this example that there are no adjustments to the Final Purchase Price subject to any portion number of such amount being treated as interest under Section 483 shares of the CodeParent Common Stock in each Tranche).
(g) After Without limiting the Closingspecificity of any of the foregoing, it is the intent of the parties to provide for fair and during equitable adjustments to the Closing Price Triggers and the Escrowed Earnout PeriodShares to preserve the economic benefits intended to be provided to the Company Stockholders under the terms of this Agreement in the event there is any change in or conversion of the Parent Common Stock and, Purchaser accordingly, the Parent Board of Directors shall notmake appropriate equitable adjustments in connection therewith, and as determined in the good faith judgment of the Parent Board of Directors.
(h) Neither Parent, the Company Stockholders nor any Affiliate thereof shall cause its Affiliates not to, take any action, nor fail to take an actiondirectly or indirectly, with the purpose intent or intention effect of impeding influencing or manipulating the achievement market prices of Parent Common Stock during any measurement period described in Sections 2.8(b), (c) and (d) hereof. Furthermore, for the purposes of determining whether a Closing Price Trigger has been achieved for 20 trading days within any 30-trading-day period pursuant to Sections 2.8(b), (c) and (d) hereof, any days during which any such persons (A) have outstanding a public announcement or statement relating to the purchase or sale of equity securities of Parent (other than ordinary-course, generic statements as to the possibility of such purchases from time to time and which do not specify either the amount of any such potential purchases nor the price or prices at which such purchases may be made), whether in the public market or otherwise, or (B) have made, in the aggregate, to the best knowledge of Parent, purchases of Parent Common Stock exceeding 1% of the Net Sales average daily trading volume reported for the security during the Earnout Period required for four calendar weeks preceding the Sellers to receive week in which such purchases were made, shall not be counted as days on which such Closing Price Trigger has been achieved. Such excluded days shall extend the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more 30-trading-day measurement period by an equal number of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountdays.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after If EBITDA for Target operating as a wholly-owned subsidiary of Buyer for the end fiscal year ending December 31, 2010 is equal to or greater than Thirty-Five Million Dollars ($35,000,000), Buyer shall issue to Sellers in accordance with the percentages set forth in Exhibit A attached hereto a number of shares of Buyer Common Stock (the “Earnout Shares”) equal to Ten Million Dollars ($10,000,000) divided by the Earnout Stock Price. In no event, however, shall the aggregate number of Earnout Shares exceed 19.9% of the Buyer’s outstanding common shares. In such event the aforesaid 19.9% would limit the amount of Earnout Periodotherwise payable to Sellers, Purchaser such dollar amount of Earnout above the 19.9% which Sellers would otherwise receive in Earnout Shares shall be payable in cash to Sellers. No fractional shares of Buyer Common Stock shall be issued, and in lieu thereof any fractional Earnout Shares shall be rounded up to the nearest whole Earnout Share.
(b) Within five (5) days following receipt by Buyer of its audited financial statements for the fiscal year ending December 31, 2010, but in no event later than April 15, 2011, Buyer shall prepare in good faith and deliver to Sellers’ Representative Representative, a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any report (the “Earnout StatementEBITDA Report”).
(b) In showing the event computation of any objection by Sellers’ Representative with respect to EBITDA for the determination of the Net Sales or the Earnout Amount payablefiscal year ending December 31, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”)2010. Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement The EBITDA Report shall be deemed to have been accepted and shall be final and binding on all parties heretobased upon the December 31, 2010 audited financial statements of Target.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of Buyer shall issue the Earnout Dispute NoticeShares to Sellers within five (5) Business Days after final determination of EBITDA for the fiscal year ending December 31, then such unresolved items 2010. The final determination of EBITDA shall be resolved by the Referee accomplished in the manner provided in Section 2.03(caccordance with subsections (d), (e) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (iif) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesbelow.
(d) In connection with During the preparation thirty (30) day period following delivery of the Earnout StatementEBITDA Report, Buyer shall permit Sellers and until Sellers’ accountants, upon reasonable notice at a mutually agreed upon time during normal business hours, to have full access to the books, records, accountants and personnel of Buyer and to make such inspections and copies of such books and records as they may reasonably request, from time to time to verify the amounts included in the EBITDA Report. Any such EBITDA Report shall become final resolution and binding upon the Parties on the thirtieth (30th) day following delivery thereof, unless Sellers’ Representative shall have given written notice of disagreement (an “Earn-Out Dispute Notice”), to Buyer prior to such date. Any Earn-Out Dispute Notice shall specify in reasonable detail the Earnout Statementnature of any disagreement so asserted. During the twenty (20) day period following the delivery of an Earn-Out Dispute Notice, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives Buyer shall seek in good faith to resolve any differences which they may have with reasonable access, during normal business hours upon reasonable advance notice, respect to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful matters specified in the determination of the calculations and amounts set forth in the Earnout Statementsuch Earn-Out Dispute Notice.
(e) On If, at the fifth Business Day after Purchaser and end of such twenty (20) day period, Sellers’ Representative agree to the Earnout Statement or Purchaser and Buyer have not so resolved such differences, Sellers’ Representative receive from and Buyer shall submit the Referee its written report pursuant dispute for resolution to Section 2.06(c)PKF Texas in the Houston, as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion Texas office (the “Earnout InterestIndependent Accounting Firm”) at a rate equal to 10% per annum (or for review and resolution of any and all matters which remain in dispute and which were properly included in such lesser rate as shall be the maximum rate allowable under applicable Law)Earn-Out Dispute Notice. Each of Buyer, for the period beginning on the Earnout Payment Deadline Target and ending on the date the remaining portion of the Earnout Amount Sellers hereby represents and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior warrants to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreethat it has no relationship with the Independent Accounting Firm.
(f) The Parties acknowledge Independent Accounting Firm shall be engaged by Sellers’ Representative and agree thatBuyer within ten (10) days following the expiration of such twenty (20) day period. Promptly, for Tax purposesbut not later than twenty (20) days after acceptance of this appointment, the payment Independent Accounting Firm shall determine those items in dispute and will render its report as to its resolution of such terms and resulting calculations of EBITDA for the Earnout Amount fiscal year ending December 31, 2010. In determining each disputed item, the Independent Accounting Firm may not assign a value to such item greater than the greatest value for such item claimed by either party or less than the lowest value for such term claimed by either party. Sellers’ Representative and Buyer shall cooperate with the Independent Accounting Firm in making its determination and such determination shall be conclusive and binding upon the parties. The losing party (if anyas defined below) will be treated as an adjustment in any such arbitration shall pay all costs and fees (including reasonable attorneys’ fees and expenses) related to such determination by the Independent Accounting Firm, including without limitation, the costs relating to any negotiations with the Independent Accounting Firm with respect to the Final Purchase Price subject to any portion terms and conditions of such amount being treated Independent Accounting Firm’s engagement. For purposes of this Section 2.3, as interest under Section 483 between Sellers’ Representative and Buyer, the “losing party” in any such determination shall mean the party whose EBITDA for the fiscal year ending December 31, 2010 (as set forth in the EBITDA Report, in the case of Buyer, or in an Earn Out Dispute Notice, in the Codecase of Sellers’ Representative), is farthest from the calculation of EBITDA for the fiscal year ending December 31, 2010, as determined by the Independent Accounting Firm.
(g) After the Closing, and during Buyer shall have no right to offset the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take Shares against any action, nor fail sum that may be due or is alleged to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the be due by Sellers to receive Buyer or the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountAcquired Companies.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Primoris Services CORP)
Earnout. The Earnout Amount parties acknowledge that the Purchase Price, as same may be modified by Section 3 herein, has been calculated generally by dividing the expected annual base rent from the Property (i.e. $2,674,471) by .079406 (the “Base Rent Divider”). In the event the Property is less than one hundred percent (100%) leased to tenants satisfying the Occupancy Conditions described upon Exhibit L attached hereto and made a part hereof as of the Closing Date, only a portion of the full Purchase Price shall be calculatedfunded at Closing and the balance of the Purchase Price (the “Unfunded Purchase Price”) shall be held by Purchaser pursuant to the terms of this Section 20. Subject to the terms of Exhibit L attached hereto, determined the Unfunded Purchase Price shall be calculated by dividing the aggregate pro forma annual base rent (per the attached Exhibit B) for the space within the Property for those tenants that do not then satisfy the Occupancy Conditions (the “Vacant Space”), by the Base Rent Divider. The balance of the Purchase Price shall be paid to Seller per the terms of this Agreement on the Closing Date (subject to Seller’s funding of the deposits described below). As of the date hereof, the Vacant Space totals 5,900 square feet. The parties agree to enter into a mutually agreeable “Earnout Agreement” (attached as Exhibit K) at Closing which sets forth the terms and conditions for the Earnout, some of which are as follows: The term of the earnout period shall commence on the Closing Date and shall continue until the first to occur of (i) a period of 36 months from the Closing Date, or (ii) the date the Vacant Space has been fully leased and is occupied by tenants then satisfying the Occupancy Conditions (the “Earnout Period”). During the term of the Earnout Period (and prior to the satisfaction of the Occupancy Conditions of any portion of the Vacant Space by a new tenant), Seller shall be responsible for the monthly pro rata share of taxes, insurance and common area expenses (collectively, the “Operating Expenses”) allocable to the Vacant Space. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to the estimated aggregate Operating Expenses for the Vacant Space payable during the Earnout Period (the “Operating Expense Escrow”). Purchaser shall draw down on the Operating Expense Escrow during the Earnout Period to pay any Operating Expenses allocable to the Vacant Space as same become due. Once any portion of the Vacant Space is leased to, and occupied by, a tenant then satisfying the Occupancy Conditions, Seller’s obligation to pay Purchaser the Operating Expenses allocable to that portion of the Vacant Space shall terminate and the balance of the Operating Expense Escrow allocable to said space shall be promptly paid in to Seller. Upon the following manner:
(a) Within 60 days after the end expiration of the Earnout Period, Purchaser the balance of the Operating Expense Escrow, if any, shall prepare in good faith and deliver be paid to Sellers’ Representative a written statement showing in reasonable detail Seller. Seller shall continue to serve as the calculation of Net Sales exclusive leasing agent for the Vacant Space during the Earnout Period and shall be responsible for all costs and expenses associated with leasing the Vacant Space, including without limitation, any brokerage commissions and tenant improvement allowances associated therewith. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to (i) $15.00 per square foot of the Vacant Space for anticipated tenant improvement allowances applicable to the Vacant Space, plus (ii) $3.00 per square foot of the Vacant Space for anticipated leasing commissions applicable to the Vacant Space (collectively, the “Leasing Escrow”). As any portion of the Vacant Space is leased to tenants during the Earnout Amount payablePeriod, Seller may draw down on the Leasing Escrow to pay any tenant improvement allowance and/or leasing commissions applicable to said lease, provided in no event shall the aggregate amount funded out of the Leasing Escrow for tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased, nor shall the aggregate amount funded from the Leasing Escrow for leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased. Upon the expiration of the Earnout Period, a portion of the Leasing Escrow in an amount equal to the collective sum of the improvement allowances for the then Vacant Space and the leasing commissions applicable to the then Vacant Space shall be either: (y) paid to Purchaser if the Vacant Space is not fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period; or (z) paid to Seller if the Vacant Space is fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period. Any amounts remaining in the Leasing Escrow after payment to Purchaser and/or Seller (as applicable), as provided immediately above shall be paid to Seller at the expiration of the Earnout Period. Additionally, if tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased or leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased (including for space which is being reconfigured for future leasing to a tenant) (e.g., relocation of walls and doorways), Seller shall be responsible for payment of such shortfall from Seller’s funds without contribution therefor from Purchaser. All leases for the Vacant Space shall comply with the Leasing Parameters attached hereto as Exhibit F or shall otherwise be approved in writing by Purchaser. At such time as Seller provides Purchaser with a new lease for any portion of the Vacant Space (and such new occupant has satisfied the “Occupancy Conditions), Purchaser shall, upon ten (10) days advance written notice from Seller, pay to Seller a portion of the Unfunded Purchase Price in an amount equal to the annual base rent payable under said new lease (such base rent in no event to exceed 110% of the pro forma annual base rent for such space per the attached Exhibit B) divided by the Base Rent Divider. Any portion of the Unfunded Purchase Price which remains unfunded as of the expiration of the Earnout Statement”).
(b) In Period shall then be deemed to be forfeited by Seller without any further act by Purchaser and shall be forever released from all obligations to fund any portion of the event Unfunded Purchase Price thereafter. Purchaser shall act in a commercially reasonable manner and in good faith during its review and approval of any objection by Sellers’ Representative with respect to the determination proposed new tenant and/or lease of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, Vacant Space. Purchaser agrees to respond to Seller deliveries of tenant information and/or leases within 60 five (5) business days after its receipt thereof by Purchaser, and in the event Purchaser fails to respond within an additional two (2) business days after a second notice, said proposed tenant and/or lease shall be deemed approved by Purchaser. In the event that any tenant and its new lease is approved (or deemed approved) and such lease is signed by the tenant and delivered to Purchaser but Purchaser fails to execute and deliver such lease within two (2) business days after receipt of the Earnout Statement, give written second notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticedescribed above, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement lease shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, executed by Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days as of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(csixth (6th) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, day following Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation receipt of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementsame.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Inland Diversified Real Estate Trust, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 Buyer shall prepare and deliver, or cause to be prepared and delivered, to the Sellers’ Representative, no later than sixty (60) days after the end of the each Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail setting forth the Company’s AUM for the most recently completed Earnout Period along with a calculation of Net Sales the applicable Earnout Payment for the most recently completed Earnout Period and the Earnout Amount payablePeriod, if any together with supporting documents (the an “Earnout Statement”).
(b) In The calculations set forth in each Earnout Statement shall be final, conclusive and binding upon the event of any objection by parties unless the Sellers’ Representative with respect delivers to Buyer, within the determination thirty (30) days following the date on which an Earnout Statement was delivered (a “Earnout Statement Review Period”), a written notice (a “Earnout Statement Notice of Objection”) that the Sellers’ Representative, on behalf of the Net Sales or Sellers, disagrees with any calculations set forth in an Earnout Statement and setting forth the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt calculation of the Earnout Statementdisputed amount, give written notice to Purchaser of such objection showing a description in reasonable detail of the calculation thereof (an “Earnout Dispute Notice”). Purchaser grounds for each such disagreement and the Sellers’ Representative shall thereafter attempt calculation of Company’s AUM for the most recently completed Earnout Period based on such objections (each such item or amount as to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If which the Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales disagrees and the Earnout Amount as set forth in the Earnout Statement Notice of Objection, an “Earnout Item of Disagreement”). During an Earnout Statement Review Period, the Sellers’ Representative, on behalf of the Sellers, and its accountants (which may be the Company’s accountants as of the date of this Agreement) shall, at the Sellers’ Representative’s expense, on behalf of the Sellers, be permitted reasonable access to review the working papers of Buyer relating to the applicable Earnout Statement to verify the accuracy thereof; provided, that in order to review such accountant’s working papers the Sellers’ Representative and its accountants shall execute any confidentiality agreements, releases or waivers customarily required by such accountant in connection therewith. Except for those Earnout Items of Disagreement set forth in the applicable Earnout Statement Notice of Objection, Buyer and the Sellers’ Representative, on behalf of the Sellers, shall be deemed to have been accepted and shall be final and binding on agreed with all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed other items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the applicable Earnout Statement, which items and amounts shall be conclusive and binding upon all of the parties. All information disclosed to Sellers’ Representative or its representatives pursuant to this Section 2.5(b) shall be considered confidential information of Buyer, and the Sellers’ Representative shall, and shall cause its representatives to, keep all such information strictly confidential.
(c) In the event that the Sellers’ Representative delivers an Earnout Statement Notice of Objection to Buyer within the applicable Earnout Statement Review Period, Buyer and the Sellers’ Representative, on behalf of the Sellers, will negotiate in good faith to resolve all applicable Earnout Items of Disagreement. If, after a period of thirty (30) days following the date on which an Earnout Statement Notice of Objection is delivered, Buyer and the Sellers’ Representative, on behalf of the Sellers, have not resolved each such Earnout Item of Disagreement, then either Buyer or the Sellers’ Representative shall be entitled to submit all such Earnout Items of Disagreement that remain unresolved to the Independent Accountant, pursuant to the procedures set forth in Section 2.4(c).
(d) Within five (5) Business Days following the date on which the Company’s AUM and the corresponding Earnout Payments for the applicable Earnout Period are finally determined in accordance with the foregoing provisions of this Section 2.5, Buyer shall pay, or cause to be paid, to the Sellers’ Representative, on behalf of the Sellers, an amount equal to the Earnout Payment.
(e) On From and after the fifth Business Day after Purchaser Effective Time, Buyer and Sellers’ Representative agree its Affiliates (i) have complete control and sole and absolute discretion with respect to decisions concerning the Earnout Statement or Purchaser and Sellers’ Representative receive from operations of the Referee its written report pursuant to Section 2.06(c), as applicable (such dateCompany, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount Subsidiaries and their respective businesses (whether or any portion thereof is not received by Sellers on or consistent with such operations prior to the Earnout Payment DeadlineEffective Time) and (ii) are only required to take actions in connection with the Company and its Subsidiaries that Buyer and its Affiliates believe to be in the best interests of Buyer and, Purchaser as applicable, its Affiliates, and do not owe any duties, express or implied, to any Sellers or any of their respective Affiliates by virtue of this Section 2.5 (other than to make the payments, if any, due under Section 2.5). The Company’s AUM is speculative and subject to numerous risks and uncertainties, many of which may be outside the control of Buyer, and there is no assurance that Company’s AUM threshold will be achieved. Notwithstanding the foregoing, Buyer and its Affiliates shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate act in good faith, and, except as shall be the maximum rate allowable under required by applicable Law), for shall not take any action(s) or implement no strategy(ies) the period beginning on the Earnout Payment Deadline primary purpose of which is to unreasonably and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance materially interfere with written instructions provided by the Sellers’ Representative ability to Purchaser at least two Business Days prior to achieve the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeEarnout Payments.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment right to receive any portion of the Earnout Amount Payments (if anyi) is solely a contractual right and is not a security (and shall confer upon the Sellers only the rights of a general unsecured creditor); (ii) will not be treated as an adjustment represented by any form of certificate or instrument; (iii) does not give any Seller any dividend rights, voting rights, liquidation rights, preemptive rights or other similar rights and (iv) is not redeemable. Notwithstanding anything herein to the Final Purchase Price contrary, the Earnout Payments are subject to any portion Purchaser’s right of such amount being treated as interest under setoff in Section 483 8.9.”
j. Section 2.6 of the Code.
(g) After the Closing, Purchase Agreement is hereby amended and during the Earnout Period, Purchaser shall not, and shall cause restated in its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.entirety as follows:
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 Upon the terms and subject to the conditions contained herein, in the event that the EBITDA of the Company and its Subsidiaries on a consolidated basis is at least Seventeen Million Eight Hundred Thousand Dollars ($17,800,000) or greater (“Target EBITDA”) for the period from January 1, 2006 through and including December 31, 2006 (the “Earnout Period”), an additional amount of consideration in the amount of Four Million Five Hundred Thousand Dollars ($4,500,000) (the “Earnout Payment”) shall become payable to the Selling Stockholder and shall be treated by the parties as an adjustment to the Purchase Price.
(b) As promptly as practicable following, but no later than sixty (60) days after following, completion of the end of Purchaser’s consolidated financial statements for the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative the Selling Stockholder (i) a written statement showing setting forth in reasonable detail the calculation of Net Sales EBITDA of the Company and its Subsidiaries on a consolidated basis for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”) and (ii) a certificate of an executive officer of Purchaser to the effect that the Earnout Statement has been in all respects prepared in accordance with this Section 3.5(b). The Earnout Statement and the components of EBITDA (“EBITDA Components”) shall be derived from the consolidated audited financial statements of the Purchaser for the year ending December 31, 2006, adjusted as necessary to comply with Section 3.5(g).
(bc) In The Selling Stockholder shall have twenty (20) days to review the event Earnout Statement (“Earnout Review Period”). If the Selling Stockholder disagrees with Purchaser’s calculation of any objection by Sellers’ Representative with respect to the determination of the Net Sales EBITDA or the Earnout Amount payableStatement delivered pursuant to Section 3.5(b), Sellers’ Representative shallthe Selling Stockholder may, within 60 twenty (20) days after its receipt of the Earnout Statement, give written deliver a notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in disagreeing with the Earnout Statement and setting forth the Selling Stockholder’ calculation of EBITDA and EBITDA Components. Any such notice of disagreement shall specify those items or amounts as to which the Selling Stockholder disagrees, and the Selling Stockholder shall be deemed to have been accepted agreed with all other items and amounts contained in the Earnout Statement delivered pursuant to Section 3.5(b). If the Stockholder Representative fails to deliver such notice in such twenty (20) day period, the Selling Stockholder shall have waived its right to contest the Earnout Statement and the calculation of EBITDA set forth therein shall be deemed to be final and binding upon Purchaser and the Selling Stockholder and shall be used for purposes of the adjustment pursuant to Section 3.5(a) above.
(d) If a notice of disagreement shall be duly delivered pursuant to Section 3.5(c), the Selling Stockholder and Purchaser shall, during the twenty (20) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts contained within the Earnout Statement in order to determine, as may be required, EBITDA. If during such period, the Selling Stockholder and Purchaser are unable to reach such agreement, then all amounts and issues remaining in dispute shall be submitted by the Selling Stockholder and Purchaser to an Accounting Referee for a determination resolving such disputed items or amounts for the purpose of calculating EBITDA (it being understood that in making such calculation, the Accounting Referee shall be functioning as an expert and not as an arbitrator). If the parties are unable to agree on an appointment of an Accounting Referee, within ten (10) days after not being able to reach agreement thereon, an Accounting Referee shall be determined by mutual agreement of the regular auditor of the Company prior to the Closing Date and the regular auditor of the Purchaser and, if such auditors are unable to reach agreement within ten (10) days of being requested to do so, an Accounting Referee shall be determined by lot with each of the Selling Stockholder and Purchaser submitting one candidate meeting the requirements of an Accounting Referee set forth in the definition thereof. In making such calculation, the Accounting Referee shall consider only those items or amounts in the Earnout Statement, the EBITDA Components and Purchaser’s calculation of EBITDA as to which the Selling Stockholder has disagreed. The Accounting Referee shall deliver to the Selling Stockholder and Purchaser, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accounting Referee), a report setting forth its calculation of EBITDA. Such report shall be final and binding upon the Selling Stockholder and Purchaser and shall be used for purposes of determining the adjustment pursuant to Section 3.5(a) above. The cost of such review and report shall be borne equally by the Selling Stockholder, on all parties heretothe one hand, and Purchaser, on the other hand.
(ce) If, for any reasonThe Selling Stockholder, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser Company shall, and shall cause the Companies and their Subsidiaries respective representatives to, (A) provide Sellers’ Representative cooperate and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for assist in the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative the calculation of EBITDA and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination conduct of the calculations review referred to in this Section 3.5, including, without limitation, the making available to the extent necessary of books, records, work papers and amounts set forth in the Earnout Statementpersonnel.
(ef) On Any payment made pursuant to this Section 3.5, shall be made within five (5) Business Days after EBITDA for the fifth Business Day after Earnout Period is agreed to by Purchaser and Sellers’ Representative agree the Selling Stockholder or is determined to the Earnout Statement or Purchaser be final and Sellers’ Representative receive from the Referee its written report binding either pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount 3.5(c) or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”Section 3.5(d) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available United States funds to an into such account or accounts specified in accordance with written instructions provided designated by the Sellers’ Representative Selling Stockholder. Notwithstanding anything to the contrary contained herein, to the extent that, at the time any Earnout Payment is to be made, there exists any amounts owing from, or claims asserted against, the Selling Stockholder to Purchaser at least two Business Days prior pursuant to Section 3.3(f), Section 8.10, Article X, or the Indemnity Side Letter, Purchaser shall be entitled to set-off any such amounts against the Earnout Payment, and when and whether such amounts are to be finally remitted to Seller or retained by Purchaser, as the case may be, shall be determined in a manner consistent with the procedures for the determination of payment of an Indemnification Claim under the Escrow Agreement; provided that (i) if the set-off relates to an Indemnification Claim and the amount set off, when added to the date amount then held under the Indemnification Escrow Agreement, would exceed the sum of (A) the Indemnification Escrow Amount and (B) $450,000 (such payment is due or on such other date as sum, the “Earnout Escrow Amount”), the Purchaser and Sellers’ Representative Selling Stockholder shall agree.
promptly execute a Joint Statement (fas defined in the Indemnification Escrow Agreement) The Parties acknowledge directing the Escrow Agent to pay to the Selling Stockholder an amount equal to such excess and agree that, for Tax purposes(ii) if the set-off relates to a claim under the Indemnity Side Letter, the payment of amount set-off shall reduce dollar for dollar any cap on liability under the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodeIndemnity Side Letter.
(g) After Operating Rules and Guidelines. Except as set forth on Schedule 3.5(g), the Closing, following guidelines and rules shall be used in calculating EBITDA and the EBITDA Components and shall be followed with respect to the Company and its Subsidiaries during the Earnout Period:
(i) EBITDA and the EBITDA Components and all other accounting terms used herein shall be determined in accordance with GAAP as in effect at the date of this Agreement applied on a basis consistent with that employed by the Company in the preparation of the Financial Statements.
(ii) During the Earnout Period, for purposes of the calculation of EBITDA, Purchaser shall notadhere to the pricing formula set forth in the Supply and Purchase Agreement dated as of February 13, 2003, by and between Purchaser and the Company (“Supply and Purchase Agreement”) with respect to sales to Purchaser of “Wabash” and “Transcraft” branded trailers; provided, however, that with respect to Purchaser’s direct house accounts (a current list of which is set forth on Exhibit A hereto), purchase price shall cause its Affiliates be determined by reference to the lowest purchase price billed on comparable volume purchases of the same products, as adjusted to give effect to seasonality, plant usage and other matters that can affect the purchase price of the Company’s products; and further, provided, however, in the event the Company is required to move the production of “Transcraft” branded trailers to regular Company customers that are already in the Company’s backlog at such time in order to satisfy orders placed by customers who are in Purchaser’s customer base, the contribution to margin of the sales to the Purchaser’s customers shall be determined based on the higher of the contribution to margin of the moved sales and the contribution to margin of the sales to the Purchaser’s customers.
(iii) During the Earnout Period, the Purchaser shall not to, take any action, nor or fail to take an action, any action with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required intent and for the Sellers to receive purpose of unfairly or prejudicially affecting the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts Company’s ability to achieve the Net Sales required for the Sellers to receive the Earnout AmountTarget EBITDA.
Appears in 1 contract
Samples: Stock Purchase Agreement (Wabash National Corp /De)
Earnout. The Earnout Amount parties acknowledge that the Purchase Price, as same may be modified by Section 3 herein, has been calculated generally by dividing the expected annual base rent from the Property (i.e. $2,826,003.00) by .081441 (the “Base Rent Divider”). In the event the Property is less than one hundred percent (100%) leased to tenants satisfying the Occupancy Conditions described upon Exhibit L attached hereto and made a part hereof as of the Closing Date, only a portion of the full Purchase Price shall be calculatedfunded at Closing and the balance of the Purchase Price (the “Unfunded Purchase Price”) shall be held by Purchaser pursuant to the terms of this Section 20. The Unfunded Purchase Price shall be calculated by dividing the aggregate pro forma annual base rent (per the attached Exhibit B) for the space within the Property for those tenants that do not then satisfy the Occupancy Conditions (the “Vacant Space”), determined by the Base Rent Divider. The balance of the Purchase Price shall be paid to Seller per the terms of this Agreement on the Closing Date (subject to Seller’s funding of the deposits described below). As of the date hereof, the Vacant Space totals 31,625 square feet. The parties agree to enter into a mutually agreeable “Earnout Agreement” (attached as Exhibit K) at Closing which sets forth the terms and conditions for the Earnout, some of which are as follows: The term of the earnout period shall commence on the Closing Date and shall continue until the first to occur of (i) a period of 36 months from the Closing Date, or (ii) the date the Vacant Space has been fully leased and is occupied by tenants then satisfying the Occupancy Conditions (the “Earnout Period”). During the term of the Earnout Period (and prior to the satisfaction of the Occupancy Conditions of any portion of the Vacant Space by a new tenant), Seller shall be responsible for the monthly pro rata share of taxes, insurance and common area expenses (collectively, the “Operating Expenses”) allocable to the Vacant Space. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to the estimated aggregate Operating Expenses for the Vacant Space payable during the Earnout Period (the “Operating Expense Escrow”). Purchaser shall draw down on the Operating Expense Escrow during the Earnout Period to pay any Operating Expenses allocable to the Vacant Space as same become due. Once any portion of the Vacant Space is leased to, and occupied by, a tenant then satisfying the Occupancy Conditions, Seller’s obligation to pay Purchaser the Operating Expenses allocable to that portion of the Vacant Space shall terminate and the balance of the Operating Expense Escrow allocable to said space shall be promptly paid in to Seller. Upon the following manner:
(a) Within 60 days after the end expiration of the Earnout Period, Purchaser the balance of the Operating Expense Escrow, if any, shall prepare in good faith and deliver be paid to Sellers’ Representative a written statement showing in reasonable detail Seller. Seller, or its affiliated entities, shall continue to serve as the calculation of Net Sales exclusive leasing agent for the Vacant Space during the Earnout Period and Seller shall be responsible for all costs and expenses associated with leasing the Vacant Space, including without limitation, any brokerage commissions and tenant improvement allowances associated therewith. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to (i) $15.00 per square foot of the Vacant Space for anticipated tenant improvement allowances applicable to the Vacant Space, plus (ii) $3.00 per square foot of the Vacant Space for anticipated leasing commissions applicable to the Vacant Space (collectively, the “Leasing Escrow”). As any portion of the Vacant Space is leased to tenants during the Earnout Amount payablePeriod, Seller may draw down on the Leasing Escrow to pay any tenant improvement allowance and/or leasing commissions applicable to said lease, provided in no event shall the aggregate amount funded out of the Leasing Escrow for tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased, nor shall the aggregate amount funded from the Leasing Escrow for leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased. Upon the expiration of the Earnout Period, a portion of the Leasing Escrow in an amount equal to the collective sum of the improvement allowances for the then Vacant Space and the leasing commissions applicable to the then Vacant Space shall be either: (y) paid to Purchaser if the then Vacant Space is not fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period; or (z) paid to Seller if the then Vacant Space is fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period. Any amounts remaining in the Leasing Escrow after payment to Purchaser and/or Seller (as applicable), as provided immediately above shall be paid to Seller at the expiration of the Earnout Period. Additionally, if tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased or leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased (including for space which is being reconfigured for future leasing to a tenant) (e.g., relocation of walls and doorways), Seller shall be responsible for payment of such shortfall from Seller’s funds without contribution therefor from Purchaser. All leases for the Vacant Space shall comply with the Leasing Parameters attached hereto as Exhibit F or shall otherwise be approved in writing by Purchaser. At such time as Seller provides Purchaser with a new lease for any portion of the Vacant Space (and such new occupant has satisfied the “Occupancy Conditions), Purchaser shall, upon ten (10) days advance written notice from Seller, pay to Seller a portion of the Unfunded Purchase Price in an amount equal to the annual base rent payable under said new lease (such base rent in no event to exceed 110% of the pro forma annual base rent for such space per the attached Exhibit B) divided by the Base Rent Divider. Any portion of the Unfunded Purchase Price which remains unfunded as of the expiration of the Earnout Statement”).
(b) In Period shall then be deemed to be forfeited by Seller without any further act by Purchaser and shall be forever released from all obligations to fund any portion of the event Unfunded Purchase Price thereafter. Purchaser shall act in a commercially reasonable manner and in good faith during its review and approval of any objection by Sellers’ Representative with respect to the determination proposed new tenant and/or lease of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, Vacant Space. Purchaser agrees to respond to Seller deliveries of tenant information and/or leases within 60 five (5) business days after its receipt thereof by Purchaser, and in the event Purchaser fails to respond within an additional two (2) business days after a second notice, said proposed tenant and/or lease shall be deemed approved by Purchaser. In the event that any tenant and its new lease is approved (or deemed approved) and such lease is signed by the tenant and delivered to Purchaser but Purchaser fails to execute and deliver such lease within two (2) business days after receipt of the Earnout Statement, give written second notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticedescribed above, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement lease shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, executed by Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days as of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(csixth (6th) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, day following Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation receipt of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementsame.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Inland Diversified Real Estate Trust, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after the end of the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”).
(b) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to The "EARNOUT AMOUNTS" shall mean, respectively, the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the ARTICLE IX with respect to any particular measurement period. The Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report Amounts will not be paid initially, but instead will be earned pursuant to Section 2.06(c), ARTICLE IX herein. Upon such time as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified is earned in accordance with written instructions provided by ARTICLE IX, Parent shall, within five (5) days, deposit such amount with the Sellers’ Representative Exchange Agent, and such earned amount shall thereafter be paid to Purchaser at least two Business Days prior to shareholders of the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeCompany in accordance with SECTIONS 1.6(b)(ii)(1)-(4).
(fii) The Parties acknowledge On the date hereof, Parent shall issue the Earnout Warrants to the Shareholder Representative, on behalf of and agree that, for Tax purposesas nominee for, the payment shareholders of the Company. Upon issuance, the Earnout Amount Warrants shall be deposited into escrow with Wilson Sonsini Goodrich & Rosati, Professional Corporation (if any) will be treated as an adjustment "WSGR"), xxxxx xxxxxxxxxx xxxx SEXXXXX 6.16 and the Closing have occurred. At such time, WSGR shall release the Earnout Warrants to the Final Purchase Price subject Shareholder Representative to any portion of such amount being treated as interest under Section 483 hold, and to distribute to the shareholders of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding Company upon the achievement of the Net Sales during specified milestones set forth therein. The Shareholder Representative shall not transfer, distribute or exercise the Earnout Period required for Warrants except as provided therein. Notwithstanding anything to the Sellers contrary herein, in the event that the portion of the Israeli Income Tax Ruling set forth in SECTION 6.4(b)(i)(b) is not obtained prior to the Closing, the Earnout Warrants shall terminate as of the Closing and be of no further force and effect. In accordance with the terms of the Earnout Warrants, in the event delivery of the Earnout Warrants would require the publishing of a prospectus pursuant to Israeli securities laws, all persons who are not Exempt Persons shall, in lieu of receiving its allotted distribution of Earnout Warrants, be entitled to receive cash in the amount of $1.33 for each share of Parent Common Stock subject to Earnout Amount or Warrants that would have otherwise fail been distributed to act such person. Parent shall deposit the aggregate amount of such cash with the Exchange Agent at the time the distribution of Earnout Warrants to such persons would have occurred, and the Exchange Agent shall distribute such cash in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountaccordance with SECTION 1.8.
Appears in 1 contract
Samples: Merger Agreement (Scansoft Inc)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 thirty (30) days after following the end completion of the Earnout Periodaudit of the Company’s financial statements for the fiscal year ending 2011, or as soon thereafter as reasonably practicable, Purchaser shall prepare in good faith and deliver deliver, or cause to Sellers’ Representative be prepared and delivered, to Frost a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”) setting forth the determination of whether the net sales of the Company, determined on a consolidated basis in accordance with GAAP, for the fiscal year ending 2011 were equal to or greater than $45,957,000 (the “Earnout Condition”).
(b) Unless Frost, within thirty (30) days after receipt of the Earnout Statement, delivers to Purchaser a notice objecting thereto and specifying in reasonable detail the basis for such objection and the amount in dispute, such Earnout Statement shall be considered accepted, final and binding upon the parties. In the event of any Frost, within such thirty (30) day period, delivers such an objection by notice to Purchaser, then Purchaser shall cause Purchaser’s Accountants, and Frost shall cause Sellers’ Representative Accountants, to use their best efforts for thirty (30) days after delivery of Frost’s objection notice to agree upon the determination of whether the Earnout Condition has been satisfied. Upon the expiration of such thirty (30) day period, any party may submit in writing for resolution to the Independent Accountants any dispute which has not been resolved with respect to the determination of the Net Sales or whether the Earnout Amount payableCondition has been satisfied. As promptly as practicable, Sellers’ Representative shall, within 60 but in no event later than thirty (30) days after its receipt such submission, the parties shall cause their respective accountants to deliver to the Independent Accountants written submissions in support of their respective positions regarding such dispute and shall direct the Independent Accountants to resolve such dispute based solely on such written submissions without any independent investigation of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”)Company’s books and records. Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation The decision of the Net Sales and Independent Accountants with respect to the determination of whether the Earnout Amount as set forth in the Earnout Statement shall be deemed to have Condition has been accepted and satisfied shall be final and binding on all each of the parties hereto. The costs of the Independent Accountants with respect to the determination of whether the Earnout Condition has been satisfied shall be shared equally between the parties.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of If it is finally determined pursuant to this Section 1.7 that the Earnout Dispute NoticeCondition has been satisfied, then then, within three (3) Business Days after such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”)determination, Purchaser shall pay to Sellers’ Representative Sellers an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment aggregate of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion Two Million Dollars ($2,000,000) (the “Earnout InterestAmount”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an such account or accounts specified designated in accordance with written instructions provided writing by the Sellers’ Representative to Purchaser Frost at least two (2) Business Days prior to the date such payment is due or on date. On such other date as payment date, Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of be permitted to reduce the Earnout Amount (if any) will be treated by the amount of any payments to Purchaser pursuant to Article VI that are outstanding as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Codepayment date.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Stock Purchase Agreement (Compass Diversified Holdings)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Closing, and as additional consideration for the Merger and the transactions contemplated hereby, within five (5) Business Days after the end occurrence of the Triggering Event, Acquiror shall issue or cause to be issued to each Eligible Company Equityholder as of such date (in each case in accordance with its respective Pro Rata Earnout PeriodPortion) an aggregate of 1,078,125 shares of Acquiror Stock (which shall be equitably adjusted for stock splits, Purchaser shall prepare in good faith and deliver reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Sellers’ Representative a written statement showing in reasonable detail Acquiror Stock occurring after the calculation of Net Sales for the Earnout Period and the Earnout Amount payableClosing) (such shares, if any (the “Earnout StatementShares”), upon the terms and subject to the conditions set forth in this Agreement; provided that, any Earnout Shares issued in respect of a Company RSA exchanged for an Exchanged RSA that remains unvested as of the Triggering Event and any such Earnout Shares issued in connection therewith pursuant to this Section 3.12 shall vest in equal amounts (or as close as possible, with any excess shares vesting on the last vesting date) over the remaining vesting schedule of the applicable Exchanged RSA, and shall be subject to the same vesting conditions applied to such Exchanged RSA; provided, further, that any such issuance of Earnout Shares will not be made to any Eligible Company Equityholder for which a filing under the HSR Act is required in connection with the issuance of Earnout Shares, until the applicable waiting period under HSR Act has expired or been terminated.
(b) In For the avoidance of doubt, (i) Eligible Company Equityholders shall be entitled to receive Earnout Shares upon the first occurrence of the Triggering Event and in no event shall the Eligible Company Equityholders be entitled to receive more than the 1,078,125 shares of Acquiror Stock pursuant to this Section 3.12; (ii) to the extent the Triggering Event does not occur in accordance with the terms of this Agreement, then any Earnout Shares that would otherwise be issued under this Agreement as a result of the occurrence of the Triggering Event shall instead be forfeited and cancelled without the payment of any objection by Sellers’ Representative with consideration in respect thereof, and (iii) until the Closing occurs, Acquiror shall have no obligations under this Section 3.12, including any obligation to the determination of the Net Sales issue or the cause to be issued any Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales Shares and the Eligible Company Equityholders shall have no right to receive any Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoShares.
(c) If, for any reason, Purchaser after the Closing and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the two (2) year anniversary of the Closing Date, there is a Change of Control pursuant to which Acquiror or its stockholders have a right to receive consideration implying value of Acquiror Common Stock (as agreed in good faith by the Acquiror Board) of equal to or greater than $13.00, then (i) immediately prior to such Change of Control, Acquiror shall issue the Earnout Payment Deadline, Purchaser shall pay Shares to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion Eligible Company Equityholders (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellerseach Eligible Company Equityholders’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser respective Pro Rata Earnout Portion) and Sellers’ Representative shall agree.
(fii) The Parties acknowledge and agree thatthereafter, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the 3.12 shall terminate and no further Earnout AmountShares shall be issuable hereunder.
Appears in 1 contract
Earnout. The Earnout Amount parties acknowledge that the Purchase Price, as same may be modified by Section 3 herein, has been calculated generally by dividing the expected annual base rent from the Property (i.e. $4,482,425.00) by .074521 (the “Base Rent Divider”). In the event the Property is less than one hundred percent (100%) leased to tenants satisfying the Occupancy Conditions described upon Exhibit L attached hereto and made a part hereof as of the Closing Date, only a portion of the full Purchase Price shall be calculatedfunded at Closing and the balance of the Purchase Price (the “Unfunded Purchase Price”) shall be held by Purchaser pursuant to the terms of this Section 20. The Unfunded Purchase Price shall be calculated by dividing the aggregate pro forma annual base rent (per the attached Exhibit B) for the space within the Property for those tenants that do not then satisfy the Occupancy Conditions (the “Vacant Space”), determined by the Base Rent Divider. The balance of the Purchase Price shall be paid to Seller per the terms of this Agreement on the Closing Date (subject to Seller’s funding of the deposits described below). As of the date hereof, the Vacant Space totals 4,800 square feet. The parties agree to enter into a mutually agreeable “Earnout Agreement” (attached as Exhibit K) at Closing which sets forth the terms and conditions for the Earnout, some of which are as follows: The term of the earnout period shall commence on the Closing Date and shall continue until the first to occur of (i) a period of 36 months from the Closing Date, or (ii) the date the Vacant Space has been fully leased and is occupied by tenants then satisfying the Occupancy Conditions (the “Earnout Period”). During the term of the Earnout Period (and prior to the satisfaction of the Occupancy Conditions of any portion of the Vacant Space by a new tenant), Seller shall be responsible for the monthly pro rata share of taxes, insurance and common area expenses (collectively, the “Operating Expenses”) allocable to the Vacant Space. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to the estimated aggregate Operating Expenses for the Vacant Space payable during the Earnout Period (the “Operating Expense Escrow”). Purchaser shall draw down monthly on the Operating Expense Escrow during the Earnout Period to pay any Operating Expenses allocable to the Vacant Space as same become due. Once any portion of the Vacant Space is leased to, and occupied by, a tenant then satisfying the Occupancy Conditions, Seller’s obligation to pay Purchaser the Operating Expenses allocable to that portion of the Vacant Space shall terminate and the balance of the Operating Expense Escrow allocable to said space shall be promptly paid in to Seller. Upon the following manner:
(a) Within 60 days after the end expiration of the Earnout Period, Purchaser the balance of the Operating Expense Escrow, if any, shall prepare in good faith and deliver be paid to Sellers’ Representative a written statement showing in reasonable detail Seller. Seller, or its affiliated entities, shall continue to serve as the calculation of Net Sales exclusive leasing agent for the Vacant Space during the Earnout Period and Seller shall be responsible for all costs and expenses associated with leasing the Vacant Space, including without limitation, any brokerage commissions and tenant improvement allowances associated therewith. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to (i) $15.00 per square foot of the Vacant Space for anticipated tenant improvement allowances applicable to the Vacant Space, plus (ii) $3.00 per square foot of the Vacant Space for anticipated leasing commissions applicable to the Vacant Space (collectively, the “Leasing Escrow”). As any portion of the Vacant Space is leased to tenants during the Earnout Amount payablePeriod, Seller may draw down on the Leasing Escrow to pay any tenant improvement allowance and/or leasing commissions applicable to said lease, provided in no event shall the aggregate amount funded out of the Leasing Escrow for tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased, nor shall the aggregate amount funded from the Leasing Escrow for leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased. Upon the expiration of the Earnout Period, a portion of the Leasing Escrow in an amount equal to the collective sum of the improvement allowances for the then Vacant Space and the leasing commissions applicable to the then Vacant Space shall be either: (y) paid to Purchaser if the then Vacant Space is not fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period; or (z) paid to Seller if the then Vacant Space is fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period. Any amounts remaining in the Leasing Escrow after payment to Purchaser and/or Seller (as applicable), as provided immediately above shall be paid to Seller at the expiration of the Earnout Period. Additionally, if tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased or leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased (including for space which is being reconfigured for future leasing to a tenant) (e.g., relocation of walls and doorways), Seller shall be responsible for payment of such shortfall from Seller’s funds without contribution therefor from Purchaser. All leases for the Vacant Space shall comply with the Leasing Parameters attached hereto as Exhibit F or shall otherwise be approved in writing by Purchaser. At such time as Seller provides Purchaser with a new lease for any portion of the Vacant Space (and such new occupant has satisfied the “Occupancy Conditions), Purchaser shall, upon ten (10) days advance written notice from Seller, pay to Seller a portion of the Unfunded Purchase Price in an amount equal to the annual base rent payable under said new lease (such base rent in no event to exceed 110% of the pro forma annual base rent for such space per the attached Exhibit B) divided by the Base Rent Divider. Any portion of the Unfunded Purchase Price which remains unfunded as of the expiration of the Earnout Statement”).
(b) In Period shall then be deemed to be forfeited by Seller without any further act by Purchaser and shall be forever released from all obligations to fund any portion of the event Unfunded Purchase Price thereafter. Purchaser shall act in a commercially reasonable manner and in good faith during its review and approval of any objection by Sellers’ Representative with respect to the determination proposed new tenant and/or lease of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, Vacant Space. Purchaser agrees to respond to Seller deliveries of tenant information and/or leases within 60 five (5) business days after its receipt thereof by Purchaser, and in the event Purchaser fails to respond within an additional two (2) business days after a second notice, said proposed tenant and/or lease shall be deemed approved by Purchaser. In the event that any tenant and its new lease is approved (or deemed approved) and such lease is signed by the tenant and delivered to Purchaser but Purchaser fails to execute and deliver such lease within two (2) business days after receipt of the Earnout Statement, give written second notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticedescribed above, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement lease shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, executed by Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days as of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(csixth (6th) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, day following Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation receipt of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementsame.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Inland Diversified Real Estate Trust, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after At the end Closing, and as additional consideration for the Merger and the other Transactions, Parent shall issue or cause to be issued to each Participating Securityholder such Participating Securityholder’s Earnout Pro Rata Share of the Aggregate Earnout PeriodShares, Purchaser which shares shall prepare be subject to forfeiture in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail accordance with the calculation of Net Sales for the Earnout Period and the Earnout Amount payablefollowing schedule (such shares, if any (the “Earnout StatementShares”)):
(i) upon the occurrence of Milestone Event I, one-half (1/2) of the Aggregate Earnout Shares shall be fully vested and no longer subject to forfeiture; and
(ii) upon the occurrence of Milestone Event II, the remaining one-half (1/2) of the Aggregate Earnout Shares shall be fully vested and no longer subject to forfeiture; or
(iii) upon the occurrence of a Subsequent Transaction at any time during the Milestone Event Period, all of the Aggregate Earnout Shares shall be fully vested and no longer subject to forfeiture.
(b) In For the avoidance of doubt, (i) the Participating Securityholders shall be entitled to be fully vested in the applicable Earnout Shares upon the occurrence of each Milestone Event or a Subsequent Transaction; provided that each Milestone Event or a Subsequent Transaction shall only occur once, if at all, and in no event shall the Participating Securityholders be entitled to receive more than the Aggregate Earnout Shares; and (ii) to the extent that any Milestone Event or a Subsequent Transaction does not occur in accordance with the terms of this Agreement during the Milestone Event Period, any Earnout Shares that would otherwise be fully vested under this Agreement as a result of the occurrence of such Milestone Event shall instead be forfeited and cancelled without the payment of any objection by Sellers’ Representative with consideration in respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretothereof.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts Parent Common Stock price targets set forth in the Earnout Statement.
definitions of Milestone Event I, Milestone Event II shall be equitably adjusted to reflect the effect of any stock split, reverse stock split, stock dividend (e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement including any dividend or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(cdistribution of securities convertible into shares of Parent Common Stock), as applicable (such datereorganization, the “Earnout Payment Deadline”)recapitalization, Purchaser shall pay reclassification, combination, merger, sale or exchange of shares or other like change with respect to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment shares of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After Parent Common Stock occurring after the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Merger Agreement (Breeze Holdings Acquisition Corp.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after After the end Closing, subject to the terms and conditions set forth herein, the Earnout Recipients shall have the contingent right to receive additional consideration based on the performance of the Earnout Period, Purchaser shall prepare Company Entities to the extent the requirements set forth in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”)this Section 2.9 are met.
(b) In the event that the VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) (the “Phase 1 Share Price Target”) for any objection by Sellers’ Representative with respect twenty (20) Trading Days within any thirty (30) consecutive Trading Day period ending on or prior to the determination three (3) year anniversary of the Net Sales or Closing, then, subject to the terms and conditions of this Agreement, the Earnout Amount payableRecipients shall be entitled to receive, Sellers’ Representative shallas additional consideration for the transactions contemplated hereby, the Phase 1 Earnout Consideration, and Parent shall cause its transfer agent and the Surviving Entity, as applicable to issue such Phase 1 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule within 60 days after its receipt five (5) Business Days following the final day of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof applicable thirty (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto30) Trading Day period.
(c) IfIn the event that the VWAP of Class A Parent Common Stock on the Stock Exchange or the principal securities exchange or securities market on which the Class A Parent Common Stock is then traded equals or exceeds $20.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) (the “Phase 2 Share Price Target”) for any reason, Purchaser and Sellers’ Representative cannot resolve twenty (20) Trading Days within any disputed items indicated in an Earnout Dispute Notice within 30 days thirty (30) consecutive Trading Day period ending on or prior to the four (4) year anniversary of the date Closing, then, subject to the terms and conditions of delivery of this Agreement, the Earnout Dispute Notice, then such unresolved items Recipients shall be resolved by entitled to receive, as additional consideration for the Referee in transactions contemplated hereby, the manner provided in Section 2.03(c) abovePhase 2 Earnout Consideration, mutatis mutandisand Parent shall cause its transfer agent and the Surviving Entity, except as modified herein. The Referee shall applicable to issue a written report which shall include a revised such Phase 2 Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes Consideration to the Earnout Statement, except as are required to resolve Recipients in accordance with the unresolved objections. The award Merger Consideration Schedule within five (5) Business Days following the final day of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesapplicable thirty (30) Trading Day period.
(d) In connection with Notwithstanding the preparation of foregoing: (i) in the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, event that (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, a Change of Control is consummated prior to the relevant books and records, including the Transferred Books and Records, for the purposes three (3) year anniversary of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; Closing and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representativesthe implied consideration per share of the Class A Parent Common Stock in such Change of Control transaction equals or exceeds the Phase 1 Share Price Target or the Phase 2 Share Price Target, including as applicable (or the equivalent fair market value thereof, as determined by providing on a timely basis information reasonably necessary or useful the Surviving Entity in good faith, in the determination event of any non-cash consideration), then, as additional consideration for the Transactions and to the extent not already issued pursuant to this Section 2.9, Parent shall issue or cause to be issued the Phase 1 Earnout Consideration and/or the Phase 2 Earnout Consideration to the Earnout Recipients in accordance with the Merger Consideration Schedule immediately prior to the consummation of such Change of Control transaction, and (ii) in the event that (A) a Change of Control is consummated on or after the three (3) year anniversary of the calculations Closing and amounts set forth prior to the four (4) year anniversary of Closing and (B) the implied consideration per share of the Class A Parent Common Stock in such Change of Control transaction equals or exceeds the Phase 2 Share Price Target (or the equivalent fair market value thereof, as determined by the Surviving Entity in good faith, in the event of any non-cash consideration), then, as additional consideration for the Transactions and to the extent not already issued pursuant to this Section 2.9, Parent shall issue or cause to be issued the Phase 2 Earnout StatementConsideration to the Earnout Recipients in accordance with the Merger Consideration Schedule immediately prior to the consummation of such Change of Control transaction.
(e) On Parent shall use commercially reasonable efforts to remain a listed company on, and for the fifth Business Day after Purchaser Class A Parent Common Stock issuable in respect of Earnout Consideration to be tradable over, the Stock Exchange or another U.S. securities exchange. Parent, as of the Merger Effective Time, will reserve for issuance the maximum number of shares of Parent Common Stock that could be earned pursuant to this Section 2.9 (including such number of Class A Parent Common Stock issuable upon the exchange of Class B Parent Common Stock) and Sellers’ Representative agree shall continue to ensure that there is a sufficient amount of Parent Common Stock reserved for issuance following the Merger Effective Time to satisfy the maximum number of shares of Parent Common Stock (including such number of Class A Parent Common Stock issuable upon the exchange of Class B Parent Common Stock) that could be earned pursuant to this Section 2.9 at any given time.
(f) Notwithstanding anything to the contrary herein, (i) the Earnout Statement Recipients shall not be entitled to receive the same Earnout Consideration on more than one occasion, and (ii) the number of shares of Parent Common Stock or Purchaser and Sellers’ Representative receive from Units of the Referee its written report pursuant to Section 2.06(c)Surviving Entity, as applicable (applicable, to be issued to any Earnout Recipient in connection with any issuance of Earnout Consideration shall be rounded down to the nearest whole number, and such date, the “Earnout Payment Deadline”), Purchaser Recipients shall pay to Sellers’ Representative receive in lieu of such fractional shares an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment value of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning fractional shares based on the Earnout Payment Deadline and ending VWAP of Class A Parent Common Stock on the date Stock Exchange or the remaining portion of principal securities exchange or securities market on which the Earnout Amount and Class A Parent Common Stock is then traded over the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of twenty (20) day trading-period immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to preceding the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, which the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodeConsideration is triggered.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Merger Agreement (Roman DBDR Tech Acquisition Corp.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Acquisition Closing, within five (5) Business Days after the end occurrence of a Triggering Event, the Earnout PeriodDomesticated SPAC shall issue or cause to be issued to (x) the Eligible Company Equityholders with respect to such Triggering Event the following shares of Domesticated SPAC Common Stock (which shall be equitably adjusted for stock splits, Purchaser shall prepare in good faith and deliver reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Sellers’ Representative a written statement showing in reasonable detail Domesticated SPAC Common Stock occurring after the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any Acquisition Closing) (the “Earnout StatementShares”) constituting the Per Share Earnout Consideration as additional consideration for the Company interests acquired in connection with the Acquisition Merger, and (y) the holders of Management Earnout RSUs, with respect to such Triggering Event, the following shares of Domesticated SPAC Common Stock (which shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Domesticated SPAC Common Stock occurring after the Acquisition Closing) (the “Management Earnout Shares”) constituting the Per Management Earnout RSU Consideration, in the case of each of (x) and (y), upon the terms and subject to the conditions set forth in this Agreement and the Ancillary Agreements:
(i) upon the occurrence of Triggering Event I, a one-time issuance of 3,333,333 Earnout Shares to the Eligible Company Equityholders and 1,666,667 Management Earnout Shares to the holders of Management Earnout RSUs;
(ii) upon the occurrence of Triggering Event II, a one-time issuance of 3,333,333 Earnout Shares to the Eligible Company Equityholders and 1,666,667 Management Earnout Shares to the holders of Management Earnout RSUs; and
(iii) upon the occurrence of Triggering Event III, a one-time issuance of 3,333,334 Earnout Shares to the Eligible Company Equityholders and 1,666,666 Management Earnout Shares to the holders of Management Earnout RSUs.
(b) In For the event avoidance of any objection by Sellers’ Representative doubt, the Eligible Company Equityholders and the holders of Management Earnout RSUs with respect to a Triggering Event shall be entitled to receive Earnout Shares and Management Earnout Shares, respectively, upon the determination occurrence of each Triggering Event; provided, however, that each Triggering Event shall only occur once, if at all, and in no event shall the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales Eligible Company Equityholders and the holders of Management Earnout Amount as set forth in the RSUs be entitled to receive more than an aggregate of 10,000,000 Earnout Statement shall be deemed Shares and 5,000,000 Management Earnout Shares pursuant to have been accepted and shall be final and binding on all parties heretothis Section 3.03.
(c) If, for any reasonduring the Earnout Period, Purchaser there is a Change of Control pursuant to which the Domesticated SPAC or its stockholders have the right to receive consideration implying a value per share of Domesticated SPAC Common Stock (as agreed in good faith by the Sponsor and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days the board of directors of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(cDomesticated SPAC) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted of:
(i) pursuant to any resolutions to objections agreed upon by Purchaser less than $12.50, then this Section 3.03 shall terminate and Sellers’ Representative and no Earnout Shares or Management Earnout Shares shall be issuable hereunder;
(ii) greater than or equal to $12.50 but less than $15.00, then, (A) immediately prior to such Change of Control, the Domesticated SPAC shall issue 3,333,333 shares of Domesticated SPAC Common Stock (less any Earnout Shares issued prior to such Change of Control pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes Section 3.03(a)) to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes Eligible Company Equityholders with respect to the Change of Control, (B) immediately prior to such Change of Control, the Domesticated SPAC shall issue 1,666,667 shares of Domesticated SPAC Common Stock (less any Management Earnout Statement Shares issued prior to such Change of Control pursuant to Section 3.03(a), provided that in no event shall such subtraction result in a negative number of shares or require a forfeiture of shares) to the holders of Management Earnout RSUs with respect to the Change of Control and (C) thereafter, this Section 3.03 shall terminate and no further Earnout Shares or Management Earnout Shares shall be issuable hereunder;
(iii) greater than or equal to $15.00 but less than $18.00, then, (A) immediately prior to such Change of Control, the sole Domesticated SPAC shall issue 6,666,666 shares of Domesticated SPAC Common Stock (less any Earnout Shares issued prior to such Change of Control pursuant to Section 3.03(a)) to the Eligible Company Equityholders with respect to the Change of Control, (B) immediately prior to such Change of Control, the Domesticated SPAC shall issue 3,333,334 shares of Domesticated SPAC Common Stock (less any Management Earnout Shares issued prior to such Change of Control pursuant to Section 3.03(a), provided that in no event shall such subtraction result in a negative number of shares or require a forfeiture of shares) to the holders of Management Earnout RSUs with respect to the Change of Control and exclusive method for resolving (C) thereafter, this Section 3.03 shall terminate and no further Earnout Shares or Management Earnout Shares shall be issuable hereunder; or
(iv) greater than or equal to $18.00, then, (A) immediately prior to such Change of Control, the Domesticated SPAC shall issue 10,000,000 shares of Domesticated SPAC Common Stock (less any Earnout Shares issued prior to such disputes.Change of Control pursuant to Section 3.03(a)) to the Eligible Company Equityholders with respect to the Change of Control, (B) immediately prior to such Change of Control, the Domesticated SPAC shall issue 5,000,000 shares of Domesticated SPAC Common Stock (less any Management Earnout Shares issued prior to such Change of Control pursuant to Section 3.03(a), provided that in no event shall such subtraction result in a negative number of shares or require a forfeiture of shares) to the holders of Management Earnout RSUs with respect to the Change of Control and (C) thereafter, this Section 3.03 shall terminate and no further Earnout Shares or Management Earnout Shares shall be issuable hereunder;
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts The Domesticated SPAC Common Stock price targets set forth in the Earnout Statementdefinitions of Triggering Event I, Triggering Event II and Triggering Event III, and in clauses (i), (ii), (iii) and (iv) of Section 3.03(c) shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Domesticated SPAC Common Stock occurring after the Acquisition Closing.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to At all times during the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such datePeriod, the “Earnout Payment Deadline”), Purchaser Domesticated SPAC shall pay keep available for issuance a sufficient number of shares of unissued Domesticated SPAC Common Stock to Sellers’ Representative an amount permit the Domesticated SPAC to satisfy in cash equal full its issuance obligations set forth in this Section 3.03 and shall take all actions reasonably required (including by convening any stockholder meeting) to increase the Earnout Amount; provided, that, without limiting authorized number of Domesticated SPAC Common Stock if at any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as time there shall be the maximum rate allowable under applicable Law)insufficient unissued Domesticated SPAC Common Stock to permit such reservation. In no event will any right to receive Earnout Shares or Management Earnout Shares be represented by any negotiable certificates of any kind, for the period beginning on the and in no event will any holder of a contingent right to receive Earnout Payment Deadline and ending on the date the remaining portion of the Shares or Management Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date Shares take any steps that would render such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreerights readily marketable.
(f) The Parties acknowledge Domesticated SPAC shall take such actions as are reasonably requested by the Eligible Company Equityholders and agree that, for Tax purposes, the payment holders of the Management Earnout Amount RSUs to evidence the issuances pursuant to this Section 3.03, including through the provision of an updated stock ledger showing such issuances (if any) will be treated as certified by an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 officer of the CodeDomesticated SPAC responsible for maintaining such ledger or the applicable registrar or transfer agent of the Domesticated SPAC).
(g) After the Closing, and during During the Earnout Period, Purchaser the Domesticated SPAC shall notuse reasonable best efforts for the Domesticated SPAC to remain listed as a public company on, and shall cause its Affiliates not tofor the Domesticated SPAC Common Stock (including, take any actionwhen issued, nor fail the Earnout Shares and the Management Earnout Shares) to take an action, with be tradable over the purpose or intention of impeding the achievement national securities exchange (as defined under Section 6 of the Net Sales during Exchange Act) on which the Earnout Period required for shares of Domesticated SPAC Common Stock are then listed; provided, however, that subject to Section 3.03(c), the Sellers to receive foregoing shall not limit the Earnout Amount Domesticated SPAC from consummating a Change of Control or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more entering into a contract that contemplates a Change of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountControl.
Appears in 1 contract
Samples: Business Combination Agreement (CHW Acquisition Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after On the end Closing Date, Parent shall deposit all of the Escrowed Earnout PeriodShares with the Escrow Agent, Purchaser shall prepare to be held in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales an escrow account for the purpose of distributing such shares to the Company Stockholders upon the achievement of certain targets, as described in this Section 2.8, provided that 7.5% of such Escrowed Earnout Period Shares shall be part of the Escrowed Indemnity Shares and placed in a separate escrow account in satisfaction of the indemnity set forth in Article VII hereof in accordance with Section 2.10 hereof. The Escrowed Earnout Amount payableShares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) of the Company Disclosure Statement and in accordance with the terms and conditions of this Section 2.8 and an agreement to be entered into at the Closing between Parent, if any the Escrow Representative, and Continental Stock Transfer & Trust Company (the “Earnout StatementEscrow Agent”) (or another escrow agent mutually agreed to by Parent and the Company), in customary form and substance as reasonably agreed to by Parent and the Company (the “Escrow Agreement”).
(b) In On the event Closing Date, the Sponsors shall deposit 1.25 million shares of any objection by Sellers’ Representative with respect to Parent Common Stock (the determination of the Net Sales or the “Escrowed Sponsor Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute NoticeShares”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount ) as set forth in Section 2.8(b) of the Parent Disclosure Statement with the Escrow Agent, to be held in an escrow account for the purpose of distributing such shares to the Sponsors upon the achievement of the First Target (as defined in Section 2.8(c)). The Escrowed Sponsor Earnout Statement Shares shall be deemed allocated to have been accepted the Sponsors in accordance with Section 2.8(b) of the Parent Disclosure Statement and shall be final in accordance with the terms and binding on all parties heretoconditions of this Section 2.8.
(c) IfSubject to Section 2.8(f) hereof, for any reason, Purchaser if between the first and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days the fifth anniversaries of the date Closing Date, the Share Price of delivery of Parent Common Stock equals or exceeds $20.00 per share (the Earnout Dispute Notice“First Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such unresolved items target, Parent and the Escrow Representative shall be resolved by instruct the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted Escrow Agent to release (i) the First Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “First Target Indemnity Shares”) pursuant to any resolutions Article VII hereof and the Escrow Agreement), which shares shall be allocated to objections agreed upon by Purchaser the Company Stockholders in accordance with Section 2.6(c) hereof and Sellers’ Representative Section 2.6(c) of the Company Disclosure Statement (the “First Target Shares”) and (ii) pursuant the Escrowed Sponsor Earnout Shares, which shares shall be allocated to the Referee’s resolution Sponsors in accordance with Section 2.8(b) of the unresolved objectionsParent Disclosure Statement. The Referee shall review only those matters specified in If the unresolved objections and shall make no changes to First Target has not been achieved for such 20 trading days during the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth four-year period referenced in this Section 2.06 for resolving disputes with respect to 2.8(c), the First Target Shares and the Escrowed Sponsor Earnout Statement Shares shall no longer be outstanding and shall be the sole and exclusive method for resolving any such disputescancelled.
(d) Subject to Section 2.8(f) hereof, if between the second and the fifth anniversaries of the Closing Date, the Share Price of Parent Common Stock equals or exceeds $24.50 per share (the “Second Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release the Second Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “Second Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) hereof and Section 2.6(c) of the Company Disclosure Statement (the “Second Target Shares”). If the Second Target has not been achieved for such 20 trading days during the three-year period referenced in this Section 2.8(d), the Second Target Shares shall no longer be outstanding and shall be cancelled.
(e) Subject to Section 2.8(f) hereof, if between the third and the fifth anniversaries of the Closing Date, the Share Price of Parent Common Stock equals or exceeds $30.50 per share (the “Third Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release the Third Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “Third Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) hereof and Section 2.6(c) of the Company Disclosure Statement (the “Third Target Shares”). If the Third Target has not been achieved for such 20 trading days during the two-year period referenced in this Section 2.8(e), the Third Target Shares shall no longer be outstanding and shall be cancelled.
(f) In the event of a Change of Control or Reorganization Event, any Escrowed Earnout Shares and Escrowed Sponsor Earnout Shares remaining in the escrow account and not theretofore cancelled shall be released or cancelled as follows: (i) to the extent that the Change of Control or Reorganization Event Consideration exceeds the First Target, any First Target Shares and Escrowed Sponsor Earnout Shares shall be released, (ii) to the extent that the Change of Control or Reorganization Event Consideration exceeds the Second Target, any Second Target Shares shall be released, and (iii) to the extent that the Change of Control or Reorganization Event Consideration exceeds the Third Target, any Third Target Shares shall be released. To the extent that the Change of Control or Reorganization Event Consideration does not exceed any given Target, the Target Shares with respect to such Tranche and the Escrowed Sponsor Earnout Shares, if applicable, shall no longer be outstanding and shall be cancelled, effective upon completion of such Change of Control or Reorganization Event.
(g) The target share price triggers listed in Sections 2.8(c), (d) and (e) hereof (such dollar amounts, the “Share Price Triggers”) and the Escrowed Earnout Shares and Escrowed Sponsor Earnout Shares to be distributed upon achievement of said targets shall be adjusted from time to time as follows:
(i) In the event the outstanding shares of Parent Common Stock shall be subdivided or reclassified into a greater number of shares of Parent Common Stock, the Share Price Triggers in effect at the close of business on the day upon which such subdivision or reclassification becomes effective shall be equitably and proportionately reduced, and conversely, in case outstanding shares of Parent Common Stock shall each be combined or reclassified into a smaller number of shares of Parent Common Stock, the Share Price Triggers in effect at the close of business on the day upon which such combination or reclassification becomes effective shall be equitably and proportionately increased, such reduction or increase, as the case may be, to become effective immediately prior to the opening of business on the day following the day upon which such subdivision or combination becomes effective.
(ii) Pursuant to the Escrow Agreement, in connection with any such subdivision or reclassification into a greater number of shares of Parent Common Stock, the preparation Escrowed Earnout Shares and Escrowed Sponsor Earnout Shares distributable upon the achievement of the applicable milestones shall be equitably and proportionately increased and, conversely, in connection with any such combination or reclassification into a smaller number of shares of Parent Common Stock, the Escrowed Earnout Statement, Shares and until Escrowed Sponsor Earnout Shares distributable upon the final resolution achievement of the Earnout Statementapplicable milestones shall be equitably and proportionately reduced. For example, Purchaser shall, and shall cause the Companies and their Subsidiaries tofor purposes of clarity, (Ax) provide Sellers’ Representative in the case of a 2-for-1 stock split of Parent Common Stock, the Escrowed Earnout Shares distributable upon the achievement of the first milestone shall be increased from 23,600,000 to 47,200,000 and its authorized Representatives with reasonable access(y) in the case of a 1-for-2 reverse stock split of Parent Common Stock, during normal business hours the Escrowed Earnout Shares distributable upon reasonable advance notice, the achievement of the first milestone shall be reduced from 23,600,000 to 11,800,000 (assuming for the purposes of this example that there are no adjustments to the relevant books number of shares of Parent Common Stock in the First Tranche).
(h) Without limiting the specificity of any of the foregoing, it is the intent of the parties to provide for fair and recordsequitable adjustments to the Share Price Triggers, including the Transferred Books Escrowed Earnout Shares and Recordsthe Escrowed Sponsor Earnout Shares to preserve the economic benefits intended to be provided to the Company Stockholders and the Sponsors, respectively, under the terms of this Agreement in the event there is any change in or conversion of the Parent Common Stock and, accordingly, the Parent Board of Directors shall make appropriate equitable adjustments in connection therewith, as determined in the good faith judgment of the Parent Board of Directors.
(i) Neither Parent, the Sponsors, the Company Stockholders nor any Affiliate thereof shall take any action, directly or indirectly, with the intent or effect of influencing or manipulating the market prices of Parent Common Stock during any measurement period described in Sections 2.8(c), (d) and (e) hereof. Furthermore, for the purposes of determining whether a Share Price Trigger has been achieved for 20 trading days within any 30-trading-day period pursuant to Sections 2.8(c), (d) and (e) hereof, any days during which any such persons (A) have outstanding a public announcement or statement relating to the review purchase or sale of equity securities of Parent (other than ordinary-course, generic statements as to the possibility of such purchases from time to time and objection right contemplated hereinwhich do not specify either the amount of any such potential purchases nor the price or prices at which such purchases may be made), Purchaser’s and its accountants’ work paperswhether in the public market or otherwise, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and or (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representativeshave made, including by providing on a timely basis information reasonably necessary or useful in the determination aggregate, to the best knowledge of Parent, purchases of Parent Common Stock exceeding 1% of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), average daily trading volume reported for the period beginning security during the four calendar weeks preceding the week in which such purchases were made, shall not be counted as days on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellerswhich such Share Price Trigger has been achieved. Such cash payment excluded days shall be made extend the 30-trading-day measurement period by wire transfer an equal number of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreedays.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Agreement and Plan of Merger (Polaris Acquisition Corp.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Standard Pacific shall cause Buyer to pay to each Seller his Pro-Rata Portion of an aggregate amount equal to 20% of the positive Company Pre-Tax Income for each of the three years ending December 31, 2003, 2004 and 2005 (each an "Earnout Payment" and collectively, the "Earnout"); provided, however, that in no event will the aggregate amount of the Earnout exceed Seven Million Dollars (the "Earnout Cap"). Said Earnout is deemed part of the Purchase Price. If the amount of Company Pre-Tax Income is negative with respect to any particular year, such negative amount shall be carried forward to the following year and such negative amount shall be included in the calculation of the Earnout Payment for such following year; provided, further, after calculation of the Earnout Payment for such following year, if any negative amount carried forward remains as of the end of the Earnout Periodsuch following year, Purchaser that negative amount shall prepare be carried forward to subsequent years and included in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”)Payment for such subsequent years.
(b) In Not later than ten (10) days after the event audit committee of any the Board of Director's of Standard Pacific approves Standard Pacific's year-end financial statements, Buyer shall prepare and deliver to each Seller its calculation of the Earnout Payment for the immediately preceding fiscal year. Within 30 days following Buyer's notification to the Sellers of its calculation of the applicable Earnout Payment, the Sellers shall deliver to Buyer a notice of objection signed by Sellers’ Representative both Sellers (an "Objection Notice") or a notice of acceptance signed by either Seller (an "Acceptance Notice") with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt calculation of the Earnout StatementPayment. Buyer shall provide the Sellers and their accountants and other representatives, give written notice upon reasonable advance notice, access to Purchaser the books and records of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt Company relating to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and Earnout Payment as may be reasonably requested by the Sellers. Buyer's Calculation of each Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and Payment shall be final and binding on all the parties hereto.
(c) Ifif an Acceptance Notice is delivered to Buyer or if no Objection Notice is delivered to Buyer within such 30 day period. Any Objection Notice shall specify the items disputed, shall describe the reasons for any reasonthe objection thereof, Purchaser shall state the amount in dispute and shall state Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery ' calculation of the Earnout Dispute NoticePayment. If an Objection Notice is given, the Sellers and Buyer shall consult with each other with respect to the objection. If the parties are unable to reach agreement within 15 days after an Objection Notice has been given, any unresolved disputed items shall be promptly referred to KPMG LLP, provided however, if either of the parties has used the services of KPMG LLP at any time in the six month period prior to such selection of an accounting firm, then such the unresolved items shall be resolved promptly referred to such other accounting firm mutually agreed to by the Referee in parties (KPMG LLP, if neither of the manner provided in Section 2.03(c) aboveparties had used KPMG LLP's services at any time during the six month period prior to KPMG LLP's selection, mutatis mutandis, except or such other firm are referred to herein as modified hereinthe "Unrelated Accounting Firm"). The Referee Unrelated Accounting Firm shall issue be directed to render a written report which shall include a revised Earnout Statement on the unresolved disputed issues as adjusted promptly as practicable (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant but in no event later than 45 days following submission of the matter to the Referee’s Unrelated Accounting Firm) and to resolve only those issues of dispute set forth in the Objection Notice. The resolution of the unresolved objections. The Referee shall review only those matters specified in dispute by the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, Unrelated Accounting Firm shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdictionthe parties. The fees and expenses of the Unrelated Accounting Firm shall be borne equally between the Sellers and Buyer; provided, however, that if the Earnout Payment calculated by one of the parties agree that (the procedure set forth "Differing Party") pursuant to this subsection differs from the final determination of the Unrelated Accounting Firm by more than twenty percent to the detriment of such Differing Party, then such Differing Party shall be responsible for the payment of all of the fees and expenses of the Unrelated Accounting Firm.
(c) If either Seller delivers to Buyer the Acceptance Notice referred to in this Section 2.06 for resolving disputes 2.3(b) or the Sellers fail to deliver an Objection Notice within the 30 day period required by Section 2.3(b) with respect to the any Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout StatementPayment, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser Buyer shall pay to the Sellers any unpaid portion amounts which Buyer's calculation shall indicate to be owed to the Sellers within five Business Days after the delivery of such Acceptance Notice or the expiration of such 30 day period, as the case may be. Alternatively, if the Sellers deliver to Buyer the Objection Notice referred to in Section 2.3(b), within five Business Days after such delivery, Buyer shall pay the undisputed portion, if any, of the amount owed and, within five Business Days after the resolution of any dispute by the parties or the Unrelated Accounting Firm relating to the Objection Notice, Buyer shall pay the remainder owed, if any. Any payment pursuant to this Section 2.3 shall be considered an adjustment to the Purchase Price, and shall be made in immediately available funds. If Buyer has not delivered its calculation of the Earnout Amount plus Payment for any applicable fiscal year to the Sellers by January 31 of the following fiscal year, Buyer shall be obligated to pay simple interest on such unpaid portion thereon at the rate of eight percent (the “Earnout Interest”8%) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period calculated beginning on the Earnout Payment Deadline February 1 of such following fiscal year and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days day prior to the date of payment.
(d) From the Closing Date until January 1, 2006 (or until the payment in full of the Earnout, if earlier), Standard Pacific:
(i) shall not, without the prior written consent of the Sellers, such payment consent not to be unreasonably withheld, conditioned or delayed, commingle the business of the Company with any other division of Standard Pacific; provided, however, that the Sellers acknowledge and agree that (A) Standard Pacific may restructure the business of the Company into any number of separate entities so long as such restructuring does not result in the commingling of the business of the Company with any other division of Standard Pacific (all reference to the Company in this Section 2.3 include the business of the Company restructured as described in this Section 2.3(d)(i)) and (B) Standard Pacific will sweep cash out of the Company in the manner that Standard Pacific sweeps cash from Standard Pacific's other divisions (such swept cash to be treated as a non-interest bearing intercompany receivable of the Company in the same manner as Standard Pacific's other divisions);
(ii) shall not burden the Company with debt incurred on behalf of the operations of Standard Pacific other than the operations of the Company; provided, however, that the Sellers acknowledge and agree that (A) the Company will be a guarantor of various obligations of Standard Pacific, but any payments made by the Company in respect of any guarantees will be disregarded for purposes of calculating Company Pre Tax Income, (B) general corporate overhead will be allocated to the Company in the same manner as such overhead is due or allocated to Standard Pacific's other divisions from time to time, (C) the cost of insurance will be allocated to the Company in the same manner as it is allocated to Standard Pacific's other divisions based on claims history, product type, volume and other relevant factors; and (D) intercompany interest will be charged on qualified assets (as described in SFAS 34 "Capitalization of Interest"), stale inventory, investments in joint ventures and on such other date assets as Purchaser and Sellers’ Representative shall agreeStandard Pacific may charge its other divisions from time to time.
(fiii) The Parties shall provide to the Company an amount of capital reasonably necessary to accomplish the Company's business plan attached hereto as Exhibit G (the "Business Plan"); provided, however, that the Sellers acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate that the Business Plan may be revised in their sole discretion such a manner so as to result in a reduction in the amount of capital reasonably necessary to accomplish the revised Business Plan either, (A) by the mutual agreement of Standard Pacific and nothing the Sellers, or (B) by Standard Pacific, acting alone, if the Company fails to meet or exceed budgeted Company Pre-Tax Income as set forth in this Section 2.06 requires Purchaser or the Business Plan for any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountparticular year.
Appears in 1 contract
Samples: Stock Purchase Agreement (Standard Pacific Corp /De/)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after Following the end Closing, and as additional consideration for the Transactions and as an incentive to generate future growth of the Earnout PeriodCompany, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and Consideration shall become subject to potential forfeiture if the Triggering Events do not occur within their respective Earnout Periods with the applicable portion of such Earnout Consideration no longer being subject to forfeiture upon the occurrence of the applicable Triggering Event. Certificates or book entries representing the Earnout Amount payableConsideration shall bear a legend referencing that they are subject to forfeiture pursuant to the provisions of this Agreement, if and any (transfer agent for such Earnout Consideration will be given appropriate stop transfer orders with respect to the “Earnout Statement”)Consideration until the occurrence of the applicable Triggering Event; provided, however, that upon the Triggering Event in accordance with the terms herein, the parties shall promptly cause the removal of such legend, as applicable, with respect to the applicable Earnout Consideration and direct such transfer agent that such stop transfer orders are no longer applicable.
(b) In The Earnout Consideration shall no longer be subject to forfeiture upon the event occurrence of any objection by Sellers’ Representative with respect to each Triggering Event, as applicable. For the determination avoidance of doubt, the Net Sales or shares comprising the Earnout Amount payableConsideration and subject to forfeiture pursuant to Section 3.03(a) shall equal 40,000,000 shares of Company Topco in the aggregate, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Allocation Schedule.
(c) If the Company or its affiliates achieves Triggering Event within the Earnout Statement Period applicable to Triggering Event I, and Triggering Event I has not been achieved previously, then Triggering Event I shall be deemed to be achieved at the same time and the corresponding Earnout Consideration for Triggering Event I shall no longer be subject to forfeiture at the same time as the Earnout Consideration for Triggering Event II is no longer subject to forfeiture.
(d) If, during the Earnout Period, there is a Change of Control, both Triggering Events shall be deemed to have been accepted occurred and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute NoticeConsideration shall no longer be subject to forfeiture. For purposes of this Agreement, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted “Change of Control” means any transaction or series of transactions (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and following which a person or “group” (iiwithin the meaning of Section 13(d) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout StatementExchange Act) of persons, except as are required to resolve the unresolved objections. The award has direct or indirect beneficial ownership of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum securities (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account rights convertible or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
exchangeable into securities) representing fifty percent (f50%) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business voting power of or economic rights or interests in their sole discretion and nothing in this Section 2.06 requires Purchaser Company Topco or any of its Affiliates subsidiaries, (ii) constituting a merger, consolidation, reorganization or other business combination, however effected, following which, the voting securities of Company Topco or any of its subsidiaries immediately prior to take such merger, consolidation, reorganization or other business combination do not continue to represent or are not converted into fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the person resulting from such combination or, if the surviving company is a subsidiary, the ultimate parent thereof, or (iii) the result of which is a sale of all or substantially all of the assets of Company Topco to any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountperson.
Appears in 1 contract
Samples: Business Combination Agreement (Good Works II Acquisition Corp.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Closing, subject to the terms and conditions set forth herein, certain directors, officers, employees and consultants of the Company who are residents of Canada for the purposes of the ITA and not subject to the provisions of the Code, each as set forth on Schedule 1.16(a) (the “Company Earnout Participants”), shall have the contingent right to receive up to an additional 5,000,000 AB PubCo Common Shares (subject to equitable adjustment for stock splits, stock dividends, combinations, recapitalizations and the like after the end Closing, including to account for any equity securities into which such AB PubCo Common Shares are exchanged or converted) (the “Company Earnout Shares”). On the forty-fifth (45th) Business Day following the achievement of the Earnout Milestone (as hereinafter defined), the Company Earnout Participants will be entitled to receive one-hundred percent (100%) of the Company Earnout Shares if, for any twenty (20) Trading Days within any thirty (30)-consecutive Trading Day period beginning on the Closing Date and ending on the date that is forty-eight (48) months following the Closing Date (the “Earnout Period”), the VWAP of AB PubCo Common Shares equals or exceeds $15.00 per share (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing) (the “Earnout Milestone”); provided, however, that each such Company Earnout Participant must have continued to serve as a director, officer, employee or consultant of the Company (or AB Pubco, as its successor) up to the time of the achievement of the Earnout Milestone to be entitled to receive any Company Earnout Shares. For the avoidance of doubt, if the Earnout Milestone is not achieved during the Earnout Period, Purchaser shall prepare in good faith and deliver the Company Earnout Participants will not be entitled to Sellers’ Representative a written statement showing in reasonable detail receive any of the calculation of Net Sales for the Company Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”)Shares.
(b) In Following the event of any objection by Sellers’ Representative with respect Closing, subject to the determination terms and conditions set forth herein, certain designees of the Net Sales SPAC, as specified by the SPAC to the Company in writing prior to the Closing (the “Designated Earnout Participants”), shall have the contingent right to receive up to an additional 2,000,000 AB PubCo Common Shares (subject to equitable adjustment for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such AB PubCo Common Shares are exchanged or converted) (the “Designated Earnout Amount payableShares,” and together with the Company Earnout Shares, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute NoticeShares”). Purchaser and Sellers’ Representative shall thereafter attempt The Designated Earnout Participants will be entitled to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation receive (100%) of the Net Sales and Designated Earnout Shares if the Earnout Amount as set forth in Milestone is achieved during the Earnout Statement shall Period. For the avoidance of doubt, if the Earnout Milestone is not achieved during the Earnout Period, the Designated Earnout Participants will not be deemed entitled to have been accepted and shall be final and binding on all parties heretoreceive any of the Designated Earnout Shares.
(c) IfPromptly, for and in any reasonevent within ten (10) Business Days, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days following the end of each monthly anniversary of the date of delivery of Closing during the Earnout Dispute NoticePeriod, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted AB PubCo’s Chief Financial Officer will calculate (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative the VWAP of the AB PubCo Common Shares on each Trading Day for such monthly anniversary period and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to whether the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to Milestone has been achieved during the Earnout Statement shall be the sole and exclusive method for resolving any such disputesPeriod.
(d) In connection with With respect to the preparation Company Earnout Participants, if the Earnout Milestone is achieved during the Earnout Period, then:
(i) within two (2) Business Days of the Earnout StatementMilestone having been achieved, AB PubCo will deliver written notice to each of the Company Earnout Participants that the Earnout Milestone has been achieved (the “Milestone Achievement Notice”);
(ii) the Company Earnout Participants shall have thirty (30) Business Days from the date of the Milestone Achievement Notice to provide written notice (the “Deferred Payment Notice”) to AB PubCo that it wishes to defer the issuance date of the Company Earnout Shares to which it is entitled, to a date that is not more one (1) year from the date of the Milestone Achievement Notice (the “Deferred Payment Date”);
(iii) those Company Earnout Participants that elect a Deferred Payment Date in accordance with Section 1.16(d)(ii), may defer the issuance date of their Company Earnout Shares for three (3) additional one (1) year periods (i.e., in each case terminating on an anniversary of the initial Deferred Payment Date) by giving a new Deferred Payment Notice to AB PubCo not earlier than ninety (90) days and not later than thirty (30) Business Days prior to the expiration of the previous Deferred Payment Date (for greater certainty, Company Earnout Participants shall not be permitted to give any such Deferred Payment Notice after the day which is thirty (30) Business Days prior to the expiration of the Deferred Payment Date, and until a Deferred Payment Notice, once given, may not be changed or revoked);
(iv) if no Deferred Payment Notice is provided by a Company Earnout Participant to AB PubCo, then AB PubCo will issue and deliver the final resolution Company Earnout Shares to the Company Earnout Participants, with each Company Earnout Participant receiving its portion of the Company Earnout StatementShares as set forth on Schedule 1.16(a), Purchaser shall, and shall cause within ten (10) Business Days following the Companies and their Subsidiaries to, date that is thirty (A30) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to Business Days from the relevant books and records, including the Transferred Books and Records, for the purposes date of the review Milestone Achievement Notice; and
(v) with respect to those Company Earnout Participants that elect a Deferred Payment Date in accordance with Section 1.16(d)(ii) or (iii), AB PubCo will issue and objection right contemplated hereindeliver the Company Earnout Shares to such Company Earnout Participants, Purchaser’s and with each such Company Earnout Participant receiving its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation portion of the Company Earnout Statement Shares as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in on Schedule 1.16(a), on the applicable Deferred Payment Date. Notwithstanding the foregoing, the Deferred Payment Date will not be later than the date, if any, which the Company Earnout StatementParticipant’s employment with the Company ends.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree With respect to the Designated Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout AmountParticipants, if the Earnout Amount or any portion thereof Milestone is not received achieved during the Earnout Period, then AB PubCo will issue and deliver the Designated Earnout Shares to the Designated Earnout Participants (in accordance with an allocation to be specified by Sellers on or the SPAC to the Company in writing prior to the Earnout Payment Deadline, Purchaser shall pay to Closing) within twenty (20) Business Days following the Sellers any unpaid portion of date that the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeMilestone was achieved.
(f) The Parties acknowledge and agree thatAt all times during the Earnout Period, AB PubCo shall (i) keep available for Tax purposes, issuance a sufficient number of the payment AB PubCo Common Shares to permit AB PubCo to satisfy in full the issuance of the Earnout Amount Shares, and shall take all actions reasonably required (if anyincluding by convening any shareholder meeting) will be treated as an adjustment to increase the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 authorized number of the CodeAB PubCo Common Shares if at any time there are insufficient unissued AB PubCo Common Shares to permit such reservation, and (ii) use commercially reasonable efforts to cause AB PubCo Common Shares to remain tradable on the principal securities exchange or securities market on which the AB PubCo Common Shares are then traded.
(g) After the Closing, and If during the Earnout Period, Purchaser a Company Sale is consummated which implies a value per share of the AB PubCo Common Shares that equals or exceeds Fifteen Dollars ($15.00) per share (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing), as determined by the Post-Closing AB PubCo Board after including all of the Earnout Shares in such determination, then immediately prior to the consummation of such Company Sale, (i) the Earnout Shares, to the extent not yet earned, shall notbe deemed earned, and (ii) AB PubCo will issue and deliver the Earnout Shares to the Earnout Participants, with each Earnout Participant receiving its portion of the Earnout Shares as contemplated by Section 1.16(a) and Section 1.16(b), as applicable.
(h) For the avoidance of doubt, the Company Earnout Shares, if any, shall be subject to the applicable lock-up restrictions set forth in Company Lock-up and Support Agreement, and the Designated Earnout Shares, if any, shall be subject to the applicable lock-up restrictions set forth in the A&R Sponsor Agreement.
(i) Any issuance of the Company Earnout Shares, including without limitation in connection with a Company Sale pursuant to Section 1.16(g), shall be treated as compensation paid to the recipients thereof, and is not intended to be, and shall cause its Affiliates not tobe treated as, take any actionAmalgamation Consideration, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required all for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountapplicable Tax purposes.
Appears in 1 contract
Samples: Business Combination Agreement (Insight Acquisition Corp. /DE)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after After the end Closing, subject to the terms and conditions set forth herein, the Sellers shall have the contingent right to receive additional consideration from Purchaser based on the performance of Purchaser and its Subsidiaries, including the Earnout PeriodCompany, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payablefiscal year ended December 31, if any 2019 (the “2019 Earnout StatementYear”) and the fiscal year ended December 31, 2020 (the “2020 Earnout Year” and each such fiscal year, an “Earnout Year” and such two-year fiscal period, the “Earnout Period”) if the requirements as set forth in this Section 1.4 are met. In the event that the Purchaser Adjusted Net Income for the 2019 Earnout Year is equal to or greater than One Hundred and Eighty Million Renminbi (RMB180,000,000) (the “2019 Earnout Target”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive from the Purchaser, as additional consideration for the purchase of the Purchased Shares, an additional Five Million (5,000,000) Purchaser Ordinary Shares (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “2019 Earnout Shares”). In the event that the Purchaser Adjusted Net Income for the 2020 Earnout Year is equal to or greater than Three Hundred and Fifteen Million Renminbi (RMB315,000,000) (the “2020 Earnout Target” and together with the 2019 Earnout Target, the “Earnout Targets”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive from the Purchaser, as additional consideration for the purchase of the Purchased Shares, an additional Five Million (5,000,000) Purchaser Ordinary Shares (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “2020 Earnout Shares”, and collectively with the 2019 Earnout Shares, the “Earnout Shares”)). In the event that an Earnout Target is not met for any Earnout Year, the Sellers shall not be entitled to receive any Earnout Shares for such Earnout Year; provided, that in the event that the aggregate Purchaser Adjusted Net Income for both Earnout Years combined is at least Four Hundred and Ninety Five Million Renminbi (RMB495,000,000) (the “Aggregate Earnout Target”), the Sellers shall be entitled to receive any Earnout Shares that they otherwise did not receive (the “Alternative Earnout”). For the avoidance of doubt, any determination of the Purchaser Adjusted Net Income that is not otherwise in Renminbi will be expressed in Renminbi by converting the applicable currency to Renminbi using the applicable exchange rate as of the last day of the applicable Earnout Year.
(b) In As soon as practicable (but in any event within ten (10) Business Days) after Purchaser’s filing of the event annual audited consolidated financial statements for Purchaser and its Subsidiaries with the SEC on Form 20-F or 10-K (or other equivalent SEC form) for each Earnout Year, the Purchaser’s Chief Financial Officer (the “CFO”) will prepare and deliver to the Purchaser Representative and the Seller Representative (each, a “Representative Party”) a written statement (each, an “Earnout Statement”) that sets forth the CFO’s determination in accordance with the terms of any objection by Sellers’ Representative this Section 1.4 of (i) the Purchaser Adjusted Net Income for such Earnout Year based on such audited financial statements, (ii) for the 2020 Earnout Year only, the aggregate Purchaser Adjusted Net Income for both Earnout Years combined based on such audited financial statements and the finally determined Earnout Statement for the 2019 Earnout Year, and (iii) whether the Sellers are entitled to receive Earnout Shares for such Earnout Year as a result of achieving the applicable Earnout Target or, with respect to the determination of 2020 Earnout Year only, the Net Sales or the Aggregate Earnout Amount payable, Sellers’ Target. Each Representative shall, within 60 Party will have thirty (30) days after its receipt of an Earnout Statement to review it. The Seller Representative and the Purchaser Representative, and their respective Representatives on their behalves, may make inquiries of the CFO and related Purchaser and Company personnel and advisors regarding questions concerning or disagreements with the Earnout Statement arising in the course of their review thereof, and the Purchaser and the Company shall provide reasonable cooperation in connection therewith. If either Representative Party has any objections to the Earnout Statement, give written notice such Representative Party shall deliver to Purchaser the Company (to the attention of such objection showing the CFO) and the other Representative Party a statement setting forth its objections thereto (in reasonable detail the calculation thereof detail) (an “Earnout Dispute NoticeObjection Statement”). Purchaser and Sellers’ If an Objection Statement is not delivered by a Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
Party within thirty (c30) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of following the date of delivery of the Earnout Dispute NoticeStatement, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant Representative Party will have waived its right to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to contest the Earnout Statement, except as are required and all determinations and calculations set forth therein, and whether the Sellers have earned the Earnout Shares for such Earnout Year (or have otherwise achieved the Alternative Earnout). If an Objection Statement is delivered within such thirty (30) day period, then the Seller Representative and the Purchaser Representative shall negotiate in good faith to resolve any such objections for a period of twenty (20) days thereafter. If the unresolved objectionsSeller Representative and the Purchaser Representative do not reach a final resolution within such twenty (20) day period, then upon the written request of either Representative Party (the date of receipt of such notice by the other Representative Party, the “Independent Expert Notice Date”), the Representative Parties will refer the dispute to the Independent Expert for final resolution of the dispute in accordance with Section 1.4(c). The award Parties acknowledge that any information provided pursuant to this Section 1.4 will be subject to the confidentiality obligations of Section 6.13.
(c) If a dispute with respect to an Earnout Statement is submitted in accordance with this Section 1.4 to the Referee shall set out Independent Expert for final resolution, the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that Parties will follow the procedure procedures set forth in this Section 2.06 for resolving disputes 1.4(c). Each of the Seller Representative and the Purchaser Representative agrees to execute, if requested by the Independent Expert, a reasonable engagement letter with respect to the Earnout Statement shall determination to be made by the sole Independent Expert. All fees and exclusive method for expenses of the Independent Expert will be borne by the Purchaser. Except as provided in the preceding sentence, all other costs and expenses incurred by the Seller Representative in connection with resolving any dispute hereunder before the Independent Expert will be borne by the Sellers, and all other costs and expenses incurred by the Purchaser Representative in connection with resolving any dispute hereunder before the Independent Expert will be borne by the Purchaser. The Independent Expert will determine only those issues still in dispute as of the Independent Expert Notice Date and the Independent Expert’s determination will be based solely upon and consistent with the terms and conditions of this Agreement. The determination by the Independent Expert will be based solely on presentations with respect to such disputesdisputed items by the Purchaser Representative and the Seller Representative to the Independent Expert and not on the Independent Expert’s independent review; provided, that such presentations will be deemed to include any work papers, records, accounts or similar materials delivered to the Independent Expert by a Representative Party in connection with such presentations and any materials delivered to the Independent Expert in response to requests by the Independent Expert. Each of the Seller Representative and the Purchaser Representative will use their reasonable efforts to make their respective presentations as promptly as practicable following submission to the Independent Expert of the disputed items, and each such Representative Party will be entitled, as part of its presentation, to respond to the presentation of the other Representative Party and any questions and requests of the Independent Expert. In deciding any matter, the Independent Expert will be bound by the provisions of this Agreement, including this Section 1.4. It is the intent of the parties hereto that the Independent Expert Procedure and the activities of the Independent Expert in connection herewith are not (and should not be considered to be or treated as) an arbitration proceeding or similar arbitral process and that no formal arbitration rules should be followed (including rules with respect to procedures and discovery). The Seller Representative and the Purchaser Representative will request that the Independent Expert’s determination be made within forty-five (45) days after its engagement, or as soon thereafter as possible, will be set forth in a written statement delivered to the Purchaser Representative and the Seller Representative and will be final, conclusive, non-appealable and binding for all purposes hereunder (other than for fraud or manifest error).
(d) In connection If for any Earnout Year there is a final determination in accordance with Section 1.4(b) that the preparation Sellers are entitled to receive Earnout Shares for such Earnout Year (or have otherwise achieved the Alternative Earnout), then such Earnout Shares will be due upon such final determination and Purchaser will deliver such shares within ten (10) Business Days thereafter (subject to this Section 1.4(e))). Notwithstanding anything to the contrary contained herein, any obligation of the Purchaser to issue Earnout Shares under this Section 1.4 will be subject to offset against the indemnification obligations of the Indemnitors under Article VII, and the number of Earnout Shares to be issued will be reduced by (up to a maximum equal to the total maximum number of Earnout Shares) (i) the number of Earnout Shares used to satisfy indemnification claims that have been made and resolved in accordance with Article VII hereof on or prior to the issuance date of such Earnout Shares that have not been satisfied or sufficiently reserved using the Escrow Property in accordance with Section 1.3 and Article VII and (ii) a number of Earnout Shares necessary to satisfy indemnification claims that have been made in accordance with Article VII hereof and that remain unresolved on or prior to the issuance date of such Earnout Shares that have not been sufficiently reserved using the Escrow Property in accordance with Section 1.3 and Article VII (with such Earnout Shares under this clause (ii) determined based on the amount of the indemnification claim included in the Claim Notice provided by the Purchaser Representative under Article VII and the Purchaser Share Price as of the date of issuance of the Earnout Statement, and until Shares). Promptly after the final resolution of all such pending indemnification claims, the remaining Earnout Shares that have been reserved for pending indemnification claims, if any, after using the Earnout StatementShares to satisfy the indemnification obligations for the pending indemnification claims that have been resolved, shall be issued by Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and recordsSellers, including the Transferred Books and Records, for the purposes with each such Seller receiving its Pro Rata Share of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the such Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout StatementShares.
(e) On Following the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable Closing (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and including during the Earnout Period), Purchaser shall notand its Subsidiaries, including the Target Companies, will be entitled to operate their respective businesses based upon the business requirements of Purchaser and shall cause its Affiliates not toSubsidiaries. Each of Purchaser and its Subsidiaries, take any actionincluding the Target Companies will be permitted, nor fail to take an action, with following the purpose or intention of impeding the achievement of the Net Sales Closing (including during the Earnout Period required for Period), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the Purchaser Adjusted Net Income and the ability of the Sellers to receive earn the Earnout Amount or otherwise fail Shares, and the Sellers will not have any right to act in good faith in respect thereto. Subject to claim the foregoing, Purchaser or one or more loss of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser all or any portion of its Affiliates to take any actions Earnout Shares or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountother damages as a result of such decisions.
Appears in 1 contract
Samples: Share Exchange Agreement (TKK SYMPHONY ACQUISITION Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Acquisition Closing, as additional consideration for the Company interests acquired in connection with the Acquisition Merger, within five (5) Business Days after the end occurrence of a Triggering Event, the Earnout PeriodSurviving Corporation shall issue or cause to be issued to the Eligible Company Equityholders with respect to such Triggering Event the following shares of Surviving Corporation Common Stock (which shall be equitably adjusted for stock splits, Purchaser shall prepare in good faith and deliver reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Sellers’ Representative a written statement showing in reasonable detail Surviving Corporation Common Stock occurring after the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any Acquisition Closing) (the “Earnout StatementShares”) constituting the Per Share Earnout Consideration (which Earnout Shares, for the avoidance of doubt, shall be issued as shares of Surviving Corporation Common Stock to all Eligible Company Equityholders), upon the terms and subject to the conditions set forth in this Agreement and the Ancillary Agreements:
(i) upon the occurrence of Triggering Event I, a one-time issuance of an aggregate of 2,500,000 Earnout Shares;
(ii) upon the occurrence of Triggering Event II, a one-time issuance of an aggregate of 2,500,000 Earnout Shares; and
(iii) upon the occurrence of Triggering Event III, a one-time issuance of an aggregate of 2,500,000 Earnout Shares.
(b) In For the event avoidance of any objection by Sellers’ Representative doubt, the Eligible Company Equityholders with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement a Triggering Event shall be deemed entitled to have been accepted receive Earnout Shares upon the occurrence of each Triggering Event; provided, however, that each Triggering Event shall only occur once, if at all, and in no event shall the Eligible Company Equityholders collectively be final and binding on all parties heretoentitled to receive more than an aggregate of 7,500,000 Earnout Shares pursuant to this Section 3.03.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of during the Earnout Dispute NoticePeriod, then there is a Change of Control (A) the Surviving Corporation shall issue 7,500,000 shares of Surviving Corporation Common Stock (less any Earnout Shares issued prior to such unresolved items Change of Control pursuant to Section 3.03(a)) to the Eligible Company Equityholders with respect to the Change of Control, and (B) thereafter, this Section 3.03 shall terminate and no further Earnout Shares shall be resolved by the Referee issuable hereunder.
(d) The Surviving Corporation Common Stock price targets set forth in the manner provided definitions of Triggering Event I, Triggering Event II and Triggering Event III and in Section 2.03(c3.03(c) aboveshall be equitably adjusted for stock splits, mutatis mutandisreverse stock splits, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Surviving Corporation Common Stock occurring after the Acquisition Closing.
(ie) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to At all times during the Earnout StatementPeriod, except as are required the Surviving Corporation shall keep available for issuance a sufficient number of shares of unissued Surviving Corporation Common Stock to resolve permit the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced Surviving Corporation to satisfy in any court of competent jurisdiction. The parties agree that the procedure full its issuance obligations set forth in this Section 2.06 for resolving disputes with respect 3.03 and shall take all actions reasonably required (including by convening any stockholder meeting) to increase the Earnout Statement authorized number of Surviving Corporation Common Stock if at any time there shall be the sole and exclusive method for resolving insufficient unissued Surviving Corporation Common Stock to permit such reservation. In no event will any such disputes.
(d) In connection with the preparation right to receive Earnout Shares be represented by any negotiable certificates of the Earnout Statementany kind, and until the final resolution in no event will any holder of the a contingent right to receive Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (Shares take any steps that would render such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreerights readily marketable.
(f) The Parties acknowledge and agree thatSurviving Corporation shall take such actions as are reasonably requested by the Eligible Company Equityholders to evidence the issuances pursuant to this Section 3.03, for Tax purposes, including through the payment provision of an updated stock ledger showing such issuances (as certified by an officer of the Earnout Amount (if any) will be treated as an adjustment to Surviving Corporation responsible for maintaining such ledger or the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 applicable registrar or transfer agent of the CodeSurviving Corporation).
(g) After During the ClosingEarnout Period, the Surviving Corporation shall use reasonable best efforts for the Surviving Corporation to remain listed as a public company on, and for the Surviving Corporation Common Stock (including, when issued, the Earnout Shares) to be tradable over the national securities exchange (as defined under Section 6 of the Exchange Act) on which the shares of Surviving Corporation Common Stock are then listed; provided, however, that subject to Section 3.03(c), the foregoing shall not limit the Surviving Corporation from consummating a Change of Control or entering into a Contract that contemplates a Change of Control.
(h) Notwithstanding anything to the contrary contained herein, the Earnout Shares to be issued to the holders of Company Options and Company RSU Awards pursuant to Section 3.03(a) shall be issued at or as soon as practicable following the Acquisition Closing in the form of restricted Surviving Corporation Common Stock pursuant to the Omnibus Incentive Plan (the “Restricted Earnout Shares”). The number of Restricted Earnout Shares issued with respect to each Company Option and Company RSU Award held by an Eligible Company Equity Holder shall be equal to (i) (A) 7,500,000, divided by (B) the number of Adjusted Aggregate Fully Diluted Company Common Shares as of immediately prior to the Acquisition Merger Effective Time, multiplied by (ii) the aggregate number of shares of Company Common Stock underlying the applicable Company Option and Company RSU Award. Each Restricted Earnout Share shall be subject to forfeiture, and such forfeiture restrictions shall lapse with respect to a pro rata portion of the Restricted Earnout Shares held by each holder of Restricted Earnout Shares upon the occurrence of a Triggering Event (or on the date on which a Change of Control occurs as described in Section 3.03(c)), but only to the extent that such Restricted Earnout Share would have been issued upon the Triggering Event (or Change of Control) had it instead been issued pursuant to Section 3.03(a)-(c), and upon such lapse of forfeiture the Restricted Earnout Shares shall be treated as issued pursuant to Section 3.03(a)-(c) (as applicable). Any Restricted Earnout Share that remains subject to forfeiture at the expiration of the Earnout Period shall automatically and without further action be forfeited, and the Eligible Company Equityholder shall have no further right, title or interest in such Restricted Earnout Share. The Restricted Earnout Shares shall be subject to adjustment in accordance with Section 3.03(a), and shall not be entitled to dividends paid with respect to the Surviving Corporation Common Stock during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject Notwithstanding anything to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing contrary in this Section 2.06 requires Purchaser or any 3.03, in no event shall the number of its Affiliates Earnout Shares issued pursuant to take any actions or refrain from taking any actions or expend any efforts pursuant to achieve Section 3.03(a)-(c), together with the Net Sales required for the Sellers to receive the number of Restricted Earnout AmountShares vesting in accordance with this Section 3.03(h), exceed 7,500,000 Earnout Shares.
Appears in 1 contract
Samples: Business Combination Agreement (G Squared Ascend I Inc.)
Earnout. (a) As additional consideration for the Company Stock, and subject to the terms and conditions set forth in this Agreement, Buyer will make an additional payment, as determined pursuant to Section 1.03(b) (such payment, the “Earnout”) of up to $3,500,000 (the “Maximum Possible Earnout”) to Seller if the Companies achieve Combined Operating Income of at least $14,000,000 for the first four full fiscal quarters following the Closing Date (the “Earnout Period”); provided, however, the Maximum Possible Earnout shall be reduced by $750,000 if BNT’s current President does not remain employed by the Companies throughout the Earnout Period for a reason other than his death, disability or termination without cause, and shall be reduced by $750,000 if BNT’s current Chief Financial Officer does not remain employed by the Companies throughout the Earnout Period for a reason other than her death, disability or termination without cause, and shall be reduced by $100,000 if BNT’s current Director of Operations does not remain employed by the Companies throughout the Earnout Period for a reason other than his death, disability or termination without cause. The Maximum Possible Earnout, as adjusted by the applicable adjustments, if any, provided in the foregoing sentence shall be the “Adjusted Maximum Possible Earnout”. For clarity, if no adjustments are applicable, the Adjusted Maximum Possible Earnout shall be equal to the Maximum Possible Earnout. Combined Operating Income for purposes of determining whether the Maximum Possible Earnout or Adjusted Maximum Possible Earnout, as applicable, has been achieved will be determined in accordance with the Earnout Rules attached hereto as Exhibit B.
(b) The Earnout Amount payable to Seller shall be calculated, determined and paid in the following manneras follows:
(ai) Within 60 If the Combined Operating Income of the Companies during the Earnout Period is less than $14,000,000, the amount of Earnout payable to Seller shall be $0;
(ii) If the Combined Operating Income of the Companies during the Earnout Period is between $14,000,000 and $15,400,000, the amount of Earnout payable to Seller shall be determined by the following formula: Adjusted Maximum Possible Earnout x [Actual Combined Operating Income of the Companies during the Earnout Period - $14,000,000] / $1,400,000. By way of example, if the actual Combined Operating Income of the Companies during the Earnout Period is $14,800,000, then the amount of Earnout payable to Seller would be $2,000,000. By way of further example, if the actual Combined Operating Income of the Companies during the Earnout Period is $14,700,000 and the President of BNT resigns before the expiration of the Earnout Period, then the Adjusted Maximum Possible Earnout would be $2,750,000, and the amount of Earnout payable to Seller would be $1,375,000.
(iii) If the Combined Operating Income of the Companies during the Earnout Period is greater than $15,400,000, the amount of Earnout payable to Seller shall be the Adjusted Maximum Possible Earnout. By way of example, if the Combined Operating Income of the Companies during the Earnout Period is $15,500,000 and if the existing President, Chief Financial Officer and Director of Operations of BNT all remain employees of the Companies through expiration of the Earnout Period, then the Adjusted Maximum Possible Earnout and the Earnout payable to Seller is $3,500,000. Further, if the Combined Operating Income of the Companies during the Earnout Period is $15,500,000 and if the existing President of BNT died prior to expiration of the Earnout Period, but the existing Chief Financial Officer and Director of Operations of BNT remained employed by the Companies upon expiration of the Earnout Period, then the Adjusted Maximum Possible Earnout and the Earnout payable to Seller is $3,500,000. However, if the Combined Operating Income of the Companies during the Earnout Period is $15,500,000 and the existing Chief Financial Officer and Director of Operations of BNT remained employed by the Companies upon expiration of the Earnout Period, but the existing President of BNT resigned prior to the expiration of the Earnout Period, then the Adjusted Maximum Possible Earnout and the Earnout payable to Seller is $2,750,000.
(c) From Closing until sixty (60) days after the end of the Earnout Period, Purchaser the Companies shall prepare make available to Seller’s Representative reasonable access to the personnel, workpapers, and other information (in good faith paper and deliver electronic format) of the Companies as is reasonably necessary to Sellersdetermine progress toward the Earnout, and Seller’s Representative may provide such information to Seller’s advisors. In addition, Buyer shall provide or shall cause the Companies to provide to Seller’s Representative an Earnout statement on a quarterly basis during the Earnout Period.
(d) Any proper indemnification claim by any Buyer Indemnitee under Section 4.03, to the extent not otherwise satisfied, at the option of the Buyer Indemnitee may be satisfied by deducting and otherwise offsetting such claims against any amounts that are otherwise payable by Buyer pursuant to this Section 1.03, subject to the limitations set forth in Article 4.
(e) Within thirty (30) days after Buyer’s receipt of Buyer’s consolidated financial statements (including the Companies’ Representative consolidated financial statements) for the four full fiscal quarters corresponding to the Earnout Period, Buyer will prepare, or cause to be prepared, a written statement showing in reasonable detail of the calculation of Net Sales Earnout for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”)) and will deliver the Earnout Statement to Seller’s Representative.
(bf) In Following receipt by Seller’s Representative of Buyer’s proposed Earnout Statement and until the event Earnout is finally determined pursuant to this Section 1.03, Seller’s Representative will be permitted (upon reasonable advance written notice and during normal business hours) to review the Companies’ books and records and working papers related to Buyer’s draft of the proposed Earnout Statement and determination of the Earnout, and Buyer will provide Seller’s Representative with reasonable access to the Companies’ personnel, books and records, and facilities in connection with such review. The proposed Earnout Statement delivered by Buyer will become final and binding on the parties thirty (30) days following Buyer’s delivery thereof to Seller’s Representative, or sixty (60) days after the end of Earnout Period, whichever is later, except to the extent (and only to the extent) Seller’s Representative delivers written notice of its disagreement (the “Earnout Notice of Disagreement”) to Buyer on or prior to such date. All matters not subject to dispute as specifically identified in the Earnout Notice of Disagreement will be final and binding. The Earnout Notice of Disagreement must identify with specificity each item in the Earnout Statement that Seller’s Representative disagrees with and, for each disputed item, contain a statement describing in reasonable detail the basis of such objection and the amount in dispute. If Seller’s Representative timely delivers an Earnout Notice of Disagreement, then the Earnout Statement will become final and binding on the parties to this Agreement on the earlier of (i) the date Buyer and Seller’s Representative resolve in writing any objection by Sellers’ Representative differences they have with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth matters specified in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) IfNotice of Disagreement, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant the date all matters in dispute are finally resolved in writing by the Independent Accountants.
(g) During the sixty (60) days following delivery of an Earnout Notice of Disagreement, Buyer and Seller’s Representative will seek in good faith to resolve in writing any differences that they may have with respect to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections Earnout Notice of Disagreement. At the end of such sixty (60) day period, Buyer and shall make no changes Seller’s Representative will submit to the Independent Accountants for resolution all matters that remain in dispute, which were included in the Earnout StatementNotice of Disagreement (and will take all actions reasonably requested by the Independent Accountants in connection with such resolution, except as are required including submitting written information to resolve the unresolved objectionsIndependent Accountants if so requested), and the Independent Accountants will make a final determination of the Earnout in accordance with the terms of this Agreement (with it being understood that Buyer and Seller’s Representative will request that the Independent Accountants deliver to Buyer and Seller’s Representative its resolution in writing not more than thirty (30) days after its engagement). The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes Independent Accountants will make a determination only with respect to the matters still in dispute and, with respect to each such matter, their determination will be within the range of the dispute between Buyer and Seller’s Representative. The Independent Accountants’ determination will be based upon the Independent Accountants’ independent review of written materials submitted by Buyer and Seller’s Representative; the Earnout Statement Targets and related definitions included herein and the provisions of this Agreement; and any other information or analysis deemed appropriate by the Independent Accountants. The Independent Accountants may request, and each party shall furnish thereto, such other documents and information as may be reasonably requested by the sole and exclusive method for resolving any Independent Accountants in connection with such disputesreview.
(dh) In connection with the preparation The costs and expenses of the Independent Accountants will be allocated between Buyer and Seller’s Representative based upon the percentage of the portion of the contested amount not awarded to Buyer or Seller bears to the amount actually contested by such party. For example, if Seller’s Representative claims the Earnout Statementis $1,000 greater than the amount claimed by Buyer, and until the final resolution Buyer contests only $500 of the Earnout Statement, Purchaser shallamount claimed by Seller’s Representative, and shall if the Independent Accountants ultimately resolves the dispute by awarding Seller $300 of the $500 contested, then the costs and expenses of the Independent Accountants will be allocated 60% (i.e., 300 ÷ 500) to Buyer and 40% (i.e., 200 ÷ 500) to Seller’s Representative.
(i) If it is finally determined in accordance with this Section 1.03 that Seller is entitled to the Earnout, within three (3) Business Days after the date on which the Earnout Statement will become binding on the parties, Buyer will pay to Seller, or cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; providedSeller, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to the account designated by Seller, an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior amount equal to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeEarnout.
(fj) The Parties acknowledge and agree that, All payments made pursuant to this Section 1.03 will be deemed to be adjustments for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment purposes to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required aggregate purchase price paid by Buyer for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountCompany Stock.
Appears in 1 contract
Samples: Stock Purchase Agreement (Knight Transportation Inc)
Earnout. (a) The holders of the shares of Company Common Stock issued and outstanding immediately prior to the First Effective Time (other than Company Excluded Shares and Company Dissenting Shares) (such holders, the “Earnout Amount Recipients”) shall be calculatedentitled to receive, determined subject to the terms and paid in conditions of this Section 1.14(a) and the following mannerPayment Spreadsheet, the Earnout Shares Consideration as follows:
(ai) Within 60 days In the event that the VWAP of the Purchaser Common Stock equals or exceeds $15.00 per share (as equitably adjusted for stock splits, stock dividends, reorganizations and recapitalizations after the end Closing Date) (the “First Share Price Target”) for twenty (20) out of any thirty (30) consecutive Trading Days during the period beginning on the Closing Date and ending on the third anniversary of the Closing Date (the “First Earnout Period”), then, subject to the terms and conditions of this Agreement, the Earnout Recipients shall be entitled to receive, and Purchaser shall issue, an aggregate of 612,500 Earnout Shares, in accordance with, and pursuant to, the Payment Spreadsheet with each Earnout Recipient to receive the portion of the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail Shares Consideration set forth opposite such Earnout Recipient’s name on the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any Payment Spreadsheet (the “First Earnout StatementShare Payment”).
(bii) In the event of any objection by Sellers’ Representative with respect to that the determination VWAP of the Net Sales Purchaser Common Stock equals or exceeds $17.50 per share (as equitably adjusted for stock splits, stock dividends, reorganizations and recapitalizations after the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of Closing Date) (the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser Second Share Price Target” and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection together with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such dateFirst Share Price Target, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout InterestShare Price Targets”) at a rate equal to 10% per annum for twenty (or such lesser rate as shall be the maximum rate allowable under applicable Law), for 20) out of any thirty (30) consecutive Trading Days during the period beginning on the Earnout Payment Deadline Closing Date and ending on the date fourth anniversary of the remaining Closing Date (the “Second Earnout Period”, and together with the First Earnout Period, the “Earnout Periods”), the Earnout Recipients shall be entitled to receive, and Purchaser shall issue, an aggregate of 612,500 Earnout Shares, in accordance with, and pursuant to, the Payment Spreadsheet with each Earnout Recipient to receive the portion of the Earnout Amount Shares Consideration set forth opposite such Earnout Recipient’s name on the Payment Spreadsheet (the “Second Earnout Share Payment”, and together with the First Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposesShare Payment, the payment of the “Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodeShare Payments”).
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 sixty (60) days after the end of each of the First Earnout Period, the Second Earnout Period and the Third Earnout Period, Buyer shall prepare and deliver to the Securityholder Representative a written statement (each an “Earnout Statement”), which, for the avoidance of doubt, will include each of the components set forth on the Base Plan Schedule, setting forth its calculation of the Adjusted EBITDA for such period in accordance with the Base Plan Schedule, compared against the Earnout calculation for the applicable Earnout Period set forth on Schedule 2.5 attached hereto (the “Base Plan Schedule”). For purposes of clarity, nothing in the Base Plan Schedule shall alter the Adjusted EBITDA targets set forth in Schedule 2.5(c).Within thirty (30) days following delivery by Buyer of an Earnout Statement, the Securityholder Representative shall deliver written notice to Buyer of any good faith disagreement that the Securityholder Representative has with respect to the contents thereof which notice explains, in reasonable detail, the basis for its disagreement. During such period, Buyer shall provide the Securityholder Representative and his Representatives reasonable access to the relevant books and records and employees of the Group Companies for the purpose of facilitating the Securityholder Representative’s review of the applicable Earnout Statement. In the event that the Securityholder Representative does not notify Buyer in writing of a disagreement with respect to the Earnout Statement within such thirty (30)-day period, such Earnout Statement shall be deemed final, conclusive and binding on the parties. If the Securityholder Representative delivers a notice of disagreement within such thirty (30)-day period, then Buyer and the Securityholder Representative shall negotiate in good faith to resolve any such disagreement. If Buyer and the Securityholder Representative, notwithstanding such good faith effort, fail to resolve such disagreement within thirty (30) days after the Securityholder Representative notifies Buyer of its disagreement, then the dispute shall be submitted for final and binding resolution to the Accounting Expert for resolution in accordance with the procedures set forth in Sections 2.3(c) and (d), which shall apply hereto mutatis mutandis.
(b) All amounts payable pursuant to this Section 2.5 shall be paid within five (5) Business Days from the date on which the Adjusted EBITDA for the pertinent period is finally determined, by wire transfer of immediately available funds: (a) with respect to the Members, to the Securityholder Representative for further distribution to each Member in accordance with each Member’s Additional Pro Rata Share and (b) with respect to the Optionholders, to the Company to be paid by the Company to the applicable Optionholders (less applicable withholding and any Taxes required to be paid by the Group Companies with respect thereto) on or before the next regularly scheduled payroll date following such payment in accordance with each Securityholder’s Additional Pro Rata Share. Buyer shall have no right to withhold and set off any amounts owed by the Member to Buyer under the terms of this Agreement against amounts payable pursuant to this Section, except as contemplated by Section 2.4(b) and Article 8.
(c) During each Earnout Period:
(i) Buyer shall operate the Business in good faith consistent with the manner in which Buyer operates its other acquired business units, applicable Law and its third-party obligations;
(ii) Buyer shall operate the Group Companies as a separate profit center, business unit or division which will maintain separate books and records sufficient for the calculation of the Earnout, provided that Buyer may, at its discretion, move or integrate certain corporate functions of the Business (including with respect to corporate, finance, human resources and legal functions), and allocate the applicable expenses of any Group Company to Buyer or Buyer Parent instead. For purposes of determining the appropriate sharing of revenue for transactions between the Buyer and the Group Companies, (A) the Group Companies will be allocated sixty five percent (65%) of revenue generated and recognized by Buyer, Buyer Parent or their respective Affiliates (other than the Group Companies) or their respective business divisions (other than the Business) as a result of cross-marketing or referrals from the Group Companies and/or the Business and (B) Buyer will be allocated sixty five (65%) of revenue generated and recognized by any Group Company or the Business as a result of cross-marketing or referrals from Buyer, Buyer Parent or their respective Affiliates (other than the Group Companies) or their respective business divisions (other than the Business); and
(iii) Buyer shall not, or permit its Affiliates to, take any action, or knowingly omit to take any action, with the primary intent of impeding achievement of or reducing the amount of the Earnout.
(d) If, prior to the end of the Earnout Period, Purchaser shall prepare Buyer effects a Company Sale at a price that is equal to or greater than the price actually paid pursuant to this Agreement (as adjusted for partial sales), then the maximum amount of the Earnout payments contemplated in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales Section 2.5(c) for the Earnout Period period in which the Company Sale occurs and the Earnout Amount payable, if any future periods (but not any past periods) (the “Outstanding Earnout StatementPayment”).
(b) shall be accelerated and become due and payable without further action required on the part of any party hereto. In the event of such acceleration, Buyer shall make (or cause the applicable acquirer or surviving company to make) the Outstanding Earnout Payment within two (2) Business Days following the consummation of a Company Sale. For purposes of this Agreement, “Company Sale” means any objection by Sellers’ Representative with respect transaction or series of transactions pursuant to the determination which any Person, other than Buyer or an Affiliate of the Net Sales Buyer, acquires, directly or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted indirectly: (i) pursuant to any resolutions to objections agreed upon 50% or more of the outstanding equity, voting securities or beneficial ownership of the Group Companies (whether by Purchaser and Sellers’ Representative and merger, consolidation, reorganization, combination, amalgamation, sale, transfer or otherwise) or (ii) pursuant to the Referee’s resolution a majority of the unresolved objectionsassets of the Group Companies, determined on a consolidated basis. The Referee For purposes of clarity, Company Sale shall review only those matters specified not include indirect acquisitions of the Group Companies’ equity and/or assets effectuated by the acquisition of the equity and/or assets of Buyer or its Affiliates (other than the Group Companies or a holding company substantially all of the assets of which are the equity interests of the Group Companies) or minority investments in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesGroup Companies.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The (a) During the Earnout Amount Period, Acquiror shall, and shall be calculated, determined and paid in the following mannercause its controlled Affiliates to:
(ai) Within 60 days not take or omit to take any action that is in bad faith and for the primary purpose of avoiding, reducing, or preventing the achievement or attainment of the Price Earnout Milestone;
(ii) as soon as practicable (and in any event within ten (10) Business Days) after the end of the Earnout each monthly anniversary of a Measurement Start Date (each such period a “Measurement Period”), Purchaser shall prepare in good faith and deliver to Sellers’ each of the Acquiror Representative and the Blade Representative (each, a “Representative Party”) a written statement showing in reasonable detail statement, certified by the calculation Acquiror’s Chief Financial Officer (each, a “Price Earnout Statement”), setting out (A) the VWAP of Net Sales the Acquiror Common Stock for each Trading Day during such Measurement Period then ended and each preceding Measurement Period during the Earnout Period and (B) a statement as to whether the Price Earnout Amount payableMilestone has been achieved during such Measurement Period (for the avoidance of doubt, if Acquiror shall have no obligation to prepare and deliver a Price Earnout Statement following a Non-Reporting Measurement Period unless and until a New Measurement Start Date has occurred);
(iii) make available, in the ten (10) Business Days following Acquiror’s delivery of a Price Earnout Statement, Acquiror’s Chief Financial Officer and related personnel and advisors to (A) conduct a telephone or video conference with the Acquiror Representative and the Blade Representative (or either of them) regarding questions concerning or disagreements with such Price Earnout Statement arising in the course of their review thereof, (B) respond to reasonable follow-up inquiries by the Acquiror Representative and the Blade Representative regarding the information provided by or on behalf of Acquiror during any such telephone or video conference and (C) otherwise reasonably cooperate with the Acquiror Representative and the Blade Representative in connection with such Representative Party’s review of any Price Earnout Statement;
(iv) promptly upon the achievement of the Price Earnout Milestone (as finally determined pursuant to Section 3.05(c) or Section 3.05(d)), and in any event within ten (10) Business Days of such finally determined achievement of the Price Earnout Milestone (the “Price Milestone Issuance Date”), issue, or cause to be issued, to the Earnout StatementParticipants, in accordance with their respective Pro Rata Shares, the Earnout Shares, subject to Section 3.05(b); and
(v) immediately prior to the occurrence of a Transaction Earnout Milestone (the “Transaction Milestone Issuance Date”), issue or cause to be issued, to the Earnout Participants, in accordance with their respective Pro Rata Shares, the Earnout Shares, subject to Section 3.05(b).
(b) In the event of any objection by Sellers’ Representative with respect Notwithstanding anything in Section 3.05(a) to the determination of contrary, to the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt extent that any portion of the Earnout Statement, give written notice Shares become issuable to Purchaser an Earnout Participant in respect of such objection showing in reasonable detail Earnout Participant’s Assumed Blade Options that remain unvested as of the calculation thereof Price Milestone Issuance Date or the Transaction Milestone Issuance Date, as applicable (each such award, an “Earnout Dispute NoticeUnvested Assumed Option”). Purchaser and Sellers’ Representative shall thereafter attempt , then, in lieu of issuing such portion of the Earnout Shares to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does Participant in respect of Unvested Assumed Options, Acquiror shall grant to such Earnout Participant, as soon as practicable following the later of (i) the Price Milestone Issuance Date or the Transaction Milestone Issuance Date, as applicable and (ii) Acquiror’s filing of a Form S-8 Registration Statement covering grants to be made in accordance herewith, restricted stock units for a number of shares of Acquiror Common Stock equal to such portion of the Earnout Shares otherwise issuable to such Earnout Participant in accordance with Section 3.05(a) in respect of Unvested Assumed Options (“Earnout RSUs”); provided that such Earnout RSUs shall only be granted in accordance herewith if the Earnout Participant remains in continuous service to Acquiror or any of its Subsidiaries as of the Price Milestone Issuance Date or the Transaction Milestone Issuance Date, as applicable (and, if such Earnout Participant has not timely deliver an Earnout Dispute Noticeso remained in continuous service, then no Earnout Shares or Earnout RSUs shall be granted to such Earnout Participant in accordance herewith in respect of such Unvested Assumed Option). Earnout RSUs shall vest, and the calculation underlying shares of Acquiror Common Stock issued, in substantially equal quarterly installments over the remaining vesting schedule of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted corresponding Unvested Assumed Option and shall be final and binding on all parties heretosubject to the same vesting conditions as apply to the corresponding Unvested Assumed Options (as adjusted to reflect quarterly vesting installments).
(c) If, for If either Representative Party has any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue objections to a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Price Earnout Statement, except as are required such Representative Party shall, within fifteen (15) Business Days of such Representative Party’s receipt of such Price Earnout Statement (the “Objection Period”), deliver to the Acquiror (to the attention of the Acquiror’s Chief Financial Officer) and the other Representative Party a written statement (an “Objection Statement”) setting forth such objections (in reasonable detail). If an Objection Statement is delivered by a Representative Party prior to the expiration of the Objection Period, the Acquiror and each Representative Party shall meet, confer and exchange any additional relevant information reasonably requested regarding the computations set forth in the Price Earnout Statement for a period of ten (10) Business Day thereafter (the “Negotiation Period”) and use reasonable best efforts to resolve by written agreement (the unresolved objections. The award of “Agreed Modifications”) any differences as to the Referee shall set out computations in the final Price Earnout Statement. In the event Acquiror and the Representative Parties so resolve any such differences, the Price Earnout Statement, as modified by the Agreed Modifications, shall be final and binding on all parties heretowith respect to the applicable Measurement Period. In the event Acquiror and the Representative Parties do not resolve any differences as to the computations in the Price Earnout Statement prior to the expiration of the Negotiation Period, then either Representative Party may refer the dispute to a nationally recognized, independent accounting firm reasonably acceptable to Acquiror and may be enforced Blade and independent to Acquiror and Blade (“Independent Expert”) within thirty (30) calendar days following the expiration of the Negotiation Period for final resolution of the dispute in any court of competent jurisdiction. The parties agree that accordance with the procedure procedures set forth in Section 3.05(d).
(d) If a dispute with respect to a Price Earnout Statement is submitted in accordance with this Section 3.05 to the Independent Expert for final resolution, Acquiror and the Representative Parties will follow the procedures set forth in this Section 2.06 for resolving disputes 3.05(d). Each of the Blade Representative and the Acquiror Representative agrees to execute, if requested by the Independent Expert, a reasonable engagement letter with respect to the Earnout Statement shall determination to be made by the sole Independent Expert pursuant to this this Section 3.05(d). All fees and exclusive method for expenses of the Independent Expert will be borne by the Acquiror. Except as provided in the preceding sentence, all other costs and expenses incurred by the Blade Representative in connection with resolving any such disputes.
(d) In dispute hereunder before the Independent Expert will be borne by the Earnout Participants, and all other costs and expenses incurred by the Acquiror Representative in connection with resolving any dispute hereunder before the preparation of Independent Expert will be borne by the Earnout StatementAcquiror. The Blade Representative and the Acquiror Representative will request that the Independent Expert’s determination be made within forty-five (45) days after its engagement, or as soon thereafter as possible, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably that such determination be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in a written statement delivered to the Earnout StatementAcquiror, the Acquiror Representative and the Blade Representative. The Independent Expert’s determination will be final, conclusive, non-appealable and binding for all purposes hereunder (other than in the event of fraud or manifest error). The Independent Expert will determine only those issues still in dispute as of the date of such Independent Expert’s engagement and such determination will be based solely upon and consistent with the terms and conditions of this Agreement. Each of the Blade Representative and the Acquiror Representative will be entitled to make one presentation to the Independent Expert and will use their reasonable best efforts to make their respective presentations to the Independent Expert as promptly as practicable following submission to the Independent Expert of the disputed items, and each such Representative Party will be entitled, as part of its presentation, to respond to the presentation of the other Representative Party and any questions and requests of the Independent Expert. In deciding any matter, the Independent Expert will be bound by the provisions of this Agreement, including this Section 3.05(d). It is the intent of the parties hereto that the activities of the Independent Expert in connection herewith are not (and should not be considered to be or treated as) an arbitration proceeding or similar arbitral process and that no formal arbitration rules should be followed (including rules with respect to procedures and discovery).
(e) On Following the fifth Business Day after Purchaser Closing, the Acquiror and Sellers’ Representative agree its Subsidiaries, including Blade and its Subsidiaries, will be entitled to operate their respective businesses based upon the business requirements of the Acquiror and its Subsidiaries. Each of the Acquiror and its Subsidiaries, including Blade and its Subsidiaries, will be permitted, following the Closing to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the closing price of the Acquiror Common Stock and the achievement of the Price Earnout Milestone, and, other than as a result of a breach of Section 3.05(a)(i), the Earnout Statement or Purchaser and Sellers’ Representative receive from Participants will not have any right to claim the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment loss of the Earnout Amount, if the Earnout Amount all or any portion thereof is not received by Sellers on of any Earnout Shares or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion other damages as a result of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreedecisions.
(f) The Parties acknowledge and agree thatIf Acquiror shall, for Tax purposesat any time or from time to time, after the date hereof effect a subdivision, stock split, stock dividend, reorganization, combination, recapitalization or similar transaction affecting the outstanding shares of Acquiror Common Stock (in each case, other than pursuant to the Conversion or the PIPE Investment) (an “Earnout Adjustment Event”), the payment number of shares of Acquiror Common Stock set forth in the definitions of Earnout Shares, and the stock price target set forth in the definition of Price Earnout Milestone, shall be equitably adjusted for such Earnout Adjustment Event. Any adjustment under this paragraph shall become effective at the close of business on the date the Earnout Amount Adjustment Event becomes effective (which shall be the “ex” date, if any) will be treated as an adjustment to the Final Purchase Price subject , with respect to any portion of such amount being treated as interest under Section 483 of the Codeevent).
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after the end Upon satisfaction of the Earnout PeriodContingency (as defined below), Purchaser Parent shall prepare in good faith and deliver pursuant to Sellers’ Representative a written statement showing in reasonable detail the calculation terms hereof pay $1,500,000 of Net Sales for the Earnout Period and the Earnout Amount payable, if any cash consideration (the “Earnout Statement”"EARNOUT CASH") in addition to the Merger Cash Amount, to be allocated pro rata to the holders, as of immediately prior to the Effective Time of Merger I, of Company Common Stock, Company Stock Options and Company Common Warrants which are not terminated or exercised prior to the Effective Time of Merger I (pro rata, based on the number of shares of Company Common Stock held by each such holder and issuable to such holder upon full exercise of such Company Stock Options and Company Common Warrants, determined in each case as of immediately prior to the Effective Time of Merger I, and assuming for this purpose that the Best Buy Warrant has been issued). The "EARNOUT CONTINGENCY" will be satisfied if and only if the Company Music Services add 100,000 Net Bona-fide Subscribers (the "EARNOUT TARGET") after the Closing Date and prior to the one year anniversary of the Closing Date (the "EARNOUT PERIOD").
(b) In Thirty-five (35) days after the event of any objection by Sellers’ Representative with respect Closing Date, Parent shall deliver to the determination Shareholder Representative written notice of the Net Sales or number of Bona-fide Subscribers at the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of Closing Date (the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”"INITIAL EARNOUT REPORT"). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Parent shall deliver to the Shareholder Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days written notice of the date of delivery satisfaction of the Earnout Dispute NoticeContingency within thirty-five (35) days of satisfaction of the Earnout Contingency (an "EARNOUT NOTICE"). If Parent has not delivered to the Shareholder Representative an Earnout Notice prior to the expiration of the Earnout Period, then such unresolved items no later than thirty-five (35) days following the expiration of the Earnout Period, Parent shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant deliver to the Referee’s resolution of Shareholder Representative a report describing in reasonable detail the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes Net Bona-Fide Subscribers added to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to Company Music Service during the Earnout Statement shall be Period (the sole and exclusive method for resolving any such disputes"EARNOUT REPORT").
(d) In connection The Shareholder Representative may object in writing to the contents of the Initial Earnout Report or the Earnout Report only by delivering to Parent, within thirty (30) days following delivery of the Initial Earnout Report or the Earnout Report, as applicable, to the Shareholder Representative, a written objection to the contents thereof setting forth the basis for such objection in reasonable detail (an "EARNOUT OBJECTION NOTICE"). Parent and the Shareholder Representative shall attempt in good faith to agree upon the rights of the respective parties with the preparation respect to satisfaction of the Earnout StatementContingency. If Parent and the Shareholder Representative should so agree, a memorandum setting forth such agreement shall be prepared and until signed by Parent and the final resolution Shareholder Representative (an "EARNOUT SETTLEMENT MEMORANDUM"). If an Earnout Objection Notice is not delivered to Parent within thirty (30) days following delivery of the Initial Earnout StatementReport or the Earnout Report, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance noticeas applicable, to the relevant books and recordsShareholder Representative, including the Transferred Books and Records, for the purposes contents of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of Initial Earnout Report or the Earnout Statement Report, as applicable, shall be conclusively and irrebuttably established, and may reasonably not be requested challenged by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ the Shareholder Representative and its authorized Representativesor any holder of Company Capital Stock, including by providing on a timely basis information reasonably necessary Company Stock Options or useful in the determination of the calculations and amounts set forth in the Company Warrants to whom Earnout StatementCash is potentially allocable pursuant to Section 1.8(a).
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the The Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable Cash shall be paid no later than forty-five (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment 45) days following satisfaction of the Earnout Amount, if the Contingency. The contingent right to receive Earnout Amount or any portion thereof is not received by Sellers on or prior Cash pursuant to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion this Section 1.8 (the “Earnout Interest”an "EARNOUT RIGHT") at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreenontransferable.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Merger Agreement (Realnetworks Inc)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days After the Adjustment Period, to the extent that a Forfeiture Event has occurred and after giving effect to the forfeiture of the Aggregate Forfeiture Shares, the Sponsor and the Company Shareholders (other than the holders of Company Series X Preference Shares) shall have the right to receive an aggregate of PubCo Class A Ordinary Shares equal to the Aggregate Forfeiture Shares that have been forfeited (subject to equitable adjustment for stock splits, stock dividends, combinations, recapitalizations and the like after the end of Closing, including to account for any equity securities into which such shares are exchanged or converted) in accordance with the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any applicable Forfeiture Ratios (the “Earnout StatementShares”) based on the performance of the PubCo Class A Ordinary Shares during the five (5) year period after the Closing Date (the “Earnout Period”) as determined pursuant to Section 2.11(a).
(b) In PubCo shall issue and the event Sponsor and the Company Shareholders (other than the holders of any objection by Sellers’ Representative with respect Company Series X Preference Shares) shall have the right to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt receive their respective portions of the Earnout StatementShares in accordance with their applicable Forfeiture Ratios if the closing price of the PubCo Class A Ordinary Shares (or any common or ordinary equity security that is the successor to the PubCo Class A Ordinary Shares (together with the PubCo Class A Ordinary Shares, give written notice to Purchaser of the “Public Ordinary Shares”)) on the principal exchange or securities market on which such objection showing in reasonable detail securities are then listed or quoted is at or above $15.00 (the calculation thereof “Price Threshold”) for ten (10) Trading Days (which need not be consecutive) over a twenty (20) Trading Day period at any time during the Earnout Period (such event, an “Earnout Dispute NoticeEvent”). Purchaser Such issuance shall be made promptly (and Sellers’ Representative shall thereafter attempt to amicably resolve in any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then event no later than the calculation of the Net Sales and third (3rd) Business Day) following the Earnout Amount as set forth in the Earnout Statement Event, and PubCo shall be deemed or shall cause its transfer agent to have been accepted provide evidence of such issuance to Sponsor and shall be final and binding on all parties heretoeach such Company Shareholder promptly thereafter.
(c) IfDuring the Earnout Period, for any reasonPubCo’s chief financial officer or controller will monitor the closing price of the Public Ordinary Shares on the principal securities exchange or securities market on which the Purchaser Common Stock is then traded, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated PubCo shall notify Sponsor and the Company Shareholders (other than the holders of Company Series X Preference Shares) in writing promptly following an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesEvent.
(d) In connection with The Price Threshold and the preparation applicable number of Earnout Shares released for each applicable Earnout Event (or Early Issuance Event, as applicable) shall be subject to equitable adjustment for share splits, share dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Public Ordinary Shares after the Closing. Additionally, the Price Threshold shall be reduced by the amount of the Earnout Statement, and until aggregate cash or the final resolution fair market value of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, any securities or other assets paid or payable by PubCo (Aor any successor public company) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and recordsholders of Public Ordinary Shares, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary per share basis, as an extraordinary dividend or useful in distribution following the determination of the calculations and amounts set forth in the Earnout StatementClosing.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment All of the Earnout AmountShares will be issued pro rata to the Sponsor and the Company Shareholders (other than the holders of Company Series X Preference Shares) in accordance with their applicable Forfeiture Ratios in the event of an Early Issuance Event, if the Earnout Amount or any portion thereof is not received by Sellers on or effective immediately prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion consummation of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeEarly Issuance Event.
(f) The Parties acknowledge and agree thatNo Earnout Shares issuable pursuant to this Section 2.11, for Tax purposesif any, shall be released to any Company Shareholder who is required to file notification pursuant to the payment HSR Act or under any applicable antitrust or other competition Laws of any non-U.S. jurisdictions (collectively, “Foreign Antitrust Laws”) until any applicable waiting period pursuant to the HSR Act or Foreign Antitrust Laws has expired or been terminated (provided, that any such Company Shareholder has notified PubCo of such required filing pursuant to the HSR Act or Foreign Antitrust Laws in connection therewith following reasonable advance notice from PubCo of the reasonably anticipated issuance of Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodeShares).
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after After the end Closing, subject to the terms and conditions set forth herein, the Stockholders shall have the contingent right to receive additional consideration from Parent based on the performance of Parent and its Subsidiaries if the Earnout Period, Purchaser shall prepare requirements as set forth in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail this Section 2.10 are achieved. If during the calculation of Net Sales for thirty-six (36) month period following the Earnout Period and the Earnout Amount payable, if any Closing Date (the “Earnout StatementPeriod”), the closing price per share of Parent Common Stock on any twenty (20) trading days in any thirty (30) consecutive day trading period (i) equals or exceeds Fourteen Dollars ($14.00) (the “First Share Price Trigger”), or (ii) equals or exceeds Sixteen Dollars ($16.00) (the “Second Share Price Trigger” and, together with the First Share Price Trigger, each a “Share Price Trigger” and collectively, the “Share Price Triggers”) then, for each Share Price Trigger that is achieved, the holders of Company Common Stock as of immediately prior to the Effective Time shall receive additional consideration (in accordance with their Pro Rata Share) from Parent (each, an “Earnout Release”) of Two Million Five Hundred Thousand (2,500,000) shares of Parent Common Stock released from the Escrow Account (which shall be equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like that occur after the Closing and prior to the relevant Earnout Release) (collectively, the “Earnout Shares”). For the avoidance of doubt and notwithstanding anything contained in this Agreement, the holders of Company Common Stock shall have the right to receive no more than two Earnout Releases, an Earnout Release may only be achieved once with respect to any Share Price Trigger and the aggregate sum of all Earnout Releases issuable hereunder (assuming both Share Price Triggers are achieved), shall be a maximum of Five Million (5,000,000) shares of Parent Common Stock in the aggregate (which shall be equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like that occur after the Closing and prior to the relevant Earnout Release).
(b) In If, during the event Earnout Period, there is a Change of Control, then any objection by Sellers’ Representative with respect Earnout Release that has not previously been released from escrow to the determination of the Net Sales Stockholder Representative (whether or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement previously earned) shall be deemed to have been accepted earned (and the applicable Share Price Trigger(s) achieved, as applicable); provided, however, that such Earnout Release shall be final deemed earned (and binding the applicable Share Price Trigger(s) achieved, as applicable) only (i) if such Change of Control has been approved by a majority of the independent directors on all parties heretothe Parent Board; and (ii) to the extent the price per share of Parent Common Stock in the Change of Control exceeds the applicable Share Price Trigger. Upon such Change of Control if applicable, Parent and the Stockholder Representative shall jointly direct the Escrow Agent to release from the Escrow Account to Stockholder Representative a number of shares equal to such remaining Earnout Release(s) within ten (10) Business Days following the date of such Change of Control.
(c) If, for any reasonduring the Earnout Period, Purchaser there is a Final Determination in accordance with this Section 2.10 that the Stockholders are entitled to receive a Earnout Release, then Parent and Sellers’ the Stockholder Representative cannot resolve any disputed items indicated in an shall jointly direct the Escrow Agent to release from the Escrow Account to Stockholder Representative a number of shares equal to such Earnout Dispute Notice Release within 30 days of ten (10) Business Days following the date of delivery of on which the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesapplicable Share Price Trigger was met or exceeded.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject With respect to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates Shares that have not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales been released during the Earnout Period required for pursuant to this Section 2.10 within five (5) Business Days following the Sellers date that it is finally determined that the Stockholders are not entitled to or eligible to receive any further Earnout Releases under this Agreement, Parent and the Stockholder Representative shall jointly direct the Escrow Agent to release from the Escrow Account to Parent for immediate cancellation all such Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountShares that have not been released.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after In addition to the end of PubCo Ordinary Shares issued pursuant to Section 4.2, 4.3 and 4.4 above, at the Earnout PeriodClosing, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any 6,000,000 additional PubCo Class B Ordinary Shares (the “Earnout StatementShares”), will be placed in an escrow account with Trustee (the “Earnout Escrow Account” and such Earnout Shares placed in the Earnout Escrow Account, the “Escrowed Earnout Shares”) for the benefit of certain Persons selected at the Company’s discretion (the “Earnout Shareholders”) pursuant to an Escrow Agreement between PubCo, Trustee and the Principal Shareholder, as the representative of the Earnout Shareholders (the “Earnout Escrow Agreement”) in form and substance reasonably satisfactory to the parties thereto; provided, that the Principal Shareholder shall only be a party to the Earnout Escrow Agreement in its capacity as the representative of the Earnout Shareholders if duly appointed by the Earnout Shareholders. Each Earnout Shareholder shall be shown as the registered owner of its, his, or her respective pro rata portion (as determined in the Company’s discretion) of the Escrowed Earnout Shares on the books and records of PubCo (in respect of each Earnout Shareholder, its, his, or her, “Pro Rata Portion”), and shall be entitled to exercise voting rights and all share rights with respect to such Escrowed Earnout Shares.
(b) In Subject to adjustment pursuant to Section 4.6(d) below, the event of any objection by Sellers’ Representative with respect Earnout Shareholders shall have the right to the determination receive their Pro Rata Portion of the Net Sales Escrowed Earnout Shares after the Closing Date as follows:
(i) the Pro Rata Portion of 3,000,000 Earnout Shares (collectively, the “2024 Earnout Shares”) will be issued and delivered by PubCo to each Earnout Shareholder within five (5) Business Days following the date of filing of an annual report on Form 20-F or 10-K, whichever is applicable, by PubCo with the SEC containing an audited report issued by the independent auditor of PubCo for PubCo’s audited consolidated annual financial statements for the fiscal year ending September 30, 2024 prepared in accordance with U.S. GAAP (the “PubCo 2024 Audited Financials”), if and only if, such PubCo 2024 Audited Financials reflect consolidated revenue in excess of RMB 436,000,000.00 during fiscal year 2024;
(ii) subject to clause (iii) below, the Pro Rata Portion of 3,000,000 Earnout Amount payableShares (collectively, Sellers’ Representative shallthe “2025 Earnout Shares”) will be issued and delivered by PubCo to each Earnout Shareholder within five (5) Business Days following the date of filing of an annual report on Form 20-F or 10-K, whichever is applicable, by PubCo with the SEC containing an audited report issued by the independent auditor of PubCo for the PubCo’s audited consolidated annual financial statements for the fiscal year ending September 30, 2025 prepared in accordance with U.S. GAAP (the “PubCo 2025 Audited Financials”), if and only if, such PubCo 2025 Audited Financials reflect consolidated revenue in excess of RMB 583,000,000.00 during fiscal year 2025; and
(iii) if the PubCo 2024 Audited Financials do not reflect consolidated revenue in excess of RMB 436,000,000.00 during fiscal year 2024, but the total consolidated revenue reflected by the PubCo 2024 Audited Financials and the PubCo 2025 Audited Financials is in excess of RMB 1,019,000,000.00 during fiscal year 2025, the Pro Rata Portion of 6,000,000 Earnout Shares will be issued and delivered by PubCo to each Earnout Shareholder within 60 days after its receipt five (5) Business Days following the date of filing of the PubCo 2025 Audited Financials. For the avoidance of doubt, and subject to adjustment pursuant to Section 4.6(d) below, the maximum aggregate number of Earnout Statement, give written notice Shares available to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative Company Shareholders pursuant to this Section 4.6 shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoexceed 6,000,000.
(c) IfAny Escrowed Earnout Shares remaining in the Earnout Escrow Account following the Final Earnout Release Date, for any reasonwill be surrendered back to PubCo without consideration by the Earnout Shareholders execution of an irrevocable surrender of shares. The Principal Shareholder, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of its capacity as the date of delivery representative of the Earnout Dispute NoticeShareholders, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution on behalf of the unresolved objections. The Referee Earnout Shareholders, shall review only those matters specified in instruct Trustee to unconditionally release the unresolved objections and shall make no changes to surrendered portion of such Escrowed Earnout Shares from the Earnout Statement, except as are required Escrow Account to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties heretoPubCo, and may be enforced PubCo shall cancel such surrendered portion of such Escrowed Earnout Shares in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes accordance with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesEscrow Agreement.
(d) In connection with the preparation The applicable number of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout AmountShares, if any, shall be subject to equitable adjustment for share splits, share dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Earnout Amount or any portion thereof is not received by Sellers on or PubCo Ordinary Shares after the Closing and prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeRelease Date.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 In connection with this Section 2.5, Acquisition Sub shall ----------- deliver to the Representative no later than sixty (60) days after following the end of the twelfth (12th) full calendar month following the Closing Date (such twelve (12) full month period beginning with the first day of the first month following the Closing Date and ending on the first anniversary of such date, the "Earnout ------- Period"), Purchaser financial statements of Acquisition Sub setting forth the amount of ------ aggregate Net Income of Acquisition Sub (the "Acquisition Sub Financial ------------------------- Statements"), along with a reasonably detailed description of the calculations ----------- of the amount of the aggregate Net Income. In the event the Net Income of Acquisition Sub equals or exceeds the Target Amount, Acquisition Sub shall prepare pay to IVonyx One Million Dollars ($1,000,000) (the "Earnout Payment") in good faith and deliver accordance --------------- with the terms of this Section 2.5. If the Acquisition Sub Financial Statements ----------- indicate that Net Income is less than the Target Amount, then unless the Representative gives written notice to Sellers’ Representative a written statement showing Acquisition Sub on or before the twentieth (20th) calendar day after the Representative's receipt of the Acquisition Sub Financial Statements, specifying in reasonable detail all disputed items and the calculation of Net Sales for basis therefor, the Representative shall be deemed to have accepted the Acquisition Sub Financial Statements and Acquisition Sub shall have no obligation to pay the Earnout Period Payment to IVonyx. If the Representative so notifies Acquisition Sub of his objection to the Acquisition Sub Financial Statements, the Representative and Acquisition Sub shall, within twenty (20) days following such notice, attempt to resolve their differences in good faith, and any resolution by them as to any disputed amounts shall be final, binding and conclusive. If, at the end of such twenty (20) day period, the Representative and Acquisition Sub are unable to resolve such disagreements, the independent accountants of Acquisition Sub and the Earnout Amount payableRepresentative shall jointly select a third independent auditor of recognized national standing to resolve any remaining disagreements, if which third independent auditor shall not have provided accounting services to Acquisition Sub, Parent or any IVonyx Party during the five (5) year period immediately preceding the Closing Date, and which auditor so selected will be set forth in writing and will be conclusive and binding upon the Parties (the “"Independent Accountant"). Acquisition Sub and ---------------------- the Representative shall use their reasonable efforts to cause the Independent Accountant to make its determination within thirty (30) calendar days of accepting its selection. The determination by the Independent Accountant shall be final, binding and conclusive on the Parties. The fees and expenses of the Independent Accountant shall be borne by the Representative if the Net Income determined by the Independent Accountant is less than the Target Amount; otherwise, the fees and expenses of the Independent Accountant shall be borne by Acquisition Sub. Subject to Section 10.13 below, within ten (10) calendar days ------------- after (i) receipt by the Representative of Acquisition Sub Financial Statements which reflect aggregate Net Income equal to or in excess of the Target Amount, or (ii) in the event of a disagreement, the date of determination by the Independent Accountant that aggregate Net Income equals or exceeds the Target Amount, Acquisition Sub shall pay the Earnout Statement”)Payment to IVonyx; provided, however, that if the Independent Accountant determines that IVonyx is entitled, under this Section 2.5, to the Earnout Payment from ----------- Acquisition Sub, Acquisition Sub shall pay the Earnout Payment with interest from the period commencing on the one hundredth (100th) day following the Closing Date to the date the Earnout Payment is actually paid at the compound rate of ten percent (10%) per annum.
(b) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting (and any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”thereon) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by cashiers or certified bank check or by wire transfer of immediately available funds to an account or accounts specified by IVonyx. The Earnout Payment shall, to the extent required by law, be deemed to include interest at the applicable federal rate under the Code (it being understood that such deemed interest will not affect the amount due and payable under this Section 2.5). -----------
(c) In connection with the operation of the Business after the Closing, the Koop Parties agree to maintain separate divisional books and records for the Business in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser generally accepted accounting principles, consistently applied. The Koop Parties and Sellers’ Representative shall agree.
(f) The Parties acknowledge and IVonyx agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject during the Earnout Period relative to the foregoingBusiness and not to take actions that (i) would be unfairly prejudicial or discriminatory to the Business or to the interests of IVonyx in receiving the Earnout Payment and (ii) are not taken in good faith for valid business reasons.
(d) Upon delivery of the Acquisition Sub Financial Statements, Purchaser Acquisition Sub shall afford to IVonyx and its accounting representatives prompt and reasonable access upon reasonable notice to all information reasonably necessary to verify calculation of the Net Income. Acquisition Sub shall make its employees who are familiar with such matters, its independent outside accounting firm and its outside actuarial advisors (if any) available to IVonyx and its representatives on a mutually convenient basis at reasonable times during normal business hours to provide an explanation of such materials and to provide such other information [(including, but not limited to, accountants' work papers and reserve calculations)] as IVonyx and its representatives may reasonably request in connection with its review of the Acquisition Sub Financial Statements.
(i) failure by Acquisition Sub to pay any amount when due under this Section 2.5; or -----------
(ii) any direct or indirect sale or transfer of all or substantially all of the assets of Acquisition Sub; unless the purchaser assumes the Koop Parties' obligations under this Section 2.5; or -----------
(iii) any sale of stock, merger, consolidation, share exchange, business combination, or similar transaction which results in persons other than the holders of Acquisition Sub's common stock immediately prior to such transaction holding a number of shares of Acquisition Sub's common stock possessing the power, under ordinary circumstances, to elect a majority of the Board of Directors of Acquisition Sub or the surviving entity following any such transaction; unless the surviving entity confirms that it will remain obligated to comply with the terms of this Section 2.5 to the same extent as the Koop ----------- Parties. In the event that one or more Events of its Affiliates will operate Default described in subsections (i) or (ii) above shall occur, then the Business in their sole discretion Earnout Payment shall be immediately due and nothing payable without demand, notice or declaration of any kind whatsoever, notwithstanding whether or not the Net Income equals or would have equaled the Target Amount. In the event of the occurrence of any Event of Default, IVonyx may exercise any remedies set forth in this Section 2.06 requires Purchaser 2.5 or ----------- otherwise in this Agreement or any of its Affiliates other rights and remedies available to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountIVonyx under applicable law.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after At the end of the Earnout PeriodClosing, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales as additional consideration for the Earnout Period Merger and the Earnout Amount payableother Transactions, if any Acquiror shall issue or cause to be issued in the name of each holder of Company Common Stock its, his or her pro rata share of a number of shares of Acquiror Common Stock equal to the quotient obtained by dividing (i) $300,000,000 by (ii) ten dollars and fifteen cents ($10.15) (the “Earnout StatementShares”)) and, in accordance with actual or deemed written instructions from the Company, Acquiror shall deposit or cause to be deposited such shares at an account (the “Escrow Account”) with an escrow agent reasonably selected by Acquiror (the “Escrow Agent”) in accordance with an escrow agreement in form and substance reasonably acceptable to Acquiror and the Company, to be entered into on the Closing Date by and among Acquiror, the Company and the Escrow Agent. The parties hereto agree that the Company Stockholders shall be treated as the owners of the Earnout Shares for so long as they are in the Escrow Account for income Tax purposes, and shall file all Tax Returns consistent with such treatment.
(b) In Promptly upon the event occurrence of any objection by Sellers’ Representative Triggering Event, Acquiror shall prepare and deliver, or cause to be prepared and delivered, a written notice to the Escrow Agent (a “Release Notice”), which Release Notice shall set forth the specific release instructions with respect thereto (including the number of Earnout Shares to be released to each Company Stockholder). No Company Stockholder shall, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, any of the Earnout Shares until the date on which the relevant Triggering Event has occurred as described in Section 3.09(d) and such shares have been released to the Company Stockholders. Any Earnout Shares not eligible to be released from the Escrow Account in accordance with the terms of Section 3.09(d) on or before the last day of the Earnout Period shall immediately thereafter be forfeited to Acquiror and canceled and the Company Stockholders shall not have any rights with respect thereto. Effective as of the Closing, each Company Stockholder shall have the right to vote each of its Earnout Shares until such Earnout Shares are forfeited as if the Company Stockholder was the owner of record of such Earnout Shares.
(c) Until Earnout Shares have been released or forfeited hereunder, an amount equal to any dividends or distributions with respect to such Earnout Shares shall accrue and be payable to the determination Company Stockholders as if the Earnout Shares had been released prior to the record date for such dividends or distributions (the “Attributed Dividends”). The Attributed Dividends shall be released, pro rata amongst the Company Stockholders, upon the release of the Net Sales corresponding Earnout Shares from the Escrow Account.
(d) The Earnout Shares shall be released and delivered from the Escrow Account and distributed to or on behalf of the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its Company Stockholders upon receipt of the applicable Release Notice by the Escrow Agent as follows:
(i) upon the occurrence of Triggering Event I, one-sixth (1/6) of the Earnout StatementShares shall be released;
(ii) upon the occurrence of Triggering Event II, give written notice one-sixth (1/6) of the Earnout Shares shall be released;
(iii) upon the occurrence of Triggering Event III, one-sixth (1/6) of the Earnout Shares shall be released;
(iv) upon the occurrence of Triggering Event IV, one-sixth (1/6) of the Earnout Shares shall be released;
(v) upon the occurrence of Triggering Event V, one-sixth (1/6) of the Earnout Shares shall be released; and
(vi) upon the occurrence of Triggering Event VI, one-sixth (1/6) of the Earnout Shares shall be released.
(e) The right of the Company Stockholders to Purchaser receive the Earnout Shares is solely a contractual right, will not be evidenced by a certificate or other instrument and does not constitute a security.
(f) Each Triggering Event shall only occur once, if at all; provided, that such Triggering Events may be achieved at the same time or on overlapping Trading Days.
(g) Notwithstanding anything to the contrary contained herein, no fraction of a Earnout Share will be issued, and each Person who would otherwise be entitled to a fraction of a Earnout Share (after aggregating all fractional Earnout Shares that otherwise would be received by such holder in connection with the occurrence of such objection showing Triggering Event) shall instead have the number of Earnout Shares issued to such Person rounded up to the nearest whole Earnout Share.
(h) If, during the Earnout Period, there is a Change of Control that will result in reasonable detail the calculation thereof holders of Acquiror Common Stock receiving a per share price (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt based on the value of the cash, securities or in-kind consideration being delivered in respect of such Acquiror Common Stock, as determined in good faith by the Acquiror Board) equal to amicably resolve any disputed items set forth or in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticeexcess of the applicable share price required in connection with Triggering Events I, II or III, then immediately prior to the calculation consummation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement such Change of Control (a) any such Triggering Event that has not previously occurred shall be deemed to have been accepted occurred and (b) the Company Stockholders shall be final and binding on all parties hereto.
(c) eligible to participate in such Change of Control. If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser there is an Change of Control that will result in the holders of Acquiror Common Stock receiving a per share price (based on the value of the cash, securities or in-kind consideration being delivered in respect of such Acquiror Common Stock, as determined in good faith by the Acquiror Board) that is less than the applicable share price required in connection with Triggering Events I, II or III and such Triggering Event has not previously occurred, then this Section 3.09 shall notterminate and no Earnout Shares shall be issuable hereunder with respect to such Triggering Event(s) in connection with or following completion of the Change of Control.
(i) The issuance of Earnout Shares is intended to comply with, and shall cause its Affiliates not tobe effected in accordance with, take Rev. Proc. 84-42, 1984-1 C.B. 521, unless otherwise required by a Tax Authority as a result of a “determination” within the meaning of Section 1313(a) of the Code (or any actionsimilar or corresponding provision of applicable Law).
(j) In the event the issuance of Earnout Shares is subject to the notification and waiting period requirements of the HSR Act or the receipt of consents or approvals under any other applicable Antitrust Laws (an “Antitrust Issuance”), nor fail Acquiror’s obligation to take an actionmake such issuance shall be delayed until, and contingent upon the occurrence of, the time that all applicable Persons have filed all required notifications under the HSR Act and any other applicable Antitrust Laws and all applicable waiting periods under the HSR Act (including any extensions thereof) have expired or terminated and any required consents and approvals under other applicable Antitrust Laws have been obtained with respect to such Antitrust Issuance.
(k) The Earnout Shares and the underlying target price for Triggering Events I, II and III will be adjusted appropriately to reflect any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible in Acquiror Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Acquiror Common Stock, occurring on or after the date hereof and prior to the time any such Earnout Shares are issued. It is the intent of the parties that such adjustments will be made in order to provide the Company Stockholders with the purpose same economic effect as contemplated by this Agreement as if no change with respect to the Acquiror Common Stock had occurred.
(l) For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, any Earnout Shares to be released and delivered from the Escrow Account and distributed to or intention of impeding the achievement on behalf of the Net Sales during Company Stockholders shall be so released, delivered and distributed within five (5) years of the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountClosing Date.
Appears in 1 contract
Samples: Merger Agreement (10X Capital Venture Acquisition Corp. III)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 Buyer shall prepare and deliver, or cause to be prepared and delivered, to the Sellers’ Representative, no later than sixty (60) days after the end of the each Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail setting forth the Company’s AUM for the most recently completed Earnout Period along with a calculation of Net Sales the applicable Earnout Payment for the most recently completed Earnout Period and the Earnout Amount payablePeriod, if any together with supporting documents (the an “Earnout Statement”).
(b) In The calculations set forth in each Earnout Statement shall be final, conclusive and binding upon the event of any objection by parties unless the Sellers’ Representative with respect delivers to Buyer, within the determination thirty (30) days following the date on which an Earnout Statement was delivered (a “Earnout Statement Review Period”), a written notice (a “Earnout Statement Notice of Objection”) that the Sellers’ Representative, on behalf of the Net Sales or Sellers, disagrees with any calculations set forth in an Earnout Statement and setting forth the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt calculation of the Earnout Statementdisputed amount, give written notice to Purchaser of such objection showing a description in reasonable detail of the calculation thereof (an “Earnout Dispute Notice”). Purchaser grounds for each such disagreement and the Sellers’ Representative shall thereafter attempt calculation of Company’s AUM for the most recently completed Earnout Period based on such objections (each such item or amount as to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If which the Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales disagrees and the Earnout Amount as set forth in the Earnout Statement Notice of Objection, an “Earnout Item of Disagreement”). During an Earnout Statement Review Period, the Sellers’ Representative, on behalf of the Sellers, and its accountants (which may be the Company’s accountants as of the date of this Agreement) shall, at the Sellers’ Representative’s expense, on behalf of the Sellers, be permitted reasonable access to review the working papers of Buyer relating to the applicable Earnout Statement to verify the accuracy thereof; provided, that in order to review such accountant’s working papers the Sellers’ Representative and its accountants shall execute any confidentiality agreements, releases or waivers customarily required by such accountant in connection therewith. Except for those Earnout Items of Disagreement set forth in the applicable Earnout Statement Notice of Objection, Buyer and the Sellers’ Representative, on behalf of the Sellers, shall be deemed to have been accepted and shall be final and binding on agreed with all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed other items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the applicable Earnout Statement, which items and amounts shall be conclusive and binding upon all of the parties. All information disclosed to Sellers’ Representative or its representatives pursuant to this Section 2.5(b) shall be considered confidential information of Buyer, and the Sellers’ Representative shall, and shall cause its representatives to, keep all such information strictly confidential.
(c) In the event that the Sellers’ Representative delivers an Earnout Statement Notice of Objection to Buyer within the applicable Earnout Statement Review Period, Buyer and the Sellers’ Representative, on behalf of the Sellers, will negotiate in good faith to resolve all applicable Earnout Items of Disagreement. If, after a period of thirty (30) days following the date on which an Earnout Statement Notice of Objection is delivered, Buyer and the Sellers’ Representative, on behalf of the Sellers, have not resolved each such Earnout Item of Disagreement, then either Buyer or the Sellers’ Representative shall be entitled to submit all such Earnout Items of Disagreement that remain unresolved to the Independent Accountant, pursuant to the procedures set forth in Section 2.4(c).
(d) Within five (5) Business Days following the date on which the Company’s AUM and the corresponding Earnout Payments for the applicable Earnout Period are finally determined in accordance with the foregoing provisions of this Section 2.5, Buyer shall pay, or cause to be paid, to the Sellers’ Representative, on behalf of the Sellers, an amount equal to the Earnout Payment.
(e) On From and after the fifth Business Day after Purchaser Effective Time, Buyer and Sellers’ Representative agree its Affiliates (i) have complete control and sole and absolute discretion with respect to decisions concerning the Earnout Statement or Purchaser and Sellers’ Representative receive from operations of the Referee its written report pursuant to Section 2.06(c), as applicable (such dateCompany, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount Subsidiaries and their respective businesses (whether or any portion thereof is not received by Sellers on or consistent with such operations prior to the Earnout Payment DeadlineEffective Time) and (ii) are only required to take actions in connection with the Company and its Subsidiaries that Buyer and its Affiliates believe to be in the best interests of Buyer and, Purchaser as applicable, its Affiliates, and do not owe any duties, express or implied, to any Sellers or any of their respective Affiliates by virtue of this Section 2.5 (other than to make the payments, if any, due under Section 2.5). The Company’s AUM is speculative and subject to numerous risks and uncertainties, many of which may be outside the control of Buyer, and there is no assurance that Company’s AUM threshold will be achieved. Notwithstanding the foregoing, Buyer and its Affiliates shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate act in good faith, and, except as shall be the maximum rate allowable under required by applicable Law), for shall not take any action(s) or implement no strategy(ies) the period beginning on the Earnout Payment Deadline primary purpose of which is to unreasonably and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance materially interfere with written instructions provided by the Sellers’ Representative ability to Purchaser at least two Business Days prior to achieve the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeEarnout Payments.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment right to receive any portion of the Earnout Amount Payments (if anyi) is solely a contractual right and is not a security (and shall confer upon the Sellers only the rights of a general unsecured creditor); (ii) will not be treated as an adjustment represented by any form of certificate or instrument; (iii) does not give any Seller any dividend rights, voting rights, liquidation rights, preemptive rights or other similar rights and (iv) is not redeemable. Notwithstanding anything herein to the Final Purchase Price contrary, the Earnout Payments are subject to any portion Purchaser’s right of such amount being treated as interest under setoff in Section 483 of the Code8.9.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The (a) Each Person that was a Company Stockholder immediately prior to the Effective Time (other than holders of Dissenting Shares) that delivers a duly executed Earnout Amount Election Agreement to the Company (copies of which will be provided to Parent) in accordance with instructions set forth therein (“Earnout Participants”) shall be calculatedentitled to receive its Pro Rata Portion, determined and paid as set forth in the following mannerClosing Consideration Spreadsheet, of:
(ai) Within 60 days after an aggregate of 4,000,000 Domesticated Parent Common Shares (subject to any adjustment pursuant to Section 4.7(e), the end of “Initial Earnout Shares”) in the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for event that over any twenty (20) Trading Days within any thirty (30)-Trading Day period during the Earnout Period and the Earnout Amount payable, if VWAP of the Domesticated Parent Common Shares is greater than or equal to $15.00 per share (subject to any adjustment pursuant to Section 4.7(e)) (the “Initial Milestone Event”); and
(ii) an aggregate of 4,000,000 Domesticated Parent Common Shares (subject to any adjustment pursuant to Section 4.7(e), the “Final Earnout StatementShares” and together with the Initial Earnout Shares, the “Earnout Shares”) in the event that over any twenty (20) Trading Days within any thirty (30)-Trading Day period during the Earnout Period the VWAP of the Domesticated Parent Common Shares is greater than or equal to $20.00 per share (subject to any adjustment pursuant to Section 4.7(e)) (the “Final Milestone Event” and together with the Initial Milestone Event, the “Milestone Events”).
(b) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt The applicable portion of the Earnout StatementShares (i) shall be issued to each Earnout Participant as soon as reasonably practicable after the occurrence of the applicable Milestone Event, give written notice free and clear of all Liens other than applicable federal and state securities restrictions. For the avoidance of doubt, Earnout Participants shall not be entitled to Purchaser of such objection showing receive any Initial Earnout Shares or Final Earnout Shares in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative event that the applicable Milestone Event does not timely deliver an Earnout Dispute Notice, then occur prior to the calculation expiration of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoPeriod.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of during the Earnout Dispute NoticePeriod, then such unresolved items shall be resolved by there occurs any transaction resulting in a Change in Control, and the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted corresponding valuation of Domesticated Parent Common Shares is greater than or equal to (i) pursuant $15.00 per share, then, immediately prior to any resolutions the consummation of such Change in Control the Initial Milestone Event shall be deemed to objections agreed upon by Purchaser have occurred and Sellers’ Representative the applicable portion of the Initial Earnout Shares shall be issued to each Earnout Participant as of immediately prior to the Change in Control, and Earnout Participants shall be eligible to participate in such Change in Control transaction with respect to such Initial Earnout Shares; and (ii) pursuant $20.00 per share, then, immediately prior to the Referee’s resolution consummation of such Change in Control the Final Milestone Event shall be deemed to have occurred and the applicable portion of the unresolved objections. The Referee Final Earnout Shares shall review only those matters specified in the unresolved objections and shall make no changes be issued to each Earnout Participant as of immediately prior to the Change in Control, and Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, Participants shall be final and binding on all parties hereto, and may be enforced eligible to participate in any court of competent jurisdiction. The parties agree that the procedure set forth such Change in this Section 2.06 for resolving disputes Control transaction with respect to the such Final Earnout Statement shall be the sole and exclusive method for resolving any such disputesShares.
(d) In connection with Parent shall take such actions as are reasonably requested by the preparation of Company Stockholders to evidence the Earnout Statementissuances pursuant to this Section 4.7, and until the final resolution of the Earnout Statementincluding, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, if such shares are issued to the relevant books and recordsrecipient in record ownership, including through the Transferred Books and Records, for the purposes provision of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees an updated stock ledger showing such issuances (as certified by an officer of Parent responsible for maintaining such ledger or the preparation applicable registrar or transfer agent of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout StatementParent).
(e) On In the fifth Business Day after Purchaser and Sellers’ Representative agree to event Parent shall at any time during the Earnout Statement Period pay any dividend on Domesticated Parent Common Shares by the issuance of additional Domesticated Parent Common Shares, or Purchaser and Sellers’ Representative receive from effect a subdivision or combination or consolidation of the Referee its written report pursuant to Section 2.06(c)outstanding Domesticated Parent Common Shares (by reclassification or otherwise) into a greater or lesser number of Domesticated Parent Common Shares, as applicable then in each such case, (i) the number of Earnout Shares shall be adjusted by multiplying such dateamount by a fraction, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to numerator of which is the Earnout Amount; provided, that, without limiting number of Domesticated Parent Common Shares (including any other remedies available hereunder shares so reclassified as Domesticated Parent Common Shares) outstanding immediately after such event and the denominator of which is the number of Domesticated Parent Common Shares that were outstanding immediately prior to such event, and (ii) the Sellers to compel payment per share dollar amount of the Earnout Amount, if Milestone Event shall be appropriately adjusted to provide to such Company Stockholders the Earnout Amount or any portion thereof is not received same economic effect as contemplated by Sellers on or this Agreement prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeevent.
(f) The Parties acknowledge During the Earnout Period, Parent shall take all reasonable efforts for Parent to remain listed as a public company on, and agree thatfor the Domesticated Parent Common Shares to be tradable over, for Tax purposesNasdaq; provided, however, that the payment foregoing shall not limit Parent from consummating a Change in Control or entering into a Contract that contemplates a Change in Control. Upon the consummation of any Change in Control during the Earnout Period, other than as set forth in Section 4.7(c), Parent shall have no further obligations pursuant to this Section 4.7(f).
(g) Except with respect to any amounts treated as imputed interest under Section 483 of the Code or any comparable law, any issuance of Earnout Amount (if any) will Shares pursuant to this Section 4.7 shall be treated as an adjustment to the Final Purchase Price subject merger consideration by the parties for Tax purposes, unless otherwise required by a change in applicable Tax Law. Any Earnout Shares that are issued pursuant to any portion of such amount being this Section 4.7 will be treated as interest eligible for non-recognition treatment under Section 483 354 of the Code (and will not be treated as “other property” within the meaning of Section 356 of the Code).
(gh) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement The parties intend that none of the Net Sales during the Earnout Period required for the Sellers rights to receive the Earnout Amount or otherwise fail Shares and any interest therein shall be deemed to act in good faith in respect theretobe a “security” for purposes of any securities law of any jurisdiction. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers The right to receive the Earnout AmountShares are deemed contractual rights in connection with the Merger and the parties do not view the right to receive the Earnout Shares as an investment by the holders thereof. The right to receive the Earnout Shares will not be represented by any physical certificate or similar instrument. The right to receive the Earnout Shares does not represent an equity or ownership interest in any entity. No interest in the right to receive the Earnout Shares may be sold, transferred assigned, pledged, hypothecated, encumbered or otherwise disposed of, except by operation of law, and any attempt to do so shall be null and void. For the avoidance of doubt, (i) once issued, the Earnout Shares shall be considered a “security” for purposes of any securities law of any jurisdiction and the restrictions set forth in the foregoing sentence shall not apply to such issued Earnout Shares, and (ii) no Earnout Shares shall be included in the calculation of the aggregate number of Domesticated Parent Common Shares outstanding at or immediately after the Closing for purposes of this Agreement.
Appears in 1 contract
Samples: Merger Agreement (Health Sciences Acquisitions Corp 2)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(ai) Within 60 On or prior to sixty (60) days after the end of each of the Earnout Periodcalendar years ended December 31, Purchaser 2012 and December 31, 2013, Parent shall prepare in good faith and deliver to Sellers’ the Earnout Representative a written draft of a statement showing setting out CY12 EBIT or CY13 EBIT, as applicable (each, an “Earnout Notice”). Each Earnout Notice shall be in reasonable detail a form generally similar to a profit and loss statement with line items for revenue, cost of revenue, general and administrative expense, sales and marketing expense and research and development expense, provided that the Earnout Notice shall only include items included in EBIT. Parent agrees that it will also promptly supply any reasonably requested back up or supporting information to the Earnout Representative relating to the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if EBIT at any (the “Earnout Statement”).
(b) In the event of any objection by Sellers’ Representative with respect time prior to the determination of the Net Sales Final CY13 EBIT; provided, however, that the provision of any such back up or supporting information shall be conditioned upon the execution of a confidentiality agreement in a form reasonably acceptable to Parent.
(ii) The Earnout Amount payable, Sellers’ Representative shall, within 60 shall have sixty (60) days after its receipt Parent’s delivery of the an Earnout Statement, give Notice to make an objection to any item in an Earnout Notice by delivering a written notice to Purchaser of such objection showing to Parent, describing in reasonable detail the calculation thereof nature of the objection (an “Earnout Dispute NoticeNotice of Objection”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such If the Earnout Dispute Notice. If Sellers’ Representative does not timely deliver such an Earnout Dispute NoticeNotice of Objection within such sixty (60) day period, then the calculation of the Net Sales and the Earnout Amount as set forth EBIT provided for in the applicable Earnout Statement shall be deemed to have been accepted and Notice shall be final and binding on all upon the parties heretoand shall constitute, as applicable, the Final CY12 EBIT or the Final CY13 EBIT.
(ciii) If, for any reason, Purchaser and Sellers’ If the Earnout Representative cannot resolve any disputed items indicated in shall have delivered an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes Objection with respect to the Earnout Statement Notice in a timely manner, the Earnout Representative and Parent will attempt in good faith to resolve such objection or dispute. If the Earnout Representative and Parent should so agree, a memorandum setting forth such agreement will be prepared and signed by both parties. In the event that the Earnout Representative and Parent cannot come to such an agreement within thirty (30) days (or such longer period as the Earnout Representative and Parent may mutually determine) after the date on which the Earnout Representative delivered the applicable Earnout Notice of Objection, such dispute shall be resolved in the sole manner set forth in Section 9.7. If the Earnout Representative executes a memorandum with Parent resolving an objection to an Earnout Notice pursuant hereto or a resolution is made pursuant to Section 9.7, then such resolution shall be final, conclusive and exclusive method binding upon the parties to this Agreement, the Shareholders and holders of Company Options and the EBIT provided for resolving any in such disputesresolution shall constitute, as applicable, the Final CY12 EBIT or the Final CY13 EBIT.
(div) In connection Except with the preparation written consent of Parent, no Person may sell, exchange, transfer or otherwise dispose of his, her or its right to receive any portion of the Total CY12 Earnout StatementConsideration or the Total CY13 Earnout Consideration, other than by the laws of descent and until distribution or succession and any transfer in violation hereof shall be null and void and shall not be recognized by Parent.
(v) Following the final resolution Closing, any and all decisions with respect to any aspect of the Earnout Statement, Purchaser shall, and shall cause operation of the Companies and their Subsidiaries to, (A) provide Sellers’ Representative business of Parent and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and recordsSubsidiaries, including the Transferred Books Surviving Corporation or any of its Subsidiaries and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary matters directly or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree indirectly related to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c)amount of EBIT, as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer Parent in its sole discretion without any express or implied obligation. Notwithstanding the foregoing:
A. Parent shall not take any action not otherwise justified for good faith business reasons which has the effect of immediately available funds to an account reducing the earning or accounts specified in accordance payment of the Total CY12 Earnout Consideration or the Total CY13 Earnout Consideration; and
B. The Earnout Representative and the most senior executive of Parent’s EA Interactive division shall, during the period commencing with written instructions provided by the Sellers’ Representative to Purchaser Effective Time and ending on December 28, 2013, meet at least two Business Days prior once every 90 days to discuss in good faith potential synergy opportunities with regard to the date business of PopCap Studio and the other business conducted by Parent. To the extent that a material synergy opportunity is identified in such payment meetings and the pursuit of such opportunity is due or on commercially reasonable both to PopCap Studio and to Parent, then Parent shall provide commercially reasonable cooperation to seek to realize such other date as Purchaser and Sellers’ synergy opportunities; provided, however, that Parent shall not be required to take any action pursuant to this Section 1.6(e)(v)B to the extent that the Earnout Representative shall agreedoes not agree in writing (which agreement may be by email to the most senior executive of Parent’s EA Interactive division, but in any event must reference intent to be binding under this Agreement) that the Costs thereof are Company Costs, to the extent such Costs are subject to clause (iii) of the definition of Company Costs.
(fvi) The Parties acknowledge Shareholders and agree thatholders of Company Options, for Tax purposesby adopting this Agreement, irrevocably appoint the payment Earnout Representative as their agent and attorney-in-fact to act on behalf of each of the Earnout Amount (if any) will be treated as an adjustment Shareholders and holders of Company Options, in connection with and to facilitate the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 consummation of the Code.transactions contemplated hereby, which shall include the power and authority for purposes of this Section 1.6(e):
(g) After the Closing, A. to give and during the Earnout Period, Purchaser shall not, receive notices and shall cause communications,
B. to negotiate matters concerning EBIT and its Affiliates not to, take any action, nor fail to take an action, calculation with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers Parent Designee, C. to receive the Earnout Amount or otherwise fail review and determine EBIT and to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion cooperate and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.work with Parent regarding such review and determination,
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated2.4.1 As promptly as practicable, determined and paid in the any event within ninety (90) days following manner:
(a) Within 60 days after the end each of the Earnout Periodfiscal years ended December 31, Purchaser shall prepare in good faith 2013, 2014 and 2015, Buyer will deliver to Sellers’ Representative the Members a written statement showing notice setting forth in reasonable detail the Buyer’s calculation of Net Sales for Actual EBITDA, in the Earnout Period case of the fiscal years ended December 31, 2013 and 2014, and Actual EBITDA and Actual Cumulative EBITDA, in the Earnout Amount payablecase of the fiscal year ended December 31, if any 2015 (the each, an “Earnout StatementEBITDA Notice”). Upon receipt of an EBITDA Notice, the Members and their Representatives shall be given reasonable access to all of the books and records of the Company relating to such notice.
2.4.2 The Members shall have thirty (b30) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its Business Days following receipt of an EBITDA Notice to review it and to notify Buyer in writing if the Earnout StatementMembers dispute any item or amount set forth on such EBITDA Notice, give written notice to Purchaser of such objection showing specifying the reasons therefor in reasonable detail together with the Members’ calculation thereof of such item or amount (each, an “Earnout Dispute Notice”). Purchaser ” and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an each item or amount on the Earnout Dispute Notice, then the calculation of the Net Sales and an “Earnout Disputed Item”). Other than the Earnout Amount as set forth in Disputed Items, the Earnout Statement Members shall be deemed to have been accepted all items and amounts contained in such EBITDA Notice.
2.4.3 In the event that the Members shall deliver an Earnout Dispute Notice to Buyer, Buyer and the Members shall attempt to resolve any Earnout Disputed Item as promptly as practicable and, upon such resolution, if any, any adjustments to the EBITDA Notice shall be final made in accordance with the agreement of Buyer and binding on all parties hereto.
(c) the Members. If, for any reason, Purchaser Buyer and Sellers’ Representative cannot the Members are unable to resolve any disputed items indicated in an Earnout Dispute Notice Disputed Item within 30 days fifteen (15) Business Days of the date of Members’ delivery of the such Earnout Dispute Notice, then such unresolved items dispute shall be resolved by the Referee Independent Accountant Arbitrator; provided that if the Independent Accountant Arbitrator is unable or unwilling to serve in this capacity, then Buyer and the manner provided Members shall within fifteen (15) Business Days after the end of such fifteen (15)-Business Day period agree on an alternate independent accounting firm, or in Section 2.03(c) abovedefault thereof such selection shall be made by AAA, mutatis mutandiswhich accounting firm shall be the “Independent Accountant Arbitrator” hereunder, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, such determination shall be final and binding on all parties heretoon, and shall not be subject to appeal by, Buyer or the Members, and may be entered and enforced as provided in any court Section 12.3. If there is a referral to the Independent Accountant Arbitrator, each of competent jurisdictionBuyer and the Members agree, if requested by the Independent Accountant Arbitrator, to execute a reasonable engagement letter and submit to the Independent Accountant Arbitrator not later than ten (10) Business Days after its appointment, a written statement summarizing such Party’s position on the Earnout Disputed Items, together with such supporting documentation as such Party deems necessary. The parties agree Independent Accountant Arbitrator shall act as an arbitrator to determine, based solely on the materials submitted and presentations by Buyer and the Members, and not by independent review, only the Earnout Disputed Items that the procedure set forth in this Section 2.06 for resolving disputes have not been settled by negotiation, and its determination with respect to the each Earnout Statement Disputed Item shall be an amount within the sole range established with respect to such Earnout Disputed Item by Buyer’s calculation delivered pursuant to Section 2.4.1, on the one hand, and exclusive method for resolving the Members’ calculation delivered pursuant to Section 2.4.2, on the other hand. The Independent Accountant Arbitrator shall be instructed to use reasonable best efforts to deliver to Buyer and the Members a written report setting forth the resolution of each Disputed Item within thirty (30) days of submission of the materials submitted by Buyer and the Members to it and, in any case, as promptly as practicable after such disputes.
(d) In connection with submission. Any expenses relating to the preparation engagement of the Independent Accountant Arbitrator in respect of its services pursuant to this Section 2.4.3 shall be borne by Buyer and the Members in relative proportion to the amount by which the calculation of the Earnout Statement, and until the final resolution Disputed Items by each of them differs from that of the Independent Accountant Arbitrator, such calculation to be made by the Independent Accountant Arbitrator. A “Final EBITDA Notice” shall be (a) if no Earnout StatementDispute Notice has been timely delivered by the Members, Purchaser shallthe EBITDA Notice, as originally submitted by Buyer, or (b) if an Earnout Dispute Notice has been timely delivered by the Members, the EBITDA Notice, as adjusted to take into account (i) the items and shall cause amounts accepted or deemed to have been accepted by the Companies and their Subsidiaries toMembers, (Aii) provide Sellers’ Representative Earnout Disputed Items settled by negotiation and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to (iii) Earnout Disputed Items determined by the relevant books and records, including the Transferred Books and Records, Independent Accountant Arbitrator.
2.4.4 If Actual EBITDA calculated based on a Final EBITDA Notice for the purposes any of the review fiscal years ended December 31, 2013, 2014 and objection right contemplated herein2015 equals or exceeds eighty-five percent (85%) of Projected EBITDA for any such fiscal year, Purchaser’s and its accountants’ work papersBuyer shall pay the Members for such fiscal year one-third (1/3) of Actual EBITDA for such fiscal year (each, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment DeadlineYearly EBITDA Payment”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds funds, without deduction, set-off, counterclaim or withholding (except as otherwise permitted pursuant to an Sections 2.5 and 10.10), within five (5) Business Days after the determination of the Final EBITDA Notice to the account or accounts specified in accordance with written instructions provided designated by the Sellers’ Representative to Purchaser at least two Members in writing no later than three (3) Business Days prior after the determination of the Final EBITDA Notice. For the avoidance of doubt, if Actual EBITDA calculated based on a Final EBITDA Notice for any of the fiscal years ended December 31, 2013, 2014 and 2015 is less than eighty-five (85%) of Projected EBITDA for any such fiscal year, Buyer shall make no Yearly EBITDA Payment for such fiscal year.
2.4.5 If Actual Cumulative EBITDA calculated based on a Final EBITDA Notice equals or exceeds one hundred percent (100%) of Projected Cumulative EBITDA, Buyer shall pay the Members, if positive, Fifteen Million Dollars ($15,000,000) less the aggregate amount of any Yearly EBITDA Payments paid or payable (the “Cumulative EBITDA Payment”), by wire transfer of immediately available funds, without deduction, set-off, counterclaim or withholding (except as otherwise permitted pursuant to Sections 2.5 and 10.10), within five (5) Business Days after the determination of the Final EBITDA Notice for the fiscal year ended December 31, 2015 to the date such payment account or accounts designated by the Members in writing no later than three (3) Business Days after the determination of the Final EBITDA Notice for the fiscal year ended December 31, 2015. If Actual Cumulative EBITDA calculated based on a Final EBITDA Notice equals or exceeds one hundred-fifteen percent (115%) of Projected Cumulative EBITDA, Buyer shall pay the Members fifty percent (50%) of the difference between Actual Cumulative EBITDA and Projected Cumulative EBITDA (the “Premium Performance Payment,” together with the Yearly EBITDA Payments and the Cumulative EBITDA Payment, each an “Earnout Amount”), by wire transfer of immediately available funds, without deduction, set-off, counterclaim or withholding (except as otherwise permitted pursuant to Sections 2.5 and 10.10), within five (5) Business Days after the determination of the Final EBITDA Notice for the fiscal year ended December 31, 2015 to the account or accounts designated by the Members in writing no later than three (3) Business Days after the determination of the Final EBITDA Notice for the fiscal year ended December 31, 2015. For the avoidance of doubt, if Actual Cumulative EBITDA calculated based on a Final EBITDA Notice is due less than one hundred percent (100%) of Projected Cumulative EBITDA, Buyer shall make no Cumulative EBITDA Payment or on such other date as Purchaser and Sellers’ Representative shall agreePremium Performance Payment.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the 2.4.6 For so long as any Earnout Amount may be payable, (if anyi) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser Buyer shall nottake, and shall cause its Affiliates the Company to take, all appropriate measures to ensure that the Company generates financial statements sufficient to allow the Earnout Amounts to be calculated and reviewed in accordance with this Agreement and (ii) Buyer shall not tointentionally take, take and shall cause the Company not to intentionally take, any action, nor fail action the primary purpose of which is to take an action, with frustrate the purpose or intention of impeding the achievement ability of the Net Sales during the Company to meet or exceed Projected EBITDA.
2.4.7 The Members hereby agree that any Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject Amounts paid to the foregoing, Purchaser or one or more of its Affiliates will operate the Business Members shall be distributed in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amountaccordance with each Member’s Allocable Share.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after Upon the end occurrence of the First Earnout PeriodTriggering Event, Purchaser (i) ACT shall prepare in good faith and deliver issue to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and Participants, the First ACT Earnout Tranche, allocated among the Earnout Amount payableParticipants in the amount and class of Post-Closing ACT Shares in accordance with Schedule III and (ii) the Company shall issue to the Earnout Participants, if any (the “First Company Earnout Statement”)Tranche, allocated among the Earnout Participants in accordance with Schedule III.
(b) In Upon the event occurrence of any objection by Sellers’ Representative with respect the Second Earnout Triggering Event, (i) ACT shall issue to the determination of Earnout Participants, the Net Sales or Second ACT Earnout Tranche, allocated among the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt Participants in the amount and class of Post-Closing ACT Shares in accordance with Schedule III and (ii) the Company shall issue to the Earnout StatementParticipants, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Second Company Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute NoticeTranche, then the calculation of the Net Sales and allocated among the Earnout Amount as set forth Participants in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoaccordance with Schedule III.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in All Post-Closing ACT Shares issued pursuant to this Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted 2.7 (i) pursuant to any resolutions to objections agreed upon by Purchaser will be duly authorized, validly issued, fully paid and Sellers’ Representative and nonassessable, (ii) pursuant will have been issued in compliance with applicable Law, including Securities Laws, in each case, under this clause (ii), in all material respects and (iii) will not have been issued in breach or violation of any preemptive rights or Contract to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified which ACT is a party or bound, in the unresolved objections and shall make no changes to the Earnout Statementeach case, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statementunder this clause (iii), shall be final and binding on all parties hereto, and may be enforced in any court material respect. All Post-Closing Company Units (A) will be duly authorized and validly issued, (B) will have been issued in compliance with applicable Law, including Securities Laws, in each case, under this clause (B), in all material respects and (C) will not have been issued in breach or violation of competent jurisdiction. The parties agree that any preemptive rights or Contract to which the procedure set forth Company is a party or bound, in each case, under this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving clause (C), in any such disputesmaterial respect.
(d) In connection with the preparation of the Earnout StatementIf, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, prior to the relevant books issuance of any Post-Closing ACT Shares pursuant to this Section 2.7, the issued and recordsoutstanding Post-Closing ACT Shares shall have been changed into a different number of shares or a different class, including by reason of any stock dividend, change to capitalization, subdivision, reclassification, recapitalization, split, combination or exchange of shares, or any similar event shall have occurred, then the Transferred Books and Records, for the purposes number of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably Post-Closing Act Shares issuable pursuant to this Section 2.7 will be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree equitably adjusted to provide to the Earnout Statement or Purchaser and Sellers’ Representative receive from Participants the Referee its written report same economic effect as contemplated by this Agreement. If, prior to the issuance of any Post-Closing Company Units pursuant to this Section 2.06(c), as applicable (such date2.7, the “Earnout Payment Deadline”)issued and outstanding Post-Closing Company Units shall have been changed into a different number of shares or a different class, Purchaser by reason of any unit distribution, change to capitalization, subdivision, reclassification, recapitalization, split, combination or exchange of units, or any similar event shall pay have occurred, then the number of Post-Closing Company Units issuable pursuant to Sellers’ Representative an amount in cash equal this Section 2.7 will be equitably adjusted to provide to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to Participants the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received same economic effect as contemplated by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreethis Agreement.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Business Combination Agreement (ArcLight Clean Transition Corp. II)
Earnout. The Earnout Amount shall be calculated2.4.1 As promptly as practicable, determined and paid in the any event within ninety (90) days following manner:
(a) Within 60 days after the end each of the Earnout Periodfiscal years ended December 31, Purchaser shall prepare in good faith 2013, 2014 and 2015, Buyer will deliver to Sellers’ Representative the Members a written statement showing notice setting forth in reasonable detail the Buyer’s calculation of Net Sales for Actual EBITDA, in the Earnout Period case of the fiscal years ended December 31, 2013 and 2014, and Actual EBITDA and Actual Cumulative EBITDA, in the Earnout Amount payablecase of the fiscal year ended December 31, if any 2015 (the each, an “Earnout StatementEBITDA Notice”). Upon receipt of an EBITDA Notice, the Members and their Representatives shall be given reasonable access to all of the books and records of the Company relating to such notice.
2.4.2 The Members shall have thirty (b30) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its Business Days following receipt of an EBITDA Notice to review it and to notify Buyer in writing if the Earnout StatementMembers dispute any item or amount set forth on such EBITDA Notice, give written notice to Purchaser of such objection showing specifying the reasons therefor in reasonable detail together with the Members’ calculation thereof of such item or amount (each, an “Earnout Dispute Notice”). Purchaser ” and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an each item or amount on the Earnout Dispute Notice, then the calculation of the Net Sales and an “Earnout Disputed Item”). Other than the Earnout Amount as set forth in Disputed Items, the Earnout Statement Members shall be deemed to have been accepted all items and amounts contained in such EBITDA Notice.
2.4.3 In the event that the Members shall deliver an Earnout Dispute Notice to Buyer, Buyer and the Members shall attempt to resolve any Earnout Disputed Item as promptly as practicable and, upon such resolution, if any, any adjustments to the EBITDA Notice shall be final made in accordance with the agreement of Buyer and binding on all parties hereto.
(c) the Members. If, for any reason, Purchaser Buyer and Sellers’ Representative cannot the Members are unable to resolve any disputed items indicated in an Earnout Dispute Notice Disputed Item within 30 days fifteen (15) Business Days of the date of Members’ delivery of the such Earnout Dispute Notice, then such unresolved items dispute shall be resolved by the Referee Independent Accountant Arbitrator; provided that if the Independent Accountant Arbitrator is unable or unwilling to serve in this capacity, then Buyer and the manner provided Members shall within fifteen (15) Business Days after the end of such fifteen (15)-Business Day period agree on an alternate independent accounting firm, or in Section 2.03(c) abovedefault thereof such selection shall be made by AAA, mutatis mutandiswhich accounting firm shall be the “Independent Accountant Arbitrator” hereunder, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, such determination shall be final and binding on all parties heretoon, and shall not be subject to appeal by, Buyer or the Members, and may be entered and enforced as provided in any court Section 12.3. If there is a referral to the Independent Accountant Arbitrator, each of competent jurisdictionBuyer and the Members agree, if requested by the Independent Accountant Arbitrator, to execute a reasonable engagement letter and submit to the Independent Accountant Arbitrator not later than ten (10) Business Days after its appointment, a written statement summarizing such Party’s position on the Earnout Disputed Items, together with such supporting documentation as such Party deems necessary. The parties agree Independent Accountant Arbitrator shall act as an arbitrator to determine, based solely on the materials submitted and presentations by Buyer and the Members, and not by independent review, only the Earnout Disputed Items that the procedure set forth in this Section 2.06 for resolving disputes have not been settled by negotiation, and its determination with respect to the each Earnout Statement Disputed Item shall be an amount within the sole and exclusive method for resolving any range established with respect to such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, PurchaserDisputed Item by Buyer’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report calculation delivered pursuant to Section 2.06(c)2.4.1, as applicable (such dateon the one hand, and the “Earnout Payment Deadline”)Members’ calculation delivered pursuant to Section 2.4.2, Purchaser shall pay to Sellers’ Representative an amount in cash equal to on the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as hand. The Independent Accountant Arbitrator shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount instructed to use reasonable best efforts to deliver to Buyer and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with Members a written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.report setting forth the
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Heidrick & Struggles International Inc)
Earnout. The Earnout Amount shall be calculated, determined and paid in (a) If the following mannerRevenue:
(ai) Within 60 days after equals or exceeds $43,000,000 (the end “Projected Revenue”), then Parent shall pay, or caused to be paid, to the Company Securityholders in accordance with their respective Pro Rata Portions, an aggregate amount equal to $25,000,000 (the “Projected Earnout”);
(ii) equals 90% of the Earnout PeriodProjected Revenue ($38,700,000) (the “Revenue Floor”), Purchaser then Parent shall prepare pay, or caused to be paid, to the Company Securityholders in good faith and deliver accordance with their respective Pro Rata Portions, an aggregate amount equal to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any $12,500,000 (the “Earnout StatementFloor”);
(iii) is less than the Projected Revenue, but exceeds the Revenue Floor, then Parent shall pay or caused to be paid, to the Company Securityholders in accordance with their respective Pro Rata Portions, an aggregate amount calculated using straight line interpolation between the Earnout Floor and the Projected Earnout and the Revenue Floor and the Projected Revenue (for example, if the Revenue equals 95% of the Projected Revenue ($40,850,000), such calculated amount shall be $18,750,000); or
(iv) is less than the Revenue Floor, Parent shall not be required to pay any amounts pursuant to this Section 1.14. Notwithstanding the foregoing, for all purposes of this Agreement, the aggregate amount of the Earnout Payment payable to the Company Securityholders shall be reduced by an amount, determined by the Securityholder Representative Committee and provided to Parent and the Paying Agent in writing, equal to the fees payable to TripleTree in connection with the earnout set forth in this Section 1.14 pursuant to the terms of the TripleTree Engagement Letter (such payment, the “TripleTree Earnout Payment”). Parent shall not be liable to any Company Stockholder for any amount paid to TripleTree pursuant to this Section 1.14.
(b) In the event of any objection by Sellers’ Representative with respect Within ninety (90) days after December 31, 2016, Parent shall cause to be prepared and delivered to the Securityholder Representative Committee a certificate (the “Earnout Certificate”), setting forth Parent’s good faith determination of the Net Sales or Revenue, the Earnout Amount payablePayment and, Sellers’ Representative shallin each case, within 60 days after its receipt a reasonably detailed calculation thereof.
(c) During the thirty (30)-day period following delivery of the Earnout StatementCertificate to the Securityholder Representative Committee, give written notice Parent will allow the Securityholder Representative Committee (and its Representatives) reasonable access to Purchaser such books, records, work papers, employees and accountants of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales Parent and the Earnout Amount as Surviving Corporation used in or who have information used in calculating the amounts set forth in the Earnout Statement Certificate as the Securityholder Representative Committee may reasonably request (including by electronic means, to the extent available), and shall provide such other cooperation as reasonably requested by the Securityholder Representative Committee.
(d) Within thirty (30) days following receipt by the Securityholder Representative Committee of the Earnout Certificate, the Securityholder Representative Committee shall deliver written notice to Parent of any dispute the Securityholder Representative Committee has with respect to the preparation or content of the Earnout Certificate. If the Securityholder Representative Committee does not so notify Parent of a dispute with respect to the Earnout Certificate within such thirty (30)-day period, the Earnout Certificate will be final, conclusive and binding on the Company Securityholders and the Securityholder Representative Committee. In the event of such notification of a dispute, Parent and the Securityholder Representative Committee shall negotiate in good faith to resolve such dispute. If Parent and the Securityholder Representative Committee, notwithstanding such good faith effort, fail to resolve such dispute within fifteen (15) days after the Securityholder Representative Committee advised Parent of its objections, then Parent and the Securityholder Representative Committee jointly shall engage a mutually agreed upon accounting firm (the “Earnout Accounting Firm”) to resolve such dispute. The Earnout Accounting Firm shall not have any material relationship with Parent, Merger Sub, the Securityholder Representative Committee or their respective Affiliates, and shall be deemed chosen by and mutually acceptable to have been accepted both Parent and the Securityholder Representative Committee; provided that if Parent and the Securityholder Representative Committee cannot agree on the appointment of the Earnout Accounting Firm, each shall select an independent accountant of nationally recognized standing and such independent accountants shall select a third to act as the Earnout Accounting Firm. The Earnout Accounting Firm shall make all determinations in accordance with this Agreement, shall make a determination of only those items remaining in dispute between Parent and the Securityholder Representative Committee within thirty (30) days of having the item referred to it pursuant to such procedures as it may require, and in doing so shall only be permitted or authorized to determine an amount with respect to any such disputed item that is either the amount of such disputed item as proposed by Parent in the Earnout Certificate or as proposed by the Securityholder Representative Committee in any notice of disagreement. All costs, fees and expenses of the Earnout Accounting Firm shall be allocated between Parent, on the one hand, and the Securityholder Representative Committee, on the other hand, in the same proportion that the aggregate amount of the disputed items so submitted to the Earnout Accounting Firm that is unsuccessfully disputed by each such party (as finally determined by the Earnout Accounting Firm) bears to the total disputed amount of such items so submitted. The determination of the Earnout Accounting Firm shall be final and binding on all the parties heretoand non-appealable.
(ce) IfFrom the Closing Date through and including December 31, for any reason2016, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser Parent shall, and shall cause the Companies Surviving Corporation and their any of its Subsidiaries to, use commercially reasonable efforts to achieve the Projected Revenue and pay the Projected Earnout. Without limiting the generality of the foregoing, from the Closing Date through and including December 31, 2016, Parent shall not, and shall not authorize or permit its Affiliates (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books Surviving Corporation and Records, for any of its Subsidiaries) to take any action with the purposes intent of avoiding or reducing the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreePayment.
(f) The Parties acknowledge and agree that, for Tax purposesNotwithstanding anything to the contrary herein, the payment Projected Earnout shall be immediately due and payable if, at any time from the Closing Date through and including December 31, 2016, (A) Parent or a Group Company commences any proceeding in bankruptcy or for dissolution, liquidation, winding-up, or other relief under state or federal bankruptcy laws; (B) any such proceeding is commenced against Parent or a Group Company or a receiver or trustee is appointed for Parent or a Group Company or a substantial part of its respective property, and such proceeding or appointment is not dismissed or discharged within thirty (30) days after its commencement; (C) Parent or a Group Company (x) makes an assignment for the benefit of creditors, or (y) petitions or applies to any tribunal for the appointment of a custodian, receiver or trustee for all or substantially all of its assets or (z) has a receiver, custodian or trustee appointed for all or substantially all of its assets and such receiver, custodian or trustee is not discharged within thirty (30) days thereafter; (D) Parent or a Group Company admits its inability to, pay its debts when they become due; or (E) any Key Employee’s employment is terminated by Parent without “cause” or any Key Employee resigns from his employment for “Good Reason” (as defined in the applicable Employment Agreement), in each case, in accordance with the terms of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Codeapplicable Employment Agreement.
(g) After For purposes of this Agreement, the Closing“Earnout Payment” means the aggregate amount payable by Parent pursuant to this Section 1.14, and during if any; provided that in no event shall the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with Payment exceed the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountProjected Earnout.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after At the end of the Earnout PeriodClosing, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales as additional consideration for the Earnout Period Merger and the other Transactions, Acquiror shall issue or cause to be issued in the name of each Eligible Company Equityholder its, his or her Pro Rata Share of a number of shares of Acquiror Class A Common Stock equal to the Total Earnout Shares Amount payable, if any (the “Earnout StatementShares”) and, in accordance with actual or deemed written instructions from the Eligible Company Equityholders, Acquiror shall deposit or cause to be deposited such shares at an account (the “Earnout Escrow Account”) with an escrow agent reasonably selected by Acquiror (the “Earnout Escrow Agent”) in accordance with an escrow agreement in form and substance reasonably acceptable to Acquiror and the Company, to be entered into on the Closing Date by and among Acquiror, the Company and the Earnout Escrow Agent (the “Earnout Escrow Agreement”). The parties hereto agree that the Eligible Company Equityholders shall be treated as the owner of the Earnout Shares for so long as they are in the Earnout Escrow Account for income Tax purposes, and shall file all Tax Returns consistent with such treatment.
(b) In Promptly upon the occurrence of any Triggering Event, Acquiror shall prepare and deliver, or cause to be prepared and delivered, a written notice to the Earnout Escrow Agent (a “Release Notice”), which Release Notice shall set forth the specific release instructions with respect thereto (including the number of Earnout Shares to be released to each Eligible Company Equityholder). No Eligible Company Equityholder shall, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, any of the Earnout Shares until the date on which the relevant Triggering Event has occurred as described in Section 3.03(f) and such shares have been released to the Eligible Company Equityholders. Any Earnout Shares not eligible to be released from the Earnout Escrow Account in accordance with the terms of Section 3.03(f) on or before the last day of the Earnout Period shall immediately thereafter be forfeited to Acquiror and canceled and the Eligible Company Equityholders shall not have any rights with respect thereto. Effective as of the Closing, each Eligible Company Equityholder shall have the right to vote each of its Earnout Shares until such Earnout Shares are forfeited as if the Eligible Company Equityholder was the owner of record of such Earnout Shares. Notwithstanding the forgoing, to the extent any holder of Exchanged Restricted Stock is entitled to Earnout Shares pursuant to this Section 3.03(b), such Earnout Shares shall only be issued to such holder, if at all, on the later of (i) the date the Earnout Shares are issued to the Eligible Company Equityholders, or (ii) the vesting of such Exchanged Restricted Stock in accordance with its terms. For the avoidance of doubt, in the event Exchanged Restricted Stock is forfeited without vesting prior to the occurrence of any objection by Sellers’ Representative a Triggering Event, such Exchanged Restricted Stock will not be entitled to Earnout Shares with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoTriggering Event.
(c) IfUntil Earnout Shares have been released or been forfeited hereunder, for an amount equal to any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of dividends or distributions that would have been payable to the date of delivery of Eligible Company Equityholders if the Earnout Dispute Notice, then Shares had been released prior to the record date for such unresolved items dividends or distributions shall be resolved delivered by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes Acquiror to the Earnout Statement, except as are required to resolve Escrow Agent for the unresolved objections. The award benefit of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes Eligible Company Equityholders with respect to the Earnout Statement Shares (the “Withholding Amount”). If any securities of Acquiror or any other person are included in the Withholding Amount, then any dividends or distributions in respect of or in exchange for any of such securities in the Withholding Amount, whether by way of stock splits or otherwise, shall be delivered to the sole Earnout Escrow Agent and exclusive method for resolving included in the “Withholding Amount”, and will be released to the Eligible Company Equityholders upon the release of the corresponding securities. If and when the Earnout Shares are released in accordance with this Section 3.03, the Earnout Escrow Agent shall release to each Eligible Company Equityholder its Pro Rata Share of the aggregate amount of the Withholding Amount attributable to such Earnout Shares that have been released and, if applicable, shall continue to withhold any remaining Withholding Amount that is attributable to such disputesEarnout Shares that have not yet been released until such Earnout Shares are released, in which case such remaining Withholding Amount shall be released to the Eligible Company Equityholders based on their respective Pro Rata Shares. If all or any portion of the Earnout Shares are forfeited to Acquiror in accordance with this Section 3.03, then the portion of the Withholding Amount attributable to the portion of the Earnout Shares that have been forfeited to Acquiror shall be automatically forfeited to Acquiror without consideration and with no further action required of any person.
(d) In connection with The Earnout Shares shall be released and delivered from the preparation Earnout Escrow Account and distributed to or on behalf of the Earnout Statement, and until the final resolution Eligible Company Equityholders upon receipt of the applicable Release Notice by the Earnout StatementEscrow Agent as follows:
(i) Upon the occurrence of Triggering Event I, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes a one-time release of one-half of the review and objection right contemplated hereinTotal Earnout Shares Amount;
(ii) Upon the occurrence of Triggering Event II, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation a one-time release of one-fourth of the Total Earnout Statement as may reasonably be requested by Sellers’ RepresentativeShares Amount; and and
(Biii) otherwise reasonably cooperate with Sellers’ Representative and its authorized RepresentativesUpon the occurrence of Triggering Event III, including by providing on a timely basis information reasonably necessary or useful in the determination one-time release of one-fourth of the calculations and amounts set forth in the Total Earnout StatementShares Amount.
(e) On For the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such dateavoidance of doubt, the “Eligible Company Equityholders shall be entitled to receive Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to Shares upon the Earnout Amountoccurrence of each Triggering Event; provided, thathowever, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amountthat each Triggering Event shall only occur once, if at all, and in no event shall the Eligible Company Equityholders be entitled to receive more than the Total Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeShares Amount.
(f) The Parties acknowledge Total Earnout Shares Amount and agree thatthe Acquiror Class A Common Stock price targets set forth in the definitions of Triggering Event I, Triggering Event II and Triggering Event III shall be equitably adjusted for Tax (i) stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Acquiror Class A Common Stock occurring on or after the Closing (other than the conversion of the Acquiror Founders Class B Stock into Acquiror Class A Common Stock prior to the Closing) and (ii) as described in the final sentence of this clause (f). To the extent any Exchanged Restricted Stock or Exchanged Restricted Stock Unit is forfeited on or after the Closing, the Total Earnout Shares Amount shall be increased by one Earnout Share for each share of Acquiror Class A Common Stock underlying such forfeited Exchanged Restricted Stock or Exchanged Restricted Stock Unit, and Acquiror shall deposit or cause to be deposited such additional shares into the Earnout Escrow Account. Such additional shares of Acquiror Class A Common Stock deposited in the Earnout Escrow Account shall be made from the authorized but unissued shares of Acquiror Class A Common Stock and shall otherwise be treated as Earnout Shares for all purposes, including under the payment terms of Earnout Escrow Account.
(g) If, during the Earnout Period, there is a Change in Control that results in the holders of Acquiror Class A Common Stock receiving a per share price equal to or in excess of the price targets set forth in the definitions of Triggering Event I, Triggering Event II and Triggering Event III, then immediately prior to the consummation of such Change in Control: (i) any such Triggering Event with a price target less than the per share price received by holders of Acquiror Class A Common Stock that has not previously occurred shall be deemed to have occurred and Acquiror shall cause the Earnout Amount Escrow Agent to release the applicable Earnout Shares with respect to a Triggering Event with a price target less than the per share price received by holders of Acquiror Class A Common Stock to any to the Eligible Company Equityholders; and (ii) all other Triggering Events shall be deemed to have not occurred and all Earnout Shares that would have been released from the Earnout Escrow Account to the Eligible Company Equityholders if anysuch other Triggering Events had occurred shall immediately thereafter be forfeited to Acquiror and canceled and the Eligible Company Equityholders shall not have any rights with respect thereto.
(h) will The issuance of Earnout Shares shall be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject total consideration paid pursuant to the foregoingMerger by the parties for Tax purposes, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales unless otherwise required for the Sellers to receive the Earnout Amountby applicable Law.
Appears in 1 contract
Samples: Business Combination Agreement (DHC Acquisition Corp.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after On or prior to June 1, 2007, Parent shall calculate the end of earnings before interest and taxes generated by the Earnout PeriodSurviving Company during the period commencing on April 1, Purchaser shall prepare in good faith 2006 and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payableending on March 31, if any 2007 (the “Earnout StatementEBIT Period”) in accordance with GAAP (the “EBIT”) and shall deliver a written notice to the Representative setting forth the EBIT and its calculation thereof (the “EBIT Notice”), together with copies of such financial statements relied upon by Parent in preparing such calculation and such other documents as the Representative may reasonably request that Parent reasonably determines would support its calculation of the EBIT.
(b) In If the event of any objection by Sellers’ Representative with respect objects to the Parent’s determination of the Net Sales or the Earnout Amount payableEBIT, Sellers’ Representative shall, it shall deliver to Parent written notice of such objection within 60 days twenty (20) Business Days after its receipt of the Earnout StatementEBIT Notice setting forth, give written notice to Purchaser of such objection showing in reasonable detail specificity, the nature of its dispute and its alternative calculation thereof of the EBIT (an “Earnout EBIT Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ the Representative does not timely deliver to Parent an Earnout EBIT Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement it shall be deemed to have been accepted agreed to Parent’s determination of the EBIT, which shall be final and binding. If the Representative does timely deliver to Parent an EBIT Dispute Notice, and Parent and the Representative are unable to mutually agree on the EBIT within twenty (20) Business Days following receipt by Parent of the EBIT Dispute Notice, Parent and the Representative shall engage McGladrey & Xxxxxx, LLP (the “Earnout Dispute Accountants”) to review, in accordance with GAAP, the EBIT Notice and the EBIT Dispute Notice (and all related information) and to finally determine the EBIT, which determination shall be final and binding on all parties heretoabsent manifest error. The costs of the Earnout Dispute Accountants shall be borne by the party (either Parent or the Stockholders as a group, jointly and severally) whose determination of the EBIT was farthest from the determination of the EBIT by the Earnout Dispute Accountants, or equally by Parent and the Stockholders as a group, jointly and severally, if the determination by the Earnout Dispute Accountants is equidistant between the determinations of the parties, provided that, any costs payable by the Stockholders shall be deducted from the Earnout Payment payable pursuant to this Section 2.4 to the extent possible.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days upon final determination of the date EBIT (whether upon agreement of delivery of the parties or by the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(cAccountants) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment DeadlineFinal Determination Date”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof EBIT is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion less than $450,000 (the “Earnout InterestMinimum EBIT Target”) at a rate equal to 10% per annum (or such lesser rate as ), the Stockholders shall be the maximum rate allowable under applicable Law)eligible to receive an aggregate earnout payment of $2,586,400, for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior subject to the date such payment is due or on such other date as Purchaser provisions of Sections 2.4(e) and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto). Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.If
Appears in 1 contract
Samples: Merger Agreement (Alloy Inc)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 Buyer shall submit to Seller, within thirty (30) days after following the conclusion of each calendar month, a monthly report setting forth (i) the aggregate cast house production (measured in metric tons) and, without duplication, molten aluminum sales volume (measured in metric tons) at the Mt. Holly Faxxxxxy for each calendar month beginning October 1, 2014 and ending December 1, 2015 and (ii) the occurrence of any Business Interruption Event and the receipt of any Business Interruption Recovery Amount, with the first such report being due within thirty (30) days following the end of the Earnout Periodfirst calendar month ending after the Closing Date. Notwithstanding anything to the contrary in this Agreement, Purchaser in no event shall the Buyer be liable to the Seller for any inaccuracies contained in any report delivered pursuant to this Section 2.7(a), provided, however, that the Buyer shall inform the Seller of any material inaccuracy contained in any such report within a reasonable time after the Buyer becomes actually aware of such material inaccuracy.
(b) On or prior to January 31, 2016, the Buyer shall prepare in good faith and deliver to Sellers’ Representative the Seller a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”).
(b) In setting forth the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt Buyer’s calculation of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoAmount.
(c) If, for any reason, Purchaser The Earnout Statement and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery calculation of the Earnout Dispute Amount reflected therein shall become final and binding upon the Buyer and the Seller on the 60th day following the Buyer’s delivery thereof to the Seller unless the Seller gives written notice of its disagreement with any component of the Earnout Statement (the “Earnout Objection Notice”) to the Buyer prior to such date. An Earnout Objection Notice shall specify in reasonable detail the nature of any such disagreement and include all supporting schedules, analyses, working papers and other documentation. If an 28 Earnout Objection Notice complying with the preceding sentence is given by the Seller in a timely manner, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement (as adjusted revised in accordance with this Section 2.7(c)) shall become final, binding and non-appealable upon the earlier of (i) pursuant to the date on which the Buyer and the Seller resolve in writing any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the matters specified in such Earnout Statement Objection Notice, or (ii) the date on which any such disputes are finally resolved in writing by the Accounting Firm. During the 60-day period following the delivery of an Earnout Objection Notice in compliance with this paragraph, the Buyer and the Seller shall seek in good faith to resolve any disputes with respect to the matters specified in the Earnout Objection Notice. If, at the end of such 60-day period, the Buyer and the Seller have not resolved such disputes, the Buyer and the Seller shall submit to the Accounting Firm for review and resolution of any and all matters that remain in dispute. The Buyer and the Seller shall use their respective good faith efforts to cause the Accounting Firm to render a decision resolving the matters in dispute within 60 days following the submission of such matters to the Accounting Firm. The Accounting Firm shall (A) allow the Buyer and the Seller to submit written presentations and supporting evidence regarding their respective positions, copies of which shall be delivered to the sole other Party, (B) include reasons for each relevant determination in its written statement, (C) review only, and exclusive method base the resolution of the calculations in dispute solely on, the submissions by the Buyer and the Seller and (D) not perform an independent review or audit of financial information, unless so requested in writing by the Buyer and the Seller. The Accounting Firm shall address only the calculations in dispute and any items directly impacted thereby, and any resolution of a disputed calculation by the Accounting Firm shall not be outside the range for resolving any such disputescalculation created by the submissions of the Buyer and the Seller. The Accounting Firm’s determination shall be set forth in a written statement delivered to the Parties and shall be final, binding and non-appealable. All fees and expenses of the Accounting Firm shall be borne by the Buyer and the Seller in inverse proportion as each may prevail on the value of (and not the quantity of) matters resolved by the Accounting Firm, which inverse proportionate allocations shall also be determined by the Accounting Firm at the time the determination of the Accounting Firm is rendered on the merits of the matters submitted.
(d) In connection with the preparation of Within 10 Business Days after the Earnout StatementAmount is finally determined in accordance with Section 2.7(c), and until the final resolution of the Earnout StatementBuyer shall pay, Purchaser shall, and shall or cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance noticeto be paid, to the relevant books and recordsSeller, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by bank wire transfer of immediately available funds to an account or accounts specified designated in accordance with written instructions provided writing by the Sellers’ Representative Seller, the lesser of (a) the Earnout Amount and (b) $22,500,000; provided, however, that, if the Earnout Amount is a negative number, the Seller shall instead pay, or cause to Purchaser at least two Business Days prior be paid, to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree thatBuyer, for Tax purposesby bank wire transfer of immediately available funds to an account designated in writing by the Buyer, the payment lesser of (a) the absolute value of the Earnout Amount and (if anyb) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code$12,500,000.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after The Shareholders will be entitled to additional consideration from Purchaser as provided in Annex I (any such additional consideration, including any amount paid pursuant to the end second paragraph of the Section 1 of Annex I, an "Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Earnout Statement”Amount").
(b) In Payments for any particular Earnout Period will not be reduced or refundable as a result of the event Company's results of operations in any objection by Sellers’ Representative with respect subsequent period. At Purchaser's option, but only to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items extent set forth in Annex I, each Earnout Amount may be satisfied by the delivery to the Shareholder Representative of unregistered shares of Parent Common Stock having a Fair Market Value, determined as of the Final Earnout Amount Determination Date (the "Value Date"), equal to such portion of such Earnout Dispute NoticeAmount. If Sellers’ Representative does not timely deliver The amount of each Earnout Amount that may be so satisfied, expressed as a percentage, is referred to herein as the "Share Percentage." Shares of Parent Common Stock issued in satisfaction of any portion of an Earnout Dispute NoticeAmount (including Post-Forecast Payment Shares (as defined below)) are referred to as "Earnout Shares" and, then together with the calculation Initial Shares, as the "Shares." In no event will any Shares be issued hereunder if the issuance of such Shares would cause (A) the sum of (1) the total number of Shares issued pursuant to this Agreement, (2) the number of shares of Parent Common Stock, if any, owned by the Shareholders as of the Net Sales and Closing Date, (3) the Earnout Amount as set forth in shares of Parent Common Stock issued to the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) Shareholders pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative employment-related incentive grants, and (ii4) without duplication, the shares of Parent Common Stock, if any, issued pursuant to the Referee’s resolution Company's Special Bonus Plan (the "Special Bonus Plan") to exceed 19.9% of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes number of shares of Parent Common Stock outstanding immediately prior to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and Closing or (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful the voting power of the securities described in the determination preceding clauses (A)(1) through (4) to exceed 19.9% of the calculations and amounts set forth in voting power of the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree voting securities of Parent outstanding immediately prior to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Closing. Any Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Initial Purchase Price that would otherwise be satisfied by the issuance of Shares in excess of such amount, and any other portion of an Earnout Amount plus interest on such unpaid portion (that is not satisfied through the “issuance of Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall Shares, will be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such paid in cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided delivered to Purchaser by the Sellers’ Representative to Shareholder Representative. Each Shareholder acknowledges and agrees that neither Purchaser at least two Business Days prior nor any other Person (including Parent) makes any guarantee or representation to the date such payment is due Shareholder Representative or on such any other date as Purchaser and Sellers’ Representative shall agreeShareholder that any Earnout Amount will be realized.
(fc) The Parties acknowledge If R. Bxxxx Xxxxxx'x employment with the Company is terminated (x) by Mx. Xxxxxx pursuant to Section 7(d) of the CEO Employment Contract, (y) by the Company pursuant to Section 4.8(c)(vi)(A) at a time when Parent is obligated to cause the Company not to take any of the actions described in Section 4.8(c)(vi), or (z) by the Company other than as permitted by the CEO Employment Contract, Purchaser will make a payment to the Shareholders equal to the aggregate amount that would be earned pursuant to this Section 1.5, assuming achievement of the consolidated EBIT forecast attached hereto as Annex B (the "EBIT Forecast") and agree thatrelevant Net Revenue targets, for Tax purposes, all Earnout Periods that are not already complete (the payment "Forecast Payment") (it being understood that (A) the Forecast Payment will offset any amounts payable thereafter to the Shareholders under Section 1.5 of this Agreement on a dollar-for-dollar basis but will not otherwise reduce or eliminate any rights of the Shareholders to receive any amounts payable to the Shareholders under Section 1.5 and (B) amounts earned with respect to Earnout Periods that are complete at the time of such termination will continue to be determined and paid in accordance with Section 1.5). The Forecast Payment will be satisfied entirely in cash. If the Forecast Payment is made, (i) at Purchaser's option, up to 100% of any amount to which the Shareholders thereafter become entitled pursuant to this Section 1.5 may be satisfied by the delivery to the Shareholder Representative of unregistered shares of Parent Common Stock having a Fair Market Value, determined as of the applicable Final Earnout Amount (if any) will be treated as an adjustment Determination Date(s), equal to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 to be so satisfied until the Share Percentage of the Codeaggregate Earnout Amounts (including the Forecast Payment) have been satisfied by delivery of shares of Parent Common Stock and (ii) thereafter, at Purchaser's option, up to the Share Percentage of any remaining portion of such amount may be satisfied by the delivery to the Shareholder Representative of unregistered shares of Parent Common Stock having a Fair Market Value, determined as of the applicable Final Earnout Amount Determination Date(s), equal to the portion of such amount to be so satisfied (any shares received pursuant to (i) or (ii), "Post-Forecast Shares").
(gd) After Purchaser will at its expense deliver to the ClosingShareholder Representative within 90 days after the end of calendar year 2005, calendar year 2006 and calendar year 2007 (each, an "Earnout Period") its calculation of Net Revenues, EBIT for such period (each, an "Initial EBIT Amount") and the Earnout Amount, if any, payable under Section 1.5. Purchaser will provide the Shareholder Representative and the Shareholders' independent auditors with reasonable access to all books and records and working papers to the extent reasonably necessary to enable the Shareholder Representative and such accounting firm to verify such calculations after the delivery thereof. Such calculations will be binding on the Parties, absent fraud or manifest error, unless the Shareholder Representative, within 30 days after the delivery of the calculations by Purchaser to the Shareholder Representative, notifies Purchaser in writing that it objects to any item or computation in connection with the calculations of Net Revenue, the Initial EBIT Amount or the Earnout Amount and specify in reasonable detail the basis for such objection. If Purchaser and the Shareholder Representative are unable to agree upon the calculations within 20 days after any notice of objection has been given by the Shareholder Representative to Purchaser, then at the election of either the Shareholder Representative or Purchaser, the dispute will be submitted to the Settlement Auditor for a final determination, which determination will be final and binding upon the Parties, absent fraud or manifest error. Purchaser and the Shareholder Representative will each bear one-half of the fees, costs and expenses of the Settlement Auditor in the event such an election is made, and during the Shareholders will severally (and not jointly) be responsible to pay their respective portions of the Shareholder Representative's portion of such fees, costs and expenses. For purposes of this Agreement, with respect to any Earnout Period, (i) the "Final EBIT Amount" for such period means the Initial EBIT Amount for such period, or such other amount as is agreed to by the Shareholder Representative and Purchaser shall notfollowing a timely notice of objection as contemplated under this Section 1.5(d), or such other amount as is determined by the Settlement Auditor, and shall cause its Affiliates not to, take any action, nor fail to take an action, with (ii) the purpose or intention "Final Earnout Amount Determination Date" for such period means: (x) the date that is 31 days after the delivery of impeding the achievement Purchaser's calculation of the Net Sales during Initial EBIT Amount for such period to the Shareholder Representative, (y) such earlier date on which the Shareholder Representative delivers an irrevocable notice to Purchaser in writing that it agrees with Purchaser's calculation of such Initial EBIT Amount, or (z) if the Shareholder Representative timely objects to such Initial EBIT Amount, such date on which the Final EBIT Amount in respect thereof is otherwise determined pursuant to this Section 1.5.
(e) In the event of a merger, consolidation, recapitalization or other transaction to which Parent is a party (a "Conversion Transaction") as a result of which outstanding shares of Parent Common Stock are converted into the right to receive, in whole or in part, equity securities, if such equity securities are traded on the New York Stock Exchange, the American Stock Exchange, The Nasdaq Stock Market or another securities exchange or interdealer quotation system reasonably acceptable to the Shareholder Representative and are registered or eligible for resale pursuant to Rule 144 on substantially the same terms as the Shares ("Listed Equity Securities"), (i) any issued Shares will be eligible to participate in any Conversion Transaction on the same basis as other outstanding shares of Parent Common Stock and (ii) any portion of any Earnout Period required for Amount payable thereafter that would otherwise be permitted to be satisfied through the Sellers issuance of Parent Common Stock will thereafter be permitted to be satisfied through the issuance of such Listed Equity Securities, valued at their aggregate Fair Market Value as of the applicable Value Date. In the event that, in any Conversion Transaction, outstanding shares of Parent Common Stock are converted into the right to receive equity securities that are not Listed Equity Securities (or are converted into the right to receive a combination of such equity securities and cash), then, until such equity securities constitute Listed Equity Securities, any Earnout Amount that thereafter becomes due will be required to be satisfied entirely in cash. In the event of a merger, consolidation, recapitalization or otherwise fail to act in good faith in respect thereto. Subject to other transaction (other than a repurchase by Parent or an Affiliate of Parent) as a result of which outstanding shares of Parent Common Stock are converted into the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers right to receive only cash, any Earnout Amount that thereafter becomes due will be required to be satisfied entirely in cash; provided, however, that if the surviving or transferee entity in such transaction (or an Affiliate thereof) has a class of Listed Equity Securities, any portion of an Earnout AmountAmount that would otherwise be permitted to be satisfied through the issuance of Parent Common Stock will thereafter be permitted to be satisfied through the issuance of such Listed Equity Securities, valued at their aggregate Fair Market Value as of the applicable Value Date.
Appears in 1 contract
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after As additional consideration for the end Company Stock, and subject to the terms and conditions set forth in this Agreement, Buyer will make additional payments not to exceed $20,000,000 in the aggregate to the Sellers in accordance with Exhibit B if, and to the extent, the Company achieves certain operational and financial performance targets set forth in Exhibit E (the "Earnout Targets") during one or more of the fiscal years commencing January 1, 2014, January 1, 2015, January 1, 2016 and January 1, 2017 (each, an "Earnout Period") (each such payment, an "Earnout Payment" and, in the aggregate, the "Earnout"). Sellers will be entitled to pro-rated Earnout Payments for partial achievements of the Earnout Targets, as described in Exhibit X. Xxxxxxx will be eligible to receive up to $6,000,000 for the 2014 Earnout Period, Purchaser shall prepare in good faith and deliver up to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales $6,000,000 for the 2015 Earnout Period, and up to $8,000,000 in the aggregate for the 2016 Earnout Period and the 2017 Earnout Amount payablePeriod. Sellers will be entitled to Earnout Payments, or the portions thereof, not earned during a prior applicable Earnout Period if any (the “maximum Earnout Statement”)Target is achieved in the 2016 or 2017 Earnout Period. For the avoidance of doubt, in no event will the Earnout payable under this Section 1.03 exceed $20,000,000 in the aggregate.
(b) In the event Any proper indemnification claim by any Buyer Indemnitee for breach of any objection of the Special Representations or Fundamental Representations and any breach by Sellers’ Representative with respect a Restricted Party of his or her obligations under Section 6.04 may be satisfied by deducting and otherwise offsetting such claims against any amounts that are otherwise payable by Buyer pursuant to this Section 1.03, subject to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items limitations set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties heretoArticle 5.
(c) If, for The continued employment by Buyer or any reason, Purchaser and Sellers’ Representative canof its Affiliates of either Xxxxx Xxxxxx or Xxxxx Xxxxxx will not resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery be a condition precedent to payment of the Earnout Dispute Noticeor any Earnout Payment. Notwithstanding anything to the contrary in this Agreement, then a Seller's right to receive his, her or its respective portion of the Earnout or any Earnout Payment, if achieved, will terminate with respect to any portion of the Earnout or any Earnout Payment that has not yet been earned at such unresolved items shall be resolved time upon (i) the breach by the Referee in the manner provided such Seller of any of his covenants or agreements contained in Section 2.03(c6.04, or (ii) the termination of such Seller's employment with Buyer or any of its Affiliates following (A) such Seller’s conviction of, or a plea of guilty or no contest by such Seller in relation to, one or more felony criminal charges under the laws of the United States or any state thereof involving punishment of at least sixty (60) days of imprisonment or other confinement; or (B) material breach by such Seller of any fiduciary duty owed to the Buyer or any Affiliate. It is understood that Buyer may withhold any Earnout Payment that would otherwise be due under this Section 1.03 only after notification of the applicable Seller of its good faith belief that such Seller has violated clause (i) or clause (ii)(B) above, mutatis mutandisand Buyer may continue to withhold payment for more than ninety (90) days only if an action in a court of competent jurisdiction (or, except as modified hereinwith the consent of the applicable Seller, an arbitration or mediation proceeding) has been initiated to determine whether such Seller has in fact breached such clause(s) (it being irrelevant for this purpose whether the terms of Section 6.04 are actually enforceable under applicable law). The Referee shall issue termination of a written report which shall include Seller's right to receive Earnout Payments based on a revised Earnout Statement as adjusted breach of clause (i) pursuant to any resolutions to objections agreed or (ii)(B) above will become effective only upon a finally determined, non-appealable decision by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any a court of competent jurisdiction. The parties agree that jurisdiction (or, with the procedure set forth in this Section 2.06 for resolving disputes with respect to consent of the Earnout Statement shall be the sole and exclusive method for resolving any such disputesapplicable Seller, an arbitration or mediation proceeding).
(d) In connection with Within thirty (30) days after Buyer's receipt of Buyer's audited consolidated financial statements for the preparation fiscal year corresponding to each Earnout Period, Buyer will prepare, or cause to be prepared, a statement of the Earnout Statement, and until Payment for the final resolution of applicable Earnout Period (the "Earnout Statement, Purchaser shall, ") and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of will deliver the Earnout Statement as may reasonably be requested by to Sellers’ ' Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On For each Earnout Period, following receipt by Sellers' Representative of Buyer's proposed Earnout Statement and until the fifth Business Day Earnout Payment is finally determined pursuant to this Section 1.03, Sellers' Representative will be permitted (upon reasonable advance written notice and during normal business hours) to review the Company's books and records and working papers related to Buyer's draft of the proposed Earnout Statement and determination of the Earnout Payment, and Buyer will provide Sellers' Representative with reasonable access to the Company's personnel, books and records, and facilities in connection with such review. The proposed Earnout Statement delivered by Buyer will become final and binding on the parties thirty (30) days following Buyer's delivery thereof to Sellers' Representative except to the extent (and only to the extent) Sellers' Representative delivers written notice of its disagreement (the "Earnout Payment Notice of Disagreement") to Buyer on or prior to such date. All matters not subject to dispute as specifically identified in the Earnout Payment Notice of Disagreement will be final and binding. The Earnout Payment Notice of Disagreement must identify with specificity each item in the Earnout Statement that the Sellers' Representative disagrees with and, for each disputed item, contain a statement describing in reasonable detail the basis of such objection and the amount in dispute. If Sellers' Representative timely delivers an Earnout Payment Notice of Disagreement, then the Earnout Statement will become final and binding on the parties to this Agreement on the earlier of (i) the date Buyer and Sellers' Representative resolve in writing any differences they have with respect to the matters specified in the Earnout Payment Notice of Disagreement, and (ii) the date all matters in dispute are finally resolved in writing by the Independent Accountants.
(f) During the thirty (30) days following delivery of an Earnout Payment Notice of Disagreement, Buyer and Sellers' Representative will seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Earnout Payment Notice of Disagreement. At the end of such thirty (30) day period, Buyer and Sellers' Representative will submit to the Independent Accountants for resolution all matters that remain in dispute, which were included in the Earnout Payment Notice of Disagreement (and will take all actions reasonably requested by the Independent Accountants in connection with such resolution, including submitting written claims to the Independent Accountants if so requested), and the Independent Accountants will make a final determination of the Earnout Payment in accordance with the terms of this Agreement (with it being understood that Buyer and the Sellers' Representative will request that the Independent Accountants deliver to Buyer and the Sellers' Representative its resolution in writing not more than thirty (30) days after Purchaser its engagement). The Independent Accountants will make a determination only with respect to the matters still in dispute and, with respect to each such matter, their determination will be within the range of the dispute between Buyer and Sellers' Representative. The Independent Accountants' determination will be based solely on written materials submitted by Buyer and Sellers' Representative (i.e., not on independent review) and on the Earnout Targets set forth in Exhibit E and related definitions included herein and the provisions of this Agreement.
(g) The costs and expenses of the Independent Accountants will be allocated between Buyer and Sellers’ Representative agree based upon the percentage of the portion of the contested amount not awarded to Buyer or Sellers bears to the amount actually contested by such party. For example, if Sellers' Representative claims the Earnout Payment is $1,000 greater than the amount claimed by Buyer, and Buyer contests only $500 of the amount claimed by Sellers' Representative, and if the Independent Accountants ultimately resolves the dispute by awarding Sellers $300 of the $500 contested, then the costs and expenses of the Independent Accountants will be allocated 60% (i.e., 300 ÷ 500) to Buyer and 40% (i.e., 200 ÷ 500) to Sellers’ Representative.
(h) Within three (3) Business Days after the date on which the Earnout Statement or Purchaser and Sellers’ Representative receive from will become binding on the Referee its written report pursuant to Section 2.06(c)parties, as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall Buyer will pay to Sellers’ Representative an amount in cash equal , or cause the Company to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law)Sellers, for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or the accounts specified designated by Sellers in Exhibit B in accordance with written instructions provided by the Sellers’ Representative allocation among the Sellers set forth in Exhibit B, an amount equal to Purchaser at least two the applicable Earnout Payment.
(i) In the event of a Change in Control prior to December 31, 2017, within five (5) Business Days prior following the effectiveness of the event constituting such Change in Control, Buyer will pay or cause to be paid by wire transfer of immediately available funds to the date such payment is due or on such other date as Purchaser accounts designated by Sellers in Exhibit B, in accordance with the allocation among the Sellers set forth in Exhibit B, an amount equal to $20,000,000 less all previous amounts paid under the Earnout.
(j) In furtherance of the covenants and agreements set forth in this Section 1.03, unless otherwise mutually agreed in writing by Buyer and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree thatRepresentative, for Tax purposes, the payment of the Earnout Amount (if any) Buyer will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall will cause its Affiliates the Company not to, take any action, nor fail action intended to take an action, with the purpose prevent or intention of impeding inhibit the achievement of any Earnout Payment.
(k) All payments made pursuant to this Section 1.03 will be deemed to be adjustments for Tax purposes to the Net Sales during the Earnout Period required aggregate purchase price paid by Buyer for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountCompany Stock.
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Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 No later than September 30, 2001 (the "Earnout Determination Date"), HSA shall, for the period commencing on the date hereof and ending on July 31, 2001 (the "Earnout Period"), deliver to the Representative DC's audited consolidated statements of operations ("Earnout Period Financial Statement"), which financial statement shall have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and reviewed by Pricewaterhouse Coopers LLP, HSA's independent accountants ("PWC"). Concurrently with the delivery of the Earnout Period Financial Statement, HSA shall deliver to the Representative a notice (the "Earnout Notice") indicating the Earnout Market Value (as defined in Section 4.3(b) below), if any, as determined by HSA in good faith based on the Earnout Period Financial Statement (the "Earnout Determination"). At the request and expense of the Representative, HSA shall permit independent accountants designated by the Representative to have access to the accounting personnel of PWC used by HSA to perform such review. The Earnout Determination shall become final (the "Final Earnout Determination") thirty (30) days after the end Earnout Notice is so delivered by HSA unless the Representative sets forth any objection thereto in a written notice to HSA, which notice shall include the basis for the objection to the Earnout Determination and the Representative's own determination of the Earnout PeriodMarket Value during such thirty (30) day period, Purchaser in which event the parties shall prepare endeavor in good faith to resolve such dispute within fifteen (15) days after such notice and deliver failing such resolution to Sellers’ Representative mutually agree upon a partner of a Big Five accounting firm (other than a firm which represents HSA) (the "Accounting Firm") to resolve such dispute promptly, and in no event later than 30 days after the 15-day dispute resolution period, and whose determination shall be final and conclusive. If the parties cannot agree on the selection of the Accounting Firm, or the selected Accounting Firm declines to accept its appointment as the Accounting Firm and the parties cannot agree on the selection of another independent accounting firm to act as the Accounting Firm, either party may seek Speedy Arbitration to select such a firm, and such appointment shall be conclusive and binding on the parties. Promptly, but within 30 days after acceptance of its appointment as the Accounting Firm, the Accounting Firm shall take all such actions (including, without limitation, any audit procedures) as shall be necessary to determine the remaining disputed items and shall render a written statement showing in reasonable detail report to the calculation of Net Sales for the Earnout Period Representative and the Earnout Amount payableSurviving Corporation upon such items. During such 30 day period, if the Surviving Corporation shall afford the Accounting Firm full access to any (the “Earnout Statement”).
(b) In the event and all of any objection by Sellers’ Representative with respect its records and work papers related to the determination dispute, and the Surviving Corporation shall use its reasonable best efforts to make available (subject to the policies of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt Surviving Corporation's accountants) any work papers of the Earnout Statement, give written notice to Purchaser of such objection showing Surviving Corporation's accountants created in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then connection with the calculation of the Net Sales Earnout Market Value, and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days assistance of the date of delivery of the Earnout Dispute NoticeSurviving Corporation's accountants, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c)each case, as applicable (such date, is necessary to enable the “Earnout Payment Deadline”), Purchaser shall pay Accounting Firm to Sellers’ Representative an amount in cash equal to review the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment calculation of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.the
Appears in 1 contract
Earnout. (a) Following the Closing, and as additional consideration for the Transactions, within five (5) Business Days after the occurrence of a Triggering Event, the Company Holders and the holders of Company Vested Equity Units and Company Unvested Equity Units set forth in the Rollover Schedule and the Allocation Schedule, shall be issued Topco Ordinary Shares, as referred to below and as set forth opposite such holder’s name on the Rollover Schedule and Allocation Schedule, which right shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to Topco Ordinary Shares occurring on or after the Closing (the “Earnout Consideration”, which consideration, for the avoidance of doubt, shall in no circumstances take the form of cash), upon the terms and subject to the conditions set forth in this Agreement; provided, however, that holders of Company Vested Equity Units and holders of Company Unvested Equity Units that are in the employment of the Company at the Closing shall, on the termination of such employment, forfeit any Earnout Consideration attributable to their Company Vested Equity Units or Company Unvested Equity Units and otherwise payable to them. Where any Earnout Consideration is forfeited, such Earnout Consideration shall be reallocated to the holders set forth on the Rollover Schedule and the Allocation Schedule on a pro rata basis. The right to receive the Earnout Consideration is not transferable. The Earnout Amount Consideration shall be calculated, determined and paid issued in the following manner:
(ai) Within 60 days after Upon the end occurrence of Triggering Event I, the Earnout Periodnumber of Topco Ordinary Shares as set forth on the Rollover Schedule and / or the Allocation Schedule (as the case may be);
(ii) Upon the occurrence of Triggering Event II, Purchaser shall prepare in good faith the number of Topco Ordinary Shares as set forth on the Rollover Schedule and deliver to Sellers’ Representative a written statement showing in reasonable detail / or the calculation Allocation Schedule (as the case may be);
(iii) Upon the occurrence of Net Sales for Triggering Event III, the Earnout Period number of Topco Ordinary Shares as set forth on the Rollover Schedule and / or the Earnout Amount payableAllocation Schedule (as the case may be); and
(iv) Upon the occurrence of Triggering Event IV, if any the number of Topco Ordinary Shares as set forth on the Rollover Schedule and / or the Allocation Schedule (as the “Earnout Statement”case may be).
(b) In For the event avoidance of any objection by Sellers’ Representative with doubt, the aggregate number of Topco Ordinary Shares that the Company Holders and the holders of Company Vested Equity Units and Company Unvested Equity Units will collectively have a right to receive pursuant to this Agreement in respect to the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Earnout Statement, give written notice to Purchaser Consideration in no event shall exceed the aggregate of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items numbers set forth in such on the Rollover Schedule and the Allocation Schedule. Any Earnout Dispute Notice. If Sellers’ Representative does Consideration that is not timely deliver an Earnout Dispute Notice, then earned and payable prior to the calculation expiration of the Net Sales and the Earnout Amount as set forth in the Earnout Statement applicable Triggering Event shall be deemed to have been accepted and shall be final and binding on all parties heretoforfeited.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of during the Earnout Dispute NoticePeriod, then such unresolved items there is a Change of Control, each Triggering Event that has not yet occurred (and has not previously expired) as of immediately prior to the Change of Control shall be resolved by deemed to have occurred if the Referee price per share in the manner provided Change of Control equals or exceeds the applicable price target described in Section 2.03(cthe applicable Triggering Event, and the Earnout Consideration (or any applicable portion thereof) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant will be deemed to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant have been issued immediately prior to the Referee’s resolution consummation of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award such Change of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesControl.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts The Topco Ordinary Share price targets set forth in the Earnout Statementdefinitions of Triggering Event I, Triggering Event II, Triggering Event III and Triggering Event IV shall be equitably adjusted for stock splits, reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to the Topco Ordinary Shares occurring after the Closing.
(e) On The Parties agree that for all income Tax purposes, any payment of any portion of the fifth Business Day after Purchaser and Sellers’ Representative agree Earnout Consideration to the Earnout Statement or Purchaser and Sellers’ Representative receive from Company Holders shall be treated as deferred consideration in the Referee its written report exchange pursuant to Section 2.06(c)351 of the Code and any corresponding provision of non-U.S. or U.S. state or local law, as appropriate (subject to imputation of interest under Section 483 or Section 1274 of the Code). The Parties shall prepare and file all Tax Returns consistent with the foregoing provisions of this Section 4.03(e) and shall not take any inconsistent position on any Tax Return, or during the course of any audit, litigation or other proceeding with respect to Taxes, unless otherwise required by applicable Law.
(such datef) The Parties agree that the obligation on Topco to issue the Earnout Consideration to Company Holders and holders of Company Vested Equity Units and Company Unvested Equity Units pursuant to Section 4.03(a) shall, without prejudice to any obligation of a Company Holder or holder of Company Vested Equity Units or Company Unvested Equity Units to make payment, in all cases be conditional on and subject to the “Earnout Payment Deadline”), Purchaser shall pay payment to Sellers’ Representative Topco of an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion aggregate nominal value of such amount being treated as interest under Section 483 of the CodeTopco Ordinary Shares.
(g) After the ClosingNotwithstanding any other provision of this Agreement, and during where an issuance of the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take Consideration would result in the imposition of an obligation on any action, nor fail person or persons (either severally or jointly) to take extend an action, with offer to the purpose or intention holders of impeding the achievement each class of equity share capital in Topco pursuant to Rule 9 of the Net Sales during Irish Takeover Panel Act, 1997, Irish Takeover Rules, 2013, the requirement on Topco to issue such Earnout Consideration shall be deferred until such time as the Irish Takeover Panel grants, for the purposes of such issuance, a waiver from the requirements of Rule 9 for the purposes of such issuance of the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout AmountConsideration.
Appears in 1 contract
Samples: Business Combination Agreement (Concord Acquisition Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after At the end of the Earnout PeriodClosing, 400,000,000 additional Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any Ordinary Shares (the “Earnout StatementShares”) will be issued by Purchaser to the Company Shareholders (other than holders of Dissenting Company Shares) and placed in an escrow account with Continental (the “Earnout Escrow Account” and such Earnout Shares placed in the Earnout Escrow Account, the “Escrowed Earnout Shares”) for the benefit of such Company Shareholders pursuant to an Escrow Agreement between Purchaser, Continental and Mx. Xxxx Xxxxxxxxx (the “Company Shareholder Representative”) as the representative of the Company Shareholders (the “Earnout Escrow Agreement”); provided that Mx. Xxxx Xxxxxxxxx shall only be a party to the Earnout Escrow Agreement, the Sponsor Promote Escrow Agreement, and the Termination Fee Escrow Agreement in his capacity as the Company Shareholder Representative if duly appointed by the Company Shareholders. Each Company Shareholder (other than holders of Dissenting Company Shares) shall be shown as the registered owner of its pro rata portion of the Escrowed Earnout Shares on the books and records of Purchaser, as set forth on Schedule 1.6 of the Company Disclosure Schedules (in respect of each Company Shareholder, its “Pro Rata Portion”), and shall be entitled to exercise voting rights and all share rights with respect to such Escrowed Earnout Shares.
(b) Subject to adjustment pursuant to Section 1.6(c) below, the Company Shareholders shall have the right to receive their Pro Rata Portion of the Escrowed Earnout Shares after the Closing Date in accordance with this Section 1.6. In the event of any objection by Sellers’ Representative with respect that the Revenue Target is achieved, the Escrowed Earnout Shares will be released from the Earnout Escrow Account to the determination Company Shareholders on the later of the Net Sales January 31, 2024 or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of Closing Date (the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute NoticeRelease Date”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Any Escrowed Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then the calculation of the Net Sales and the Earnout Amount as set forth Shares remaining in the Earnout Statement Escrow Account following the Earnout Release Date, will be surrendered back to Purchaser without consideration by the Company Shareholders executing an irrevocable surrender of shares. The Company Shareholder Representative, on behalf of the Company Shareholders, shall be deemed instruct Continental to have been accepted unconditionally release the surrendered portion of such Escrowed Earnout Shares from the Earnout Escrow Account to Purchaser, and Purchaser shall be final cancel such surrendered portion of such Escrowed Earnout Shares in accordance with the Earnout Escrow Agreement and binding the Company Shareholder Representative shall execute an Irrevocable Surrender of Shares on all parties heretobehalf of the Company Shareholders in form and substance satisfactory to the Sponsor and surrender such Earnout Shares to Purchaser without consideration.
(c) IfThe applicable number of Earnout Shares, for any reasonif any, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by subject to equitable adjustment for share splits, share dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the Referee in Purchaser Ordinary Shares after the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser Closing and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes prior to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputesRelease Date.
(d) In connection with Notwithstanding anything contained in this Section 1.6, if during the preparation Interim Period, the Company obtains transaction financing in the aggregate amount of at least $215,000,000, in the form of firm written commitments from investors recognized and accepted by Purchaser or in the form of no less than $107,500,000 good faith deposit made by investors for a private placement of equity, debt or other alternative financing to Purchaser, each Company Shareholder (other than holders of Dissenting Company Shares) shall be entitled to receive its Pro Rata Portion of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning Shares on the Earnout Payment Deadline and ending on Closing Date, regardless of whether the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment Revenue Target is due or on such other date as Purchaser and Sellers’ Representative shall agreeachieved.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Business Combination Agreement (AlphaVest Acquisition Corp.)
Earnout. The Sellers shall be eligible to receive the Earnout Amount shall be calculated, determined and paid from the Purchaser on the terms set forth in the following manner:this Section 2.08.
(a) Within 60 days The Purchaser shall use its reasonable best efforts to deliver to the Sellers as promptly as practicable after December 31, 2015 (and, in any event, no later than April 14, 2016) true and complete copies of the end audited consolidated balance sheets of the Purchaser for the fiscal year ended as of December 31, 2015, and the related audited consolidated statements of income, equity and cash flows (the “2015 Financial Statements”) and a written statement setting forth the Purchaser’s calculation, together with reasonable supporting detail, of the Earnout Period, Purchaser shall prepare in good faith and deliver to Sellers’ Representative a written statement showing in reasonable detail the calculation of Net Sales for the Earnout Period and the Earnout Amount payable, if any (the “Initial Earnout Statement”). For purposes of this Section 2.08, Adjusted EBITDA will be calculated in accordance with the accounting principles and practices used by the Companies prior to the date hereof; provided that revenue recognition of the Companies and the Company Subsidiaries will be calculated in accordance with the updated revenue recognition principles (percentage of completion) of the Companies to the extent those updated principles are used in preparation of the 2015 Financial Statements.
(b) In Throughout the event period following receipt by the US Seller of any objection by Sellers’ Representative with respect to the Initial Earnout Statement until the determination of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt of the Final Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute NoticePurchaser, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their the Company Subsidiaries to, (A) provide Sellers’ Representative shall permit the US Seller and its authorized Representatives reasonable access (with reasonable accessthe right to make copies), during normal business hours upon reasonable advance notice, to the relevant financial books and recordsrecords of the Purchaser, including the Transferred Books Companies and Records, the Company Subsidiaries for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees together with reasonable access to the individuals responsible for the preparation of the Initial Earnout Statement as may reasonably be requested by Sellers’ Representative; and the 2015 Financial Statements (Bincluding the independent auditors of the Companies) otherwise reasonably cooperate with Sellers’ Representative in order to respond to the inquiries of the US Seller and its authorized RepresentativesRepresentatives related thereto.
(c) The US Seller shall deliver to the Purchaser by the Objection Deadline Date either a notice indicating that it accepts the Initial Earnout Statement (which shall be a Notice of Acceptance for purposes of this Section 2.08), including by providing on or a detailed statement describing its objections to the Initial Earnout Statement (which shall be a Notice of Disagreement for purposes of this Section 2.08). If the US Seller timely basis information reasonably necessary or useful delivers a Notice of Disagreement, only those matters specified in the determination such Notice of Disagreement shall be deemed to be in dispute (and such matters shall be Disputed Items for purposes of this Section 2.08). Any component of the calculations and amounts set forth in the Initial Earnout Statement that is not the subject of a timely delivered Notice of Disagreement shall be final and binding upon the parties hereto, unless the resolution of any such Disputed Item affects an undisputed component of the Initial Earnout Statement, in which case such undisputed component shall, notwithstanding the failure to object to such component in the Notice of Disagreement, be considered a “Disputed Item” to the extent affected by such resolved Disputed Item.
(d) The dispute resolution procedures of Section 2.06(d) shall apply to the Final Earnout Statement, mutatis mutandis.
(e) On The Final Earnout Statement shall be final and binding upon the fifth Business Day after Purchaser and Sellers’ Representative agree parties hereto for the purposes of this Agreement upon the earliest to occur of: (i) the delivery by the US Seller of a Notice of Acceptance or the failure of the US Seller to deliver a Notice of Disagreement by the Objection Deadline Date with respect to the Initial Earnout Statement or Statement; (ii) the resolution of all Disputed Items by the US Seller and the Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c2.08(d), as applicable ; and (such date, iii) the “resolution of all Unresolved Objections pursuant to Section 2.08(d) by the Neutral Accountant. Within five (5) Business Days after the Final Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to Statement becomes final and binding upon the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amountparties hereto, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to a positive amount, then the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of an amount equal to the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the CodeBank Account.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
Appears in 1 contract
Samples: Purchase Agreement (Forterra, Inc.)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days after After the end Closing, subject to the terms and conditions set forth herein, the Sellers shall have the contingent right to receive additional consideration from Pubco based on the performance of Pubco and its Subsidiaries, including the Company, during the period commencing on the first day of the Earnout Periodfirst fiscal quarter following Closing (but in any event no earlier than October 1, Purchaser shall prepare in good faith 2021) and deliver to Sellers’ Representative a written statement showing in reasonable detail ending on the calculation twelve (12) month anniversary of Net Sales for the Earnout Period and the Earnout Amount payable, if any such date (the “Earnout StatementYear”)) if the requirements as set forth in this Section 2.6 are met.
(b) In The Sellers shall be entitled to receive from Pubco, if and when earned, as additional consideration for the event of any objection by Sellers’ Representative with respect to the determination purchase of the Net Sales or Purchased Shares, the Earnout Amount payable, Sellers’ Representative shall, within 60 days after its receipt Earned Escrow Shares together with the Other Escrow Property. To the extent that the amount of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail Earned Escrowed Shares is less than the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute NoticeEscrow Share Number, then the calculation amount of Escrow Shares equal to such difference will be forfeited by the Sellers and released to Pubco for cancellation along with any accrued but unpaid dividends payable in respect of such Escrow Shares. To the extent that any Other Escrow Property is released to the Sellers, it shall be allocated among the Sellers in accordance with their pro rata interests in the Earned Escrow Shares. Further, to the extent that any portion of the Net Sales and Escrow Shares consist of equity securities other than Exchange Shares, any distribution from the Earnout Amount as set forth in the Earnout Statement Escrow Shares under this Section 2.6 shall be deemed to have been accepted and shall be final and binding on all parties heretomade in proportional amounts among the different types of securities.
(c) If, As soon as practicable (but in any event within ten (10) Business Days) after Pubco’s filing of consolidated financial statements for any reason, Purchaser Pubco and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of its Subsidiaries with the date of delivery SEC for the period ending on the last day of the Earnout Dispute NoticeYear, then such unresolved items shall be resolved by the Referee in Chairman will prepare and deliver to the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue Purchaser Representative and the Seller Representative a written report which shall include a revised statement (an “Earnout Statement as adjusted Statement”) that sets forth the Chairman's determination in accordance with the terms of this Section 2.6 of (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative the revenue for the Earnout Year based on such financial statements, and (ii) the Escrow Property that the Sellers and Pubco (as applicable) are entitled to receive pursuant to the Referee’s resolution of the unresolved objectionsSection 2.6(b). The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole final, conclusive, non-appealable and exclusive method binding for resolving any such disputesall purposes hereunder (other than for fraud or manifest error).
(d) In connection Pubco and the Seller Representative will provide written instructions to the Escrow Agent within ten (10) Business Days of their receipt of a final Earnout Statement to release the Escrow Property in accordance with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statement.
(e) On Following the fifth Business Day after Purchaser and Sellers’ Representative agree to Closing (including during the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(cYear), as applicable Pubco and its Subsidiaries, including the Target Companies, will be entitled to operate their respective businesses based upon the business requirements of Pubco and its Subsidiaries. Each of Pubco and its Subsidiaries, including the Target Companies will be permitted, following the Closing (such dateincluding during the Earnout Year), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the revenue, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to share price of Pubco Ordinary Shares and the Earnout Amount; provided, that, without limiting any other remedies available hereunder to ability of the Sellers to compel payment earn the Escrow Shares, and the Sellers will not have any right to claim the loss of the Earnout Amount, if the Earnout Amount all or any portion thereof is not received by Sellers on of any Escrow Shares or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion other damages as a result of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreedecisions.
(f) The Parties acknowledge and agree that, for Tax purposesFor purposes of this Section 2.6, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser following definitions shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.apply:
Appears in 1 contract
Samples: Business Combination Agreement (East Stone Acquisition Corp)
Earnout. The Earnout Amount shall be calculated, determined and paid in the following manner:
(a) Within 60 days Following the Closing, as additional consideration for the Company Shares acquired in connection with the Merger, within five (5) Business Days after the end occurrence of a Triggering Event, Newco shall issue or cause to be issued to each applicable Eligible Company Equityholder pursuant to Section 4.11(f), with respect to each outstanding Company Share and Vested Company Option, as applicable, owned by such Eligible Company Equityholder immediately prior to the Effective Time, the applicable Per Share Earnout PeriodConsideration in connection with such Triggering Event (which shall be equitably adjusted for stock splits, Purchaser reverse stock splits, stock dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to shares of Newco Class A Common Stock occurring after the Closing and upon or prior to the applicable Triggering Event), upon the terms and subject to the conditions set forth in this Agreement. For the avoidance of doubt, the Eligible Company Equityholders (excluding Eligible Company Equityholders in their capacity as holders of Unvested Company Options or Unvested Company RSUs solely to the extent they are eligible to receive Earnout RSU Shares pursuant to Section 4.11(e)) with respect to each Triggering Event shall prepare in good faith and deliver be entitled to Sellers’ Representative a written statement showing in reasonable detail receive Earnout Shares upon the calculation occurrence of Net Sales for the Earnout Period and the Earnout Amount payablesuch Triggering Event; provided, however, that each Triggering Event shall only occur once, if any (at all. Holders of Vested Company Options that are unexercised, issued and outstanding immediately before the “Effective Time, holders of Unvested Company Options that hold related Converted Options that are vested as of such Triggering Event and holders of Unvested Company RSUs that hold related Converted RSUs that are vested as of such Triggering Event shall in each case receive the applicable Per Share Earnout Statement”Consideration in accordance with this paragraph and Section 4.11(f) and shall not receive Earnout RSUs pursuant to Section 4.11(e).
(b) In the event of any objection by Sellers’ Representative with respect to the determination of the Net Sales or At all times during the Earnout Amount payablePeriod, Sellers’ Representative shall, within 60 days after Newco shall keep available for issuance a sufficient number of shares of unissued shares of Newco Class A Common Stock to permit Newco to satisfy in full its receipt of the Earnout Statement, give written notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items issuance obligations set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Notice, then this Section 4.11 and shall take all actions reasonably required (including by convening any shareholder meeting and soliciting any required consents or approvals from shareholders) to increase the calculation authorized number of the Net Sales and the Earnout Amount as set forth in the Earnout Statement shares of Newco Class A Common Stock if at any time there shall be deemed insufficient unissued shares of Newco Class A Common Stock to have been accepted permit such reservation. In no event will any right to receive Earnout Shares or Earnout RSU Shares be represented by any negotiable certificates of any kind, and shall be final and binding on all parties heretoin no event will any holder of a contingent right to receive Earnout Shares or Earnout RSU Shares take any steps that would render such rights readily marketable.
(c) If, for any reason, Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days of the date of delivery of the Earnout Dispute Notice, then Newco shall take such unresolved items shall be resolved actions as are reasonably requested by the Referee in Eligible Company Equityholders to evidence the manner provided in Section 2.03(c) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) issuances pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 4.11, including through the provision of an updated register of members showing such issuances (as certified by a director or officer of Newco responsible for resolving disputes with respect to maintaining such register of members or the Earnout Statement shall be the sole and exclusive method for resolving any such disputesapplicable registrar or transfer agent of Newco).
(d) In connection with During the preparation Earnout Period, Newco shall use reasonable best efforts for Newco to remain listed as a public company on, and for the shares of Newco Class A Common Stock (including, when issued, the Earnout Shares) to be tradable over the national securities exchange (as defined under Section 6 of the Earnout Statement, and until Exchange Act) on which the final resolution shares of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout StatementNewco Class A Common Stock are then listed.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree Notwithstanding anything to the contrary contained herein, in lieu of receiving Earnout Statement Shares, holders of Unvested Company Options that are unexercised, issued and outstanding and holders of Unvested Company RSUs outstanding, in each case as of immediately prior to the Effective Time shall be issued Earnout RSUs upon the occurrence of a Trigging Event in accordance with this Section 4.11(e) to the extent the Converted Option related to such Unvested Company Option or Purchaser the Converted RSU related to such Unvested Company RSU is outstanding and Sellers’ Representative receive from unvested as of the Referee its written report pursuant occurrence of a Triggering Event. If the Converted Option or Converted RSU related to Section 2.06(c)such Unvested Company Option or Unvested Company RSU, as applicable, was forfeited after the Effective Time but prior to such Triggering Event, no Earnout RSUs will be issued for such Unvested Company Option or Unvested Company RSU, as applicable. The number of Earnout RSUs issued with respect to each Unvested Company Option shall be equal to (i) Per Share Earnout Consideration multiplied by (ii) the aggregate number of Company Shares underlying the applicable Unvested Company Option (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount assuming payment in cash of the exercise price of such Unvested Company Option) multiplied by (iii) the percentage of the shares of Newco Class A Common Stock subject to the related Converted Option that are unvested as of the Triggering Event. The number of Earnout RSUs issued with respect to each Unvested Company RSU shall be equal to the (i) Per Share Earnout Amount; provided, that, without limiting any other remedies available hereunder Consideration multiplied by (ii) the aggregate number of Company Shares underlying the applicable Unvested Company RSU multiplied by (iii) the percentage of the shares of Newco Class A Common Stock subject to the Sellers to compel payment related Converted RSU that are unvested as of the Triggering Event. Each Earnout Amount, RSU shall be subject to forfeiture if the Earnout Amount underlying vesting conditions of the applicable Converted Option associated with the Unvested Company Option or any portion thereof is Converted RSU associated with the Unvested Company RSU are not received by Sellers on or prior attained, and such forfeiture restrictions shall lapse with respect to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid a pro rata portion of the Earnout Amount plus interest on RSUs held by each holder of Earnout RSUs upon the satisfaction of such unpaid portion (underlying vesting conditions of the “applicable Converted Option associated with the Unvested Company Option or Converted RSU associated with the Unvested Company RSU and the relevant Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as RSU Shares shall be the maximum rate allowable under applicable Law), for the period beginning on the issued to such holder. Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment RSUs that have been forfeited shall be made by wire transfer reallocated pro rata to the other holders of immediately available funds to an account or accounts specified Converted Options and Converted RSUs then outstanding with holders of vested Converted Options and Converted RSUs receiving Earnout RSU Shares and holders of unvested Converted Options and Converted RSUs receiving Earnout RSUs that vest pro-rata in accordance with written instructions provided by the Sellers’ Representative remaining vesting schedule of the underlying unvested Converted Option or Converted RSU.. Each Earnout RSU shall be subject to Purchaser at least two Business Days prior adjustment in accordance with Section 4.11(a) as if such Earnout RSU were an Earnout Share, and shall not be entitled to dividends paid with respect to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agreeshares of Newco Class A Common Stock during the forfeiture period.
(f) The Parties acknowledge and agree thatIn any issuance of shares of Newco Class A Common Stock to Eligible Company Equityholders pursuant to Section 4.11(a) or 4.11(e), for Tax purposeseach Eligible Company Equityholder shall receive a number of Earnout Shares or Earnout RSU Shares, as applicable, equal to the payment applicable Per Share Earnout Consideration multiplied by the sum of the Earnout Amount (if any) will be treated number of Company Shares Outstanding and the number of shares of Company Common Stock issued or exercisable upon the exercise of all Company Options and settlement of Unvested Company RSUs, as an applicable, in each case held by such Eligible Company Equityholder immediately before the Effective Time, subject to further adjustment and reallocation, to the Final Purchase Price subject to extent applicable, as a result of forfeiture of any portion of such amount being treated Earnout RSUs as interest under provided in Section 483 of the Code4.11(e).
(g) After Any Earnout Shares received by an Eligible Company Equityholder pursuant to Section 4.11(a) shall be treated as additional shares of Newco Class A Common Stock received in the ClosingMerger for all applicable U.S. federal, state and during local Tax purposes, except as otherwise required by Applicable Law pursuant to a “final determination” within the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention meaning of impeding the achievement Section 1313(a) of the Net Sales during Code (or any similar provision of applicable U.S. state or local Applicable Law).
(h) The Parties intend that none of the Earnout Period required for the Sellers rights to receive the Earnout Amount or otherwise fail Shares and any interest therein shall be deemed to act in good faith in respect theretobe a “security” for purposes of any securities law of any jurisdiction. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers The right to receive the Earnout AmountShares are deemed contractual rights in connection with the Merger and the parties do not view the right to receive the Earnout Shares as an investment by the holders thereof. The right to receive the Earnout Shares will not be represented by any physical certificate or similar instrument. The right to receive the Earnout Shares does not represent an equity or ownership interest in any entity. No interest in the right to receive the Earnout Shares may be sold, transferred assigned, pledged, hypothecated, encumbered or otherwise disposed of, except by operation of law, and any attempt to do so shall be null and void. For the avoidance of doubt, (i) once issued, the Earnout Shares shall be considered a “security” for purposes of any securities law of any jurisdiction and the restrictions set forth in the foregoing sentence shall not apply to such issued Earnout Shares, and (ii) no Earnout Shares shall be included in the calculation of the aggregate number of shares of Newco Common Stock outstanding at or immediately after the Closing for purposes of this Agreement.
Appears in 1 contract
Samples: Merger Agreement (Duddell Street Acquisition Corp.)
Earnout. The Earnout Amount parties acknowledge that the Purchase Price, as same may be modified by Section 3 herein, has been calculated generally by dividing the expected annual base rent from the Property (i.e. $3,426,567) by .082369 (the “Base Rent Divider”). In the event the Property is less than one hundred percent (100%) leased to tenants satisfying the Occupancy Conditions described upon Exhibit L attached hereto and made a part hereof as of the Closing Date, only a portion of the full Purchase Price shall be calculatedfunded at Closing and the balance of the Purchase Price (the “Unfunded Purchase Price”) shall be held by Purchaser pursuant to the terms of this Section 20. The Unfunded Purchase Price shall be calculated by dividing the aggregate pro forma annual base rent (per the attached Exhibit B) for the space within the Property for those tenants that do not then satisfy the Occupancy Conditions (the “Vacant Space”), determined by the Base Rent Divider. The balance of the Purchase Price shall be paid to Seller per the terms of this Agreement on the Closing Date (subject to Seller’s funding of the deposits described below). As of the date hereof, the Vacant Space totals 8,400 square feet. The parties agree to enter into a mutually agreeable “Earnout Agreement” (attached as Exhibit K) at Closing which sets forth the terms and conditions for the Earnout, some of which are as follows: The term of the earnout period shall commence on the Closing Date and shall continue until the first to occur of (i) a period of 36 months from the Closing Date, or (ii) the date the Vacant Space has been fully leased and is occupied by tenants then satisfying the Occupancy Conditions (the “Earnout Period”). During the term of the Earnout Period (and prior to the satisfaction of the Occupancy Conditions of any portion of the Vacant Space by a new tenant), Seller shall be responsible for the monthly pro rata share of taxes, insurance and common area expenses (collectively, the “Operating Expenses”) allocable to the Vacant Space. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to the estimated aggregate Operating Expenses for the Vacant Space payable during the Earnout Period (the “Operating Expense Escrow”). Purchaser shall draw down on the Operating Expense Escrow during the Earnout Period to pay any Operating Expenses allocable to the Vacant Space as same become due. Once any portion of the Vacant Space is leased to, and occupied by, a tenant then satisfying the Occupancy Conditions, Seller’s obligation to pay Purchaser the Operating Expenses allocable to that portion of the Vacant Space shall terminate and the balance of the Operating Expense Escrow allocable to said space shall be promptly paid in to Seller. Upon the following manner:
(a) Within 60 days after the end expiration of the Earnout Period, Purchaser the balance of the Operating Expense Escrow, if any, shall prepare in good faith and deliver be paid to Sellers’ Representative a written statement showing in reasonable detail Seller. Seller shall continue to serve as the calculation of Net Sales exclusive leasing agent for the Vacant Space during the Earnout Period and shall be responsible for all costs and expenses associated with leasing the Vacant Space, including without limitation, any brokerage commissions and tenant improvement allowances associated therewith. To that end, Seller agrees to escrow with Escrow Agent at Closing, an amount equal to (i) $15.00 per square foot of the Vacant Space for anticipated tenant improvement allowances applicable to the Vacant Space, plus (ii) $3.00 per square foot of the Vacant Space for anticipated leasing commissions applicable to the Vacant Space (collectively, the “Leasing Escrow”). As any portion of the Vacant Space is leased to tenants during the Earnout Amount payablePeriod, Seller may draw down on the Leasing Escrow to pay any tenant improvement allowance and/or leasing commissions applicable to said lease, provided in no event shall the aggregate amount funded out of the Leasing Escrow for tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased, nor shall the aggregate amount funded from the Leasing Escrow for leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased. Upon the expiration of the Earnout Period, a portion of the Leasing Escrow in an amount equal to the collective sum of the improvement allowances for the then Vacant Space and the leasing commissions applicable to the then Vacant Space shall be either: (y) paid to Purchaser if the Vacant Space is not fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period; or (z) paid to Seller if the Vacant Space is fully leased to tenants satisfying the Occupancy Conditions prior to the expiration of the Earnout Period. Any amounts remaining in the Leasing Escrow after payment to Purchaser and/or Seller (as applicable), as provided immediately above shall be paid to Seller at the expiration of the Earnout Period. Additionally, if tenant improvement allowances exceed $15.00 per square foot of the aggregate amount of Vacant Space leased or leasing commissions exceed $3.00 per square foot of the aggregate amount of Vacant Space leased (including for space which is being reconfigured for future leasing to a tenant) (e.g., relocation of walls and doorways), Seller shall be responsible for payment of such shortfall from Seller’s funds without contribution therefor from Purchaser. All leases for the Vacant Space shall comply with the Leasing Parameters attached hereto as Exhibit F or shall otherwise be approved in writing by Purchaser. At such time as Seller provides Purchaser with a new lease for any portion of the Vacant Space (and such new occupant has satisfied the “Occupancy Conditions), Purchaser shall, upon ten (10) days advance written notice from Seller, pay to Seller a portion of the Unfunded Purchase Price in an amount equal to the annual base rent payable under said new lease (such base rent in no event to exceed 110% of the pro forma annual base rent for such space per the attached Exhibit B) divided by the Base Rent Divider. Any portion of the Unfunded Purchase Price which remains unfunded as of the expiration of the Earnout Statement”).
(b) In Period shall then be deemed to be forfeited by Seller without any further act by Purchaser and shall be forever released from all obligations to fund any portion of the event Unfunded Purchase Price thereafter. Purchaser shall act in a commercially reasonable manner and in good faith during its review and approval of any objection by Sellers’ Representative with respect to the determination proposed new tenant and/or lease of the Net Sales or the Earnout Amount payable, Sellers’ Representative shall, Vacant Space. Purchaser agrees to respond to Seller deliveries of tenant information and/or leases within 60 five (5) business days after its receipt thereof by Purchaser, and in the event Purchaser fails to respond within an additional two (2) business days after a second notice, said proposed tenant and/or lease shall be deemed approved by Purchaser. In the event that any tenant and its new lease is approved (or deemed approved) and such lease is signed by the tenant and delivered to Purchaser but Purchaser fails to execute and deliver such lease within two (2) business days after receipt of the Earnout Statement, give written second notice to Purchaser of such objection showing in reasonable detail the calculation thereof (an “Earnout Dispute Notice”). Purchaser and Sellers’ Representative shall thereafter attempt to amicably resolve any disputed items set forth in such Earnout Dispute Notice. If Sellers’ Representative does not timely deliver an Earnout Dispute Noticedescribed above, then the calculation of the Net Sales and the Earnout Amount as set forth in the Earnout Statement lease shall be deemed to have been accepted and shall be final and binding on all parties hereto.
(c) If, for any reason, executed by Purchaser and Sellers’ Representative cannot resolve any disputed items indicated in an Earnout Dispute Notice within 30 days as of the date of delivery of the Earnout Dispute Notice, then such unresolved items shall be resolved by the Referee in the manner provided in Section 2.03(csixth (6th) above, mutatis mutandis, except as modified herein. The Referee shall issue a written report which shall include a revised Earnout Statement as adjusted (i) pursuant to any resolutions to objections agreed upon by Purchaser and Sellers’ Representative and (ii) pursuant to the Referee’s resolution of the unresolved objections. The Referee shall review only those matters specified in the unresolved objections and shall make no changes to the Earnout Statement, except as are required to resolve the unresolved objections. The award of the Referee shall set out the final Earnout Statement, shall be final and binding on all parties hereto, and may be enforced in any court of competent jurisdiction. The parties agree that the procedure set forth in this Section 2.06 for resolving disputes with respect to the Earnout Statement shall be the sole and exclusive method for resolving any such disputes.
(d) In connection with the preparation of the Earnout Statement, and until the final resolution of the Earnout Statement, Purchaser shall, and shall cause the Companies and their Subsidiaries to, (A) provide Sellers’ Representative and its authorized Representatives with reasonable access, during normal business hours upon reasonable advance notice, to the relevant books and records, including the Transferred Books and Records, for the purposes of the review and objection right contemplated herein, day following Purchaser’s and its accountants’ work papers, schedules and other supporting data, facilities and employees responsible for the preparation receipt of the Earnout Statement as may reasonably be requested by Sellers’ Representative; and (B) otherwise reasonably cooperate with Sellers’ Representative and its authorized Representatives, including by providing on a timely basis information reasonably necessary or useful in the determination of the calculations and amounts set forth in the Earnout Statementsame.
(e) On the fifth Business Day after Purchaser and Sellers’ Representative agree to the Earnout Statement or Purchaser and Sellers’ Representative receive from the Referee its written report pursuant to Section 2.06(c), as applicable (such date, the “Earnout Payment Deadline”), Purchaser shall pay to Sellers’ Representative an amount in cash equal to the Earnout Amount; provided, that, without limiting any other remedies available hereunder to the Sellers to compel payment of the Earnout Amount, if the Earnout Amount or any portion thereof is not received by Sellers on or prior to the Earnout Payment Deadline, Purchaser shall pay to the Sellers any unpaid portion of the Earnout Amount plus interest on such unpaid portion (the “Earnout Interest”) at a rate equal to 10% per annum (or such lesser rate as shall be the maximum rate allowable under applicable Law), for the period beginning on the Earnout Payment Deadline and ending on the date the remaining portion of the Earnout Amount and the Earnout Interest are received by the Sellers. Such cash payment shall be made by wire transfer of immediately available funds to an account or accounts specified in accordance with written instructions provided by the Sellers’ Representative to Purchaser at least two Business Days prior to the date such payment is due or on such other date as Purchaser and Sellers’ Representative shall agree.
(f) The Parties acknowledge and agree that, for Tax purposes, the payment of the Earnout Amount (if any) will be treated as an adjustment to the Final Purchase Price subject to any portion of such amount being treated as interest under Section 483 of the Code.
(g) After the Closing, and during the Earnout Period, Purchaser shall not, and shall cause its Affiliates not to, take any action, nor fail to take an action, with the purpose or intention of impeding the achievement of the Net Sales during the Earnout Period required for the Sellers to receive the Earnout Amount or otherwise fail to act in good faith in respect thereto. Subject to the foregoing, Purchaser or one or more of its Affiliates will operate the Business in their sole discretion and nothing in this Section 2.06 requires Purchaser or any of its Affiliates to take any actions or refrain from taking any actions or expend any efforts to achieve the Net Sales required for the Sellers to receive the Earnout Amount.
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Samples: Purchase and Sale Agreement (Inland Diversified Real Estate Trust, Inc.)