Earnout. (i) At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout (the “Earnout Units”) and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case, to be held in escrow in accordance with the terms of the Escrow Agreement and this Section 3.01(c). (ii) Upon receipt of the Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:

Appears in 1 contract

Samples: Agreement and Plan of Merger (FAST Acquisition Corp. II)

Earnout. (a) In connection with this Section 2.5, Acquisition Sub shall deliver to the Representative no later than sixty (60) days 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 end of the twelfth (12th) full calendar month of such date, the "Earnout Period"), 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 Net Income of Acquisition Sub: (i) At equals or exceeds the Bonus Amount, Acquisition ~~Merger Effective Time,~~ Sub shall (A) ~~the Company~~ pay to IVonyx $2,000,000, of which $1,000,000 shall ~~issue and deposit~~ be paid in four equal quarterly installments with the ~~Escrow Agent a number~~ first installment due on the first day of ~~New Company Units equal to~~ the ~~Maximum Seller~~ month following the end of the third Earnout ~~(the “Earnout Units”)~~ Period, and (B) ~~Pubco~~ issue to IVonyx 7,500,000 shares of Common Stock (the "Bonus Earnout Payment"); (ii) equals or exceeds the Target Amount and is less than the Bonus Amount, Acquisition Sub shall ~~issue and deposit~~ (A) pay to IVonyx $2,000,000, of which $1,000,000 shall be paid in four equal quarterly installments with the ~~Escrow Agent~~ first installment due on the first day of the month following the three month period after the end of the Earnout Period, and (xB) ~~a number of~~ issue to IVonyx 2,500,000 shares of ~~Pubco Class B~~ Common Stock ~~equal to the Maximum Seller Earnout~~ (the ~~“Seller~~ "Target Earnout ~~Shares”~~Payment"); or (iii) ~~and~~ does not equal or exceed the Target Amount but equals or exceeds the Reduced Target Amount, Acquisition Sub shall (yA) ~~a number~~ pay to IVonyx $666,667 plus an incremental 33% of ~~shares of Pubco Class A Common Stock~~ the amount by which Net Income exceeds the Reduced Target Amount, to be paid in four equal ~~to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together~~ quarterly installments with the ~~Seller~~ first installment due on the first day of the month following the three month period after the end of the Earnout ~~Shares,~~ Period (the “"Reduced Target Earnout ~~Shares”~~Payment," with each of the Bonus Earnout Payment and the Target Earnout Payment referred to herein as an "Earnout Payment"), in each ~~case, to be held in escrow~~ case in accordance with the terms of ~~the Escrow Agreement and~~ this Section ~~3.01(c).~~ 2.5. Unless the Representative gives written notice to Acquisition Sub on or before the twentieth (ii20th) ~~Upon~~ calendar day after the Representative's receipt of the ~~Earnout Shares~~ Acquisition Sub Financial Statements, specifying in reasonable detail all disputed items and ~~Earnout Units~~the basis therefor, the ~~Escrow Agent~~ Representative shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have ~~been achieved~~accepted the Acquisition Sub Financial Statements and Acquisition Sub shall have (i) no obligation to pay any Earnout Payment to IVonyx if Net Income is less than the Reduced Target Amount or (ii) an obligation to pay the applicable Earnout Payment if Net Income is above the Reduced Target Amount. If the Representative so notifies Acquisition Sub of his objection to the Acquisition Sub Financial Statements, the ~~First Earnout Units~~ Representative and ~~First Earnout Shares shall also be deemed~~ Acquisition Sub shall, within twenty (20) days following such notice, attempt to ~~have vested~~resolve their differences in good faith, and ~~Pubco~~ 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 ~~Company~~ Representative shall ~~cause the Escrow Agent~~ jointly select a third independent auditor of recognized national standing to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:resolve any remaining

Appears in 1 contract

Samples: Asset Purchase Agreement (Drkoop Com Inc)

Earnout. (ia) ~~At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal~~ In addition to the ~~Maximum~~ Closing Consideration, Seller ~~Earnout~~ shall be entitled to receive the amounts set forth in this Section (~~the~~ each, an “Earnout ~~Units”)~~ Payment” and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Sharestogether, the “Earnout ~~Shares~~Payments”), if any that become payable pursuant to the terms hereof. A sample calculation of the Earnout Payments is included on Schedule 1.9. (b) If Buyer’s Adjusted EBITDA for the 2025 calendar year (the “First Earnout Period”) is greater than Four Million Dollars ($4,000,000), Buyer shall pay Seller an amount equal to Five Hundred Thousand Dollars ($500,000). (c) If Buyer’s Adjusted EBITDA for the 2026 calendar year (the “Second Earnout Period” and together with the First Earnout Period, the “Earnout Periods” and each, an “Earnout Period”) is greater than Five Million Dollars ($5,000,000), Buyer shall pay Seller an amount equal to One Million Dollars ($1,000,000). (d) The applicable Earnout Payment shall be made within ten (10) business days of the final determination of the Buyer’s Adjusted EBITDA for the applicable Earnout Period. (e) No later than ninety (90) days after the end of each Earnout Period, Buyer shall deliver to Seller Buyer’s good faith calculations of the Buyer’s Adjusted EBITDA for the applicable Earnout Period. Xxxxx’s undisputed calculations of the Buyer’s Adjusted EBITDA for the appliable Earnout Period shall be final, conclusive and binding on Seller unless Seller provides a Dispute Notice to Buyer no later than thirty (30) calendar days after Buyer’s delivery of its calculations to Seller. The Dispute Notice shall set forth in reasonable detail the nature of any disagreement so asserted and the estimated dollar amount of the disputed sums. Xxxxx and Seller shall attempt to resolve the matters raised in a Dispute Notice in good faith. If any such matters remain unresolved by the date that is thirty (30) calendar days after the date on which the Dispute Notice was delivered to Buyer, Buyer and Seller shall jointly submit the disputed items to the Accounting Firm (appointed in accordance with Section 1.6(c) mutatis mutandis). (f) During the Earnout Period, Buyer shall (i) use good faith efforts to operate the Business in a profitable manner and (ii) not take any actions, the intent or the primary effect of which is to avoid or reduce the maximum Earnout Payment payable hereunder. (g) Notwithstanding anything to the contrary in this Agreement, the Earnout Payments shall become immediately and automatically due and payable to Seller upon the occurrence of any of the following events: (i) any bankruptcy, reorganization, assignment for the benefit of creditors, or other proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding initiated by or against Buyer; (ii) any sale of all or substantially all of the assets of Buyer; or (iii) any person or group of persons (excluding Xxxxxxx Entities and any other Affiliates of Buyer) directly or indirectly acquires more than 50% of the equity interests of Buyer, including by way of merger, consolidation or otherwise (but, in each case, ~~to be held in escrow in accordance with~~ for the ~~terms~~ avoidance of ~~the Escrow Agreement and this Section 3.01(c~~doubt, excluding internal reorganization transactions). (ii) Upon receipt of the Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:

Appears in 1 contract

Samples: Asset Purchase Agreement (Commercial Vehicle Group, Inc.)

Earnout. (ia) At The Earnout Recipients have the ~~Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number~~ right to receive up to an aggregate of ~~New Company Units equal to the Maximum Seller Earnout (the “Earnout Units”) and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of~~ 4,500,000 additional shares of ~~Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco~~ Parent Class A Common Stock ~~equal to the sum of~~ (~~I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares,~~ the “Earnout Shares”~~), in each case, to be held in escrow in accordance with the terms of the Escrow Agreement and this Section 3.01(c). (ii~~) Upon receipt of the Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (Ai) On 3,500,000 Earnout Shares if the ~~occurrence~~ VWAP of Parent’s Common Stock is above $12.50 for any twenty (20) out of thirty (30) consecutive Trading Days during the Earnout ~~Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000)~~ Period (the “~~First~~ 12.50 Earnout ~~Units~~Trigger”), and (ii) ~~multiplied by (y) its~~ 1,000,000 Earnout ~~Pro Rata Portion and (2) a number~~ Shares if the VWAP of ~~shares of Pubco Class B~~ Parent’s Common Stock ~~equal~~ is above $15.00 for any twenty (20) out of thirty (30) consecutive Trading Days during the Earnout Period (together with the $12.50 Earnout Trigger, the “Earnout Triggers” and each an “Earnout Trigger”). (b) The Earnout Shares (i) shall be issued to the recipients thereof free and clear of all Liens other than applicable federal and state securities restrictions and restrictions set forth in the Earnout Escrow Agreement, (xii) ~~fifteen million (15,000,000)~~ shall be deposited in escrow at Closing pursuant to an escrow agreement substantially in the form attached hereto as Exhibit J (the “~~First~~ Earnout ~~Shares~~Escrow Agreement”~~) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II~~), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2iii) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow ~~in relation~~ to the ~~Pubco EBITDA targets for~~ extent they are earned as a result of the ~~2023~~ occurrence of the applicable Earnout ~~Measurement Periods~~Trigger or, to the extent not earned as a result of the occurrence of the applicable Earnout Trigger, shall thereupon be returned to Parent, in either case pursuant to the Earnout Escrow Agreement. If The Earnout Shares, if earned, shall be distributed to the ~~Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023~~ Earnout ~~Measurement Period”) is equal to or greater than~~ Recipients in accordance with the ~~Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and~~ principles set forth in the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata PortionConsideration Spreadsheet. (IIc) ~~The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal~~ If, at any time after the Closing and prior to or ~~greater than~~ on the ~~Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D)~~fifth (5th) anniversary of the Closing Date, ~~Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I)~~ there occurs any transaction resulting in a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D)Change in Control, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), then the Earnout ~~Units and Earnout Shares~~ Triggers set forth in Sections 3.6(a)(i) - (ii) shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have ~~been achieved~~occurred provided, however, that, the ~~First Earnout Units and First~~ Earnout Shares shall ~~also~~ be ~~deemed~~ released to ~~have vested, and Pubco and~~ the ~~Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs~~ recipients thereof as of immediately prior to the ~~occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved~~Change in Control, and the ~~First Earnout Units and First Earnout Shares and Second Earnout Units and Second~~ recipients of such Earnout Shares shall ~~also~~ be ~~deemed~~ eligible to ~~have vested~~participate in such Change in Control transaction with respect to such Earnout Shares. (d) During the Earnout Period, Parent shall use commercially reasonable efforts to remain listed as a public company on, and ~~Pubco and~~ for the ~~Company~~ Parent Class A Common Stock to be tradable over, Nasdaq; provided, however, that the foregoing shall ~~cause~~ not limit Parent from consummating a Change in Control or entering into a Contract that contemplates a Change in Control. Upon the ~~Escrow Agent~~ consummation of any Change in Control during the Earnout Period, Parent shall have no further obligations pursuant to ~~release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with~~ this Section ~~3.01(c)(ii~~3.6(d). (ve) ~~Promptly following~~ Except with respect to any amounts treated as imputed interest under Section 483 of the ~~filing~~ Code, any issuance of ~~Pubco’s 10~~shares of Earnout Shares pursuant to this Section 3.6 shall be treated as an adjustment to the merger consideration by the parties for Tax purposes, unless otherwise required by a change in applicable Tax Law. To the extent any Earnout Shares hereunder are required to be treated as contingent interest pursuant to Treasury Regulations Section 1.483-~~K with~~ 4(b), example (2), or other applicable Law, then the ~~SEC~~ Earnout Shares so issued shall be represented by separate share certificates to the extent they represent contingent interest versus the principal component under such Regulations or other applicable Law. Any Earnout Share that is issued pursuant to this Section 3.6 will be treated as eligible for non-recognition treatment under Section 354 of the ~~2023 fiscal year~~ Code (and ~~2024 fiscal year:~~will not be treated as “other property” within the meaning of Section 356 of the Code). (f) For the avoidance of doubt, the Pre-PIPE Convertible Noteholder is not an Earnout Recipient and has no right to earn, and no rights to, any of the Earnout Shares.

Appears in 1 contract

Samples: Merger Agreement (Revelstone Capital Acquisition Corp.)

Earnout. (ia) At In connection with this Section 2.7, Acquiror shall deliver to the ~~Acquisition Merger Effective Time~~Seller no later than sixty (60) days following the end of each of the first four calendar quarters following the Closing Date (it being understood that if the Closing occurs in June, ~~(A)~~ the ~~Company~~ first of such calendar quarters shall ~~issue and deposit~~ be the calendar quarter ending September 30, 2002), financial statements of the Upshot Business setting forth the amount of aggregate Net Revenue of the Upshot Business for each month in such calendar quarter beginning with the ~~Escrow Agent~~ first full calendar month following the Closing Date and ending with the twelfth full calendar month following the Closing Date (the "Upshot Business Financial Statements"). The Upshot Business Financial Statements shall set forth the Net Revenue attributable to the Upshot Business on a ~~number~~ client by client basis and shall specify the amount of ~~New Company Units~~ each adjustment to Net Revenues contemplated by clauses (a)-( ) of Schedule 2.5(a). In the event Net Revenue of the Upshot Business for the first full twelve calendar month period following the Closing Date equals or exceeds the Target Amount, Acquiror shall pay to Seller an amount equal to fifty percent (50%) of the ~~Maximum Seller Earnout (~~amount by which Net Revenue exceeds the “Earnout Units”) and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case, to be held in escrow Target Amount in accordance with the terms of ~~the Escrow Agreement and~~ this Section ~~3.01(c~~2.7, up to a maximum aggregate payment of Two Million Dollars ($2,000,000.00) pursuant to this sentence. In the event Net Revenue of the Upshot Business for the first twelve calendar month period following the Closing Date exceeds the Bonus Amount, Acquiror shall pay to Seller an amount equal to thirty three percent (33%) of the amount by which Net Revenue exceeds the Bonus Amount (in addition to the amount paid pursuant to the preceding sentence) in accordance with the terms of this Section 2.7. Any amounts required to be paid pursuant to either of the preceding two sentences are collectively referred to as "Earnout Payments". Notwithstanding the foregoing, in the event a Change of Control of Acquiror occurs and Xxxxx Xxxxxxxxx'x responsibilities are expanded beyond the Upshot Business, then the maximum aggregate Earnout Payments that Acquiror will be required to make under this Section 2.7 will equal Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000.00). If Net Revenue for the first full twelve calendar month period following the Closing Date equals or is less than the Target Amount, Acquiror shall have no obligation to pay any Earnout Payment. (b) Unless Seller gives written notice to Acquiror on or before the twentieth (20th) calendar day after Seller's receipt of the final Upshot Business Financial Statement to be delivered pursuant to this Section 2.7(b), specifying in reasonable detail all disputed items and the basis therefor, Seller shall be deemed to have accepted the Upshot Business Financial Statements and Acquiror shall (i) have no obligation to pay any Earnout Payment to Seller if Net Revenue for the first full twelve calendar month period following the Closing Date is equal to or less than the Target Amount or (ii) have an obligation to pay the applicable Earnout Payment(s) if Net Revenue exceeds the Target Amount. If Seller so notifies Acquiror of its objection to the Upshot Business Financial Statements, Seller and Acquiror 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, Seller and Acquiror are unable to resolve such disagreements, Acquiror and Seller shall jointly select an independent auditor of recognized national standing that is not Xxxxxxxx to resolve any remaining disagreements; provided that PricewaterhouseCoopers LLP will be the independent auditor if Acquiror and Seller cannot agree on the selection of such independent auditor (the "Independent Accountant"). Acquiror and Seller 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 Acquiror and Seller Parties in proportion to the aggregate amount of all disputed items as to which such party's claim was unsuccessful (i.e., if there is a $1,000,000 dispute regarding the amount of the Earnout Payment and the Independent Accountant determines that Seller's claim prevails with respect to $250,000 of such disputed amount and Acquiror's claim prevails with respect to $750,000 of such disputed amount, then Seller Parties would be obligated to pay seventy five percent (75%) of the fees and expenses and Acquiror would be obligated to pay twenty five percent (25%) of the fees and expenses). (c) Subject to Section 10.9 below, within ten (10) calendar days after (i) receipt by Seller of Upshot Business Financial Statements which reflect aggregate Net Revenue for the first twelve month period following the Closing Date equal to or in excess of the Target Amount, or (ii) ~~Upon receipt~~ in the event of a disagreement, the date of resolution of such disagreement by the Parties or the date of determination by the Independent Accountant pursuant to Section 2.7(c) (it being understood that this clause (ii) shall only apply to any disputed portion of the Earnout ~~Shares and Earnout Units~~Payments), the ~~Escrow Agent shall place the~~ applicable Earnout ~~Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units~~ Payment shall be ~~earned, released and delivered~~ paid by Acquiror as follows: (Ai) On Acquiror shall pay ninety percent (90%) of the ~~occurrence~~ Earnout Payment to an account designated by Seller in writing; and (ii) Acquiror shall deposit ten percent (10%) of the Earnout ~~Triggering Event I~~Payment to the Holdback Fund, ~~Pubco and~~ which amount shall become part of the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata PortionHoldback Amount. (Bd) On In connection with the ~~occurrence~~ operation of the Upshot Business after the Closing, Acquiror agrees to maintain separate divisional books and records for the Upshot Business in accordance with GAAP, consistently applied. Acquiror and each of the Seller Parties agree to act in good faith during the Earnout ~~Triggering Event II, Pubco~~ Period relative to the Upshot Business and not to take actions that would be unfairly prejudicial or discriminatory to the ~~Company shall cause~~ Upshot Business for the ~~Escrow Agent to release to each~~ purpose of adversely affecting Seller's interest in receiving an Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata PortionPayment. (Ce) On Upon delivery of the ~~occurrence~~ Upshot Business Financial Statements, Acquiror shall afford to Seller and its accounting representatives prompt and reasonable access upon reasonable notice to all information reasonably necessary to verify calculation of ~~Earnout Triggering Event III~~the Net Revenue. Acquiror shall make its employees who are familiar with such matters, ~~Pubco~~ its independent outside accounting firm available to Seller 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 as Seller and its representatives may reasonably request in connection with its review of the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata PortionUpshot Business Financial Statements. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:

Appears in 1 contract

Samples: Asset Purchase Agreement (Equity Marketing Inc)

Earnout. (ia) ~~At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal~~ Subject to the ~~Maximum Seller Earnout~~ terms and conditions of this Section 2.6, as additional consideration for the purchase of the Acquired Assets, Sellers shall be eligible to receive an additional earnout payment in an aggregate amount not to exceed Two Million Dollars ($2,000,000) (the “Earnout ~~Units~~Payment”), based upon the Case Volume for the period beginning on the First Closing Date and ending on the date that is twelve (12) ~~and (B) Pubco shall issue and deposit with~~ months after the ~~Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout~~ First Closing Date (the “~~Seller~~ Earnout ~~Shares~~Period”~~) and~~ ), as set forth below (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Sharesas applicable, the “Earnout ~~Shares~~Target”): (i) If the Case Volume for the Earnout Period is more than 8,000 but less than 10,000, then Sellers will receive an Earnout Payment in an amount equal to Seven Hundred Fifty Thousand Dollars ($750,000); or (ii) If the Case Volume for the Earnout Period is more than 10,000 but less than 11,000, then Sellers will receive an Earnout Payment in ~~each case~~an amount equal to One Million Five Hundred Thousand Dollars ($1,500,000); or (iii) If the Case Volume for the Earnout Period is more than 11,000, then Sellers will receive an Earnout Payment in an amount equal to ~~be held in escrow in accordance with the terms of the Escrow Agreement and this Section 3.01(c~~Two Million Dollars ($2,000,000). (iib) ~~Upon~~ Purchaser will provide to Parent or its designee or assigned beneficiary hereunder, a report within ten (10) Business Days after the end of each month during the Earnout Period, excepting the last month of the Earnout Period, setting forth in reasonable detail the Purchaser’s good faith calculation of the Case Volume during such month and cumulative Case Volume during the Earnout Period. (c) Not later than thirty (30) Business Days after the end of the Earnout Period, Purchaser shall prepare and deliver (or cause to be prepared and delivered) to Sellers a written statement (the “Earnout Statement”) setting forth Purchaser’s good faith calculation of the Case Volume during the Earnout Period. If Sellers objects to Purchaser’s calculation of the Case Volume set forth in the Earnout Statement, then Sellers shall notify Purchaser in writing of such objection within twenty (20) days following its receipt of the Earnout ~~Shares and Earnout Units~~Statement. If, for any reason, Sellers fail to give Purchaser notice of any such objection within such 20-day period, then, for purposes of this Section 2.6(b), Purchaser’s calculation of the ~~Escrow Agent shall place~~ Case Volume set forth in the Earnout ~~Shares~~ Statement shall be conclusive and binding upon the parties. If Sellers notify Purchaser in writing of such an objection within such 20-day period, then Purchaser and Sellers shall, for a period not to exceed thirty (30) days (unless otherwise agreed in writing by the parties) after the date upon which Purchaser receives Sellers’ objection notice (such period of time being hereinafter referred to as the “Objection Period”), work together diligently and in good faith to resolve any and all such objections. If, at or before the end of the Objection Period, Sellers and Purchaser resolve their disputes regarding the calculation of the Case Volume set forth in the Earnout ~~Units into one or more escrow accounts~~ Statement, then the calculation as so agreed to by Sellers and Purchaser shall be conclusive and binding upon the parties. If, at the end of the Objection Period, Sellers and Purchaser have not resolved their disputes regarding the calculation of the Case Volume, then such disputes shall, within five (5) Business Days after the expiration of the Objection Period, be submitted to arbitration pursuant to the procedure set forth in ~~accordance~~ Section 10.2. The arbitrator shall only have the authority to resolve matters expressly submitted to it for resolution. The parties and their respective employees shall cooperate with the ~~Escrow Agreement~~arbitrator during its engagement by promptly complying with all reasonable requests by the arbitrator for information, books, records and similar items. Sellers shall bear the fees and expenses of the arbitration for such determination unless it is determined by the arbitrator that the Earnout ~~Shares~~ Target has been achieved, in which case, such fees and ~~Earnout Units~~ expenses shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied paid by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata PortionPurchaser. (Bd) On Sellers hereby acknowledge that the ~~occurrence~~ contingent right of ~~Earnout Triggering Event II~~Sellers to receive any amounts pursuant to this Section 2.6 is solely a contractual right and is not a security for purposes of any federal or state securities laws (and shall confer upon Sellers only the rights of a general, ~~Pubco~~ unsecured creditor under Applicable Law), (ii) will not be represented by any form of certificate or instrument, (iii) does not give Sellers any distribution rights, voting rights, liquidation rights, preemptive rights or other rights of holders of equity securities, (iv) is not assignable or otherwise transferable by Sellers except by operation of law or otherwise permitted under this Agreement (and ~~the Company~~ any purported assignment or transfer in violation hereof shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion be null and void ab initio), and (2v) ~~a number~~ is speculative in nature and is not guaranteed until earned. Sellers further acknowledge and agree that during the Earnout Period, Purchaser shall have sole discretion with regard to all matters relating to the operations of ~~shares~~ the Business; provided, however, that Purchaser shall not take any action in bad faith with the intention of ~~Pubco Class B Common Stock equal~~ reducing Case Volume or any amounts that may be payable pursuant to ~~(x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion~~this Section 2.6. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (ive) In the event ~~that Earnout Triggering Event II occurs prior~~ of one or more Indemnifiable Claims by any Purchaser Indemnified Party against Sellers or Parent for Damages pursuant to Section 8.2, subject to the ~~occurrence~~ limitations set forth in Section 8.4, Purchaser shall have the right to reduce any amount payable pursuant to this Section 2.6 up to the aggregate amount of ~~Earnout Triggering Event I, Earnout Triggering Event I will be deemed to~~ Damages that have been ~~achieved,~~ or may be sustained by the ~~First Earnout Units and First Earnout Shares shall also be deemed~~ Purchaser Indemnified Parties in connection with such Indemnifiable Claims. The parties agree that any reduction of any amounts payable pursuant to ~~have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with~~ this this Section ~~3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior~~ 2.6 pursuant to the ~~occurrence~~ right of ~~Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II,~~ set-off in the immediately preceding sentence shall be treated as ~~applicable, will be deemed~~ a decrease to ~~have been achieved, and~~ the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)Purchase Price. ~~(v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:~~

Appears in 1 contract

Samples: Asset Purchase Agreement (Assure Holdings Corp.)

Earnout. The Base Purchase Price shall be subject to periodic increases (iand in no event to decrease) At not to exceed an aggregate increase in the ~~Acquisition Merger Effective Time,~~ amount of Twelve Million Seven Hundred Sixty-Three Thousand Three Hundred Thirteen and No/100 Dollars (A$12,763,313) as hereinafter set forth at such time or times (whether before or after the ~~Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout (the “Earnout Units”~~Initial Closing) and such increase(s) shall be deemed earned at such time as Seller shall have procured any tenant(s) for all or any portion of the Vacant Space and such tenant shall have accepted its space "as-is" (~~B) Pubco shall issue~~ subject only to punch-list items to be timely completed by Seller at Seller's sole cost and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”expense), ~~in each case~~taken possession, ~~to be held in escrow in accordance with the terms of the Escrow Agreement~~ opened for business and ~~this Section 3.01(c)~~commenced full rental payments, including CAM, taxes and insurance on a pro-rata basis per their respective leases. (iia) ~~Upon receipt~~ The increase to the Base Purchase Price in each such event shall be in an amount (the "Earnout Purchase Price") determined as follows: the base rent payable by each such tenant during the first twelve (12) months of its lease term during which such tenant is paying full base rent under its lease shall first be divided by a base rent divider of 7.2298% and then the resulting quotient shall be reduced by the Aggregate Slippage of such tenants, if any. It is currently anticipated that the aggregate Earnout Purchase Price will be approximately Twelve Million Five Hundred Twenty-Six Thousand Five Hundred Eighty Nine and 00/100 Dollars ($12,526,589), calculated based on an estimated aggregate base rent for the Vacant Space of $905,652,00, divided by the base rent divider of 7.2298% (less the Aggregate Slippage for such tenants, if any), which amount shall in no event increase above $12,763,313 in accordance -5- herewith. Purchaser shall deliver at the Initial Closing, a guaranty, in form and substance reasonably acceptable to Seller, from Inland Western Retail Real Estate Trust, Inc., a Maryland corporation, fully guarantying the timely payment and performance when and if due of all Purchaser's obligations with respect to the payment of the Earnout ~~Shares~~ Purchase Price. [ILLEGIBLE] guaranty shall be a guaranty of payment and ~~Earnout Units,~~ performance as opposed to a guaranty of [ILLEGIBLE] Seller shall not be required first to exhaust its remedies against Purchaser as a condition to its rights to proceed directly against the ~~Escrow Agent~~ guarantor. The Seller shall ~~place~~ have a maximum time period of 24 months following the Initial Closing to earn all or any portion of the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata PortionPurchase Price. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:

Appears in 1 contract

Samples: Purchase and Sale Agreement (Inland Western Retail Real Estate Trust Inc)

Earnout. (a) In the event that the Company achieves a Pretax Income above certain thresholds after the Closing Date as provided below, the Sellers will be entitled to the payments set forth in this Section 2.1.3 (“Earn-out Payments”). The Earn-out Payments shall be calculated as follows: (i) At In the ~~Acquisition Merger Effective Time~~event that the Company achieves an Pretax Income of at least $611,000 (the “Year 1 Target”) for the fiscal year beginning on the first day after the Closing Date and ending on the first anniversary of the Closing Date (“Year 1”), the Buyer shall be required to pay $433,000 (the “Year 1 Maximum Payment”) to the Sellers as provided below. In the event that the Company achieves an Pretax Income for Year 1 exceeding 487,000 (the “Year 1 Floor”) but less than the Year 1 Target, the Buyer shall be required to pay to the Sellers (a) is hereinafter referred to as the “Actual Year 1 Payment.” The Actual Year 1 Payment, if any, shall be paid by the Buyer to the Sellers on a pro rata basis based upon each Seller’s ownership of the Shares immediately prior to the Closing Date, within 5 days after the determination of the Actual Year 1 Payment becomes final and binding pursuant to Section 2.1.3(b), by wire transfer of immediately available funds as directed by the Sellers to the Buyer. (ii) In the event that the Company achieves a cumulative Pretax Income of at least $1,417,000 (the “Year 2 Cumulative Target”) for the period beginning on the first day after the Closing Date and ending on the second anniversary of the Closing Date (“Years 1 and 2”), the Buyer shall be required to pay $866,000 (the “Year 2 Cumulative Maximum Payment”) to the Sellers, minus the Actual Year 1 Payment, as provided below. In the event that the Company achieves a cumulative Pretax Income for Years 1 and 2 exceeding 1,004,000 (the “Year 2 Cumulative Floor”) but less than the Year 2 Cumulative Target, the Buyer shall be required to pay to the Sellers as provided below an amount equal to the product of: (A) the ~~Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the~~ Year 2 Cumulative Maximum ~~Seller Earnout (the “Earnout Units”)~~ Payment; and (B) ~~Pubco shall issue and deposit~~ the following fraction, expressed as a percentage, with the ~~Escrow Agent (x)~~ numerator being the cumulative Pretax Income for Years 1 and 2 minus the Year 2 Cumulative Floor and the denominator being the Year 2 Cumulative Target minus the Year 2 Cumulative Floor, minus the Actual Year 1 Payment. In the event that the Company achieves a ~~number of shares of Pubco Class B Common Stock~~ cumulative Pretax Income for Years 1 and 2 less than or equal to the ~~Maximum Seller Earnout~~ Year 2 Cumulative Floor, no payment shall be required to be made by the Buyer to the Sellers pursuant to this clause (ii) of Section 2.1.3(a). The amount of any payment required to be made by the Buyer to the Sellers pursuant to this clause (ii) of Section 2.1.3(a) is hereinafter referred to as the “Actual Year 2 Payment.” The Actual Year 2 Payment, if any, shall be paid by the Buyer to the Sellers on a pro rata basis based upon each Seller’s ownership of the Shares immediately prior to the Closing Date, within 5 days after the determination of the Actual Year 2 Payment becomes final and binding pursuant to Section 2.1.3(b), by wire transfer of immediately available funds as directed by the Sellers to the Buyer. (iii) In the event that the Company achieves a cumulative Pretax Income of at least $2,513,000 (the “~~Seller Earnout Shares~~Year 3 Cumulative Target”) for the period beginning on the first day after the Closing Date and ending on the third anniversary of the Closing Date (y“Years 1,2 and 3”), the Buyer shall be required to pay $1,300,000 (the “Year 3 Cumulative Maximum Payment”) to the Sellers, minus the Actual Year 1 Payment and the Actual Year 2 Payment, as provided below. In the event that the Company achieves a ~~number of shares of Pubco Class A Common Stock~~ cumulative Pretax Income for Years 1, 2 and 3 exceeding 1,598,000 (the “Year 3 Cumulative Floor”) but less than the Year 3 Cumulative Target, the Buyer shall be required to pay to the Sellers as provided below an amount equal to the ~~sum of~~ product of: (IA) the Year 3 Cumulative Maximum ~~Sponsor Earnout~~ Payment; and (IIB) the ~~Maximum Xxxxxxxxx Earnout~~ following fraction, expressed as a percentage, with the numerator being the cumulative Pretax Income for Years 1, 2 and 3 minus the Year 3 Cumulative Floor and the denominator being the Year 3 Cumulative Target minus the Year 3 Cumulative Floor, minus the Actual Year 1 Payment (~~collectively~~a) is hereinafter referred to as the “Actual Year 3 Payment.” The Actual Year 3 Payment, if any, shall be paid by the Buyer to the Sellers on a pro rata basis based upon each Seller’s ownership of the Shares immediately prior to the Closing Date, within 5 days after the determination of the Actual Year 3 Payment becomes final and binding pursuant to Section 2.1.3(b), by wire transfer of immediately available funds as directed by the Sellers to the Buyer. (b) Within 30 days after each of the first three anniversaries of the Closing Date, the ~~“Pubco Earnout Shares” and, together with~~ Buyer shall cause to be prepared and delivered to the ~~Seller Earnout Shares~~Sellers a calculation and all supporting documentation of the Actual Year 1 Payment, the Actual Year 2 Payment and the Actual Year 3 Payment, respectively or the calculation and all supporting documentation evidencing that no such payment is due (the “~~Earnout Shares~~Earn-out Payment Calculations”). Within 30 days following receipt by the Sellers of the Earn-out Payment Calculations, the Sellers shall deliver written notice to the Buyer (an “Earn-out Objection Notice”), of any dispute they have regarding the Earn-out Payment Calculations. The Earn-out Objection Notice must describe in ~~each case~~reasonable detail the items contained in the Earn-out Payment Calculations that the Sellers dispute and the basis for any such disputes. Any determination set forth on the Earn-out Payment Calculations which is not specifically objected to in the Earn-out Objection Notice shall be deemed acceptable and shall be final and binding upon the Buyer and the Sellers upon delivery of the Earn-out Objection Notice. If the Sellers do not provide the Buyer with an Earn-out Objection Notice within such 30-day period, such Earn-out Payment Calculations will be final, conclusive and binding on the Buyer and the Sellers. In the event the Sellers provide an Earn-out Objection Notice to ~~be held~~ the Buyer, the Buyer and the Sellers shall negotiate in ~~escrow~~ good faith to resolve any such disputes. If the Buyer and the Sellers, notwithstanding such good faith effort, fail to resolve any of the disputes described in the Earn-out Objection Notice within 30 days after the Buyer’s receipt of the Earn-out Objection Notice, then the Buyer and the Sellers jointly shall engage the firm of Deloitte & Touche LLP (the “Arbitration Firm”) to resolve such disputes in accordance with the terms of this Agreement. As promptly as practicable thereafter, the ~~Escrow Agreement~~ Buyer and ~~this Section 3.01(c). (ii) Upon receipt~~ the Sellers shall each prepare and submit any relevant materials to the Arbitration Firm, along with copies of the ~~Earnout Shares~~ Earn-out Payment Calculations and ~~Earnout Units~~Earn-out Objection Notice. As soon as practicable thereafter, the ~~Escrow Agent~~ Buyer and the Sellers shall ~~place~~ cause the ~~Earnout Shares and Earnout Units into one~~ Arbitration Firm to make a final determination of the Actual Year 1 Payment, the Actual Year 2 Payment or ~~more escrow accounts~~ the Actual Year 3 Payment in accordance with the ~~Escrow~~ terms of this Agreement. The Arbitration Firm shall make an independent determination of the Actual Year 1 Payment, ~~and such Earnout Shares and Earnout Units~~ the Actual Year 2 Payment or the Actual Year 3 Payment that shall be ~~earned~~final and binding on the Sellers and the Buyer. The fees, ~~released~~ costs and ~~delivered as follows:~~expenses of the Arbitration Firm shall be paid by the party whose calculation of the Earn-out Payment in dispute was different by the greater amount from that of the Arbitration Firm. (Ac) On From and after the ~~occurrence~~ Closing Date through the third anniversary thereof, Gxxxxxxx and Rxxxxxx shall have control over the performance of ~~Earnout Triggering Event I~~the Company, ~~Pubco~~ subject to oversight by Buyer in accordance with the strategy outlined by Buyer. All aspects of the operation of the Business by the Company after the Closing Date through the third anniversary thereof will be accounted for through the Company. The continued employment of Gxxxxxxx and Rxxxxxx by the Company shall not be a condition precedent to the payment of the Earn-out Payments. The Buyer covenants and agrees that it shall not cause the ~~Escrow Agent~~ Company to ~~release~~ accelerate (or defer) any sales, or defer (or accelerate) any expenses, in a manner that would increase (or reduce) Pretax Income, except to ~~each Earnout Participant (1)~~ the extent that any such deferral or acceleration is done in good faith for a ~~number~~ legitimate business purpose and not with the intent of ~~New Company Units equal~~ affecting any Earn-out Payment. The Buyer acknowledges and agrees that it intends to ~~(x) fifteen million (15,000,000) (~~pay off any of the ~~“First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion~~ Company’s indebtedness for borrowed money within twelve months after Closing and ~~(2) a number of shares of Pubco Class B Common Stock equal~~ does not presently intend to ~~(x) fifteen million (15,000,000) (~~leverage the ~~“First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On~~ Business during the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly first three years following the ~~filing of Pubco’s Form 10-K with~~ Closing, such that interest expense during the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly first three years following the ~~filing of Pubco’s Form 10-Q or 10-K with~~ Closing should be nominal, except as reasonably required by the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata PortionBusiness. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii). (v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:

Appears in 1 contract

Samples: Stock Purchase Agreement (Preformed Line Products Co)

Earnout. (i) At Following the ~~Acquisition Merger Effective Time~~Closing and during the Earnout Period, and as additional consideration for the Pre-Closing Reorganization and the transactions contemplated hereby, within twenty (A20) Business Days after the ~~Company~~ occurrence of a Triggering Event, NewCo shall issue ~~and deposit~~ or cause to be issued to each Pre-Closing Holder (in accordance with ~~the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout~~ its respective Pro Rata Participation Percentage) NewCo Common Shares (~~the “Earnout Units”) and (B) Pubco~~ which shall ~~issue and deposit with the Escrow Agent (x) a number~~ be equitably adjusted for share splits, reverse share splits, share dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares ~~of Pubco Class B~~ or other like change or transaction with respect to NewCo Common ~~Stock equal to~~ Shares occurring after the ~~Maximum Seller Earnout~~ Closing) (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Sharessuch shares, the “Earnout Shares”), upon the terms and subject to the conditions set forth in ~~each case~~this Agreement; provided, however, that any such issuance of Earnout Shares will not be made to ~~be held~~ any Pre-Closing Holder for which a filing under the HSR Act is required in ~~escrow in accordance~~ connection with the ~~terms~~ issuance of Earnout Shares, until the ~~Escrow Agreement and this Section 3.01(c). (ii) Upon receipt of~~ applicable waiting period under the ~~Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one~~ HSR Act has expired or ~~more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows~~been terminated: (A) On Upon the occurrence of ~~Earnout~~ Triggering Event I, ~~Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1)~~ a ~~number~~ one-time issuance of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the ~~Maximum Sponsor~~ product of (1) the quotient obtained by dividing (a)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (b) 0.90, multiplied by (2) 0.025 (the “Triggering Event I Earnout ~~have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii~~Shares”), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share.; (B) ~~After~~ Upon the occurrence of Triggering Event II, a one-time issuance of a number of Earnout Shares equal to the ~~Maximum Sponsor~~ product of (1) the quotient obtained by dividing (a)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (b) 0.90, multiplied by (2) 0.025 (the “Triggering Event II Earnout ~~have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii~~Shares”), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions.; and (C) ~~Each~~ Upon the occurrence of Triggering Event III, a one-time ~~Xxxxxxxxx is entitled~~ issuance of a number of Earnout Shares equal to the product of (1) the quotient obtained by dividing (a)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (b) 0.90, multiplied by (2) 0.05 (the “Triggering Event III Earnout Shares”); provided, that in the event a Triggering Event occurs prior to Closing, NewCo shall issue or cause to be ~~delivered a New Company Unit and share of Pubco Class B Common Stock~~ issued the applicable Earnout Shares to each Pre-Closing Holder (in accordance with its respective Pro Rata Participation Percentage) within twenty (20) Business Days after, and conditioned upon, the Closing. (ii) For avoidance of doubt, the Pre-Closing Holders shall be entitled to 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 Pre-Closing Holders be entitled to receive more than an aggregate number of Earnout Shares equal to the product of (1) the quotient obtained by dividing (a)(i) the Aggregate Stock Consideration Shares minus (ii) the Repurchased Shares by (b) 0.90, multiplied by (2) 0.10. In the event of the failure of the occurrence of any Triggering Event during the Earnout Period, no Earnout Shares will be issued to the Pre-Closing Holders in respect of such Triggering Event pursuant to this Section ~~3.01(c)(ii~~2.2(b). (iii) If, ~~Pubco~~ during the Earnout Period, there is a Change of Control pursuant to which NewCo or its shareholders have the right to receive consideration with a value per NewCo Common Share (as determined in good faith by the disinterested members of the NewCo Board) of: (A) less than $11.50, then this Section 2.2(b) shall terminate and no Earnout Shares shall be issuable hereunder; (B) greater than or equal to $11.50 but less than $12.50, then, (I) immediately prior to the ~~Company~~ consummation of such Change of Control, NewCo shall ~~instead cause~~ issue a number of NewCo Common Shares equal to the ~~Escrow Agent~~ Triggering Event I Earnout Shares (such number of shares to ~~release~~ be reduced by the number of Earnout Shares that have become earned and payable prior thereto as a result of the prior occurrence of Triggering Event I, if any) to ~~Xxxxxxxxx one Pubco~~ the Pre-Closing Holders (in accordance with each Pre-Closing Holder’s respective Pro Rata Participation Percentage) and (II) thereafter, this Section 2.2(b) shall terminate and no further Earnout ~~Share~~Shares shall be issuable hereunder; (C) greater than or equal to $12.50 but less than $14.00, then, (I) immediately prior to the consummation of such Change of Control, NewCo shall issue a number of NewCo Common Shares equal to the sum of (1) the Triggering Event I Earnout Shares and (2) the Triggering Event II Earnout Shares (such number of shares to be reduced by the number of Earnout Shares that have become earned and payable prior thereto as a result of the prior occurrence of Triggering Event I or Triggering Event II, if any) to the Pre-Closing Holders (in accordance with each Pre-Closing Holder’s respective Pro Rata Participation Percentage) and (II) thereafter, this Section 2.2(b) shall terminate and no further Earnout Shares shall be issuable hereunder; or (D) greater than or equal to $14.00, then, (I) immediately prior to the consummation of such Change of Control, NewCo shall issue a number of NewCo Common Shares equal to the sum of (1) the Triggering Event I Earnout Shares, (2) the Triggering Event II Earnout Shares, and (3) the Triggering Event III Earnout Shares (such number of shares to be reduced by the number of Earnout Shares that have become earned and payable prior thereto as a result of the prior occurrence of Triggering Event I, Triggering Event II or Triggering Event III, if any) to the Pre-Closing Holders (in accordance with each Pre-Closing Holder’s respective Pro Rata Participation Percentage) and (II) thereafter, this Section 2.2(b) shall terminate and no further Earnout Shares shall be issuable hereunder. (iv) In The NewCo Common Share price targets set forth in the ~~event that Earnout Triggering Event II occurs prior to the occurrence~~ definitions of ~~Earnout~~ Triggering Event I, ~~Earnout~~ Triggering Event ~~I will be deemed to have been achieved, the First Earnout Units~~ II and ~~First Earnout Shares shall also be deemed to have vested~~Triggering Event III, and ~~Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares~~ in ~~accordance with Section 3.01(c)(ii~~clauses (A)~~. In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II~~, ~~Earnout Triggering Event I and Earnout Triggering Event II~~(B), ~~as applicable, will be deemed to have been achieved~~(C), and (D) of Section 2.2(b)(iii) shall be equitably adjusted for share splits, reverse share splits, share dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to NewCo Common Shares occurring after the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)Closing. ~~(v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:~~

Appears in 1 contract

Samples: Business Combination Agreement (Sports Entertainment Acquisition Corp.)

Earnout. (ia) At In addition to the ~~Acquisition Merger Effective Time~~Cash Payment, Sellers will be entitled to certain additional consideration from Buyer after the Closing pursuant to the terms and conditions of this Section 1.8. (b) With respect to the twelve-month period beginning on the Closing Date and each of the two succeeding twelve-month periods (each of such three twelve-month periods, an “Earnout Period”), the Sellers (taken together) shall be entitled to receive a cash payment from Buyer in an amount (such amount, an “Earnout Amount”) equal to (x) 1.25%, multiplied by (y) the sum of (A) the ~~Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller~~ Company’s Written Premium for such Earnout ~~(the “Earnout Units”)~~ Period and (B) ~~Pubco~~ the Company’s Fees for such Earnout Period; provided, however, that if at any time prior to the end of the final Earnout Period, the Company or any material portion of its assets or business is sold (whether pursuant to a merger, stock sale, sale of all or substantially all of the Company’s assets, or otherwise, and whether in a single transaction or a series of transactions) (such a sale, a “Sale of the Company”), then the total Earnout Amount payable by Buyer to Sellers in respect of all three Earnout Periods shall ~~issue and deposit with~~ instead be calculated as follows: (i) if the ~~Escrow Agent~~ Sale of the Company occurs prior to the end of the first Earnout Period, then the total Earnout Amount shall be an amount equal to (x) ~~a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and~~ 1.25%, multiplied by (y) ~~a number~~ the sum of ~~shares~~ (A) the Company’s Written Premium for the period of ~~Pubco Class A Common Stock~~ twelve calendar months ending as of the last day of the month preceding the month in which the Sale of the Company occurs and (B) the Company’s Fees for such twelve calendar month period, multiplied by (z) three (3); or (ii) if the Sale of the Company occurs after the end of the first Earnout Period, but prior to the end of the second Earnout Period, then the total Earnout Amount shall be an amount equal to (x) the Earnout Amount paid or payable with respect to the first Earnout Period, plus (y) an amount equal to (A) 1.25%, multiplied by (B) the sum of (I) ~~Maximum Sponsor Earnout~~ the Company’s Written Premium for the period of twelve calendar months ending as of the last day of the month preceding the month in which the Sale of the Company occurs and (II) the ~~Maximum Xxxxxxxxx Earnout~~ Company’s Fees for such twelve calendar month period, multiplied by (~~collectively,~~ C) two (2); or (iii) if the ~~“Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case, to be held in escrow in accordance with the terms~~ Sale of the ~~Escrow Agreement and this Section 3.01(c). (ii) Upon receipt~~ Company occurs after the end of the second Earnout ~~Shares and~~ Period, but prior to the end of the third Earnout ~~Units~~Period, then the ~~Escrow Agent shall place the~~ total Earnout ~~Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units~~ Amount shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units an amount equal to (x) ~~fifteen million~~ the Earnout Amounts paid or payable with respect to each of the first and second Earnout Periods, plus (~~15,000,000~~y) an amount equal to (~~the “First Earnout Units”~~A) 1.25%, multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the ~~occurrence~~ sum of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) ~~The Pubco EBITDA~~ the Company’s Written Premium for ~~one (but not both)~~ the period ~~listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than~~ of twelve calendar months ending as of the ~~Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and~~ last day of the month preceding the month in which the Sale of the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion occurs and (II) the Company’s Fees for such twelve calendar month period. Any and all amounts payable to Sellers pursuant to clause (i), (ii) or (iii) above shall be paid at or prior to the closing of the Sale of the Company. For the avoidance of doubt, if any amount is paid to Sellers pursuant to clause (i), (ii) or (iii) above in connection with a ~~number~~ Sale of ~~shares~~ the Company, no additional Earnout Amount shall be payable to Sellers at any time following the date of ~~Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion~~such payment. (IIc) ~~The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal~~ Buyer shall deliver to ~~or greater than~~ Sellers within sixty (60) days after the ~~Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to~~ end of each Earnout ~~Participant (I)~~ Period a ~~number~~ worksheet setting forth Buyer’s calculation of ~~New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its~~ the Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed Amount for such Earnout ~~Measurement~~ Period ~~on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each~~ (such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii)worksheet, the “Earnout ~~Units~~ Statement”). The Earnout Statement shall be accompanied by all records and work papers necessary for Sellers to compute and otherwise review the information set forth therein. Sellers shall have thirty (30) days after receipt of an Earnout ~~Shares shall instead be~~ Statement to review such Earnout Statement delivered by Buyer. Unless Sellers deliver written notice to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs Buyer on or prior to the ~~occurrence~~ thirtieth (30th) day after Sellers’ receipt of an Earnout ~~Triggering Event I~~Statement specifying in reasonable detail Sellers’ objections to the Earnout Statement, ~~Earnout Triggering Event I will~~ Sellers shall be deemed to have ~~been achieved~~accepted and agreed to the Earnout Amount as set forth in such Earnout Statement delivered by Buyer. If Sellers so notify Buyer of an objection to an Earnout Statement and the applicable Earnout Amount as set forth in such Earnout Statement, Sellers and Buyer shall, within thirty (30) days (or such longer period as they may agree) following such notice (the ~~First~~ “Earnout ~~Units and First Earnout Shares shall also be deemed~~ Resolution Period”), attempt to ~~have vested~~resolve their differences, and ~~Pubco~~ any resolution by them as to any disputed amounts shall be final, binding and conclusive. At the ~~Company~~ conclusion of the Earnout Resolution Period, (i) if any amounts remain in dispute, then all amounts remaining in dispute shall ~~cause~~ be submitted to the ~~Escrow Agent to release the First Earnout Units and First Earnout Shares~~ Accountants for resolution in accordance with the procedures set forth in Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved1.5(b) mutatis mutandis, and ~~the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares~~ (ii) all amounts not in dispute, if not previously paid, shall ~~also~~ be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)paid as provided herein. (vd) ~~Promptly following~~ For purposes of this Section 1.8, (i) “Written Premium” of the ~~filing~~ Company means the amount of ~~Pubco~~total private passenger and commercial assigned risk, voluntary take out and mandatory take out premium managed and administered by the Company on behalf of a servicing carrier (the “Managed Business”), plus the total amount of private passenger and commercial auto premium managed and administered by the Company on behalf of state departments of insurance, assigned risk plans and other agencies; and (ii) “Fees” means the amount of buyout fees and proceeds from the sale of take out, territorial and other credits received by such Company servicing carriers from insurance carriers with respect to the Managed Business. For illustrative purposes, attached as Exhibit B hereto is a statement of the Company’s ~~10-K with the SEC~~ Written Premium and Fees for the ~~2023 fiscal~~ year ended December 31, 2014, and ~~2024 fiscal year:~~a sample calculation of the Earnout Amount that would have been payable based thereon.

Appears in 1 contract

Samples: Stock Purchase Agreement (Kingsway Financial Services Inc)

Earnout. Within three (i3) At business days following execution of this Amendment by the ~~Acquisition Merger Effective Time~~parties hereto, ~~(A) the Company~~ Parent shall ~~issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout~~ pay $12,250,000 (the “Earnout ~~Units~~Payment”) to the Shareholders and to the holders of the Options terminated prior to the Closing set forth on Part II of Exhibit B (the “Option Holders”) as follows: (a) Until Total Consideration equals or exceeds the Option Holder Threshold, the Earnout Payment shall be payable to the Shareholders in accordance with the percentages set forth in Part I of Exhibit B. When Total Consideration is greater than the Option Holder Threshold, to the extent the Earnout Payment causes Total Consideration to be greater than the Option Holder Threshold, the amount of the Earnout Payment in excess of the Option Holder Threshold shall be payable to the Shareholders and Option Holders in accordance with the percentages set forth in Part II of Exhibit B. For the avoidance of doubt, the parties acknowledge and agree that the Earnout Payment shall be payable in accordance with Schedule I to this Amendment. (b) All payments due to the Shareholders pursuant to Sections 1.8(a) and (Bb) ~~Pubco~~ shall ~~issue and deposit with~~ be made by the ~~Escrow Agent (x)~~ issuance to each Shareholder of a number of ~~shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout~~ Parent Shares (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”)) equal in value to the amount due to such Shareholder (valuing the Parent Shares, ~~in each case, to be held in escrow in accordance with the terms~~ for purposes of ~~the Escrow Agreement and~~ this Section ~~3.01(c~~1.8, using the No Collar Share Valuation Method on March 29, 2011). Parent shall pay any amount due to the Option Holders under Section 1.8(b) by delivery of cash or check for good funds, subject to any applicable withholding. (iic) ~~Upon receipt of the Earnout Shares and Earnout Units~~Healthcare Growth Partners, ~~the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units~~ LLC shall be ~~earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent~~ entitled to ~~release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000)~~ receive an amount (the “~~First Earnout Units~~Broker Fee”) ~~multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock~~ equal to ~~(x) fifteen million (15,000,000) (~~$200,000. Parent shall pay the ~~“First~~ amount due to Healthcare Growth Partners, LLC by wire transfer of immediately available funds to an account designated by Healthcare Growth Partners, LLC. For the avoidance of doubt, the Broker Fee shall be paid by Parent and shall not be deducted from the Earnout ~~Shares”) multiplied by (y) its Earnout Pro Rata Portion~~Payment. (Bd) On For purposes of this Amendment, “No Collar Share Valuation Method” shall mean the ~~occurrence~~ valuation of ~~Earnout Triggering Event II, Pubco and~~ the ~~Company shall cause~~ Parent Shares based upon the ~~Escrow Agent to release to each Earnout Participant~~ average closing price of Parent’s common stock as reported by the NASDAQ Global Select Market over the forty-five (145) ~~a number~~ trading days ending on the close of ~~New Company Units equal to (x) fifteen million (15,000,000) (~~the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (iii) Notwithstanding the foregoing: (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share. (iv) In the event that Earnout Triggering Event II occurs trading day immediately prior to the ~~occurrence~~ date of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)this Amendment. ~~(v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:~~

Appears in 1 contract

Samples: Agreement and Plan of Merger (Quality Systems, Inc)

Earnout. (ia) ~~At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal~~ Subject to the ~~Maximum Seller Earnout~~ Business achieving mutually agreed upon financial results during the period from January 1, 2005 through and including December 31, 2005 (the “"Earnout ~~Units”~~Period"), an additional amount of consideration in the maximum aggregate amount of $4,000,000 (the "Earnout") ~~and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal~~ will become payable to the ~~Maximum~~ Seller ~~Earnout (~~and will be treated by the ~~“Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal~~ Parties as an adjustment to the ~~sum of (I) Maximum Sponsor Earnout and (II)~~ Initial Purchase Price. The formula for calculating the ~~Maximum Xxxxxxxxx Earnout (collectively~~Earnout, ~~the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case,~~ subject to ~~be held in escrow in accordance with~~ the terms ~~of the Escrow Agreement~~ and ~~this Section 3.01(c). (ii) Upon receipt of the Earnout Shares and Earnout Units~~conditions contained herein, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered is as follows: (Ai) On if the ~~occurrence~~ Earnout Revenues of the Business are $35,000,000 or greater, an Earnout ~~Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units~~ in an amount equal to $4,000,000 will become due and payable to the Seller; (xii) ~~fifteen million (15,000,000) (~~if the ~~“First~~ Earnout ~~Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock~~ Revenues are equal to or greater than $34,000,000 but less than $35,000,000, an Earnout in an amount equal to $3,000,000 will become due and payable to the Seller; (xiii) ~~fifteen million~~ if the Earnout Revenues are equal to or greater than $33,000,000 but less than $34,000,000, an Earnout in an amount equal to $2,000,000 will become due and payable to the Seller; (~~15,000,000~~iv) if the Earnout Revenues are equal to or greater than $32,000,000 but less than $33,000,000, an Earnout in an amount equal to $1,000,000 will become due and payable to the Seller; or (v) if the ~~“First~~ Earnout ~~Shares”) multiplied by (y) its~~ Revenues are less than $32,000,000, no Earnout ~~Pro Rata Portion~~will be due and payable. (Bb) On or prior to February 15, 2006, the ~~occurrence~~ Buyer will prepare and deliver to the Seller a statement setting forth the sales, net of returns, of the Business for the Earnout ~~Triggering Event II~~Period, ~~Pubco and~~ together with the ~~Company shall cause~~ adjustments thereto used in calculating the ~~Escrow Agent to release to each~~ Earnout ~~Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000)~~ Revenues (the ~~“Second~~ "Earnout ~~Units”) multiplied by (y) its~~ Statement"). The Earnout ~~Pro Rata Portion~~ Statement will be derived from the financial statements of the Business as of and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the ~~fiscal~~ year ending December 31, ~~2023~~2004, using accounting principles consistent with the preparation of the Financial Statements, and prepared in good faith. (c) For a period of 30 days following delivery of the Earnout Statement (the "Review Period"), the Buyer will permit the Seller and its representatives to have access at all reasonable times to all appropriate and relevant books, records, facilities, personnel and accountants of the Buyer reasonably necessary for the purpose of reviewing and verifying the Buyer's determination of the Earnout Statement and the Earnout. If within such 30 days, the Seller delivers written notice to the Buyer of its objection to the Buyer's determination of the Earnout Statement or the Earnout, which notice will specify in reasonable detail the grounds for objection, the Buyer and the Seller will attempt in good faith to reach an agreement as to any matters in dispute. If the Buyer and the Seller fail to agree upon the Earnout Statement or the Earnout within 10 days after the Seller advises the Buyer of its objections, then, at the election of either Party, the matters identified in such written notice that remain in dispute will be finally and conclusively determined by an independent auditing firm of recognized national standing (the "Arbiter") selected by the Buyer and the Seller, which firm will not be the regular auditing firm of the Buyer or the Seller or any of their respective Affiliates. The Buyer and the Seller will each deliver to the other Party within two business days after submission to the Arbiter a copy of its written presentation submitted to the Arbiter setting forth such Party's determination of the Earnout Statement and the Earnout. The Buyer and the Seller will have two business days following their respective receipt of the other Party's presentation to provide a written response to the Arbiter with regard to the other Party's presentation. Promptly, but not later than 30 days after its acceptance of its appointment, the Arbiter will determine (based solely on written presentations by the Seller and the Buyer and not by independent review) only those matters in dispute and will render a written report as to the disputed matters and the resulting calculation of the final Earnout Statement and the Earnout, which report will thereupon be conclusive and binding upon the Parties. The fees and expenses of the Arbiter will be shared equally by the Buyer and the Seller. If the Seller fails to notify the Buyer of any disputes in accordance with the aforementioned procedures, the Earnout Statement and the Earnout reflected thereon will be conclusive and binding on all Parties upon the expiration of the Review Period. (d) Any payment pursuant to this Section 3.4 will be made within fifteen business days following the final determination of the Earnout Statement in accordance with this Section 3.4 by wire transfer of immediately available funds to the account designated in writing by the Seller. (e) During the Earnout Period the Buyer will dedicate sufficient resources and funds to support the level of growth anticipated to be necessary to achieve the targeted gross revenues. Without limiting the generality of the foregoing, during the Earnout Period, Buyer will comply with the following covenants with respect to the conduct of the Business: (1i) If The Buyer will use commercially reasonable efforts to manage and operate the ~~Pubco EBITDA for all of 2023 is less than $12,416,530~~Business, ~~no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets~~ including reasonable product pricing practices, lead times and production planning; (ii) The Buyer will account for the ~~2023~~ Business as a stand-alone operation for purposes of preparing the Earnout ~~Measurement Periods. If the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023~~ Statement and calculating any Earnout ~~Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco~~ that may become due and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion.payable; (iii) ~~Notwithstanding~~ The Buyer will not take or fail to take any action for the ~~foregoing: (A) Until a number~~ purpose of unfairly or prejudicially affecting the Seller's ability to prepare the Earnout ~~Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance~~ Statements consistent with Section ~~3.01(c)(ii), each time~~ 3.4(b) or to achieve and receive the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share. (B) After a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout Share.Earnout; and (iv) ~~In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I~~ The Buyer will ~~be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall~~ not take any action or cause the ~~Escrow Agent~~ Business to ~~release~~ take any action outside of the ~~First Earnout Units and First Earnout Shares~~ ordinary course of business that has the effect of shifting revenues into or out of any periods in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will which such revenues would otherwise be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)recognized. (vf) ~~Promptly following~~ If a Change of Control occurs at any time during the ~~filing~~ Earnout Period, the maximum Earnout of ~~Pubco’s 10-K with~~ $4,000,000 will become immediately due and payable to the ~~SEC for~~ Seller in cash at the ~~2023 fiscal year and 2024 fiscal year:~~time of the Change of Control.

Appears in 1 contract

Samples: Asset Purchase Agreement (Astronics Corp)

Earnout. (a) If the First Year EBITDA exceeds $8,500,000, then the Buyer shall pay, or cause to be paid, to Seller aggregate consideration equal to the product of (i) At the ~~Acquisition Merger Effective Time~~excess of the First Year EBITDA over $8,500,000 multiplied by (ii) four (the "Excess Earnout Amount"). If the First Year EBITDA is less than $8,500,000, ~~(A)~~ then the ~~Company~~ Seller shall ~~issue and deposit with the Escrow Agent a number of New Company Units~~ pay, or cause to be paid, to Buyer aggregate consideration equal to the ~~Maximum Seller Earnout~~ product of (i) the excess of $8,500,000 over the First Year EBITDA multiplied by (ii) four (the “"Shortfall Earnout ~~Units”~~Amount"). The Excess Earnout Amount and the Shortfall Earnout Amount shall hereinafter be referred to, as the context requires, as the "Earnout Amount". Notwithstanding the foregoing, in no event shall the Excess Earnout Amount exceed $28,000,000 or the Shortfall Earnout Amount exceed $15,000,000. (b) On the Earnout Payment Date: (i) In the case of an Excess Earnout Amount, Buyer shall pay or cause to be paid to Seller one-half of the Excess Earnout Amount in cash, and ~~(B) Pubco~~ Parent, on behalf of Buyer, shall issue ~~and deposit with the Escrow Agent (x) a~~ or cause to be issued to Seller an aggregate number of shares of ~~Pubco Class B~~ Parent Common Stock equal to (1) one-half of the ~~Maximum Seller~~ Excess Earnout Amount divided by (2) the ~~“Seller Earnout Shares”~~greater of (A) ~~and~~ $14.00 or (yB) a to the extent the Average Closing Price exceeds $14.50, the Average Closing Price; provided, however, that in no event shall the number of shares of ~~Pubco Class A~~ Parent Common Stock ~~equal~~ issued pursuant to this clause (i) exceed 1,000,000 shares (the ~~sum~~ "Parent Common Stock Cap"). If the number of ~~(I) Maximum Sponsor Earnout and (II) the Maximum Xxxxxxxxx Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case,~~ shares of Parent Common Stock to be ~~held in escrow in accordance with~~ issued pursuant to this clause (i) exceeds the ~~terms~~ Parent Common Stock Cap then the portion of the ~~Escrow Agreement and this Section 3.01(c)~~Excess Earnout Amount that would have been payable in Parent Common Stock shall be paid in cash. (ii) ~~Upon receipt~~ In the case of a Shortfall Earnout Amount, Seller shall pay or cause to be paid to Buyer one-half of the Shortfall Earnout ~~Shares~~ Amount in cash and ~~Earnout Units~~transfer or cause to be transferred to Buyer, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows: (A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a an aggregate number of shares of ~~Pubco Class B~~ Parent Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) ~~a number~~ one-half of ~~New Company Units equal to (x) fifteen million (15,000,000) (~~the ~~“Second~~ Shortfall Earnout ~~Units”) multiplied~~ Amount divided by ~~(y) its Earnout Pro Rata Portion and~~ (2) ~~a number~~ the greater of ~~shares of Pubco Class B Common Stock equal to~~ (xi) ~~fifteen million~~ $14.00 or (~~15,000,000~~ii) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion. (D) Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, 2023: (1) If the Pubco EBITDA for all of 2023 is less than $12,416,530, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the ~~Pubco EBITDA targets for~~ extent the ~~2023 Earnout Measurement Periods. If~~ Average Closing Price exceeds $14.50, the Pubco EBITDA for all of 2023 is at least $12,416,530, and: (I) The Pubco EBITDA for one (but not both) period listed on Schedule 3.01(c)(ii)(D) (each such period, a “2023 Earnout Measurement Period”) is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods. (2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and: (I) The Pubco Revenue for one (but not both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion. (III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. (E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”): (1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion. (2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata PortionAverage Closing Price. (iii) ~~Notwithstanding~~ The cash portion of any Earnout Amount shall be payable by wire transfer of immediately available funds to such bank account or accounts as per written instructions of Seller or Buyer, as the ~~foregoing:~~ case may be, given to the other party at least five days prior to the Earnout Payment Date. No fractional shares of Parent Common Stock shall be issued or transferred pursuant to clause (i) or (ii) above. If any party would be entitled to a fractional share of Parent Common Stock pursuant to clause (i) or (ii) above, such party shall receive an amount in cash equal to the product of (A) Until a number of Earnout Shares equal to the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and such fractional share ~~of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share.~~ multiplied by (B) ~~After a number~~ the greater of ~~Earnout Shares equal~~ (i) $14.00 or (ii) to the ~~Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time~~ extent the ~~Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii)~~Average Closing Price exceeds $14.50, the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding Xxxxxxxxx) in proportion to their Earnout Pro Rata Portions. (C) Each time Xxxxxxxxx is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Xxxxxxxxx one Pubco Earnout ShareAverage Closing Price. (iv) In Buyer shall have the ~~event that~~ right to withhold and set-off against any Excess Earnout ~~Triggering Event II occurs prior~~ Amount the amount of any claim for indemnification or payment of Losses provided for in Section 9.1 or any amounts payable by Seller to ~~the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed~~ Buyer pursuant to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii)4. ~~(v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:~~

Appears in 1 contract

Samples: Asset Purchase Agreement (MTD Products Inc)

Common use of Earnout Clause in Contracts