Annual Cash Bonus During the Term, Executive may be eligible to receive an annual cash bonus, on terms and conditions as determined by the Committee in its sole discretion taking into account Company and individual performance objectives.
Earn-Out Payments (i) Pursuant to the Purchase Agreement, the WME Member or the Company, as applicable, are the obligors in respect of a portion of the Earn-Out Payment. Subject to Section 7.03(g)(ii), the Earn-Out Payments may be funded in any of the following manners (or any combination thereof) as determined by unanimous Board approval (provided that if unanimous Board approval is not obtained, the WME Member or the Company, as applicable, shall nevertheless be permitted to comply with their respective obligations to the Earn-Out Recipients under the Purchase Agreement): (A) for so long as the January Capital Member is a Member, a special cash distribution by the Company to the January Capital Member in consideration of that portion of the Earn-Out Payment due to the January Capital Member, (B) a cash distribution to all Common Members on a pro rata basis to enable the Common Members (other than the Class B Members) to make Earn-Out Payments to the Earn-Out Recipients (provided that all such Common Members shall be required to make such Earn-Out Payment following receipt of such distribution), (C) a special cash distribution by the Company to the WME Member to fund Earn-Out Payments by the WME Member to the Earn-Out Recipients (provided that the WME Member shall be required to make such Earn-Out Payment following receipt of such distribution), and (D) funding by the WME Member (and to the extent agreed to by the Sponsor Members, the Sponsor Members) for Earn-Out Payments to the Earn-Out Recipients.
(ii) The Earn-Out Payments shall be subject to the following rules: (A) Earn-Out Payments to the January Capital Member will, to the extent permitted under the terms of any indebtedness and Senior Equity of the Company and its Subsidiaries and Annex A, and to the extent the WME Directors reasonably determine (after meaningful consultation with the full Board) that doing so would not have an adverse impact on the Company or its Subsidiaries, for so long as the January Capital Member is a Member, be distributed by the Company to the January Capital Member (subject, in each case, to clause (B) below) (provided that, for purposes of clarification, the January Capital Member shall not lose or waive its right to receive unpaid Earn-Out Payments solely because it ceases to be a Member; provided further that, if the Company is prohibited under the terms of any indebtedness or Senior Equity of the Company or its Subsidiaries or Annex A, or the Board otherwise determines that doing so would have an adverse impact on the Company or its Subsidiaries, and accordingly does not distribute Earn-Out Payments to the January Capital Member in accordance with this clause (A), then the January Capital Member shall have the right, but not the obligation, to elect in writing to defer the payment of such Earn-Out Payment for a period of up to 24 months (the “Outside Earn-Out Payment Date”); provided further that the deferred Earn-Out Payment will be made to the January Capital Member on the earliest to occur of (A) the date on which the deferred Earn-Out Payment may be made by the Company in accordance with, and subject to the terms and conditions of, this clause (A), (2) the date specified in writing by the January Capital Member (provided the January Capital Member provides written notice to the WME Member at least 60 days prior to the date on which the January Capital Member would like to receive the deferred Earn-Out Payment if such date is prior to the Outside Earn-Out Payment Date) and (3) the Outside Earn-Out Payment Date, (B) the Class B Members shall be grossed up so that they do not bear the effect of any Dilutive Adjustment (as defined below) or the Economic Cost of any Earn-Out Payments that are funded by distributions by the Company, (C) the Class B Members shall not bear any dilution arising from (x) the issuance of any Units that are issued in connection with the Earn-Out Payments or (y) any adjustment to the exercise price (a “Dilutive Adjustment”) of any securities or other interests convertible into Equity Securities of the Company resulting from any gross-up or true-up payment made in connection with, or that constitutes, any Earn-Out Payment, and (D) if any portion of the Earn-Out Payments are paid pursuant to clause (D) of Section 7.03(g)(i) by the WME Member and, if applicable, any Sponsor Members, the WME Member and such Sponsor Members (if any), will be issued Class A Common Units in respect of the amounts so paid thereby pursuant to such clause (D) at a price to be unanimously determined by the Board, which shall in no event be greater than Fair Market Value; provided, that if the Board does not unanimously agree on the price per Class A Common Unit, such Class A Common Units will be issued at Fair Market Value, as unanimously determined by the Board; provided, further, that if the Board does not unanimously agree on Fair Market Value, such value shall be determined by an investment banking firm of national reputation selected by the WME Member and reasonably acceptable to the SL Member, the KKR Member and the Company, whose expenses shall be borne by the Company.
(iii) Solely for purposes of this Section 7.03(g), “Economic Cost”, means, with respect to a Class B Member, such Member’s direct or indirect Percentage Interest of any Company cash or other Company asset that is distributed in a non-pro rata distribution to fund all or any portion of any Earn-Out Payment; provided, that, “Economic Cost” shall not include any diminution in value, lost profits or similar cost not relating to the immediate economic effect of the applicable non-pro-rata distribution.
Earnout Payments (a) The Constituents shall be eligible to receive earnout consideration up to a maximum of three million dollars ($3,000,000) for all such earnout payments, based on the performance of the Surviving Corporation following the Closing as set forth in this Section 1.7.
(i) For the period beginning immediately after the Closing and ending on the first anniversary of the Closing (the “First Earnout Period”), the Constituents shall receive $3 for every $1 of Post-Closing Net Income in excess of one hundred ten percent (110%) of the Adjusted Forecast for such First Earnout Period (the “First Earnout Period Payment”).
(ii) For the period beginning on the day after the first anniversary of the Closing and ending on the second anniversary of the Closing (the “Second Earnout Period”), the Constituents shall receive $3 for every $1 of Post-Closing Net Income in excess of one hundred ten percent (110%) of the Adjusted Forecast for such Second Earnout Period until the Post-Closing Net Income results in an aggregate of $1.5 million of earnout consideration being earned during the Second Earnout Period (such amount of Post-Closing Net Income, the “Second Earnout Threshold”), at which point the amount earned thereafter shall change to $1.50 for every $1 of Post-Closing Net Income in excess of the Second Earnout Threshold for such Second Earnout Period (collectively, the “Second Earnout Period Payment”).
(b) Earnout amounts shall be calculated promtly after the preparation of the Parent’s financial statements following the accounting period in which the end of such earnout period occurs. The First Earnout Period Payment, if any, shall be deposited with Escrow Agent and made part of the Escrow Amount. The calculation of the amount earned in the First Earnout Period Payment or Second Earnout Period Payment, as the case may be, may be referred to as the “Earnout Payment” for such period. Such Earnout Payments shall be delivered to the Escrow Agent or paid to the Constituents in accordance with Section 1.5(a), as the case may be, within the later of (i) ninety (90) days after the Parent’s delivery to the Stockholder Representatives of the applicable Earnout Certificate, or (ii) if disputed pursuant to Section 1.7(f) below, ten (10) Business Days after final determination of the applicable Earnout Payment pursuant to the provisions of Section 1.7(f).
(c) [intentionally omitted]
(d) In no case shall the aggregate amounts paid pursuant to this Section 1.7 exceed $3 million.
(e) As soon as reasonably practicable following Parent’s determination of the Earnout Payment for each of the First Earnout Period and Second Earnout Period (but in no event prior to the date the Parent’s financial statements for the periods to which such Earnout Payments relate have been publicly disclosed by Parent), Parent will deliver to the Stockholder Representatives (i) a statement that includes each element of the calculation of the Earnout Payment; and (ii) a certificate of the Parent’s Chief Financial Officer certifying on behalf of the Parent that the calculation of the Earnout Payment was made in accordance with the terms of this Section 1.7 (such statement and certificate being referred to as the “Earnout Certificate”). The Stockholder Representatives and their professional advisors will be given reasonable access to only those books and records of the Surviving Corporation that are necessary to confirm the calculation of the Earnout Payment. All information obtained by the Stockholder Representatives shall be deemed to be confidential information of the Parent subject to the restrictions of the Confidentiality Agreement attached hereto as Exhibit I.
Bonus Payments No employee shall be required or requested to make any written or verbal agreement that will conflict with the terms of this Agreement. All employees must be paid weekly for all hours worked as provided in this Agreement. Any bonuses, commissions or other methods of payments over and above the requirements of this Agreement shall be in addition to the requirements of this Agreement and may not be used to offset such contractual requirements and shall not be subject to negotiations.
Catch-Up Contributions In the case of a Traditional IRA Owner who is age 50 or older by the close of the taxable year, the annual cash contribution limit is increased by $1,000 for any taxable year beginning in 2006 and years thereafter.
Cash Bonus Executive shall be entitled to a fraction of any Cash Bonus for the fiscal year of the Company within which Executive’s termination of employment occurs which, based upon the criteria established for such Cash Bonus, would have been payable to Executive had he remained employed through the date of payment, the numerator of which is the number of days of such fiscal year prior to his termination of employment and the denominator of which is three hundred and sixty-five (365); and
Cash Incentive Bonus The pro rata share of any Cash Incentive Bonus that would have been paid to the Executive had the Executive not been terminated Without Cause based on the extent to which performance standards are met on the last day of the year in which the Executive is terminated Without Cause.
Earn-Out In addition to the Closing Purchase Price, the earn-out amounts set forth below can be earned and shall be paid, if earned, to Sellers.
(a) Up to an aggregate of One Million Three Hundred Thirty Three Thousand Dollars ($1,333,000) (the “Annual Maximum”) can be earned based on the AEBITDA of the Sellers’ Operations during each of the twelve (12) month periods (each a “Measurement Period”) ending June 30 of 2011 through and including 2015.
(i) If the AEBITDA for any applicable Measurement Period is equal to or greater than the Target AEBITDA, then earn-out amount for such Measurement Period shall be equal to the Annual Maximum for such Measurement Period and such amount shall be deemed earned as of the expiration of such Measurement Period and be payable by Purchaser to Sellers as and when provided in Section 2.7(c) hereof.
(ii) If the AEBITDA for any applicable Measurement Period is less than the Target AEBITDA, then the earn-out amount for such Measurement Period shall be equal to (A) the Annual Maximum for such Measurement Period, minus (B) the amount by which the actual AEBITDA for such Measurement Period is less than the Target AEBITDA, and such amount shall be deemed earned as of the expiration of such Measurement Period and be payable by Purchaser to Sellers as and when provided in Section 2.7(c) hereof.
(iii) Subject to Section 2.7(b) hereof, if the AEBITDA for any applicable Measurement Period is zero or negative then no earn-out amount for such Measurement Period shall be deemed earned or be payable by Purchasers to Sellers.
(b) If the Annual Maximum is not earned for any of the first four (4) Measurement Periods, then up to Two Hundred Sixty Six Thousand Dollars ($266,000) of the amount not earned may be recaptured (the “Recapture Maximum”) to the extent that the AEBITDA in the immediately subsequent Measurement Period is greater than the Target AEBITDA, in which case, the amount of the recapture earn-out shall be equal to the amount that the applicable AEBITDA exceeds the Target AEBITDA on a dollar for dollar basis, up to the Recapture Maximum for such immediately subsequent Measurement Period. Similarly, if the Annual Maximum is not earned in any of the final four (4) Measurement Periods, then up to Two Hundred Sixty Six Thousand Dollars ($266,000) of the amount not earned may carried forward (the “Carry-forward Maximum”) to the extent that the AEBITDA in the immediately prior Measurement Period is greater than the Target AEBITDA, in which case, the amount of the carry forward earn-out shall be equal to the amount that the applicable AEBITDA exceeded the Target AEBITDA in the prior period on a dollar for dollar basis, up to the Carry-forward Maximum for such immediately prior Measurement Period. Any such recapture earn-out amount or carry-forward earn-out amount for any applicable Measurement Period shall be in addition to any earn-out amount earned by Sellers pursuant to Section 2.7(a)(i) hereof for such applicable Measurement Period and shall be payable by Purchaser to Sellers as and when provided in Section 2.7(c)If the Annual Maximum is not earned for any of the first four (4) Measurement Periods, then up to Two Hundred Sixty Six Thousand Dollars ($266,000) of the amount not earned may be recaptured (the “Recapture Maximum”) to the extent that the AEBITDA in the subsequent Measurement Period is greater than the Target AEBITDA, in which case, the amount of the recapture earn-out shall be equal to the amount that the applicable AEBITDA exceeds the Target AEBITDA on a dollar for dollar basis, up to the Recapture Maximum for such Measurement Period. Any such recapture earn-out amount for any Measurement Period shall be in addition to any earn-out amount earned by Sellers pursuant to Section 2.7(a)(i) hereof for such Measurement Period and shall be payable by Purchaser to Sellers as and when provided in Section 2.7(c) hereof. Notwithstanding the foregoing, in no event shall the total aggregate recapture earn-out and/or carry-forward earn-out for all measurement periods exceed Two Hundred Sixty Six Thousand Dollars ($266,000). By way of illustration only, if AEBITDA (x) for the first Measurement Period is $100,000 less than the Target AEBITDA, (y) for the second Measurement Period exceeds the Target AEBITDA by $350,000, and (z) for the third Measurement Period is $200,000 less than the Target AEBITDA, then Sellers shall be entitled to the following: for the first Measurement Period, the Annual Maximum earn-out, less $100,000 (i.e., a dollar for dollar reduction by the amount that the actual AEBITDA for the first Measurement Period is less than the Target AEBITDA); for second Measurement Period, the Annual Maximum earn-out, plus a recapture earn-out of $100,000 (i.e., a dollar for dollar recapture (up to the maximum aggregate recapture and carry-forward earn-out amount for all Measurement Periods of $266,000) by the amount that the AEBITDA for the second Measurement Period exceeded the Target AEBITDA as a recapture for the first Measurement Period by the amount that the Annual Maximum was not earned for the first Measurement Period); and for the third Measurement Period, the Annual Maximum earn-out, less $200,000 (i.e., a dollar for dollar reduction by the amount that the actual AEBITDA for the third Measurement Period was less than the Target AEBITDA), plus a carry-forward earn-out amount of $166,000 (i.e., a dollar for dollar carry-forward (up to the maximum aggregate recapture and carry-forward earn-out for all Measurement Periods amount of $266,000) by the amount that the AEBITDA for the second Measurement Period exceeded the Target AEBITDA as a carry-forward for the third Measurement Period by the amount that the Annual Maximum was not earned for the third Measurement Period, but limited so that the total aggregate recapture earn-out paid for the first Measurement Period and the carry-forward earn-out for the third Measurement Period does not exceed $266,000.00).
(c) Except as expressly provided in Section 2.7(b) hereof, each earn-out amount (and/or recapture or carry-forward earn-out amounts) for each Measurement Period will stand alone and shall be achieved, if at all, and be calculated separately based upon the AEBITDA for such Measurement Period. Each earn-out amount earned by Sellers for any Measurement Period pursuant to Section 2.7(a) hereof, together with any recapture or carry-forward earn-out amounts earned by Sellers for such Measurement Period pursuant to Section 2.7(b) hereof, shall be paid by Purchaser to Sellers within sixty (60) days after the applicable Measurement Period ends (except that the for the last Measurement Period, such payment shall be made within fifteen (15) days after the expiration of the Medicare Cap Year immediately following such Measurement Period, or such earlier date as Purchaser and Sellers may mutually agree) (each, an “Earn-Out Payment Date”) by wire transfer to the accounts set forth on Schedule 2.7(c), and the allocation such earn-out amounts among Sellers shall be in accordance with Schedule 2.3 regardless of the amount that each Seller’s former Operations contributed to the AEBITDA. Sellers acknowledge and agree that the achievement of any earn-out amounts pursuant to this Section 2.7 is contingent upon the AEBITDA with respect to Seller’s Operations as a whole after the Closing Date and neither Purchaser nor its Representatives is guaranteeing that any level of AEBITDA will be achieved or that any of the earn-out amounts will be earned by Sellers.
(d) On or before each applicable Earn-Out Payment Date, Purchaser shall deliver Sellers’ Representative a written notice stating the amount, if any, of the applicable earn-out amount deemed earned during any applicable Measurement Period as determined by Purchaser (each an “Earn-Out Notice”), together with a reasonably detailed calculation of AEBITDA for the applicable Measurement Period. In the event Sellers’ Representative objects to any earn-out amount set forth an Earn-Out Notice, Sellers’ Representative must deliver to Purchaser within fifteen (15) days of the date of such Earn-Out Notice a written notice setting forth the basis for such objections (an “Objection Notice”). If Sellers’ Representative delivers an Objection Notice, Purchaser and Sellers shall attempt in good faith to agree upon the applicable earn-out amount. If Purchaser and Sellers so agree in writing to the applicable earn-out amount, Purchaser shall, within five (5) business days of reaching such agreement pay to Sellers any additional amounts agreed upon. If, however, no agreement is reached after good-faith negotiations, either Purchaser or Sellers may demand arbitration of the dispute and the matters shall be resolved by confidential arbitration conducted by three independent arbitrators, one selected by Purchaser, one selected by Sellers, and the third (who must be independent of the parties hereto) selected jointly by the two arbitrators previously so selected. All arbitrators must be members of the CPR National Panel or CPR California Panel. The arbitrators shall set a limited time period and establish procedures designed to reduce the cost and time for discovery of information relating to any dispute while allowing the parties an opportunity, adequate as determined in the sole judgment of the arbitrators, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrators shall rule upon motions to compel, limit or allow discovery as they shall deem appropriate given the nature and extent of the disputed claim. The arbitrators shall also have the authority to impose sanctions, including attorneys’ fees and other costs incurred by the parties, to the same extent as a court of law or equity, if the arbitrators determine that discovery was sought without substantial justification or that discovery was refused or objected to by a party without substantial justification. The decision of a majority of the three arbitrators as to the earn-out amount related to the applicable Earn-Out Notice shall be binding and conclusive upon the parties. Such decision shall be written and shall be supported by written findings of fact and conclusions of law regarding the dispute, which shall set forth the award, judgment, decree or order of the arbitrators. Judgment upon any award, judgment, decree or order rendered by the arbitrators may be entered in any court having competent jurisdiction. Any such arbitration shall be held in the City and County of Orange, California under the CPR Rules for Non-Administered Arbitration then currently in effect. The non-prevailing party (as determined by the arbitrators) to any arbitration under this Section 2.7 shall pay its own expenses, the fees of each arbitrator, the administrative costs of the arbitration and the expenses, including reasonable attorneys’ fees and costs, incurred by the other party to the arbitration. Purchaser shall pay to Seller the amount of any additional earn-out amount deemed earned by the arbitrators within five (5) business days of notice of the arbitrators decision. If Sellers are the determined to be the non-prevailing party, Purchaser may deduct the fees of the arbitrators, the administrative costs of the arbitration and the expenses, including reasonable attorney’s fees and costs, incurred by Purchaser out any amounts then owing to Sellers hereunder prior to payment of such amounts to Sellers. Any remaining amounts owing by Sellers to Purchaser on account of the fees of the arbitrators, the administrative costs of the arbitration and the expenses, including reasonable attorney’s fees and costs, incurred by Purchaser, after any such deduction of amounts then owing by Purchaser to Sellers hereunder (if applicable), shall be paid by Sellers to Purchaser within five (5) business days of notice of the arbitrators decision.
Company Equity Awards (a) Each option to purchase shares of Company Common Stock that has been granted under the Company Stock Plans (each, a “Company Option”) and that is outstanding and unexercised immediately prior to the Effective Time will, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders thereof, be treated as follows:
(i) as of the Effective Time, each Company Option (whether or not vested) that is outstanding and unexercised immediately prior to the Effective Time and that has a per share exercise price less than the Merger Consideration (an “In-the-Money Option”) will be canceled in exchange for payment to the holder of such In-the-Money Option of an amount in cash equal to (A) the number of shares of Company Common Stock remaining subject to such In-the-Money Option immediately prior to the Effective Time multiplied by (B) the amount by which (x) the Merger Consideration exceeds (y) the per share exercise price for such In-the-Money Option (the “Company Option Cash Out Amount”); and
(ii) each Company Option that is not an In-the-Money Option will be canceled at the Effective Time without payment of any consideration.
(b) As of the Effective Time, each restricted stock unit award subject to time-based or other vesting restrictions that is outstanding under any Company Stock Plan (each, a “Company RSU Award””) immediately prior to the Effective Time, shall, to the extent not vested, become fully vested and then (ii) each such Company RSU Award shall be canceled without any action of the part of any holder or beneficiary thereof in consideration for the right to receive a lump sum cash payment with respect thereto equal to the product of (x) the Merger Consideration and (y) the number of shares of Company Stock represented by such Company RSU Award (the “Company RSU Cash Out Amount”).
(c) All Company Options (whether or not vested) that are outstanding and unexercised immediately prior to the Effective Time, all Company RSU Awards that are outstanding immediately prior to the Effective Time, and rights under the Company Stock Plans, will terminate as of, and contingent upon the occurrence of, the Effective Time (after given effect to this Section 2.3), and, following the Effective Time, no holder of any Company Option, Company RSU Award, or any other rights under the Company Stock Plans will have any right to acquire any equity securities of the Company, its Subsidiaries, or the Surviving Corporation as a result of such holder’s Company Options, Company RSU Awards, or other rights under the Company Stock Plans and the Company shall have no further Liability under or with respect to any such Company Option, Company RSU Awards, or the Company Stock Plans (except as provided pursuant to Section 2.3(a)(i) in respect of In-The-Money Options), or as provided pursuant to Section 2.3(b) in respect of the Company RSU Awards.
(d) Payment of the Company Option Cash Out Amount for each In-the-Money Option and the Company RSU Cash Out Amount for each Company RSU Award is subject to Section 2.7 and will be made as follows: No later than thirty (30) Business Days after the Closing Date, Parent shall, or shall cause the Surviving Corporation to, deliver (through the Surviving Corporation payroll or such other means of payment as Parent may provide) to the holder of any In-the-Money Option or Company RSU Award the applicable Company Option Cash Out Amount or Company RSU Cash Out Amount, net of Tax withholdings. To the extent that such Taxes are so deducted or withheld and paid over to the appropriate Taxing Authority, the amounts thereof will be treated for all purposes hereunder as having been paid to the Person to whom such amounts would otherwise have been paid.
(e) Prior to the Effective Time, the Company shall take (or cause there to be taken, as the case may be) all such actions as are necessary to effect the treatment of Company Options and Company RSU Awards provided for under this Section 2.3, under all Contracts governing the terms of all Company Options and Company RSU Awards, and under any other applicable plan or arrangement to which the Company is a party or by which the Company may be bound with respect to such Company Options, Company RSU Awards or the Company Stock Plans, including (A) to accelerate the vesting of any unvested Company Options that are outstanding and unvested immediately prior to the Effective Time and (B) at the request of Parent or as otherwise may be required, sending to any holders of Company Options notices (if drafted and at the request of Parent, subject to reasonable review and approval by the Company, which approval will not be unreasonably withheld, conditioned or delayed) with respect to the treatment of such instruments under this Agreement. The Company shall not send or otherwise make available any notices to any holders of Company Options, or solicit any consents or other approvals from the holders of any Company Options unless and until Parent has reviewed and approved all such notices and related documentation (including any email messages and notifications) to be sent or made available to such holders (which approval may not be unreasonably withheld or delayed), in each case, solely to the extent such notices, consents or approvals relate to the Merger Transaction.
(f) The Company shall promptly take (or cause there to be taken, as the case may be) all such actions as are necessary to ensure that no offering or purchase period commences under the Company ESPP and that no shares of Company Capital Stock are issued under the Company ESPP. Prior to the Effective Time, the Company shall take (or cause there to be taken, as the case may be) all such actions as are necessary to terminate the Company ESPP such that, from and after the time of such termination, the Company shall have no Liability under or with respect to the Company ESPP.
Equity Contributions Make, or permit any Significant Subsidiary to make, any equity contributions to any Unregulated Subsidiary; provided, however, that this Section 5.03(h) shall not restrict or otherwise apply to (i) any such equity contributions that are required by Applicable Law or court order or (ii) any intercompany advances made to any Unregulated Subsidiary (including, without limitation, pursuant to the Unregulated Money Pool Agreement) that are recharacterized by a court or other Governmental Authority as equity contributions.
