Holdback Shares Clause Samples
The Holdback Shares clause defines a portion of shares that are withheld from the seller at closing, typically as security for the buyer against potential post-closing claims or adjustments. In practice, a specified number of shares are set aside and not immediately transferred to the seller; these shares may be released to the seller after a certain period or upon satisfaction of specific conditions, such as the resolution of indemnity claims. This clause primarily functions to protect the buyer by ensuring there are assets available to cover any unforeseen liabilities or breaches that may arise after the transaction is completed.
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Holdback Shares. (a) The parties hereby agree that 31,000 shares of the Parent Common Stock (the "Holdback Shares"), out of the total number of shares of Parent Common Stock to be issued to the holders of Company Common Stock pursuant to the Merger and upon exercise of the Company Options and the Substitute Warrant following the Effective Time, shall be held in escrow by Parent and available for use to satisfy claims for recovery by Parent under this Article VIII and Section 1.11(e). In the event Parent is entitled to recover any amount in respect of the Adjustment Amount pursuant to Section 1.11(e) or any Losses pursuant to Section 8.2, Parent may set off such amount against the Holdback Shares. In each such event, the number of Holdback Shares deliverable by Parent to the Shareholders hereunder shall be reduced by an amount equal to the quotient obtained by dividing (i) the amount of the applicable set-off, by (ii) the Closing Stock Price. Any Holdback Shares which are so applied to Parent's rights of recovery shall be retained by Parent and cancelled and shall not be delivered to the Shareholders or reserved for issuance upon exercise of any assumed Company Options or the Substitute Warrant. The number of Holdback Shares to be applied against any recovery claim and/or released to the Shareholders pursuant to this Section 8.4 shall be subject to appropriate adjustments for any stock split, reverse stock split, stock dividend, recapitalization or similar event.
(b) Notwithstanding the foregoing, Parent shall not be entitled to exercise any right of recovery or set-off arising under Section 8.2(a) until the aggregate amount of Losses for which Parent would otherwise be entitled to recovery under Section 8.2(a) exceeds or is reasonably expected to exceed $50,000 (the "Basket"), at which point Parent shall be entitled to recovery of all such Losses, including all Losses included in reaching the Basket. The foregoing limitation shall not apply to (i) any Losses arising out of fraud on the part of the Company or any Shareholder, (ii) any Losses arising out of any breach of any of the representations and warranties set forth in Sections 2.2, 2.4, 2.5 or 2.26 of this Agreement, or (iii) any right of recovery arising under Section 1.11(e), 8.2(b) or 8.2(c) of this Agreement.
(c) Any remaining Holdback Shares, after application of all set-offs and deductions provided for in this Section 8.4, less the number of Holdback Shares which may be required to satisfy any then pending claim...
Holdback Shares. Subject to the terms and conditions of this Agreement, Parent shall retain and hold back from issuance the Holdback Shares, at such time and in such proportion as the Base Stock Consideration is issued to Company Members in accordance with Section 5(d).
Holdback Shares. On the Closing Date, Buyer shall withhold the Holdback Shares to be retained as security for the indemnification obligations of the Shareholders set forth in of Section 8.3. The portion of the Holdback Shares contributed on behalf of each Shareholder shall be in proportion to the aggregate amount of Consideration to which such Shareholder would otherwise be entitled under this Agreement. All claims for indemnification pursuant to Section 8.3 below shall be satisfied first from the Holdback Shares to the full extent thereof. For the purpose of this Agreement, including without limitation the distribution of the Holdback Shares, the value of each Holdback Share (the “Holdback Shares Indemnity Value”) shall be equal to the fair market value of a share of Buyer Common Stock as determined by the board of directors of Buyer, acting in good faith, at the time of distribution; provided, however, that in the event shares of Buyer Common Stock are actively traded on any national securities exchange, the Holdback Shares Indemnity Value shall be determined by the average closing price per share of Buyer Common Stock on the ten (10) consecutive trading days immediately preceding the date of distribution of the Holdback Shares. Promptly, but in any event within three (3) Business Days, following the twelve (12) month anniversary of the Closing Date, Buyer will release the remaining Holdback Shares to the Shareholders in accordance with their respective Pro Rata Share. To the extent any Buyer Indemnitee has made a claim for indemnification prior to the twelve (12) month anniversary of the Closing Date, the release of any shares then remaining in the Holdback Shares will be reduced by the aggregate amount of any Losses which the Buyer, acting in good faith, reasonably estimates to have been incurred or reasonably estimated to be incurred by a Buyer Indemnitee with regard to all such pending claims. Any funds retained will be released within three (3) Business Days following final resolution of any such pending claim in accordance with Section 8.7(a).
Holdback Shares. Nothing contained in this Section 3.2 will be construed to require Buyer to hold Shares in escrow in any fiduciary capacity or to treat any Shares held in the Escrow in any manner other than as collateral security for the indemnified liabilities and the obligations of Seller and Selling Principal’s obligations under this Agreement. The rights of Buyer under this Section 3.2 will not be exclusive, and Buyer, at its option, will be entitled to proceed against Seller and Selling Principal to recover any monies which become due to it under this Agreement.
Holdback Shares. On the Closing Date the Buyer shall retain the Holdback Shares to be held by the Buyer (“Escrow Agent”) in escrow to satisfy any claims by Buyer against Seller or Shareholders for a period of up to one (1) year after the Closing Date (the “Escrow Period”), in accordance with the terms of this Agreement. At the end of each calendar month during the Escrow Period Buyer shall, in good faith, determine the amount of any claims under this Agreement and deliver to the Seller notice of the number of Holdback Shares to be disbursed to address any such claims by Buyer. Following the expiration of the Escrow Period, Buyer shall cause the remaining balance of the Holdback Shares, after the payment of all such claims and reservation of amounts reasonably deemed sufficient to satisfy unresolved claims, to be distributed by the Escrow Agent to Seller within five (5) Business Days in accordance with the terms of this Agreement. The costs and expenses associated with the establishment and maintenance of the Holdback Shares shall be borne by the Buyer.
Holdback Shares. “Holdback Shares” shall mean a number of Acquirer Shares equal to $500,000 divided by the Acquirer Stock Price, rounded to the nearest whole share.
Holdback Shares. (a) On the Closing Date, Parent shall issue and set aside an aggregate number of shares of Parent Common Stock equal to the Indemnity Amount (the “Indemnity Holdback Fund”). The Indemnity Holdback Fund will be available to hold harmless and indemnify each of the Parent Indemnified Persons in accordance with, and subject to the terms and limitations of, Section 5. The Indemnity Holdback Fund shall be held by Parent in trust and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any Person, and shall be held and disbursed solely for the purposes and in accordance with the terms of this Agreement. Except to the extent permanently retained by Parent or released to a Parent Indemnified Person pursuant to this Section 1.8 or Article 5, the Parent Common Stock included in the Indemnity Holdback Fund shall be legally outstanding under applicable state law as of the Effective Time, shall be treated by Parent as issued and outstanding capital stock of Parent (including being shown on Parent’s financial statements), and such shares shall be treated as owned by the Stockholders from the Effective Time (notwithstanding that Parent sets aside or retains such shares). The Stockholders will be entitled to exercise voting rights and receive dividends (provided that any stock dividends shall be withheld by Parent and included as part of the Indemnity Holdback Fund), in each case with respect to such Parent Common Stock, and no portion of such Parent Common Stock shall be treated as “imputed interest” upon delivery by Parent to the Stockholders.
(b) Within five Business Days following the date that is 12 months after the Closing Date (the “Indemnity Holdback Release Date”), Parent shall release to each Stockholder its Pro Rata Interest of a number of shares of Parent Common Stock equal to (i) the Indemnity Amount less (ii) any shares deducted from the Indemnity Holdback Fund to satisfy obligations pursuant to any fully determined Third Party Claim or a Direct Claim by a Parent Indemnified Person pursuant to Section 5; provided, that if on or prior to the Indemnity Holdback Release Date, a Parent Indemnified Person has delivered to the Seller’s Representative a Third Party Claim or a Direct Claim Notice containing a claim which has not been resolved prior to such release, Parent shall hold back from such distribution and retain a number of shares of Parent Common Stock equal to the quotient of (A) the amount of damag...
Holdback Shares. The Holdback Shares shall be registered in the name of the Target Shareholder, and shall be held by the Acquiror, in its capacity as Holdback Agent, such shares and any Additional Holdback Shares to constitute the Holdback Fund and to be governed by the terms set forth herein. In the event Acquiror issues any Additional Holdback Shares, such shares will be issued in the name of the Target Shareholder and held by the Holdback Agent in the same manner as the Holdback Shares delivered at the Closing. Once released from the Holdback Fund, shares of Acquiror Common Stock shall cease to be Holdback Shares and Additional Holdback Shares.
Holdback Shares. The Holdback Shares shall be registered in the name of the Shareholders’ Representative and shall be delivered to and held by the Holdback Agent in accordance with the terms set forth herein and the terms of the Holdback Escrow Agreement (as defined in Section 9.4). In the event RDSI issues any Additional Holdback Shares, such shares will be issued in the name of the Shareholders’ Representative and delivered to and held by the Holdback Agent in the Holdback Fund in the same manner as the Holdback Shares.
Holdback Shares. The Escrow Agent shall distribute to each Participating Holder in accordance with such Participating Holder’s Pro Rate Share, subject to the terms and conditions of the Escrow Agreement, on the date that is the 366th day after the Closing Date, all of the then remaining Holdback Shares representing a value (based on the closing sale price per share of HoldCo Common Stock on Nasdaq, as reported in the New York City edition of The Wall Street Journal (or, if not reported thereby, as reported in another authoritative source) on the 365th day after the Closing Date) in excess of the sum of any amounts with respect to (i) which any Parent Entity or Surviving Corporation is entitled to, but has not yet received, indemnification, pursuant to this Article VIII (plus the amount of any income earned on such amount) and (ii) any unresolved claims for indemnification on such date (plus the amount of any income earned on such amount).