Common use of Net Working Capital Adjustment Clause in Contracts

Net Working Capital Adjustment. Within fourteen (14) days after the Closing Date (the “Net Working Capital Review Period”), the Parties shall work in good faith to jointly prepare a statement setting forth their calculation of Net Working Capital, which statement shall contain a balance sheet of the Company estimated in good faith as of the Closing Date (without giving effect to the transactions contemplated herein), and a good faith calculation of Closing Working Capital (the “Net Working Capital Statement”). If Net Working Capital is positive, on or prior to the end of the Net Working Capital Review Period, Buyer shall pay Sellers an amount equal to the Net Working Capital relating to (x) prepaid expenses and (y) accounts receivable and inventory which have been paid or sold, respectively, after Closing but prior to the end of the Net Working Capital Review Period. On a monthly basis thereafter, to the extent Net Working Capital was not paid in full in accordance with the preceding sentence, Sellers may submit to Buyer a statement calculating the amount of accounts receivable and inventory that have been paid or sold, respectively, after the Net Working Capital Review Period. No later than ten (10) business days after receipt of each such statement, Buyer shall pay Sellers an amount equal to the portion of Net Working Capital which relates to accounts receivable and inventory that has been paid or sold, respectively, after the Net Working Capital Review Period, which has not yet been paid; provided that, Buyer’s payments hereunder shall in no event exceed the Net Working Capital as determined in the Net Working Capital Statement. For the avoidance of doubt, the amounts payable hereunder are in addition to the amounts payable with respect to the Purchase Price and Earn- Out Payment.

Net Working Capital Adjustment. Within fourteen The Aggregate Merger Consideration to be paid by Parent pursuant to Section 1.8 hereof shall be adjusted in accordance with Schedule 1.8 which contains calculations to adjust for changes in net working capital of the Company from a target net working capital of $800,000 (14the “Target Net Working Capital”). In connection therewith, on or before the Closing, the Company shall prepare and deliver to Parent a calculation of the estimated net working capital of the Company as of the Saturday first preceding the Closing (the “Estimated Net Working Capital”). For purposes hereof, the Estimated Net Working Capital of the Company shall be calculated in the same manner and subject to the same adjustments as provided in this Section 1.8(b)(iii) and Schedule 1.8 with respect to the determination of the Final Net Working Capital Schedule (as defined below) (except that such Estimated Net Working Capital calculation shall not be audited). (A) If the Estimated Net Working Capital is equal to or greater than the Target Net Working Capital, then there shall be no adjustment to the Aggregate Merger Consideration based on the Estimated Net Working Capital. If the Estimated Net Working Capital is less than the Target Net Working Capital, then, the Initial Consideration Amount to be paid by Parent pursuant to Section 1.8(a)(i) shall be decreased by an amount equal to the difference between the Target Net Working Capital and the Estimated Net Working Capital (the “Estimated Deficiency Amount”). (B) Promptly following the Closing, the Parent shall prepare at the Parent’s expense and deliver to the Stockholder Representative within sixty (60) days after following the Closing, a balance sheet and a schedule (the “Final Net Working Capital Schedule”) which includes a calculation of the net working capital of the Company on the last business day preceding the Closing Date (the “Final Net Working Capital”). The Final Net Working Capital Review Period”), Schedule will be prepared in accordance with the Parties shall work in good faith to jointly prepare a statement setting forth their calculation terms of Net Working Capital, which statement shall contain a balance sheet of the Company estimated in good faith as of the Closing Date (without giving effect to the transactions contemplated herein), and a good faith calculation of Closing Working Capital (the “Net Working Capital Statement”). If Net Working Capital is positive, on or prior to the end of the Net Working Capital Review Period, Buyer shall pay Sellers an amount equal to the Net Working Capital relating to (x) prepaid expenses and (y) accounts receivable and inventory which have been paid or sold, respectively, after Closing but prior to the end of the Net Working Capital Review Period. On a monthly basis thereafterSchedule 1.8 and, to the extent not expressly provided for herein, on a basis consistent with generally accepted accounting principles (“GAAP”) consistently applied by the Company prior to the Closing. Parent shall after the Closing provide the Stockholder Representative with reasonable access to the Company’s books, records and facilities and to the Company’s employees until issuance of the Final Net Working Capital was not paid in full in accordance with the preceding sentence, Sellers may submit to Buyer a statement calculating the amount of accounts receivable and inventory that have been paid or sold, respectively, after the Net Working Capital Review Period. No later than ten (10) business days after receipt of each such statement, Buyer shall pay Sellers an amount equal to the portion of Net Working Capital which relates to accounts receivable and inventory that has been paid or sold, respectively, after the Net Working Capital Review Period, which has not yet been paid; provided that, Buyer’s payments hereunder shall in no event exceed the Net Working Capital as determined in the Net Working Capital Statement. For the avoidance of doubt, the amounts payable hereunder are in addition to the amounts payable with respect to the Purchase Price and Earn- Out PaymentSchedule.

Net Working Capital Adjustment. The Purchase Price shall be adjusted (such adjustment may be positive or negative), if at all, on a dollar-for-dollar basis as set forth below: (i) Within fourteen two (142) days after Business Days prior to the Closing, the Sellers shall cause the Company to prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and reasonable best estimate of the Net Working Capital of the Company as of the close of business on the Business Day before the Closing Date (the “Estimated Net Working Capital Review PeriodCapital”), the Parties components of which Estimated Net Working Capital shall work be prepared in good faith accordance with the Accounting Principles. If the Estimated Net Working Capital exceeds the Target Net Working Capital, then the Purchase Price payable to jointly the Seller Representative on behalf of the Sellers at the Closing pursuant to Section 2.2 shall be increased by an amount equal to the amount by which the Estimated Net Working Capital exceeds the Target Net Working Capital (the “Preliminary Net Working Capital Excess”). If the Estimated Net Working Capital is less than the Target Net Working Capital, then the Purchase Price payable to the Seller Representative on behalf of the Sellers at the Closing pursuant to Section 2.2 shall be decreased by an amount equal to the amount by which the Target Net Working Capital exceeds the Estimated Net Working Capital (the “Preliminary Net Working Capital Shortfall,” and together with the Preliminary Net Working Capital Excess, the “Estimated Working Capital Adjustment”). (ii) Within ninety (90) calendar days after the Closing Date, Buyer shall prepare and deliver to the Seller Representative an unaudited statement of Net Working Capital of the Company as of the close of business on the Business Day before the Closing Date (the “Statement of Net Working Capital”) which shall also set forth a statement setting forth their calculation of Net Working Capital, which statement shall contain a balance sheet Capital determined from the Statement of the Company estimated in good faith as of the Closing Date (without giving effect to the transactions contemplated herein), and a good faith calculation of Closing Net Working Capital (the “Net Working Capital StatementCalculation”) and the amount, if any, by which the Net Working Capital so determined is less than or greater than the Estimated Net Working Capital (the “Adjustment Calculation”). If The Statement of Net Working Capital, the Net Working Capital is positiveCalculation and the Adjustment Calculation shall be prepared in accordance with the Accounting Principles, provided that the Statement of Net Working Capital, the Net Working Capital Calculation and the Adjustment Calculation shall not have footnotes or other audit disclosures. In the event that the Closing Date does not occur at a financial week- or month-end for accounting purposes, the Parties shall agree on mutually acceptable roll forward or roll back procedures. (iii) On or prior to the end thirtieth (30th) calendar day following Buyer’s delivery of the Statement of Net Working Capital, the Net Working Capital Calculation and the Adjustment Calculation, the Seller Representative may deliver to Buyer a written notice stating in reasonable detail the Seller Representative’s objections (an “Objection Notice”) to the Statement of Net Working Capital or the determination of the Net Working Capital Review PeriodCalculation or the Adjustment Calculation. During such thirty (30) calendar day period, Buyer shall pay provide the Seller Representative and its independent accountants and other authorized representatives with access, at reasonable times and upon reasonable notice, to the Company’s facilities, books and records and its personnel and accountants. Any Objection Notice shall specify in reasonable detail the dollar amount of any objection and the reasonable basis therefore. Any determination set forth on the Statement of Net Working Capital, the Net Working Capital Calculation or the Adjustment Calculation to which the Seller Representative does not object in the Objection Notice shall be deemed acceptable and shall be final and binding upon the Parties upon delivery of the Objection Notice. If the Seller Representative does not deliver to Buyer an Objection Notice within such thirty (30)-day period, then the Statement of Net Working Capital, the Net Working Capital Calculation and the Adjustment Calculation will be conclusive and binding upon the Parties and the Net Working Capital Calculation and the Adjustment Calculation set forth with the Statement of Net Working Capital will constitute the Net Working Capital Calculation and the Adjustment Calculation for purposes of determining additional amounts to be paid from the Sellers to Buyer or from Buyer to the Sellers pursuant to Section 2.3.1(v) below. (iv) Following Buyer’s receipt of any Objection Notice, the Seller Representative and Buyer shall attempt to negotiate in good faith to resolve such dispute. In the event that the Seller Representative and Buyer fail to agree on any of the Seller Representative’s proposed adjustments set forth in the Objection Notice within thirty (30) days after Buyer receives the Objection Notice, the Seller Representative and Buyer agree that an Accounting Arbitrator shall make the final determination regarding the proposed adjustments set forth in the Objection Notice that are not resolved by the Seller Representative and Buyer (the “Net Working Capital Disputed Items”); provided that if the Parties are unable to agree on a Neutral Accounting Firm to act as Accounting Arbitrator, each of Buyer, on the one hand, and the Seller Representative, on the other hand, shall select a Neutral Accounting Firm and such firms together shall select the Neutral Accounting Firm to act as the Accounting Arbitrator. The Buyer and the Seller Representative shall use reasonable efforts to cause the Accounting Arbitrator to render a decision resolving the matters in dispute within 30 days following the submission of such matters to the Accounting Arbitrator. Buyer and the Seller Representative each shall provide the Accounting Arbitrator with their respective determinations of the Net Working Capital Disputed Items. The Accounting Arbitrator shall make an independent determination on the Net Working Capital Disputed Items and the resultant Net Working Capital Calculation that shall be final and binding on the Sellers and Buyer. The determination of the Net Working Capital Disputed Items by the Accounting Arbitrator shall be based on whether such Net Working Capital Disputed Items have been calculated in accordance with the standards set forth in this Agreement, and the Accounting Arbitrator is not to make any other determination. The Accounting Arbitrator shall not assign a value to any item greater than the greatest value for such item claimed by Buyer or the Seller Representative or less than the smallest value for such item claimed by Buyer or the Seller Representative and shall be limited to the selection of either Buyer’s or the Seller Representative’s position on a disputed item (or a position in between the positions of Buyer and the Seller Representative) based solely on presentations and supporting material provided by the Parties and not pursuant to any independent review. The Accounting Arbitrator shall not impose an alternative resolution outside the bounds set in the preceding sentence. Buyer and the Seller Representative shall make readily available to the Accounting Arbitrator all relevant books and records relating to the Net Working Capital Calculation and all other items reasonably requested by the Accounting Arbitrator. The fees, costs and expenses of the Accounting Arbitrator shall be paid pro rata by each Party in relation to the proportional difference between the Accounting Arbitrator’s final determination of the Net Working Capital Calculation (and the other price adjustments called for by this Section 2.3) and each Party’s Net Working Capital Calculation (and such other adjustments). (v) If the Estimated Net Working Capital exceeds the Net Working Capital Calculation, then Buyer shall have the right to be paid out of the Adjustment Escrow, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which the Estimated Net Working Capital relating to (x) prepaid expenses and (y) accounts receivable and inventory which have been paid or sold, respectively, after Closing but prior to the end of exceeds the Net Working Capital Review PeriodCalculation, together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of payment. On a monthly basis thereafter, to the extent Net Working Capital was not paid in full in accordance with the preceding sentence, Sellers may submit to Buyer a statement calculating the amount of accounts receivable and inventory that have been paid or sold, respectively, after If the Net Working Capital Review Period. No later than ten (10) business days after receipt of each such statementCalculation exceeds the Estimated Net Working Capital, then Buyer shall pay to the Seller Representative on behalf of the Sellers by wire transfer of immediately available funds, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, an amount equal to the portion of Net Working Capital amount by which relates to accounts receivable and inventory that has been paid or sold, respectively, after the Net Working Capital Review Period, which has not yet been paid; provided that, Buyer’s payments hereunder shall in no event exceed Calculation exceeds the Estimated Net Working Capital (Buyer to pay each Seller his or its pro rata share of such shortfall), together with interest thereon at the Prime Rate (as determined in of the Net Working Capital Statement. For Closing Date) from the avoidance Closing Date to and including the date of doubt, the amounts payable hereunder are in addition to the amounts payable with respect to the Purchase Price and Earn- Out Paymentpayment.