Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities. (b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement. (c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price. (d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses. (e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative. (f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative. (g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties. (h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Purchase and Sale Agreement (Caci International Inc /De/)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior Prior to the Closingexecution and delivery of this Agreement, the Company shall prepare and deliver has delivered to the Buyer a certificate setting forth the Company’s itemized good faith calculation of (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth Working Capital prepared in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Balance Sheet Principles (such estimate, “Estimated Working Capital”), (ii) the Closing Net Cash (such estimate, “Estimated Net Cash”) and in a manner consistent with (iii) the applicable definitions contained in this Agreement. From and after delivery Company’s calculation of the Estimated Unadjusted Cash Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price Amount in accordance with Section 3.1 as a result of the amounts set forth estimates described in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens foregoing clauses (i) arising under the Securities Act and applicable state securities Laws or through (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation currency conversions made in preparation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership foregoing will be made at the Monthly Exchange Rate as of the Purchased SecuritiesClosing Date.
(b) Within ninety (90) 90 calendar days following after the Closing Date, the Buyer shall will in good faith prepare and deliver to the Seller Representative (i) Company an unaudited consolidated balance sheet of the Company Entities Transferred Assets, as of the Adjustment Calculation Time close of business on the Closing Date (the “Closing Balance Sheet”). The Closing Balance Sheet will be prepared in accordance with the Balance Sheet Principles and will be accompanied by a certificate based on such Closing Balance Sheet setting forth the Buyer’s itemized good faith calculation of (i) the Closing Working Capital, and (ii) a statement the Closing Net Cash and (iii) the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Final Cash Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Amount and the calculation amount of the Purchase Price resulting therefromadjustment pursuant to Section 3.3(f), if any, in each case, based on case calculated in accordance with this Section 3.3 (the “Closing Balance Sheet. The Certificate” and together with the Closing Balance Sheet, the “Closing Cash-on-Hand, Statements”). Any currency conversions made in preparation of the foregoing will be made at the Monthly Exchange Rate as of the Closing Indebtedness and the Closing Net Working Capital Date. The Company shall each be calculated in accordance cooperate with the Agreed Accounting Principles and Buyer in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt preparation of the Closing Balance Sheet and the Closing Statementprovide access to such employees, Buyer shalldocuments, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and accounting records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent as may be reasonably requested by the Seller Representative or any of its Representatives Buyer in connection with their review of therewith. The Company and the Buyer acknowledge and agree that, for all purposes under this Article III, including the preparation and delivery of, and any related calculations made in connection with, the certificate delivered pursuant to Section 3.3(a), the Closing Statements pursuant to this Section 3.3(b) and the Adjustment Report pursuant to Section 3.3(1) (and all determinations and calculations made by the Accountant pursuant to Sections 3.3(d), 3.3(e) and 3.30), in the event that the Balance Sheet and Principles conflict with U.S. GAAP, the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementPrinciples shall prevail.
(c) The Closing Balance Sheet, Company shall have 60 calendar days from the date on which the Closing Statement Statements are delivered to it to review such documents, books and accounting records of the Buyer used to prepare the Closing Statements as may be reasonably requested by the Company. If the Company in good faith disagrees in any respect with any item or amount shown or reflected in the Closing Statements it may, within such 60-day period, deliver to the Buyer a notice setting forth, in reasonable detail, each disputed item or amount and the basis for the Company’s disagreement therewith, together with, if applicable, supporting calculations (the “Dispute Notice”). If no Dispute Notice is received by the Buyer on or prior to the end of siich 60 calendar day period, or if the Company notifies the Buyer in writing that it accepts such Closing Cash-on-HandStatements as prepared by the Buyer, the such Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Statements shall become final and binding upon and shall be the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of DisagreementFinal Closing Statements”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If Within 30 calendar days after the Buyer’s receipt of a timely Dispute Notice, unless the matters in the Dispute Notice have otherwise been resolved by mutual agreement of Disagreement is delivered the Buyer and the Company, the Buyer and the Company shall jointly retain Xxxxx Xxxxxxxx LLP (the “Accountant”) to review this Section 3.3 (and any related definitions) and the Dispute Notice for the purpose of calculating the Final Cash Closing Amount. If Xxxxx Xxxxxxxx LLP does not agree to be the Accountant, the Buyer and the Company shall mutually agree upon and jointly retain another independent accounting firm of national reputation (which may be the accounting firm regularly retained by either party). In such case, if the Buyer and the Company cannot agree on the accounting firm to be retained, each shall submit the names of two firms (provided that no such firm has a conflict of interest). Each of the Buyer and the Company may strike the name of one of the two names submitted by the Seller Representative to Buyer in accordance with Section 1.05(c), then other and the Accountant shall be selected by lot from the remaining firms.
(e) The Accountant shall conduct such review of the Closing Balance Sheet Statements that are the subject of such Dispute Notice, such Dispute Notice and any supporting documentation as the Accountant in its sole discretion deems necessary, and the Accountant shall conduct such hearings or hear such presentations by the parties as the Accountant in its sole discretion deems necessary. In its review and calculation of the Final Cash Closing Statement Amount, such Accountant shall (as revised i) be limited to a review of whether the disputed amounts were calculated in accordance with this Section 1.05(d)3.3 (and any related definitions), (ii) consider only those items or amounts in the Dispute Notice as to which the Company has disagreed and shall therefore be bound as to all other matters and calculations as to which the Closing Statements and the Closing Cash-on-HandDispute Notice are in accord, (iii) be bound in all respects and for all purposes by the Closing Indebtedness, the Closing Net Working Capital definitions hereof and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of DisagreementPrinciples , and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute disputed amount greater than the greatest value for such item assigned higher of the amounts proposed by Buyer, on the one hand, or Buyer and the Seller Representative, on the other hand, Company or less than the smallest value for such item assigned lower of the amounts proposed by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative Company, and (iv) not consider in any respect or for any purpose any settlement discussions or settlement offer made by or on behalf of the Buyer or the Company, unless otherwise agreed by the Buyer and the Company, and no party hereto will disclose (or permit its representatives to disclose) to the Accountant any such discussions or offer.
(f) The Accountant shall, as promptly as practicable and in no event later than 30 calendar days following its retention by the Buyer and the Company, deliver to the Buyer and the Company a written report (the “Adjustment Report”) setting forth its calculation of Final Cash Closing Amount. The Adjustment Report shall also instruct set forth, in reasonable detail, the Arbiter toAccountant’s determination with respect to each of the disputed items or amounts specified in such Dispute Notice, and the Arbiter shallrevisions, make its determination based solely on written presentations by Buyer and if any, to be made to the Seller Representative Closing Statements that are in accordance the subject of such Dispute Notice, together with supporting calculations. Such Closing Statements, as so adjusted by the guidelines and procedures set forth in this Agreement and not on Accountant, shall be the basis of an independent reviewFinal Closing Statements. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Adjustment Report shall become be final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)parties, absent arithmetical error, and such resolution by the Arbiter shall not be deemed an award subject to court review under the Federal Arbitration Act or otherwise appealable, absent manifest error or manifest failure similar statute. The cost of such review and report shall be borne by the Arbiter to adhere party against whom the disagreement is resolved as determined by the Accountant; provided, however, that if the resolution favors both parties or does not favor either party, such costs shall be borne pro rata by the Company and the Buyer in proportion to the requirements of this Agreement. The Seller Representative (on behalf of extent the Sellers) shall pay disagreement is resolved against a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed particular party as determined by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesAccountant.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare cause to be prepared and deliver delivered to Buyer Purchaser a statement of Seller’s good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities Net Working Capital (as defined below) as of the Adjustment Calculation Time end of business on the Closing Date (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the (ii) Estimated Working Capital Adjustment (as defined below). The calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital and Estimated Working Capital Adjustment (as defined below) shall each be calculated prepared by the Company in accordance with the Agreed Accounting Principles same accounting methods, practices and principles used in a manner consistent with the applicable definitions contained in this Agreementpreparation of the Reference Statement. From If Estimated Closing Working Capital is (i) greater than or equal to the Lower Working Capital Collar and after delivery of less than or equal to the Upper Working Capital Collar, then the Purchase Price payable at Closing will be unchanged (“Closing Working Capital Neutral Amount”), (ii) greater than the Upper Working Capital Collar, then the Purchase Price payable at Closing will be increased by an amount equal to Estimated Closing Working Capital minus the Upper Working Capital Collar (“Closing Working Capital Excess”) and (iii) if the Estimated Closing Balance Sheet and Working Capital is less than the Lower Working Capital Collar, then the Purchase Price payable at Closing will be decreased by an amount equal to the Lower Working Capital Collar minus the Estimated Closing Statement until Working Capital (“Closing Working Capital Deficiency”). “Estimated Working Capital Adjustment” means the Closingchange to Purchase Price payable at Closing by an amount equal to either the Closing Working Capital Neutral Amount, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to Closing Working Capital Excess or the books and records Closing Working Capital Deficiency. “Net Working Capital” means the Current Assets of the Company Entities and to senior management personnel less the Current Liabilities of the Company EntitiesCompany, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review determined as of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review end of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following business on the Closing Date, Buyer shall prepare applied with the same accounting methods, practices, principles, policies and deliver to procedures used in the Seller Representative (i) an unaudited consolidated balance sheet preparation of the Company Entities as of the Adjustment Calculation Time (the Reference Statement. “Closing Balance Sheet”)Current Assets” means accounts receivable, deposits and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Handprepaid expenses, the Closing Indebtedness, the Closing Net Working Capital but excluding deferred tax assets and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds receivables from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.Company’s Affiliates, directors, employees, officers or stockholders and any of their Affiliates. “Current Liabilities” means accounts payable, accrued
Appears in 1 contract
Purchase Price Adjustment. (a) As of the Effective Date, the Purchase Price shall be increased or decreased, as the case may be, on a dollar-for-dollar basis by the amount by which the Assumed Current Liabilities is greater or less than $1,500,000 (the “Liabilities Target”); provided, however, in no event shall there be any adjustment pursuant to this Section 3.2 resulting from reserves for bad debt, inventory obsolescence, and/or contractual allowances.
(b) The Purchase Price shall be subject to adjustment, if any, as specified in this Section 3.2(b).
(i) At least three (3) two Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Representative shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet a statement of the Company Entities Assumed Current Liabilities as of the Adjustment Calculation Time Effective Date (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Initial Draft Assumed Liabilities Closing Statement”) setting prepared by Sellers. The Initial Draft Assumed Liabilities Closing Statement shall be prepared in conformity with the definition of Assumed Current Liabilities and in accordance with the calculations set forth on Schedule 3.2(b).
(ii) As soon as practicable following the Closing, with the assistance of the Company’s accountants, Buyer shall prepare a statement of Assumed Current Liabilities as of the Effective Date (the “Second Draft Assumed Liabilities Closing Statement”). The Second Draft Assumed Liabilities Closing Statement shall be prepared in conformity with the definition of Assumed Current Liabilities and in accordance with the calculations set forth on Schedule 3.2(b). Buyer shall deliver the Second Draft Assumed Liabilities Closing Statement to the Representative not later than 90 calendar days following the Closing Date.
(iii) The Second Draft Assumed Liabilities Closing Statement shall be final and binding upon the Parties, and shall be deemed to be the Assumed Liabilities Closing Statement, (as defined below) unless, within 30 calendar days after receipt of the Second Draft Assumed Liabilities Closing Statement from Buyer, the Representative shall provide to Buyer a report indicating its objections to the Second Draft Assumed Liabilities Closing Statement. Any such objections shall be set forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand in a report (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working CapitalRepresentative’s Report”) and that shall indicate the calculation of grounds upon which the Purchase Price resulting therefrom (Representative disputes that the “Estimated Purchase Price”), in each case, based on the Estimated Second Draft Assumed Liabilities Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated Statement has been prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in requirements of this Agreement. From and after delivery of Buyer shall provide to the Estimated Closing Balance Sheet Representative reasonable access (at such time as reasonably agreed to between Buyer and the Estimated Closing Statement until the ClosingRepresentative), the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice hours, to the books and records of the Company Entities and to senior management the Company’s personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives and accountants in connection with their review the Representative’s preparation of the Estimated Closing Balance Sheet and Representative’s Report, provided that the Estimated Closing Statement, and Representative shall not interfere with the Business in the exercise of such right.
(yiv) cooperate with Within 15 calendar days after the receipt by Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and Representative’s Report, the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds Representative and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect endeavor in good faith to the allocation of the Purchase Price among such Sellers shall not interfere agree on any matters in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesdispute.
(bv) Within ninety (90) If Buyer and the Representative are unable to agree on any matters in dispute within 15 calendar days following after receipt by Buyer of the Closing DateRepresentative’s Report, Buyer shall prepare and deliver the matters in dispute will be submitted for resolution to the Seller office of Ernst & Young located in Boston, Massachusetts or such other independent accounting firm of regional or national reputation as may be mutually acceptable to Buyer and the Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance SheetIndependent Accounting Firm”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed which Independent Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer Firm shall, within 30 calendar days after such submission, determine and shall cause issue a written report to the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company EntitiesBuyer regarding, in each casesuch disputed items, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon which written report shall become be final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”)Parties. The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith cooperate with each other and each other’s representatives to resolve in writing any differences that they may have with respect enable the Independent Accounting Firm to the matters specified in the Notice of Disagreement, render a written report as promptly as possible. The fees and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 expenses of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer Independent Accounting Firm shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned be borne equally by Buyer, on the one hand, or the Seller Representativeand Sellers, on the other hand, or with one Party reimbursing the other, if necessary, following such determination. In acting under this Agreement, the Independent Accounting Firm shall be entitled to the privileges and immunities of arbitrators.
(vi) The statement of Assumed Current Liabilities incorporating the resolution of matters in dispute with respect to Assumed Current Liabilities (or, if a Representative’s Report is not provided within the time prescribed in Section 3.2(b)(iii), the Second Draft Assumed Liabilities Closing Statement) is referred to as the “Assumed Liabilities Closing Statement.” The Assumed Liabilities Closing Statement shall be final, binding and conclusive on the Parties.
(vii) If the Assumed Current Liabilities calculated by reference to the Assumed Liabilities Closing Statement (the “Final Assumed Current Liabilities”) are less than the smallest value for Liabilities Target, the Purchase Price shall be increased on a dollar-for-dollar basis by an amount equal to such item assigned shortfall (the “Assumed Liabilities Shortfall”). In such event, Buyer shall pay to Sellers the amount of the Assumed Liabilities Shortfall. If the Final Assumed Current Liabilities are greater than the Liabilities Target, the Purchase Price shall be decreased on a dollar-for-dollar basis by Buyeran amount equal to such surplus (the “Assumed Liabilities Surplus”). In such event, on Sellers shall pay to Buyer the one hand, or amount of the Seller Representative, on Assumed Liabilities Surplus.
(viii) Any payment of Assumed Liabilities Surplus to be made by Sellers pursuant to Section 3.2(b)(vii) shall be paid by Sellers in cash within ten calendar days after the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations date of receipt by Buyer and the Seller Representative that are in accordance with of the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Assumed Liabilities Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties as finally established pursuant to this Section 1.05, make 3.2. Any payment of Assumed Liabilities Shortfall to be made by Buyer pursuant to Section 3.2(b)(vii) shall be paid in cash within ten calendar days after the Adjustment Amount, date of receipt by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after of the Closing Balance Sheet, the Assumed Liabilities Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties as finally established pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account3.2. If the Excess Amount is less than the Escrow Funds (such shortfallapplicable, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred all payments shall be made to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account Sellers on a pro rata basis in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.Schedule A.
Appears in 1 contract
Samples: Stock Purchase Agreement (Critical Homecare Solutions Holdings, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than Within seventy-five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9075) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Representative a written statement setting forth (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s good faith calculation of the Closing Cash-on-HandDate Net Working Capital (and each component thereof) and, the Closing Indebtednessbased thereon, the Closing Net Working Capital Adjustment Amount, the Closing Cash (and each component thereof), the Closing Funded Indebtedness (and each component thereof) and the Closing Transaction Expenses (and each component thereof), which written statement shall contain reasonably detailed support for each calculation set forth therein and (ii) based thereon, its calculation of the Aggregate Consideration and the Net Positive Purchase Price Adjustment Amount or Net Negative Purchase Price Adjustment Amount assuming the amounts set forth in the Purchase Price Adjustment Statement were final (the “Purchase Price Adjustment Statement”).
(b) Following the delivery of the Purchase Price resulting therefromAdjustment Statement, in each case, based on Seller shall have sixty (60) days (the Closing Balance Sheet. The Closing Balance Sheet, “Review Period”) to review the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementPurchase Price Adjustment Statement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing StatementReview Period, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management its Subsidiaries through the Closing Date and relevant personnel of the Company Entitiesin connection therewith, in each case, and work papers prepared by Buyer or Buyer’s accountants to the extent reasonably requested by that they relate to the Purchase Price Adjustment Statement; provided, however, that such access shall be in a manner that does not unreasonably interfere with the normal business operations of Buyer, the Company or its Subsidiaries. For the purposes of this Agreement, the Closing Date Net Working Capital shall be calculated in accordance with this Agreement (including the items and exclusions set forth on Section 1.1(a) of the Seller Representative or any of its Representatives Disclosure Schedule) and with IFRS applied using the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used in connection with their review the preparation of the Closing Balance Sheet and the Closing Statement, and Financial Statements (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement“IFRS Consistently Applied”).
(c) If Seller disagrees with the calculation of any of the items set forth in the Purchase Price Adjustment Statement, Seller shall notify Buyer in writing of such disagreement (an “Objection Dispute”) on or prior to the last day of the Review Period. Any Objection Dispute shall specify in reasonable detail the nature of any disagreement so asserted, and include reasonable supporting documentation. If Seller fails to deliver an Objection Dispute before the expiration of the Review Period, the Purchase Price Adjustment Statement shall be deemed to be the final Purchase Price Adjustment Statement (the “Final Purchase Price Adjustment Statement”) and shall be deemed to be final and binding on Buyer, the Company, and Seller for purposes of this Agreement. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing IndebtednessDate Net Working Capital, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance SheetAdjustment Amount, the Closing Statement Cash, the Closing Funded Indebtedness and the Closing Cash-on-HandTransaction Expenses, each as shown on the Final Purchase Price Adjustment Statement, shall be referred to as the “Final Closing Indebtedness, Date Net Working Capital,” the “Final Closing Net Working Capital Adjustment Amount,” the “Final Closing Cash,” the “Final Closing Funded Indebtedness” and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the “Final Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceTransaction Expenses,” respectively.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysFor purposes of this Agreement, but no more than five (5) Business Days, prior the “Adjustment Amount” shall be the absolute value of the difference between the Purchase Price and the Estimated Purchase Price as finally determined pursuant to this Section 1.4. After the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities Purchase Price will be increased or decreased, on a dollar-for-dollar basis, as of applicable, by the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesAmount.
(b) Within No later than ninety (90) days following the Closing Date, Buyer the Purchaser shall prepare and deliver to the Seller Sellers’ Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Date Statement”) setting forth in reasonable detail Buyer’s providing (i) its calculation of (A) the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Date Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and Amount (prepared in a manner consistent with the applicable definitions principles contained in this Agreement. the Net Working Capital Schedule) and the Working Capital Adjustment, if any, (B) the Closing Cash and Cash Equivalents, (C) the Closing Date Indebtedness and (D) the Unpaid Transaction Expenses and (ii) based on the amounts set forth in clause (i), the Purchase Price and the Adjustment Amount, together with reasonable supporting detail and documentation (collectively, the “Post-Closing Deliveries”).
(c) During the thirty Dispute Period and Resolution Period (30) days immediately following each as defined below), the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and Purchaser shall cause the Company Entities to, Group to (xi) provide the Seller Sellers’ Representative and its Representatives with reasonable access at all reasonable times authorized Representatives, during normal business hours and upon reasonable prior notice notice, reasonable access to the such senior finance employees, relevant Representatives, documents, books and accounting records (including internal work papers, schedules, memoranda and other documents) and supporting data as may be reasonably requested by or at the direction of the Company Entities Sellers’ Representative in connection with its (and to senior management personnel its Representatives’) review of the Company EntitiesPost-Closing Deliveries, in each case, solely to the extent reasonably requested by related to the Seller Representative or any of its Representatives in connection Post-Closing Deliveries; provided that such access does not unreasonably interfere with their review the conduct of the Closing Balance Sheet and the Closing Statement, Business and (yii) cooperate with the Seller Sellers’ Representative and its Representatives authorized Representatives, including the provision on a reasonably timely basis of all information reasonably necessary or useful in connection with their review of analyzing the Post-Closing Balance Sheet and the Closing StatementDeliveries.
(cd) The After receipt of the Post-Closing Balance SheetDeliveries, the Sellers’ Representative shall review the Post-Closing Deliveries and, no later than forty-five (45) days after receipt by the Sellers’ Representative of the Post-Closing Deliveries (the “Dispute Period”), the Sellers’ Representative shall notify the Purchaser in writing that (i) the Sellers’ Representative agrees with the Closing Date Statement and the Closing Cash-on-HandAdjustment Amount (an “Approval Notice”) or (ii) the Sellers’ Representative disagrees with such calculations, identifying with reasonable specificity the Closing Indebtedness, items with which the Closing Net Working Capital Sellers’ Representative disagrees and the Purchase Price set forth thereon basis therefor and proposed amounts (a “Dispute Notice”). The Sellers shall be deemed to have waived any rights to object to the Post-Closing Deliveries unless the Sellers’ Representative delivers a Dispute Notice to the Purchaser within the Dispute Period and, if the Dispute Period expires without the Sellers’ Representative so delivering a Dispute Notice, then the Post-Closing Deliveries shall become final and binding upon on the parties hereto Parties for all purposes of this Agreement and not subject to further audit or arbitration, except to correct manifest clerical or mathematical errors. If the Sellers’ Representative timely delivers to the Purchaser a Dispute Notice, all items in the Post-Closing Deliveries, other than such matters that are specifically disputed in the Dispute Notice, shall be deemed to be irrevocably accepted and agreed to by the Parties, except as necessary to correct manifest clerical or mathematical errors. Upon receipt by the Purchaser of a Dispute Notice, the Purchaser, on the one hand, and the Sellers’ Representative and the Sellers’ Representative’s accountants, on the other hand, will use good-faith efforts during the thirty (30) day period following the date of the receipt by the Purchaser of a Dispute Notice (the “Resolution Period”) to resolve any differences they may have as to the items and amounts set forth in the Dispute Notice. If the Purchaser and the Sellers’ Representative cannot reach written agreement during the Resolution Period, within five (5) Business Days thereafter, their disagreements, limited to only those items and amounts set forth in the Dispute Notice which are still in dispute (the “Remaining Disputes”), shall be promptly submitted to a nationally recognized independent public accounting firm reasonably satisfactory to both the Purchaser and the Sellers’ Representative (the “Independent Accountant”). The Sellers’ Representative and the Purchaser will cooperate fully with the Independent Accountant to facilitate its resolution of the Remaining Disputes, including by providing a written statement that contains the calculations and methodology used to prepare or calculate the Closing Date Statement, the Adjustment Amount and the Remaining Disputes and submitting each of their proposed calculations of the Post-Closing Deliveries; provided, however, notwithstanding anything to the contrary herein, no Party will disclose to the Independent Accountant, and the Independent Accountant will not consider for any purpose, any settlement discussions or settlement offer made by any Party. The Independent Accountant shall determine the Post-Closing Deliveries in accordance with GAAP and the terms of this Section 1.4 and the principles contained in the Net Working Capital Schedule (the “Independent Accountant Determination”); provided that such Independent Accountant Determination of the Adjustment Amount shall be equal to or between the amount of the Adjustment Amount proposed by each of the Purchaser and the Sellers’ Representative, as adjusted for any differences resolved by the Sellers’ Representative and the Purchaser prior to the submission of the Remaining Disputes to the Independent Accountant. Such Independent Accountant Determination shall be completed as promptly as practicable and if possible in no event later than thirty (30) days following the Seller Representative’s receipt thereof unless submission of the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) Remaining Disputes to Buyer prior to such datethe Independent Accountant, which notice shall describe be explained in reasonable detail and confirmed by the nature of such disagreement; providedIndependent Accountant in writing to, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become be final and binding upon on the parties hereto upon the Seller Representative’s deliveryParties for all purposes of this Agreement and not subject to further audit or arbitration, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) correct manifest clerical or mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Priceerrors.
(de) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)The fees, then the Closing Balance Sheet costs and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement expenses of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement Independent Accountant shall be revised to allocated between the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Sellers’ Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or and the Seller RepresentativePurchaser, on the other hand, based upon the percentage that the amount not awarded to the Sellers’ Representative or less the Purchaser pursuant to Section 1.4(d) bears to the amount actually contested by the Sellers’ Representative or the Purchaser, as applicable, such that the prevailing Party pays the lesser proportion of such fees, costs and expenses (for example, if the Sellers’ Representative claims that the appropriate adjustments are $1,000 greater than the smallest value for such item assigned amount determined by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter toPurchaser, and the Arbiter shall, make its determination based solely on written presentations Independent Accountant ultimately resolves the dispute by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere awarding to the requirements of this Agreement. The Seller Sellers’ Representative (on behalf $700 of the Sellers) shall pay a portion of $1,000 disputed, then the fees fees, costs and expenses of the Arbiter equal Independent Accountant will be allocated 70% (i.e., 700 ÷ 1,000) to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission Purchaser and 30% (i.e., 300 ÷ 1,000) to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Sellers’ Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses).
(ef) On the fifth (5th) Business Day after the earliest of (1) the receipt by the Purchaser of an Approval Notice, (2) the expiration of the Dispute Period if the Purchaser has not received an Approval Notice or a Dispute Notice within such period, (3) the resolution by the Sellers’ Representative and the Purchaser of all differences regarding the Closing Date Statement and the Adjustment Amount within the Resolution Period or (4) the receipt of the Independent Accountant Determination, the Adjustment Amount (if any) as agreed or determined pursuant to this Section 1.4, shall be paid as follows:
(i) If the Estimated final Purchase Price is less than the Estimated Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller RepresentativePrice, and (iiA) Buyer the Adjustment Amount is greater than the Adjustment Escrow Amount, then the Purchaser and the Seller Sellers’ Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, shall deliver joint written instructions to the Escrow Agent to cause instructing the Escrow Agent to make payment of deliver to the Escrow Funds Purchaser from the Adjustment Escrow Account all funds contained in the Adjustment Escrow Account, within two ; or (2B) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price Adjustment Amount is greater less than the Purchase Price (such excess, the “Excess Adjustment Escrow Amount”), then Buyer the Purchaser and the Seller Sellers’ Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, shall deliver joint written instructions to the Escrow Agent to cause instructing the Escrow Agent to make payment, within two deliver to (2y) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount Purchaser from the Adjustment Escrow Funds Account an amount equal to the Adjustment Amount and (z) the Sellers the remaining funds contained in the Adjustment Escrow Account. Notwithstanding anything contained herein to the contrary, the Sellers shall have no Liability under this Section 1.4 for any Adjustment Amount in excess of the Adjustment Escrow Amount.
(ii) If the Excess Amount final Purchase Price is less greater than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”)Estimated Purchase Price, then Buyer (A) the Purchaser and the Seller Sellers’ Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, shall deliver joint written instructions to the Escrow Agent to cause instructing the Escrow Agent to pay deliver to the Remaining Escrow Funds Sellers from the Adjustment Escrow Account toall funds contained in the Adjustment Escrow Account, and (B) the Purchaser shall pay to the Sellers the Adjustment Amount by wire transfer of immediately available funds to the account or as directed byaccounts designated by the Sellers’ Representative. Notwithstanding anything contained herein to the contrary, the Seller RepresentativePurchaser shall have no Liability under Section 1.4(f)(ii)(B) for any Adjustment Amount in excess of an amount equal to the Adjustment Escrow Amount.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds For greater clarity, in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source event either Party breaches any provision of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.051.4, without limiting any other remedies available to it, the nondefaulting Party shall be have the exclusive remedies for right to obtain injunctive relief, if necessary, to cause the matters addressed or that could be addressed by breaching Party to comply in a timely manner with its obligations under this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties1.4.
(h) Any The Parties agree to treat any payment made pursuant to this Section 1.05 shall be treated 1.4 as an adjustment to the Purchase Price for U.S. federal income tax all Tax purposes, except as otherwise required by Law.
(i) The Parties agree that the Sellers’ Representative is responsible for directing any Unpaid Transaction Expenses that become payable to any employees following the Closing on account of (1) actions taken by the Sellers or the Sellers’ Representative, (2) actions taken by any Company Group Member on or prior to the Closing Date, or (3) under Contracts at Closing which provide for payments following Closing, in each case as described herein, and that and that no Company Group Member shall be responsible for determining any amounts owed to employees as Unpaid Transaction Expenses pursuant to any of the foregoing clauses (1) through (3).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to Within 75 days after the ClosingClosing Date, the Company shall Buyer will prepare and deliver to Buyer (i) an estimated consolidated the Seller a draft balance sheet of (the “Draft Closing Date Balance Sheet”) for the Company Entities as of the Adjustment Calculation Time (determined on a pro forma basis as though the “Estimated Closing Balance Sheet”), and (iiParties had not consummated the transactions contemplated by this Agreement) along with a statement (the “Estimated Draft Closing Statement”) setting forth in reasonable detail the CompanyBuyer’s good faith estimates calculation of (i) the Closing Cash-on-Hand , (ii) the “Closing Indebtedness, (iii) the Transaction Expenses, (iv) the Net Working Capital, and (v) a recalculation of the Estimated Purchase Price using these recalculated numbers in place of the Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-HandIndebtedness, the Estimated Closing Indebtedness Transaction Expenses and the Estimated Closing Net Working Capital. The Buyer will prepare the Draft Closing Date Balance Sheet using the accounting policies applied by the Company in preparing the Most Recent Balance Sheet and will calculate the Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles sample calculation set forth on Schedule 2.4(a), using the same components (i.e., line items), adjustments and methodologies used in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery calculation of the Estimated Closing Net Working Capital (without introduction of new or different accounting methods, policies, practices, procedures, classifications, judgments, or estimation methodologies). The Buyer will make available to the Seller and its accountants the work papers and back-up materials used in preparing the Draft Closing Date Balance Sheet and the Estimated Draft Closing Statement. The Draft Closing Date Balance Sheet and the Draft Closing Statement until the Closing, the Company shall will entirely disregard (x) provide Buyer any and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to effects on the books and records assets or liabilities of the Company Entities as a result of the transactions contemplated by this Agreement or of any financing or refinancing arrangements entered into at any time by the Buyer or any other transaction entered into by the Buyer in connection with the consummation of the transactions contemplated by this Agreement, and (y) any of the plans, transactions, or changes that the Buyer intends to senior management personnel initiate or make or cause to be initiated or made after the Closing with respect to the Company or the business of the Company Entitiesor its assets, in each case, or any facts or circumstances that are unique or particular to the extent reasonably requested by Buyer or any of its Representatives assets or liabilities. Table of Contents
(b) If the Seller has any objections to the Draft Closing Date Balance Sheet or the Draft Closing Statement, then it must deliver a statement describing its objections in connection with their review of reasonable detail to the Estimated Buyer within 30 days after receiving the Draft Closing Date Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Draft Closing Statement. Provided that The Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet will use reasonable efforts to resolve any such objections themselves through good faith negotiation. If the Parties do not obtain a final resolution within 30 days after the Buyer has received the statement of the Company Entities as of the Adjustment Calculation Time objections, however, Ernst & Young (the “Closing Balance SheetIndependent Accountant”)) will resolve any remaining objections. The Seller, on one hand, and (ii) a statement (the “Closing Statement”) setting forth Buyer, on the other hand, will each pay its own costs and expenses incurred in reasonable detail Buyer’s calculation this Section 2.4(b). The fees and expenses of the Closing Cash-on-HandIndependent Accountant will be proportionately apportioned by the Independent Accountant to the Seller, on the Closing Indebtednessone hand, the Closing Net Working Capital and the calculation of Buyer, on the Purchase Price resulting therefrom, in each caseother hand, based on the Closing Balance Sheet. The Closing Balance Sheet, extent to which the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller RepresentativeSeller, on the other hand, or less than is the smallest value for such item assigned prevailing party in the resolution of each disputed matter. The determination made by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures Independent Accountant will be set forth in this Agreement writing and not on will be conclusive and binding upon the basis of an independent reviewParties. The “Closing Date Balance Sheet, ” means the Draft Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Date Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously Sheet together with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment revisions made pursuant to this Section 1.05 shall be treated as an adjustment 2.4(b), and the “Closing Date Statement” means the Draft Closing Date Statement together with any revisions made pursuant to the Purchase Price for U.S. federal income tax purposes.this Section 2.4(b)
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s (i) its good faith estimates estimate of the (A) Closing Cash-on-Hand Working Capital (the “Estimated Working Capital”), (B) Closing Cash (“Estimated Closing Cash-on-Hand”), the (C) Closing Indebtedness Amount (the “Estimated Closing Indebtedness”), the Closing Net Working Capital and (D) Transaction Expenses (the “Estimated Transaction Expenses”), and (ii) based on the foregoing, the resulting Closing Net Consideration and the Company’s good faith calculation of the Estimated Adjustment Amount (along with reasonable supporting documentation).
(b) No later than seventy-five (75) days after the Closing Date, the Buyer shall deliver to the Seller Representative a written statement (the “Buyer Closing Statement”) setting forth Buyer’s good faith calculation of (i) Closing Working Capital (“Buyer Closing Working Capital”), (ii) Closing Cash (“Buyer Closing Cash”), (iii) Closing Indebtedness Amount (“Buyer Closing Indebtedness”), (iv) Transaction Expenses (the “Buyer Transaction Expenses”) and (v) based on the foregoing, the resulting Closing Consideration and Buyer’s good faith calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementFinal Adjustment Amount. From and after the delivery of the Estimated Closing Balance Sheet and the Estimated Buyer Closing Statement until the Closingdetermination of Final Closing Working Capital, Final Closing Cash, Final Closing Indebtedness and Final Transaction Expenses in accordance with this Section 2.6, Buyer will provide, and cause the Company and its Subsidiaries to provide, the Company shall (x) provide Buyer and its Representatives Seller Representative with reasonable access at all reasonable times (during normal business hours and upon reasonable prior notice notice) to (i) the books books, records, personnel, accountants and records other relevant financial and other information of the Company Entities and to senior management personnel its Subsidiaries, and (ii) copies of the Company Entities, all work papers of their independent accountants in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with necessary to complete their review of the Estimated Closing Balance Sheet and the Estimated Buyer Closing Statement; provided, and (y) cooperate with Buyer and its Representatives in connection with their review however, that the independent accountants of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer Surviving Company shall not be responsible or have obligated to make any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver working papers available to the Seller Representative (i) an unaudited consolidated balance sheet unless and until the Seller Representative has signed a customary confidentiality agreement and a release letter relating to such access to working papers in form and substance reasonably acceptable to such independent accountant. Buyer shall not amend, supplement or modify the Buyer Closing Statement following its delivery to the Seller Representative without the written consent of the Company Entities as of Seller Representative.
(c) If Buyer fails to deliver the Adjustment Calculation Time Buyer Closing Statement within five (the “Closing Balance Sheet”), and (ii5) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately Business Days following the Seller Representative’s receipt delivery of written notice to Buyer of its failure to deliver the Buyer Closing Balance Sheet and the Closing StatementStatement in accordance with Section 2.6(b), (A) Buyer shallwill provide, and shall cause the Company Entities toand its Subsidiaries to provide, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times (during normal business hours and upon reasonable prior notice notice) to (x) the books books, Records, employees, consultants, accountants and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementSubsidiaries, and (y) cooperate with the Seller Representative financial and its Representatives in connection with their review other information, as of the Closing Balance Sheet Date, of the Company and its Subsidiaries and (B) then, at the Seller Representative’s election, either (i) the Estimated Closing Statement, including the Company’s calculation of the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Consideration set forth thereon therein, shall become be final and binding upon Buyer and the parties hereto thirty Securityholders or (30ii) the Seller Representative shall submit the Estimated Closing Statements to the Accounting Firm, together with a notice specifying those items or amounts therein as to which the Seller Representative disagrees and the Seller Representative’s resulting calculation of the Closing Consideration, and shall cause the Accounting Firm to promptly review this Agreement and such items or amounts for the purpose of calculating the Closing Consideration; provided, that with respect to Buyer’s obligations pursuant to the foregoing clause (A), (1) neither Buyer nor the Company shall be required to provide access to any information that based on advice of the Company’s or Buyer’s counsel, would violate applicable Law or fiduciary standards, or would destroy attorney client privilege and (2) no independent accountant of the Surviving Company shall be obligated to make any working papers available to the Seller Representative unless and until the Seller Representative has signed a customary confidentiality agreement and a release letter relating to such access to working papers in form and substance reasonably acceptable to such independent accountant. The Accounting Firm’s review and report pursuant to the immediately preceding clause (ii) shall be performed in accordance with the applicable provisions of Section 2.6(d), mutatis mutandis, except that the Accounting Firm’s review shall be limited to those items or amounts specified in the Seller Representative’s notice delivered pursuant to the immediately preceding clause (ii), and shall be based solely on written or oral materials, presentations and arguments submitted and/or made by the Seller Representative.
(d) If Buyer timely delivers the Buyer Closing Statement in accordance with Section 2.6(b), the Seller Representative may dispute the calculation of Buyer Closing Working Capital, Buyer Closing Cash, Buyer Closing Indebtedness, and/or Buyer Transaction Expenses by notifying Buyer of such disagreement in writing (a “Notice of Objection”), within forty-five (45) days following after the Seller Representative’s receipt thereof unless of the Buyer Closing Statement. The Notice of Objection shall set forth in reasonable detail each item that the Seller Representative gives written notice of its disagreement disputes and the rationale for such objection and resulting proposed calculation (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreementextent it can be reasonably calculated based on the information then available); provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon in no event shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration Representative submit more than one (1) Notice of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement Objection and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified any items not raised in the Notice of Disagreement are finally Objection shall be final, binding and conclusive for all purposes hereunder. In the event that the Seller Representative does not provide a Notice of Objection within such forty-five (45) day period, the Securityholders shall be deemed to have accepted the Buyer Closing Statement delivered by Buyer and Buyer’s calculation of Buyer Closing Working Capital, Buyer Closing Cash, Buyer Closing Indebtedness and Buyer Transaction Expenses set forth therein, which shall then be final, binding and conclusive for all purposes hereunder. In the event any Notice of Objection is timely delivered, Buyer and the Seller Representative shall use their commercially reasonable efforts for a period of thirty (30) days (or such longer period as they may agree in writing) to resolve any disagreements set forth in the Notice of Objection. For purposes of the resolution process, other than with respect to any updates to the Parties’ respective calculations to reflect any disputed items conclusively resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the Parties within thirty (30) days immediately following after the delivery of a the Notice of Disagreement in accordance with Section 1.05(c) Objection to Buyer (or such longer period as the Seller Representative and Buyer they may agree in writing), neither Buyer nor the Seller Representative may change its calculations from the amounts proposed in the Buyer Closing Statement (with respect to Buyer) and Buyer shall seek in good faith to resolve in writing any differences that they may have the Notice of Objection (with respect to the matters specified Seller Representative) without the other party’s written consent. If Buyer and the Seller Representative are unable to resolve such items in dispute (the Notice “Unresolved Items”) by the end of Disagreementsuch period then, at any time thereafter, either the Seller Representative or Buyer may require that the Accounting Firm resolve the Unresolved Items. For the avoidance of doubt, the Accounting Firm shall only resolve the Unresolved Items and all such discussions related thereto shall (unless otherwise agreed not any disagreements that have been resolved by the Parties. In connection with engaging the Accounting Firm, each of Buyer and the Seller Representative agrees, if requested by the Accounting Firm, to work with the Accounting Firm to negotiate and execute an engagement letter on terms reasonably satisfactory to both Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter toAccounting Firm to determine as promptly as practicable, and in any event within thirty (30) days after the Arbiter shalldate on which such dispute is referred to the Accounting Firm, make a final determination based solely on the provisions of the items included and definitions contained in the Closing Balance Sheet this Agreement and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines written and procedures set forth in this Agreement. Buyer and oral presentations by the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not toBuyer, and not on an independent review, whether and to what extent (if any) the Arbiter shall notcalculations of Closing Working Capital, Closing Cash, Closing Indebtedness Amount and/or Transaction Expenses (including the components thereof) require adjustment; provided, however, that in resolving any Unresolved Item, the Accounting Firm may not assign a value to any item in dispute greater than the greatest value for of such item assigned claimed by Buyer, on the one hand, Buyer or the Seller Representative, on the other hand, Representative or less than the smallest value for such item assigned claimed by either Buyer or the Seller Representative. The fees and expenses of the Accounting Firm shall be allocated between Buyer, on the one hand, or and the Securityholders in accordance with the Allocation Schedule (which may be paid by the Seller RepresentativeRepresentative out of the Seller Representative Holdback Amount), on the other hand, based upon the percentage which the portion of the contested amount not awarded to each party bears to the amount actually contested by such party. For example, should the items in dispute total in amount to $1,000 and the Accounting Firm awards $600 in favor of the Seller Representative’s position, 60% of the costs payable to the Accounting Firm would be borne by Buyer and 40% of the costs would be borne by the Seller Representative (for the account of the Securityholders). The determination of the Accounting Firm shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on be set forth in a written presentations by Buyer and statement delivered to the Seller Representative that are and Buyer and shall be final, conclusive and binding on the Parties. The determination of the Accounting Firm shall be fully enforceable by a court of competent jurisdiction in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements terms of this Agreement. The Seller Representative (date on behalf of the Sellerswhich Closing Working Capital, Closing Cash, Closing Indebtedness Amount and Transaction Expenses are finally determined in accordance with this Section 2.6(d) shall pay a portion of the fees and expenses of the Arbiter equal is hereinafter referred to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, as the “Adjustment AmountDetermination Date.”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer its good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities Net Working Capital as of the Adjustment Calculation Time Closing Date (the “"Estimated Closing Balance Sheet”Net Working Capital Amount"), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates Inventories as of the Closing Cash-on-Hand Date (the “"Estimated Closing Cash-on-Hand”Inventory Amount"), (iii) the Indebtedness of the Business to be assumed by Buyer (the "Assumed Indebtedness") as of the Closing Indebtedness Date (the “"Estimated Closing Assumed Indebtedness”)") and (iv) the Excess Amount and the Schedule of Consigned Inventory and the components of each such item prepared in accordance with GAAP, on a basis consistent with the Closing Financial Statements and the Accounting Methodologies and, in the case of the Estimated Net Working Capital (the “Amount and Estimated Closing Net Working Capital”) and the Inventory Amount, subject to Section 2.5(e). Seller's calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Amount and Estimated Assumed Indebtedness shall each be calculated used in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of determining the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Cash Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division purposes of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesSection 2.4.
(b) The Base Cash Purchase Price shall be (i) (x) increased, if the Estimated Net Working Capital Amount exceeds the Benchmark, by an amount equal to such excess, or (y) decreased, if the Benchmark exceeds the Estimated Net Working Capital Amount, by an amount equal to such excess and (ii) decreased by any amount of the Estimated Assumed Indebtedness (to the extent not included in the calculation of the Estimated Net Working Capital Amount).
(c) Within ninety sixty (9060) days following after the Closing Date, Buyer shall prepare and deliver to Seller a statement (the Seller Representative "Adjustment Statement") which sets forth in reasonable detail the calculation of (i) an unaudited consolidated balance sheet of the Company Entities Net Working Capital as of the Adjustment Calculation Time Closing Date (the “"Preliminary Net Working Capital Amount"), (ii) the Inventories of the Business as of the Closing Balance Sheet”Date (the "Preliminary Inventory Amount"), (iii) the Assumed Indebtedness as of the Closing Date (the "Preliminary Assumed Indebtedness"), and (iiiv) the Excess Amount and a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation Schedule of Consigned Inventory as of the Closing Cash-on-Hand, Date (the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom"Preliminary Consignment Items"), in each case, from the books and records of the Business. The Adjustment Statement shall be prepared in accordance with GAAP, on a basis consistent with the Financial Statements, and the Accounting Methodologies and, in the case of the Preliminary Net Working Capital Amount and the Preliminary Inventory Amount, subject to Section 2.5(e). Seller agrees to cooperate with Buyer in connection with the preparation of the Adjustment Statement and related information, and shall provide to Buyer such books, records and information as may be reasonably requested by Buyer from time to time in connection with its preparation of the Adjustment Statement.
(d) The amount of Inventory as of the Closing Date set forth in the Adjustment Statement shall be based on the Closing Balance Sheet. The Closing Balance Sheet, Inventory set forth in the Closing Cash-on-HandInventory Report to the extent such items of Inventory are covered by the Physical Inventory Count, together with changes in Inventory from the date of the Physical Inventory Count referred to in Section 2.6 below in relation to the Closing Indebtedness Date and net of any required inventory reserves (with such reserves being calculated on the same bases as the Adjustment Statement).
(e) The amount of Inventories used in the calculation of the Current Assets, Estimated Net Working Capital, Preliminary Net Working Capital, Final Net Working Capital, Estimated Inventory Amount, Preliminary Inventory Amount and the Final Inventory Amount shall not exceed the Inventory Benchmark applicable for the time period in which the Closing Date occurs.
(f) If Seller disagrees with the determination of the Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the Preliminary Assumed Indebtedness or the Preliminary Consignment Items, Seller shall each be calculated notify Buyer in accordance with writing of such disagreement within the Agreed Accounting Principles thirty (30) Business Day period immediately following the delivery of the Adjustment Statement, which notice shall describe the specific nature of any such disagreement and in a manner consistent with the applicable definitions contained in this Agreementprovide reasonable supporting documentation for such disagreement. During the thirty (30) days Business Day period of its review, Seller shall have reasonable access to any documents, schedules or work papers used in the preparation of the Adjustment Statement. Seller agrees that any failure by it to notify Buyer in writing of any such disagreement prior to end of the thirty (30) Business Day period immediately following the Seller Representative’s receipt delivery of the Closing Balance Sheet Adjustment Statement shall be deemed to be an acceptance by Seller of the Adjustment Statement and shall constitute a complete waiver of any right of Seller to dispute such Adjustment Statement and Buyer's calculation of the Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the Preliminary Assumed Indebtedness and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records Preliminary Consignment Items for purposes of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementthis Agreement.
(cg) The Closing Balance Sheet, Buyer and Seller agree to negotiate to resolve any such disagreement regarding the Closing Statement and determination of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Preliminary Net Working Capital Amount, Preliminary Inventory Amount, the Preliminary Assumed Indebtedness or the Preliminary Consignment Items, and the Purchase Price set forth thereon any resolution of such disagreement agreed to in writing by Buyer and Seller shall become be final and binding upon the parties hereto and their successors and assigns. If Buyer and Seller are unable to resolve such disagreement identified by Seller pursuant to Section 2.5(f) within the thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives Business Day period after delivery to Buyer of written notice of its such disagreement by Seller, then the disputed matters shall be referred for final determination to the Settlement Accountant.
(h) Each of Buyer and Seller shall provide a “Notice written submission of Disagreement”their positions on each item in dispute within fifteen (15) days of the appointment of the Settlement Accountant, with a copy to the other party. The Settlement Accountant shall consider only those items and amounts as to which Buyer and Seller have disagreed within the time periods and on the terms specified above and shall resolve the matter in accordance with the terms and provisions of this Agreement, including Section 2.5(e). The Settlement Accountant shall consider only the written submissions provided by Buyer and Seller pursuant to this paragraph (f) and shall not conduct any independent investigation or review. The Settlement Accountant is expressly limited to the selection of either Seller's or Buyer's position on a disputed item or a position in between the positions of Seller or Buyer based upon written submissions of Buyer and Seller and it shall thus select as a resolution for each disputed matter the position of either Buyer or Seller or a position in between the positions of Seller or Buyer, and the Settlement Accountant may not impose an alternative resolution outside those bounds. The Settlement Accountant shall deliver to Buyer prior to such dateand Seller, which notice shall describe as promptly as practicable and in reasonable detail any event within forty-five (45) days after its appointment, a written report setting forth the nature resolution of such disagreement; provided, that (i) each disputed matter and its determination of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Preliminary Net Working Capital and Amount, Preliminary Inventory Amount, the Purchase Price set forth thereon Preliminary Assumed Indebtedness and/or the Preliminary Consignment Items determined in accordance with the terms of this Agreement. Such report shall become final be final, non-appealable and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty fullest extent permitted by Applicable Law and may be enforced in any court having competent jurisdiction. The forty-five (30)-day period, of 45) day period for delivering the written notice to Buyer of its acceptance report may be extended by the mutual written consent of the Closing Balance Sheetparties or for good cause shown by the Settlement Accountant at its sole discretion. The fees, expenses and costs of the Settlement Accountant shall be borne one-half by Buyer and one-half by Seller.
(i) (i)
(a) If no dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Preliminary Net Working Capital and Amount, as originally submitted by Buyer, or (b) if a dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Purchase Price set forth thereonPreliminary Net Working Capital Amount, as determined pursuant to the resolution of such dispute in accordance with Section 2.5(g) or (h), shall be the "Final Net Working Capital Amount", (ii) except (a) if no dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Preliminary Inventory Amount, as originally submitted by Buyer, or (b) if a dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Preliminary Inventory Amount, as determined pursuant to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration resolution of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer dispute in accordance with Section 1.05(c2.5(g) or (h), then shall be the Closing Balance Sheet and the Closing Statement "Final Inventory Amount", (as revised in accordance with this iii) (a) if no dispute notice has been timely delivered by Seller pursuant to Section 1.05(d)2.5(f), and the Closing Cash-on-HandPreliminary Assumed Indebtedness, as originally submitted by Buyer, or (b) if a dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Closing Preliminary Assumed Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised as determined pursuant to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement such dispute in accordance with Section 1.05(c2.5(g) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreementh). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt"Final Assumed Indebtedness", and without limiting (iv) (a) if no dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the generality Preliminary Consignment Items, as originally submitted by Buyer, or (b) if a dispute notice has been timely delivered by Seller pursuant to Section 2.5(f), the Preliminary Consignment Items, as determined pursuant to resolution of the foregoingsuch dispute in accordance with Section 2.5(g) or (h), no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties"Final Consignment Items".
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Purchase and Sale Agreement (International Paper Co /New/)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet Parent its good faith estimate of the Company Entities as calculation of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and ), Selling Expenses, and, in accordance with Section 6.17, the calculation Facilities Renovation Balance (the Company’s good faith estimate of the Purchase Price resulting therefrom Facilities Renovation Balance and Selling Expenses shall be referred to herein as the “Estimated Adjustment Items”).
(b) As promptly as practicable, but no later than ninety (90) days after the Closing Date, Parent shall deliver, or shall cause to be delivered, to the Securityholder Representative a certificate (the “Estimated Purchase PriceClosing Certificate”), setting forth a good faith calculation of Net Working Capital, Selling Expenses, the Facilities Renovation Balance, the Net Adjustment Amount and the amount of any cash or cash equivalents of the Company not distributed or used to retire any portion of Company Debt (“Excess Cash”), in each casecase as of the Closing, based on along with reasonable supporting or underlying documentation used in the Estimated preparation of the Closing Balance Sheet Certificate. Parent shall deliver and including furnish the Estimated Purchased Shares Purchase Price, Securityholder Representative any additional supporting or underlying documentation pertinent to the Estimated CoVant Series LGS Purchased Units Purchase Price, Closing Certificate as may be reasonably requested by the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata PortionSecurityholder Representative. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each Certificate is to be calculated prepared in accordance with the Agreed Accounting Principles with respect to the calculation of Net Working Capital and in a manner consistent with Excess Cash.
(c) If the applicable definitions contained in this Agreement. From and after delivery Securityholder Representative delivers written notice (the “Disputed Items Notice”) to Parent within thirty (30) days following receipt by the Securityholder Representative of the Estimated Closing Balance Sheet and Certificate, stating that the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice Securityholder Representative objects to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds Certificate and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail specifying the nature of such disagreement; providedthe dispute and the basis therefor, that then (i) the Closing Balance SheetSecurityholder Representative and Parent shall in good faith attempt to resolve any such dispute and, if they so resolve all disputes, the Closing Statement Certificate (and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration amount or computation of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each caseSelling Expenses, Facilities Renovation Balance, Excess Cash and the Net Adjustment Amount indicated therein), as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised amended to the extent necessary to reflect any the resolution by of the Seller Representative dispute, shall be conclusive and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty binding on all parties, (30ii) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences only those matters that they may have with respect to the matters are specified in the such Disputed Items Notice of Disagreementshall be deemed to be in dispute, and all such discussions related thereto other matters shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final conclusive and binding on all parties, (iii) in the parties hereto event that the Net Adjustment Amount shown on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested Closing Certificate prepared by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price Parent is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shallpositive, within two (2) Business Days after following the Securityholder Representative’s receipt of the Closing Balance SheetCertificate, the Closing Statement Parent and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Securityholder Representative shall instruct the Escrow Agent to release any funds in the Working Capital and Escrow Account, including interest earned thereon, to the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer Securityholders in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representativeaccordance with their Pro Rata Percentages, and (iiiv) Buyer and in the Seller Representative shallevent that the Net Adjustment Amount shown on the Closing Certificate prepared by Parent is negative, within two (2) Business Days after following the Securityholder Representative’s receipt of the Closing Balance SheetCertificate, Parent and the Securityholder Representative shall instruct the Escrow Agent to release any funds in the Working Capital Escrow Account in excess of the absolute value of the Net Adjustment Amount to the Securityholders in accordance with their Pro Rata Percentages. The Securityholder Representative shall not dispute the accounting principles and adjustments used in preparing the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Certificate with respect to Net Working Capital if such principles and adjustments are consistent with the Accounting Principles. If the Securityholder Representative does not deliver a Disputed Items Notice to Parent within thirty (30) days following receipt by the Securityholder Representative of the Closing Certificate, the computation of Net Working Capital, Selling Expenses, Facilities Renovation Balance, Excess Cash and the Purchase Price corresponding Net Adjustment Amount specified in the Closing Certificate shall be conclusively presumed to be true and correct in all respects and shall be binding upon all parties.
(d) If the Securityholder Representative and Parent, notwithstanding such good faith effort, are unable to agree upon all of the computations contained in the Closing Certificate as identified in the Disputed Items Notice within thirty (30) days after delivery of the Disputed Items Notice, then the Securityholder Representative and Parent jointly shall engage the Houston, Texas office of Deloitte & Touche LLP (the “Accounting Firm”), to resolve any items in the Disputed Items Notice that have not been resolved and to make a determination of such amounts. The parties shall request that the determination of the Accounting Firm shall be made within thirty (30) days after its selection pursuant to procedures mutually agreeable to by Parent and the Securityholder Representative. The Accounting Firm shall resolve only the items set forth thereon become final in the Disputed Items Notice that are still in dispute and make a determination of the computation of the relevant amounts, which shall be conclusive and binding on all parties. In resolving any disputed item, the parties Accounting Firm (i) shall be bound by the provisions of this Section 2.8 and any other relevant provisions of this Agreement and (ii) may not assign a value to any item greater than the greatest value for such items claimed by either Parent or the Securityholder Representative or less than the smallest value of such items claimed by either Parent or the Securityholder Representative.
(e) The fees, costs and expenses (“Accounting Firm Costs”) of the Accounting Firm’s review and determination as set forth in Section 2.8(d) above shall be allocated based on the inverse of the percentage its determination (before such allocation) bears to the amount of the Net Adjustment Amount in dispute as originally submitted to the Accounting Firm. For example, should the amount of the Net Adjustment Amount in dispute total in amount to $1,000 and the Accounting Firm awards $600 in favor of the Securityholder Representative’s position, 60% of the costs of its review would be borne by Parent, and 40% of the costs of its review would be paid out of the Working Capital Escrow Account, as provided below. Any Accounting Firm Costs in respect of the Securityholder Representative’s position pursuant to this Section 1.05, deliver joint written instructions 2.8(e) shall be paid upon the final determination of the Net Adjustment Amount by release of funds to Parent from the Working Capital Escrow Account to the extent there are sufficient funds in the Working Capital Escrow Agent Account; provided, however, that to cause the Escrow Agent to make payment of extent there are insufficient funds in the Escrow Funds from the Working Capital Escrow Account, within two (2) Business Days after receipt such payment shall be by release of such instructions, to, or as directed by, all funds to Parent from the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer Working Capital Escrow Account and the Seller Representative shallremaining funds (or, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyerif Backstop Securities have been issued, by wire transfer in immediately available release of Backstop Securities and/or funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Indemnity Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source Order of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereofPriority) shall be asserted against any released to Parent from the Indemnity Escrow Account, in each case, by the Escrow Agent in accordance with the terms of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment Escrow Agreement. During the review by the Accounting Firm, Parent, the Securityholder Representative and the Surviving Corporation will each make available to the Purchase Price for U.S. federal income tax purposesAccounting Firm interviews with such individuals, and such information, books and records and work papers, as may be reasonably required by the Accounting Firm to fulfill its obligations under Section 2.8(d); provided, however, that the accountants of the Securityholder Representative, Parent or the Surviving Corporation shall not be obliged to make any work papers available to the Accounting Firm unless and until such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more Not less than five (5) Business Days, Days prior to the Closinganticipated Closing Date, the Company shall prepare and deliver provide to Buyer Parent a written statement setting forth the Company’s good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)Working Capital, and (ii) a statement the Aggregate Option Exercise Price, (iii) Estimated Closing Cash, (iv) the Closing Debt, including the ABL Amount, the Debenture Amount and the Holdco Note Amount and (v) the Transaction Expenses (collectively, the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance SheetStatement shall be accompanied by (A) the most recently available final unaudited trial balance as of a month-end preceding the Closing, (B) a roll-forward of account balances from the final unaudited trial balance required by clause (A) of this Section 2.15(a) to the date of the Estimated Closing Cash-on-HandStatement, (C) such relevant account reconciliations as Parent shall have reasonably requested at least seven Business Days prior to the anticipated Closing Date, and (D) a notice (the “Closing Notice”) that sets forth the Company’s determination of the Aggregate Purchase Price and the Per Share Merger Consideration as of such date, and the accounts to which Parent shall transfer funds pursuant to Sections 2.14(a), (b) and (c). During such five Business Day period, the Company shall provide to Parent, on reasonable advance notice and during regular business hours, reasonable access to accounting representatives of the Company. The Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed Accounting Principles principles set forth on Schedule II to this Agreement, and to the extent not set forth on Schedule II, in accordance with GAAP, applied in a manner consistent with the applicable definitions contained principles, policies and methodologies used by the Company in this Agreementthe preparation of the Audited Financial Statements for the fiscal year ended December 31, 2012 (collectively, the “Balance Sheet Principles”). From and after Following delivery to Parent of the Estimated Closing Balance Sheet Statement and prior to the Closing Date, the Company shall consider in good faith any significant errors asserted by Parent prior to the Closing Date in the calculation of the amounts contained in the Estimated Closing Statement until and the ClosingClosing Notice and, if it is in agreement with any such asserted errors, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with appropriately adjust the amounts set forth in the Estimated Closing Statement, Buyer’s obligation Statement and the Closing Notice to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of correct such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitieserrors.
(b) Within ninety (90) As promptly as practicable, but in any case no later than 60 days following after the Closing Date, Buyer Parent shall prepare cause to be prepared in accordance with the Balance Sheet Principles and deliver delivered to the Seller Representative (i) Sellers a closing statement setting forth Parent’s calculation of Closing Working Capital and Closing Cash, and containing an unaudited consolidated balance sheet of the Company Entities and its Subsidiaries as of the Adjustment Calculation Time close of business on the day immediately preceding the Closing Date (without giving effect to the “Closing Balance Sheet”), and (iitransactions contemplated by the Transaction Agreements) a statement (the “Closing Statement”).
(c) setting forth in reasonable detail BuyerIf the Sellers disagree with the Closing Statement or Parent’s calculation of Closing Working Capital or Closing Cash delivered pursuant to Section 2.15(b), the Sellers may, within 45 days after receipt of the Closing Cash-on-HandNotice, deliver a notice to Parent providing Table of Contents reasonable detail of the reason for any disagreement and setting forth the Sellers’ calculation of such amount. Any such notice of disagreement shall specify all items or amounts with which the Sellers disagree, and the parties shall be deemed to have agreed with all other items and amounts contained in the Closing Indebtedness, the Closing Net Working Capital Statement and the calculation of the Purchase Price resulting therefromClosing Working Capital and Closing Cash delivered pursuant to Section 2.15(b). If the Sellers do not deliver any such notice by such date, in each case, based the Sellers shall be deemed to have accepted the Closing Statement and the calculations contained therein shall be final and binding on the Closing Balance SheetSellers and Parent. The Closing Balance Sheet, Sellers and Parent shall cause their respective representatives to cooperate and assist in the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt preparation of the Closing Balance Sheet Statement and the calculation of the Closing Statement, Buyer shallWorking Capital and Closing Cash, and in the conduct of the review referred to in this Section 2.15, including making available, to the extent necessary, books, records, work papers and appropriate personnel. Without limiting the foregoing, the Sellers and their representatives (including accountants) shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with have reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities Company, the personnel of, and to senior management personnel of the Company Entitieswork papers prepared by, in each case, Parent or Parent’s accountants to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, that they relate to the Closing Statement and to such historical financial information (to the extent in Parent’s possession) relating to the Closing Cash-on-Hand, Statement as the Closing Indebtedness, Sellers may reasonably request for the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice purpose of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, reviewing the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration prepare a notice of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Pricedisagreement.
(d) If a timely Notice notice of Disagreement disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c2.15(c), then the Sellers and Parent shall, during the 30 days following such delivery, use their reasonable best efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Closing Balance Sheet Working Capital and Closing Cash. If, during such period, the Sellers and Parent are unable to reach such agreement, they shall promptly thereafter cause the Referee to review the relevant portions of this Agreement, the Closing Statement (as revised in accordance with this Section 1.05(d)), and the disputed items or amounts for the purpose of calculating Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (Closing Cash. In making such firmcalculation, the “Arbiter”). The Closing Balance Sheet and Referee shall consider only those remaining items or amounts in the Closing Statement and Parent’s calculation of Closing Working Capital and Closing Cash as to which the Sellers still dispute at the time of such review and shall use the Balance Sheet Principles. Parent and the Sellers shall have the opportunity to provide written submissions regarding their positions on the disputed matters, which written submissions shall be revised provided to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingReferee, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreementif at all, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of no later than 15 Business Days after the date of this Agreement). At referral of the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit disputed matters to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of DisagreementReferee. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final The determination of the items included Referee shall be based solely on the written submissions by Parent and the Sellers and their respective representatives. The Referee shall deliver to Parent and the Sellers, as promptly as practicable (but in no event later than 30 Business Days from the date of engagement of the Referee), a report setting forth its calculation of the Closing Balance Sheet Working Capital and Closing Cash, as applicable; provided, that the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter Referee may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either Parent or the Seller Representative, on the other hand, Sellers or less than the smallest value for such item assigned claimed by Buyereither Parent or the Sellers. Such report shall be final and binding on, and non-appealable by, Parent and the Sellers. The costs and expenses of the Referee shall be borne in the same proportion that the aggregate dollar amount of such remaining disputed items so submitted to the Referee that are unsuccessfully disputed by Parent, on the one hand, or and the Seller RepresentativeSellers, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested as finally determined by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Referee, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate total dollar amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesremaining disputed items so submitted.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Merger Agreement (Convergys Corp)
Purchase Price Adjustment. (a) At least three Three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver delivered to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Closing Statement”) ), setting forth in reasonable detail and accompanied by reasonably detailed backup documentation, the Company’s good faith estimates estimate of (i) the Closing Cash-on-Hand Balance Sheet Changes (“Estimated Closing Balance Sheet Changes”), and (ii) the Unpaid Transaction Expenses (the “Estimated Closing Cash-on-HandTransaction Expenses”). Notwithstanding any input Buyer may have with respect to the amounts reflected in such written statement, no position or agreement made or taken by any of the parties with respect to the amounts reflected in such statement and/or such accompanying calculations shall preclude the Buyer from taking any other position or making any other argument with respect to the Adjustment Statement and/or accompanying calculations, as applicable. The Estimated Closing Indebtedness Statement is to be prepared in accordance with GAAP, as consistently applied in the preparation of the Financial Statements (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working CapitalAccounting Principles”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesherein.
(b) Within ninety (90) days following after the Closing Date, Buyer shall prepare cause to be prepared and deliver delivered to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”)Sellers’ Representative, and (ii) a written statement (the “Closing Adjustment Statement”) setting forth in reasonable detail and accompanied by reasonably detailed backup documentation, Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30i) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementChanges, and (yii) cooperate with Unpaid Transaction Expenses (collectively, the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement“Proposed Amounts”).
(c) The Closing Balance Sheet, the Closing Adjustment Statement (and the Closing Cash-on-Hand, computations of the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Proposed Amounts indicated thereon) delivered by Buyer to Sellers’ Representative shall become final be deemed to be conclusive and binding upon the parties hereto unless Sellers’ Representative, within thirty (30) days following after delivery to Sellers’ Representative of the Seller Representative’s receipt thereof unless Adjustment Statement, notifies Buyer in writing that Sellers dispute in good faith the Seller Representative gives written notice calculation of its disagreement (a “Notice of Disagreement”) to Buyer prior to such datespecific line items set forth therein, which notice shall describe in reasonable detail specifying the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement each individual disputed line item calculation and the Closing Cash-on-Hand, basis therefor in reasonable detail. Any line items not disputed by the Closing Indebtedness, Sellers’ Representative within thirty (30) days after delivery to Sellers’ Representative of the Closing Net Working Capital and the Purchase Price set forth thereon Adjustment Statement shall become be final and binding upon on the parties. The parties shall in good faith attempt to resolve any dispute and, if the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheetso resolve all disputes, the Closing Adjustment Statement (and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth computations of Proposed Amounts indicated thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case), as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised amended to the extent necessary to reflect any the resolution by of the Seller Representative dispute, shall be deemed to be conclusive and Buyer and/or any final resolution made by binding on the Arbiter parties. If the parties do not reach agreement in accordance with this Section 1.05(d). During resolving the dispute within thirty (30) days immediately after such notice is given by Sellers’ Representative to Buyer pursuant to this Section 2.4(c), the parties shall submit the dispute to a nationally recognized independent accounting firm which is mutually agreeable to Sellers’ Representative, on behalf of the Sellers, and Buyer and which has not been engaged by, or provided services to, Sellers or the Company within the two-year period preceding the Closing (the “Independent Accountant”) for resolution; provided, that if the parties are unable to agree on the selection of the Independent Accountant, Sellers’ Representative, on the one hand, and Buyer, on the other hand, shall each select a nationally recognized independent accounting firm, which together shall appoint a third nationally recognized independent accounting firm to serve as the Independent Accountant, and such appointment shall be conclusive and binding on the parties. As promptly as practicable thereafter (and, in any event, within fifteen (15) days after the Independent Accountant’s engagement), Sellers’ Representative shall submit any unresolved disputes to the Independent Accountant in writing (with a copy to Buyer), supported by any documents and arguments upon which it relies. As promptly as practicable thereafter (and, in any event, within fifteen (15) days following the delivery Sellers’ Representative submission of such unresolved disputes), Buyer shall submit its response to the Independent Accountant (with a Notice of Disagreement in accordance with Section 1.05(ccopy to the Sellers’ Representative) or such longer period supported by any documents and arguments upon which it relies. As soon as the Seller Representative and Buyer may agree in writingpracticable thereafter, the Seller Representative and Buyer Independent Accountant shall seek in good faith to resolve in writing any differences that they may have with respect to render a decision based solely on the matters specified in the Notice respective written presentations of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Sellers’ Representative. The Independent Accountant shall act solely as an expert in resolving any disputed item and not as an arbitrator. In resolving any disputed item, the Independent Accountant (x) shall be governed bound by Rule 408 of the Federal Rules of Evidence (as in effect as of the date provisions of this Agreement). At the end of such thirty Section 2.4 and (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such mattersy) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned items claimed by either Buyer or Sellers’ Representative or less than the smallest value for such items claimed by either Buyer or Sellers’ Representative. The fees, costs and expenses of the Independent Accountant shall be allocated to and borne by Buyer, on the one hand, or and the Seller Sellers’ Representative, on behalf of the Sellers, on the other hand, or less than the smallest value for such item assigned by Buyer, based on the one handinverse of the percentage that the Independent Accountant’s determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Independent Accountant. For example, or should the Seller Representative, on the other hand. Buyer items in dispute total in amount to $1,000 and the Seller Representative shall also instruct Independent Accountant awards $600 in favor of Sellers position, 60% of the Arbiter to, and the Arbiter shall, make costs of its determination based solely on written presentations review would be borne by Buyer and 40% of the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall costs would be requested borne by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Sellers’ Representative, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion . Subject to Section 7.2(a)(iii), the final, binding and conclusive calculation of Closing Balance Sheet Changes and Unpaid Transaction Expenses, based either upon agreement or deemed agreement by Buyer and Sellers or the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed written report delivered by the Seller Representative Independent Accountant, in each case, in accordance with this Section 2.4(c), will be the Seller Representative’s submission to “Final Closing Balance Sheet Changes” or “Final Transaction Expenses” as the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
case may be (e) If the Estimated Purchase Price is less than the Purchase Price (such shortfallcollectively, the “Adjustment AmountFinal Amounts”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to for all purposes of this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeAgreement.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase Agreement (Staffing 360 Solutions, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer Post-Closing Adjustment.
(i) an estimated consolidated balance sheet Not later than thirty (30) days after the Closing Date, a physical count of the Company Entities as of the Adjustment Calculation Time Inventory (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing StatementInventory Count”) setting forth in reasonable detail will be taken by the Company’s good faith estimates employees of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated Buyer in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each caseGAAP and, to the extent reasonably requested not inconsistent therewith, the past practices of Seller as of the date of such Inventory Count, subject to the supervision of Seller and its accountants, and a statement setting forth the Inventory Count will be prepared in writing by Buyer or any of its Representatives in connection with their review of (the Estimated Closing Balance Sheet and the Estimated Closing “Inventory Statement”). The Inventory Count, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts as set forth in the Estimated Inventory Statement is hereby deemed final, conclusive and binding, absent manifest error. Not later than forty-five (45) days after the Closing StatementDate, a roll-back (the “Roll-Back”) of the Inventory Count (the “Roll Back Inventory”) to the Effective Time will be performed by employees of Buyer’s obligation to pay the Purchase Price shall . The Roll-Back will be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or performed in accordance with GAAP.
(ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
Within sixty (b) Within ninety (9060) days following after the Closing Date, Buyer shall prepare and deliver to Seller (a) a statement setting forth its calculation of Closing Working Capital, which statement shall be substantially in the Seller Representative (iform of Section 2.06(a)(ii) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time Disclosure Schedules (the “Closing Balance SheetWorking Capital Statement”), ) and (iib) a statement certificate of an officer of Buyer stating that the Closing Working Capital Statement was prepared in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in preparing the Reviewed Financial Statements for the most recent fiscal year end, subject to the modifications and limitations set forth on Section 2.06(a)(ii) of the Disclosure Schedules.
(iii) The “Post-Closing Adjustment” shall be an amount equal to the Closing Working Capital minus One Million Seven Hundred Seventy Three Thousand Dollars ($1,773,000.00) (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Target Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The If the Post-Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of Adjustment is a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingpositive number, the Seller Representative and then Buyer shall seek in good faith pay to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter amount equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Post-Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow AccountAdjustment. If the Excess Amount Post-Closing Adjustment is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”)a negative number, then Buyer Seller shall (and the Stockholder shall cause Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to) pay to in the immediately preceding sentence, deliver joint written instructions Buyer an amount equal to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativePost-Closing Adjustment.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three Within the later of (3i) Business Days, but no more than ninety (90) days after the Closing Date and (ii) five (5) Business Daysdays following the receipt from Xxxxxx of the Final Pension Underfunding Amount, prior the Buyer shall deliver to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Seller a statement (the “Estimated Post-Closing Statement”) ), setting forth in reasonable detail the CompanyBuyer’s good faith estimates determination of (i) Closing Working Capital and the resulting Working Capital Overage or Working Capital Underage, (ii) Closing Cash, (iii) Closing Indebtedness, (iv) the Company Expenses and (v) the Estimated Purchase Price calculated in accordance with Section 2.1(a), using the amounts of Closing Working Capital and the resulting Working Capital Overage or Working Capital Underage, Closing Cash, Closing Indebtedness and the Company Expenses as set forth in the Post-Closing Statement, as applicable, instead of the estimated amounts for each such item used in calculating the Estimated Purchase Price in the Pre-Closing Cash-on-Hand Statement, in each case of the foregoing clauses (the “Estimated Closing Cash-on-Hand”i) through (v), prepared in accordance with the definitions set forth herein, and including reasonable supporting detail of all of the foregoing. The Buyer shall not amend, supplement or modify the Post-Closing Indebtedness (Statement following its delivery to the “Estimated Seller. The Buyer and the Seller acknowledge that no adjustments shall be made to the Working Capital Target Amount. Once the Buyer has delivered the Post-Closing Indebtedness”)Statement, the Post-Closing Net Working Capital (Statement shall be deemed irrevocable by the “Estimated Closing Net Working Capital”) and Buyer for purposes of the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Final Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Buyer shall be foreclosed and barred in all respects from amending, supplementing or modifying the Post-Closing Net Working Capital shall each Statement and related calculations following delivery to the Seller; provided, that the Post-Closing Statement may be calculated revised in accordance with Section 2.3(b). The Buyer and the Agreed Accounting Principles and in Seller shall jointly engage Xxxxxx to prepare a manner consistent with the applicable definitions contained in this Agreement. From and after delivery calculation of the Estimated Final Pension Underfunding Amount as of the Closing Balance Sheet Date, and shall use reasonable efforts to cause Mercer to deliver such calculation to the Seller and the Estimated Buyer no later than seventy-five (75) days after the Closing Statement until Date. The Final Pension Underfunding Amount as determined by Xxxxxx shall be final, conclusive and binding on the ClosingParties, absent a showing of fraud or manifest error, and shall be the Company shall used as the amount of Indebtedness pursuant to clause (xvi) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel definition of Indebtedness for purposes of calculation of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesIndebtedness.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing CashThe Post-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty Parties on the forty-fifth (3045th) days day following the Seller Representative’s receipt thereof date on which the Post-Closing Statement was delivered to the Seller, unless the Seller Representative gives delivers a written notice of its disagreement with the Post-Closing Statement (a “Notice of Disagreement”) to the Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, however, that (i) if the Closing Balance SheetBuyer has not provided the access or information to the Seller pursuant to Section 2.3, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) deadline for a Notice of Disagreement may only include disagreements based on (A) shall be tolled until the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, Buyer provides such access or information pursuant to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) Section 2.3. If a timely Notice of Disagreement is delivered by to the Seller Representative to Buyer in accordance with Section 1.05(c)a timely manner, then the Closing Balance Sheet and the Post-Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon sentence) shall become final and binding upon the parties hereto Seller and the Buyer on the earlier of (xi) the date all the Seller and the Buyer resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (ii) the date any disputed matters are finally resolved in writing by the Accounting Firm (as defined below). If the Seller Representative does not timely deliver a Notice of Disagreement to the Buyer, the Post-Closing Statement (and Buyer the components thereof) shall become final, conclusive and (y) binding on the date all Parties. If the Seller timely delivers a Notice of Disagreement to the Buyer, any matters specified that are not disputed in the Notice of Disagreement not resolved by written agreement of shall become final, conclusive and binding on the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d)Parties. During the thirty (30) days immediately 30)-day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingDisagreement, the Seller Representative and the Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions and communications related thereto shall (unless otherwise agreed by the Buyer and the Seller Representativein writing) be governed by by, and treated as compromise and settlement negotiations for purposes of, Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement)and any applicable similar state rule. At If at the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and the Buyer shall submit to have not resolved in writing the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included specified in the Notice of Disagreement, the Seller and the Buyer shall submit to an independent accounting firm (the “Accounting Firm”), acting as an expert and not as an arbitrator, for resolution, in accordance with the standards set forth in this Section 2.3, only matters that remain in dispute. The Accounting Firm shall be Xxxxxxx & Marsal or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the Seller and the Buyer in writing, and, the Seller and the Buyer shall enter into a customary engagement letter with, and to the extent necessary each Party and its Affiliates will waive any conflicts with, the Accounting Firm at the time such dispute is submitted to the Accounting Firm and shall cooperate with the Accounting Firm in connection with its determination pursuant to this Section 2.3(b). Within five (5) Business Days after the expiration of such thirty (30)-day period, each of the Buyer and the Seller Representative shall instruct may deliver to the Arbiter toAccounting Firm its response to the other’s position on the matters that remain in dispute; provided, that it delivers a copy thereof substantially simultaneously to the other. The Seller and the Arbiter shall, make Buyer shall use reasonable efforts to cause the Accounting Firm to render a final determination written decision resolving the matters submitted to the Accounting Firm within thirty (30) days of the receipt of such submission. The scope of the disputes to be resolved by the Accounting Firm shall be limited to correcting mathematical errors and determining whether the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) dispute were determined in accordance with the guidelines definitions set forth herein, if applicable, and procedures this Agreement and the Accounting Methodology, and the Accounting Firm is not to make any other determination, including any determination as to (I) whether the Working Capital Target Amount is correct, (II) the accuracy of the representations and warranties set forth in this AgreementAgreement (III) the compliance by any Party with any of its covenants in this Agreement or (IV) whether the Final Pension Underfunding Amount determined by Xxxxxx is correct. For the avoidance of doubt, this Section 2.3 is not intended to adjust the enterprise value of the Company or the Final Purchase Price for any errors or omissions, under IFRS or otherwise, that may be found with respect to the Financial Statements. The Accounting Firm’s decision shall be based solely on written submissions by the Seller and the Buyer and their respective Representatives (a copy of which shall be delivered to the Seller Representative will cooperate with Buyer or the Arbiter during Seller, as applicable) and not by independent review and shall be final and binding on all of the term Parties (absent a showing of fraud or manifest error) and be enforceable as an arbitration award in any court of competent jurisdiction under the terms of the U.S. Federal Arbitration Act or its engagementstate law equivalents. Buyer and the Seller Representative shall instruct the Arbiter The Accounting Firm may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, any Party or the Seller Representative, on the other hand, or less smaller than the smallest value for such item assigned claimed by Buyerany Party. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the Party against which such determination is to be enforced.
(i) The up-front engagement fees and expenses of the Accounting Firm incurred pursuant to this Section 2.3 in connection with any disputed items submitted to the Accounting Firm under this Section 2.3 shall initially be borne 50% by the Seller, on the one hand, or and 50% by the Seller RepresentativeBuyer, on the other hand, provided, all such fees, costs and expenses shall ultimately be borne in proportion to the final allocation made by such Accounting Firm of the disputed items weighted in relation to the claims made by the Seller and the Buyer, such that the prevailing Parties pay the lesser proportion of such fees, costs and expenses. For example, if the Seller claims that the appropriate adjustments are €1,000 greater than the amount determined by the Buyer and if the Accounting Firm ultimately resolves the dispute by awarding to the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf €300 of the Sellers) shall pay a portion of €1,000 contested, then the fees fees, costs and expenses of the Arbiter equal Accounting Firm will be allocated 30% (i.e., 300 ÷ 1,000) to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission Buyer and 70% (i.e., 700 ÷ 1,000) to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSeller.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, all fees, costs and without limiting expenses incurred by the generality of Parties in connection with resolving any dispute hereunder before the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) Accounting Firm has been engaged shall be asserted against any of borne by the Seller PartiesParty incurring such fee, cost or expense.
(hc) Any payment made pursuant to For the purposes of this Agreement, (i) “Final Closing Working Capital”, “Final Closing Cash”, “Final Closing Indebtedness” and “Final Company Expenses” means the Closing Working Capital, Closing Cash, Closing Indebtedness and Company Expenses, respectively, as finally agreed or determined in accordance with Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes2.3(b).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysAttached hereto as Exhibit C is a worksheet, but no more than five (5) Business Daysprepared on behalf of the Shareholders by the Shareholder Representative, prior to setting forth a reasonable estimate of the Closing, the Company shall prepare Indebtedness and deliver to Buyer (i) an estimated consolidated balance sheet Net Working Capital of the Company Entities as of the Closing Date as well as a computation of the estimated Adjustment Calculation Time Amount (the “Estimated Closing Balance SheetAdjustment Amount”). If the Estimated Adjustment Amount is a positive number, and the Purchase Price payable at Closing shall be decreased in an amount equal to the Estimated Adjustment Amount, with a reduction (iiallocated on a Pro-Rata Basis) in the Cash Consideration otherwise payable to each Shareholder at Closing. If the Estimated Adjustment Amount is a statement negative number (the “Estimated Closing Statement”) setting forth in reasonable detail i.e., if the Company’s good faith estimates Net Working Capital in excess of $200,000 exceeds the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”Company’s Indebtedness as of Closing), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), payable at Closing shall be increased in each case, based on an amount equal to the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase PriceAdjustment Amount, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro with an increase (allocated on a Pro-Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (xBasis) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation Cash Consideration otherwise payable to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or each Shareholder at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesClosing.
(b) Within ninety 90 days after the Closing, the Purchaser shall prepare a computation of the actual Adjustment Amount as of the Closing Date (90) the “Actual Adjustment Amount”). If within 15 days following delivery of such computation the Closing DateShareholder Representative does not object in writing thereto, Buyer then the Actual Adjustment Amount shall prepare be the final, binding and conclusive computation of the Actual Adjustment Amount. If the Shareholder Representative objects in writing to the computation, then the Purchaser and the Shareholder Representative shall negotiate in good faith and attempt to resolve the disagreement. Should such negotiations not result in an agreement within 20 days, then the matter shall be submitted to an independent accounting firm of national reputation mutually acceptable to both the Purchaser and the Shareholder Representative (the “Neutral Auditor”). If the Purchaser and the Shareholder Representative are unable to agree on the Neutral Auditor, then they shall request the American Arbitration Association to appoint the Neutral Auditor. All fees and expenses relating to appointment of the Neutral Auditor and the work, if any, to be performed by the Neutral Auditor will be borne equally by the Purchaser and the Primary Shareholders (unless the Primary Shareholders’ share of such fees and expenses is less than $25,000, in which case such amount shall be distributed to the Neutral Auditor, upon the agreement and instruction of Purchaser and the Shareholder Representative, from the Escrow Funds, allocated on a Primary Pro-Rata Basis). The Neutral Auditor will deliver to the Seller Purchaser and the Shareholder Representative a written determination (isuch determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on the provisions of this Agreement and information provided to the Neutral Auditor by the Purchaser and the Shareholder Representative, or their respective representatives) an unaudited consolidated balance sheet of the Company Entities as disputed items within 30 days of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet disputed items, which determination will be final, binding and conclusive on the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementParties.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days Promptly following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s agreement on or delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) final written determination setting forth the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement Actual Adjustment Amount (as revised contemplated in accordance with this Section 1.05(d3.3(b)), the Purchaser and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Shareholders shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (account to each other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.053.3(c). If the Estimated Adjustment Amount less the Actual Adjustment Amount is a positive number, the Shareholders shall have a right to receive a cash payment equal to such excess, allocated on a Pro-Rata Basis, as an increase in the Purchase Price. If the Estimated Adjustment Amount less the Actual Adjustment Amount is a negative number, Purchaser shall be entitled to receive a payment from the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubtPrimary Shareholders equal to such deficit, and without limiting the generality of the foregoingallocated on a Primary Pro-Rata Basis (unless such deficit is less than $50,000, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) in which case such amount shall be asserted against any of distributed to Purchaser the Seller Parties.
(h) Escrow Funds, allocated on a Primary Pro-Rata Basis). Any such excess or deficit payment made shall be due and payable within three business days after the Actual Adjustment Amount is determined pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes3.3.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to Days before the Closing, the Company shall prepare Seller caused to be prepared and deliver delivered to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)Buyer, for Buyer’s review and (ii) consent, a statement (the “Estimated Closing Statement”) (which may be revised one (1) Business Day before the Closing) setting forth in reasonable detail the Company’s its good faith estimates estimate of the (i) Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”), (ii) Closing Cash, (iii) Existing Debt and (iv) Closing Transaction Expenses, which amounts are being used to determine the calculation of the Purchase Price resulting therefrom Price, Net Payment Amount and payments to be made pursuant to Section 2.02 at the Closing.
(b) Not later than forty-five (45) days after the Closing Date, a physical count of the Company’s Inventory (the “Estimated Purchase PriceInventory Count”) will be taken by Xxxxxxxxxxx Xxxxxxxx and such other person(s) as may be designated by Buyer and agreed to by Seller, in writing, in accordance with GAAP and, to the extent not inconsistent therewith, the past practices of the Company as of the date of such Inventory Count. Buyer shall give Seller reasonable advance notice of the Inventory Count and allow a Representative of Seller to be physically present during such count. Not later than forty-five (45) days after the Closing Date, a roll-back (the “Roll-Back”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities taking into account Inventory purchases and to senior management personnel sales and other book entries affecting Inventory occurring between the date of the Company EntitiesClosing Date and the Inventory Count (the Inventory Count as adjusted pursuant to the Roll-Back, the “Roll-Back Inventory”), will be performed by the Buyer or the Company. The Roll-Back will be performed in each caseaccordance with GAAP and, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statementnot inconsistent therewith, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation past practices of the Purchase Price among Company and a manner consistent with the method utilized in preparing the Historical Financial Statements. A statement setting forth the Roll-Back Inventory based upon such Sellers shall Roll-Back, will be delivered by Buyer to Seller not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of later than forty-five (45) days after the Purchased SecuritiesClosing Date.
(bc) Within ninety Not later than sixty (9060) days following after the Closing Date, Buyer shall prepare will cause to be prepared and deliver delivered to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a draft statement (the “Draft Closing Statement”) ), setting forth in reasonable detail Buyer’s calculation determination of the (i) Closing Working Capital, (ii) Closing Cash-on-Hand, the (iii) Existing Debt and (iv) Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance SheetTransaction Expenses. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide to Seller whatever information or documentation in its or the Seller Representative Company’s possession, custody or control and its Representatives with reasonable such access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entitiestheir personnel, in each casecase that is reasonably necessary for Seller to review the Draft Closing Statement or to participate in the dispute resolution process set forth in this Section 2.03.
(d) If Seller disagrees with the computation of Closing Working Capital, to Closing Cash, Existing Debt and/or Closing Transaction Expenses reflected on the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Draft Closing Statement, and then Seller may, within thirty (y30) cooperate days after receipt of the Draft Closing Statement, deliver a written notice (an “Objection Notice”) to Buyer setting forth Seller’s calculation of such items. The Objection Notice shall specifically state Seller’s disagreement with the Seller Representative and its Representatives in connection with their review of information set forth on the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Draft Closing Statement and the basis therefor. If an Objection Notice is not delivered within such time period, then the amount of Closing Working Capital, Closing Cash-on-Hand, the Existing Debt and Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Transaction Expenses set forth thereon on the Draft Closing Statement shall become be conclusive and binding upon the parties hereto. If an Objection Notice is delivered and it does not object to one or more of the amount of Closing Working Capital, Closing Cash, Existing Debt or Closing Transaction Expenses, as set forth on the Draft Closing Statement, then the item(s) for which no objection was made shall be conclusive and binding upon the parties hereto. Seller shall provide to Buyer whatever information or documentation in its possession, custody or control and such access to its personnel, in each case that is reasonably necessary for Buyer to review the Objection Notice or to participate in the dispute resolution process set forth in this Section 2.03.
(e) If an Objection Notice is delivered within such time period, Buyer and Seller shall, during the twenty (20) Business Days following the receipt by Buyer of such notice, use their reasonable good faith efforts to reach agreement on the disputed items or amounts, but if they do not obtain a final resolution within such twenty (20)-Business Day period, then Buyer and Seller shall jointly retain the dispute resolution group of Xxxxx Xxxxxxx LLP, with which each party hereto acknowledges that it has no current engagement (unless another accounting firm is mutually agreed to in writing between Buyer and Seller prior to such time) (the “Independent Accountant”), to resolve any remaining disagreements. In connection with the retention by Buyer and Seller of the Independent Accountant, Buyer and Seller shall each execute an engagement letter with the Independent Accountant in a form reasonably satisfactory to each of Buyer and Seller; provided, however, that if Buyer and Seller cannot agree upon a form of engagement letter within five (5) days of their receipt of the engagement letter first provided to them by the Independent Accountant, Buyer and Seller shall each sign the Independent Accountant’s standard engagement letter (with only those modifications agreed upon by Buyer and Seller); provided, further, that if (x) Buyer fails to sign such standard engagement letter within five (5) days of the expiration of the prior five (5)-day period, then the amounts set forth in the Objection Notice with respect to any items remaining in dispute shall be conclusive and binding upon the parties hereto thirty or (30y) Seller fails to sign such standard engagement letter within five (5) days following of the Seller Representative’s receipt thereof unless expiration of the Seller Representative gives written notice of its disagreement prior five (a “Notice of Disagreement”) to Buyer prior to such date5)-day period, which notice shall describe then the amounts set forth in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Draft Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon with respect to any items remaining in dispute shall become final be conclusive and binding upon the parties hereto upon hereto. Buyer and Seller shall direct the Seller Representative’s delivery, prior Independent Accountant to the expiration of such render a determination within thirty (30)-day period, of written notice to Buyer 30) Business Days of its acceptance of the Closing Balance Sheetretention, the Closing Statement and the parties hereto and their respective employees shall cooperate with the Independent Accountant during its engagement. Buyer and Seller shall direct the Independent Accountant to consider only those items in dispute. The Independent Accountant’s determination shall (i) be based on the definitions of Closing Working Capital, Closing Cash-on-Hand, Existing Debt and Closing Transaction Expenses, as the Closing Indebtednesscase may be, the Closing Net Working Capital and the Purchase Price set forth thereon, related terms and (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final be conclusive and binding upon the parties hereto upon the Seller Representativehereto. The Independent Accountant’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure determination of the Closing Cash-on-Hand, matters raised in the Closing Indebtedness and applicable Objection Notice cannot be more favorable to Buyer than the Closing Net Working Capital, in each case, as related amount reflected on the Draft Closing Statement, Statement nor more favorable to be calculated Sellers than the related amount reflected in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation Objection Notice. The fees and expenses of the Closing Cash-on-HandIndependent Accountant will be allocated between Buyer (or, at Buyer’s election, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(cCompany), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representativeand Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to upon the percentage by which the portion of the disputed amounts matters raised in the Seller Representative’s submission to the Arbiter applicable Objection Notice not awarded to the Seller Representative such party hereto bears to the aggregate amount actually disputed contested by such party hereto. For example, if Seller claims that the Seller Representative appropriate adjustments are, in the Seller Representative’s submission to the Arbiteraggregate, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is $1,000 greater than the Purchase Price (amount determined by Buyer and if the Independent Accountant ultimately resolves such excessmatters by awarding to Seller, in the “Excess Amount”)aggregate, $300 of the $1,000 contested, then the fees, costs and expenses of the Independent Accountant will be allocated 30% (i.e., $300 ÷ $1,000) to Buyer and the Seller Representative shall70% (i.e., within two (2$700 ÷ $1,000) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativeSeller.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase and Redemption Agreement (P&f Industries Inc)
Purchase Price Adjustment. (a) At least three (3) Pre‑Closing Statement. No later than twelve Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall will prepare and deliver to the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Closing Pre‑Closing Statement”) ), together with any relevant supporting materials, which will include a supporting trial balance (which, for the avoidance of doubt, will not be prepared pursuant to the Accounting Methods)), setting forth in reasonable detail the Company’s calculation of a good faith estimates estimate of (A) the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting as derived therefrom (the “Estimated Purchase PriceWorking Capital”), (B) the combined amount of Cash of the Divested Companies and any other Cash which otherwise constitutes a Sold Asset anticipated to exist immediately prior to the Closing Date (the “Estimated Cash”), (C) the combined amount of Debt Obligations of the Divested Companies and any other Debt Obligations which otherwise constitute Assumed Liabilities anticipated to exist immediately prior to the Closing (the “Estimated Indebtedness”), (D) the combined amount of unpaid Transaction Expenses (the “Estimated Transaction Expenses”); (E) the Unspent Capital Expenditure Amount (the “Estimated Unspent Capital Expenditure Amount”), (F) the Cap Gemini Excess Amount, (G) the Esfel Amount, (H) the Separation Delay Amount, (I) the Earn-Out Amount and (J) the Closing Purchase Price calculated as the Initial Value: (i) adjusted to give effect to the Estimated Working Capital in each caseaccordance with this Section 2.6(a) plus (ii) the Estimated 30 Cash, based less (iii) the Estimated Indebtedness less (iv) the Estimated Transaction Expenses, less (v) the Estimated Unspent Capital Expenditure Amount, less (vi) the Cap Gemini Excess Amount, less (vii) the Esfel Amount, less (viii) the Separation Delay Amount; provided, that following the delivery of such Pre-Closing Statement, the Company shall provide any additional supporting materials and information reasonably requested by the Buyer and, at the Buyer’s request, meet with the Buyer and its advisors to discuss the Pre-Closing Statement and shall consider in good faith the Buyer’s reasonable comments thereto for the purposes of determining the Closing Purchase Price to be actually paid to the Company on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata PortionDate. The Estimated Pre-Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each Statement will be calculated prepared in accordance with the Agreed Accounting Principles Methods and presented in a manner consistent with the applicable definitions contained form attached hereto as Exhibit G. If the Estimated Working Capital (as set forth in this Agreement. From and after delivery the Pre‑Closing Statement) is less than the Target Working Capital, then the Initial Value will be adjusted downward by an amount equal to the amount of the Estimated Closing Balance Sheet deficiency between the Target Working Capital and the Estimated Closing Statement until Working Capital. If the ClosingEstimated Working Capital (as set forth in the Pre‑Closing Statement) is greater than the Target Working Capital, then the Initial Value will be adjusted upward by an amount equal to the amount of the excess between the Estimated Working Capital and the Target Working Capital. If the Estimated Working Capital is equal to the Target Working Capital, then no adjustment will be made to the Initial Value with respect to the Estimated Working Capital. In addition, the Company shall (x) provide Initial Value will be adjusted upward by the amount of any Estimated Cash, adjusted downward by the amount of any Estimated Indebtedness, any Estimated Transaction Expenses, any Estimated Unspent Capital Expenditure Amount, the Cap Gemini Excess Amount, the Esfel Amount and the Separation Delay Amount. The Parties acknowledge and agree that, subject to Section 2.6, the consideration for the sale and transfer of the Shares and the Sold Assets set out in the Local Purchase Agreements will be deemed to have been fully paid by the Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records respective Sellers under the Local Purchase Agreements upon payment of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses2.5.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three No later than two (32) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer a certificate of an officer of Seller setting forth its good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities Net Assets as of the Adjustment Calculation Time Closing Date (the “Estimated Closing Balance SheetNet Assets”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Aggregate Company Indebtedness (the “Estimated Closing Aggregate Company Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on iii) the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesExecutive Retirement Plan Settlement Amount.
(b) The Initial Purchase Price shall be (i) increased, if the Estimated Net Assets exceeds the Reference Net Assets, by an amount equal to the amount of such excess, or (ii) decreased, if the Reference Net Assets exceeds the Estimated Net Assets, by an amount equal to such excess (such increase or decrease, as the case may be, being the “Estimated Closing Adjustment”).
(c) Within ninety sixty (9060) days following the Closing Date, Buyer shall prepare and deliver to Seller a reasonably detailed calculation by Buyer of the Seller Representative Aggregate Company Indebtedness (the “Aggregate Company Indebtedness Statement”) and the following (collectively, the “Preliminary Net Assets Statement”):
(i) an unaudited consolidated balance sheet of the Company Entities as of and its Subsidiaries immediately prior to the Adjustment Calculation Time Closing (the “Preliminary Closing Balance Sheet”), and prepared by Buyer in accordance with GAAP;
(ii) a statement certificate of an officer of Buyer, or one of its Subsidiaries, certifying that the Preliminary Closing Balance Sheet has been prepared in accordance with GAAP; and
(iii) a reasonably detailed calculation by Buyer of Net Assets immediately prior to the Closing based on the Preliminary Closing Balance Sheet (the “Closing StatementPreliminary Net Assets”).
(d) setting forth in reasonable detail Buyer’s calculation Seller shall have thirty (30) Business Days following receipt of the Closing Cash-on-Hand, Aggregate Company Indebtedness Statement and the Closing Indebtedness, the Closing Preliminary Net Working Capital and Assets Statement to (i) confirm the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Aggregate Company Indebtedness and to review the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Preliminary Closing Balance Sheet and the Closing Statementcalculation of Preliminary Net Assets and (ii) notify Buyer in writing if it disputes the amount of the Aggregate Company Indebtedness set forth on the Aggregate Company Indebtedness Statement and/or the amount of the Preliminary Net Assets set forth on the Preliminary Net Assets Statement (the “Dispute Notice”), Buyer shallspecifying the reasons therefor in reasonable detail.
(e) In connection with Seller’s review, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with shall have reasonable access at all reasonable times access, during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each casenotice, to the extent reasonably requested all relevant work papers, schedules, memoranda and other documents prepared by the Seller Representative Buyer or any of its Representatives in connection with their review its preparation of the Preliminary Closing Balance Sheet and/or its calculation of Preliminary Net Assets and/or the Aggregate Company Indebtedness and to finance personnel of Buyer and its Subsidiaries and any other information that Seller reasonably requests, and Buyer shall, and shall cause its Subsidiaries to, cooperate reasonably with Seller and its Representatives in connection therewith.
(f) In the event that Seller delivers a Dispute Notice to Buyer, Buyer and Seller shall cooperate in good faith to resolve such dispute as promptly as practicable and, upon such resolution, if any, any adjustments to the Aggregate Company Indebtedness Statement and/or Preliminary Closing Balance Sheet and Preliminary Net Assets shall be made in accordance with the agreement of Buyer and Seller. If Buyer and Seller are unable to resolve any such dispute within ten (10) Business Days of Seller’s delivery of such Dispute Notice (or such longer period as Buyer and Seller shall mutually agree upon in writing), such dispute shall be resolved by the Independent Accounting Firm, and such determination shall be final and binding on the parties. The Independent Accounting Firm shall consider only those items and amounts as to which Buyer and Seller have disagreed upon within the time periods and on the terms specified above. The Independent Accounting Firm may rely only upon information submitted to it by Buyer or Seller. The Independent Accounting Firm shall be instructed to use reasonable best efforts to deliver to Buyer and Seller a written report setting forth the resolution of each disputed matter within thirty (30) days of submission of the Aggregate Company Indebtedness Statement and/or Preliminary Closing Balance Sheet and Preliminary Net Assets to it and, in any case, as promptly as practicable after such submission. Any expenses relating to the engagement of the Independent Accounting Firm in respect of its services pursuant to this Section 2.3(f) shall initially be shared equally by Seller and Buyer; provided, however, that all fees and expenses relating to the foregoing work by the Independent Accountant Firm shall ultimately be borne by Buyer and Seller in inverse proportion as they may prevail on the matters resolved by the Independent Accounting Firm, which proportionate allocation also will be determined by the Independent Accounting Firm and be included in the Independent Accounting Firm’s written report. The Preliminary Closing Balance Sheet and the Closing StatementPreliminary Net Assets, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheetif no Dispute Notice has been timely delivered by Seller, the Closing Statement and the Closing Cash-on-Handas originally submitted by Buyer, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, or (ii) except if a Dispute Notice has been timely delivered by Seller, as determined pursuant to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration resolution of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised dispute in accordance with this Section 1.05(d)2.3(f), and the Closing Cash-on-Handshall be, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firmrespectively, the “Arbiter”). The Final Closing Balance Sheet Sheet” and the Closing Statement shall be revised “Final Net Assets.” The Aggregate Company Indebtedness set forth on the Aggregate Company Indebtedness Statement, (i) if no Dispute Notice has been timely delivered by Seller, as originally submitted by Buyer, or (ii) if a Dispute Notice has been timely delivered by Seller, as adjusted pursuant to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter of such dispute in accordance with this Section 1.05(d2.3(f). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty “Final Aggregate Company Indebtedness.”
(30g) days following submission of such disputed matters)If the Final Net Assets exceeds the Estimated Net Assets, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company Buyer shall pay the remaining portion amount of such fees excess to Seller, less the amount of any Taxes required to be withheld, including pursuant to Section 1445(a) of the Code and expenses.
(e) corresponding provisions of state Law. If the Estimated Purchase Price is less than Net Assets exceeds the Purchase Price (Final Net Assets, Seller shall pay the amount of such shortfallexcess to Buyer. Buyer or Seller, as the “Adjustment Amount”)case may be, then (i) Buyer shall, within two five (25) Business Days after the Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Final Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Assets pursuant to this Section 1.052.3(f), make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, other by wire transfer in immediately available funds of the Excess Amount amount payable by Buyer or Seller, as the case may be, in respect of the Final Net Assets Adjustment, together with interest thereon from the Escrow Funds in Closing Date to the Escrow Accountdate of payment, at a floating rate equal to the U.S. dollar prime rate per annum, as quoted by Citibank, N.A. from time to time during such period. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer Such interest shall be calculated based on a year of 365 days and the Seller Representative shall, simultaneously with number of days elapsed since the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller PartiesClosing Date.
(h) Any If the Estimated Aggregate Company Indebtedness exceeds the Final Aggregate Company Indebtedness, Buyer shall pay the amount of such excess to Seller, less the amount of any Taxes required to be withheld, including pursuant to Section 1445(a) of the Code and corresponding provisions of state Law. If the Final Aggregate Company Indebtedness exceeds the Estimated Aggregate Company Indebtedness, Seller shall pay the amount of such excess to Buyer. Buyer or Seller, as the case may be, shall, within five (5) Business Days after the determination of the Final Aggregate Company Indebtedness pursuant to Section 2.3(f), make payment to the other by wire transfer in immediately available funds of the amount payable by Buyer or Seller, as the case may be, in respect of the Final Aggregate Company Indebtedness Adjustment, together with interest thereon from the Closing Date to the date of payment, at a floating rate equal to the U.S. dollar prime rate per annum, as quoted by Citibank, N.A. from time to time during such period. Such interest shall be calculated based on a year of 365 days and the number of days elapsed since the Closing Date.
(i) The parties agree that any payments made pursuant to this Section 1.05 shall 2.3 will be treated for Tax purposes as an adjustment to the Purchase Price for U.S. federal income tax purposesPrice.
Appears in 1 contract
Samples: Share Purchase Agreement (Health Care Property Investors Inc)
Purchase Price Adjustment. (a) At least three (3) Business DaysAs promptly as practicable, but in no more event later than five sixty (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9060) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Sellers’ Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth Buyer’s good faith calculation of (i) Net Working Capital (the “Revised Net Working Capital”), (ii) Closing Cash (the “Revised Closing Cash”), (iii) Closing Indebtedness (the “Revised Closing Indebtedness”), (iv) Closing Transaction Expenses (the “Revised Closing Transaction Expenses”), and (v) Revised Cash Consideration. During the (30) thirty day period immediately following the delivery of the Closing Statement by Buyer to the Sellers’ Representative (the “Objection Period”), Buyer shall provide the Sellers’ Representative and its respective Representatives with a reasonable opportunity, in a manner that does not unreasonably interfere with the businesses and operations of Buyer and its Affiliates (including the Company), to review any work papers, books and records used in preparing the Closing Statement and have an opportunity to discuss the Closing Statement with the employees of the Buyer who prepared the statements.
(b) If, prior to 5:00 p.m. (Central Time) on the last day of the Objection Period (the “Objection Deadline”), the Sellers’ Representative has not given Buyer written notice of any good faith objection to the Closing Statement or any component thereof specifying in reasonable detail Buyer’s calculation the nature and basis of such objection, as well as the specific matters in dispute (the “Disputed Matters”) and the amount of any proposed adjustments (an “Objection Notice”), then the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Statement and the calculation of the Purchase Price resulting therefrom, in each case, based all components thereof are to be deemed final and are to be binding and conclusive on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Parties for all purposes under this Agreement and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice not subject to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative further dispute or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementchallenge.
(c) The Closing Balance SheetIf, prior to the Objection Deadline, the Sellers’ Representative has given Buyer an Objection Notice, then Buyer and the Sellers’ Representative shall in good faith attempt to resolve the Disputed Matters (and, for avoidance of doubt, all other matters with respect to, and all other components of, the Closing Statement are to be binding and conclusive on the Parties for all purposes under this Agreement and not subject to further dispute or challenge). If Buyer and the Closing Cash-on-Hand, Sellers’ Representative fail to resolve all of the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto Disputed Matters within thirty (30) days following the Seller RepresentativeBuyer’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; providedObjection Notice, that then Buyer and the Sellers’ Representative shall submit the Disputed Matters remaining in dispute (i) the Closing Balance Sheetand only such Disputed Matters, as all other matters with respect to, and all other components of, the Closing Statement (including those Disputed Matters resolved by Buyer and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated Sellers’ Representative in accordance with the Agreed Accounting Principles immediately preceding sentence) are to be binding and in a manner consistent with conclusive on the applicable definitions contained in Parties for all purposes under this Agreement and/or (Band not subject to further dispute or challenge) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any Independent Accounting Firm for resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. If Disputed Matters are submitted to the Independent Accounting Firm for resolution in accordance with the immediately preceding sentence, (i) Buyer and the Seller Sellers’ Representative will cooperate with shall furnish, or cause to be furnished, to the Arbiter during Independent Accounting Firm such work papers and other documents and information relating to such Disputed Matters as the term of its engagement. Independent Accounting Firm requests and as are available to such Party or such Party’s Representatives and Buyer and the Seller Sellers’ Representative are to be afforded the opportunity to present to the Independent Accounting Firm any material relating to such Disputed Matters, (ii) Buyer and the Sellers’ Representative shall instruct the Arbiter not toIndependent Accounting Firm to deliver the Independent Accounting Firm’s determination in a written notice to Buyer and the Sellers’ Representative within thirty (30) days of the submission to the Independent Accounting Firm of such Disputed Matters, and such determination is to be final, binding and conclusive on the Arbiter shall notParties for all purposes under this Agreement and not subject to further dispute or challenge and is to be used in the calculation of the Final Net Working Capital and the determination of the Final Closing Cash, assign a value Final Closing Indebtedness and Final Closing Transaction Expenses, as applicable, and (iii) the fees and expenses of the Independent Accounting Firm are to any item in dispute greater than the greatest value for such item assigned be allocated and payable by Buyer, on the one hand, or and the Seller Sellers’ Representative, on the other hand, or less than in proportion to the smallest value for such item assigned amounts by Buyer, on which the one hand, or the Seller Representative, on the other hand. proposals of Buyer and the Seller Representative shall also instruct Sellers’ Representative, respectively, differed from the Arbiter toIndependent Accounting Firm’s final determination of such Disputed Matters, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Sellers’ Representative shall instruct the Independent Accounting Firm to determine such proportions in the Independent Accounting Firm’s final determination.
(d) Within three (3) Business Days following the determination of the Final Cash Consideration, the Sellers’ Representative shall prepare (or cause to be prepared) and deliver to Buyer, an updated Allocation Certificate that are in accordance with reflects any changes to the guidelines and procedures information set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere therein resulting from any adjustment to the requirements of Transaction Consideration pursuant to this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSection 2.6.
(e) If the Estimated Purchase Price is less than Cash Consideration exceeds the Purchase Price Final Cash Consideration (the amount of such shortfallexcess, the “Downward Adjustment Amount”), then within five (5) Business Days of the final determination of the Final Cash Consideration, (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, Parties shall jointly instruct the Closing Statement and Escrow Agent to distribute the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and Downward Adjustment Amount from the Purchase Price set forth thereon become final and binding on the parties pursuant NWC Escrow Fund to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller RepresentativeBuyer, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to Parties shall jointly instruct the Escrow Agent to cause distribute any funds remaining in the NWC Escrow Agent to make Fund after such payment of the Escrow Funds from Downward Adjustment Amount to (A) to the Escrow Transaction Consideration Bank Account, within two on behalf of Sellers and the Warrantholder and (2B) Business Days after receipt of the Company, to be distributed by the Company through a special Company payroll, to each Optionholder (such instructionsdistributions to be in accordance with each Sellers’, to, or Optionholders’ and the Warrantholder’s Allocation Percentage (as directed by, reflected in the Seller Representativeupdated Allocation Certificate)).
(f) If the Final Cash Consideration equals or exceeds the Estimated Purchase Price is greater than Cash Consideration (the Purchase Price (amount of such excess, the “Excess Upward Adjustment Amount”), then Buyer and the Seller Representative shall, within two five (25) Business Days after of the Closing Balance Sheetfinal determination of the Final Cash Consideration, (i) the Parties shall jointly instruct the Escrow Agent to distribute the NWC Escrow Fund to (A) to the Transaction Consideration Bank Account, on behalf of Sellers and the Warrantholder, and (B) the Company, to be distributed by the Company through a special Company payroll (subject to and reduced by applicable withholding Taxes), to each Optionholder (such distributions to be in accordance with the Allocation Percentages (as reflected in the updated Allocation Certificate), and (ii) the Purchaser shall pay, or cause the Company to pay, as applicable, by wire transfer of immediately available funds, (A) to an account designated by the Sellers’ Representative, on behalf of Sellers and the Warrantholder, an amount equal to each Seller’s and the Warrantholder’s Allocation Percentage (as reflected in the updated Allocation Certificate) of the Upward Adjustment Amount, and (B) through a special Company payroll, to each Optionholder, their respective Allocation Percentages (as reflected in the updated Allocation Certificate) of the Upward Adjustment Amount (subject to and reduced by applicable withholding Taxes).
(g) The Estimated Closing Statement and the Closing Cash-on-HandStatement, Closing Indebtednessas well as all estimates, Closing calculations and determinations therein, are to be prepared and calculated on a consolidated basis for the Company using the accounting principles, practices, classifications, procedures, policies and methods set forth on Annex D (the “Accounting Principles”). An example calculation of Net Working Capital and using the Purchase Price Accounting Principles is also set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.Annex D.
(h) Any The Parties shall treat each payment made pursuant to under this Section 1.05 shall 2.6 as an adjustment to the Transaction Consideration for Tax purposes, unless (i) a final determination (which includes the execution of a Form 870-AD or successor form) with respect to any such payment causes such payment not to be treated as an adjustment to the Purchase Price Transaction Consideration for U.S. federal income tax purposesTax purposes or (ii) as otherwise required by applicable Legal Requirements.
Appears in 1 contract
Samples: Stock Purchase Agreement (Computer Programs & Systems Inc)
Purchase Price Adjustment. (a) At least three four (34) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Purchaser a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates calculation of (i) the estimated amount of Working Capital, as of the Closing Cash-on-Hand Adjustment Time (the “Estimated Closing Cash-on-HandWorking Capital Amount”), (ii) the estimated amount of Closing Indebtedness (the “Estimated Closing Indebtedness”), (iii) the estimated amount of Closing Net Working Capital Cash, as of the Adjustment Time (the “Estimated Closing Net Working CapitalCash”) and (iv) the calculation estimated amount of the Purchase Price resulting therefrom Transaction Expenses (the “Estimated Purchase PriceTransaction Expenses”), in each case, case based on the Estimated Closing Balance Sheet Company’s books and including records and other information available at the Estimated Purchased Shares Purchase Pricetime. From the Adjustment Time to the Effective Time, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Company shall each be calculated not take any actions that would result in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and any changes to the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and as expressly required by applicable state securities Laws Law or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesthis Agreement.
(b) Within ninety (90) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Securityholder Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail BuyerPurchaser’s good faith calculation of the amount, as of the Adjustment Time, of Working Capital and Closing Cash-on-Hand, and the amount of Closing Indebtedness, in each case with reasonable supporting detail of each of the calculations set forth in the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. Statement.
(c) During the thirty (30) days immediately following the Seller Securityholder Representative’s receipt of the Closing Balance Sheet and Statement (the Closing Statement“Review Period”), Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Securityholder Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice shall be permitted to review the books and records of the Company Entities Surviving Entity and to senior management personnel its Subsidiaries and the working papers of Purchaser, the Company EntitiesSurviving Entity and their independent accountants, in each caseif any, relating to the extent reasonably requested by the Seller Representative or any preparation of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the calculation of the Working Capital, Closing Cash-on-Hand, Closing Indebtedness and Transaction Expenses therein, and shall be provided with reasonable access, during normal business hours and in a manner so as not to interfere with the normal business operations of Purchaser or the Surviving Entity, to the current and former personnel and advisors of Purchaser and the Surviving Entity who were involved in the preparation of the Closing Statement in order to ask questions and receive answers related to the Closing Statement and the preparation thereof; provided, however, that the independent accountants of Purchaser or the Surviving Entity shall not be obligated to make any working papers available to the Securityholder Representative unless and until the Securityholder Representative has signed a customary confidentiality and hold harmless agreement relating to such access to working papers in form and substance reasonably acceptable to such independent accountants. Purchaser shall not, and shall cause the Surviving Entity and its Subsidiaries not to, take any action to limit the Securityholder Representative’s reasonable access to the books and records of, and the current and former personnel and advisors of, Purchaser, the Closing Indebtedness, Surviving Entity and their Subsidiaries. The Securityholder Representative shall notify Purchaser in writing (the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, Review Period if the Securityholder Representative disagrees with the Closing Statement or the Working Capital, Closing Cash and Closing Indebtedness set forth therein. The Notice of Disagreement shall set forth in reasonable detail the basis for such disagreement, the amounts involved and the Securityholder Representative’s determination of the amount, as of the Adjustment Time, of the Working Capital and Closing Cash-on-Hand, and the amount of Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance case with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Pricereasonably detailed supporting documentation.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as Disagreement, the Seller Securityholder Representative and Buyer may agree in writing, the Seller Representative and Buyer Purchaser shall seek in good faith to resolve in writing any differences disagreement that they may have with respect to the matters specified in the Notice of Disagreement. If no Notice of Disagreement is received by Purchaser on or prior to the expiration date of the Review Period, and all such discussions related thereto shall (unless otherwise agreed by Buyer then the Closing Statement and the Seller RepresentativeWorking Capital, Closing Cash and Closing Indebtedness set forth in the Closing Statement shall be deemed to have been accepted by the Securityholder Representative and shall become final and binding upon Purchaser and the Unitholders. If the parties cannot agree on the Working Capital, Closing Cash and Closing Indebtedness within such thirty (30) day period, the Working Capital, Closing Cash and/or Closing Indebtedness, in each case solely to the extent not agreed between the Securityholder Representative and Purchaser, shall be governed determined by Rule 408 PricewaterhouseCoopers (the “Independent Accountant”). The Securityholder Representative and Purchaser shall each enter into a customary engagement letter with the Independent Accountant. The Securityholder Representative and Purchaser shall furnish the Independent Accountant with a statement setting forth the items from the Notice of Disagreement which are still in dispute (the Federal Rules “Independent Accountant Dispute Notice”). In the event that PricewaterhouseCoopers refuses or is otherwise unable to act as the Independent Accountant, the Securityholder Representative and Purchaser shall cooperate in good faith to appoint an independent certified public accounting firm in the United States of Evidence national recognition mutually agreeable to the Securityholder Representative and Purchaser, in which event “Independent Accountant” shall mean such firm. Within thirty (30) days after the submission of such matters to the Independent Accountant, or as in effect soon as practicable thereafter, the Independent Accountant, acting as an expert and not as an arbitrator, will, applying those policies and procedures set forth on Annex A, based on information known or knowable as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter toClosing Date, and otherwise in a manner consistent with the Arbiter shallbasis upon which the Sample Calculations were made, make a final determination in writing of the appropriate amount of each of the line items included in the Closing Balance Sheet Statement as to which there is disagreement as specified in the Independent Accountant Dispute Notice, which determination shall be final, conclusive and binding on the Closing Statement (Securityholder Representative, the Surviving Entity and Purchaser, absent fraud, bad faith or manifest error. With respect to the extent each disputed line item, such amounts are properly in dispute) determination, if not in accordance with the guidelines position of either the Securityholder Representative or Purchaser, shall not be in excess of the higher, nor less than the lower, of the amounts advocated by the Securityholder Representative or Purchaser in the Independent Accountant Dispute Notice with respect to such disputed line item (and procedures set forth Purchaser shall not advocate any positions more adverse to the Unitholders than the amounts reflected in this Agreementthe Closing Statement). Buyer For the avoidance of doubt, the Independent Accountant shall not review any line items or make any determination with respect to any matter other than those matters in the Independent Accountant Dispute Notice that are in dispute. The statement of the amount, as of the Adjustment Time, of Working Capital, Closing Cash, Closing Indebtedness and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not toTransaction Expenses, and the Arbiter determination of the Working Capital, Closing Cash, Closing Indebtedness and Transaction Expenses therefrom that are final and binding on the Securityholder Representative and Purchaser, as determined either through agreement by the Securityholder Representative and Purchaser (deemed or otherwise) or through the determination of the Independent Accountant pursuant to this Section 3.4(d) is referred to herein as the “Final Working Capital Amount”, “Final Closing Cash”, “Final Closing Indebtedness” and “Final Transaction Expenses”, respectively, and the Estimated Closing Consideration, Estimated Aggregate Cash Amount, and Estimated Aggregate Equity Amount derived therefrom are referred to herein as the “Final Closing Consideration”, “Final Aggregate Cash Amount” and “Final Aggregate Equity Amount”, respectively. During the review by the Independent Accountant, (i) neither Purchaser or the Securityholder Representative or any of their respective Affiliates or representatives shall nothave any ex parte communications or meetings with the Independent Accountant and (ii) the Securityholder Representative and Purchaser shall each make reasonably available to the Independent Accountant such individuals and such information, assign books, records and work papers, as may be reasonably required by the Independent Accountant to fulfill its obligations under this Section 3.4(d); provided, however, that the independent accountants of the Securityholder Representative or Purchaser shall not be obligated to make any working papers available to the Independent Accountant unless and until the Independent Accountant has signed a value customary confidentiality and hold harmless agreement relating to any item such access to working papers in dispute greater than form and substance reasonably acceptable to such independent accountants.
(e) The cost of the greatest value for such item assigned Independent Accountant’s review and determination shall be borne on a proportionate basis by BuyerPurchaser, on the one hand, or and the Seller RepresentativeUnitholders, on the other hand(whose share shall be paid on their behalf by the Securityholder Representative from the Securityholder Representative Funds), or less than based on the smallest value for percentage which the portion of the contested amount not awarded in favor of each such item assigned Person bears to the amount actually contested by Buyersuch Person. By way of illustration, if Purchaser’s calculations would have resulted in a $1,000,000 net payment to Purchaser, and the Securityholder Representative’s calculations would have resulted in a $1,000,000 net payment to the Unitholders, and the Independent Accountant’s final determination as adopted pursuant to Section 3.4(d) results in an aggregate net payment of $500,000 to the Unitholders, then Purchaser, on the one hand, or and the Seller RepresentativeUnitholders (whose share shall be paid on their behalf by the Securityholder Representative from the Escrow), on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter toother, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees 75% and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter25%, and the Company shall pay the remaining portion respectively, of such fees and expenses.
(ef) The “Final Closing Consideration” shall be calculated by recalculating the Estimated Closing Consideration using the Final Working Capital Amount in lieu of the Estimated Working Capital Amount, using Final Closing Cash in lieu of Estimated Cash, using Final Closing Indebtedness in lieu of Estimated Closing Indebtedness, using Final Transaction Expenses in lieu of Estimated Transaction Expenses, using Final Closing Consideration in lieu of Estimated Closing Consideration, using Final Aggregate Cash Amount in lieu of Estimated Aggregate Cash Amount, and using Final Aggregate Equity Amount in lieu of Estimated Aggregate Equity Amount, and otherwise using the components of Estimated Closing Consideration as set forth in the definition of Estimated Closing Consideration. If the Estimated Purchase Price Final Closing Consideration is less than the Purchase Price Estimated Closing Consideration paid at the Closing (such shortfallamount, the “Adjustment Deficiency Amount”), Purchaser shall be paid and have deposited promptly (but in any event within five (5) Business Days after the Final Working Capital Amount, Final Closing Cash, Final Closing Indebtedness and Final Transaction Expenses have been agreed upon or determined by the Independent Accountant), by wire transfer from the Escrow Account, an amount in cash equal to the Deficiency Amount; provided, however, in no event shall any Unitholder have personal liability for payment of such amount or any portion thereof, and Purchaser’s sole recourse with respect thereto shall be the Escrow held by the Escrow Agent. If the Final Closing Consideration is greater than the Estimated Closing Consideration paid at the Closing (such amount, the “Excess Amount”), Purchaser shall promptly (but in any event within five (5) Business Days after the Final Working Capital Amount, Final Closing Cash, Final Closing Indebtedness and Final Transaction Expenses have been agreed upon or determined by the Independent Accountant) pay and deliver, or cause to be paid and delivered, to and deposit with the Paying Agent, on behalf of and as agent of the Unitholders, an amount equal to the Excess Amount, which, together with any Remaining Amount, shall be payable in the form of consideration specified with respect to each Unitholder in Section 3.2(a)(iv). If any Escrow remains in the Escrow Account after the payment of the Deficiency Amount or Excess Amount, as the case may be (which shall be the entirety of the Escrow in the case of a payment of the Excess Amount) (such amount, the “Remaining Amount”), then (ia) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment portion of the Adjustment Amount, Remaining Amount payable to Unitholders in cash in accordance with Section 3.2(a)(iv) shall be released to the Paying Agent (on behalf of and as agent for the Unitholders) by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by from the Seller Representative and Buyer in writing) to, or as directed by, the Seller RepresentativeEscrow Account, and (iib) Buyer Purchaser shall, for the benefit of the Unitholders, issue and deposit with the Paying Agent, for delivery to each such Unitholder certificates or evidence of book-entry shares or limited partnership units, as the case may be, representing whole Parent Class A Shares or Purchaser Units issuable pursuant to Section 3.2(a)(ii)(A) and in accordance with Section 3.2(a)(iv), and upon deposit thereof, Purchaser shall be entitled to return of an amount of cash equal to the value of the securities so deposited (as determined in accordance with Section 3.2(a)(iii)). Purchaser and the Seller Securityholder Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant hereby agree to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, (i) within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (25) Business Days after the Final Working Capital Amount, Final Closing Balance SheetCash, Final Closing Indebtedness and Final Transaction Expenses have been agreed upon or determined by the Independent Accountant to deliver promptly from the Escrow Account all funds to be delivered in accordance with this Section 3.4(f) and (ii) within five (5) Business Days after Purchaser shall have made the issuance and deposit with the Paying Agent referred to in clause (b) above, to deliver promptly from the Escrow Account to Purchaser an amount in cash equal to the value (as determined pursuant to Section 3.2(a)(iii)) of the securities so deposited by Purchaser.
(g) Each of the Estimated Closing Statement (including the Estimated Working Capital Amount, Estimated Cash, Estimated Closing Indebtedness and Estimated Transaction Expenses) and the Closing Statement (including the Final Working Capital, Final Closing Cash, Final Closing Indebtedness and Final Transaction Expenses) shall be prepared and calculated in accordance with the definitions of such terms contained in the Agreement and Annex A and, except that the Estimated Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital Statement (and the Purchase Price all calculations set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2in each) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that : (i) the payment not include any purchase accounting or other adjustment arising out of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment consummation of the Excess Amount (if any) and Transactions, (ii) be based on facts and circumstances as they exist up to the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount Closing (or at the Adjustment Time, as applicable) and shall exclude the effect of any portion thereofact, decision or event occurring after the Closing; (iii) shall be asserted against any of include the Seller Parties.
same line items (hand only those line items) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to set forth in the Purchase Price for U.S. federal income tax purposes.Sample Calculations; and (iv) utilize those policies and procedures set forth on Annex A.
Appears in 1 contract
Samples: Merger Agreement (PJT Partners Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior Seller has delivered to the Closing, the Company shall prepare and deliver to Buyer Purchaser its good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time Cash (the “Estimated Closing Balance SheetCash”), ) and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) 90 days following after the Closing Datedate hereof, Buyer shall prepare and Purchaser will deliver to the Seller Representative (i) an unaudited a consolidated balance sheet sheet, in substantially the same form as the Sample Statement, of the Company Entities Companies as of the Adjustment Calculation Time open of business on the date hereof (the “Closing Balance Sheet”), ) and (ii) a statement (showing the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Indebtedness and Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of derived from the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Target Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty Amount (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) together with the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing “Preliminary Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet shall be prepared, and Cash, Indebtedness and Net Working Capital shall be determined (including for purposes of Section 1.05(a)), (i) on a basis consistent with the principles, assumptions, policies, practices and methodologies applied in preparing the Sample Statement and in substantially the same manner as the calculations of Cash, Indebtedness and Net Working Capital set forth therein, and (ii) to the extent consistent with the basis set forth in clause (i), in accordance with Seller’s Accounting Policies and Practices. The Target Net Working Capital Amount shall be determined in accordance with the definition thereof in Section 8.04(b). The Closing Balance Sheet shall not include any changes in assets or liabilities as a result of purchase accounting adjustments or other changes arising from or resulting as a consequence of the transactions contemplated hereby. The Parties agree that the purpose of preparing the Closing Balance Sheet and determining Cash, Indebtedness, the Target Net Working Capital Amount and Net Working Capital is not to permit the introduction of different judgments, accounting methods, policies, principles, practices, procedures, classifications or estimation methodologies for the purpose of preparing the Closing Balance Sheet or determining Cash, Indebtedness, the Target Net Working Capital Amount or Net Working Capital. During the 60-day period following Seller’s receipt of the Preliminary Statement and until final resolution hereunder, Seller and its accountants and other representatives shall be permitted reasonable access to review the books and records of Purchaser and the Closing Companies and any work papers related to the preparation of the Preliminary Statement. Seller and its accountants and other representatives may make inquiries of Purchaser, the Companies and their respective accountants regarding questions concerning or disagreements with the Preliminary Statement arising in the course of their review thereof, and Purchaser shall use its, and shall cause the Companies to use their, commercially reasonable efforts to cause any such accountants to cooperate with and respond to such inquiries. If Seller has any objections to the Preliminary Statement, Seller shall deliver to Purchaser a statement (an “Objections Statement”) that shall specify in reasonable detail the nature of any disagreement so asserted. If an Objections Statement is not delivered to Purchaser within 60 days after delivery of the Preliminary Statement to Seller, the Preliminary Statement shall be revised to the extent necessary to reflect any resolution final, binding and nonappealable by the Parties hereto. Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer Purchaser shall seek negotiate in good faith to resolve in writing any differences that such objections, but if they may have with respect to do not reach a final resolution within 30 days after the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 delivery of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodObjections Statement, the Seller Representative and Buyer Purchaser shall submit to Ernst & Young or, if Ernst & Young is not available, another independent accounting or valuation firm reasonably acceptable to Seller and Purchaser (the Arbiter “Valuation Firm”), for review and resolution of any and all matters (but only such matters) which that remain in dispute and which were properly included in the Notice of DisagreementObjections Statement. Buyer Any further submissions to the Valuation Firm must be written and delivered to each Party to the Seller Representative dispute. The Valuation Firm shall instruct the Arbiter to, and the Arbiter shall, make a final determination of Cash, Indebtedness, the items included in the Closing Balance Sheet Target Net Working Capital Amount and the Closing Statement (Net Working Capital to the extent such amounts are properly in dispute) , in each case, in accordance with the guidelines terms of this Agreement, including the Sample Statement and procedures the definitions of Cash, Indebtedness, Target Net Working Capital Amount and Net Working Capital set forth in this Agreement. Buyer herein, and the Seller Representative resulting Final Consideration will be calculated with reference to such amounts. The Parties will cooperate with the Arbiter Valuation Firm during the term of its engagement. Buyer The determination of Cash, Indebtedness and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital as of the open of business on the date hereof, the determination of the Target Net Working Capital Amount and the Purchase Price set forth thereon resulting Final Consideration calculated with reference thereto, shall become final and binding on the parties hereto Parties on the earlier of (A) the date Seller and Purchaser resolve in writing any differences they have with respect to the matters specified in the Objections Statement and (B) the date the Arbiter Valuation Firm delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution Parties. The Valuation Firm shall be requested by the parties instructed to be delivered not more than thirty (30) render its determination of all matters submitted to it within 30 days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementsubmission. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal Valuation Firm incurred pursuant to the percentage this Section 1.05(b) shall be borne 50% by which the portion Seller and 50% by Purchaser. The fees and disbursements of Seller’s accountants and other representatives incurred in connection with their review of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Preliminary Statement and preparation of any Objections Statement shall be borne by the Seller Representative in the Seller Representative’s submission to the ArbiterSeller, and the Company shall pay the remaining portion of such fees and expensesdisbursements of Purchaser’s accountants and other representatives incurred in connection with their preparation of the Preliminary Statement and review of any Objections Statement shall be borne by Purchaser.
(ec) If the Estimated Purchase Price Final Consideration is greater than the Closing Date Consideration, Purchaser shall promptly (but in any event within five Business Days after the date on which the Final Consideration is finally determined pursuant to Section 1.05(b)) pay to Seller the amount of such excess, by wire transfer of immediately available funds to an account or accounts designated in writing by Seller to Purchaser. If the Final Consideration is less than the Purchase Price Closing Date Consideration, Seller shall promptly (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, but in any event within two (2) five Business Days after the Closing Balance Sheet, date on which the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Final Consideration is finally determined pursuant to this Section 1.05, make payment 1.05(b)) pay to Purchaser the amount of the Adjustment Amountsuch excess, by wire transfer in of immediately available funds (to an account or other alternative delivery arrangement mutually agreed accounts designated in writing by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant Purchaser to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeSeller.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and Within 30 calendar days after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer the Sellers shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Buyer a statement (reflecting the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of Final Cash Payment and the Closing Cash-on-HandAdjusted Principal Amount, the Closing Indebtednesssum of which shall equal the Cash Purchase Price, the Closing Net Working Capital and the calculation of thereof (the Purchase Price resulting therefrom"Final Statement"), in each case, based prepared on a basis consistent with the Closing Balance Sheet. The Closing Balance Sheet; provided, however, that for purposes of determining the Closing Cash-on-Hand, the Closing Indebtedness Cash Purchase Price and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty calculation thereof, (30i) days immediately following the Seller Representative’s receipt of "Accrued Liabilities" on the Closing Balance Sheet and the Closing StatementFinal Balance Sheet shall not include accrued general liabilities and auto insurance, Buyer shallaccrued warranty expense with respect to the Warranty Obligations, payroll deduction, accrued sick pay, accrued bonuses, accrued audit fees, Taxes and shall cause the Company Entities toaccrued Taxes, (xii) the amount of the allowance for doubtful accounts deducted from accounts receivable set forth on the Final Balance Sheet shall be determined on a basis consistent with the Closing Balance Sheet, (iii) the amount of the allowance for obsolete, damaged, missing, excess or slow-moving inventories deducted from inventories set forth on the Final Balance Sheet shall be $415,000, (iv) the amount of the accrual for Company-provided employee medical and dental expenses, to the extent such expenses are within the Company's deductible, set forth on the Final Balance Sheet shall be $35,000, (v) the amount of the accrual for expressed or implied warranty obligations, including, when applicable, handling, transportation and installation costs, set forth on the Final Balance Sheet shall be $43,740 and (vi) the amount of the accrual for penalties related to failure to meet committed delivery dates for crane units set forth on the Final Balance Sheet shall be $397,350. The Buyer shall provide the Seller Representative and its Representatives with Sellers reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records pertaining to the 4 Business to enable them to prepare the Final Statement. The Sellers shall provide the Buyer access to copies of all work papers and other relevant documents to verify the entries contained in the Final Statement. The Buyer shall have a period of 30 calendar days after delivery to them of the Company Entities Final Statement (the "Response Period") to review it and to senior management personnel of make any objections the Company Entities, Buyer may have in each case, writing to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives Sellers. If written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior objections to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Final Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except are delivered to the extent addressed by a duly delivered Notice of Disagreement prior to Sellers within the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)Response Period, then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of Sellers shall attempt to resolve the Federal Rules of Evidence (as matter or matters in effect as of dispute. If no written objections are made within the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodResponse Period, the Seller Representative Final Cash Payment and Buyer the Adjusted Principal Amount shall submit be compared to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer Closing Cash Payment and the Seller Representative shall instruct the Arbiter to, Non-Adjusted Principal Amount and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (adjustments will be made according to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any1.5(e) and (iiSection 1.5(f) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partieshereof.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Asset Purchase Agreement (Offshore Tool & Energy Corp)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior In order finally to determine the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase PriceClosing Payment will be increased or decreased, as the Estimated Legos Holdings Purchased Units Purchase case may be, by the amount, if any, by which the Adjustment Amount and Indebtedness, each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated as finally determined in accordance with this Section 1.3, differ (on a combined basis) from the Agreed Accounting Principles and amounts thereof reflected in a manner consistent with the applicable definitions contained in Estimated Purchase Price Adjustment Amount. For purposes of this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice the adjustment referred to in the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, immediately preceding sentence will be finally calculated on a net basis and (y) cooperate with Buyer and its Representatives in connection with their review all determinations of the Estimated actual amounts thereof (the "Actual Purchase Price Adjustment Amount") will be determined by reference to the amounts thereof required to be shown, with respect to Indebtedness, on a consolidated balance sheet as of the opening of business on the Closing Balance Sheet Date and, with respect to Net Cash Flow, on a consolidated statement of cash flows for the period from and including November 2, 1997 through the Estimated opening of business on the Closing Date (collectively, the "Closing Statement. Provided that Buyer pays "), each on a basis consistent with, and using the Purchase Price same accounting principles, policies, practices and procedures used in preparing, the Financial Statements and in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds Schedule 1.2 and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, BuyerSection 1.2(a). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) 60 calendar days following after the Closing Date, Buyer shall Purchaser will in good faith prepare and deliver deliver, or cause to be prepared and delivered, to Seller a Closing Statement setting forth Purchaser's determination of the Seller Representative Actual Purchase Price Adjustment Amount. The parties and their respective authorized representatives will be entitled to review, during normal business hours, the books, records and work papers of the Company to prepare or review, as the case may be, the Closing Statement and to determine the Actual Purchase Price Adjustment Amount. Without limiting the generality or effect of any other provision hereof, (i) an unaudited consolidated balance sheet the parties will provide the other parties and their authorized representatives access, during normal business hours, to the facilities, personnel and accounting and other records of the Company Entities and the parties, as the case may be, to the extent reasonably determined by such other parties to be necessary to 4 permit Purchaser to prepare or have prepared the Closing Statement and to compute the Actual Purchase Price Adjustment Amounts as herein provided and to permit Seller to review such Closing Statement and computation (including, if requested by Seller, such access as may be necessary or appropriate to permit Arthur Andersen L.L.P. ("AA") to perform an audit of Net Cash Flow); pxxxxxxd, xxxxxxr, that the Adjustment Calculation Time (parties will conduct any such review in a manner that does not unreasonably interfere with the “Closing Balance Sheet”)conduct of any other party's business, and (ii) a statement (Seller will take such actions as may be reasonably requested by Purchaser to close, or to assist Purchaser in closing, as of the “opening of business on the Closing Statement”) setting forth Date, or as of the Closing, as the case may be, the books and accounting records of the Company and otherwise reasonably to cooperate with Purchaser and its representatives in reasonable detail Buyer’s calculation the preparation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance SheetStatement. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance Concurrently with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt delivery of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall Seller will use its reasonable efforts to cause the Company Entities to, (x) AA to provide the Seller Representative and its Representatives with reasonable Purchaser access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives such firm's workpapers, trial balances and similar materials prepared in connection with their review such firm's audits or reviews of any of the Closing Balance Sheet and Financial Statements (the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement"Workpapers").
(c) If, within 45 calendar days after the date of Purchaser's delivery of its computation of the Actual Purchase Price Adjustment Amount, Seller determines in good faith that such computations are inaccurate, Seller will give written notice to Purchaser within such 45 calendar day period (i) setting forth Seller's computation of Actual Purchase Price Adjustment Amount and (ii) specifying in reasonable detail Seller's basis for its disagreement with Purchaser's computations. The Closing Balance Sheetfailure by Seller so to express its disagreement or provide such specification within such 45 calendar day period will constitute Seller's acceptance of Purchaser's computation of the Actual Purchase Price Adjustment Amounts. If Purchaser and Seller are unable to resolve any disagreement between them within ten calendar days after the giving of notice of such disagreement, the Closing Statement items in dispute will be referred for determination to KPMG Peat Marwick LLP (the "Accountants") as promptly as practicable. The Accountants will make a determination as to each of the items in dispute, which determination will be (A) in writing, (B) furnished to each of the parties hereto as promptly as practicable after the items in dispute have been referred to the Accountants, (C) made in accordance with this Agreement, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final (D) conclusive and binding upon each of the parties hereto thirty hereto. In connection with their determination of the disputed items, the Accountants will be entitled to rely on the Workpapers and the Company's books and records, and the fees and expenses of the Accountants will be shared equally by Purchaser and Seller (30) days following except as provided below). Purchaser and Seller will use reasonable efforts to cause the Accountants to render their decision as soon as practicable, including without limitation by promptly complying with all reasonable requests by 5 the Accountants for information, books, records and similar items. If the determination of the Accountants represents an outcome more favorable to either Purchaser or Seller Representative’s receipt thereof unless than the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature midpoint of such disagreement; providedparties' last written settlement offers related to all items in dispute, that (i) in the Closing Balance Sheetaggregate, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior submitted to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance other party at least two calendar days before the referral of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except matter to the extent addressed by Accountants (each a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c"Last Offer"), then the Closing Balance Sheet party obtaining such favorable result will be deemed the "Prevailing Party" and the Closing Statement (as revised in accordance with this Section 1.05(d))other party will be deemed the "Non-Prevailing Party". For purposes hereof, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal Accountants, will be borne by the Non-Prevailing Party. No party will disclose to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the ArbiterAccountants, and the Company shall pay Accountants will not consider for any purpose, any settlement offer (other than the remaining portion of such fees and expensesLast Offer) made by any party.
(ed) If To the extent that the Actual Purchase Price Adjustment Amount, determined as provided in this Section 1.3 is more or less than the Estimated Purchase Price is less than Adjustment Amount, Seller or Purchaser, as applicable, will, within ten calendar days after the final determination of the Actual Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shallcalculated on a net basis, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.051.3, make or, in the case of Purchaser, cause to be made payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount amount of such difference, together with interest thereon from the Escrow Funds Closing Date to the date of payment (at a rate equal to The Chase Manhattan Bank's prime rate, as publicly announced and in effect from time to time during such period, plus 2.0%, calculated on the Escrow Account. If basis of the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”actual number of days elapsed over 365), then Buyer and the Seller Representative shallto such account as has been designated by Purchaser or Seller, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representativeapplicable.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (ai) At least three two (32) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, Seller shall, or shall cause the Company shall to, prepare and shall deliver to Buyer Purchaser a statement (ithe “Estimated Closing Statement”), which shall be prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) on a basis consistent with and in accordance with the Accounting Principles, setting forth (x) an estimated consolidated balance sheet of the Company Entities as of 12:01 a.m. New York City time on the Closing Date (such time, the “Measurement Time”) and (y) Seller’s good faith calculation of (A) the Base Purchase Price, (B) the estimated amount of Working Capital as of the Adjustment Calculation Measurement Time (the “Estimated Closing Balance SheetWorking Capital Amount”), and (iiC) a statement (the “Estimated estimated amount of Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates Indebtedness as of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness Measurement Time (the “Estimated Closing Indebtedness”), ) and (D) the Closing Net Working Capital estimated amount of the Transaction Expenses (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase PriceTransaction Expenses”), in each case, based on the Estimated Closing Balance Sheet Company’s books and including records and other information available at the Estimated Purchased Shares Purchase Pricetime, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each Base Purchase Price will be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreementbased on such estimates. From and after Following delivery of the Estimated Closing Balance Sheet Statement, Purchaser shall be given reasonable access to the relevant books, records, information and personnel and representatives of each of Seller, the Company and its Subsidiaries (including the Company’s working papers and the working papers of the Company’s independent accountants, if any, relating to the preparation of the Estimated Closing Statement) as Purchaser or its representatives may request for the purposes of reviewing the Estimated Closing Statement, and Seller shall consider in good faith any comments or suggested modifications to the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer suggested by Purchaser and its Representatives with representatives. Seller shall, and shall cause the Company, its Subsidiaries and each of their respective representatives to, cooperate in good faith to answer any questions and use commercially reasonable access at all reasonable times during normal business hours and upon reasonable prior notice efforts to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested resolve any legitimate issues raised by Buyer Purchaser or any of its Representatives representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or .
(ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
Within seventy-five (b) Within ninety (9075) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting that shall include and set forth a balance sheet of the Company as of the Measurement Time, which shall be prepared in reasonable detail Buyeraccordance with GAAP on a basis consistent with and in accordance with the Accounting Principles, and on that basis set forth Purchaser’s good faith calculation of the Working Capital, Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Indebtedness and the calculation of the Purchase Price resulting therefromTransaction Expenses, in each case, based on as of the Closing Balance Sheet. The Closing Balance SheetMeasurement Time (such amounts, the “Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementAdjustment Amounts”). During the thirty forty-five (3045) days immediately following the Seller RepresentativeSeller’s receipt of the Closing Balance Sheet Statement (the “Purchase Price Adjustment Review Period”), Seller and its representatives shall be permitted to review the Company’s working papers and the working papers of the Company’s independent accountants, if any, relating to the preparation of the Closing Statement and the calculation of Working Capital and Closing Indebtedness therein, and shall, upon reasonable advance notice to Purchaser, have reasonable access to the relevant books, records, information, personnel and representatives of the Company as Seller or its representatives may request for the purposes of reviewing the Closing Statement, Buyer and Purchaser shall, and shall cause the Company Entities Company, its Subsidiaries and each of their respective representatives to, (x) provide the cooperate in good faith to answer any questions and use commercially reasonable efforts to resolve any legitimate issues raised by Seller Representative and or its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet Statement; provided, however, that the independent accountants of the Company shall not be obligated to make any working papers available to Seller unless and until Seller has signed a customary confidentiality and hold harmless agreement relating to such access to working papers in form and substance reasonably acceptable to such independent accountants. Seller shall notify Purchaser in writing (the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Purchase Price Adjustment Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Adjustment Review Period if Seller disagrees with the Closing Statement, or Working Capital, Closing Indebtedness or Transaction Expenses set forth thereon, (ii) except to the extent addressed by a duly delivered therein. The Notice of Purchase Price Adjustment Disagreement prior to shall set forth in reasonable detail the expiration of basis for such thirty disagreement, the disputed amounts involved (30)-day period, each component the “Disputed Amounts”) and Seller’s determination of the Closing Balance Sheetamount of Working Capital, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working CapitalTransaction Expenses, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-HandMeasurement Time, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d)reasonably detailed supporting documentation. During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Purchase Price Adjustment Disagreement, Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer Purchaser shall seek in good faith to resolve in writing any differences disagreement that they may have with respect to the matters specified in the Notice of Purchase Price Adjustment Disagreement; provided that, to the extent Seller does not object to certain items in the Closing Statement, such items shall be deemed accepted by Seller and all such discussions related thereto shall (unless otherwise agreed become conclusive and binding on the parties hereto. If no Notice of Purchase Price Adjustment Disagreement is received by Buyer and Purchaser on or prior to the Seller Representative) be governed by Rule 408 expiration date of the Federal Rules of Evidence (as Purchase Price Adjustment Review Period, then the Closing Statement and Working Capital and Closing Indebtedness set forth in effect as of the date of this Agreement)Closing Statement shall be deemed to have been accepted by Seller and shall become final and binding upon Seller and Purchaser. At the end of If Seller and Purchaser cannot agree on Working Capital, Closing Indebtedness and Transaction Expenses within such thirty (30)-day period or such agreed-upon longer period, the Seller Representative Working Capital, Closing Indebtedness and/or and Buyer shall submit Transaction Expenses, in each case, solely to the Arbiter extent not agreed between Purchaser and Seller, shall be determined in accordance with the terms of this Section 1.02(c)(ii) by Xxxxx Xxxxxxxx LLP or, if such accounting firm determines it is not independent for review purposes of acting as the Independent Accountant, another nationally recognized accounting firm mutually acceptable to both Seller and resolution any Purchaser (the “Independent Accountant”). Seller and all matters (but only such matters) which remain in dispute and which were properly included in Purchaser shall furnish the Independent Accountant with a statement setting forth the items from the Notice of DisagreementPurchase Price Adjustment Disagreement which are still in dispute (in either case, the “Independent Accountant Dispute Notice”). Buyer In the event that Xxxxx Xxxxxxxx LLP refuses or is otherwise unable to act as the Independent Accountant, Seller and Purchaser shall cooperate in good faith to appoint an independent certified public accounting firm in the United States of national recognition mutually agreeable to Seller Representative and Purchaser, in which event “Independent Accountant” shall instruct mean such firm. As soon as practicable, but in no event later than thirty (30) days after the Arbiter tosubmission of such matters to the Independent Accountant, acting as an expert and not as an arbitrator, the Arbiter shall, Independent Accountant will make a final determination of the appropriate amount of each of the line items included in the Closing Balance Sheet Statement as to which there is disagreement as specified in the Independent Accountant Dispute Notice, which determination shall be conclusive and the Closing Statement (binding on Seller and Purchaser and shall not be subject to the extent appeal or further review, absent manifest error or fraud. With respect to each disputed line item, such amounts are properly in dispute) determination, if not in accordance with the guidelines and procedures set forth position of either Seller or Purchaser, shall not be in this Agreement. Buyer and excess of the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other handhigher, or less than the smallest value for lower, of the amounts advocated by Seller in the Notice of Purchase Price Adjustment Disagreement or Purchaser in the Closing Statement with respect to such item assigned by Buyerdisputed line item. For the avoidance of doubt, on the one hand, Independent Accountant shall not review any line items or make any determination with respect to any matter other than those matters in the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative Independent Accountant Dispute Notice that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent reviewdispute. The statement of Working Capital, Closing Balance Sheet, Indebtedness and Transaction Expenses as of the Closing Statement Measurement Time and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net determination of Working Capital and Closing Indebtedness and the Purchase Price set forth thereon shall become Transaction Expenses therefrom that are final and binding on Seller and Purchaser pursuant to the parties hereto on terms of this Section 1.02(c)(ii), as determined either through agreement of Seller and Purchaser (deemed or otherwise) or through the date determination of the Arbiter delivers its final resolution in writing Independent Accountant pursuant to Buyer this Section 1.02(c)(ii) are referred to herein as the “Final Working Capital Amount”, “Final Closing Indebtedness” and “Final Transaction Expenses”, respectively. During the Seller Representative (which final resolution shall be requested review by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Independent Accountant, Seller and Purchaser shall, and Purchaser shall cause the Company to, make available to the Independent Accountant such resolution individuals and such information, books, records and work papers, as may be reasonably required by the Arbiter Independent Accountant to fulfill its obligations under this Section 1.02(c)(ii); provided, however, that the independent accountants of Seller, Purchaser or the Company shall not be subject obligated to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere make any working papers available to the requirements of Independent Accountant unless and until the Independent Accountant has signed a customary confidentiality and hold harmless agreement relating to such access to working papers in form and substance reasonably acceptable to such independent accountants.
(iii) With respect to any fees payable to the Independent Accountant pursuant to this Agreement. The , Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter Independent Accountant equal to one hundred percent (100%) multiplied by a fraction, the percentage numerator of which is the aggregate amount of Disputed Amounts submitted to the Independent Accountant that are resolved in favor of Purchaser (that being the difference between the Independent Accountant’s determination and Seller’s determination) and the denominator of which is the total amount of Disputed Amounts submitted to the Independent Accountant (that being the sum total by which Purchaser’s determination and Seller’s determination differ from the determination of the Independent Accountant). Purchaser shall pay that portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesexpenses of the Independent Accountants that Seller is not required to pay hereunder.
(eiv) The Final Purchase Price shall be calculated by recalculating the Base Purchase Price using the Final Working Capital Amount in lieu of the Estimated Working Capital Amount, using the Final Closing Indebtedness in lieu of the Estimated Closing Indebtedness and using the Final Transaction Expenses in lieu of the Estimated Transaction Expenses and otherwise using the components of Base Purchase Price as set forth in the definition of Base Purchase Price.
(v) If the Estimated Final Purchase Price is less than the Base Purchase Price paid at the Closing (the absolute value of such shortfalldifference, the “Adjustment Deficiency Amount”)) and the Deficiency Amount exceeds $50,000, then Seller shall promptly (i) Buyer shall, but in any event within two five (25) Business Days after the Closing Balance SheetFinal Working Capital Amount, the Final Closing Statement Indebtedness and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and Final Transaction Expenses have been agreed upon (or deemed agreed upon) or determined by the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, Independent Accountant) pay by wire transfer in of immediately available funds (or other alternative delivery arrangement mutually agreed by to Purchaser the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt amount of such instructions, to, or as directed by, the Seller Representative.
(f) Deficiency Amount. If the Estimated Final Purchase Price is greater than the Base Purchase Price paid at the Closing (the absolute value of such excessdifference, the “Excess Amount”), then Buyer ) and the Seller Representative shallExcess Amount exceeds $50,000, Purchaser shall promptly (but in any event within two five (25) Business Days after the Final Working Capital Amount, the Final Closing Balance SheetIndebtedness and the Final Transaction Expenses have been agreed upon (or deemed agreed upon) or determined by the Independent Accountant) pay by wire transfer of immediately available funds to Seller the amount of such Excess Amount. Any payment due under this Section 1.02(c)(v) shall bear interest from the date such payment should have been paid pursuant to Section 1.02(c)(v) to the date of actual payment at a rate equal to the “prime rate” adjusted on a daily basis as published from time to time in The Wall Street Journal. This Section 1.02(c)(v) shall survive the Closing until any payment due and accruing under this Section 1.02(c)(v) has been received by the respective party to whom such payment is to be made.
(vi) Seller and Purchaser agree that, absent manifest error or fraud, the procedures set forth in this Section 1.02 for resolving disputes with respect to the Closing Statement and the calculation of any Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement Adjustment Amounts shall be the sole and exclusive remedy and source method for resolving any such disputes; provided that this provision shall not prohibit any party from instituting litigation to enforce any decision pursuant to the terms hereof by the Independent Accountant in any court of recovery for Buyer for payment competent jurisdiction. It is the intent of the Excess Amount (if any) and (ii) parties to have any determination by the purchase price adjustment Independent Accountant proceed in an expeditious manner and the dispute resolution provisions provided for in this Section 1.05parties agree to advise and instruct the Independent Accountant to abide by the deadlines and time period set forth herein; provided, shall however, that any deadline or time period contained herein may be the exclusive remedies for the matters addressed extended or that could be addressed modified by this Section 1.05. For the avoidance of doubt, and without limiting the generality agreement of the foregoing, no claim by Buyer for parties and the payment parties agree that the failure of the Excess Amount (Independent Accountant to strictly conform to any deadline or time period contained herein shall not in and of itself be a basis for seeking to overturn any portion thereof) shall be asserted against any of determination rendered by the Seller PartiesIndependent Accountant.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase Agreement (Alj Regional Holdings Inc)
Purchase Price Adjustment. (a) At least Estimated Closing Statement. Parent shall prepare in good faith and shall provide to Buyer no later than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Closing Statement”) ), together with reasonably detailed supporting information, setting forth in reasonable detail the CompanyParent’s good faith estimates of (i) the aggregate amount of all Indebtedness outstanding and unpaid as of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), including a breakdown of the amount and obligee with respect to each item of Indebtedness; (ii) the aggregate amount of all Transaction Expenses outstanding and unpaid as of the Closing Net Working Capital (the “Estimated Closing Net Working CapitalTransaction Expenses”) and the calculation ), including a breakdown of the Purchase Price resulting therefrom amount and obligee with respect to each Transaction Expense; (iii) the aggregate amount of all Pass Card Liabilities as of the Closing (the “Estimated Purchase PricePass Card Liability Amount”); (iv) the aggregate amount of all Film Equipment Expenses unpaid (whether or not then due and payable) as of the Closing (the “Estimated Film Equipment Expenses”), in including a breakdown of the amount and obligee with respect to each caseFilm Equipment Expense; (v) the aggregate amount of all New Theatre Development Expenses (the “Estimated New Theatre Development Expenses”); (vi) the Concession Inventory Amount as of the Closing (the “Estimated Concession Inventory Amount”); (vii) the aggregate amount of all Repair Amounts as of the Closing (the “Estimated Repair Amounts”); (viii) the aggregate amount of all NCM Buyout Obligations (the “Estimated NCM Buyout Amount”), provided that the Estimated NCM Buyout Amount shall not exceed (but may be less than) the NCM Buyout Obligation Cap; and (ix) based on clauses (i) through (viii), a calculation of the resulting Estimated Closing Balance Sheet and including the Estimated Purchased Shares Cash Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed applicable Accounting Principles and Principles. Prior to Closing, Parent shall consider in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and good faith any proposed changes to the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested proposed by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety Pay-Off Letters; Lien Releases. No later than three (903) days following Business Days prior to the Closing Date, Buyer Parent shall prepare and deliver to the Seller Representative Buyer (i) an unaudited consolidated balance sheet of pay-off letters, each in form and substance reasonably satisfactory to Buyer, together with UCC termination statements with respect to all Indebtedness set forth on the Company Entities as of the Adjustment Calculation Time Estimated Closing Statement (the each, a “Closing Balance SheetPay-Off Letter”), ; and (ii) a statement (the “Closing Statement”) setting full releases of all Liens securing or in respect of all Indebtedness set forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Estimated Closing Statement (as revised in accordance with this Section 1.05(d))each, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “ArbiterLien Release”). The Closing Balance Sheet and the Closing Statement Without limitation, each Pay-Off Letter shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingset forth, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing applicable Indebtedness, the dollar amount necessary to fully repay such Indebtedness at the Closing Net Working Capital and (including per diem amounts through the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution Closing Date), wire-transfer pay-off instructions for such Indebtedness, a reasonably detailed description of any Liens securing or in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission respect of such disputed matters)Indebtedness, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies contact information for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesnamed party debtor with respect to such Indebtedness.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Asset Purchase Agreement
Purchase Price Adjustment. (a) At least three (3) For the purposes of clarification only, Seller is retaining all Accounts Payable and Accounts Receivable of the Business Days, but no more than five (5) Business Days, prior and the only purchase price adjustment after Closing will be the adjustment of the Net Inventory pursuant to the Closing, the Company shall prepare and deliver to Buyer this Section 2.4.
(i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time Within sixty (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9060) days following after the Closing Date, Buyer shall cause its independent certified public accountants (“Buyer’s Accountants”) to prepare and deliver to Seller a statement, the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the “Buyer’s Price Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation the difference between the Net Inventory as of the Closing Cash-on-Hand, Date and $771,179. In connection with the Closing Indebtedness, the Closing Net Working Capital and the calculation preparation of the Purchase Buyer’s Price resulting therefromAdjustment Statement, Buyer shall take and prepare a physical count of inventory included in each case, based the Assets as of the close of business on the Closing Balance Sheet. The Closing Balance Sheet, Date and Buyer’s Accountants shall observe and audit such physical count and deliver to Seller a certificate that the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated Buyer’s Price Adjustment Statement was prepared in accordance with the Agreed Accounting Principles Principles. Buyer shall cause Buyer’s Accountants to include with such certificate a copy of Buyer’s Accountants’ workpapers or otherwise make such workpapers available for review by Seller and in a manner consistent with Seller’s Accountants. If Buyer’s Accountants fail to deliver the applicable definitions contained in this Agreement. During the thirty Buyer’s Price Adjustment Statement to Seller within sixty (3060) days immediately following the Seller Representative’s receipt of after the Closing Balance Sheet and Date the Closing Statement, Buyer shallNet Inventory shall be deemed to be an amount equal to $771,179, and this amount shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become be final and binding upon the parties hereto thirty parties.
(30ii) If Buyer’s Accountants timely deliver the Buyer’s Price Adjustment Statement to Seller and Seller disagrees with it, Seller shall have the right to have its independent certified public accountants (“Seller’s Accountants”) prepare and deliver to Buyer within sixty (60) days following after receipt of the Buyer’s Price Adjustment Statement its own Price Adjustment Statement (“Seller’s Price Adjustment Statement”) prepared in accordance with the Accounting Principles. If Seller Representativefails to deliver the Seller’s Price Adjustment Statement to Buyer within sixty (60) days after receipt thereof unless of the Seller Representative gives written Buyer’s Price Adjustment Statement, the Buyer’s Price Adjustment Statement shall be final and binding upon the parties.
(iii) If Seller’s Accountants timely deliver the Seller’s Price Adjustment Statement to Buyer and Buyer fails to deliver a notice of its disagreement (a “Notice of Disagreement”) with the Seller’s Price Adjustment Statement to Buyer prior to such date, which notice shall describe in reasonable detail Seller within thirty (30) days after receipt of the nature of such disagreement; provided, that (i) the Closing Balance SheetSeller’s Price Adjustment Statement, the Closing Seller’s Price Adjustment Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become be final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty parties.
(30)-day period, of written notice to iv) If Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by delivers a duly delivered timely Notice of Disagreement prior to Seller, Buyer and Seller shall select other independent certified public accountants to be mutually agreed upon, who shall determine the expiration of such thirty (30)-day period, each component of Net Inventory at the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated Date in accordance with the Agreed Accounting Principles, and that determination shall be binding upon both Buyer and Seller. For clarification, the Accounting Principles and in a manner used to value the inventory shall be consistent with the applicable definitions contained methodology used in the Financial Statements, a copy of which has previously been provided to Buyer. The fees and expenses of the certified independent accountants selected by both Buyer and Seller pursuant to Section 2.4(a)(iv) shall be borne one half each by Buyer and Seller. Buyer and Seller acknowledge and agree that the provisions of Sections 12.12 and 12.13 shall not apply to disputes described in this Agreement and/or Section 2.4(a).
(Bb) mathematical errors in If the computation final Price Adjustment Statement discloses a positive net change to the specific items included therein, then the amount of such positive net change (the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or "Positive Purchase Price Adjustment") shall be added to the Purchase Price. If the Price Adjustment Statement discloses a negative net change to the specific items included therein then the Purchase Price shall be reduced by the amount of such negative net change (the "Negative Purchase Price Adjustment").
(c) Not later than three (3) business days after the determination of the final Price Adjustment Statement (such third business day being the "Purchase Price Adjustment Due Date"), Buyer shall pay to Seller by wire transfer of immediately available funds to such bank account as Seller shall designate in writing to Buyer, the Positive Purchase Price Adjustment, if any, plus interest thereon from the Closing Date through the date of payment at the prime rate published by the Wall Street Journal as that rate may vary from time to time, or if that rate is no longer published, a comparable rate ("Agreed Rate").
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and On or before the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Adjustment Due Date, Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in of immediately available funds of to such bank account as Buyer shall designate in writing to Seller, the Excess Amount Negative Purchase Price Adjustment, if any, plus interest thereon from the Escrow Funds in Closing Date through the Escrow Account. If date of payment at the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativeAgreed Rate.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysWithin 60 days -------------------------- after the Closing Date, but no more than five (5) Business Days, prior to the Closing, the Company Seller shall prepare and deliver to Buyer Purchaser (i) an estimated consolidated audited combined balance sheet of the Company Entities Division as of the Adjustment Calculation Time Closing Date (the “Estimated "Closing Balance Sheet”"), prepared from the books and records of Seller and its subsidiaries relating to the Division in accordance with generally accepted accounting principles applied on a consistent basis with the Balance Sheet, together with a report thereon prepared and certified by Price Waterhouse, (ii) a statement (the “Estimated "Closing Statement”") setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (as defined below) as of the “Estimated close of business on the Closing Net Date ("Closing Working Capital”"), together with a certificate of Price Waterhouse that the Closing Statement has been prepared in compliance with the requirements of this Section 2.3 , (iii) and a statement setting forth the calculation Restructuring Amount (as defined below) as of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based close of business on the Estimated Closing Balance Sheet Date and including (iv) a statement setting forth the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery Norden Amount (as defined below) as of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal close of business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following on the Closing Date, Buyer . Purchaser shall prepare and deliver to cause the Seller Representative (i) an unaudited consolidated balance sheet employees of the Company Entities as of Division to assist Seller in the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt preparation of the Closing Balance Sheet and the Closing Statement, Buyer shall, Statement and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the personnel, properties, books and records of the Company Entities and to senior management personnel Division for such purpose. Seller's independent auditors may participate in the preparation of the Company EntitiesClosing Statement and Purchaser's independent auditors may review the preparation of, in each caseand all working papers related to, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement; provided, however, that Purchaser acknowledges that Seller shall have the -------- ------- primary responsibility and (y) cooperate with the Seller Representative and its Representatives in connection with their review of authority for preparing the Closing Balance Sheet and the Closing Statement.
(c) The . At Purchaser's option and expense, a physical of the inventory shall be conducted by Sellers consistent with past practice on or before the Closing Date for the purpose of preparing the Closing Balance Sheet, and each of Seller and Purchaser and their respective independent auditors shall have the right to observe the taking of such physical inventory. Any costs or expenses incurred by the Division in connection with such taking of such physical inventory shall be added back in determining Closing Working Capital. During the 30-day period following Purchaser's receipt of the Closing Statement Statement, subject to signing of customary releases, Purchaser and its independent auditors shall be permitted to review Seller's independent auditors' working papers relating to the Closing Balance Sheet and the Closing Cash-on-Hand, the Statement. The Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Statement shall become final and binding upon the parties hereto thirty (30) days on the thirtieth day following the Seller Representative’s receipt thereof delivery thereof, unless the Seller Representative Purchaser gives written notice of its disagreement with the Closing Statement (a “"Notice of Disagreement”") to Buyer Seller prior to such date, which notice . Any Notice of Disagreement shall describe (A) specify in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereonany disagreement so asserted, (iiB) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be Capital not being calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or Section 2.3 (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then which includes disagreements based on the Closing Balance Sheet and the Closing Statement not being in compliance with the requirements of this Section 2.3) and (C) be accompanied by a certificate of Purchaser that it has complied with the covenants set forth in Section 2.3(f). If a Notice of Disagreement is received by Seller in a timely manner, then the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon clause (I) or (II) below) shall become final and binding upon the parties hereto Seller and Purchaser on the earlier of (xI) the date all Seller and Purchaser resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (II) the date any disputed matters are finally resolved in writing by the Seller Representative and Buyer and Accounting Firm (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(das defined below). During the thirty (30) days immediately -day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Disagreement, Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer Purchaser shall seek in good faith to resolve in writing any differences that which they may have with respect to the matters specified in the Notice of Disagreement, . During such period Seller and all such discussions related thereto its independent auditors shall (unless otherwise agreed by Buyer and have access to the Seller Representative) be governed by Rule 408 working papers relating to the Notice of the Federal Rules of Evidence (as in effect as of the date of this Agreement)Disagreement. At the end of such thirty (30)-day period or such agreed30-upon longer day period, the Seller Representative and Buyer Purchaser shall submit to an independent accounting firm (the Arbiter "Accounting Firm") for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer The Accounting Firm shall be Ernst & Young or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the parties hereto in writing. Seller and Purchaser shall jointly use all reasonable efforts to cause the Accounting Firm to render a decision resolving the matters submitted to the Accounting Firm within 30 days following submission. Seller Representative shall instruct and Purchaser agree that judgment may be entered upon the Arbiter to, and the Arbiter shall, make a final determination of the items included Accounting Firm in any court having jurisdiction over the Closing Balance Sheet and the Closing Statement (party against which such determination is to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent reviewbe enforced. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative cost of any arbitration (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of including the fees and expenses of the Arbiter equal to the percentage by which the portion Accounting Firm and reasonable attorney fees and expenses of the disputed amounts parties) pursuant to this Section 2.3 shall be borne by Purchaser and Seller in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed inverse proportion as they may prevail on matters resolved by the Seller Representative Accounting Firm, which proportionate allocations shall also be determined by the Accounting Firm at the time the determination of the Accounting Firm is rendered on the merits of the matters submitted. The fees and disbursements of Seller's independent auditors incurred in the Seller Representative’s submission to the Arbiterconnection with their review of any Notice of Disagreement shall be borne by Seller, and the Company shall pay the remaining portion of such fees and expensesdisbursements of Purchaser's independent auditors incurred in connection with their review of the Closing Statement shall be borne by Purchaser.
(eb) If the Estimated The Purchase Price shall be increased by the Restructuring Amount, by the Norden Amount and by the amount by which Closing Working Capital exceeds $349,000,000 (the "WC Amount"), and the Purchase Price shall be decreased by the amount by which Closing Working Capital is less than the WC Amount (the Purchase Price (such shortfallas so increased or decreased is herein referred to as the "Adjusted Purchase Price"). If the Closing Date Amount is less than the Adjusted Purchase Price, Purchaser shall, and if the “Adjustment Amount”)Closing Date Amount is more than the Adjusted Purchase Price, then (i) Buyer Seller shall, within two (2) Business Days 10 business days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become becomes final and binding on the parties pursuant to this Section 1.05parties, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount amount of such difference, together with interest thereon at the rate of 8.5% per annum, calculated on the basis of the actual number of days elapsed divided by 365, from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions Closing Date to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account todate of actual payment, or as directed by, the Seller Representativecompounded annually.
(gc) Buyer agrees that The term "Working Capital" shall mean Current Assets minus Current Liabilities (i) the payment of the Excess in each case as defined below). The WC Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated equals Working Capital as an adjustment to the Purchase Price for U.S. federal income tax purposes.set forth
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet As of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)Effective Date, and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfiedincreased or decreased, Buyer shall not be responsible as the case may be, on a dollar-for-dollar basis, by the amount by which the Assumed Current Liabilities is greater or have any liability to any Person for less than $2,500,000 (the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i“Liabilities Target”) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyerin accordance with Section 3.2(b). Any disputes among the Sellers with respect to the allocation of In addition, at Closing, the Purchase Price among such Sellers shall not interfere in any way with, be increased or give rise to any claim or right upon, Buyer’s ownership decreased by the aggregate amount of the Purchased SecuritiesEffective Date Adjustments based upon the estimate of such items included in the Initial Draft Assumed Liabilities and Adjustments Closing Statement delivered to Buyer pursuant to Section 3.2(b)(i) (the “Estimated Effective Date Adjustments Payment”).
(b) Within ninety The Purchase Price shall be subject to adjustment, if any, as specified in this Section 3.2(b).
(90i) days following At least two Business Days prior to the Closing Date, the Representative shall deliver to Buyer a statement of Assumed Current Liabilities as of the Effective Date and a statement of the Sellers’ good faith estimate of the aggregate amount of the Effective Date Adjustments (the “Initial Draft Assumed Liabilities and Adjustments Closing Statement”). The Initial Draft Assumed Liabilities and Adjustments Closing Statement shall be prepared in conformity with the definition of Assumed Current Liabilities and in accordance with the calculations set forth on Schedule 3.1(a) and Schedule 3.1(c).
(ii) As soon as practicable following the Closing, with the assistance of the Company’s accountants, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet a statement of the Company Entities Assumed Current Liabilities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), Effective Date and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty Effective Date Adjustments (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.Second
Appears in 1 contract
Samples: Stock Purchase Agreement (Critical Homecare Solutions Holdings, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) a. Within ninety (90) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to Seller Parent a statement setting forth, without duplication of any items, Purchaser’s calculation as of 12:01 a.m. (New York time) on the Closing Date of the Working Capital, the Net Cash, VAT due by Purchaser under Section 6.6(i), the amount of Transfer Taxes payable by the Sellers and by Purchaser, the allocation of Transfer Taxes payable by the Sellers and by Purchaser under Section 6.6(h), and reasonable supporting schedules for the foregoing (the “Proposed Closing Statement”). The Proposed Closing Statement shall be unaudited but shall be prepared in good faith and applying the Accounting Principles, and on a basis consistent with the preparation of the Balance Sheet Statement.
b. During the sixty (60)-day period (“Review Period”) following Seller Representative Parent’s receipt of the Proposed Closing Statement, (i) an unaudited consolidated balance sheet Seller Parent and its Representatives shall be permitted reasonable access during normal business hours to the working papers of Purchaser and its independent auditors used in the preparation of the Company Entities as of the Adjustment Calculation Time Proposed Closing Statement (the “Closing Balance Sheet”)provided, that Seller Parent and its Representatives, including its independent auditors, have executed all release letters reasonably requested by Purchaser’s independent auditors in connection therewith) and (ii) Seller Parent may dispute the amounts reflected on the line items of the Proposed Closing Statement (a statement (the “Closing StatementDisputed Item”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheetbasis that a Disputed Item does not reflect, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and or has not been made in a manner consistent with with, the applicable definitions contained in provisions of this Agreement. During ; provided, however, Seller Parent shall notify Purchaser in writing of each Disputed Item, and specify the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet amount thereof in dispute and the Closing Statementspecific basis therefor, Buyer shall, and shall cause within the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written Review Period. Any notice of its disagreement Disputed Items shall (a “Notice of Disagreement”i) to Buyer prior to such date, which notice shall describe specify in reasonable detail the nature of any disagreement so asserted (with reasonable supporting documentation) and (ii) specify the amount that Seller Parent reasonably believes is the correct Working Capital or the Net Cash, based on the disagreements set forth in the notice of Disputed Items, including a reasonably detailed description of the adjustments applied to the Proposed Closing Statement in calculating such disagreement; providedamount. Seller Parent shall be deemed to have agreed with all other items and amounts contained in the Proposed Closing Statement not so objected to in a notice of Disputed Items within the Review Period, that (i) and the Closing Balance Sheet, failure by Seller Parent to provide a notice of Disputed Items to Purchaser within the Review Period will constitute Seller Parent’s acceptance of all of the items in the Proposed Closing Statement and the Proposed Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Statement shall become final be conclusive and binding upon the parties hereto Parties as the Final Closing Statement at the end of the Review Period.
c. If a notice of Disputed Items shall be timely delivered pursuant to Section 2.10(b), Seller Parent and Purchaser shall, during the forty-five (45) days following the date of such delivery (the “Resolution Period”), negotiate in good faith to resolve the Disputed Items. During the Resolution Period, Purchaser and its Representatives (including its independent auditors) shall be permitted reasonable access during normal business hours to the working papers of Seller Parent and its independent auditors relating to the notice of Disputed Items (provided, that Purchaser and its Representatives, including its independent auditors, have executed all release letters reasonably requested by Seller Parent’s independent auditors in connection therewith). To the extent the Disputed Items are so resolved in writing within the Resolution Period, then the Proposed Closing Statement, as revised to incorporate such changes as have been agreed between Purchaser and Seller Parent, shall be conclusive and binding upon the Parties as the Final Closing Statement.
d. If during such Resolution Period the Parties are unable to reach agreement, Seller Representative’s deliveryParent and Purchaser shall refer all unresolved Disputed Items to the Independent Accountant. The Parties shall instruct the Independent Accountant to make a determination with respect to each unresolved Disputed Item within thirty (30) days after its engagement by Seller Parent and Purchaser to resolve such Disputed Items, which determination shall be made in accordance with the rules set forth in this Section 2.10. The Independent Accountant may conduct such proceedings as the Independent Accountant believes, in its sole discretion, will assist in the determination of the unresolved Disputed Items; provided, however, that, except as Seller Parent and Purchaser may otherwise agree, all communications between Seller Parent and Purchaser or any of their respective Representatives, on the one hand, and the Independent Accountant, on the other hand, will be in writing with copies simultaneously delivered to the non-communicating Party. The Independent Accountant shall make its determination solely (i) on the documentation submitted by, and presentations (any such documentation or presentation must be provided to the other Party prior to its submission or presentation to the expiration Independent Accountant) made by Seller Parent and Purchaser, (ii) on the definitions of Preliminary Purchase Price, Working Capital, and Net Cash (and each of the defined terms used in each of those terms) and (iii) in accordance with the Accounting Principles. The Parties shall instruct the Independent Accountant to deliver to Seller Parent and Purchaser, within such thirty (30)-day period, of a written notice report setting forth its adjustments, if any, to Buyer of its acceptance of the Closing Balance Sheet, the Proposed Closing Statement and the Closing Cash-on-Handcalculations supporting such adjustments, and any such adjustments must be within the Closing Indebtedness, range of values established for such Disputed Item in the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Proposed Closing Statement and the Closing Cash-on-Handnotice of Disputed Items delivered pursuant to Section 2.10(b). Such report shall be final, binding on the Closing IndebtednessParties and conclusive on Seller Parent and Purchaser, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreementabsent manifest errors, and enforceable in a court of law, effective as of the date the Independent Accountant’s written determination is received by Seller Parent and Purchaser. Seller Parent and Purchaser shall each pay one-half (iii1/2) a Notice of Disagreement may only include disagreements based on all the costs incurred in connection with the engagement of the Independent Accountant. As used herein, “Final Working Capital” means (A) if no notice of Disputed Items with respect to the failure of Working Capital is delivered by Seller Parent to Purchaser within the Closing Cash-on-HandReview Period, the Working Capital as shown in the Proposed Closing Indebtedness and the Closing Net Working CapitalStatement as prepared by Purchaser, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or or (B) mathematical errors in if such a notice of Disputed Items with respect to the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by Seller Parent, either (x) the Working Capital as agreed to in writing by Seller Representative Parent and Purchaser, or (y) the Working Capital as shown in the Independent Accountant’s calculation delivered pursuant to Buyer this Section 2.10(d). As used herein, “Final Net Cash” means (1) if no notice of Disputed Items with respect to the Net Cash is delivered by Seller Parent to Purchaser within the Review Period, the Net Cash as shown in accordance with Section 1.05(c), then the Closing Balance Sheet and the Proposed Closing Statement as prepared by Purchaser, or (2) if such a notice of Disputed Items with respect to the Net Cash is delivered by Seller Parent, either (x) the Net Cash as revised agreed to in writing by Seller Parent and Purchaser, or (y) the Net Cash as shown in the Independent Accountant’s calculation delivered pursuant to this Section 2.10(d). Seller Parent and Purchaser acknowledge that they have discussed their past contacts, if any, with the Independent Accountant, and that neither Party shall have the right to object to the Independent Accountant’s service in such role by reason of disclosed past contacts and conflicts of interest. If, before the Independent Accountant renders its determination with respect to the Disputed Items in accordance with this Section 1.05(d)2.10(d), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier (I) Seller Parent notifies Purchaser of (x) the date all matters specified its agreement with any items in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Proposed Closing Statement shall be revised to the extent necessary to reflect any resolution by the or (II) Purchaser notifies Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term Parent of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not toagreement with any Disputed Items, and the Arbiter shall not, assign a value to any item then in dispute greater than the greatest value for each case such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final items as so agreed will be conclusive and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of Parties immediately upon such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesnotice.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock and Asset Purchase Agreement (Icu Medical Inc/De)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more No later than five (5) Business Days, Days prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer Parent shall prepare and deliver to the Seller Representative (i) Acquiror an estimated unaudited consolidated balance sheet on a consolidated basis of the Company Group Entities as of the Adjustment Calculation Time (Closing Date, prior to giving effect to the “Pre-Closing Balance Sheet”)Dividend, but after giving effect to the Parent Restructuring Transactions, together with reasonable supporting documentation, and (ii) a statement (the “Closing Statement”) executed on behalf of Parent by a duly authorized executive officer of Parent, collectively setting forth in reasonable detail BuyerParent’s calculation good faith estimate of (i) the Closing Tangible Book Value (the “Estimated Tangible Book Value”), (ii) the Pre-Closing Dividend Amount (if any) (the “Estimated Pre-Closing Dividend Amount”), and (iii) the Excess Tangible Book Value (if any) (the “Estimated Excess Tangible Book Value”), (iv) the Deferred Payment Amount (if any) (the “Estimated Deferred Payment Amount”), (v) the Loss Reserves (the “Estimated Loss Reserves”) and (vi) the Estimated Closing Consideration and Closing Cash Consideration resulting therefrom, each as calculated as of the Closing Cash-on-HandDate, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheettogether with reasonable supporting documentation. The Closing Balance SheetStatement shall be subject to the review of and reasonable comment of the Acquiror, which Parent shall consider in good faith.
(b) Within one hundred twenty (120) days following the Closing Date, the Closing Cash-on-HandAcquiror shall prepare and deliver to Parent, in the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and same format as the Closing Statement, Buyer shalleach as calculated as of the Closing Date, the following (collectively, the “Preliminary Statement”):
(i) a calculation by the Acquiror of the amount of the Pre-Closing Dividend (if any) (the “Preliminary Pre-Closing Dividend Amount”);
(ii) a calculation by the Acquiror of the Closing Tangible Book Value determined in good faith (the “Preliminary Tangible Book Value”);
(iii) a calculation by the Acquiror of the Excess Tangible Book Value (the “Preliminary Excess Tangible Book Value”), and the resulting Deferred Payment Amount (if any) (the “Preliminary Deferred Payment Amount”); and
(iv) a calculation by the Acquiror of the Loss Reserves (the “Preliminary Loss Reserves”).
(c) Parent shall have forty-five (45) days following receipt of the Preliminary Statement to review the calculations of the Preliminary Pre-Closing Dividend Amount, the Preliminary Deferred Payment Amount, the Preliminary Tangible Book Value, the Preliminary Excess Tangible Book Value and the Preliminary Loss Reserves, and to notify the Acquiror in writing if Parent disputes any aspect of the Preliminary Pre-Closing Dividend Amount, the Preliminary Deferred Payment Amount, the Preliminary Tangible Book Value, the Preliminary Excess Tangible Book Value or the Preliminary Loss Reserves set forth in the Preliminary Statement (the “Dispute Notice”), specifying the reasons therefor in reasonable detail. Parent shall be conclusively deemed to have accepted all items and amounts contained in the Preliminary Statement other than the items identified in the Dispute Notice. In connection with Parent’s review of the Preliminary Statement, the Acquiror shall permit, and shall cause the Company Entities toits Representatives to permit, (x) provide the Seller Representative Parent and its Representatives with to have reasonable access at all reasonable times access, during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each casenotice, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheetbooks, the Closing Statement records and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance relevant employees of the Closing Balance Sheet, the Closing Statement Company Group Entities and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to all relevant work papers, schedules, memoranda and other documents prepared by the extent addressed by a duly delivered Notice Acquiror in connection with its preparation of Disagreement prior to the expiration of such thirty (30)-day period, each component its calculation of the Preliminary Pre-Closing Balance SheetDividend Amount, the Closing Statement Preliminary Deferred Payment Amount, the Preliminary Tangible Book Value, the Preliminary Excess Tangible Book Value and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PricePreliminary Loss Reserves.
(d) If In the event that Parent shall deliver a timely Dispute Notice of Disagreement is delivered by to the Seller Representative Acquiror, the Acquiror and Parent shall attempt to Buyer resolve such dispute as promptly as practicable and, upon such resolution, if any adjustments to the Preliminary Pre-Closing Dividend Amount, the Preliminary Deferred Payment Amount, the Preliminary Tangible Book Value, the Preliminary Excess Tangible Book Value and/or the Preliminary Loss Reserves shall be made in accordance with Section 1.05(c)the resolution of the Acquiror and Parent, then the Closing Balance Sheet Acquiror and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Parent shall set forth thereon shall become final any such resolution in writing. If the Acquiror and binding upon the parties hereto on the earlier of Parent are unable to resolve any such dispute within fifteen (x15) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and Business Days (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative Acquiror and Buyer may Parent shall mutually agree in writing) of Parent’s delivery of such Dispute Notice, the Seller Representative Acquiror and Buyer Parent shall seek promptly submit any items remaining in good faith dispute to resolve the Independent Accounting Firm, acting solely as an expert and not as an arbitrator, for resolution, and any determination of the Independent Accounting Firm shall be final and binding on the parties. The Acquiror and Parent agree to enter into a customary engagement letter with the Independent Accounting Firm, and any fees, costs or expenses of the Independent Accounting Firm (and the American Arbitration Association if engaged pursuant to the definition of Independent Accounting Firm) in writing any differences that they may have respect of its services as contemplated by this Section 2.05(d) shall be borne by the parties in reverse proportion to the relative success of the parties on the disputed items submitted to the Independent Accounting Firm, with such determination of relative success made by the Independent Accounting Firm, or if the Independent Accounting Firm is unwilling to make such determination, then such fees, costs and expenses shall be borne fifty percent (50%) by Parent and fifty percent (50%) by the Acquiror. The Independent Accounting Firm shall be instructed to use reasonable best efforts to perform its services and reach a final determination with respect to the matters specified in the Notice submitted to it for resolution within thirty (30) days of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 submission of the Federal Rules dispute thereto and, in any case, as promptly as practicable after such submission. In resolving any disputed item, the Independent Accounting Firm (i) shall be bound by the provisions of Evidence (as in effect as of the date this Section 2.05(d) and any other relevant provisions of this Agreement). At the end of such thirty , (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such mattersii) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on either the one hand, Acquiror or the Seller Representative, on the other hand, Parent or less than the smallest value for such item assigned claimed by Buyer, on either the one hand, Acquiror or the Seller Representative, on the other hand. Buyer Parent and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, (iii) must make its determination based solely on written presentations by Buyer and the Seller Representative that are calculations in accordance with the guidelines Transaction Accounting Principles and procedures set forth any other applicable standards and definitions in this Agreement Agreement. In connection with the Independent Accounting Firm’s consideration of the dispute submitted to it, each party hereto shall permit, and not on cause its Affiliates and Representatives to permit, the basis Independent Accounting Firm and its Representatives to have reasonable access, during normal business hours and upon reasonable notice, to all relevant work papers, schedules, memoranda and other documents prepared by such party in connection with its preparation of an independent reviewthe Preliminary Statement and/or the Dispute Notice, as the case may be, and to finance personnel of such party and its Affiliates and any other information which the Independent Accounting Firm or any Representative thereof reasonably requests, and the parties hereto shall, and shall cause their respective Affiliates to, otherwise cooperate with the Independent Accounting Firm and its Representatives in connection therewith. The Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Independent Accounting Firm shall become be final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere with respect to the requirements of this Agreement. The Seller Representative (on behalf calculation of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts items in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesDispute Notice.
(e) If the Estimated Purchase Price is less than Acquiror fails to deliver the Purchase Price Preliminary Statement to Parent within one hundred twenty (such shortfall120) days following the Closing Date, the “Adjustment Amount”)Parent may, then in its sole discretion, elect to either (i) Buyer shallproduce the Preliminary Statement, within two in which case Parent shall have thirty (230) days following the end of such one hundred twenty (120)-day period to produce and deliver the Preliminary Statement to the Acquiror and the procedures set forth in Section 2.05(c) and Section 2.05(d) shall apply mutatis mutandis (with references to “Parent” therein deemed to be references to “Acquiror” and vice versa, except with respect to the second sentence of Section 2.05(c)) or (ii) have the Estimated Pre-Closing Dividend Amount, the Estimated Deferred Payment Amount, the Estimated Tangible Book Value, the Estimated Excess Tangible Book Value and the Estimated Loss Reserves be considered final and binding as the “Pre-Closing Dividend Amount,” the “Deferred Payment Amount,” the “Closing Tangible Book Value,” the “Closing Excess Tangible Book Value” and the “Loss Reserves,” respectively. Parent shall have five (5) Business Days after the Closing Balance Sheetend of such one hundred twenty (120)-day period to make such election by written notice to the Acquiror; provided that if Parent fails to deliver such notice to the Acquiror within such period, Parent shall be deemed to have made the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer election specified in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and clause (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativepreceding sentence.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excessThe Preliminary Pre-Closing Dividend Amount, the “Excess Amount”Preliminary Deferred Payment Amount (if any), then Buyer the Preliminary Tangible Book Value, the Preliminary Excess Tangible Book Value and the Seller Representative shallPreliminary Loss Reserves: (i) if no Dispute Notice has been timely delivered, within two as originally submitted and calculated by the Acquiror or Parent, as applicable, or (2ii) Business Days after if a Dispute Notice has been timely delivered by Parent or Acquiror, as applicable, as adjusted pursuant to the resolution of such dispute in accordance with Section 2.05(d) (whether by mutual written agreement of the Acquiror and Parent, or by the determination of the Independent Accounting Firm), shall be the “Pre-Closing Balance Sheet, Dividend Amount,” the “Deferred Payment Amount,” the “Closing Statement Tangible Book Value,” the “Closing Excess Tangible Book Value” and the Closing Cash-on-Hand“Loss Reserves,” respectively, Closing Indebtednessand shall be used, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05if a component thereof, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If definition of “Final Closing Consideration” to calculate the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativeFinal Closing Consideration.
(g) Buyer agrees that If the Final Closing Consideration (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account as determined in accordance with Section 2.05(f)) is less than the Escrow Agreement Estimated Closing Consideration, then Parent shall be promptly, but in any event within five (5) Business Days following the sole and exclusive remedy and source of recovery for Buyer for payment determination of the Excess Amount (if any) and (ii) Final Closing Consideration as determined in accordance with Section 2.05(f), pay to the purchase price adjustment and Acquiror an amount equal to the dispute resolution provisions provided for in this Section 1.05, shall be amount by which the exclusive remedies for Estimated Closing Consideration exceeds the matters addressed Final Closing Consideration by wire transfer of immediately available funds to the account or that could be addressed accounts designated by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller PartiesAcquiror.
(h) Any payment made pursuant If the Final Closing Consideration (as determined in accordance with Section 2.05(f)) is greater than the Estimated Closing Consideration, then the Acquiror shall promptly, but in any event within five (5) Business Days following the determination of the Final Closing Consideration as determined in accordance with Section 2.05(f), pay to this Parent an amount equal to the amount by which the Final Closing Consideration exceeds the Estimated Closing Consideration by wire transfer of immediately available funds to the account or accounts designated by Parent.
(i) The parties acknowledge that the payments contemplated by Section 1.05 shall 2.05(g), Section 2.05(h), Section 2.09, Section 5.12(b) through Section 5.12(e) and Section 6.02(k) are intended by the parties to be treated as part of the Purchase Price and the parties will treat any such payment as an adjustment to the Purchase Price for U.S. federal income tax Tax and financial reporting purposes. The Acquiror and Parent agree not to take any position that is inconsistent with the intent expressed in this Section 2.05(i) unless required by applicable Law.
Appears in 1 contract
Samples: Stock Purchase Agreement (Renaissancere Holdings LTD)
Purchase Price Adjustment. (a) At Sellers shall, at least three (3) Business Days, but no more than five (5) Business Days, business days prior to the ClosingClosing Date, the Company shall prepare cause to be prepared and deliver delivered to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Preliminary Statement”) ), setting forth in reasonable detail the Company’s Sellers’ good faith estimates estimate of each of the Modified Net Working Capital as of the Closing Cash-on-Hand Date (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Date Modified Net Working Capital”) and the calculation Capital Expenditure Account Balance as of the Purchase Price resulting therefrom Closing Date (the “Estimated Purchase PriceClosing Date Capital Expenditure Account Balance”). The estimate of Closing Date Modified Net Working Capital is referred to herein as the “Estimated Modified Net Working Capital” and the estimate of the Closing Date Capital Expenditure Account Balance is referred to herein as the “Estimated Closing Date Capital Expenditure Account Balance.”
(b) Within forty-five (45) calendar days after the Closing Date, Buyer shall cause to be prepared and delivered to Sellers a statement (the “Statement”) setting forth Buyer’s calculations of Closing Date Modified Net Working Capital, the Closing Date Capital Expenditure Account Balance and the components and calculation of each, which comments and calculations shall be included and made in accordance with Section 1.2 of the Disclosure Letter and, to the extent not provided for therein, GAAP (in each casecase as and to the same extent determined pursuant to Section 1.2(c)(ii)). At the same time, based Buyer shall also cause to be prepared and delivered to Sellers a statement (the “Adjustment Statement”) setting forth the calculation (whether a positive or negative number) of (i) the amount of the Closing Date Modified Net Working Capital as shown on the Statement minus the Estimated Modified Net Working Capital plus (ii) the Closing Date Capital Expenditure Account Balance minus the Estimated Closing Date Capital Expenditure Account Balance Sheet and including (the Estimated Purchased Shares Purchase Pricesum of such amounts, whether a positive or negative number, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase “Adjustment Amount”). Buyer shall provide Sellers and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance their accountants with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the relevant books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, Sellers Employees to the extent reasonably requested by Buyer or any of its Representatives required in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers dispute with respect to the allocation Statement and the Adjustment Statement and shall furnish Sellers with any other information that might be relevant to the calculation of Closing Date Modified Net Working Capital or the Closing Date Capital Expenditure Account Balance. If, at any time prior to the final resolution of all disputed items on the Statement or the Adjustment Statement, additional information shall become known to Buyer or Sellers that would change the amount of the Purchase Price among Closing Date Modified Net Working Capital or the Closing Date Capital Expenditure Account Balance shown on the Statement or the calculation thereof, then Buyer shall amend the Statement and Adjustment Statement to reflect such additional information. Buyer or Sellers shall not interfere in promptly notify Sellers or Buyer, as applicable, upon becoming aware of any way with, or give rise additional information prior to any claim or right upon, Buyer’s ownership the end of the Purchased SecuritiesResolution Period.
(bc) Within ninety After receipt of the Statement and the Adjustment Statement, Sellers will have thirty (9030) calendar days following from receipt to review the Closing Date, Buyer shall prepare Statement and the Adjustment Statement together with the workpapers used in their preparation. Unless Sellers deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) Buyer written notice setting forth in reasonable detail Buyer’s the specific items disputed by Sellers and a written statement setting forth Sellers’ calculation of each line item shown on the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Statement so disputed and the calculation amount in dispute (the “Sellers’ Statement”) on or prior to the thirtieth (30th) day after receipt of the Purchase Price resulting therefromStatement and the Adjustment Statement, in each caseSellers will be deemed to have accepted and agreed to the Statement and the Adjustment Statement and such agreement will be final, based binding and conclusive. Any items on the Closing Balance SheetStatement or Adjustment Statement as to which Sellers have not given notice of their objection and provided an alternative calculation on Sellers’ Statement will be deemed to have been agreed upon by the Parties, subject to the penultimate sentence of Section 1.3(b). The Closing Balance SheetIf Sellers so notify Buyer of their objections to any of the Statement or the Adjustment Statement and provide Buyer with Sellers’ Statement in a timely manner, Buyer and Sellers will, within thirty (30) calendar days following such notice (the Closing Cash-on-Hand“Resolution Period”), attempt to resolve their differences. Any resolution by Buyer and Sellers during the Closing Indebtedness Resolution Period as to any disputed amounts will be final, binding and conclusive. If the Closing Net Working Capital amount claimed by Buyer on the Adjustment Statement to be owed by Sellers is less than the Escrow Amount, then, promptly after delivery of the Adjustment Statement, any amount on deposit in the Escrow Account that is in excess of the amount claimed by Buyer to be owed by Sellers under this Section shall each be calculated distributed from the Escrow Account to Sellers in accordance with the Agreed Accounting Principles Escrow Agreement, and Buyer agrees to reasonably cooperate with Sellers in a manner consistent any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to Sellers in accordance with the applicable definitions contained Sharing Percentages set forth on Annex A. If Buyer and Sellers do not resolve all disputed items by the end of the Resolution Period, then all items remaining in this Agreement. During the thirty dispute will be submitted within ten (3010) days immediately following after the Seller Representative’s receipt expiration of the Closing Balance Sheet Resolution Period to a national independent accounting firm mutually acceptable to Buyer and Sellers (the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records “Neutral Accounting Arbitrator”); it being understood that no member of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative Neutral Accounting Arbitrator’s engagement team shall have an existing professional relationship with Buyer or any of its Representatives Affiliates. The Neutral Accounting Arbitrator shall act as an arbitrator to determine only those items in connection with their review of the Closing Balance Sheet dispute. All fees and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior expenses relating to the expiration of such thirty (30)-day periodwork, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statementif any, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered performed by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall Neutral Accounting Arbitrator will be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by allocated between Buyer, on the one hand, or the Seller Representativeand Sellers, on the other hand, or less than the smallest value for such item assigned by Buyer, in inverse proportion as they shall prevail on the one hand, or amounts of such disputed items so submitted (as finally determined by the Seller Representative, on the other handNeutral Accounting Arbitrator). The Neutral Accounting Arbitrator will deliver to Buyer and the Seller Representative shall also instruct the Arbiter to, Sellers a written determination (such determination to include a work sheet setting forth all material calculations used in arriving at such determination and the Arbiter shall, make its determination to be based solely on written presentations information provided to the Neutral Accounting Arbitrator by Buyer Sellers and Buyer) of the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than disputed items within thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion receipt of the disputed amounts items (or as soon as practicable thereafter), which determination will be final, binding and conclusive. The final, binding and conclusive Statement and Adjustment Statement, which either are agreed upon by Buyer and Sellers or are delivered by the Neutral Accounting Arbitrator in accordance with this Section 1.3, will be the Seller Representative’s submission “Conclusive Statement” and the “Conclusive Adjustment Statement,” respectively. In the event that either Buyer or Sellers fails to submit its statement regarding any items remaining in dispute within the time determined by the Neutral Accounting Arbitrator, then the Neutral Accounting Arbitrator shall render a decision based solely on the evidence timely submitted to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Neutral Accounting Arbitrator by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesBuyer and/or Sellers.
(ed) If the Estimated Purchase Price Adjustment Amount as shown on the Conclusive Adjustment Statement (the “Conclusive Adjustment Amount”) is a negative number, then the Cash Consideration will be reduced by the amount of the Conclusive Adjustment Amount, but not in excess of the Escrow Amount, and Buyer shall be entitled to payment of such amount from the Escrow Account by wire transfer of immediately available funds to an account or accounts designated by the Party entitled to receive such funds (and Sellers agree to cooperate reasonably in facilitating such payment, including by executing and delivering an appropriate joint instruction to the Escrow Agent). If the Conclusive Adjustment Amount is a positive number, then the Cash Consideration will be increased by the amount of the Conclusive Adjustment Amount, but not in excess of the Escrow Amount, and Buyer shall pay to Sellers cash equal to such amount, to be paid to an account or accounts designated in writing by Sellers prior to the date when such payment is due. All payments to be made pursuant to this Section 1.3(d) will be made on the fifth business day following the date on which Buyer and Sellers agree to, or the Neutral Accounting Arbitrator delivers, the Conclusive Statement and the Conclusive Adjustment Statement and, in the case of payment to Buyer, instruct the Escrow Agent by joint written instruction accordingly. If the Conclusive Adjustment Amount is a positive number, or is a negative amount that is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding amount remaining on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer deposit in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days then, promptly after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds determination of the Excess Amount from the Escrow Funds Conclusive Adjustment Amount, any amount remaining on deposit in the Escrow Account. If Account that is in excess of the Excess lesser of the Conclusive Adjustment Amount is less than and the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds Amount shall be distributed from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account to Sellers in accordance with the Escrow Agreement Agreement, and Buyer agrees to reasonably cooperate with Sellers in any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to Sellers in accordance with the Sharing Percentages set forth on Annex A.
(e) Buyer acknowledges and agrees that its sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made amount due to it pursuant to this Section 1.05 1.3 shall be treated as its right to payment from the Escrow Account in an adjustment amount not to exceed the Purchase Price Escrow Amount. Sellers acknowledge and agree that their sole and exclusive remedy for U.S. federal income tax purposesany amount due to them pursuant to this Section 1.3 shall be the right to payment from Buyer in an amount not to exceed the Escrow Amount.
Appears in 1 contract
Samples: Purchase and Sale Agreement (International Power PLC)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no Not more than five (5) Business Days, prior to but in no event less than three (3) Business Days, before the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer Purchaser:
(i) an estimated consolidated unaudited combined balance sheet of the Company Entities Companies as of the Adjustment Calculation Time close of business on the Closing Date prepared on a basis consistent with the template attached as Schedule 2.6(a) and including only those assets and liabilities listed on Schedule 2.6(a) (the “Estimated Adjusted Closing Balance Sheet”), and ;
(ii) a statement (the “Estimated Closing Adjustment Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”)” and, the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on together with the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Adjusted Closing Balance Sheet, the “Estimated Closing Cash-on-HandFinancial Statements”) setting forth Seller’s good faith estimate of:
(A) the Adjusted Aggregate Net Indebtedness (such estimated amount, the “Estimated Closing Indebtedness and Adjusted Aggregate Net Indebtedness”);
(B) the Estimated Closing Adjusted Net Working Capital (such estimated amount, the “Estimated Adjusted Net Working Capital”);
(C) the amount of the Adjustment Liabilities (such estimated amount, the “Estimated Adjustment Liabilities”);
(D) the Seller Outstanding Checks (such estimated amount, the “Estimated Seller Outstanding Checks”); and
(E) the Accrued Bonus Amount (such estimated amount, the “Estimated Accrued Bonus Amount”); in each case as of the close of business on the Closing Date, with such amounts being derived from the Estimated Adjusted Closing Balance Sheet or determined as contemplated by Exhibit C, accompanied by a statement showing in reasonable detail how such good faith estimate was determined. The Estimated Adjustment Statement shall each be calculated prepared in accordance with Seller Accounting Principles and, with respect to the Agreed Adjusted Net Working Capital, the Adjusted Net Working Capital Example. If there is an inconsistency between Seller Accounting Principles and the definitions of Adjusted Aggregate Net Indebtedness, Adjusted Net Working Capital, Adjustment Liabilities, Seller Outstanding Checks and Accrued Bonus Amount, the terms set forth in a manner consistent such definitions shall control. If there is an inconsistency between Seller Accounting Principles and the Adjusted Net Working Capital Example, the Adjusted Net Working Capital Example shall control. Contemporaneously with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and Adjustment Statement, Seller shall also deliver to Purchaser copies of supporting calculations that Seller used in preparing the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Adjustment Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) The Base Purchase Price shall be subject to adjustment, without duplication, on the Closing Date as follows:
(i) If the Estimated Adjusted Aggregate Net Indebtedness is less than U.S.$34,000,000, the Base Purchase Price shall be increased by an amount equal to the amount by which the Estimated Adjusted Aggregate Net Indebtedness is less than U.S.$34,000,000. If the Estimated Adjusted Aggregate Net Indebtedness is greater than U.S.$34,000,000, the Base Purchase Price shall be decreased by an amount equal to the amount by which the Estimated Adjusted Aggregate Net Indebtedness exceeds U.S.$34,000,000.
(ii) If the Estimated Adjusted Net Working Capital is less than the Target Adjusted Net Working Capital, the Base Purchase Price shall be decreased by an amount equal to the amount by which the Target Adjusted Net Working Capital exceeds the Estimated Adjusted Net Working Capital. If the Estimated Adjusted Net Working Capital is greater than the Target Adjusted Net Working Capital, the Base Purchase Price shall be increased by an amount equal to the amount by which the Estimated Adjusted Net Working Capital exceeds the Target Adjusted Net Working Capital.
(iii) If the Estimated Adjustment Liabilities are greater than U.S.$231,000,000, the Base Purchase Price shall be decreased by an amount equal to the amount by which the Estimated Adjustment Liabilities exceed U.S.$231,000,000 less the amount of any Tax Benefit associated with such excess. If the Estimated Adjustment Liabilities are less than U.S.$231,000,000, the Base Purchase Price shall be increased by an amount equal to the amount by which U.S.$231,000,000 exceeds the Estimated Adjustment Liabilities less the amount of any Tax Benefit associated with such excess.
(iv) The Base Purchase Price shall be increased by the Estimated Seller Outstanding Checks.
(v) The Base Purchase Price shall be decreased by the amount of the Estimated Accrued Bonus Amount less the amount of any Tax Benefit associated with such Estimated Accrued Bonus Amount.
(c) Within ninety one hundred and twenty (90120) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Representative Seller:
(i) an unaudited consolidated combined balance sheet of the Company Entities Companies as of the Adjustment Calculation Time close of business on the Closing Date (the “Closing Balance Sheet”), and ; and
(ii) a statement (the “Closing Adjustment Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand” and, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance together with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the “Closing Statement and Date Financial Statements”) setting forth:
(A) the Adjusted Aggregate Net Indebtedness;
(B) the Adjusted Net Working Capital;
(C) the Adjustment Liabilities;
(D) the Seller Outstanding Checks; and
(E) the Accrued Bonus Amount; in each case as of the close of business on the Closing Cash-on-HandDate, with such amounts being derived from the Closing Balance Sheet and accompanied by a statement showing in reasonable detail how such amount was determined. The Closing Date Financial Statements shall be prepared in accordance with Seller Accounting Principles and, with respect to the Adjusted Net Working Capital, the Closing Indebtedness, the Closing Adjusted Net Working Capital Example. If there is an inconsistency between Seller Accounting Principles and the Purchase Price definitions of Adjusted Aggregate Net Indebtedness, Adjusted Net Working Capital, Adjustment Liabilities, Seller Outstanding Checks and Accrued Bonus Amount, the terms set forth thereon in such definitions shall become final control. If there is an inconsistency between Seller Accounting Principles and binding upon the parties hereto upon Adjusted Net Working Capital Example, the Adjusted Net Working Capital Example shall control. Contemporaneously with the delivery of the Closing Date Financial Statements, Purchaser shall also deliver to Seller Representative’s delivery, (subject to the confidentiality obligations of Section 6.4 (Publicity)) copies of the supporting calculations that Purchaser used in preparing the Closing Date Financial Statements.
(d) In the event that Seller either (i) has no objections to the Closing Date Financial Statements as prepared by Purchaser and does not deliver a Dispute Notice to Purchaser prior to the expiration of such thirty (30)-day periodthe Objection Deadline, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, or (ii) except Seller otherwise fails to the extent addressed by deliver a duly delivered Dispute Notice of Disagreement to Purchaser prior to the expiration of such thirty (30)-day periodthe Objection Deadline then, each component upon expiration of the Closing Balance SheetObjection Deadline, the Closing Statement and Date Financial Statements prepared by Purchaser, including the Closing Cash-on-Hand, the Closing Adjusted Aggregate Net Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Adjusted Net Working Capital, the Adjustment Liabilities, Seller Outstanding Checks and the Accrued Bonus Amount (all such items, the “Closing Adjustment Items”) set forth therein, shall be deemed to be and shall become final, binding and conclusive on all of the Parties. In the event that Seller disputes the amount of any of the Closing Adjustment Items as set forth in the Closing Date Financial Statements, Seller shall, on or prior to the date that is forty-five (45) days following the date on which Purchaser delivers the Closing Date Financial Statements to Seller (the “Objection Deadline”), prepare and deliver to Purchaser a written notice of dispute (the “Dispute Notice”), which Dispute Notice shall (i) identify with reasonable specificity, and provide a reasonably detailed explanation of, the basis upon which Seller has delivered such Dispute Notice, including the applicable provisions of this Agreement on which the dispute set forth in such Dispute Notice is based, and (ii) set forth the amount of each case, of the Closing Adjustment Items that Seller believe existed as reflected of the close of business on the Closing StatementDate, together with supporting documents and information that Seller has utilized in connection with making such determinations and calculations.
(e) In the event Seller timely delivers a Dispute Notice to be calculated Purchaser in accordance with the Agreed Accounting Principles terms hereof, Purchaser and Seller shall in a manner consistent with the applicable definitions contained good faith attempt to reconcile their differences and specify any resolution in this Agreement and/or (B) mathematical errors in the computation writing. Any definitive written resolution by Purchaser and Seller as to any such disputes shall be final, binding and conclusive on all of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) Parties. If a timely Notice of Disagreement is delivered by the Purchaser and Seller Representative are unable to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (resolve any such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the dispute within thirty (30) days immediately after Purchaser’s receipt of the Dispute Notice from Seller, either Purchaser or Seller may submit the items remaining in dispute for resolution to Ernst & Young Global Limited or another independent accounting firm mutually acceptable to Purchaser and Seller (the “Independent Accounting Firm”). Upon the selection of the Independent Accounting Firm, and in any event within fifteen (15) Business Days following such selection, Purchaser and Seller shall submit to such Independent Accounting Firm (and the delivery other Party) documentary materials and analyses that Purchaser or Seller, as the case may be, believes support its respective position relating to the disputed matters set forth in the Dispute Notice, but excluding any work papers of independent certified public accountants. The Independent Accounting Firm shall, within forty-five (45) Business Days after receipt of all such submissions by Purchaser and Seller, make a Notice of Disagreement determination in accordance with Section 1.05(cstandards provided herein and deliver to Purchaser and Seller a written report (the “Final Report”) or containing such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 Independent Accounting Firm’s determination of the Federal Rules of Evidence disputed matters that were so submitted to it (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain ). In resolving any matter specified in dispute and which were properly included in a Dispute Notice, the Notice of Disagreement. Buyer and the Seller Representative Independent Accounting Firm shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either Party or less than the smallest value for such item assigned claimed by Buyereither Party. The determinations of the Independent Accounting Firm that are contained in the Final Report shall be final, binding and conclusive on all of the one hand, or Parties. The fees and disbursements of the Independent Accounting Firm shall be paid by Seller Representative, on in the other hand. Buyer and same proportion that the aggregate amount of the remaining disputed items so submitted to the Independent Accounting Firm that are unsuccessfully disputed by Seller Representative shall also instruct (as finally determined by the Arbiter toIndependent Accounting Firm) bears to the total amount of such remaining disputed items so submitted, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution balance shall be requested paid by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativePurchaser.
(f) If No later than five (5) Business Days following the Determination Date, Seller or Purchaser (or applicable Purchaser Designee, who shall be caused by Purchaser to make the relevant payment), as the case may be, shall make the following payments, after netting, without duplication, against each other all payments required to be made by Seller and/or Purchaser (or the applicable Purchaser Designee), as the case may be, pursuant to clauses (i) through (xii) immediately below, with all such payments being made to the applicable Person(s) via wire transfer of immediately available funds to the account or accounts designated in writing by the Person(s) entitled to receive such payment:
(i) if the Estimated Purchase Price Adjusted Aggregate Net Indebtedness is a negative amount and is less than the Final Adjusted Aggregate Net Indebtedness, Seller shall pay to Purchaser an amount equal to the amount by which the Final Adjusted Aggregate Net Indebtedness exceeds the Estimated Adjusted Aggregate Net Indebtedness; for example, if the Estimated Adjusted Aggregate Net Indebtedness is (U.S.$20) and the Final Adjusted Aggregate Net Indebtedness is (U.S.$10), Seller pays Purchaser U.S.$10;
(ii) if the Estimated Adjusted Aggregate Net Indebtedness is a negative number and is greater than the Purchase Price Final Adjusted Aggregate Net Indebtedness, Purchaser shall pay to Seller an amount equal to the amount by which the Estimated Adjusted Aggregate Net Indebtedness exceeds the Final Adjusted Aggregate Net Indebtedness; for example, if the Estimated Adjusted Aggregate Net Indebtedness is (such excess, U.S.$20) and the “Excess Amount”Final Adjusted Aggregate Net Indebtedness is (U.S.$30), then Buyer Purchaser pays Seller U.S.$10;
(iii) if the Estimated Adjusted Aggregate Net Indebtedness is a positive number and is less than the Final Adjusted Aggregate Net Indebtedness, Seller shall pay to Purchaser an amount equal to the amount by which the Final Adjusted Aggregate Net Indebtedness exceeds the Estimated Adjusted Aggregate Net Indebtedness; for example, if the Estimated Adjusted Aggregate Net Indebtedness is U.S.$20 and the Final Adjusted Aggregate Net Indebtedness is U.S.$30, Seller Representative shallpays Purchaser U.S.$10;
(iv) if the Estimated Adjusted Aggregate Net Indebtedness is a positive number and is greater than the Final Adjusted Aggregate Net Indebtedness, within two (2) Business Days after Purchaser shall pay to Seller an amount equal to the Closing Balance Sheetamount by which the Estimated Adjusted Aggregate Net Indebtedness exceeds the Final Adjusted Aggregate Net Indebtedness; for example, if the Closing Statement Estimated Adjusted Aggregate Net Indebtedness is U.S.$30 and the Closing Cash-on-HandFinal Adjusted Aggregate Net Indebtedness is U.S.$20, Closing Indebtedness, Closing Purchaser pays Seller U.S.$10;
(v) if the Estimated Adjusted Net Working Capital and is less than the Purchase Price set forth thereon become final and binding on the parties pursuant Final Adjusted Net Working Capital, Purchaser shall pay to this Section 1.05, deliver joint written instructions Seller an amount equal to the Escrow Agent amount by which the Final Adjusted Net Working Capital exceeds the Estimated Adjusted Net Working Capital;
(vi) if the Estimated Adjusted Net Working Capital is greater than the Final Adjusted Net Working Capital, Seller shall pay to cause Purchaser an amount equal to the Escrow Agent amount by which the Estimated Adjusted Net Working Capital exceeds the Final Adjusted Net Working Capital;
(vii) if the Estimated Adjustment Liabilities are less than the Final Adjustment Liabilities, Seller shall pay to make paymentPurchaser an amount equal to the amount by which the Final Adjustment Liabilities exceed the Estimated Adjustment Liabilities less the amount of any Tax Benefit associated with such excess;
(viii) if the Estimated Adjustment Liabilities are greater than the Final Adjustment Liabilities, within two Purchaser shall pay to Seller an amount equal to the amount by which the Estimated Adjustment Liabilities exceed the Final Adjustment Liabilities less the amount of any Tax Benefit associated with such excess;
(2ix) Business Days after receipt of such instructionsif the Estimated Seller Outstanding Checks is less than the Final Seller Outstanding Checks, Purchaser shall pay to BuyerSeller an amount equal to the amount by which the Final Seller Outstanding Checks exceeds the Estimated Seller Outstanding Checks;
(x) if the Estimated Seller Outstanding Checks is greater than the Final Seller Outstanding Checks, Seller shall pay to Purchaser an amount equal to the amount by wire transfer in immediately available funds of which the Excess Amount from Estimated Seller Outstanding Checks exceeds the Escrow Funds in Final Seller Outstanding Checks;
(xi) if the Escrow Account. If the Excess Estimated Accrued Bonus Amount is less than the Escrow Funds (such shortfallFinal Accrued Bonus Amount, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred shall pay to in the immediately preceding sentence, deliver joint written instructions Purchaser an amount equal to the Escrow Agent amount by which the Final Accrued Bonus Amount exceeds the Estimated Accrued Bonus Amount less the amount of any Tax Benefit associated with such excess; and
(xii) if the Estimated Accrued Bonus Amount is greater than the Final Accrued Bonus Amount, Purchaser shall pay to cause Seller an amount equal to the Escrow Agent to pay amount by which the Remaining Escrow Funds from Estimated Accrued Bonus Amount exceeds the Escrow Account to, or as directed by, Final Accrued Bonus Amount less the Seller Representativeamount of any Tax Benefit associated with such excess.
(g) Buyer agrees that Any amount payable pursuant to Section 2.6(f) shall bear simple interest at the Applicable Rate determined as of the Closing Date, to accrue daily on the basis of a 365-day year, calculated for the actual number of days elapsed from (iand including) the Closing Date through (but excluding) the date of payment. Such interest payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance shall be payable together with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made amount payable pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes2.6(f).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and Within 60 days after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer Xxxxxx Xxxxxxxx LLP shall prepare and deliver to the Seller Representative (i) Stockholders and the Buyer an unaudited consolidated audit of the balance sheet of the Company Entities at and as of the Adjustment Calculation Time Closing Date (the “"AUDITED CLOSING DATE BALANCE SHEET"). The Audited Closing Date Balance Sheet will be prepared in accordance with the Company's procedures as represented in Section 3(f). The Buyer will bear the fees and expenses incurred in connection with the preparation and audit of the Audited Closing Date Balance Sheet”), . Both Parties will make their work papers and other materials available to Xxxxxx Xxxxxxxx LLP.
(ii) a statement (In the “Closing Statement”event that either the Stockholders or the Buyer dispute any item(s) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Audited Closing Date Balance Sheet, such Party shall deliver a detailed statement describing such objections to the other Parties within 15 days after receiving the Audited Closing Date Balance Sheet. The Buyer and the Stockholders will use reasonable efforts to resolve any such objections themselves. If the Parties do not obtain a final resolution within 90 calendar days from the Closing Balance SheetDate, the Closing Cash-on-Hand, the Closing Indebtedness Buyer and the Closing Net Working Capital Stockholders will select another "Big Five" accounting firm mutually acceptable to them (the "INDEPENDENT ACCOUNTANTS") to resolve any remaining objections. If the Buyer and the Stockholders are unable to agree on the choice of an accounting firm, they will select the Independent Accountants by lot (after excluding their respective regular outside accounting firms). All unresolved objections will be submitted to the Independent Accountants for resolution. The cost of retaining the Independent Accountants shall each be calculated in accordance with borne by the Agreed Accounting Principles and in a manner consistent with disputing party; PROVIDED, HOWEVER, that the applicable definitions contained in this Agreement. During non-disputing party shall reimburse the thirty (30) days immediately following the Seller Representative’s receipt disputing party for 50% of the cost of the Independent Accountants in the event that such review results in an increase (if the Stockholders are the disputing party) or decrease (if the Buyer is the disputing party) of more than $25,000 in total stockholders' equity as reflected on the Audited Closing Date Balance Sheet audited by Xxxxxx Xxxxxxxx LLP. The determination of the Independent Accountants shall be made in writing within 30 days of its selection, and the Closing Statementdetermination shall be conclusive, Buyer shall, final and shall cause binding on the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementParties.
(ciii) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon will be adjusted as follows:
(1) If the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each casetotal stockholders' equity, as reflected on the Audited Closing StatementDate Balance Sheet as finally determined, is less than $1,750,000, then the Stockholders will pay to be calculated the Buyer, in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or immediately available funds within ten (B10) mathematical errors in the computation days of delivery of the Audited Closing Cash-on-HandDate Balance Sheet as finally determined, an amount equal to the difference between $1,750,000 and the total stockholders' equity as reflected on the Audited Closing IndebtednessDate Balance Sheet as finally determined.
(2) If the total stockholders' equity, as reflected on the Audited Closing Net Working Capital or Date Balance Sheet as finally determined, is greater than $1,750,000, then the Buyer will pay to the Stockholders, in immediately available funds within ten (10) days of delivery of the Audited Closing Date Balance Sheet as finally determined, an amount equal to the difference between the total stockholders' equity as reflected on the Audited Closing Date Balance Sheet as finally determined and $1,750,000.
(3) If the total stockholders' equity, as reflected on the Audited Closing Date Balance Sheet as finally determined, is equal to $1,750,000, then there will be no adjustment to the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase Agreement (Power Ten)
Purchase Price Adjustment. (a) At least three (3) Business DaysAs soon as practicable, but in no more event later than five sixty (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9060) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet a calculation of the Company Entities Net Working Capital of the Business as of the Adjustment Calculation Time Closing Date (the “Closing Balance SheetNet Working Capital”), and .
(iib) a statement (During the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the period of any dispute within the contemplation of this Section 2.8, Seller shall cooperate with Buyer’s and Buyer’s authorized representatives’ reasonable requests with respect to the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, including by providing on a timely basis all information necessary or useful in each case, as reflected on calculating the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in Net Working Capital.
(c) Buyer shall deliver a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation written statement of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or (the Purchase Price.
(d“Closing Net Working Capital Statement”) If a timely Notice to Seller promptly after it has been prepared. After receipt of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Statement, Seller shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the have thirty (30) days immediately following to review the delivery Closing Net Working Capital Statement. During such review period of the Closing Net Working Capital Statement and the period of any dispute within the contemplation of this Section 2.8, Buyer shall (i) provide Seller and its authorized representatives reasonable access during normal business hours to all relevant books and records and employees of Buyer concerning the Business and (ii) cooperate with Seller’s and Sellers’s authorized representatives’ reasonable requests with respect to the calculation of the Closing Net Working Capital, including by providing on a Notice timely basis all information necessary or useful in their review of Disagreement the Closing Net Working Capital Statement. Unless Seller delivers written notice to Buyer on or prior to the thirtieth (30th) day after Seller’s receipt of the Closing Net Working Capital Statement specifying in accordance with Section 1.05(creasonable detail the amount, nature and basis of all disputed items, Seller shall be deemed to have accepted and agreed to the calculation of the Closing Net Working Capital. If Seller timely notifies Buyer of its objection to the calculation of the Closing Net Working Capital, Buyer and Seller shall, within sixty (60) days (or such longer period as the Seller Representative and Buyer parties may agree in writing) following such notice (the “Resolution Period”), attempt to resolve their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive.
(d) If, at the conclusion of the Resolution Period, there are any amounts remaining in dispute, then such amounts remaining in dispute shall be submitted to a firm of nationally recognized independent public accountants (the “Neutral Auditors”) selected by Seller Representative and Buyer within ten (10) days after the expiration of the Resolution Period. If Seller and Buyer are unable to agree on the Neutral Auditors, then each of Seller and Buyer shall seek in good faith have the right to resolve in writing request the office of the American Arbitration Association to appoint the Neutral Auditors, which Neutral Auditors shall not have had a material relationship with Seller, Buyer or any differences that they may have with respect of their respective Affiliates within the past two (2) years. Each party agrees to execute, if requested by the Neutral Auditors, a reasonable engagement letter, including customary indemnities. All fees and expenses relating to the matters specified work, if any, to be performed by the Neutral Auditors shall be borne pro rata as between Seller and Buyer in proportion to the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 allocation of the Federal Rules of Evidence (as in effect as dollar amount of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the amounts remaining in dispute between Seller Representative and Buyer shall submit to made by the Arbiter for review and resolution any and all matters (but only Neutral Auditors such matters) which remain in dispute and which were properly included in that the Notice of Disagreement. Buyer and prevailing party pays the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination lesser proportion of the items included in the Closing Balance Sheet fees and the Closing Statement (expenses. The Neutral Auditors shall act as an arbitrator to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not todetermine, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in provisions of this Agreement and the presentations by Seller and Buyer, and not on the basis of an by independent review, only those issues still in dispute. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution Neutral Auditors' determination shall be requested by the parties to be delivered not more than made within thirty (30) days following submission of such their selection, shall be set forth in a written statement delivered to Seller and Buyer, shall be within the range of values assigned to each disputed matters)item in the Closing Working Capital Statement and any notice of dispute delivered by Seller, and such resolution by shall be deemed a final, binding and conclusive arbitration award. A judgment of a court of competent jurisdiction may be entered upon the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this AgreementNeutral Auditors’ determination. The Seller Representative (on behalf of term “Final Closing Net Working Capital” shall mean the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, definitive Closing Net Working Capital agreed to (or deemed to be agreed to) by Buyer and Seller in accordance with Section 2.8(c) or resulting from the Purchase Price set forth thereon become final and binding on determinations made by the parties pursuant to Neutral Auditors in accordance with this Section 1.052.8(d) (in addition to those items theretofor agreed to by Seller and Buyer), make payment of the Adjustment Amountin each case, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative which shall be final, binding upon, and Buyer in writing) to, or as directed non-appealable by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativeparties.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) On the fifth Business Days, but no more than five (5) Business Days, Day prior to the ClosingClosing Date, the Company shall Seller will prepare in good faith and deliver to Buyer (i) an estimated consolidated unaudited pro forma balance sheet of the Company Entities Commodities Business as of the Adjustment Calculation Time last day of the calendar month preceding the date of such preparation (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance SheetSheet will (i) be prepared from the Documents of the Commodities Business, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall U.S. GAAP (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts except as otherwise set forth in the Estimated Closing StatementAgreed Adjustments) and the Agreed Adjustments, Buyer’s obligation to pay applied consistently with the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for methodology employed in the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation preparation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated pro forma balance sheet of the Company Entities Commodities Business as of December 31, 2010 set forth on Section 2.6(a) of the Adjustment Calculation Time Seller Disclosure Letter (the “Closing Reference Balance Sheet”), and (ii) a statement set forth an estimate of the Net Book Value of the Commodities Business derived from the Estimated Closing Balance Sheet (the “Estimated Net Book Value.”)
(b) As soon as reasonably practicable, but in no event more than 90 days following the Closing, Buyer will prepare in good faith and deliver to Seller an unaudited pro forma balance sheet of the Commodities Business as of the Closing Date (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet”). The Closing Balance Sheet will (i) be prepared from the Documents of the Commodities Business, in accordance with U.S. GAAP (except as otherwise set forth in the Agreed Adjustments) and the Agreed Adjustments, applied consistently with the methodology employed in the preparation of the Reference Balance Sheet, and (ii) set forth the Net Book Value of the Commodities Business derived from the Closing Cash-on-Hand, Balance Sheet (the “Closing Net Book Value”). In the event Seller has any objection either to the Closing Indebtedness and Balance Sheet or the Closing Net Working Capital Book Value, Seller shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) deliver to Buyer within 30 days immediately following the Seller Representative’s receipt after delivery of the Closing Balance Sheet by Buyer to Seller a written objection (“Seller’s Objection”) setting forth a specific description of the basis of Seller’s objection and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice adjustments to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) Book Value Seller believes should be made. If no Seller’s Objection is received within 30 days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance after delivery of the Closing Balance Sheet, the Closing Statement Balance Sheet and the Closing Cash-on-HandNet Book Value shall be final and binding on the parties. Buyer shall have 15 days from its receipt of Seller’s Objection to respond in writing. If Buyer does not respond within 15 days after delivery of Seller’s Objection, the adjustments set forth in Seller’s Objection shall be final and binding.
(c) If Seller and Buyer are unable to resolve all of their disagreements with respect to the proposed adjustments set forth in the Seller’s Objection within 15 days of Buyer’s receipt of the Seller’s Objection, they shall refer any remaining disagreements to the Balance Sheet Auditor, who, acting as an expert and not as an arbitrator, shall determine, on the basis set forth in Section 2.6(b), and only with respect to the remaining differences so submitted, whether the Closing Indebtedness, Balance Sheet and the Closing Net Working Capital Book Value require adjustment. Buyer and Seller shall instruct the Balance Sheet Auditor to deliver its written determination to Buyer and Seller no later than 30 days after the remaining differences underlying the Seller’s Objection are referred to the Balance Sheet Auditor. The Balance Sheet Auditor’s determination shall be conclusive and binding upon Buyer and Seller and their Affiliates. The pro forma balance sheet of the Commodities Business as of the Closing Date as finally determined pursuant to Section 2.6(b) or this Section 2.6(c) shall be referred to as the “Final Closing Balance Sheet”; and the Purchase Price set forth thereonNet Book Value of the Commodities Business as of the Closing Date as finally determined pursuant to Section 2.6(b) or this Section 2.6(c) shall be referred to as the “Final Net Book Value.” The fees and disbursements of the Balance Sheet Auditor shall be borne equally by Buyer and Seller. Buyer and Seller shall make readily available to the Balance Sheet Auditor all relevant Documents and any work papers (including those of the parties’ respective accountants, (ii) except to the extent addressed permitted by a duly delivered Notice of Disagreement prior such accountants) relating to the expiration of such thirty (30)-day periodEstimated Closing Balance Sheet, each component of the Estimated Net Book Value, the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-HandNet Book Value, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller RepresentativeSeller’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, Objection and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the other items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be reasonably requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts Balance Sheet Auditor in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesconnection therewith.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock and Asset Purchase Agreement (Jefferies Group Inc /De/)
Purchase Price Adjustment. (a) At least three Within sixty (360) Business Days, but no more than five (5) Business Days, prior to days after ------------------------- the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer Seller shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Buyer a statement (the “Closing "Adjustment Statement”") setting forth in reasonable detail Buyer’s calculation which reflects (i) the difference between (A) the book value, as determined by an independent evaluator designated by the Seller and approved by the Buyer as of the Closing Cash-on-HandDate, of all fuel inventory used at or in connection with the Purchased Assets and (B) the Estimated Inventory Adjustment Amount (such difference is referred to as the "Inventory Adjustment Amount"), (ii) the difference between (A) the book value, as determined by an independent evaluator designated by the Seller and approved by the Buyer as of the Closing Date, of the materials and supplies used at or in connection with the Purchased Assets and (B) the Estimated Materials and Supplies Adjustment Amount (such difference is referred to as the "Materials and Supplies Adjustment Amount") and (iii) the difference between (A) the Maintenance and Capital Expenditures Amount and (B) the Estimated Maintenance and Capital Expenditures Amount (such difference is referred to as the "Maintenance and Capital Expenditures Adjustment Amount"). The Inventory Adjustment Amount, the Closing IndebtednessMaterials and Supplies Adjustment Amount and the Maintenance and Capital Expenditures Adjustment Amount are referred to collectively as the "Adjustment Amount." The Adjustment Statement shall be prepared using the same generally accepted accounting principles, policies and methods as the Closing Net Working Capital and Seller has historically used in connection with the calculation of the Purchase Price resulting therefrom, in each case, based items reflected on the Closing Balance SheetAdjustment Statement. The Closing Balance SheetBuyer agrees to cooperate with the Seller in connection with the preparation of the Adjustment Statement and related information, and shall provide to the Seller such books, records and information as may be reasonably requested from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount, the Closing Cash-on-HandMaterials and Supplies Adjustment Amount or the Maintenance and Capital Expenditures Amount; provided, however, that the Buyer shall notify the Seller -------- ------- in writing of the disputed amount, and the basis of such dispute, within ten (10) Business Days of the Buyer's receipt of the Adjustment Statement. In the event of a dispute with respect to the Inventory Adjustment Amount, the Closing Indebtedness Materials and Supplies Adjustment Amount or the Maintenance and Capital Expenditures Amount, the Buyer and the Closing Net Working Capital Seller shall each attempt to reconcile their differences and any resolution by them as to any disputed amounts shall be calculated in accordance with final, binding and conclusive on the Agreed Accounting Principles parties. If the Buyer and in the Seller are unable to reach a manner consistent with the applicable definitions contained in this Agreement. During the resolution of such differences within thirty (30) days immediately following the Seller Representative’s of receipt of the Closing Balance Sheet Buyer's written notice of dispute to the Seller, the Buyer and the Closing StatementSeller shall submit the amounts remaining in dispute for determination and resolution to the Independent Accounting Firm, Buyer shallwhich shall be instructed to determine and report to the parties, within thirty (30) days after such submission, upon such remaining disputed amounts, and such report shall cause be final, binding and conclusive on the Company Entities to, (x) provide parties hereto with respect to the amounts disputed. The fees and disbursements of the Independent Accounting Firm shall be allocated between the Buyer and the Seller Representative so that the Buyer's share of such fees and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice disbursements shall be in the same proportion that the aggregate amount of such remaining disputed amounts so submitted by the Buyer to the books and records of Independent Accounting Firm that is unsuccessfully disputed by the Company Entities and to senior management personnel of Buyer (as finally determined by the Company Entities, in each case, Independent Accounting Firm) bears to the extent reasonably requested total amount of such remaining disputed amounts so submitted by the Seller Representative or any of its Representatives in connection with their review of Buyer to the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementIndependent Accounting Firm.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty Within ten (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (210) Business Days after the Closing Balance SheetBuyer's receipt of the Adjustment Statement, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment Buyer shall pay all undisputed portions of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by . If there is a dispute with respect to any amount on the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shallAdjustment Statement, within two five (25) Business Days after the Closing Balance Sheetfinal determination of such disputed amounts on the Adjustment Statement, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions Buyer shall pay to the Escrow Agent Seller an amount equal to cause the Escrow Agent to make payment disputed portion of the Escrow Funds from Adjustment Amount as finally determined to be payable with respect to the Escrow AccountAdjustment Statement; provided, within two (2) Business Days after receipt of however, that if such instructionsamount shall be less than -------- ------- zero, to, or as directed by, then the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions shall pay to the Escrow Agent to cause Buyer the Escrow Agent to make payment, within two (2) Business Days after receipt of amount by which such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05zero. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment All payments made pursuant to this Section 1.05 3.2(c) shall be treated as an adjustment to paid together, with interest thereon for the Purchase Price for U.S. period commencing on the Closing Date through the date of payment, calculated at the prime rate of The Chase Manhattan Bank in effect on the Closing Date, in cash by federal income tax purposesor other wire transfer of immediately available funds.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three Business Days (3) but no earlier than five Business Days, but no more than five (5) Business Days, prior to the ClosingClosing Date, the Company Seller shall prepare prepare, or cause to be prepared, and deliver to the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Preliminary Closing Statement”) setting forth in reasonable detail a good-faith estimate of (i) the Company’s good faith estimates Net Working Capital as of the Closing Cash-on-Hand Adjustment Time (the “Estimated Closing Cash-on-HandNet Working Capital”), (ii) Indebtedness of the Acquired Entity and the Purchased Subsidiaries relating to the Business as of immediately prior to the Closing Indebtedness (the “Estimated Closing Indebtedness”), (iii) Cash as of the Closing Net Working Capital Adjustment Time (the “Estimated Closing Net Working CapitalCash”), (iv) and any Transaction Expenses not otherwise paid by the calculation of the Purchase Price resulting therefrom Seller pursuant to Section 2.3(d) (the “Estimated Purchase PriceTransaction Expenses”), in each case, based on ) and (v) the Estimated Purchase Price calculated therefrom, together with any supporting detail and information the Buyer has reasonably requested to verify the amounts reflected in the Preliminary Closing Balance Sheet and including Statement; provided that notwithstanding the Estimated Purchased Shares Purchase Priceforegoing, any amounts in respect of Taxes shall be determined as of the Estimated CoVant Series LGS Purchased Units Purchase Price, end of the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata PortionClosing Date. The Estimated Closing Balance Sheet, Following the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Preliminary Closing Balance Sheet and the Estimated Closing Statement until the ClosingStatement, the Company shall (x) provide Buyer Seller and its Representatives with reasonable access at all reasonable times during normal business hours shall cooperate in good faith to answer any questions and upon reasonable prior notice to resolve any issues raised by the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Preliminary Closing Statement. Provided that The Seller shall consider in good faith any revisions to the Preliminary Closing Statement by the Buyer pays and to the Purchase Price extent the Seller agrees to any such revisions in accordance with its sole discretion, the amounts Preliminary Closing Statement shall be modified to include such revisions. The Preliminary Closing Statement shall be prepared using those components set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens financial definitions set forth herein (i) arising under the Securities Act in accordance with GAAP, and applicable state securities Laws or (ii) created or incurred byusing the accounting principles, or at practices, assumptions, conventions and policies used in the direction ofpreparation of the Interim Financial Statements (collectively, Buyerthe “Applicable Accounting Principles”)); provided, however, that for all purposes of this Agreement, the term Applicable Accounting Principles in respect of Taxes shall mean applicable Law (and not accounting principles, practices, assumptions, conventions and policies). Any disputes among For the Sellers avoidance of doubt, clause (i) of this Section 2.4(a) will take precedence over clause (ii) of this Section 2.4(a). Notwithstanding anything to the 97989374_16 contrary contained elsewhere in this Agreement, any income Tax receivables, income Tax payables, deferred income Tax assets, and deferred income Tax liabilities of the Acquired Entity and the Seller shall be excluded from current assets and current liabilities in the calculation of Estimated Net Working Capital, Closing Net Working Capital or any component thereof. Prior to the Closing, the Seller and the Buyer shall seek to resolve any differences that they may have with respect to the allocation computation of any of the items in the Preliminary Closing Statement; provided, that if the parties are unable to resolve all such differences prior to the Closing, the amounts of the Estimated Net Working Capital, Indebtedness, Cash and Transaction Expenses as reflected in the Preliminary Closing Statement shall be used for purposes of calculating the Estimated Purchase Price among such Sellers on the Closing Date. For purposes of determining the Estimated Cash, the Estimated Indebtedness, the Estimated Net Working Capital and the Estimated Transaction Expenses, the parties shall not interfere convert any amounts stated in any way with, or give rise to any claim or right upon, Buyer’s ownership a currency other than U.S. dollars into U.S. dollars at the rate of exchange set forth in The Wall Street Journal as of the Purchased Securitiesdate of the Preliminary Closing Statement.
(b) Within ninety (90) 90 days following after the Closing Date, the Buyer shall prepare cause to be prepared and deliver delivered to the Seller Representative a written statement (the “Final Closing Statement)”), that shall include and set forth a calculation in reasonable detail of the actual (i) an unaudited consolidated balance sheet Net Working Capital of the Company Entities Business (“Closing Net Working Capital”), (ii) Indebtedness of the Acquired Entity and the Purchased Subsidiaries (“Closing Indebtedness”), (iii) Cash (“Closing Cash”), (iv) Transaction Expenses not otherwise paid by the Seller pursuant to Section 2.3(d) (“Closing Transaction Expenses”) and (v) the resulting calculation of the Purchase Price, each determined as of the Adjustment Calculation Time (except for Closing Indebtedness and Closing Transaction Expenses, which shall be calculated as of the “end of the day on the Closing Balance Sheet”Date). The Final Closing Statement (A) shall be prepared on a basis consistent with this Agreement (and if not addressed herein, the Applicable Accounting Principles) and (iiB) a statement (as it relates to the “evaluation of the impact of subsequent events on the Closing Statement”) setting forth , shall be based exclusively in reasonable detail Buyeraccordance with FASB Accounting Standards Codification Topic 855, Subsequent Events. For the purposes of applying FASB Accounting Standards Codification Topic 855, Subsequent Events, the date in which the Closing Statement is delivered shall be deemed the date on which the financial statements were issued or available to be issued. To the extent any actions following the Closing with respect to the accounting books and records of the Seller on which the Final Closing Statement and the foregoing calculations are to be based are not consistent with the Seller’s calculation past practices, such changes shall not be taken into account in preparing the Final Closing Statement or calculating amounts reflected thereon, unless otherwise required by GAAP or the Applicable Accounting Principles. For purposes of determining the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance SheetTransaction Expenses, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital parties shall each be calculated in accordance with the Agreed Accounting Principles and convert any amounts stated in a manner consistent with currency other than U.S. dollars into U.S. dollars at the applicable definitions contained rate of exchange set forth in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt The Wall Street Journal as of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementDate.
(c) The Closing Balance Sheet, the Final Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price its components set forth thereon therein shall become final and binding upon on the parties hereto thirty (30) days 45th day following delivery thereof, unless prior to the end of such period, the Seller Representative’s receipt thereof unless delivers to the Seller Representative gives Buyer written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe specifying in reasonable detail the nature and amount of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior any dispute as to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each caseClosing Indebtedness, Closing Cash and/or Closing Transaction Expenses, as reflected on set forth in the Final Closing Statement, together with a proposed alternate calculation thereof and reasonable supporting documentation setting forth the objections thereto. The Seller shall be deemed to have agreed with all 97989374_16 items and amounts of Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses not specifically referenced in the Notice of Disagreement or not reasonably related to items or amounts referenced therein, and such items and amounts shall not be calculated subject to review in accordance with Section 2.4(d) and shall be final, conclusive and binding on the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Priceparties.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately 30day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as by the Seller Representative and Buyer may agree in writingto the Buyer, the Seller Representative and Buyer parties shall seek in good faith to resolve in writing any differences that they may have with respect to the matters calculation of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses as specified therein. Any disputed items resolved in writing between the Buyer and the Seller within such 30day period shall be final and binding with respect to such items, and if the Buyer and the Seller agree in writing on the resolution of each disputed item specified by the Seller in the Notice of DisagreementDisagreement and the amount of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and Closing Transaction Expenses, the amounts so determined shall be final and binding on the parties for all such discussions related thereto shall (unless otherwise agreed by purposes hereunder. If the Buyer and the Seller Representative) be governed have not resolved all such differences by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer 30day period, the Seller Representative and the Buyer shall submit submit, in writing, to an independent public accounting firm (the “Independent Accounting Firm”), their briefs detailing their views as to the Arbiter for review correct nature and resolution any and all matters (but only such matters) which remain amount of each item remaining in dispute and which were properly included the amounts of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses, and the Independent Accounting Firm shall make a written determination as to each such disputed item and the amounts of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses. The Independent Accounting Firm shall be KPMG LLP or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed in writing by the Notice of DisagreementSeller and the Buyer. The Buyer and the Seller Representative shall instruct use their commercially reasonable efforts to cause the Arbiter to, Independent Accounting Firm to render a written decision resolving the matters submitted to it within 30 days following the submission thereof. The Independent Accounting Firm shall consider only those items and amounts in the Buyer’s and the Arbiter shall, make a final determination Seller’s respective calculations of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses, that are identified as being items included in and amounts to which the Closing Balance Sheet Buyer and the Closing Statement (Seller have been unable to agree. The scope of the extent such disputes to be resolved by the Independent Accounting Firm shall be limited to correcting mathematical errors and determining whether the items and amounts are properly in dispute) dispute were determined in accordance with the guidelines Applicable Accounting Principles and procedures set forth in this Agreement. Buyer Agreement and the Seller Representative will cooperate with Independent Accounting Firm is not to make any other determination, including any determination as to whether the Arbiter during Target Net Working Capital or any estimates on the term of its engagementPreliminary Closing Statement are correct, adequate or sufficient. Buyer and In resolving any disputed item, the Seller Representative shall instruct the Arbiter Independent Accounting Firm may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyereither party as set forth in the Final Closing Statement and the Notice of Disagreement, on the one hand, or the Seller Representative, on the other handrespectively, or less than the smallest value for such item assigned claimed by Buyereither party as set forth in the Final Closing Statement and the Notice of Disagreement, respectively. The Independent Accounting Firm’s determination of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses shall be based solely on written materials submitted by the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to(i.e., and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review). The Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Independent Accounting Firm shall become final be conclusive and binding on upon the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review appeal or otherwise appealable, absent manifest error or manifest failure by further review. Judgment may be entered upon the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf written determination of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account Independent Accounting Firm in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.97989374_16
Appears in 1 contract
Purchase Price Adjustment. (a) At least three Within the later of (3i) Business Days, but no more than ninety (90) days after the Closing Date and (ii) five (5) Business Daysdays following the receipt from Xxxxxx of the Final Pension Underfunding Amount, prior the Buyer shall deliver to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Seller a statement (the “Estimated Post-Closing Statement”) ), setting forth in reasonable detail the CompanyBuyer’s good faith estimates determination of (i) Closing Working Capital and the resulting Working Capital Overage or Working Capital Underage, (ii) Closing Cash, (iii) Closing Indebtedness, (iv) the Company Expenses and (v) the Estimated Purchase Price calculated in accordance with Section 2.1(a), using the amounts of Closing Working Capital and the resulting Working Capital Overage or Working Capital Underage, Closing Cash, Closing Indebtedness and the Company Expenses as set forth in the Post-Closing Statement, as applicable, instead of the estimated amounts for each such item used in calculating the Estimated Purchase Price in the Pre-Closing Cash-on-Hand Statement, in each case of the foregoing clauses (the “Estimated Closing Cash-on-Hand”i) through (v), prepared in accordance with the definitions set forth herein, and including reasonable supporting detail of all of the foregoing. The Buyer shall not amend, supplement or modify the Post-Closing Indebtedness (Statement following its delivery to the “Estimated Seller. The Buyer and the Seller acknowledge that no adjustments shall be made to the Working Capital Target Amount. Once the Buyer has delivered the Post-Closing Indebtedness”)Statement, the Post-Closing Net Working Capital (Statement shall be deemed irrevocable by the “Estimated Closing Net Working Capital”) and Buyer for purposes of the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Final Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Buyer shall be foreclosed and barred in all respects from amending, supplementing or modifying the Post-Closing Net Working Capital shall each Statement and related calculations following delivery to the Seller; provided, that the Post-Closing Statement may be calculated revised in accordance with Section 2.3(b). The Buyer and the Agreed Accounting Principles and in Seller shall jointly engage Xxxxxx to prepare a manner consistent with the applicable definitions contained in this Agreement. From and after delivery calculation of the Estimated Final Pension Underfunding Amount as of the Closing Balance Sheet Date, and shall use reasonable efforts to cause Xxxxxx to deliver such calculation to the Seller and the Estimated Buyer no later than seventy-five (75) days after the Closing Statement until Date. The Final Pension Underfunding Amount as determined by Xxxxxx shall be final, conclusive and binding on the ClosingParties, absent a showing of fraud or manifest error, and shall be the Company shall used as the amount of Indebtedness pursuant to clause (xvi) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel definition of Indebtedness for purposes of calculation of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesIndebtedness.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing CashThe Post-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty Parties on the forty-fifth (3045th) days day following the Seller Representative’s receipt thereof date on which the Post-Closing Statement was delivered to the Seller, unless the Seller Representative gives delivers a written notice of its disagreement with the Post-Closing Statement (a “Notice of Disagreement”) to the Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, however, that (i) if the Closing Balance SheetBuyer has not provided the access or information to the Seller pursuant to Section 2.3, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) deadline for a Notice of Disagreement may only include disagreements based on (A) shall be tolled until the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, Buyer provides such access or information pursuant to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) Section 2.3. If a timely Notice of Disagreement is delivered by to the Seller Representative to Buyer in accordance with Section 1.05(c)a timely manner, then the Closing Balance Sheet and the Post-Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon sentence) shall become final and binding upon the parties hereto Seller and the Buyer on the earlier of (xi) the date all the Seller and the Buyer resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (ii) the date any disputed matters are finally resolved in writing by the Accounting Firm (as defined below). If the Seller Representative does not timely deliver a Notice of Disagreement to the Buyer, the Post-Closing Statement (and Buyer the components thereof) shall become final, conclusive and (y) binding on the date all Parties. If the Seller timely delivers a Notice of Disagreement to the Buyer, any matters specified that are not disputed in the Notice of Disagreement not resolved by written agreement of shall become final, conclusive and binding on the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d)Parties. During the thirty (30) days immediately 30)-day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingDisagreement, the Seller Representative and the Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions and communications related thereto shall (unless otherwise agreed by the Buyer and the Seller Representativein writing) be governed by by, and treated as compromise and settlement negotiations for purposes of, Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement)and any applicable similar state rule. At If at the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and the Buyer shall submit to have not resolved in writing the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included specified in the Notice of Disagreement, the Seller and the Buyer shall submit to an independent accounting firm (the “Accounting Firm”), acting as an expert and not as an arbitrator, for resolution, in accordance with the standards set forth in this Section 2.3, only matters that remain in dispute. The Accounting Firm shall be Xxxxxxx & Marsal or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the Seller and the Buyer in writing, and, the Seller and the Buyer shall enter into a customary engagement letter with, and to the extent necessary each Party and its Affiliates will waive any conflicts with, the Accounting Firm at the time such dispute is submitted to the Accounting Firm and shall cooperate with the Accounting Firm in connection with its determination pursuant to this Section 2.3(b). Within five (5) Business Days after the expiration of such thirty (30)-day period, each of the Buyer and the Seller Representative shall instruct may deliver to the Arbiter toAccounting Firm its response to the other’s position on the matters that remain in dispute; provided, that it delivers a copy thereof substantially simultaneously to the other. The Seller and the Arbiter shall, make Buyer shall use reasonable efforts to cause the Accounting Firm to render a final determination written decision resolving the matters submitted to the Accounting Firm within thirty (30) days of the receipt of such submission. The scope of the disputes to be resolved by the Accounting Firm shall be limited to correcting mathematical errors and determining whether the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) dispute were determined in accordance with the guidelines definitions set forth herein, if applicable, and procedures this Agreement and the Accounting Methodology, and the Accounting Firm is not to make any other determination, including any determination as to (I) whether the Working Capital Target Amount is correct, (II) the accuracy of the representations and warranties set forth in this AgreementAgreement (III) the compliance by any Party with any of its covenants in this Agreement or (IV) whether the Final Pension Underfunding Amount determined by Xxxxxx is correct. For the avoidance of doubt, this Section 2.3 is not intended to adjust the enterprise value of the Company or the Final Purchase Price for any errors or omissions, under IFRS or otherwise, that may be found with respect to the Financial Statements. The Accounting Firm’s decision shall be based solely on written submissions by the Seller and the Buyer and their respective Representatives (a copy of which shall be delivered to the Seller Representative will cooperate with Buyer or the Arbiter during Seller, as applicable) and not by independent review and shall be final and binding on all of the term Parties (absent a showing of fraud or manifest error) and be enforceable as an arbitration award in any court of competent jurisdiction under the terms of the U.S. Federal Arbitration Act or its engagementstate law equivalents. Buyer and the Seller Representative shall instruct the Arbiter The Accounting Firm may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, any Party or the Seller Representative, on the other hand, or less smaller than the smallest value for such item assigned claimed by Buyerany Party. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the Party against which such determination is to be enforced.
(i) The up-front engagement fees and expenses of the Accounting Firm incurred pursuant to this Section 2.3 in connection with any disputed items submitted to the Accounting Firm under this Section 2.3 shall initially be borne 50% by the Seller, on the one hand, or and 50% by the Seller RepresentativeBuyer, on the other hand, provided, all such fees, costs and expenses shall ultimately be borne in proportion to the final allocation made by such Accounting Firm of the disputed items weighted in relation to the claims made by the Seller and the Buyer, such that the prevailing Parties pay the lesser proportion of such fees, costs and expenses. For example, if the Seller claims that the appropriate adjustments are €1,000 greater than the amount determined by the Buyer and if the Accounting Firm ultimately resolves the dispute by awarding to the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf €300 of the Sellers) shall pay a portion of €1,000 contested, then the fees fees, costs and expenses of the Arbiter equal Accounting Firm will be allocated 30% (i.e., 300 ÷ 1,000) to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission Buyer and 70% (i.e., 700 ÷ 1,000) to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSeller.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, all fees, costs and without limiting expenses incurred by the generality of Parties in connection with resolving any dispute hereunder before the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) Accounting Firm has been engaged shall be asserted against any of borne by the Seller PartiesParty incurring such fee, cost or expense.
(hc) Any payment made pursuant to For the purposes of this Agreement, (i) “Final Closing Working Capital”, “Final Closing Cash”, “Final Closing Indebtedness” and “Final Company Expenses” means the Closing Working Capital, Closing Cash, Closing Indebtedness and Company Expenses, respectively, as finally agreed or determined in accordance with Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes2.3(b).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three two (32) Business Days, but no more than five (5) Business Days, prior to Days before the Closing, the Company Seller shall prepare and deliver to Buyer a statement setting forth its calculation of the Closing Date Payment, together with:
(i) a schedule of its good faith estimate of all unpaid Company Indebtedness (the “Estimated Company Indebtedness”) that specifies the amount of Company Indebtedness that is to be repaid to each lender or other holder of Indebtedness at the Closing (the “Company Indebtedness Payoff Schedule”) together with payoff letters from each lender and other holders of Indebtedness identified on the Company Indebtedness Payoff Schedule, which payoff letters shall state the amount of the Company Indebtedness owed to such lender or other holder and that, if such amount is paid to such lender or other holder on the Closing Date, such lender or other holder, as applicable, shall release any and all Encumbrances that it may have with respect to the Acquired Companies and their respective assets);
(ii) a schedule of its good faith estimate of all unpaid Company Transaction Expenses (the “Estimated Company Transaction Expenses”) and payees thereof (the “Company Transaction Expense Schedule”);
(iii) its reasonably detailed good faith estimate of Closing Working Capital (the “Estimated Closing Working Capital”), which statement shall contain an estimated consolidated balance sheet of the Company Entities Acquired Companies as of the Adjustment Calculation Time close of business on the Closing Date prepared in accordance with the Accounting Principles (without giving effect to the “Estimated Closing Balance Sheet”transactions contemplated herein), and (ii) a statement (calculation of the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working CapitalCapital Statement”);
(iv) its good faith estimate of Cash and the calculation Cash Equivalents of the Purchase Price resulting therefrom Company (the “Estimated Purchase PriceCash and Cash Equivalents”), in each case, based on ; and
(v) a certificate of the Chief Financial Officer of the Company that the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated Statement was prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until Principles.
(b) At the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for adjusted in the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens following manner:
(i) arising under either (1) an increase by the Securities Act and applicable state securities Laws amount, if any, by which the Estimated Closing Working Capital (as determined in accordance with Section 2.5(a)) is greater than the Target Working Capital, or (2) a decrease by the amount, if any, by which the Estimated Closing Working Capital is less than the Target Working Capital;
(ii) created or incurred by, or at an increase by the direction of, Buyer). Any disputes among the Sellers with respect amount equal to the allocation Cash and Cash Equivalents of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.Company;
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered decrease by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter amount equal to the percentage unpaid Company Indebtedness, if any; and
(iv) a decrease by which the portion amount of the disputed amounts in the Seller Representative’s submission unpaid Company Transaction Expenses. The net amount after giving effect to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement adjustments listed above shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties“Closing Date Payment.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.”
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysAs promptly as practicable, but no more later than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and 30 calendar days after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare will cause to be prepared and deliver delivered to Seller the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a closing statement (the “Closing Statement”) setting forth in reasonable detail ). The Closing Statement will present Buyer’s good faith calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation value of the Purchase Price resulting therefrom, in each case, based Purchased Inventory as of the close of business on the Closing Balance Sheet. The Date (“Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Inventory Value”) and the Closing Net Working Capital shall each will be calculated in accordance with GAAP, the Agreed Accounting Principles past practices of Seller, and the accounting protocol used by Seller to prepare the Inventory workpaper as set forth on Schedule 3.2(a), which includes agreed-on Purchased Inventory unit costs and the value of the Purchased Inventory in a manner consistent accordance with the applicable definitions contained in this Agreement. During the thirty Section 3.2.
(30b) Within 30 calendar days immediately following the Seller Representativeafter Seller’s receipt of the Closing Balance Sheet and the Closing Statement, Seller may deliver a written notice of disagreement (a “Dispute Notice”) to Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review setting forth Seller’s good faith calculation of the Closing Balance Sheet and Inventory Value. If Seller does not deliver a Dispute Notice to Buyer within such 30-calendar-day period, then the Closing StatementInventory Value set forth in the Closing Statement will be deemed final, conclusive and binding on the parties in all respects. Any such Dispute Notice will specify those items or amounts in the Closing Statement as to which Seller disagrees, and (y) cooperate Seller will be deemed to have agreed with the Seller Representative all other items, amounts and its Representatives calculations contained in connection with their review of the Closing Balance Sheet and the Closing StatementStatement delivered pursuant to Section 3.2(a) not objected to in such notice.
(c) The If a Dispute Notice is duly delivered pursuant to Section 3.2(b), Buyer and Seller will, during the ten Business Days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Balance SheetInventory Value. If the parties so resolve all disputes, the Closing Statement and the Closing Cash-on-HandInventory Value, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except as amended to the extent addressed by a duly delivered Notice of Disagreement prior necessary to reflect the expiration of such thirty (30)-day period, each component resolution of the Closing Balance Sheetdispute, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final will be conclusive and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Priceparties.
(d) If a timely Notice during such period, Buyer and Seller are unable to reach an agreement, they will promptly thereafter cause the Independent Accountant to review the disputed items or amounts for the purpose of Disagreement is delivered by resolving each disputed item and calculating Closing Inventory Value (it being understood that in making such calculation, the Seller Representative to Buyer Independent Accountant will be functioning as an arbitrator and not as an accountant). In resolving such disputed items and making such calculation, the Independent Accountant will consider only those items or amounts in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-HandDispute Notice and the actual quantities of the Purchased Inventory, if necessary. In resolving any disputed item, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement Independent Accountant may not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either party or less than the smallest value for such item assigned claimed by Buyereither party. The Independent Accountant will deliver to Buyer and Seller, as promptly as practicable (but in any case no later than 30 calendar days from the date of engagement of the Independent Accountant) a written report signed by the Independent Accountant setting forth such calculation. Such report will be final and binding on Buyer and Seller, with no right to appeal the one handdecision of the Independent Accountant, and will not be subject to collateral attack (other than for fraud or the Seller Representative, on the other handmanifest error). Buyer and Seller agree to execute, if requested by the Independent Accountant, a reasonable engagement letter in customary form. The fees, costs and expenses of the Independent Accountant’s review and report will be borne by the party whose aggregate estimate of the disputed amounts differs most from the determination of the Independent Accountant.
(e) Buyer and Seller Representative shall also instruct the Arbiter will, and will cause their respective Representatives to, cooperate and assist in the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis preparation of an independent review. The Closing Balance Sheet, the Closing Statement and the calculation of Closing Cash-on-Hand, Inventory Value and in the Closing Indebtedness, conduct of the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution review referred to in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed mattersSection 3.2(c), including making available books, records, work papers and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativepersonnel.
(f) If the Estimated Purchase Price Final Inventory Value is greater less than the Inventory Target, Seller will pay to Buyer the amount of the shortfall. If the Final Inventory Value is more than the Inventory Target, Buyer will pay to Seller the amount of the excess. If the Final Inventory Value is equal to the Inventory Target, there will be no adjustment to the Purchase Price (Price. Any such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, adjustment payment will be made within two (2) five Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, Final Inventory Value has been determined by wire transfer in by Buyer or Seller, as the case may be, of immediately available funds to an account of the Excess Amount from the Escrow Funds such other party as may be designated in the Escrow Account. If the Excess Amount is less than the Escrow Funds (writing by such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representativeother party.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Asset Purchase Agreement (Scott's Liquid Gold - Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior Purchaser shall cause Company to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities Sellers, as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)soon as practicable, and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) event within 30 days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative : (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “"Closing Balance Sheet”), and ") prepared in accordance with GAAP applied consistently with the past practices of the Company; (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on Working Capital of Company as of the Calculation Time determined by reference to the Closing Balance Sheet. The Closing Balance Sheet, Sheet (the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net "Working Capital Statement"), which statement shall each be calculated in accordance with GAAP and shall include the Agreed Accounting Principles amount of the Company's Working Capital (the "Adjustment Amount") as of the Calculation Time, it being understood that a positive Working Capital amount will result in an equivalent positive Adjustment Amount and a negative Working Capital amount will result in a manner consistent an equivalent negative Adjustment Amount. No change in accounting principles and practices shall be made from those described above, including with respect to the applicable definitions contained nature or classification of accounts. No reserves or other accruals shall be increased or created. Purchaser shall provide, or cause to be provided to Sellers, copies of all working papers resulting from, or used in this Agreement. During connection with, the thirty preparation of the Purchase Price Adjustment Documents.
(30b) days immediately following On or prior to the Seller Representative’s 10th Business Day after Sellers' receipt of the Closing Balance Sheet Purchase Price Adjustment Documents (such 10 Business Day period, the "Objection Period"), either Seller may give Purchaser a written notice (the "Objection Notice") stating in reasonable detail that Seller's objections to the Purchase Price Adjustment Documents. Any Objection Notice shall specify in reasonable detail the dollar amount and nature of any objection and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, basis therefor. Except to the extent reasonably requested by that either Seller makes a specific objection to a specific determination set forth on a Purchase Price Adjustment Document pursuant to the Seller Representative or any of its Representatives in connection with their review of Objection Notice delivered to Purchaser within the Closing Balance Sheet and the Closing StatementObjection Period, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final Adjustment Documents will be conclusive and binding upon the parties hereto thirty for purposes of determining the adjustment in Section 3.6(d).
(30c) days following the If either Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (delivers a “timely Objection Notice of Disagreement”) as described in Section 3.6(b), then Purchaser and Sellers will negotiate in good faith to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and resolve their disputes regarding the Purchase Price set forth thereon Adjustment Documents. If Purchaser and Sellers are unable to resolve all disputes regarding the Purchase Price Adjustment Documents on or prior to the 10th day after Purchaser's receipt of the Objection Notice, then Sellers and Purchaser will retain an independent accounting firm (selected either by mutual agreement or, in the absence of mutual agreement, by random choice after eliminating any such firm which is conflicted or otherwise unable to participate) (an "Independent Accounting Firm"), to resolve the dispute as soon as practicable, and in any event within 20 days of its appointment. Each of Sellers, on the one hand, and Purchaser, on the other hand, shall become final provide to the Independent Accounting Firm its view of the correct amount of the Adjustment Amount and the constituent items forming part of the Working Capital Statement. The Independent Accounting Firm shall act as an expert and not as an arbitrator to determine, based solely on the written submissions of the parties and not by independent investigation, only the specific items under dispute by Sellers and Purchaser. The Independent Accounting Firm shall render a written report as to the resolution of the dispute and the resulting computation of the Adjustment Amount. The Adjustment Amount as determined by the Independent Accounting Firm will, absent manifest error, be conclusive and binding upon the parties hereto upon and will constitute the Seller Representative’s delivery, prior to the expiration Adjustment Amount for all purposes of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheetthis Section 3.6. In resolving any disputed item, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Independent Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of Firm: (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing shall be bound by the Seller Representative and Buyer provisions of this Section 3.6(c); and (y) the date all matters specified in the Notice of Disagreement may not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either Sellers or the Seller Representative, on the other hand, Purchaser or less than the smallest value for such item assigned claimed by Buyer, on either Sellers or Purchaser. Where the one hand, or Independent Accounting Firm determines that the Seller Representative, on Adjustment Amount should be increased by more than 15% from the other hand. Buyer and amount contemplated in the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing Statement delivered by Purchaser to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Sellers, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) Purchaser shall pay a portion of the fees all fees, costs and expenses of the Arbiter equal to Independent Accounting Firm in resolving the percentage by which dispute, otherwise such fees, costs and expenses shall be the portion responsibility of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSellers.
(ed) If the Estimated Purchase Price there is less than the Purchase Price (such shortfall, the “a negative Adjustment Amount”), then (iSellers shall pay such amount to Purchaser by wire transfer of immediately available funds. If there is a positive Adjustment Amount, Purchaser shall pay such amount to Sellers by wire transfer of immediately available funds. Any payment made pursuant to this Section 3.6(d) Buyer shall, shall be made within two (2) Business Days (i) if no Objection Notice is delivered, after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) toObjection Period has expired, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shallif an Objection Notice is delivered, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties all disputes are finally resolved pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative3.6(c).
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(he) Any payment made pursuant to this Section 1.05 shall 3.6(d) will be treated as an adjustment to the Estimated Purchase Price for U.S. federal income tax all purposes, unless a contrary treatment is required by applicable Laws.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Solitario Exploration & Royalty Corp.)
Purchase Price Adjustment. Following the Closing Date, the Purchase Price shall be adjusted, if at all, as set forth below:
(a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company The Purchaser shall prepare and deliver to Buyer the Sellers’ Representative (as defined below) within ninety (90) Business Days after the Closing Date (i) an estimated a consolidated balance sheet of the Company Entities and its Subsidiaries as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates close of business on the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated Date in accordance with the Agreed Accounting Principles and GAAP applied in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery preparation of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited audited consolidated balance sheet of included within the Company Entities as of Financial Statements for the Adjustment Calculation Time fiscal year ended July 31, 2002 that shall be audited by PricewaterhouseCoopers LLP who shall be engaged by the Purchaser (the “Closing Balance Sheet”), ) and (ii) a statement calculation of Net Working Capital derived from the Closing Balance Sheet (the “Closing StatementNet Working Capital Calculation”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the ). The Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Calculation shall each be calculated prepared in accordance with the Agreed Accounting Principles definition of Net Working Capital and in accordance with GAAP applied in a manner consistent with the applicable definitions contained preparation of the audited consolidated balance sheet included within the Financial Statements for the fiscal year ended July 31, 2002. For the avoidance of doubt, the Closing Balance Sheet shall be prepared in this Agreement. accordance with the Company’s historic cost basis of accounting and will not be adjusted for the purchase price paid by the Purchaser in excess of the historic carrying value of the consolidated assets and liabilities of the Company.
(b) During the thirty (30) days immediately -day period following the Seller Sellers’ Representative’s receipt of the Closing Balance Sheet and the Closing StatementNet Working Capital Calculation, Buyer shall, and the Purchaser shall cause provide to the Company Entities to, (x) provide the Seller Sellers’ Representative and its Representatives with reasonable full access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities to permit the Sellers’ Representative to review the Closing Balance Sheet and to senior management personnel of the Company Entities, in each case, Closing Net Working Capital Calculation. On or prior to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review thirtieth (30th) day following Seller’s Representative’s receipt of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance SheetNet Working Capital Calculation, the Closing Statement and Sellers’ Representative may give the Closing Cash-on-Hand, Purchaser a written notice stating in reasonable detail the Closing Indebtedness, Sellers’ Representative’s objections (an “Objection Notice”) to the Closing Net Working Capital Calculation. Any Objection Notice shall specify in reasonable detail the dollar amount of any objection and the Purchase Price basis therefor. Any determination set forth thereon in the Closing Net Working Capital Calculation which is not specifically objected to in the Objection Notice shall become be deemed acceptable and shall be final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding Parties upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance delivery of the Closing Balance Sheet, Objection Notice. If the Closing Statement and Sellers’ Representative does not give the Closing CashPurchaser an Objection Notice within such 30-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), Net Working Capital Calculation will be conclusive and binding upon the Closing Cash-on-Hand, the Closing Indebtedness, Parties and the Closing Net Working Capital Calculation will be used for purposes of Section 1.5(a) and 1.5(e) herein.
(c) Following the Purchaser’s receipt of any Objection Notice, the Sellers’ Representative and the Purchase Price set forth thereon Purchaser shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised attempt to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek negotiate in good faith to resolve in writing such dispute. In the event that the Sellers’ Representative and the Purchaser fail to agree on any differences that they may have with respect to of the matters specified Sellers’ Representative’s proposed adjustments set forth in the Objection Notice of Disagreementwithin thirty (30) Business Days after the Purchaser receives the Objection Notice, and all such discussions related thereto shall (unless otherwise agreed by Buyer the Sellers’ Representative and the Seller RepresentativePurchaser agree that Deloitte & Touche, LLP or if Deloitte & Touche, LLP is not then independent, willing and able, a mutually acceptable accounting firm of nationally recognized standing (the “Independent Auditors”) be governed by Rule 408 of shall, within the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of 30-day period immediately following such thirty (30)-day period or such agreed30-upon longer day period, make the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Calculation in accordance with the terms of this Agreement. The Purchaser and the Purchase Price set forth thereon Sellers’ Representative each shall become provide the Independent Auditors with their respective determinations of the Closing Net Working Capital Calculation. In making the determination of Closing Net Working Capital, the Independent Auditors shall be instructed to determine only the specific items in dispute as identified in the Objection Notice. The Independent Auditors shall make an independent determination of the Closing Net Working Capital in compliance with the previous clause that shall be within the range proposed by the Purchaser and the Sellers’ Representative in their respective proposed Closing Net Working Capital Calculations. The Independent Auditors’ determination shall be final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer Sellers’ Representative and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this AgreementPurchaser. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees fees, costs and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Independent Auditors shall be paid fifty percent (50%) by the Seller Representative in Purchaser and fifty percent (50%) by the Seller Sellers’ Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(ed) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the The term “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after Closing Balance Sheet” shall mean the Closing Balance SheetSheet delivered pursuant to Section 1.5(a) as adjusted, if at all, pursuant to Sections 1.5(b) and (c). The date on which the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Balance Sheet is finally determined pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or 1.5 shall hereinafter be referred to as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess AmountSettlement Date”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five Five (5) Business Days, days prior to the Closing, the Company Companies shall prepare have prepared and deliver delivered to Buyer an estimated closing statement that contains (except, in the case of clauses (ii), (iii) and (iv), to the extent such information is otherwise included in the Closing Memorandum) a good faith estimate prepared in accordance with the Applicable Accounting Practices and Procedures, together with reasonably detailed supporting documentation, of (i) an the estimated consolidated balance sheet (x) positive difference by which Net Working Capital exceeds $63,000,000 or (y) the negative difference between Net Working Capital and $58,000,000 ((x) or (y), the “Estimated Net Working Capital Difference”), (ii) the amount of Indebtedness of the Company Entities as of Companies calculated through and including the Adjustment Calculation Time Closing Date that will be unpaid immediately prior to the Closing (the “Estimated Closing Balance SheetIndebtedness”), (iii) the Transaction Expenses of the Companies calculated through and (ii) a statement including the Closing that will be unpaid immediately prior to the Closing (the “Estimated Transaction Expenses”), (iv) the Service Bonuses of the Companies that will be unpaid immediately prior to the Closing Statement(the “Estimated Service Bonus Expenses”) setting forth in reasonable detail the Company’s good faith estimates and (v) Cash and Cash Equivalents of the Companies as of immediately prior to the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), such estimated amounts which shall be taken into account in determining the Closing Indebtedness (Purchase Price pursuant to the “Estimated Closing Indebtedness”), definition thereof. The Parties acknowledge that Buyer shall be entitled to rely on the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) Memorandum and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated any payments made by Buyer in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice Memorandum will be deemed to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price have been made in accordance with the amounts set forth in the Estimated Closing Statementthis Agreement, and Buyer’s obligation to pay the Purchase Price make payments under this Agreement shall be deemed to have been satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within No later than ninety (90) calendar days following after the Closing Date, Buyer shall prepare in good faith and deliver to the Seller Sellers’ Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth Buyer’s calculation, in reasonable detail and prepared in accordance with the Applicable Accounting Practices and Procedures, of (i) (x) positive difference by which Net Working Capital exceeds $63,000,000 or (y) the negative difference between Net Working Capital and $58,000,000 ((x) or (y), the “Closing Net Working Capital Difference”), (ii) the amount of Indebtedness of the Companies calculated through and including the Closing and unpaid immediately prior to the Closing (the “Closing Indebtedness”), (iii) the Transaction Expenses calculated through and including the Closing and unpaid immediately prior to the Closing (the “Closing Transaction Expenses”), (iv) the Service Bonuses of the Companies that were unpaid immediately prior to the Closing (the “Closing Service Bonus Expenses”), (v) the Cash and Cash Equivalents as of immediately prior to Closing (“Closing Cash”), and (vi) Buyer’s proposed calculation of the Closing Cash-on-Hand, Adjustment.
(c) On or prior to the thirtieth (30th) calendar day following Buyer’s delivery of the Closing IndebtednessStatement to Sellers’ Representative, Sellers’ Representative may give Buyer a written notice stating Sellers’ Representative’s objections (an “Objection Notice”) to the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementStatement. During the such thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statementcalendar-day period, Buyer shall, and shall cause the Company Entities to, (x) will provide the Seller Sellers’ Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to (i) review the financial books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, Companies to the extent reasonably requested by the Seller Representative or any of necessary for its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (yii) cooperate with the Seller employees and other representatives of Buyer and the Companies to respond to questions relating to the Closing Statement. Any Objection Notice shall specify in reasonable detail, the nature and dollar amount of the objections and the reasonable basis or bases therefor. If Sellers’ Representative and its Representatives in connection with their review does not timely deliver an Objection Notice, then Buyer’s proposed calculation of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, Adjustment as set forth in the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital shall be deemed accepted and the Purchase Price set forth thereon shall become be final and binding upon on the parties hereto parties.
(d) Following Buyer’s receipt of an Objection Notice, Sellers’ Representative and Buyer shall attempt to negotiate in good faith to resolve such dispute. If Sellers’ Representative and Buyer fail to resolve such dispute within thirty (30) days following after Buyer receives the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)Objection Notice, then the Closing Balance Sheet they shall jointly retain and the Closing Statement (as revised in accordance with this Section 1.05(d))refer their disagreements to a nationally recognized independent accounting firm, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller mutually acceptable to Sellers’ Representative and Buyer who, unless otherwise agreed by Sellers’ Representative and (y) Buyer, will have had no prior connections, business relationships, personal relationships, or conflicts with any of the date all matters specified Parties or others that are in any way participating in the negotiation, discussion, or closing of the Contemplated Transactions (the “Independent Accountant”). The Independent Accountant shall make the final, binding determination, absent fraud or Manifest Error, regarding the proposed adjustments set forth in the Objection Notice of Disagreement that are not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Sellers’ Representative and Buyer (such firm, the “ArbiterClosing Adjustment Disputed Items”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller and Sellers’ Representative, on the other hand, or less than each shall provide the smallest value for such item assigned by Buyer, on Independent Accountant with their respective determinations of the one hand, or Closing Adjustment Disputed Items. The Independent Accountant shall make its determination of the Seller Representative, on the other hand. Buyer Closing Adjustment Disputed Items and the Seller resultant Closing Adjustment which determination shall be final and binding on Sellers’ Representative and Buyer (absent fraud or Manifest Error). The determination of any of the Closing Adjustment Disputed Items by the Independent Accountant shall also instruct the Arbiter tobe within, and limited by, the Arbiter shall, range comprised of the respective determination of each of Buyer’s and Sellers’ Representative’s calculation with respect to such Closing Adjustment Disputed Items. The determination of the Closing Adjustment Disputed Items by the Independent Accountant shall be based on whether such Closing Adjustment Disputed Items have been calculated in accordance with the standards set forth in this Agreement. The Independent Accountant shall make its determination based solely on written presentations and supporting material provided by Buyer and Sellers’ Representative in response to the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent reviewIndependent Accountants’ request or otherwise. The Closing Balance Sheetfees, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees costs and expenses of the Arbiter equal Independent Accountant shall be split equally between Sellers’ Representative and Buyer. Either of Sellers’ Representative or Buyer may require that the Independent Accountant enter into a customary form of confidentiality agreement with respect to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission work papers and other documents and information provided to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesIndependent Accountant under this Section 2.05.
(e) If the Estimated Purchase Price is less than the Purchase Price Closing Adjustment, as finally determined pursuant to Section 2.05(c) or (such shortfall, the “Adjustment Amount”d), then (i) as applicable, is a negative number after final determination pursuant to this Section 2.05, Sellers’ Representative and Buyer shall, within two three (23) Business Days after the Closing Balance Sheet, final determination of the Closing Statement and the Closing Cash-on-HandAdjustment, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to jointly instruct the Escrow Agent to cause disburse from the Escrow Agent Fund by wire transfer of immediately available funds to make payment Buyer, an amount in cash equal to the Closing Adjustment. For the avoidance of doubt, recovery from the Escrow Fund shall be the sole and exclusive remedy available to Buyer for and in respect of any negative Closing Adjustment, and neither any Seller, AvKARE Holdings nor any other Person shall have any liability to Buyer or any other Person for any portion of such negative Closing Adjustment following depletion of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeFund.
(f) If the Estimated Purchase Price is greater than the Purchase Price Closing Adjustment, as finally determined pursuant to Section 2.05(c) or (such excess, the “Excess Amount”d), then as applicable, is a positive number, any excess shall be paid by Buyer and within 12 months following the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt date of such instructions, to Buyer, by wire transfer final determination in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole same payment allocations and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesinstructions.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Equity Purchase Agreement (Amneal Pharmaceuticals, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business DaysAs promptly as practicable and in any event within 90 days after the Closing Date, but no more than five (5) Business Days, prior to the Closing, the Company Parent shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyerits good faith calculation of (i) the Net Working Capital (calculated without reference to the Delayed Consent Subsidiaries), (ii) the Closing Indebtedness, (iii) the Transaction Expenses, (iv) the Pipeline Acquisition Costs, (v) the Cash Amount and (vi) the resulting calculation of the Purchase Price.
(b) Seller Representative shall have 45 days following delivery of the Closing Statement to review and either accept or dispute the Closing Statement and the calculations set forth therein. If Seller Representative disputes any amounts reflected on the Closing Statement, it shall deliver to Parent a statement setting forth its objections thereto, setting forth, in reasonable detail, the basis for such dispute, the dollar amounts involved and Seller Representative’s calculation of the adjustments to the Closing Cash-on-HandStatement that Seller Representative believes should be made, within 45 days of delivery of the Closing Statement to Seller Representative (such written notice of objection, the Closing Indebtedness“Objection Statement”). If an Objection Statement is not delivered to Parent within the time period required by the preceding sentence, then the Closing Net Working Capital Statement (as delivered by Parent to Seller Representative), as modified to include any changes agreed to by Seller Representative and Parent, shall be final, binding and non-appealable by the parties hereto.
(c) If Seller Representative timely delivers an Objection Statement to Parent, Seller Representative and Parent shall negotiate in good faith to resolve any objections made by Seller Representative, but if they do not reach a final resolution within 30 days (or such longer period as may be agreed by Seller Representative and Parent) after the delivery of the Objection Statement, Seller Representative and Parent shall submit the items remaining in dispute for final resolution to the Accountants for final arbitration. Promptly following the submission of the items in dispute to the Accountants, and in any event within ten Business Days following such submission, each of Parent and Seller Representative shall submit to the Accountants (and the calculation other party) all documentary materials and analyses that Parent or Seller Representative, as the case may be, believes to be relevant to a resolution of the Purchase Price resulting therefrom, disputed items set forth in each case, based on the Closing Balance SheetObjection Statement. The Closing Balance SheetAccountants shall render their determination of all disputed items submitted for resolution within 30 days after receipt of all submissions by Parent and Seller Representative to the Accountants, the Closing Cashand such determination shall be final, binding and non-on-Handappealable absent bad faith or manifest error. The Accountants shall, the Closing Indebtedness acting as experts in accounting and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and not as arbitrators, determine in a manner consistent with the applicable definitions contained in requirements of this Agreement. During Agreement (including the thirty Accounting Principles), based solely on written presentations and written submissions by Parent and Seller Representative (30) which presentations and submissions shall be made to the Accountants no later than 15 days immediately following after the Seller Representative’s receipt engagement of the Closing Balance Sheet and the Closing Statement, Buyer shallAccountants), and shall cause the Company Entities tonot by independent review, (x) provide the whether those items identified by Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice on the Objection Statement that were submitted to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementAccountants, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheetany resulting adjustments, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be were properly calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in terms of this Agreement and/or (B) mathematical errors in including the computation of the Closing Cash-on-HandAccounting Principles). In resolving any disputed item, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement Accountants may not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either party or less than the smallest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other handeither party. Buyer and the Neither Parent nor Seller Representative shall also instruct engage in any ex parte communications with the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Accountants. Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance SheetParent shall promptly execute, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be if reasonably requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Accountants, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementa commercially reasonable engagement letter. The fees and expenses of the Accountants shall be allocated between the Surviving Company and Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the ArbiterSecurity Holders, severally, and the Company shall pay the remaining portion not jointly, in accordance with each Security Holder’s Pro Rata Share), so that each such party’s share of such fees and expensesexpenses shall be equal to the product of (A) the aggregate amount of such fees and expenses and (B) a fraction, the numerator of which is the amount in dispute that is ultimately resolved in the other party’s favor pursuant to this Section 2.15 (as finally determined by the Accountants) and the denominator of which is the total amount of the disputed items submitted to the Accountants.
(ed) If the Estimated Purchase Price is less No later than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) five Business Days after the Closing Balance SheetPurchase Price has been finally determined in accordance with this Section 2.15, the Closing Statement and parties agree to the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and following payments (if any):
(i) If the Purchase Price set forth thereon become final and binding is greater than the Estimated Purchase Price, Parent shall pay the amount of such excess to Seller Representative (on the parties pursuant to this Section 1.05, make payment behalf of the Adjustment Amount, by wire transfer Security Holders for distribution to each such Security Holder in immediately available accordance with its Pro Rata Share thereof) and all funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding Adjustment Escrow Account shall be released to Seller Representative (on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment behalf of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of Security Holders for distribution to each such instructions, to, or as directed by, the Seller RepresentativeSecurity Holder in accordance with its Pro Rata Share thereof).
(fii) If the Estimated Purchase Price is greater than the Purchase Price Price, (A) the amount of such excess, excess (the “Excess AmountPurchase Price Overpayment”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and shall be released to Parent from the Purchase Price set forth thereon become final Adjustment Escrow Account and binding (B) all remaining funds in the Purchase Price Adjustment Escrow Account shall be released to Seller Representative (on behalf of the parties Security Holders for distribution to each such Security Holder in accordance with its Pro Rata Share thereof). Except as provided in the next sentence, the payment of funds from the Purchase Price Adjustment Escrow Account in accordance with this Section 2.15(d)(ii) shall be Parent’s sole and exclusive remedy for any adjustments to the Purchase Price contemplated by this Section 2.15, and if the Purchase Price Overpayment would otherwise exceed the remaining funds at the time of such adjustments from the Purchase Price Adjustment Escrow Account, Parent and the Acquired Companies shall have no recourse against the Security Holders or their Affiliates for such excess. Notwithstanding anything to the contrary in this Agreement or any Ancillary Document, Parent may offset against any consideration payable to Sailor Newco under the Delayed Consent Subsidiary Purchase Agreements any amount by which the Purchase Price Overpayment exceeds the funds in the Purchase Price Adjustment Escrow Account.
(iii) If the Purchase Price is equal to the Estimated Purchase Price, all funds in the Purchase Price Adjustment Escrow Account shall be released to Seller Representative (on behalf of the Security Holders for distribution to each such Security Holder in accordance with its Pro Rata Share thereof).
(e) Any payment to be made pursuant to this Section 1.052.15 shall be made by wire transfer of immediately available funds to an account (or accounts) specified in writing by Seller Representative or Parent, as applicable. Promptly following final determination of the Purchase Price in accordance with this Section 2.15, Parent and Seller Representative hereby agree to deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount release from the Escrow Funds in the Purchase Price Adjustment Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall Agreement, the funds to be delivered in accordance with Section 2.15(d). The parties acknowledge and agree that, with respect to any payments to be made by Seller Representative to the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made Security Holders pursuant to this Section 1.05 2.15, Seller Representative shall be treated as an adjustment entitled to rely on the instructions provided by the Security Holders, and any deliveries made by Seller Representative in accordance with such instructions based on each Security Holder’s Pro Rata Share will be deemed to have been made in accordance with this Agreement. Seller Representative shall have no obligations to make, or cause to be made, any distributions of the amounts described in this Section 2.15 to the Purchase Price for U.S. federal income tax purposesSecurity Holders in excess of the funds actually received by Seller Representative from Parent or the Escrow Agent, as applicable, in accordance with the terms hereof.
Appears in 1 contract
Purchase Price Adjustment. (a) At least No later than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and Sellers’ Representative will deliver to Buyer an internally prepared statement (ithe “Estimated Working Capital Statement”) an estimated consolidated balance sheet setting forth Sellers’ good faith estimate of the Company Entities Working Capital as of the Adjustment Calculation Time Closing Date (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each Statement will be calculated prepared in accordance with the Agreed Accounting Principles GAAP and shall be acceptable to Buyer in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to respects. The Cash Purchase Price payable at the books and records of the Company Entities and to senior management personnel of the Company EntitiesClosing will be (i) increased, in each casedollar-for-dollar, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and Working Capital, as reflected on the Estimated Closing Working Capital Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of is greater than the Estimated Target Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws Working Capital or (ii) created or incurred bydecreased, or at the direction ofdollar-for-dollar, Buyer). Any disputes among the Sellers with respect to the allocation of extent the Purchase Price among such Sellers shall not interfere in any way withEstimated Closing Working Capital, or give rise to any claim or right uponas reflected on the Estimated Working Capital Statement, Buyer’s ownership of is less than the Purchased SecuritiesTarget Closing Working Capital.
(b) Within ninety (90) As promptly as practicable, but in no event later than 60 days following the Closing Date, Buyer shall prepare cause to be prepared and deliver delivered to the Seller Sellers’ Representative (i) an unaudited consolidated balance sheet internally prepared statement setting forth the calculation of the Company Entities Working Capital as of the Adjustment Calculation Time Closing Date (the “Closing Balance SheetWorking Capital Statement”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each Statement will be calculated prepared by Buyer in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementGAAP. During the thirty (30) days immediately following the Seller Representative’s receipt of The Sellers’ Representative shall be permitted to review the Closing Balance Sheet Working Capital Statement and the Closing Statement, work papers created by Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their the preparation of the Closing Working Capital Statement and to meet with and ask questions of the individuals who prepared such Closing Working Capital Statement and related work papers in connection with the review of the Closing Balance Sheet and Working Capital Statement by the Closing StatementSellers’ Representative.
(c) The If the Sellers’ Representative does not agree with the Closing Balance SheetWorking Capital Statement or any item contained therein or the preparation thereof, the Sellers’ Representative shall notify Buyer in writing of its objections within 30 days after its receipt of the Closing Working Capital Statement and shall set forth, in reasonable detail, the reasons for the Sellers’ Representative’s objections (an “Objection Notice”). If the Sellers’ Representative fails to deliver an Objection Notice within such 30-day period, the Sellers shall be deemed to have irrevocably accepted as final the Closing Working Capital Statement. If the Sellers’ Representative delivers to Buyer an Objection Notice within such 30-day period, the Sellers’ Representative and Buyer shall endeavor in good faith to resolve such disputed items within 30 days after Buyer’s receipt of the Sellers’ Representative’s Objection Notice. To the extent Buyer and the Sellers’ Representative are able to resolve the disputed items within such 30-day period, Buyer and the Sellers shall be deemed to have accepted, as final, such disputed items as so resolved and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to reflect such resolved items as of the Closing Date. To the extent necessary Buyer and the Sellers’ Representative are unable to reflect any resolution by resolve all such disputed items within such 30-day period, Buyer and the Sellers’ Representative shall engage, within 10 days following the expiration of such 30-day period, McGladrey, which Buyer and each Seller Representative respectively represents and warrants is not engaged by, or affiliated with, and is independent from, Buyer and/or any final resolution made by of its Affiliates (other than, in the Arbiter case of Buyer, Avista Capital Partners, which has and may have portfolio companies that may use McGladrey and which has used and may use McGladrey for certain advisory services, but McGladrey is not the primary accounting firm of Avista Capital Partners) (the “Independent Accounting Firm”) to resolve the items remaining in accordance with this Section 1.05(ddispute (the “Disputed Items”). During If such accounting firm is unwilling or unable to accept the thirty (30) engagement as the Independent Accounting Firm, then another mutually agreed nationally or regionally recognized accounting firm that does not have an existing relationship with Buyer or its Affiliates or any of the Sellers or their Affiliates will be engaged to act as the Independent Accounting Firm. Within 10 days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 engagement of the Federal Rules of Evidence (as in effect as Independent Accounting Firm, each of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Sellers’ Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in Independent Accounting Firm their respective positions with regard to the Notice of DisagreementDisputed Items. The Buyer and the Seller Representative Sellers shall instruct use reasonable efforts to cause the Arbiter toIndependent Accounting Firm to resolve all the Disputed Items within 30 days. The selection by the Independent Accounting Firm shall be conclusive and binding on the Sellers and Buyer absent manifest error. In connection with the Independent Accounting Firm’s determinations hereunder, and (i) the Arbiter shall, make a final determination scope of the items included in Independent Accounting Firm’s review shall be limited to only the Closing Balance Sheet and unresolved Disputed Items, (ii) the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative Independent Accounting Firm shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute Disputed Item greater than the greatest value for such item assigned Disputed Item claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either party or less than the smallest lowest value for such item assigned Disputed Item claimed by Buyereither party, on in each case as presented to the one handIndependent Accounting Firm, or and (iii) the Seller RepresentativeIndependent Accounting Firm shall conduct its determination activities in a manner wherein all materials submitted to it are held in confidence and shall not be disclosed to third parties, on except to the other handextent required by applicable law. After the Independent Accounting Firm has resolved such Disputed Items, Buyer and the Seller Sellers shall be deemed to have accepted as final a revised Closing Working Capital Statement, which shall be prepared by the Independent Accounting Firm and which shall reflect (A) the Disputed Items, if any, resolved by agreement of the Sellers’ Representative shall also instruct and Buyer and (B) the Arbiter toDisputed Items resolved by the Independent Accounting Firm, and setting forth the Arbiter shall, make basis for its resolution of each of the Disputed Items (including its determination based solely on written presentations of the allocation of fees and expenses pursuant to Section 2.4(f)). The Closing Working Capital Statement as finally determined pursuant to this Section 2.4(c) (whether by Buyer failure of the Sellers’ Representative to deliver a notice of objections, by agreement of the parties or by final determination of the Independent Accounting Firm) shall be referred to herein as the “Final Closing Working Capital Statement” and the Seller Representative Working Capital calculation resulting therefrom shall be referred to herein as the “Final Closing Working Capital.” The parties hereto agree that are judgment may be entered upon the determination of the Independent Accounting Firm in any court having jurisdiction over the party or parties against which such determination is to be enforced.
(d) At a supplemental closing (the “Supplemental Closing”) to be held promptly after the determination of the Final Closing Working Capital, but in no event later than five Business Days after the delivery of the Final Closing Working Capital Statement in accordance with Section 2.4(c), the guidelines and procedures set forth Cash Purchase Price shall be adjusted on a dollar-for-dollar basis as follows:
(i) if (A) the Final Closing Working Capital exceeds (B) the Estimated Closing Working Capital, then the Cash Purchase Price shall be increased by an amount equal to such excess; or
(ii) if (A) the Final Closing Working Capital is less than (B) the Estimated Closing Working Capital, then the Cash Purchase Price shall be decreased by an amount equal to such difference.
(e) Any adjustment to the Cash Purchase Price pursuant to Section 2.4(d) shall be effected by means of a cash payment by Buyer to the Members (in this Agreement and not on the basis event of an independent reviewincrease in the Cash Purchase Price) or by the Members to Buyer (in the event of a decrease in the Cash Purchase Price), which cash payment shall be made to the recipient thereof at the Supplemental Closing. The Any payment to or required from the Members at the Supplemental Closing Balance Sheetshall be allocated among them in accordance with their Ownership Percentage, and to the extent payment is required from the Members, each of the Sellers will be jointly and severally liable for such payment.
(f) Any payments due pursuant to Section 2.4(e) shall be paid at the Supplemental Closing Statement and by means of wire transfer of funds to an account designated by the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on recipients of such payment in writing at least two days prior to the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the Supplemental Closing. All fees and expenses of the Arbiter equal Independent Accounting Firm selected pursuant to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”Section 2.4(f), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be borne by the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment party whose position with respect to the Purchase Price for U.S. federal income tax purposesClosing Working Capital Statement is further from the actual Final Closing Working Capital Statement, as determined by the Independent Accounting Firm.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) 90 days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet Parent a final adjustments spreadsheet showing Buyer’s good faith calculation of the Company Entities unpaid Target Transaction Expenses as of the Adjustment Calculation Time Closing, Target Debt, Net Working Capital (including reasonably detailed work papers that support the “Closing Balance Sheet”Net Working Capital calculation, and the resultant Working Capital Surplus or Working Capital Shortfall), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on prepared using the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness same basis and the Closing Net Working Capital shall each be calculated methodologies and in accordance with the Agreed Accounting Principles and same principles used in a manner consistent connection with the applicable definitions contained calculations set forth in this Agreementthe Initial Adjustments Spreadsheet (the “Final Adjustments Spreadsheet”). During the thirty (30) days immediately following the Seller Representative’s receipt If Parent objects to all or part of the Closing Balance Sheet Final Adjustments Spreadsheet as delivered by Buyer, Parent must deliver written notice of such objections (the “Objection Notice”) to Buyer not more than 45 days after the date Parent receives such Final Adjustments Spreadsheet from Buyer. Any Objection Notice shall specify, in reasonable detail, the nature and amount of any and all items in dispute, the amounts of any proposed adjustments and the Closing Statementbasis for Parent’s proposed adjustments. If Parent does not deliver an Objection Notice to Buyer within such 45-day period, Parent shall be deemed to have accepted the Final Adjustments Spreadsheet delivered by the Buyer. If Parent delivers an Objection Notice to Buyer within such 45-day period, Buyer shalland Parent shall use commercially reasonable efforts to resolve all objections relating to the Final Adjustments Spreadsheet. If Buyer and Parent do not reach a final resolution of all such objections within 30 days after delivery of all objections in accordance with this Section 2.5(a), Buyer and Parent shall submit all unresolved objections to an “Independent Accountant,” to be mutually agreed upon between Buyer and Parent, to review and make a determination solely as to the subject matter of such disagreement. The Independent Accountant shall determine only the unresolved objections so submitted by Buyer or Parent to the Independent Accountant, and shall cause not make an independent review of all items included in the Company Entities toFinal Adjustments Spreadsheet. Any documents submitted by a party to the Independent Accountant, (x) either unilaterally or at the Independent Accountant’s request, shall be simultaneously submitted to the other party. Buyer and Parent shall provide all such documents and records as the Seller Representative Independent Accountant shall reasonably request to be furnished. The determination of the Independent Accountant shall be set forth in writing and shall be conclusive and binding. The Final Adjustments Spreadsheet shall be revised by Buyer and Parent reflecting the numbers established in the resolution of any such objections between the parties or by the Independent Accountant in accordance with this Section 2.5(a). Buyer and its Representatives with reasonable access at all reasonable times during normal business hours advisors shall make available to Parent and upon reasonable prior notice its advisors from the time the Final Adjustments Spreadsheet is delivered to Parent until the Final Purchase Price is determined, and to the books and records of Independent Accountant in the Company Entities and to senior management personnel of the Company Entities, in each case, event any unresolved objections to the extent Final Adjustments Spreadsheet are submitted to the Independent Accountant any supporting documentation, information and calculations reasonably requested by Parent and/or the Seller Representative or Independent Accountant, as applicable.
(b) In the event that Buyer and Parent submit any unresolved objections with respect to the Final Adjustments Spreadsheet to the Independent Accountant for resolution as provided in Section 2.5(a), Buyer and Parent shall each pay their own fees and expenses. The costs and charges of the Independent Accountant will be allocated between the parties based on the inverse of the percentage its determination (before such allocation) bears to the aggregate amount of the items in dispute as originally submitted to the Independent Accountant. By way of illustration and not limitation, assuming the items in dispute total an amount equal to $1,000 and the Independent Accountant awards $600 in favor of Parent’s position, 60% of the costs of its Representatives in connection with their review would be borne by Buyer and 40% of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementsuch costs would be borne by Parent.
(c) The Closing Balance SheetBased on the Final Adjustments Spreadsheet determined in accordance with Section 2.5(a), the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and parties shall recalculate the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheetrecalculated amount, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the “Final Purchase Price”).
(d) If a timely Notice of Disagreement is delivered by Within three Business Days after such determination or agreement:
(i) in the Seller Representative to Buyer in accordance with Section 1.05(c), then event that the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and Final Purchase Price exceeds the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified calculated in the Notice of Disagreement are finally resolved in writing Updated Adjustments Spreadsheet (an “Adjustment Excess”) by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accountingan amount greater than $250,000, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one handpay, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties cause to be delivered not more than thirty (30) days following submission paid, to Sellers, by wire transfer of such disputed matters)immediately available funds, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter an aggregate amount in cash equal to the percentage by which the portion full amount of the disputed amounts such Adjustment Excess; or
(ii) in the Seller Representative’s submission to event that the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Final Purchase Price is less than the Purchase Price calculated in the Updated Adjustments Spreadsheet (such shortfall, the an “Adjustment AmountShortfall”)) by an amount greater than $250,000, then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative Parent and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver shall issue joint written instructions to the Escrow Agent to cause release an aggregate amount in cash equal to the Escrow Agent to make payment full amount of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeAdjustment Shortfall to Buyer in satisfaction thereof.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysOn February 28, but no more than five (5) Business Days, prior to the Closing2001, the Company shall prepare and deliver to Sellers will provide the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) with a statement (the “Estimated Closing "Price Adjustment Statement”) "), certified by an appropriate senior executive officer of the Parent, setting forth in reasonable detail the Company’s good faith estimates actual amount of the Closing Cash-on-Hand (Eligible Trade Accounts Receivable, Eligible Vendor Accounts Receivable and Inventory acquired by the “Estimated Closing Cash-on-Hand”), Buyer as of the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) Effective Time and the calculation a recalculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated Amount in accordance with the Agreed Accounting Principles provisions of Section 4.2 and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with Annex 1 using the amounts set forth in on the Estimated Closing Price Adjustment Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following The Sellers and the Closing DateBuyer will mutually prepare the Price Adjustment Statement, with the full participation and cooperation of each other. If the Sellers and the Buyer shall prepare and deliver are unable to agree on the Price Adjustment Statement by March 9, 2001, then all disagreements will be submitted for resolution to the Seller Representative (i) an unaudited consolidated balance sheet of Bankruptcy Court. The Price Adjustment Statement, either as agreed to by the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Buyer and the calculation of Sellers or as determined by the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice Bankruptcy Court pursuant to the books preceding sentence, will be final and records of binding and will be referred to as the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing "Final Price Adjustment Statement."
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and If the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, Amount as reflected recalculated on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Final Price Adjustment Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfallAmount paid on the Closing Date, the “Adjustment Amount”), then (i) Sellers will pay the difference to Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and business days. If the Purchase Price set forth thereon become final and binding Amount as recalculated on the parties pursuant to this Section 1.05, make payment of the Final Price Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excessAmount paid on the Closing Date, Buyer will pay the “Excess Amount”), then Buyer and difference to the Seller Representative shall, Sellers within two (2) Business Days business days.
(d) To the extent that Sellers are unable, after using commercially reasonable efforts, to adjust their payroll system to provide for any Transferred Employee accruing his or her last day of base compensation payable by Sellers on the Closing Date, Buyer will reimburse Sellers the full amount of all base compensation paid or to be paid by Sellers to such Transferred Employee in respect of any business day after the Closing Balance SheetDate, provided that Buyer is -------- able to obtain such agreement as Buyer may reasonably require from such Transferred Employee to permit Buyer to adjust the compensation to be paid by Buyer to such Transferred Employee in respect of any business day after the Closing Statement and Date to allow Buyer to recover in full the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties amount of any compensation paid by Sellers to such Transferred Employee for which Buyer has reimbursed or is required to reimburse Sellers pursuant to this Section 1.05, Subsection (d). Sellers will deliver joint to Buyer written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt notice together with reasonable supporting documentation of any such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously reimbursable payments concurrent with the delivery of the joint written instructions referred Price Adjustment Statement pursuant to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
Subsection (g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubta), and without limiting Buyer will pay such reimbursement to Seller as soon as Buyer is able to obtain the generality aforementioned agreement from any such Transferred Employee (which agreement Buyer will use commercially reasonable efforts to obtain promptly after receipt of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller PartiesSellers' notice requiring reimbursement.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Horizon shall prepare prepare, or cause to be prepared, and Horizon shall deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Pasha Parent a statement (the “Estimated Preliminary Closing Statement”) setting forth in reasonable detail the Company’s good (i) a good-faith estimates estimate of the Closing Cash-on-Hand (A) Net Working Capital (“Estimated Net Working Capital”), (B) Hawaii Capital Expenditures (“Estimated Hawaii Capital Expenditures”), (C) Excess Out of Class Defect Cost (the “Estimated Closing Cash-on-HandExcess Out of Class Defect Cost”), the Closing Indebtedness (D) Non-Ordinary Course Expenses and Liabilities (the “Estimated Closing IndebtednessNon-Ordinary Course Expenses and Liabilities”), the Closing Net Working Capital and (E) Paid Non-Ordinary Course Liabilities (the “Estimated Closing Net Working CapitalPaid Non-Ordinary Course Expenses and Liabilities”) and the calculation ), each determined as of the Purchase Price resulting therefrom Closing Date, based on Horizon’s books and records and other information available at the Closing, (ii) the Additional Closing Payment Amount, (iii) an estimate of Transaction AMT (the “Estimated Purchase PriceTransaction AMT”), in each case, based ) and (iv) on the Estimated Closing Balance Sheet and including basis of the Estimated Purchased Shares Purchase Priceforegoing, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery calculation of the Estimated Purchase Price. An illustrative example of a Preliminary Closing Balance Sheet Statement and a calculation of Net Working Capital, Hawaii Capital Expenditures, Excess Out of Class Defect Cost, Non-Ordinary Course Expenses and Liabilities, Paid Non-Ordinary Course Expenses and Liabilities, Additional Closing Payment Amount, Estimated Transaction AMT and Estimated Purchase Price is set forth as Exhibit B (the “Sample Statement”). Estimated Net Working Capital, Estimated Hawaii Capital Expenditures, Estimated Excess Out of Class Defect Cost, Estimated Non-Ordinary Course Expenses and Liabilities and Estimated Paid Non-Ordinary Course Expenses and Liabilities shall be calculated on a basis consistent with Schedule 1.4(a), the Sample Statement and the Estimated Closing Statement until Applicable Accounting Principles. Prior to the Closing, the Company Horizon and Pasha Parent in good faith shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice seek to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or resolve any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided differences that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or they may have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation computation of any of the Purchase Price among such Sellers shall not interfere items in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesPreliminary Closing Statement.
(b) Within ninety (90) days following after the Closing Date, Buyer Horizon shall prepare cause to be prepared and deliver delivered to Pasha Parent a written statement (the Seller Representative “Final Closing Statement”) that shall include and set forth a calculation in reasonable detail of the (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time actual (the A) Net Working Capital (“Closing Balance SheetNet Working Capital”), (B) Hawaii Capital Expenditures (“Closing Hawaii Capital Expenditures”), (C) Excess Out of Class Defect Cost (“Closing Excess Out of Class Defect Cost”), (D) Non-Ordinary Course Expenses and Liabilities (“Closing Non-Ordinary Course Expenses and Liabilities”), and (E) Paid Non-Ordinary Course Expenses and Liabilities (“Closing Paid Non-Ordinary Course Expenses and Liabilities”), each determined as of the Closing Date, as well as (ii) a statement revised estimate of Transaction AMT, if applicable (the “Closing StatementFurther Estimated Transaction AMT”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the ). Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Liabilities and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing CashPaid Non-on-Hand, the Closing Indebtedness Ordinary Course Expenses and the Closing Net Working Capital Liabilities shall each be calculated in accordance prepared on a basis consistent with Schedule 1.4(a), the Agreed Applicable Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Sample Statement.
(c) The Closing Balance SheetSubject to further adjustments to the Further Estimated Transaction AMT as described in Section 6.16, the Final Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon on the parties hereto thirty thirtieth (3030th) days day following delivery thereof, unless prior to the Seller Representative’s receipt thereof unless the Seller Representative gives end of such period, Pasha Parent delivers to Horizon written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail specifying the nature and amount of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the any dispute as to Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Further Estimated Transaction AMT, Closing Non-Ordinary Course Expenses and the Purchase Price Liabilities and/or Closing Paid Non-Ordinary Course Expenses and Liabilities as set forth thereon on the Final Closing Statement. Pasha shall become final be deemed to have agreed with all items and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration amounts of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Further Estimated Transaction AMT, Closing Non-Ordinary Course Liabilities and/or Closing Paid Non-Ordinary Course Expenses and Liabilities not specifically referenced in the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness such items and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, amounts shall not be subject to be calculated review in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceSection 1.4(d).
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty fifteen (3015) days immediately day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingby Pasha Parent to Horizon, the Seller Representative and Buyer shall seek parties in good faith shall seek to resolve in writing any differences that they may have with respect to the matters calculation of Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Expenses and Liabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and/or Further Estimated Transaction AMT as specified in the Notice of Disagreement. Any disputed items resolved in writing between Horizon and Pasha Parent within such fifteen (15) day period shall be final and binding with respect to such items, and if Horizon and Pasha Parent agree in writing on the resolution of each disputed item specified by Pasha Parent in the Notice of Disagreement and the amount of Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Expenses and Liabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and Further Estimated Transaction AMT, the amounts so determined shall be final and binding on the parties for all purposes hereunder. If Horizon and Pasha Parent have not resolved all such discussions related thereto shall (unless otherwise agreed differences by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty fifteen (30)-day period or such agreed-upon longer 15) day period, Horizon and Pasha Parent shall submit, in writing, to an independent public accounting firm (the Seller Representative and Buyer shall submit “Independent Accounting Firm”), their briefs detailing their views as to the Arbiter for review correct nature and resolution any and all matters (but only such matters) which remain amount of each item remaining in dispute and which were properly included in the Notice amounts of Disagreement. Buyer Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Expenses and the Seller Representative shall instruct the Arbiter toLiabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and/or Further Estimated Transaction AMT, and the Arbiter shall, Independent Accounting Firm shall make a final written determination as to each such disputed item and the amount of Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Expenses and Liabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and/or Further Estimated Transaction AMT. The Independent Accounting Firm shall be PricewaterhouseCoopers LLP or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed in writing by Horizon and Pasha Parent. Pasha and Horizon shall use their reasonable best efforts to cause the Independent Accounting Firm to render a written decision resolving the matters submitted to it within thirty (30) days following the submission thereof (the date of such decision, the “Determination Date”). The Independent Accounting Firm shall consider only those items and amounts in Pasha’s and Horizon’s respective calculations of Closing Net Working Capital, Closing Hawaii Capital Expenditures, Closing Excess Out of Class Defect Cost, Closing Non-Ordinary Course Expenses and Liabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and/or Further Estimated Transaction AMT that are identified as being items and amounts to which Pasha and Horizon have been unable to agree. Except with respect to the calculation of Further Estimated Transaction AMT, the scope of the disputes to be resolved by the Independent Accounting Firm shall be limited to correcting mathematical errors and determining whether the items included and amounts in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) dispute were determined in accordance with Schedule 1.4(a), the guidelines and procedures set forth in this Agreement. Buyer Applicable Accounting Principles and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer Sample Statement and the Seller Representative shall instruct Independent Accounting Firm is not to make any other determination, including any determination as to whether Target Net Working Capital, Target Hawaii Capital Expenditures or any estimates on the Arbiter Preliminary Closing Statement are correct, adequate or sufficient. In resolving any disputed item, the Independent Accounting Firm may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either party or less than the smallest value for such item assigned claimed by Buyereither party. The Independent Accounting Firm’s determination of Closing Net Working Capital, on the one handClosing Hawaii Capital Expenditures, or the Seller RepresentativeClosing Excess Out of Class Defect Cost, on the other hand. Buyer Closing Non-Ordinary Course Expenses and the Seller Representative Liabilities, Closing Paid Non-Ordinary Course Expenses and Liabilities and/or Further Estimated Transaction AMT shall also instruct the Arbiter to, and the Arbiter shall, make its determination be based solely on written presentations materials submitted by Buyer Pasha and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and Horizon (i.e., not on the basis of an independent review). The Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Independent Accounting Firm shall become final be conclusive and binding on upon the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review appeal or otherwise appealablefurther review, absent manifest error or manifest failure by except with respect to Transaction AMT as further provided herein. In acting under this Agreement, the Arbiter to adhere Independent Accounting Firm will be entitled to the requirements privileges and immunities of an arbitrator.
(e) The costs of any dispute resolution pursuant to this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of Section 1.4, including the fees and expenses of the Arbiter equal to the percentage by which the portion Independent Accounting Firm and of any enforcement of the disputed determination thereof, shall be borne by Horizon and Pasha in inverse proportion as they may prevail on the matters resolved by the Independent Accounting Firm, which proportionate allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed dispute and shall be determined by the Seller Representative in Independent Accounting Firm at the Seller Representative’s submission to time the Arbiter, and the Company shall pay the remaining portion determination of such firm is rendered on the merits of the matters submitted. The fees and expenses.
(e) If disbursements of the Estimated Purchase Price is less than Affiliates and Representatives of each party incurred in connection with the Purchase Price (such shortfall, preparation or review of the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Final Closing Statement and the Closing Cash-on-Handpreparation or review of any Notice of Disagreement, Closing Indebtednessas applicable, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, shall be borne by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativeparty.
(f) If Each party will afford the Estimated Purchase Price is greater than other party and its Representatives reasonable access, during normal business hours and upon reasonable prior notice, and consistent with applicable Laws and regulations, to the Purchase Price (personnel, properties, books and records of such excessparty and its Subsidiaries and to any other information reasonably requested for purposes of preparing and reviewing the calculations contemplated by this Section 1.4. Each party shall authorize its accountants to disclose work papers generated by such accountants in connection with preparing and reviewing the calculations specified in this Section 1.4; provided, the “Excess Amount”), that such accountants shall not be obligated to make any work papers available except in accordance with such accountants’ disclosure procedures and then Buyer and the Seller Representative shall, within two (2) Business Days only after the Closing Balance Sheet, the Closing Statement non-client party has signed an agreement relating to access to such work papers in form and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant substance acceptable to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representativeaccountants.
(g) Buyer agrees that Subject to adjustment as provided in Section 6.16(e) below, the Purchase Price shall equal the Estimated Purchase Price, adjusted, upwards or downwards, as follows:
(i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance purposes of doubtthis Agreement, and without limiting the generality of the foregoing“Net Adjustment Amount” means an amount, no claim by Buyer for the payment of the Excess Amount which may be positive or negative, equal to (or any portion thereofA) shall be asserted against any of the Seller Parties.
(h) Any payment made Closing Net Working Capital, as finally determined pursuant to this Section 1.05 shall be treated 1.4, minus Estimated Net Working Capital, plus (B) Closing Hawaii Capital Expenditures, as an finally determined pursuant to this Section 1.4, minus Estimated Hawaii Capital Expenditures, plus (C) Closing Excess Out of Class Defect Cost, as finally determined pursuant to this Section 1.4, minus Estimated Excess Out of Class Defect Cost, plus (D) Estimated Retained Non-Ordinary Course Expenses and Liabilities, minus Closing Retained Non-Ordinary Course Expenses and Liabilities, as finally determined pursuant to this Section 1.4, plus, (E) Closing Paid Non-Ordinary Course Expenses and Liabilities, as finally determined pursuant to this Section 1.4, minus Estimated Paid Non-Ordinary Course Expenses and Liabilities, plus (F) Further Estimated Transaction AMT, as finally determined pursuant to this Section 1.4 (and taking into account any adjustment to the Transaction AMT made pursuant to Section 6.16 prior to the completion of the Purchase Price for U.S. federal income tax purposesadjustment under this Section 1.4, it being understood that such amount is subject to further adjustment provided in Section 6.16), minus Estimated Transaction AMT.
Appears in 1 contract
Samples: Contribution, Assumption and Purchase Agreement (Horizon Lines, Inc.)
Purchase Price Adjustment. (a) At The Company shall deliver to Buyer, at least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet a statement of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) ), certified by an officer of the Company, setting forth in reasonable detail the Company’s good faith estimates of (i) the Closing Cash-on-Hand Net Working Capital Amount (the “Estimated Net Working Capital Amount”), including a calculation of Current Assets and Current Liabilities (in each case, with each of the line items used in such calculation and the entries in the Company’s general ledger from which such line items are derived), (ii) the Closing Date Cash (the “Estimated Closing Date Cash-on-Hand”), (iii) the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (iv) Transaction Expenses (the “Estimated Closing Net Working CapitalTransaction Expenses”), (v) the number of Shares outstanding as of the Effective Time and (vi) based on such estimates described in the foregoing clauses (i) through (v), a calculation of the Purchase Price resulting therefrom (Closing Merger Consideration and the “Estimated Purchase Price”)Per Share Consideration, in each case, based on with reasonable supporting detail therefor sufficient to allow Buyer to independently calculate such amounts (including an itemized list of the Estimated Closing Balance Sheet components thereof), and including such estimates shall be prepared in accordance with the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase Agreed Accounting Principles and each Seller’s Pro Rata Portionconsistent with Section 2.8(h). The Estimated Closing Balance SheetNet Working Capital Amount, the Estimated Closing Date Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Transaction Expenses shall, subject to Section 2.8(b), be used to calculate the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet Merger Consideration and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing StatementPer Share Consideration, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts shall be subject to adjustment as set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesthis Section 2.8.
(b) Within ninety two Business Days of the Company’s delivery of the Estimated Closing Statement, if Buyer acting in good faith has any objections with respect to one or more line items on the Estimated Closing Statement so delivered, then Buyer may deliver to the Company a statement describing its objections in reasonable detail (90the “Pre-Closing Dispute Notice”). Buyer and the Company shall use their respective good faith efforts to resolve any dispute with respect to any of the line items on the Estimated Closing Statement prior to the anticipated Closing Date. If Buyer and the Company are unable to resolve all disputes with respect to any of the line items on the Estimated Closing Statement prior to the anticipated Closing Date, then the Estimated Closing Statement as originally delivered pursuant to Section 2.8(a) and, if applicable, as revised following mutual agreement between Buyer and the Company on any disputes, shall constitute the Estimated Closing Statement for all purposes under this Agreement. Buyer’s election to not deliver a Pre-Closing Dispute Notice, or to not dispute any amount included in, or component of any such amount included in, the Estimated Closing Statement in any Pre-Closing Dispute Notice or any agreed upon adjustments to the Estimated Closing Statement, shall not limit, or have any effect on, Buyer’s rights pursuant to Section 2.8(b) to conduct a review of the Closing Net Working Capital Amount, Closing Date Cash, the Closing Indebtedness, Transaction Expenses and the number of Shares outstanding as of the Effective Time, and to deliver the Closing Date Schedule based on such review.
(c) As soon as reasonably practicable, but no later than 75 days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative shall, at its expense, (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) cause to be prepared a statement (the “Closing StatementDate Schedule”) setting forth in reasonable detail Buyer’s good faith calculation of the Closing Net Working Capital Amount, Closing Date Cash-on-Hand, the Closing Indebtedness, Transaction Expenses and the number of Shares outstanding as of the Effective Time, in each case without giving effect to the transactions occurring at the Closing or any purchase accounting or similar adjustments resulting from the consummation of the transactions contemplated by this Agreement, and, based on such amounts, Buyer’s calculation of the Purchase Price, the Closing Merger Consideration and the Per Share Consideration and (ii) deliver to the Stockholder Representative the Closing Date Schedule, together with a certificate of Buyer confirming that the Closing Date Schedule was prepared in good faith and in accordance with this Section 2.8(b). The Closing Date Schedule, including the Closing Net Working Capital and the calculation of the Purchase Price resulting therefromAmount, in each caseClosing Date Cash, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Transaction Expenses, shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementSection 2.8(h).
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (ai) At least three (3) Business Days, but no more than Within forty-five (545) Business Days, prior to days after the Closing, the Company Seller shall prepare submit to Purchaser for its review and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) approval a statement (the “Estimated Closing "Adjustment Statement”") setting forth forth, in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation components of the Purchase Price resulting therefrom and providing detail (and reasonable supporting materials if applicable) on variations from the “Estimated amounts provided for in the Preliminary Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or .
(ii) created or incurred by, or at If Purchaser does not notify Seller of a dispute regarding the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere Adjustment Statement in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
writing within forty-five (b) Within ninety (9045) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as after receipt of the Adjustment Calculation Time Statement (an "Objection Notice") (which shall set forth the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth basis for any such disagreement in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30detail) days immediately following the or if Purchaser notifies Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance SheetAdjustment Statement, the Closing Statement and the Closing Cash-on-HandPurchase Price, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price as set forth thereon, (ii) except to in the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereonAdjustment Statement, shall become be deemed final and binding upon on all parties and the parties hereto upon Working Capital amount stated therein (which for this purpose shall include the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure amount of the Closing Cash-on-Hand, RAC Receivables) shall be referred to as the Closing Indebtedness "Final Working Capital Statement." If Purchaser and the Closing Net Working Capital, in each case, as reflected Seller do not agree on the Closing Adjustment Statement, then Purchaser and Seller shall use their best efforts to be calculated negotiate the differences in accordance with the Agreed Accounting Principles and in order to reach a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or mutual agreement as to the Purchase Price.
(diii) If Purchaser and Seller are unable to resolve any such disagreements within 20 days after the Purchaser's delivery of the Objection Notice to Seller, Purchaser and Seller shall submit the dispute to an American Arbitration Association arbitrator (which arbitrator shall also be a timely Notice Certified Public Accountant) jointly selected by Purchaser and the Seller (the "Accounting Arbitrator"), for resolution under the Commercial Arbitration Rules of Disagreement is delivered the American Arbitration Association. If Purchaser and Seller are unable to agree upon the Accounting Arbitrator, the Accounting Arbitrator shall be an American Arbitration Association arbitrator (which arbitrator shall also be a Certified Public Accountant) selected by lot after Purchaser and Seller each exclude an equal number of potential arbitrators on a list provided by the American Arbitration Association. Purchaser and Seller Representative shall use their respective best efforts to Buyer in accordance with Section 1.05(c), then cause the Closing Balance Sheet and Accounting Arbitrator to use its independent good faith judgment to resolve all disagreements over the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-HandWorking Capital, the Closing Indebtednessamount of Qualified Monthly Recurring Revenues and any other issue raised by the Adjustment Statement as soon as practicable, but in any event shall direct the Closing Net Working Capital Accounting Arbitrator to render a determination within 60 days of its retention. The Accounting Arbitrator shall consider only those items and amounts in the Adjustment Statement which are identified in the Objection Notice which Purchaser and Seller are unable to resolve. The determination of Purchase Price set forth thereon shall become final by the Accounting Arbitrator will be conclusive and binding upon Purchaser and Seller and their respective affiliates and the parties hereto on the earlier of (x) the date all matters specified Working Capital amount stated in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement Accounting Arbitrator's report shall be revised referred to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may "Final Working Capital Statement." The Parties agree that all arbitration proceedings shall take place in writingAtlanta, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of DisagreementGeorgia, and all such discussions related thereto shall (unless otherwise agreed by Buyer and agree to divide the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees costs and expenses of the Arbiter equal to arbitration equally.
(iv) If the percentage Purchase Price is greater than provided in the Estimated Purchase Price, Purchaser or Ameritech shall pay Seller the amount by which the portion of the disputed amounts Purchase Price exceeds that provided in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative Estimated Purchase Price, together with interest thereon as provided in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSection 1.3(g).
(ev) If the Estimated Purchase Price is less than provided in the Estimated Purchase Price (such shortfallPrice, Seller shall pay Purchaser the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after amount by which the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer amount provided in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than exceeds the Purchase Price (such excessPrice, the “Excess Amount”together with interest thereon as provided in Section 1.3(g), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. The Adjustment (as defined below) ------------------------- will be determined as follows:
(a) At least three Cambridge and Seller agree that the Final Cash Purchase Price shall be determined as follows:
(3i) Business DaysTwenty-Seven Million Five Hundred Sixty Thousand Dollars ($27,560,000);
(iii) plus any amount that (A) Actual Total Accounts Receivable Amount less Actual Trade Accounts Payable amount exceeds (B) $10,600,000 or -- minus any that (A) $10,600,000 exceeds (B) the Actual Total Accounts Receivables Amount less the Actual Trade Accounts Payable Amount, as the case may be.
(b) As promptly as possible following the Closing Time, but no more than five in any event within thirty (530) Business Daysdays following the Closing Time, prior to the Closing, the Company Seller shall prepare and deliver to Buyer Cambridge a closing statement (ithe "Closing Statement") an estimated consolidated balance sheet of setting for the Company Entities Actual Non-Tooling Accounts Receivable Amount, the Actual Total Accounts Receivable Amount and the Actual Trade Accounts Payable Amount (collectively, the "Actual Receivable and Payable Items") as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata PortionTime. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed GenCorp Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each caseand, to the extent reasonably requested by Buyer or any not described in the GenCorp Accounting Principles, in accordance with GAAP consistently applied (for purposes of its Representatives this Section 2.07 collectively referred to as the "Accounting Principles"). Cambridge shall give Seller access to the data necessary to prepare the Closing Statement and provide Seller with the reasonable assistance of Cambridge's employees in connection therewith. Representatives of Cambridge shall have the right to participate with their review the representatives of Seller in the Estimated process of preparing the Closing Balance Sheet Statement and shall have access to all data, schedules and work papers used by Seller in preparing the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays Cambridge shall have the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation right to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer Statement audited and Seller shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative Cambridge and its Representatives Cambridge's accountants in connection with their review of the Closing Balance Sheet and the Closing Statementconducting such audit.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon Cambridge unless on or before the parties hereto thirty (3030th) days following day after Cambridge's receipt of the Closing Statement Cambridge shall deliver to Seller Representative’s receipt thereof unless the Seller Representative gives a written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior objection to the expiration amount of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement any Actual Receivable and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected Payable Item on the Closing Statement, together with proposed changes thereto and the reasons for such changes; provided, however, that the only objection to be calculated the Closing Statement which Cambridge may make is whether the Closing Statement accurately reflects, in accordance with the Agreed Accounting Principles used to prepare the Closing Statement, the book value or book amount of the Actual Receivable and in Payable Items included thereon. Cambridge may not object to any other matter pertaining to the Closing Statement. All matters on which no notice of objection is given shall be deemed final and binding. In no event may Cambridge submit a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors notice of objection which suggests a change in the computation Closing Statement of less than $100,000 in the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Priceaggregate.
(d) If Cambridge issues a timely Notice notice of Disagreement is delivered objection, Seller and Cambridge shall meet and attempt to resolve the dispute within fifteen (15) days following Cambridge's notice of objection. If the parties resolve all or some of the matters in dispute within such fifteen (15) day period then the parties shall prepare and sign an Adjusted Closing Statement reflecting such agreement which shall be deemed final and binding. As to matters which remain in dispute after such fifteen (15) day period ("Unresolved Matters"), the Closing Statement shall be deemed final unless Cambridge shall within ten (10) days after the end of such fifteen (15) day period request that the Closing Statement be reviewed by the Accounting Firm.
(e) Cambridge shall give notice of its request for review by the Accounting Firm to Seller Representative in writing and shall within ten (10) days after such notice submit a written statement of its position to Buyer the Accounting Firm and to Seller. Seller may within ten (10) days of Cambridge submitting its written statement to the Accounting Firm respond to such written statement with its own written statement. The Accounting Firm shall consider both written statements as it performs its duties. The authority of the Accounting Firm in reviewing the Closing Statement shall be limited to determining whether, as to the Actual Receivable and Payable Items included within the Unresolved Matters, the Closing Statement accurately reflects, in accordance with Section 1.05(c), then the Accounting Principles used to prepare the Closing Balance Sheet Statement, the book value or book amount of such Actual Receivable and Payable Items. The Accounting Firm shall not have the authority to review or make a determination with respect to any matter except the Actual Receivable and Payable Items included within Unresolved Matters, it being understood that the Accounting Firm shall not be retained to conduct its own independent audit or review, but rather shall be retained only to resolve specific differences between Seller and Cambridge within the range of such difference and consistent with the Accounting Principles. The Accounting Firm may request that each of the parties provide it additional information in connection with its review of the Unresolved Matters. The parties shall require the Accounting Firm to complete its review not later than the thirtieth (30th) day following the submission of the matter to the Accounting Firm. Cambridge and Seller shall bear the fees and expenses of review by the Accounting Firm in the same proportion as the ratio of each parties' position is to the final determination by the Accounting Firm, as determined by the Accounting Firm, whose determination shall be final and binding on the parties.
(f) The Accounting Firm shall prepare a report of any adjustments to such Actual Receivable and Payable Items it deems necessary so that such Actual Receivable and Payable Items are reflected on the Closing Statement in accordance with the Accounting Principles. Such report shall contain an explanation of any such adjustment and a description of why the Accounting Principles required such adjustment. Promptly after its completion, the Accounting Firm shall provide such report to Seller and Cambridge. Seller shall incorporate all such adjustments into the Closing Statement within fifteen (as revised 15) days after receipt of such adjustments, which shall thereupon become the Adjusted Closing Statement and which shall be final and binding upon Cambridge and Seller.
(g) Within ten (10) days after the date the Closing Statement or the Adjusted Closing Statement becomes final in accordance with this Section 1.05(d)2.07 (such tenth day being referred to herein as the "Settlement Date"), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of to Cambridge the fees and expenses of the Arbiter equal to the percentage amount, if any, by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Final Cash Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfallEstimated Cash Purchase Price or Cambridge shall pay to Seller the amount, if any, by which the “Remaining Escrow Funds”)Final Cash Purchase Price is more than the Estimated Cash Purchase Price, then Buyer and together with, in either case, interest from the Seller Representative shallClosing Time on the amount paid under this Section 2.07(g) calculated at an annual rate equal to the prime rate as publicly announced by Citibank, simultaneously with the delivery N.A., New York, New York as of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
Closing Time (g) Buyer agrees that (iany amount so paid under this Section 2.07(h) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties"Adjustment").
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Asset Purchase Agreement (Cambridge Industries Inc /De)
Purchase Price Adjustment. (a) At least Seller shall prepare and deliver to Buyer not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date (i) an estimated balance sheet of the TEAK Companies (on a consolidated basis) as of the Effective Time (together with supporting documentation reasonably necessary for Buyer to verify such balance sheet, the Company “Estimated Balance Sheet”), (ii) worksheets showing Seller’s estimate of the Net Working Capital derived from the Estimated Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities) (the “Estimated Net Working Capital”) and (iii) Seller’s estimate of the Purchase Price as adjusted pursuant to Section 3.4 (the “Estimated Purchase Price”). The Estimated Balance Sheet, the Estimated Net Working Capital and the Estimated Purchase Price (together, the “Estimated Closing Items”) shall be prepared on a basis consistent with the past practices of the TEAK Companies.
(b) No later than sixty (60) calendar days after the Closing Date (or such later date as mutually agreed by Buyer and Seller), Seller shall prepare and deliver to Buyer (i) an estimated consolidated a balance sheet of the Company Entities TEAK Companies (on a consolidated basis) as of the Adjustment Calculation Effective Time (together with supporting documentation reasonably necessary for Buyer to verify such balance sheet, the “Estimated Closing Final Balance Sheet”), and (ii) a statement worksheets showing Seller’s calculation of the Net Working Capital derived from the Final Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities) (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Final Net Working Capital”) and the (iii) Seller’s calculation of the Purchase Price resulting therefrom as adjusted pursuant to Section 3.4 (the “Estimated Final Purchase Price”), in each case, based on together with a worksheet showing the difference, if any, between any Estimated Closing Balance Sheet Item and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portioncorresponding Final Closing Item (as defined below). The Estimated Closing Final Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Final Net Working Capital and the calculation Final Purchase Price (together, the “Final Closing Items”) shall be prepared on a basis consistent with past practice of the Purchase Price resulting therefrom, TEAK Companies and consistent with the principles and assumptions used in each case, based on preparation of the Estimated Closing Balance SheetItems. The If Seller does not deliver the Final Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated Items in accordance with this Section 3.6 on or before the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty sixtieth (3060th) days immediately following the Seller Representative’s receipt of calendar day after the Closing Balance Sheet Date (or such later date as mutually agreed by Buyer and Seller), Buyer shall have the right to prepare such Final Closing Items on or before the ninetieth (90th) day after the Closing Statement, Date (or such later date as mutually agreed by Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company EntitiesSeller), in which case the relative obligations of Buyer and Seller in the remainder of this Section 3.6 shall be switched. Buyer and Seller shall promptly provide to each case, to the extent other all documents reasonably requested by the Seller Representative or other to verify any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price items set forth thereon in the Final Closing Item calculations. Buyer shall become final and binding upon have the parties hereto right for thirty (30) days following receipt of the Seller Representative’s receipt thereof unless Final Closing Items to object to the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Final Balance Sheet, the Closing Statement and proposed calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Final Net Working Capital and the proposed calculation of the Final Purchase Price (other than with respect to an Environmental Defect or an Environmental Defect Amount, which shall be determined exclusively in accordance with ARTICLE VIII). Buyer and its representatives shall be entitled to reasonable access during normal business hours to all books and records of Seller as may be reasonably requested by Buyer for the purpose of this Section 3.6(b). Any objection made by Buyer shall be made in writing and shall set forth thereon such objection in reasonable detail. Buyer shall become final and binding upon the parties hereto upon the be deemed to have waived any rights to object under this Section 3.6(b) unless Buyer furnishes its written objections to Seller Representative’s delivery, prior to the expiration of within such thirty (30)-day 30) day period, of written notice to . If Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of delivers an objection within such thirty (30)-day 30) day period, each component then Buyer and Seller shall endeavor in good faith to resolve the objections. If, at the end of a fifteen (15) day period from the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s date of delivery of a Notice of Disagreementany objection by Buyer or such longer period as may be mutually agreed by Buyer and Seller, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, there are any objections that remain in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)dispute, then the Closing Balance Sheet and remaining objections in dispute shall be submitted for resolution to the Closing Statement accounting firm of Ernst & Young LLP (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “ArbiterClosing Item Arbitrator”). The Closing Balance Sheet and Item Arbitrator shall determine the Closing Statement shall be revised Final Purchase Price as promptly as reasonably practicable after the objections that remain in dispute are submitted to the extent necessary to reflect it, but in any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the event within thirty (30) days immediately following after such objections that remain in dispute are submitted to it. If any objections are submitted to the delivery Closing Item Arbitrator for resolution, (i) each of Buyer and Seller shall furnish to the Closing Item Arbitrator such workpapers and other documents and information relating to such objections as the Closing Item Arbitrator may request and are reasonably available to that party (or its independent public accountants) and will be afforded the opportunity to present to the Closing Item Arbitrator any material relating to the determination of the matters in dispute and to discuss such determination with the Closing Item Arbitrator; (ii) the Closing Item Arbitrator must not adopt an amount of the Final Purchase Price that is greater than the amount submitted by Seller or less than the amount submitted by Buyer; and (iii) the determination by the Closing Item Arbitrator of the Final Purchase Price, as set forth in a Notice of Disagreement written notice delivered to both Buyer and Seller by the Closing Item Arbitrator, shall be made in accordance with Section 1.05(c) or such longer period as this Agreement and shall be binding and conclusive on the Seller Representative parties and, absent manifest error, shall constitute an arbitral award that is final, binding and Buyer unappealable and upon which a judgment may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed be entered by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreementa court having jurisdiction thereof. Buyer and the Seller Representative shall instruct the Arbiter to, each bear their own legal fees and the Arbiter shall, make a final determination of the items included other costs in the Closing Balance Sheet and the Closing Statement (to the extent connection with any such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by objection; provided that Buyer, on the one hand, or the Seller Representativeand Seller, on the other hand, or less than shall bear one-half of the smallest value for such item assigned by Buyercosts and expenses of the Closing Item Arbitrator. Notwithstanding anything in this Agreement to the contrary, on but subject to Section 3.6(c) and ARTICLE VIII, the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines Closing Item Arbitrator and procedures set forth in this Agreement and not on herein shall be the basis of an independent review. The Closing Balance Sheet, sole method for resolving any disputes regarding the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Final Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing (other than with respect to Buyer and the Seller Representative (an Environmental Defect or an Environmental Defect Amount, which final resolution shall be requested by determined exclusively in accordance with ARTICLE VIII) or the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements provisions of this AgreementSection 3.6. The Seller Representative (on behalf Following the final determination of the Sellers) shall pay a portion Final Purchase Price pursuant to this Section 3.6, if the reconciliation of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If Final Purchase Price with the Estimated Purchase Price is less results in a cumulative amount payable to either Buyer or Seller (“Final Payment Amount”) of more than the Purchase Price Fifty Thousand Dollars (such shortfall$50,000), the “Adjustment Amount”), then amount of the Final Payment Amount shall be promptly (i) Buyer shall, but in any event within two five (25) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment determination of the Final Payment Amount) paid by Buyer or Seller, as applicable, by wire transfer in immediately available funds (to Seller or other alternative delivery arrangement mutually agreed Buyer, as applicable, to an account designated by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativepayee.
(fc) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to Notwithstanding anything in this Section 1.05, deliver joint written instructions 3.6 to the Escrow Agent to cause the Escrow Agent to make paymentcontrary, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess any dispute regarding an Environmental Defect or an Environmental Defect Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account shall be determined exclusively in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller PartiesARTICLE VIII.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Purchase and Sale Agreement
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet The Closing Balance Sheet shall be deemed final upon the earliest to occur of (A) the Sellers’ Representative’s failure to notify the Purchaser of a dispute by the 30th Business Day after the Purchaser’s delivery of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”Sheet to the Sellers’ Representative, (B) the resolution of all disputes, pursuant to Section 2.06(c)(i), by the Sellers’ Accountants and the Purchaser’s Accountants and (C) the resolution of all disputes, pursuant to Section 2.06(c)(ii), by the Independent Accounting Firm.
(ii) a statement (If the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based reflected on the Estimated Closing Balance Sheet and including exceeds the Estimated Purchased Shares Purchase Price, Net Working Capital reflected on the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, then the Estimated Purchase Price shall be adjusted downward in an amount equal to such excess, and within five Business days of the Closing Cash-on-HandBalance Sheet being deemed final, the Estimated Closing Indebtedness Sellers’ Representative shall pay the amount of such excess to the Purchaser by wire transfer in immediately available funds. If the Sellers’ Representative shall fail to pay the amount of such deficiency within the period specified in the immediately preceding sentence, then the Purchaser may deliver written notice to the Escrow Agent and the Estimated Closing Net Working Capital shall each be calculated Sellers’ Representative specifying such amount, and the Escrow Agent shall, within three Business Days of its receipt of such notice and in accordance with the Agreed Accounting Principles and terms of the Escrow Agreement, pay such amount to the Purchaser out of the Escrow Account by wire transfer in immediately available funds. No failure of the Purchaser to deliver a manner consistent with notice of the applicable definitions contained type specified in this Agreement. From and after delivery the immediately preceding sentence shall relieve the Sellers’ Representative of the obligation to pay the amount of such deficiency to the Purchaser.
(iii) If the Net Working Capital reflected on the Estimated Closing Balance Sheet and is less than the Estimated Closing Statement until Net Working Capital reflected on the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing StatementSheet, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay then the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability adjusted upward in an amount equal to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”)deficiency, and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) within five Business days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and being deemed final, the Closing Statement, Buyer shall, and Purchaser shall cause pay the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice amount of such deficiency to the books and records of the Company Entities and to senior management personnel of the Company EntitiesSellers, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30Section 2.05(a)(i) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment AmountDisclosure Schedule, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposesBank Accounts.
Appears in 1 contract
Samples: Stock Purchase Agreement (Lincoln Educational Services Corp)
Purchase Price Adjustment. (a) At least three (3) Unless otherwise agreed to by the Sellers Representative and the Buyer, on the second Business Days, but no more than five (5) Business Days, Day prior to the ClosingClosing Date, the Company Sellers Representative shall prepare (in consultation and cooperation with the Buyer) and deliver to the Buyer a certificate executed by the chief financial officer of the Company setting forth the good faith estimate of (i) an estimated consolidated balance sheet of the Company Entities Cash as of the Adjustment Calculation Effective Time (such estimate, the “Estimated Cash”), (ii) the Company Debt as of the Effective Time (such estimate, the “Estimated Company Debt”), (iii) the unpaid portion of the Selling Expenses (the “Estimated Closing Balance SheetSelling Expenses”) and (iv) the Net Working Capital as of the Effective Time prepared in accordance with the principles set forth on Schedule 2.3(a) (such estimate, the “Estimated Working Capital”), which estimate shall, upon the Buyer’s written request, be supported by working papers and (ii) a statement (the “Estimated Closing Statement”) other reasonable supporting documents setting forth such estimate; provided, however, in reasonable detail the Company’s good faith event there is disagreement between the Sellers Representative and the Buyer with respect to any of such estimates of that cannot be resolved between the parties prior to the Closing Cash-on-Hand (it being understood that in no event shall the “Estimated Closing Cash-on-Hand”be delayed as a result of any such disagreement), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and Sellers Representative’s estimate shall be used for purposes of determining the calculation of the Purchase Price resulting therefrom payable at the Closing. If the Estimated Working Capital is less than the Target Working Capital, the Initial Purchase Price will be reduced by the amount of such shortfall (the “Estimated Purchase PriceWorking Capital Underage”), subject to further adjustment as provided in each case, based on this Section 2.3. If the Estimated Closing Balance Sheet and including Working Capital is greater than the Estimated Purchased Shares Purchase PriceTarget Working Capital, the Estimated CoVant Series LGS Purchased Units Initial Purchase Price, Price will be increased by the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, amount of such excess (the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net “Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained Overage”), subject to further adjustment as provided in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesSection 2.3.
(b) Within ninety (90) 60 days following after the Closing Date, the Buyer shall prepare cause to be prepared and deliver delivered to the Seller Sellers Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) ), setting forth the Buyer’s calculation of: (i) the Net Working Capital as of the Effective Time, prepared in accordance with the principles of preparation set forth on Schedule 2.3(a) (the “Closing Working Capital”), (ii) the Company Debt as of the Effective Time (the “Closing Company Debt”), (iii) the unpaid portion of Selling Expenses as of the Effective Time (the “Closing Selling Expenses”), and (iv) Cash as of the Effective Time, prepared in accordance with the methodology used to prepare the Estimated Cash (the “Closing Cash”), which calculation shall be accompanied by working papers and other reasonable supporting documents setting forth such calculation.
(c) Within 30 days following receipt by the Sellers Representative of the Closing Statement, the Sellers Representative shall deliver written notice to the Buyer of any dispute it has with respect to the preparation or content of the Closing Statement. If the Sellers Representative does not notify the Buyer in writing of a dispute with respect to the Closing Statement within such 30-day period (which notification shall state in reasonable detail the basis of the Sellers Representative’s objection), such Closing Statement will be final, conclusive and binding on the parties. To the extent not set forth in such a notification of dispute, the Sellers Representative shall be deemed to have agreed with Buyer’s calculation of all other items and amounts contained in the Closing Cash-on-HandStatement. In the event of such notification of a dispute, the Closing IndebtednessBuyer and the Sellers Representative shall negotiate in good faith to resolve such dispute. If the Buyer and the Sellers Representative, notwithstanding such good faith effort, fail to resolve such dispute within 30 days after the Sellers Representative advises the Buyer of its objections, then the Buyer and the Sellers Representative shall jointly enter into an engagement letter with the Arbitration Firm to resolve such dispute. Such engagement letter shall provide that the Arbitration Firm shall consider only those items and amounts in dispute. As promptly as practicable thereafter, the Buyer and the Sellers Representative shall each prepare and submit a presentation to the Arbitration Firm and shall furnish or cause to be furnished to the Arbitration Firm such work papers and other documents and information relating to the items and amounts in dispute as the Arbitration Firm may reasonably request and as are available to that party or its advisors and agents. As soon as practicable thereafter, the Buyer and the Sellers Representative will cause the Arbitration Firm to choose one of the parties’ positions with respect to each of Closing Net Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash, as applicable, based solely upon the presentations by the Buyer and the Sellers Representative. The party whose position is not accepted by the Arbitration Firm with respect to Closing Working Capital shall be responsible for all of the fees and expenses of the calculation Arbitration Firm. All determinations made by the Arbitration Firm will be final, conclusive and binding on all parties to this Agreement.
(d) Within two Business Days after the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c), if the amount of the Purchase Price resulting therefromas would have been determined pursuant to Section 2.2(a) had (i) the Closing Working Capital (as finally determined pursuant to Section 2.3(c)) been substituted for the Estimated Working Capital for purposes of Section 2.3(a), and (ii) Closing Company Debt, Closing Selling Expenses and Closing Cash (each as finally determined pursuant to Section 2.3(c)) been substituted for the Estimated Company Debt, Estimated Selling Expenses and Estimated Cash, respectively, as of the Closing, is different from the Purchase Price that was paid on the Closing Date, then:
(i) If such substitutions would have resulted in a Purchase Price that is less than the Purchase Price that was paid on the Closing Date, then the Buyer and the Sellers Representative shall deliver a joint written instruction to the Escrow Agent (an “Adjustment Notice”) instructing the Escrow Agent to release an amount of cash equal to such shortfall from the Adjustment Escrow Amount to the Buyer, by bank wire transfer of immediately available funds to an account designated in writing by the Buyer to the Sellers Representative and the Escrow Agent, within five Business Days from the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c). If such shortfall is less than the Adjustment Escrow Amount, the Adjustment Notice shall instruct the Escrow Agent to release the remainder of the Adjustment Escrow Amount to the Sellers Representative for further distribution to the Stockholders and to the Company for further distribution to the Optionholders, in each case, based in their respective Seller Pro Rata Portions. With respect to the Optionholders, such amounts shall be paid by the Escrow Agent to the Company and the Company shall, in turn, pay or cause the Subsidiary to pay such amounts to the Optionholders as promptly thereafter as practicable by the methods and within the time periods set forth in Section 2.2(b)(ii) (provided that the date on which the Company receives such amounts from the Escrow Agent pursuant this Section 2.3(d) shall be substituted for the Closing Date as appropriate and four (4) Business Days shall be substituted for the references to two (2) Business Days therein). If such shortfall exceeds the Adjustment Escrow Amount, the Adjustment Notice shall instruct the Escrow Agent to release to the Buyer such excess from the Indemnity Escrow Amount. In no event will an adjustment to the Purchase Price pursuant to this Section 2.3(d) exceed the sum of the Adjustment Escrow Amount and the Indemnity Escrow Amount then available for distribution under the terms of the Escrow Agreement.
(ii) If such substitutions would have resulted in a Purchase Price that is greater than the Purchase Price that was paid on the Closing Balance Sheet. The Closing Balance SheetDate, then Buyer shall pay, or cause to be paid, to the Closing Cash-on-HandSellers Representative for further distribution to the Stockholders and to the Company for further distribution to the Optionholders, the Closing Indebtedness and the Closing Net Working Capital shall in each be calculated case, in accordance with their respective proportions set forth on Schedule 2.3(d) (the Agreed Accounting Principles “Seller Pro Rata Portions”), an amount in cash equal to such excess. With respect to the Stockholders, such amounts shall be paid by the Buyer within five Business Days from the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c) by bank wire transfer of immediately available funds to the account designated in a manner consistent writing by the Sellers Representative to the Buyer. With respect to the Optionholders, such amounts shall be paid by the Buyer to the Company within five Business Days from the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c), and the Company shall, in turn, pay or cause the Subsidiary to pay such amounts to the Optionholders as promptly thereafter as practicable by the methods and within the time periods set forth in Section 2.2(b)(ii) (provided that the date on which the Company receives such amounts from the Buyer pursuant this Section 2.3(d) shall be substituted for the Closing Date as appropriate and four (4) Business Days shall be substituted for the references to two (2) Business Days therein). Within five Business Days from the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c), the Buyer and Sellers Representative shall deliver an Adjustment Notice to the Escrow Agent to release the Adjustment Escrow Amount to the Sellers Representative for further distribution to the Stockholders and to the Company for further distribution to the Optionholders, in each case, accordance with their respective Seller Pro Rata Portions. With respect to the Optionholders, such amounts shall be paid by the Escrow Agent to the Company and the Company shall, in turn, pay or cause the Subsidiary to pay such amounts to the Optionholders as promptly thereafter as practicable by the methods and within the time periods set forth in Section 2.2(b)(ii) (provided that the date on which the Company receives such amounts from the Escrow Agent pursuant to this Section 2.3(d) shall be substituted for the Closing Date, as appropriate and four (4) Business Days shall be substituted for the references to two (2) Business Days therein).
(e) Within two Business Days after the date on which the Closing Working Capital, Closing Company Debt, Closing Selling Expenses and Closing Cash are finally determined pursuant to Section 2.3(c), if the amount of the Purchase Price as would have been determined pursuant to Section 2.2(a) had (i) the Closing Working Capital (as finally determined pursuant to Section 2.3(c)) been substituted for the Estimated Working Capital for purposes of Section 2.3(a), and (ii) Closing Company Debt, Closing Selling Expenses and Closing Cash (each as finally determined pursuant to Section 2.3(c)) been substituted for the Estimated Company Debt, Estimated Selling Expenses and Estimated Cash, respectively, as of the Closing, is equal to the Purchase Price that was paid on the Closing Date, the Buyer and Sellers Representative shall deliver an Adjustment Notice to the Escrow Agent to release the Adjustment Escrow Amount to the Sellers Representative for further distribution to the Stockholders and to the Company for further distribution to the Optionholders, in each case, accordance with their respective Seller Pro Rata Portions. With respect to the Optionholders, such amounts shall be paid by Escrow Agent to the Company and the Company shall, in turn, pay or cause the Subsidiary to pay such amounts to the Optionholders as promptly thereafter as practicable by the methods and within the time periods set forth in Section 2.2(b)(ii) (provided that the date on which the Company receives such amounts from the Escrow Agent pursuant to this Section 2.3(e) shall be substituted for the Closing Date, as appropriate and four (4) Business Days shall be substituted for the references to two (2) Business Days therein).
(f) For purposes of complying with the applicable definitions contained terms set forth in this Agreement. During Section 2.3, each party shall cooperate with and make available to the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative other party and its Representatives with reasonable access at all reasonable times representatives, during normal business hours and upon reasonable prior notice notice, all financial information, records, data and working papers and shall permit access to the books its facilities and records of the Company Entities and to senior management personnel of the Company Entitiespersonnel, in each case, to the extent as may be reasonably requested by the Seller Representative or any of its Representatives required in connection with their review the preparation and analysis of the Closing Balance Sheet Statement and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review resolution of the Closing Balance Sheet and any disputes under the Closing Statement.
(cg) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) Any amounts payable to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Optionholders pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment paid to the Purchase Price for U.S. federal income tax purposesCompany, which shall, in turn, pay or cause the Subsidiary to pay such amounts less any applicable Taxes required to be withheld to the Optionholders.
Appears in 1 contract
Samples: Stock Purchase Agreement (Watts Water Technologies Inc)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Sellers a closing statement (the “Closing Statement”) ), in a form substantially similar to the Estimated Closing Statement, setting forth in reasonable detail BuyerPurchaser’s good faith calculation and determination of the (A) the Closing Financial Debt, (B) the Closing Cash-on-Hand, the Closing Indebtedness, (C) the Closing Net Working Capital Adjustment, (D) the Transaction Expenses, and the calculation of (E) the Purchase Price resulting therefrom, in each case, based on calculated therefrom (the Closing Balance Sheet“Reviewed Items”). The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed Accounting Principles Policies. If Sellers disagree with the calculation and determination of any of the Reviewed Items set forth in the Closing Statement, Sellers may, within thirty (30) days after the Sellers’ receipt of the Closing Statement, provide written notice to Purchaser setting forth Sellers’ disagreement therewith and Sellers’ calculation of the Reviewed Items that Sellers propose to adjust (such notice, a “Seller Notice of Disagreement”), which shall be prepared reasonably and in a manner consistent with the applicable definitions contained in this Agreementgood faith by Sellers. During the thirty (30) days immediately day period following the Seller Representative’s Sellers’ receipt of the Closing Balance Sheet Statement, Sellers and their accountants shall, at Sellers’ expense, be permitted reasonable access to review the work papers, books, records and applicable personnel of the Company used in the preparation of the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and at the Company’s offices, upon reasonable prior notice to the books and records solely for purposes of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, reviewing the Closing Statement and the Reviewed Items. Purchaser agrees that, following the Closing Cash-on-HandDate through the date that the Closing Statement becomes final and binding, it will not take or permit to be taken, any actions with respect to any accounting books, records, policies or procedures on which the Abbreviated Financials or the Closing Statement is based, that are inconsistent with the Accounting Policies or that would or would reasonably be expected to materially impede or delay the determination of the amount of the Closing Financial Debt, the Closing IndebtednessCash, the Closing Net Working Capital Adjustment, the Transaction Expenses, and the Purchase Price calculated therefrom or the preparation of any Seller Notice of Disagreement or the Closing Statement in the manner and utilizing the methods provided by this Agreement. Any Seller Notice of Disagreement shall specify in reasonable detail those Reviewed Items as to which Sellers disagree, the nature and extent of such disagreement and Sellers’ resulting calculation of the Purchase Price. Sellers shall be deemed to have agreed with all other Reviewed Items contained in the Closing Statement but not reflected in the Seller Notice of Disagreement. If Seller does not deliver a Seller Notice of Disagreement within such thirty (30) day period, Sellers shall be deemed to have accepted the Closing Statement with respect to all Reviewed Items set forth therein, and the determination of the Purchase Price set forth thereon in the Closing Statement shall be final and binding upon the Parties.
(ii) If Sellers timely deliver a Seller Notice of Disagreement, Purchaser and Sellers shall have a period of thirty (30) days from Purchaser’s receipt thereof to resolve any disagreement specified therein. Any disputed amount resolved in writing by Purchaser and Sellers during such period or at any time thereafter will become final and binding upon the parties hereto Parties as of the date of such agreement. Any disputed amounts that cannot be agreed to by Sellers and Purchaser within thirty (30) days following the Seller Representativeafter Purchaser’s receipt thereof unless the of a Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”Disagreement shall be determined by the Accounting Firm. Sellers and Purchaser shall cooperate and each use commercially reasonable efforts to cause the written determination of any disputed Reviewed Item and the resulting Purchase Price by the Accounting Firm to be completed within sixty (60) to Buyer prior to days after the engagement of the Accounting Firm and such datedetermination shall be final and binding on the Parties. The Accounting Firm shall resolve the disputed Reviewed Items based solely on the applicable definitions and other terms in this Agreement and the presentations by Purchaser and Sellers, which notice and not by independent review. In resolving any disputed Reviewed Item, the Accounting Firm, acting in the capacity of an expert and not as an arbitrator, shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price limit its review to matters specifically set forth thereon shall become final and binding upon the parties hereto upon in the Seller Representative’s delivery, prior Notice of Disagreement delivered pursuant to the expiration Section 1.5(d)(ii) as a disputed Reviewed Item (other than matters thereafter resolved by mutual written agreement of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement Purchaser and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereonSellers), (ii) except further limit its review to whether the extent addressed by a duly delivered Notice calculation of Disagreement prior to any such disputed Reviewed Item is mathematically accurate and has been prepared using the expiration of such thirty (30)-day periodrules, each component of the Closing Balance Sheet, the Closing Statement definitions and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price accounting principles set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreementin this Agreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned item, in each case, claimed by BuyerPurchaser in the Closing Statement or Sellers in the Seller Notice of Disagreement, as applicable. The Parties agrees they will use their commercially reasonable efforts to cause their respective independent accountants to, cooperate and assist in the preparation of the conduct of the reviews related to the Accounting Firm’s determination of disputed amounts under this Section 1.5(d)(ii), including by making available, to the extent necessary, books, records, work papers and personnel (subject to the execution of customary working papers access letters, if requested). The fees and expenses payable to the Accounting Firm in connection with resolving any dispute under this Section 1.5(d)(ii) shall be borne by Sellers, on the one hand, or the Seller Representativeand by Purchaser, on the other hand, in proportion to the amounts by which their respective calculations of Purchase Price differ from the Purchase Price as finally determined by the Accounting Firm. Buyer Purchaser and Sellers agree that the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, Section 1.5(d)(ii) for resolving disputes with respect to the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery method for Buyer for payment resolving any such disputes; provided that this provision shall not prohibit the Parties from instituting litigation to enforce any final determination of the Excess Amount (if any) and (ii) Purchase Price by the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made Accounting Firm pursuant to this Section 1.05 1.5(d)(ii) in any court of competent jurisdiction in accordance with Section 10.6. It is the intent of the Parties to have any final determination of the Purchase Price by the Accounting Firm proceed in an expeditious manner; provided, however, that any deadline or time period contained herein may be extended or modified by the written agreement of Sellers and Purchaser, and Sellers and Purchaser agree that the failure of the Accounting Firm to strictly conform to any deadline or time period contained herein shall not be a basis for seeking to overturn any determination rendered by the Accounting Firm which otherwise conforms to the terms of this Section 1.5(d)(ii).
(iii) Following the final determination of the Purchase Price pursuant to Section 1.5(d)(i) or Section 1.5(d)(ii), as the case may be:
(A) if the Purchase Price as finally determined is greater than the Estimated Purchase Price, Purchaser shall pay, or cause to be paid, to Direct Seller the amount (the “Excess Amount”) equal to the excess of (1) the Purchase Price as finally determined over (2) the Estimated Purchase Price; or
(B) if the Purchase Price as finally determined is lower than the Estimated Purchase Price, Direct Seller shall pay, or cause to be paid, to Purchaser, the amount equal to the excess of (1) the Estimated Purchase Price over (2) the Purchase Price as finally determined.
(iv) The payments referred to in Section 1.5(d)(iii) shall be made within five (5) Business Days of the final determination of the Purchase Price pursuant to Section 1.5(d)(i) or Section 1.5(d)(ii), as the case may be. The payment referred to in Section 1.5(d)(iii)(A) shall be made in cash by wire transfer of immediately available funds to the account designated by Direct Seller in the Estimated Closing Statement. The payment referred to in Section 1.5(d)(iii)(B) shall be made in cash by wire transfer of immediately available funds to the account designated by Purchaser in the Estimated Closing Statement.
(v) Any payments made pursuant to Section 1.5(d)(iii) and Section 1.5(d)(iv) shall be treated as an adjustment to the Purchase Price by the Parties for U.S. federal income tax Tax purposes, unless otherwise required by Law.
Appears in 1 contract
Samples: Membership Interest and Asset Purchase Agreement (Smith Micro Software, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business DaysAs promptly as possible, but no more than five in any event within ninety (590) Business Daysdays after the Closing Date, prior Parent shall deliver to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Stockholders’ Representative a statement (the “Estimated Closing Preliminary Statement”) setting forth in reasonable detail showing the Company’s good faith estimates calculation of (i) the Closing Cash-on-Hand , Closing Net Working Capital, Closing Indebtedness, and Closing Transaction Expenses; and (ii) the “Closing Consideration Shares substituting the Closing Cash, Closing Net Working Capital, Closing Indebtedness, and Closing Transaction Expenses as set forth in the Preliminary Statement for the Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) , Estimated Closing Indebtedness, and Estimated Closing Transaction Expenses as set forth in the calculation of the Purchase Price resulting therefrom Closing Date Statement, respectively (the “Estimated Purchase PriceFinal Closing Consideration Shares”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness Each of Parent and the Estimated Closing Net Working Capital Stockholders’ Representative shall each be calculated in accordance with provide the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer other party and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management relevant personnel and properties during the preparation of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet Preliminary Statement and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review resolution of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided any disputes that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising may arise under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesthis Section 2.9.
(b) Within ninety (90) days following If the Closing DateStockholders’ Representative has any objections to the Preliminary Statement, Buyer the Stockholders’ Representative shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Parent a statement (the “Closing Statement”) setting forth its objections thereto in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheetwith reasonable supporting documentation (an “Objections Statement”). The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the If an Objections Statement is not delivered to Parent within thirty (30) days immediately following the Seller Representative’s receipt after delivery of the Closing Balance Sheet and the Closing Preliminary Statement, Buyer shallthe Preliminary Statement shall be final, binding and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested non-appealable by the Seller Representative parties hereto. Any item or any of amount as to which no dispute is raised in the Objections Statement shall be final, binding and non-appealable on the parties hereto, unless such item or amount is by its Representatives nature adjusted in connection with their review of the Closing Balance Sheet matters raised in the Objections Statement. The Stockholders’ Representative and the Closing Parent shall negotiate in good faith to resolve any objections set forth in an Objections Statement, and (y) cooperate with any resolution agreed to in writing by the Seller Stockholders’ Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Parent shall become be final and binding upon the parties hereto thirty parties. If the Stockholders’ Representative and Parent are unable to reach a resolution of all such objections within fifteen (3015) days following after the Seller Representative’s receipt thereof unless delivery of the Seller Objections Statement, the Stockholders’ Representative gives written notice of its disagreement and Parent shall submit such dispute to a jointly selected arbiter from a nationally recognized independent public accounting firm (the “Auditor”), who shall be appointed as an expert and not as an arbitrator. If the Stockholders’ Representative and Parent are unable to agree upon an Auditor, each party shall select a “Notice of Disagreement”) to Buyer prior to nationally recognized independent public accounting firm and such date, which notice chosen firms shall describe in reasonable detail mutually agree upon a nationally recognized independent public accounting firm that shall serve as the nature of such disagreementAuditor; provided, that such firm shall not be the independent auditor of (or otherwise serve as a Consultant to) Parent, the Company, or any of their respective Affiliates. Each of the Stockholders’ Representative and Parent shall furnish to the Auditor a statement setting forth its position with respect to each item or amount set forth in the Objections Statement that remains unresolved following such fifteen (15)-day period (each, a “Disputed Line Item”), together with such other information and documents as it deems relevant (each such party’s “Dispute Resolution Submission”), with copies of such submission and all such documents and information being concurrently given to the other party. The Auditor shall consider only the Disputed Line Items identified in the Dispute Resolution Submission. The Auditor’s determination shall be based solely on (i) the Closing Balance Sheet, the Closing Statement and the definitions of Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, and Closing Transaction Expenses contained herein and (ii) the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered Dispute Resolution Submissions provided by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet Parent and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Stockholders’ Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines terms and procedures set forth in this Agreement and (i.e., not on the basis of an independent review). The Closing Balance SheetStockholders’ Representative and Parent shall use their commercially reasonable efforts to cause the Auditor to resolve all disagreements as soon as practicable. The Auditor shall select as a resolution of all such disagreements, in the Closing Statement and aggregate, either the Closing Cash-on-Hand, positions of Parent or the Closing Indebtedness, positions of the Closing Net Working Capital and the Purchase Price Stockholders’ Representative as set forth thereon in their respective Dispute Resolution Submissions based upon which party’s positions are closest to the determinations of the Auditor. The resolution of all Disputed Line Items by the Auditor shall become final be final, binding and binding non-appealable on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementhereto. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees costs and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Auditor shall be borne by the Seller Representative in party whose Dispute Resolution Submission was not selected by the Seller Representative’s submission to Auditor for the Arbiter, and the Company shall pay the remaining portion resolution of such fees and expensesall Disputed Line Items.
(ec) If the Estimated Purchase Price Closing Consideration Shares as set forth in the Closing Date Statement is less than the Purchase Price Closing Consideration Shares as set forth in the Final Statement (such shortfall, the “Adjustment Shortfall Amount”), then (i) Buyer shall, within two (2) Business Days after following the Closing Balance SheetFinal Determination Date (i) Parent shall deliver or cause to be delivered to the Administrator, for further distribution to the Closing Statement and Stockholders in accordance with Section 2.8(a)(ii) shares of Parent Common Stock in an aggregate amount equal to the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and Shortfall Amount (it being understood that such shares shall be valued for purposes of such distribution at the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment VWAP as of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller RepresentativeFinal Determination Date), and (ii) Buyer Parent and the Seller Stockholders’ Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds disburse from the Working Capital Escrow Account to the Administrator for further distribution to the Stockholders in accordance with Section 2.8(a)(iii) an amount equal to the Working Capital Escrow Shares then remaining in the Working Capital Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(fd) If the Estimated Purchase Price Closing Consideration Shares as set forth in the Closing Date Statement is greater than the Purchase Price Closing Consideration Shares as set forth in the Final Statement (such excess, the “Excess Amount”), then Buyer Parent shall satisfy the Excess Amount (i) first, from the Working Capital Escrow Shares then remaining in the Working Capital Escrow Account (it being understood that such shares shall be valued for purposes of such distribution at the VWAP of the Original Agreement Date), (ii) second, to the extent that the Excess Amount exceeds the amounts then remaining in the Working Capital Escrow Account, then directly from the Stockholders on a joint and several basis; provided that Parent may (but shall not be obligated to) offset any portion of the Seller Representative shallExcess Amount in excess of amounts remaining in the Working Capital Escrow Account against any shares of Parent Common Stock issued to the Stockholders pursuant to this Agreement and held by such Stockholders at the time of such offset (it being understood that such shares shall be valued for purposes of such offset at the VWAP of the Original Agreement Date). In the event that there is an Excess Amount, within two (2) Business Days after following the Closing Balance Sheet, the Closing Statement Final Determination Date (x) Parent and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, Stockholders’ Representative shall deliver joint written instructions to the Escrow Agent to cause disburse from the Working Capital Escrow Agent Account to make payment, within two Parent the number of Working Capital Escrow Shares equal to the Excess Amount or such lesser amount as then remains in the Working Capital Escrow Account (2) Business Days after receipt it being understood that such shares shall be valued for purposes of such instructionsdistribution at the VWAP as of the Original Agreement Date) and (y) if, after disbursement to Buyer, by wire transfer in immediately available funds Parent of the Excess Amount from the Escrow Funds in accordance with this Section 2.9(d), any amount remains in the Working Capital Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer Parent and the Seller Stockholders’ Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds disburse from the Working Capital Escrow Account toto the Administrator, or as directed byapplicable, for further distribution to the Seller RepresentativeStockholders in accordance with Section 2.8(a)(iii) the Working Capital Escrow Shares that remain in the Working Capital Escrow Account.
(ge) Buyer agrees that (i) Notwithstanding anything herein to the payment contrary, the authority of the Excess Amount Auditor under this Section 2.9 shall be limited solely to the resolution of the calculation of the Disputed Line Items, and all other disputes between the parties (if anyincluding with respect to the contractual interpretation of this Section 2.9) from the Escrow Funds in the Escrow Account shall be resolved in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties10.11.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than Within forty five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and days after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated a balance sheet of the Company Entities Business as of the Adjustment Calculation Time Closing Date (the “"CLOSING DATE BALANCE SHEET"). The Closing Date Balance Sheet”Sheet shall set forth the net tangible asset value of the Business (the "CLOSING DATE NET TANGIBLE ASSET VALUE"), which shall be calculated by subtracting the following from total assets: goodwill, accounts payable, current lease obligations, accrued salary, foreign income taxes, other accrued obligations and long term lease obligations. Buyer shall prepare the Closing Date Balance Sheet in accordance with: (i) the same practice standards and procedures used in the preparation of the Financial Statements (as defined in Section 4.5 below); and (ii) a statement (all books, records and accounts of Seller. Any extraordinary or non-recurring material liabilities, including, without limitation, any liabilities associated with Buyer's post-Closing decision to sublease or assign the “Closing Statement”) setting forth lease relating to Seller's Addison, Illinois Facility, shall not be reflected in reasonable detail Buyer’s calculation of the Closing Cash-on-HandDate Balance Sheet without the prior written consent of Seller, which may be withheld in Seller's sole discretion.
(b) For the purposes of preparing the Closing IndebtednessDate Balance Sheets, following the Closing Net Working Capital Closing, Buyer shall take the appropriate actions and use appropriate accounting methods, consistent with generally accepted accounting principles and Seller's past practices and perpetual inventory records and inventory valuation methodologies consistent with past practices to determine the calculation of the Purchase Price resulting therefrom, in each case, based Inventory transferred on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shallDate by Seller, and Seller (or its representatives) shall cause the Company Entities to, (x) provide the Seller Representative be permitted to observe such actions and review such methods. Each party shall bear its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives own expense in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementtherewith.
(c) The Seller and its representatives shall have the right to review all work papers and procedures used to prepare the Closing Date Balance Sheet and shall have the right to perform any other reasonable procedures necessary to verify the accuracy thereof. Unless Seller, within thirty days after delivery to Seller of the Closing Date Balance Sheet, notifies Buyer in writing that it objects to the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Date Balance Sheet, and specifies the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of basis for such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree objection in writing, the Closing Date Balance Sheet shall become final, binding and conclusive upon the parties for all purposes. If Buyer and Seller Representative and Buyer shall seek in good faith are unable to resolve in writing any differences that they may have with respect objections to the matters specified in Closing Date Balance Sheet within ten days after any such notification has been given, the Notice of Disagreementdispute shall be referred to Ernst & Young LLP (the "DESIGNATED ACCOUNTANT") for resolution (or, and all such discussions related thereto shall (unless otherwise if the Designated Accountant is unavailable, to another nationally recognized public accounting firm mutually agreed upon by Buyer and Seller within five days from the date upon which the Designated Accountant notifies the parties that it is not available). If Buyer and Seller Representative) be governed by Rule 408 are unable to agree upon the designation of such an accounting firm within such time, either party may thereafter request that the President of the Federal Rules of Evidence (American Arbitration Association make such designation. The accounting firm so designated will make a determination as in effect as to each of the date items in dispute, which determination shall be final, conclusive and binding upon each of this Agreement)the parties hereto. At the end of such thirty (30)-day period or such agreed-upon longer period, the Buyer and Seller Representative shall cooperate with each other and Buyer shall submit with each other's authorized representatives in order to the Arbiter for review and resolution resolve any and all matters (but only such matters) which remain in dispute under this Section 2.2(c) as soon as practicable and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of share the fees and expenses of the Arbiter equal to the percentage by which the portion Designated Accountant and, as necessary, of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the ArbiterAmerican Arbitration Association, and the Company shall pay the remaining portion of such fees and expensesequally.
(ei) If For the Estimated Purchase Price is less than the Purchase Price (such shortfallpurposes hereof, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativeterm "BASE ASSET AMOUNT" means $33,546,000.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the The Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in Section 1.2(a) shall be subject to the Estimated Closing Statementadjustments as set forth below, Buyer’s obligation and all references in this Agreement to pay the Purchase Price shall be deemed satisfied, Buyer shall not to be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise as adjusted pursuant to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following this Section 1.4. Prior to the Closing Date, the Seller will deliver to the Buyer a calculation of the Seller’s good faith estimate of the Closing Working Capital Amount, which shall be prepared on a consistent basis with the accounting principles, practices, procedures, policies, methods, calculation guidelines and example calculations set forth on Schedule 1.4 (the “Working Capital Guidelines”). The Buyer will have the right to review the computation and work papers and the underlying books and records used in such calculation and approve such calculation, which approval may not be unreasonably withheld, delayed or conditioned. Such approved estimated Closing Working Capital Amount, with such changes if any as may be agreed to between the Seller and the Buyer not later than the Business Day immediately preceding the Closing Date, is the “Estimated Working Capital Amount.” The Purchase Price paid at Closing will be increased to the extent that the Estimated Working Capital Amount is greater than the Target Working Capital Amount and will be decreased to the extent that the Estimated Working Capital Amount is less than the Target Working Capital Amount.
(a) Within 60 days after the Closing Date, the Buyer shall prepare and deliver the Closing Statement to the Seller Representative (i) an unaudited consolidated balance sheet Seller. The Closing Statement shall be prepared on a consistent basis with the Working Capital Guidelines. The Closing Statement shall set forth in reasonable detail the actual amount of the Company Entities as of Closing Working Capital Amount and the Adjustment Calculation Time (the “Closing Balance Sheet”)Working Capital Adjustment, and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation recalculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, Buyer’s recalculations of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions adjustments contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(cb) The Seller shall deliver to the Buyer, within 30 days after the Buyer’s delivery of the Closing Balance SheetStatement, either a notice indicating that the Seller accepts the Closing Statement and or a statement describing the Seller’s objections to the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such dateStatement, which notice statement of objections shall describe in reasonable detail the nature and amount of the Seller’s objections. If the Seller does not deliver a notice objecting to the Closing Statement delivered by the Buyer within 30 days after the Buyer’s delivery of the Closing Statement, the Closing Statement shall be final and binding on the Parties.
(c) If the Seller objects to the Closing Statement and any such objections are not resolved by the Seller and the Buyer within 60 days after the Buyer’s delivery of the Closing Statement, the Buyer and the Seller shall (A) jointly prepare and sign a statement setting forth (1) those objections (if any) that the Buyer and the Seller have resolved and the resolution of such disagreement; provided, objections and (2) those objections that remain unresolved and (B) engage the Neutral Accountant to resolve such unresolved objections. Each of the Buyer and the Seller shall provide to the Neutral Accountant any information of such Party that the Neutral Accountant reasonably requests for purposes of resolving such unresolved objections. The Buyer and the Seller shall instruct the Neutral Accountant that (iX) the scope of its review and authority shall be limited to resolving such unresolved objections, (Y) the Neutral Accountant shall act as an expert and not as an arbitrator, and (Z) the Neutral Accountant shall issue a ruling which sets forth the resolution of each such unresolved objection and includes a statement reflecting the Neutral Accountant’s resolution of such unresolved objections. The resolution by the Neutral Accountant of such unresolved objections and calculation of Closing Balance Sheet, Working Capital Amount prepared by the Neutral Accountant giving effect thereto shall be conclusive and binding upon the Buyer and the Seller. The Buyer and the Seller each agrees that the procedures set forth in this Section 1.4(c) for resolving disputes with respect to the Closing Statement shall be the sole and exclusive method for resolving any such disputes; provided that this provision shall not prohibit any Party from instituting litigation to enforce the determination of the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and Amount by the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and Neutral Accountant in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation court of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer competent jurisdiction determined in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”)12.12. The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer each shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of share equally the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesNeutral Accountant for its services under this Section 1.4(c).
(ed) If Upon the Estimated Purchase Price is less than the Purchase Price (such shortfalldetermination, the “Adjustment Amount”in accordance with Sections 1.4(a)-(c), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment calculations of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt amounts of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Closing Working Capital Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and Working Capital Adjustment, the dispute resolution provisions provided for in this Section 1.05, Purchase Price shall be recalculated using such finally determined amounts. The term “Final Purchase Price” means the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality recalculation of the foregoing, no claim Purchase Price shown on the Final Closing Statement. If the Closing Working Capital Amount (as adjusted by Buyer for the payment agreement of the Excess Amount (Parties as set forth herein or any portion thereof) shall be asserted against any by the determination of the Neutral Accountant as set forth herein) exceeds the Estimated Working Capital Amount, the Buyer shall pay the Seller Parties.
(h) Any payment made the amount of such excess by wire transfer or other delivery of immediately available funds, within three Business Days after the date on which the Final Closing Statement is finally determined pursuant to this Section 1.05 1.4 (plus interest thereon at the rate of 3.25% per annum, compounded monthly, from the Closing Date). If the Estimated Working Capital Amount exceeds the Closing Working Capital Amount (as adjusted by agreement of the Parties as set forth herein or by the determination of the Neutral Accountant as set forth herein), the Seller shall be treated as an adjustment pay the Buyer the amount of such excess by wire transfer or other delivery of immediately available funds, within three Business Days after the date on which the Final Closing Statement is finally determined pursuant to this Section 1.4 (plus interest thereon at the Purchase Price for U.S. federal income tax purposesrate of 3.25% per annum, compounded monthly, from the Closing Date).
Appears in 1 contract
Purchase Price Adjustment. (a) At least Seller shall prepare and deliver to Buyer not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date (i) an estimated balance sheet of the TEAK Companies (on a consolidated basis) as of the Effective Time (together with supporting documentation reasonably necessary for Buyer to verify such balance sheet, the Company “Estimated Balance Sheet”), (ii) worksheets showing Seller’s estimate of the Net Working Capital derived from the Estimated Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities) (the “Estimated Net Working Capital”) and (iii) Seller’s estimate of the Purchase Price as adjusted pursuant to Section 3.4 (the “Estimated Purchase Price”). The Estimated Balance Sheet, the Estimated Net Working Capital and the Estimated Purchase Price (together, the “Estimated Closing Items”) shall be prepared on a basis consistent with the past practices of the TEAK Companies.
(b) No later than sixty (60) calendar days after the Closing Date (or such later date as mutually agreed by Buyer and Seller), Seller shall prepare and deliver to Buyer (i) an estimated consolidated a balance sheet of the Company Entities TEAK Companies (on a consolidated basis) as of the Adjustment Calculation Effective Time (together with supporting documentation reasonably necessary for Buyer to verify such balance sheet, the “Estimated Closing Final Balance Sheet”), and (ii) a statement worksheets showing Seller’s calculation of the Net Working Capital derived from the Final Balance Sheet (based upon, and subject to the adjustments set forth in, the definitions of Current Assets and Current Liabilities) (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Final Net Working Capital”) and the (iii) Seller’s calculation of the Purchase Price resulting therefrom as adjusted pursuant to Section 3.4 (the “Estimated Final Purchase Price”), in each case, based on together with a worksheet showing the difference, if any, between any Estimated Closing Balance Sheet Item and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portioncorresponding Final Closing Item (as defined below). The Estimated Closing Final Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Final Net Working Capital and the calculation Final Purchase Price (together, the “Final Closing Items”) shall be prepared on a basis consistent with past practice of the Purchase Price resulting therefrom, TEAK Companies and consistent with the principles and assumptions used in each case, based on preparation of the Estimated Closing Balance SheetItems. The If Seller does not deliver the Final Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated Items in accordance with this Section 3.6 on or before the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty sixtieth (3060th) days immediately following the Seller Representative’s receipt of calendar day after the Closing Balance Sheet Date (or such later date as mutually agreed by Buyer and Seller), Buyer shall have the right to prepare such Final Closing Items on or before the ninetieth (90th) day after the Closing Statement, Date (or such later date as mutually agreed by Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company EntitiesSeller), in which case the relative obligations of Buyer and Seller in the remainder of this Section 3.6 shall be switched. Buyer and Seller shall promptly provide to each case, to the extent other all documents reasonably requested by the Seller Representative or other to verify any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price items set forth thereon in the Final Closing Item calculations. Buyer shall become final and binding upon have the parties hereto right for thirty (30) days following receipt of the Seller Representative’s receipt thereof unless Final Closing Items to object to the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Final Balance Sheet, the Closing Statement and proposed calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Final Net Working Capital and the proposed calculation of the Final Purchase Price set forth thereon (other than with respect to an Environmental Defect or an Environmental Defect Amount, which shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated determined exclusively in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(cARTICLE VIII), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution representatives shall be requested by the parties entitled to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.reasonable access during normal
Appears in 1 contract
Samples: Purchase and Sale Agreement (Atlas Pipeline Partners Lp)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more Not less than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer (i) an estimated consolidated unaudited combined balance sheet of the Company Entities Group Companies as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a written statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s (x) its good faith estimates estimate of (A) the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Date Net Working Capital (the “Estimated Closing Date Net Working Capital”) and the resulting Net Working Capital Adjustment Amount, (B) the aggregate amount of all Indebtedness as of the Closing (the “Estimated Closing Date Indebtedness”), (C) the Cash and Cash Equivalents of the Group Companies as of the Adjustment Time (the “Estimated Closing Date Cash”) and (D) the Unpaid Transaction Expenses and (y) its resulting calculation of the estimated Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on prepared in a format consistent with the Estimated Sample Closing Balance Sheet Statement and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles definitions of this Agreement and in a manner consistent with accompanied by reasonable supporting documentation for the applicable definitions estimates and calculations contained in this Agreementtherein. From and after Following the delivery of the Estimated Closing Balance Sheet Statement, Seller and the Estimated Closing Statement until the Closing, the Company Group Companies shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior advance notice to the relevant records (other than records that are subject to attorney-client privilege or work product doctrine), books and records of the Company Entities and to senior management personnel of Seller and the Company Entities, in each case, Group Companies relating to the extent reasonably requested by Buyer or any of its Representatives in connection with their review preparation of the Estimated Closing Balance Sheet and the Estimated Closing Statement, Statement and (y) shall cause the personnel of Seller and the Group Companies to reasonably cooperate during normal business hours upon reasonable advance notice with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, in each case, as is relevant to Buyer’s obligation to pay review of the Purchase Price Estimated Balance Sheet and Closing Statement. Seller shall be deemed satisfied, consider in good faith any reasonable comments made by Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation Estimated Balance Sheet and Estimated Closing Statement and, to the extent Seller, acting in good faith, agrees with any such comments, incorporate the same; provided, that in no event shall any review of Estimated Balance Sheet or Estimated Closing Statement by Buyer or its Representatives or any dispute relating thereto delay or prevent the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesClosing.
(b) Within As soon as reasonably practicable following the Closing Date, and in any event within ninety (90) days following the Closing Datethereof, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated combined balance sheet of the Company Entities Group Companies as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a written statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s good faith calculation of (A) the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Date Net Working Capital and the calculation resulting Net Working Capital Adjustment Amount, (B) the aggregate amount of Indebtedness as of the Closing (the “Closing Date Indebtedness”), (C) Cash and Cash Equivalents of the Group Companies as of the Adjustment Time (the “Closing Date Cash”), (D) the Unpaid Transaction Expenses, and (E) the resulting Purchase Price resulting therefromPrice, in each case, based on determined without giving effect to (x) the consummation of the transactions contemplated by this Agreement to occur at the Closing (including any adjustments as a result of the application of purchase accounting), (y) any financing transactions in connection therewith by Buyer or its Subsidiaries (including the Group Companies) after the Closing or (z) any action or omission by Buyer or any of its Subsidiaries (including the Group Companies) with respect to the Business or the Group Companies following the Closing. Except as otherwise provided herein, the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Sheet and the Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained Sample Closing Statement. Nothing in this AgreementSection 2.05(b) is intended to be used to adjust for errors, omissions or inconsistencies that may be found with respect to the Financial Statements or the Balance Sheet, or any actual or alleged failure of the Financial Statements or the Balance Sheet to be prepared in accordance with the Accounting Principles or in good faith. During Following the thirty delivery of the Closing Statement through the final determination of the Purchase Price in accordance with this Section 2.05, Buyer shall provide Seller and its Representatives reasonable access during normal business hours upon reasonable advance notice to the records (30) days immediately following other than records that are subject to attorney-client privilege or work product doctrine), books and personnel of Buyer relating to the Seller Representative’s receipt preparation of the Closing Balance Sheet and the Closing Statement, Buyer shall, Statement and shall cause the Company Entities to, (x) provide the Seller Representative personnel of Buyer and its Representatives with reasonable access at all reasonable times Subsidiaries (including the Group Companies) to reasonably cooperate during normal business hours and upon reasonable prior advance notice to the books with Seller and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their each case, as is relevant to Seller’s review of the Closing Balance Sheet and the Closing Statement.
(c) The If Seller disagrees with the calculation of the Purchase Price set forth in the Closing Balance SheetStatement (or any portion of the calculation thereof), it shall notify Buyer of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement, within forty-five (45) days after its receipt of the Closing Statement. In the event that Seller does not provide such a notice of disagreement within such forty-five (45)-day period, Seller shall be deemed to have accepted the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and calculation of the Purchase Price set forth thereon therein, which shall become final be final, binding and binding upon conclusive for all purposes hereunder. In the parties hereto thirty event any such notice of disagreement is timely provided, Buyer and Seller shall use commercially reasonable efforts for a period of forty-five (3045) days following (or such longer period as they may mutually agree) to resolve any disagreements with respect to the Closing Statement. If, at the end of such period, they are unable to resolve such disagreements, then an independent accounting or financial consulting firm of recognized national standing as may be mutually selected by Xxxxx and Seller Representative’s receipt thereof unless (the Seller Representative gives written notice of its disagreement (a “Notice of DisagreementAccountant”) shall resolve any remaining disagreements. The Accountant shall determine as promptly as practicable, but in any event within forty-five (45) days of the date on which such dispute is referred to the Accountant, whether the line items for which disagreements exists between Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, and Seller on the Closing Statement were prepared in accordance with the standards set forth in Section 2.05(b) and whether and to what extent (if any) such line items and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and calculation of the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, in the Closing Statement requires adjustment. The Accountant shall act as an expert, not as an arbitrator, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price its decision shall be set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing and be based solely on written submissions by the Seller Representative Xxxxx and Buyer Xxxxxx and (y) the date all matters specified in the Notice of Disagreement their respective Representatives and not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreementindependent review. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter Accountant not to, and the Arbiter Accountant shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by BuyerSeller, on the one hand, or the Seller RepresentativeBuyer, on the other hand, or less than the smallest value for such item assigned by BuyerSeller, on the one hand, or the Seller RepresentativeBuyer, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested or any notice of disagreement contemplated by the parties to be delivered not more than thirty (30) days following submission of such disputed mattersthis Section 2.05(c), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees fees, costs and expenses of the Arbiter equal Accountant shall be borne pro rata as between Seller, on the one hand, and Buyer, on the other hand, in proportion to the percentage final allocation made by which the portion such Accountant of the disputed amounts items weighted in relation to the claims made by Seller and Buyer, such that the prevailing party pays the lesser proportion of such fees, costs and expenses. For example, if Buyer claims that the appropriate adjustments are, in the aggregate, $1,000 greater than the amount determined by Seller Representative’s submission and if the Accountant ultimately resolves the dispute by awarding to Buyer an aggregate of $300 of the Arbiter not awarded $1,000 contested, then the fees, costs and expenses of the Accountant will be allocated 30% (i.e., 300 ÷ 1,000) to Seller and 70% (i.e., 700 ÷ 1,000) to Buyer. The determination of the Seller Representative bears Accountant shall be final, binding and conclusive on the Parties (absent fraud or manifest error). The date on which the calculation of the Purchase Price is finally determined in accordance with this Section 2.05(c) is hereinafter referred to as the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses“Determination Date.”
(ed) If the Purchase Price, as finally determined pursuant to Section 2.05(c), exceeds the Estimated Purchase Price Price, Buyer shall pay, or cause to be paid, to Seller (or one or more Retained Companies designated by Seller), within five (5) Business Days of the Determination Date, an amount in cash equal to such excess in immediately available funds by wire transfer to an account or accounts designated by Seller, by written notice to Buyer at least three (3) days prior to the payment date. If the Purchase Price, as finally determined pursuant to Section 2.05(c), is less than the Estimated Purchase Price Price, Seller shall pay, or shall cause to be paid, to Buyer within five (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (25) Business Days after of the Closing Balance SheetDetermination Date, an amount in cash equal to such difference in immediately available funds by wire transfer to an account or accounts designated by Buyer, by written notice to Seller. For U.S. federal income and other applicable Tax purposes, to the Closing Statement and the Closing Cash-on-Handextent permitted by applicable Law, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties any payment pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 2.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes(and allocated between US Holdco, GES Canada, GES UK (and each EMEA Company that is a direct Subsidiary of GES UK), and Viad UK based on the relative values attributed to each under Section 2.03(b)).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three Within sixty (360) Business Daysdays after the Closing Date, but no more than five (5) Business Days, prior Parent shall cause the Surviving Company to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Unitholders’ Representative a written statement (the “Estimated Closing Purchase Price Adjustment Statement”) setting forth in reasonable detail the Surviving Company’s good faith estimates calculations of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation Closing Indebtedness, together with such schedules and data with respect to the determination thereof as may be appropriate to support the calculations set forth in the Purchase Price Adjustment Statement. The foregoing items shall be calculated by the Surviving Company in accordance with this Agreement and Exhibit B hereto.
(b) Following the delivery of the Purchase Price resulting therefromAdjustment Statement and until the Purchase Price Adjustment Statement has become final and binding as set forth in Section 2.8(h), in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Parent shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Unitholders’ Representative and its Representatives representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books Business Records and records relevant personnel and properties of the Surviving Company Entities and its Subsidiaries, as well as to senior management personnel any documents or work papers used in the preparation of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Purchase Price Adjustment Statement, and (y) cooperate with as the Seller Unitholders’ Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementmay reasonably request.
(c) The Closing Balance Sheet, If the Closing Statement and Unitholders’ Representative disagrees (or is unable to agree by reason of lack of sufficient substantiating information) with the Closing Cash-on-Hand, calculation of any of the Closing Indebtedness, the Closing Net Working Capital and items set forth in the Purchase Price set forth thereon Adjustment Statement, the Unitholders’ Representative shall become notify Parent in writing thereof (such notification, a “Dispute Notice”) within sixty (60) days after receipt of the Purchase Price Adjustment Statement by the Unitholders’ Representative. If the Unitholders’ Representative fails to deliver a Dispute Notice to Parent within sixty (60) days after delivery of the Purchase Price Adjustment Statement to the Unitholders’ Representative, or if the Unitholders’ Representative notifies Parent in writing that it will not deliver a Dispute Notice, then the Purchase Price Adjustment Statement shall be final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheeton Parent, the Closing Statement Surviving Company, the Unitholders’ Representative and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration Equityholders for purposes of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceAgreement.
(d) If the Unitholders’ Representative delivers a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)Dispute Notice, then the Closing Balance Sheet Parent and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Unitholders’ Representative shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek negotiate in good faith to resolve each dispute set forth therein (each, an “Objection Dispute”), and any resolution agreed to in writing any differences that they may have with respect to by Parent and the matters specified in Unitholders’ Representative shall be final and binding on Parent, the Notice Surviving Company, the Unitholders’ Representative and the Equityholders for purposes of Disagreement, and all such this Agreement. All discussions related thereto to such negotiations shall (unless otherwise agreed by Buyer Parent and the Seller Unitholders’ Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At If Parent and the end Unitholders’ Representative are able to resolve all of the Objection Disputes, then the Purchase Price Adjustment Statement, adjusted to reflect such thirty resolution of all Objection Disputes, shall be final and binding on Parent, the Surviving Company, the Unitholders’ Representative and the Equityholders for purposes of this Agreement. If Parent and the Unitholders’ Representative are unable to resolve all Objection Disputes within twenty (30)-day period 20) days (or such agreed-later time as may be agreed by Parent and the Unitholders’ Representative) after delivery of the Dispute Notice by the Unitholders’ Representative to Parent, then the Objection Disputes that have not been resolved shall, at the request of either the Unitholders’ Representative or Parent, be referred for final determination to KPMG LLP (the “Accounting Arbitrator”) within fifteen (15) days thereafter. If such firm is unable to serve, Parent and the Unitholders’ Representative shall jointly appoint an accounting firm of national standing that is not the independent auditor of (and does not otherwise provide services under a contractual arrangement with) either Parent (or any of its controlled Affiliates) or the Unitholders’ Representative (or any of its controlled Affiliates) to be the Accounting Arbitrator. If Parent and the Unitholders’ Representative are unable to agree upon longer periodsuch firm within ten (10) days after KPMG LLP has advised Parent and the Unitholders’ Representative of its inability to serve, then the Seller Accounting Arbitrator shall be an accounting firm of national standing appointed by the American Arbitration Association in New York, New York; provided that such firm shall not be the independent auditor of (or otherwise provide services under a contractual arrangement with) either Parent (or any of its controlled Affiliates) or the Unitholders’ Representative (or any of its controlled Affiliates).
(e) Parent and Buyer the Unitholders’ Representative shall make available to the Accounting Arbitrator the Business Records and relevant personnel and properties of the Surviving Company and its Subsidiaries, as well as any documents or work papers used in the preparation of the Purchase Price Adjustment Statement and the Dispute Notice, and all other items reasonably requested by the Accounting Arbitrator, and shall submit to the Arbiter for review and resolution any and Accounting Arbitrator a list of all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer Objection Disputes that have not been resolved by Parent and the Seller Unitholders’ Representative (together with a list of the Objection Disputes that have been resolved with a description of the resolution). The Accounting Arbitrator shall instruct the Arbiter to, deliver to Parent and the Arbiter shallUnitholders’ Representative, make as promptly as practicable and in any event shall endeavor to do so within thirty (30) days after its appointment, a final determination written report (i) setting forth (A) its resolution of the items included in the Closing Balance Sheet and the Closing Statement (each Objection Dispute that had not been resolved when submitted to the extent such amounts are properly in dispute) it, determined in accordance with the guidelines provisions of this Section 2.8 and procedures set forth in this Agreement. Buyer Exhibit B hereto, and (B) any adjustments that are required to be made to the Purchase Price Adjustment Statement to reflect such resolution, and (ii) which shall have attached thereto a Purchase Price Adjustment Statement that has been revised to reflect (x) the resolution of any Objection Disputes by Parent and the Seller Representative will cooperate Unitholders’ Representative, and (y) the adjustments, if any, referred to in clause (i)(B) of this sentence (the “Arbitrator’s Report”).
(f) The Accounting Arbitrator shall consider only those Objection Disputes submitted to it for resolution. In resolving each such Objection Dispute, the Accounting Arbitrator (i) shall resolve such Objection Dispute solely in accordance with the Arbiter during the term provisions of its engagement. Buyer this Section 2.8 and Exhibit B hereto and the Seller definitions of the defined terms used in Section 2.8 and Exhibit B hereto, (ii) shall make its determination based solely on the presentations and supporting material provided by Parent and the Unitholders’ Representative shall instruct the Arbiter and not topursuant to any independent review, and the Arbiter shall not, (iii) may not assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either Parent or the Seller Representative, on the other hand, Unitholders’ Representative or less than the smallest value for such item assigned claimed by Buyer, on the one hand, either Parent or the Seller Unitholders’ Representative. The Arbitrator’s Report (and the Purchase Price Adjustment Statement attached thereto) shall, upon delivery thereof to Parent and the Unitholders’ Representative, on be final and binding upon Parent, the other hand. Buyer Surviving Company, the Unitholders’ Representative and the Seller Representative Equityholders for purposes of this Agreement.
(g) The fees, costs and expenses of the Accounting Arbitrator shall also instruct be borne by Parent in the Arbiter to, and proportion that the Arbiter shall, make its determination based solely on written presentations by Buyer and aggregate dollar amount of the Seller Representative items that are successfully disputed by the Unitholders’ Representative (as finally determined by the Accounting Arbitrator) bears to the aggregate dollar amount of the items submitted to the Accounting Arbitrator and by the Unitholders’ Representative in accordance with the guidelines proportion that the aggregate dollar amount of the disputed items that are unsuccessfully disputed by the Unitholders’ Representative (as finally determined by the Accounting Arbitrator) bears to the aggregate dollar amount of the items submitted to the Accounting Arbitrator.
(h) For the purposes of this Agreement, (i) the Purchase Price Adjustment Statement that shall have become final and procedures set forth in this Agreement and not on binding pursuant to the basis last sentence of an independent review. The Closing Balance SheetSection 2.8(c), the Closing third sentence of Section 2.8(d) or the last sentence of Section 2.8(f) shall be referred to as the “Final Purchase Price Adjustment Statement,” (ii) the date on which the Purchase Price Adjustment Statement shall have become final and binding as aforesaid shall be referred to as the “Final Date,” (iii) the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Closing Indebtedness, each as shown on the Final Purchase Price set forth thereon Adjustment Statement, shall become final and binding on be referred to as the parties hereto on “Final Closing Cash,” the date the Arbiter delivers its final resolution in writing to Buyer “Final Closing Net Working Capital,” and the Seller Representative “Final Closing Indebtedness,” respectively, (which final resolution iv) the sum of the Final Closing Cash, plus the Final Closing Net Working Capital Adjustment Amount (if a positive number), minus the Final Closing Indebtedness, minus the absolute value of the Final Closing Net Working Capital Adjustment Amount (if a negative number) shall be requested by referred to as the parties to be delivered not more than thirty “Final Closing Payment,” and (30v) days following submission the sum of such disputed mattersthe Estimated Closing Cash, plus the Estimated Closing Net Working Capital Adjustment Amount (if a positive number), and such resolution by minus the Arbiter shall not be subject to court review or otherwise appealableEstimated Closing Indebtedness, absent manifest error or manifest failure by minus the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf absolute value of the SellersEstimated Closing Net Working Capital Adjustment Amount (if a negative number) shall pay a portion of be referred to as the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses“Estimated Closing Payment.”
(ei) If the Final Closing Payment exceeds the Estimated Purchase Price is less than the Purchase Price Closing Payment (such shortfallexcess, the “Positive Purchase Price Adjustment Amount”), then (i) Buyer Parent shall, within two three (23) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment AmountFinal Date, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) topay, or as directed byshall cause the Surviving Company to pay, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent an amount in cash equal to cause the Escrow Agent Positive Purchase Price Adjustment Amount for distribution to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeEquityholders in accordance with Section 2.8(l).
(fj) If the Estimated Purchase Price is greater than Closing Payment exceeds the Purchase Price Final Closing Payment (such excess, the “Excess Negative Purchase Price Adjustment Amount”), then Buyer Parent shall be entitled to receive out of the moneys in the Purchase Price Adjustment Escrow Account, a payment in cash equal to the Negative Purchase Price Adjustment Amount up to a maximum amount equal to the Purchase Price Adjustment Escrow Fund, and Parent and the Seller Unitholders’ Representative shall, within two three (23) Business Days after of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05Final Date, deliver a joint written instructions to the Escrow Agent to cause notice instructing the Escrow Agent to make such payment. The Escrow Agreement shall provide that in the event of a Negative Purchase Price Adjustment Amount, promptly (and in any event within five (5) Business Days) following the receipt by the Escrow Agent of joint written instructions pursuant to this Section 2.8(j), the Escrow Agent shall pay to Parent the amount due pursuant to this Section 2.8(j).
(k) In the event of a Positive Purchase Price Adjustment Amount, or if the Purchase Price Adjustment Escrow Fund exceeds the Negative Purchase Price Adjustment Amount, or if there is neither a Positive Purchase Price Adjustment Amount nor a Negative Purchase Price Adjustment Amount, Parent and the Unitholders’ Representative shall, within two three (23) Business Days after receipt of such instructionsfollowing the Final Date, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the deliver a joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause notice instructing the Escrow Agent to pay the Remaining Unused Purchase Price Adjustment Escrow Funds from Amount to the Escrow Account to, or as directed by, the Seller RepresentativeEquityholders in accordance with Section 2.8(l).
(gl) Buyer agrees The Escrow Agreement shall provide that in the event of a Positive Purchase Price Adjustment Amount, promptly (and in any event within five (5) Business Days) following the receipt by the Escrow Agent of joint written instructions pursuant to Section 2.8(k) and, if applicable, the payment referred to in Section 2.8(i), the Escrow Agent shall make payments in accordance with such joint written instructions, as follows:
(i) to the account of each Unitholder, with respect to each Unit outstanding immediately prior to the Effective Time for which a Letter of Transmittal that includes such Unitholders’ payment information has theretofore been properly delivered to the Company with a copy to Parent (if at prior to the Closing) or to the Escrow Agent and Parent (if after the Closing), an amount equal to that portion of the Excess Amount sum of (A) the Positive Purchase Price Adjustment Amount, if any, plus (B) from the Unused Purchase Price Adjustment Escrow Funds Amount payable in the Escrow Account respect of such Unit, calculated in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment terms of the Excess Amount Operating Agreement as though (x) the Company had sold all of its assets for an amount equal to the Net Estimated Merger Consideration plus the Positive Purchase Price Adjustment Amount, if any, plus the Unused Purchase Price Adjustment Escrow Amount, and (y) had distributed such amount to the Equityholders pursuant to Section 10.02 of the Operating Agreement, minus the aggregate amounts previously paid in respect of such Unit pursuant to Section 2.6, all as set forth in a schedule (which shall reflect allocations that are consistent with the allocations of the Net Estimated Merger Consideration set forth in the Allocation Certificate) to be prepared and certified by the Unitholders’ Representative and attached to the joint written instruction delivered pursuant to Section 2.8(k) (the “Payment Schedule”); and
(ii) to the purchase price adjustment and Unit Exchange Fund, an amount equal to that portion of the dispute resolution provisions provided for sum of (A) the Positive Purchase Price Adjustment Amount, if any, plus (B) the Unused Purchase Price Adjustment Escrow Amount payable in this respect of the aggregate number of Units outstanding immediately prior to the Effective Time in respect of which no Letters of Transmittal have theretofore been properly delivered, calculated in the manner set forth in Section 1.052.8(l)(i), shall all as set forth in the Payment Schedule, to be the exclusive remedies held in trust for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality benefit of the foregoingholders of such Units and disbursed in accordance with Section 2.7(b);
(iii) to the Surviving Company for payment through the Surviving Company’s payroll system on the Surviving Company’s first regular payroll date following receipt of the joint written instructions, to each Optionholder who held Options immediately prior to the Effective Time for which an Option Payment Letter has theretofore properly been delivered to the Company with a copy to Parent (if at or prior to the Closing) or to the Surviving Company (if after the Closing) as specified therein, an amount equal to that portion of the sum of (A) the Positive Purchase Price Adjustment Amount, if any, plus (B) the Unused Purchase Price Adjustment Escrow Amount, if any, payable in respect of the Class A Units subject to issuance upon exercise of such Options, calculated in the manner set forth in Section 2.8(l)(i), all as set forth in the Payment Schedule; and
(iv) to the Surviving Company to be held in the Option Exchange Fund, an amount equal to that portion of the sum of (A) the Positive Purchase Price Adjustment Amount, if any, plus (B) the Unused Purchase Price Adjustment Escrow Amount, if any, payable in respect of the Class A Units subject to issuance upon the exercise of Options for which no claim by Buyer Option Payment Letters have theretofore properly been delivered, calculated in the manner set forth in Section 2.8(l)(i), all as set forth in the Payment Schedule, to be held in trust for the payment benefit of the Excess Amount (or any portion thereof) shall be asserted against any holders of the Seller Partiessuch Options and disbursed in accordance with Section 2.7(b).
(hm) Any All payments by Parent or the Surviving Company pursuant to this Section 2.8 shall be made by wire transfer of immediately available funds unless otherwise designated by the payee thereof or unless the payment is less than $1,000 in which case payment may be made by check. The parties hereto agree (and agree to cause their respective Affiliates) to treat any payment made pursuant to this Section 1.05 shall be treated 2.8 as an adjustment to the purchase price for federal, state, local and foreign income Tax purposes, except to the extent otherwise required by applicable Law or pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any similar provision of state, local or foreign Law).
(n) The amount contained in the Purchase Price Adjustment Escrow Account shall serve as security for U.S. federal income tax purposesand as the sole and exclusive source of payment of, Parent’s and the Surviving Company’s rights pursuant to Section 2.8.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of On the Closing Cash-on-Hand Date, Seller shall pay to Buyer, as a purchase price adjustment, Two Million Dollars (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”$2,000,000) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiescash.
(b) Within ninety forty-five (9045) days following after the Closing Date, Buyer Seller shall pay to Buyer, as a purchase price adjustment, an additional Two Million Dollars ($2,000,000) in cash.
(c) Within forty-five (45) Business Days after the Closing Date, the Seller shall prepare and deliver to the Seller Representative (i) an unaudited consolidated Buyer, a balance sheet of the Company Entities as of 12:01 a.m. (Pacific Time) on the Adjustment Calculation Time Closing Date (the “Closing Balance Sheet”), ) and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-HandWorking Capital, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of derived from the Closing Balance Sheet and the (“Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and Closing Working Capital shall be prepared by Seller using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation and accrual methodologies that were used in the preparation of the Financial Schedules. At request of the Seller, Buyer shall promptly provide copies of all financial books, records and accounts of Group Companies reasonably necessary for Seller to prepare the Closing Statement Balance Sheet and statement of Closing Working Capital derived from the Closing Balance Sheet.
(d) If Target Working Capital is more than Closing Working Capital, then Seller shall be revised pay to Buyer, within ten (10) Business Days of the Closing Balance Sheet being deemed final and binding on the Parties pursuant to Section 2.04(f), an amount in cash equal to the extent necessary excess of Target Working Capital over Closing Working Capital. If Target Working Capital is less than Closing Working Capital, then Buyer shall pay to reflect Seller, within ten (10) Business Days of the Closing Balance Sheet being deemed final and binding on the Parties pursuant to Section 2.04(f), an amount in cash equal to the excess of Closing Working Capital over Target Working Capital.
(e) In the event that the Buyer objects to any resolution by of the Seller Representative and calculations shown in the Closing Balance Sheet or Closing Working Capital, the following provisions shall apply:
(i) Buyer and/or any final resolution made by may present the Arbiter in accordance with this Section 1.05(d). During the Seller, within thirty (30) days immediately following after the delivery receipt by Buyer of a Notice the Closing Balance Sheet, with written notice of Disagreement disagreement specifying in reasonable detail the nature and extent of the disagreement.
(ii) The Seller and the Buyer shall attempt in good faith to resolve any such disagreements within forty-five (45) Business Days after the receipt by Seller of the Buyer’s objections. If the Seller and the Buyer are unable to resolve any disagreement with respect to the Closing Balance Sheet within such forty-five (45) Business Day period, the items of disagreement alone will be promptly referred for final determination to the Reporting Accountants in accordance with the terms of Section 1.05(c2.04(e)(iii). To the extent that the Reporting Accountants informs the Parties in writing that any items of disagreement relate to matters beyond their scope of engagement as set forth in Section 2.04(e)(v) below, the interpretation of such matters identified by the Reporting Accountants shall then be referred to the Reporting Arbitrator in accordance with the terms of Section 2.04(e)(iii).
(iii) The Reporting Accountants and, to the extent required, the Reporting Arbitrator shall be engaged jointly by the Seller and the Buyer on the terms set out in this Section 2.04(e)(iii) and otherwise on such terms as shall be agreed, provided that neither the Seller nor the Buyer shall unreasonably refuse their agreement to terms proposed by the Reporting Accountants or the Reporting Arbitrator, as applicable, or by the Buyer or the Seller, as the case may be. If the terms of engagement of the Reporting Accountants or the Reporting Arbitrator, as applicable, have not been settled within forty-five (45) Business Days of their identity having been determined (or such longer period as the Seller Representative and the Buyer may agree) then, unless the Seller or the Buyer unreasonably refuse agreement to those terms, those accountants or arbitrators, as applicable, shall be deemed never to have become the Reporting Accountants or the Reporting Arbitrator, as applicable, and new Reporting Accountants or the new Reporting Arbitrator, as applicable, shall be selected in accordance with the provisions of this Agreement.
(iv) Except to the extent that the Seller and the Buyer mutually agree in writingotherwise, the Seller Representative Reporting Accountants and Buyer the Reporting Arbitrator shall seek determine their own procedure and shall make their determination as soon as reasonably practicable.
(v) Apart from procedural matters and as otherwise set out in good faith this Agreement, the Reporting Accountants shall determine only whether any of the arguments for an alteration to resolve the Closing Balance Sheet put forward in writing any differences that they may have the notice referred to in Section 2.04(e)(i) is correct with respect to the matters specified application of GAAP in the Notice of Disagreementwhole or in part, and all if so, what alterations should be made to the Closing Balance Sheet in order to correct the relevant inaccuracy in it. All other matters related to any disagreement with respect to the Closing Balance Sheet and/or Closing Working Capital shall be determined by the Reporting Arbitrator.
(vi) For the avoidance of doubt, the Reporting Accountants and the Reporting Arbitrator shall not be entitled to determine the scope of their own jurisdiction.
(vii) The determination of the Reporting Accountants and the Reporting Arbitrator, as applicable, shall:
A. be made in writing and made available for collection by the Seller and the Buyer at the offices of the Reporting Accountants or the Reporting Arbitrator, as applicable, or by mail at such discussions related thereto time as the Reporting Accountant shall (determine; and
B. unless otherwise agreed by Buyer the Seller and the Buyer, include reasons for each relevant determination.
(viii) The Reporting Accountants shall act as experts and not as arbitrators and their determination of any matter falling within their jurisdiction shall be final and binding on the Seller Representativeand the Buyer, save in the event of manifest error (when the relevant part of their determination shall be void and the matter shall be remitted to the Reporting Accountants for correction).
(ix) be governed by Rule 408 The expenses of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer Reporting Accountants and the Seller Representative Reporting Arbitrator shall instruct be borne as they shall direct at the Arbiter totime they make any determination or, and failing such direction, equally between the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or and the Seller RepresentativeSeller, on the other hand.
(x) The Seller and the Buyer shall co-operate with the Reporting Accountants and the Reporting Arbitrator and comply with their reasonable requests made in connection with the carrying out of their duties under this Agreement. In particular, or less than without limitation, the smallest value for such item assigned by BuyerBuyer shall keep up-to-date all books and records relating to the Group Companies, on subject to reasonable notice and confidentiality arrangements, and shall make available to one another’s accountants and other representatives and the one hand, Reporting Accountants or the Seller RepresentativeReporting Arbitrator, on as applicable, all books and records relating to the Group Companies during normal office hours during the period from the appointment of the Reporting Accountants or Reporting Arbitrator, as applicable, down to the making of the relevant determination.
(xi) Each Party shall, and shall procure that its accountants and the other hand. Buyer advisers, the Reporting Accountants and the Seller Representative shall also instruct the Arbiter to, and the Arbiter Reporting Arbitrator shall, make its determination based solely on written presentations by Buyer keep all information and documents provided to them pursuant to this Section 2.04(e) confidential and shall not use the Seller Representative that are same for any purpose, except for disclosure or use in connection with the proceedings of the Reporting Accountants in accordance with the guidelines and procedures set forth this Section 2.04(e) or another matter arising out of this Agreement, or in defending any claim or argument or alleged claim or argument relating to this Agreement and not on the basis of an independent review. or its subject matter.
(f) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become Sheet will be deemed to be final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative Parties upon:
(which final resolution shall be requested by the parties to be delivered not more than i) thirty (30) days following submission of such disputed matters), and such resolution after the receipt by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf Buyer of the Sellers) shall pay a portion of Closing Balance Sheet if the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter Buyer has not awarded delivered to the Seller Representative bears a notice of disagreement; or
(ii) resolution of any disagreement by mutual written agreement of the Seller and the Buyer after a timely notice of disagreement has been delivered to the aggregate amount actually disputed Buyer;
(iii) notification by the Seller Representative in the Seller Representative’s submission to the Arbiter, Reporting Accountants and the Company shall pay Reporting Arbitrator of their final determination of the remaining portion items of such fees and expenses.disagreement submitted to them; or
(eiv) If acceptance in writing by the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed Sheet as submitted by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeSeller.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Volt Information Sciences, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a written statement (the “Purchaser’s Closing Payment Calculation Statement”) setting forth forth, in reasonable detail Buyerdetail, Purchaser’s calculation calculations (“Purchaser’s Proposed Calculations”) of (i) the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Capital, (ii) the Debt Amount, (iii) the Transaction Expenses, and (iv) the calculation of cash payment actually due to the Purchase Price resulting therefrom, Sellers in each case, accordance with Section 2.1 based on the amounts in the foregoing clauses (i) — (iii) (“Purchaser’s Closing Balance Sheet. The Payment”).
(b) After receipt of Purchaser’s Closing Balance SheetPayment Calculation Statement, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Seller Representative shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the have thirty (30) days immediately following (the “Review Period”) to review Purchaser’s Closing Payment Calculation Statement. During the Review Period, Purchaser shall (i) permit the Seller RepresentativeRepresentative and his representatives (subject to such representatives executing a customary confidentiality agreement) to have reasonable access during normal business hours to the books, records and work papers pertaining to or used in connection with the preparation of Purchaser’s receipt of the Closing Balance Sheet Payment Calculation Statement and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (xii) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours to Purchaser’s and upon reasonable prior notice to the books Company’s employees and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent accountants as reasonably requested by the Seller Representative Representative; provided that such access will be in a manner that does not interfere with the normal business operations of Purchaser or any of its Representatives in connection with their review the Company. On or prior to the last day of the Closing Balance Sheet and the Closing StatementReview Period, and (y) cooperate with the Seller Representative shall notify Purchaser in writing of any disagreement with Purchaser’s Closing Payment Calculation Statement or with the accuracy of any of Purchaser’s Proposed Calculations. Any such notice of disagreement shall specify those items or amounts as to which the Seller Representative disagrees and its Representatives in connection with their review shall include the Seller Representative’s proposed changes to the calculation of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance SheetCompany Cash, the Closing Statement and the Closing Cash-on-HandDebt Amount, the Closing IndebtednessTransaction Expenses, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon Price, as applicable (the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of DisagreementSellers’ Proposed Calculations”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement); provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement Representative may only include disagreements dispute any matters in Purchaser’s Proposed Calculations based on (Ax) non-compliance with the failure definitions of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each caseDebt Amount and Transaction Expenses, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (By) mathematical errors in the computation of Purchaser’s Proposed Calculations. The Seller Representative shall be deemed to have agreed with all other items and amounts included in Purchaser’s Closing Payment Calculation Statement that are not identified in the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) Sellers’ Proposed Calculations. If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)does not dispute any aspect thereof or the amount of any of Purchaser’s Proposed Calculations during the Review Period, then the Purchaser’s Closing Balance Sheet Payment Calculation Statement and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Purchaser’s Proposed Calculations shall become final be conclusive and binding upon the parties hereto on Parties.
(c) In the earlier event of (x) a dispute with respect to the date all matters specified in the Notice of Disagreement are finally resolved in writing by Sellers’ Proposed Calculations, Purchaser and the Seller Representative shall attempt to reconcile differences and Buyer any resolution by them as to any disputed amounts shall be final, binding and (y) conclusive on the date all matters specified in the Notice of Disagreement not resolved by written agreement of Parties. If Purchaser and the Seller Representative and Buyer are finally resolved in writing by unable to reach a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (resolution to such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the effect within thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 after Purchaser’s receipt of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodSellers’ Proposed Calculations, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer Purchaser and the Seller Representative shall instruct engage BDO USA LLP (the Arbiter to“Independent Accounting Firm”), acting as experts and not as arbitrators, to resolve the Arbiter shall, make a final determination of remaining disputed items (the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute“Remaining Disputed Items”) in accordance with the guidelines and procedures set forth in terms of this Agreement. Buyer The Independent Accounting Firm shall be directed to, within thirty (30) days after such submission, determine and report to the Parties upon the Remaining Disputed Items with respect to Purchaser’s Closing Payment Calculation Statement, with a written explanation in reasonable detail of the resolution of each Remaining Disputed Item, and such report shall be final, binding and conclusive on the Parties hereto absent manifest error. The Independent Accounting Firm shall be authorized to resolve only the Remaining Disputed Items, and such resolution shall be based solely on the materials submitted by the Parties and not on independent review, and, in any event, shall be no less than the lesser of the amount claimed by either Purchaser or the Seller Representative, and shall be no greater than the greater of the amount claimed by either Purchaser or the Seller Representative. The statement and amount selected by the Independent Accounting Firm are referred to herein as the “Final Purchase Price Calculation Statement” and the Seller Representative will cooperate with the Arbiter during the term of its engagement“Final Purchase Price,” respectively. Buyer Purchaser and the Seller Representative shall instruct execute, if requested by the Arbiter Independent Accounting Firm, an engagement letter containing reasonable and customary terms (including that all negotiations and submissions to the Independent Accounting Firm shall be treated as confidential information). The Independent Accounting Firm shall determine the allocation of its costs and expenses based upon the percentage by which the portion of the contested amount not to, and the Arbiter shall not, assign a value awarded to any item in dispute greater than the greatest value for such item assigned by BuyerPurchaser, on the one hand, or the Seller Representative, on the other hand, bears to the amount actually contested by or less on behalf of such Parties. For example, if the Seller Representative claims the Final Purchase Price is $1,000 more than the smallest value for such item assigned amount determined by BuyerPurchaser, on and Purchaser contests only $500 of the one hand, or amount claimed by the Seller Representative, on and if the Independent Accounting Firm ultimately resolves the dispute by awarding the Seller Representative $300 of the $500 contested, then the costs and expenses of arbitration will be allocated 60% (i.e., 300/500) to Purchaser and 40% (i.e., 200/500) to the Seller Representative. Absent fraud or manifest error, the decision rendered by the Independent Accounting Firm pursuant to this Section 2.4(c) is final, conclusive and binding. Any Party may seek specific enforcement or take other hand. Buyer necessary legal action to enforce any decision by the Independent Accounting Firm under this Section 2.4.
(d) Upon the determination, in accordance with Section 2.4, of the Final Purchase Price and the determination of the Final Net Working Capital, the Final Debt Amount and the Final Company Transaction Expenses pursuant to Section 2.4(c):
(i) If the Final Purchase Price is greater than the Estimated Purchase Price, then Purchaser shall, within five (5) Business Days of the date upon which the Final Purchase Price is determined, pay the amount of any such excess to the Seller Representative (for further distribution to each Seller of its Pro Rata Share of such payment) in accordance with written instructions provided by the Seller Representative to Purchaser, and Purchaser and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver provide joint written instructions to the Escrow Agent to cause pay the Adjustment Escrow Agent Amount to make payment the Seller Representative (for further distribution to each Seller of its Pro Rata Share of such payment); and
(ii) If the Escrow Funds from Final Purchase Price is less than the Escrow AccountEstimated Purchase Price, then the Seller Representative and Purchaser shall, within two five (25) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If date upon which the Estimated Final Purchase Price is greater than the Purchase Price (such excessdetermined, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver provide joint written instructions to the Escrow Agent to cause pay the amount of any such deficiency to Purchaser; provided that, if such deficiency (stated as a positive number) is (a) greater than the Adjustment Escrow Agent to make paymentAmount, within two (2) Business Days after receipt the Sellers shall pay Purchaser the amount of such instructionsexcess, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less or (b) lesser than the Adjustment Escrow Funds (such shortfallAmount, the “Remaining Escrow Funds”), then Buyer Purchaser and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver shall provide joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining remaining portion of the Adjustment Escrow Funds from Amount to the Escrow Account toSeller Representative (for further distribution to each Seller of its Pro Rata Share of such payment).
(e) Any payment to be made pursuant to Section 2.4 shall be, subject to Section 2.7, paid in cash and made to the account designated in writing by Purchaser or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment , as applicable. Any rights accruing to any Party under this Section 2.4 shall be in addition to and independent of the Excess Amount (if any) from rights to indemnification under Article X and any payments made to any Party under this Section 2.4 shall not be subject to the Escrow Funds requirements of Article X; provided, however, the recoverable Damages with respect to any indemnification claim pursuant to Article X shall be net of the amount of any specific reserves or any specific accruals established on or included as a liability in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment calculation of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment Final Purchase Price with respect to the Purchase Price for U.S. federal income tax purposesfacts and circumstances giving rise to such indemnification claim.
Appears in 1 contract
Purchase Price Adjustment. (a) At least No later than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement prepared in accordance with this Section 2.4(a) (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness Statement shall be prepared and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement, the Sample Calculation and in accordance with the Accounting Principles. From The Estimated Closing Statement shall set forth the Seller’s good faith estimate of: (i) the Closing Working Capital (such estimate, the “Estimated Closing Working Capital”); (ii) the Closing Cash (such estimate, the “Estimated Closing Cash”); (iii) the Closing Indebtedness (such estimate, the “Estimated Closing Indebtedness”); (iv) the Closing Transaction Costs (such estimate, the “Estimated Closing Transaction Costs”); (v) the Escrow Amount (which, for the avoidance of doubt, shall not be an estimate, but shall be the amount set forth in this Agreement); and after delivery (vi) the resulting Closing Payment. The Estimated Closing Statement shall also include instructions that identify (A) the bank account(s) for the Seller and the amount of the Closing Payment to be paid to the Seller’s bank account(s) and (B) the bank accounts designated to facilitate direct payment by the Buyer of the Estimated Closing Balance Sheet Indebtedness, the Estimated Closing Transaction Costs, and the Escrow Amount to the applicable payees on behalf of the Seller and the Company Entities. The Estimated Closing Working Capital, the Estimated Closing Cash, the Estimated Closing Indebtedness and the Estimated Closing Statement until the Closing, the Company shall Transaction Costs (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts as set forth in the Estimated Closing Statement, Statement delivered by the Seller to the Buyer’s obligation to pay the Purchase Price ) shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person binding on the Parties for the division purposes of such proceeds and Buyer shall own determining the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesClosing Payment.
(b) Within ninety (90) As soon as reasonably practicable following the Closing, but in any event no later than 90 days following after the Closing Date, the Buyer shall will prepare and deliver deliver, or cause to be prepared and delivered, to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) ), setting forth the Buyer’s good faith calculation of each of the Closing Amounts and the Closing Payments. The Closing Statement shall be prepared and calculated in reasonable detail accordance with the Accounting Principles. In the event the Buyer does not deliver the Closing Statement to the Seller within 90 days after the Closing Date, the Estimated Closing Statement shall be deemed to have been delivered by the Buyer to the Seller on the date that is 90 days after the Closing Date.
(c) Upon receipt from the Buyer, the Seller shall have 45 days to review the Closing Statement (the “Review Period”). At the request of the Seller, the Buyer shall (i) reasonably cooperate with and assist, and shall cause its Subsidiaries, including the Company Entities, and each of their respective Representatives to reasonably cooperate with and assist, the Seller and its Representatives in the review of the Closing Statement (including by executing such documents and other instruments and taking further actions as may be reasonably required to cause the Buyer and the Company Entities and their respective accountants to deliver to the Seller and its Representatives copies of their work papers relating to the Company Entities) and (ii) provide the Seller and its Representatives with any information reasonably requested by the Seller that is necessary for its review of the Closing Statement; provided, that such access shall be in a manner that does not materially interfere with the normal business operations of the Buyer or the Company. If the Seller disagrees with the Buyer’s computation of the Closing Amounts (each as set forth in the Closing Statement), the Seller shall, on or prior to the last day of the Review Period, deliver a written notice to the Buyer (the “Notice of Objection”) that sets forth the Seller’s objections to the Buyer’s calculation of the Closing Cash-on-HandAmounts, as applicable. Any Notice of Objection shall specify those items or amounts with which the Closing Indebtedness, Seller disagrees and shall set forth the Closing Net Working Capital and the Seller’s calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Amounts and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements Payment based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Pricesuch objections.
(d) If the Seller does not deliver a timely Notice of Disagreement is delivered by Objection to the Seller Representative Buyer with respect to Buyer an item contained in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (within the Review Period, the Seller shall be deemed to have accepted the Buyer’s calculation of the underlying item of the Closing Amounts, as revised applicable, and such calculation shall be final, conclusive and binding. If the Seller delivers a Notice of Objection to the Buyer within the Review Period, the Buyer and the Seller shall, during the 30 days following such delivery or any mutually agreed extension thereof, use their good faith efforts to reach agreement on the disputed items and amounts in accordance with this Section 1.05(d))order to determine the amount of the disputed Closing Amounts, as applicable, and the Closing CashPayment. If, at the end of such 30-on-Handday period or any mutually agreed extension thereof, the Closing Indebtedness, the Closing Net Working Capital Buyer and the Purchase Price set forth thereon Seller are unable to resolve their disagreements, they shall become final jointly retain and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by refer their disagreements to KPMG, US, LLP or if such Person refuses such engagement, a nationally recognized accounting, consulting or valuation independent accounting firm (other than a so-called “Big Four” accounting firm) mutually selected by acceptable to the Buyer and the Seller Representative and Buyer (such firm, the “ArbiterIndependent Expert”). The Closing Balance Sheet Buyer and the Seller shall instruct the Independent Expert promptly to review this Section 2.4, as well as the Closing Statement shall be revised to the extent necessary to reflect Statement, Notice of Objection and any resolution other materials reasonably requested by the Seller Representative Independent Expert, and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingto determine, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have solely with respect to the matters specified disputed items and amounts so submitted, whether and to what extent, if any, the Closing Amounts set forth in the Notice of Disagreement, and all such discussions related thereto Closing Statement require adjustment. The Independent Expert shall (unless otherwise agreed base its determination solely on written submissions by the Buyer and the Seller Representative) be governed by Rule 408 of and the Federal Rules of Evidence (as in effect as of the date terms of this Agreement)Agreement and not on an independent review. At The Parties shall make available to the end of such thirty (30)-day period or such agreed-upon longer periodIndependent Expert all relevant books and records and other items reasonably requested by the Independent Expert. As promptly as practicable, but in no event later than 45 days after its retention, the Seller Representative and Buyer Independent Expert shall submit deliver to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination report that sets forth its resolution of the disputed items included in and amounts and its calculation of the Closing Balance Sheet and Amounts; provided, however, that the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter Independent Expert may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by the Buyer, on the one hand, or and the Seller RepresentativeSeller, on the other hand, or nor less than the smallest value for such item assigned claimed by the Buyer, on the one hand, or and the Seller RepresentativeSeller, on the other hand. Buyer and The decision of the Seller Representative Independent Expert shall also instruct the Arbiter tobe final, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final conclusive and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative Parties (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed mattersabsent manifest error), and such resolution no determinations by the Arbiter shall not be subject to court review Independent Expert, including any work or otherwise appealable, absent manifest error or manifest failure analyses performed by the Arbiter to adhere Independent Expert in connection with its resolution of any dispute under this Section 2.4(d), shall be admissible as evidence in any Proceeding among the Parties, except to the requirements of extent necessary to enforce payment obligations under this AgreementSection 2.4. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees costs and expenses of the Arbiter equal to Independent Expert shall be allocated between the Buyer, on the one hand, and the Seller, on the other hand, based upon the percentage by which that the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter aggregate contested amount not awarded to the Seller Representative such Party bears to the aggregate amount actually disputed contested by such Party, as determined by the Seller Representative in Independent Expert. For example, if (i) the Seller Representative’s submission submits a Notice of Objection for $1,000, (ii) the Buyer contests only $500 of the amount claimed by the Seller, and (iii) the Independent Expert ultimately resolves the dispute by awarding the Seller $300 of the $500 contested, then the costs and expenses of the Independent Expert would be allocated 60% (i.e., 300/500) to the ArbiterBuyer and 40% (i.e., 200/500) to the Seller. The Buyer and the Company shall pay Seller agree to execute, if requested by the remaining portion Independent Expert, a reasonable engagement letter, including customary indemnities in favor of such fees and expensesthe Independent Expert.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to For purposes of this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.Agreement:
Appears in 1 contract
Purchase Price Adjustment. (ai) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing (or, if later, two (2) Business Days after delivery of the Company Closing Date Notice), Seller shall prepare and deliver to Buyer (ia) an estimated consolidated balance sheet of the Company Entities August Cayman Intermediate and its Subsidiaries as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (iib) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the CompanySeller’s good faith estimates estimate of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”), the Closing Net Indebtedness (the “Estimated Closing Net Indebtedness”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each casewhich Estimated Purchase Price, based on for the avoidance of doubt, shall be calculated as the result equal to (i) the Base Purchase Price, minus (ii) the Estimated Closing Balance Sheet and including Net Indebtedness, plus (iii) the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and amount (if any) by which the Estimated Closing Net Working Capital exceeds $78,400,000, minus (iv) the amount (if any) by which $68,400,000 exceeds the Estimated Closing Net Working Capital. The Estimated Closing Balance Sheet shall each be calculated prepared on a consolidated basis in accordance with GAAP applied on a basis consistent with the methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the Latest Balance Sheet. The Estimated Closing Statement shall, with respect to the Estimated Closing Net Working Capital and any Cash included in the Estimated Closing Net Indebtedness, be derived from the Estimated Closing Balance Sheet, and shall, with respect to the Estimated Closing Net Working Capital and the Estimated Closing Net Indebtedness and the Estimated Purchase Price resulting therefrom, be prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, Seller shall, and shall cause the Company shall Entities to, (x1) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records records, supporting data, facilities and employees of the Company Entities (including all work papers and to senior management other documents and all relevant personnel of responsible for accounting and finance) and the Company Entities’ accountants and advisors, in each case, case to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y2) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(bii) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (ia) an unaudited consolidated balance sheet of the Company Entities August Cayman Intermediate and its Subsidiaries as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (iib) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-HandNet Working Capital, the Closing Net Indebtedness and the Purchase Price resulting therefrom. The Closing Balance Sheet shall be prepared on a consolidated basis in accordance with GAAP applied on a basis consistent with the methodologies, practices, estimation techniques, assumptions and principles used in the preparation of the Latest Balance Sheet. The Closing Statement shall, with respect to the Closing Net Working Capital and any Cash included in the Closing Net Indebtedness, be derived from the Closing Balance Sheet, and shall, with respect to the Closing Net Working Capital and the calculation of Closing Net Indebtedness and the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller RepresentativeAfter Seller’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x1) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records records, supporting data, facilities and employees of the Company Entities Buyer and to senior management personnel of its Subsidiaries (including the Company Entities) (including all work papers and other documents and all relevant personnel responsible for accounting and finance) and their accountants and advisors, in each case, case to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y2) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(ciii) The Closing Balance Sheet, the Closing Statement Sheet and the Closing Cash-on-HandStatement, and the Closing IndebtednessNet Working Capital, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Indebtedness and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the sixty (60) days following Seller’s receipt thereof unless Seller Representative’s delivery gives written notice of its good faith disagreement (a “Notice of Disagreement, and (iii”) a Notice of Disagreement may only include disagreements based on (A) the failure of to Buyer prior to such date; provided that the Closing Cash-on-Hand, Balance Sheet and the Closing Indebtedness Statement, and the Closing Net Working Capital, in each casethe Closing Net Indebtedness and the Purchase Price set forth thereon, as reflected on shall become final and binding upon the parties upon Seller’s delivery, prior to the expiration of such sixty (60)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet and the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing IndebtednessNet Working Capital, the Closing Net Working Capital or Indebtedness and the Purchase PricePrice set forth thereon. Any Notice of Disagreement shall specify in reasonable detail the nature and amount of any disagreement so asserted.
(div) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)Seller, then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d1E(iv)), and the Closing Cash-on-Hand, the Closing IndebtednessNet Working Capital, the Closing Net Working Capital Indebtedness and the Purchase Price set forth thereon thereon, shall become final and binding upon the parties hereto on the earlier of (xa) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and Seller and (yb) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Buyer and Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Buyer and Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any mutually agreed final resolution by the Buyer and Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d1E(iv). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) Disagreement, or such longer period as the Buyer and Seller Representative and Buyer may agree in writing, the Buyer and Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that which they may have with respect to the matters any matter specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller RepresentativeSeller) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement)) and any applicable similar state rule. At the end of such thirty (30)-day period or such agreed-upon longer period, the Buyer and Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (but only to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller RepresentativeSeller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller RepresentativeSeller, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and (i.e., not on the basis of an independent review). The Closing Balance Sheet, the Closing Statement Sheet and the Closing Cash-on-HandStatement, and the Closing IndebtednessNet Working Capital, the Closing Net Working Capital Indebtedness and the Purchase Price set forth thereon thereon, shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal pursuant to the percentage this Section 1E(iv) shall be paid 50% by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Buyer and 50% by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesSeller.
(ev) If the Estimated Purchase Price is less than the Purchase Price as finally determined in accordance with this Section 1E (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance SheetSheet and the Closing Statement, and the Closing Net Working Capital, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital Indebtedness and the Purchase Price set forth thereon thereon, become final and binding on the parties pursuant to this Section 1.051E, (a) Buyer shall make payment to Seller, by wire transfer of immediately available funds to an account specified in writing by Seller, of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (iib) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, as soon as reasonably practicable (and in any event within two (2) Business Days after receipt of such joint written instructions) to Seller, toby wire transfer of immediately available funds to an account specified in writing by Seller, or as directed by, of all of the Seller RepresentativeAdjustment Escrow Funds then contained in the Adjustment Escrow Account.
(fvi) If the Estimated Purchase Price is greater than the Purchase Price as finally determined in accordance with this Section 1E (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance SheetSheet and the Closing Statement, and the Closing Net Working Capital, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital Indebtedness and the Purchase Price set forth thereon thereon, become final and binding on the parties pursuant to this Section 1.051E, Buyer and Seller shall (a) deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, payment as soon as reasonably practicable (and in any event within two (2) Business Days after receipt of such joint written instructions, ) to Buyer, by wire transfer in of immediately available funds to an account specified in writing by Buyer, of the Excess Amount from the Adjustment Escrow Funds then contained in the Adjustment Escrow Account. If , and (b) if the Excess Amount is less than the Adjustment Escrow Funds (such shortfall, then contained in the “Remaining Adjustment Escrow Funds”), then Buyer and the Seller Representative shallAccount, simultaneously with the delivery of the joint written instructions referred to in contemplated by the immediately preceding sentenceforegoing clause (a), deliver joint written instructions to the Escrow Agent to cause make payment as soon as reasonably practicable (and in any event within two (2) Business Days after receipt of such joint written instructions) to Seller, by wire transfer of immediately available funds to an account specified in writing by Seller, of all of the Escrow Agent to pay the Remaining Adjustment Escrow Funds from remaining in the Adjustment Escrow Account to, or as directed by, after giving effect to the Seller Representativepayment to Buyer contemplated by the immediately foregoing clause (a).
(gvii) Buyer agrees that (ia) the payment of net indebtedness adjustment and the Excess Amount (if any) from the Escrow Funds working capital adjustment provided for in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment this Section 1E, and the dispute resolution provisions provided for in this Section 1.051E, shall be the sole and exclusive remedies for the matters addressed or that could be addressed by this Section 1.051E, (b) the payment of the Excess Amount (if any) from the Adjustment Escrow Funds then contained in the Adjustment Escrow Account pursuant to and in accordance with this Section 1E shall be the sole and exclusive remedy of Buyer for payment of the Excess Amount (if any), and (c) the Adjustment Escrow Funds contained from time to time in the Adjustment Escrow Account shall be Buyer’s sole and exclusive source of recovery for any amounts owing to Buyer pursuant to this Section 1E, even if the Excess Amount exceeds the Adjustment Escrow Funds contained in the Adjustment Escrow Account. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(hviii) Any payment made pursuant Buyer agrees that following the Closing it will not, and it will cause its Subsidiaries (including the Company Entities) not to, take any actions with respect to the accounting books, records, methodologies, practices, estimation techniques, assumptions and principles of the Company Entities that would obstruct or prevent the preparation of the Closing Balance Sheet or the Closing Statement as provided in this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.1E.
Appears in 1 contract
Samples: Share Purchase Agreement (Sensata Technologies Holding N.V.)
Purchase Price Adjustment. (a) At least three Within sixty (360) Business Days, but no more than five (5) Business Days, prior to days after ------------------------- the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer Seller shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Buyer a statement (the “Closing "Adjustment Statement”") setting forth in reasonable detail Buyer’s calculation which reflects (i) the difference between (A) the book value, as determined by an independent evaluator designated by the Seller and approved by the Buyer as of the Closing Cash-on-HandDate, of all fuel inventory used at or in connection with the Purchased Assets and (B) the Estimated Inventory Adjustment Amount (such difference is referred to as the "Inventory Adjustment Amount"), (ii) the difference between (A) the book value, as determined by an independent evaluator designated by the Seller and approved by the Buyer as of the Closing Date, of the materials and supplies used at or in connection with the Purchased Assets and (B) the Estimated Materials and Supplies Adjustment Amount (such difference is referred to as the "Materials and Supplies Adjustment Amount") and (iii) the difference between (A) the Maintenance and Capital Expenditures Amount and (B) the Estimated Maintenance and Capital Expenditures Amount (such difference is referred to as the "Maintenance and Capital Expenditures Adjustment Amount"). The Inventory Adjustment Amount, the Closing IndebtednessMaterials and Supplies Adjustment Amount and the Maintenance and Capital Expenditures Adjustment Amount are referred to collectively as the "Adjustment Amount." The Adjustment Statement shall be prepared using the same generally accepted accounting principles, policies and methods as the Closing Net Working Capital and Seller has historically used in connection with the calculation of the Purchase Price resulting therefrom, in each case, based items reflected on the Closing Balance SheetAdjustment Statement. The Closing Balance SheetBuyer agrees to cooperate with the Seller in connection with the preparation of the Adjustment Statement and related information, and shall provide to the Seller such books, records and information as may be reasonably requested from time to time.
(b) The Buyer may dispute the Inventory Adjustment Amount, the Closing Cash-on-HandMaterials and Supplies Adjustment Amount or the Maintenance and Capital Expenditures Amount; provided, however, that the Buyer shall notify the Seller -------- ------- in writing of the disputed amount, and the basis of such dispute, within ten (10) Business Days of the Buyer's receipt of the Adjustment Statement. In the event of a dispute with respect to the Inventory Adjustment Amount, the Closing Indebtedness Materials and Supplies Adjustment Amount or the Maintenance and Capital Expenditures Amount, the Buyer and the Closing Net Working Capital Seller shall each attempt to reconcile their differences and any resolution by them as to any disputed amounts shall be calculated in accordance with final, binding and conclusive on the Agreed Accounting Principles parties. If the Buyer and in the Seller are unable to reach a manner consistent with the applicable definitions contained in this Agreement. During the resolution of such differences within thirty (30) days immediately following the Seller Representative’s of receipt of the Closing Balance Sheet Buyer's written notice of dispute to the Seller, the Buyer and the Closing StatementSeller shall submit the amounts remaining in dispute for determination and resolution to the Independent Accounting Firm, Buyer shallwhich shall be instructed to determine and report to the parties, within thirty (30) days after such submission, upon such remaining disputed amounts, and such report shall cause be final, binding and conclusive on the Company Entities to, (x) provide parties hereto with respect to the amounts disputed. The fees and disbursements of the Independent Accounting Firm shall be allocated between the Buyer and the Seller Representative so that the Buyer's share of such fees and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice disbursements shall be in the same proportion that the aggregate amount of such remaining disputed amounts so submitted by the Buyer to the books and records of Independent Accounting Firm that is unsuccessfully disputed by the Company Entities and to senior management personnel of Buyer (as finally determined by the Company Entities, in each case, Independent Accounting Firm) bears to the extent reasonably requested total amount of such remaining disputed amounts so submitted by the Seller Representative or any of its Representatives in connection with their review of Buyer to the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementIndependent Accounting Firm.
(c) The Closing Balance SheetWithin ten (10) Business Days after the Buyer's receipt of the Adjustment Statement, the Closing Statement and Buyer shall pay all undisputed portions of the Closing Cash-on-HandAdjustment Amount. If there is a dispute with respect to any amount on the Adjustment Statement, within five (5) Business Days after the final determination of such disputed amounts on the Adjustment Statement, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Buyer shall become final and binding upon the parties hereto thirty (30) days following pay to the Seller Representative’s receipt thereof unless an amount equal to the Seller Representative gives written notice disputed portion of its disagreement (a “Notice of Disagreement”) the Adjustment Amount as finally determined to Buyer prior be payable with respect to such date, which notice shall describe in reasonable detail the nature of such disagreementAdjustment Statement; provided, however, that (i) the Closing Balance Sheetif such amount shall be less than -------- ------- zero, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon then the Seller Representative’s delivery, prior shall pay to the expiration Buyer the amount by which such amount is less than zero within five (5) Business Days of such thirty (30)-day periodfinal determination. All payments made pursuant to this Section 3.2(c) shall be paid together, of written notice to Buyer of its acceptance of with interest thereon for the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected period commencing on the Closing StatementDate through the date of payment, to be calculated at the prime rate of The Chase Manhattan Bank in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of effect on the Closing Cash-on-HandDate, the Closing Indebtedness, the Closing Net Working Capital in cash by federal or the Purchase Priceother wire transfer of immediately available funds.
(d) If a timely Notice Buyer acknowledges that if the Closing occurs after the closing of Disagreement is delivered the transactions contemplated by the Seller Representative to Xxxx Xxxxxxx Asset Sales Agreement, Buyer in accordance with shall make the payment contemplated by Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x3.2(d) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised Xxxx Xxxxxxx Asset Sales Agreement pursuant to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) Xxxx Xxxxxxx Asset Sales Agreement in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf terms of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesXxxx Xxxxxxx Asset Sales Agreement.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least Not later than three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closingscheduled Closing Date, the Company shall prepare and Seller will deliver to Buyer (i) an estimated consolidated balance sheet a written statement setting forth Seller’s good-faith estimate, applying the Accounting Principles, of the Company Entities as of following items and the Adjustment Calculation Time components thereof (collectively, the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Pre-Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities): [***].
(b) Within ninety seventy-five (9075) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a written statement (the “Closing Adjustment Statement”) setting forth forth, in reasonable detail and with reasonable supporting information, Buyer’s calculation good-faith calculations of the Closing Cash-on-Hand, actual amount of [***]. Buyer shall prepare the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and Adjustment Statement in a manner consistent with the applicable terms of (including the definitions contained in in) this Agreement. During the Seller shall have thirty (30) days immediately following from the date on which the Adjustment Statement is delivered to Seller Representative’s receipt of (the Closing Balance Sheet and “Review Period”) to review the Closing Adjustment Statement. During such Review Period, Buyer shall, and shall cause the Company Entities to, (xi) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books books, records (including work papers, schedules, memoranda and records other documents), supporting data, facilities and employees of the Company Entities Buyer and to senior management personnel its Affiliates for purposes of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Adjustment Statement, ; and (yii) reasonably cooperate with the requests of Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementsuch review.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Seller shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives deliver to Buyer a written notice prior to 5:00 p.m., New York City time on the last day of its disagreement the Review Period stating that it either accepts the Adjustment Statement (a the “Notice of DisagreementAcceptance”) or that it objects to Buyer prior an item or items shown or reflected in the Adjustment Statement by describing each of its objections (such item or items, the “Disputed Items” and, such notice, the “Dispute Notice”). Seller shall have been deemed to such datedeliver the Notice of Acceptance if it fails to deliver the Notice of Acceptance or the Dispute Notice by the deadline set forth above. The Dispute Notice shall specify what Seller reasonably believes is the correct amount for each Disputed Item, which notice shall describe in reasonable detail be based only on (x) mathematical or clerical errors or (y) that the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance calculation of the Closing Balance Sheet, amounts included in the Closing Adjustment Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated were not determined in accordance with the Agreed Accounting Principles and or otherwise were not determined in a manner consistent with the applicable terms of (including the definitions contained in in) this Agreement and/or (B) mathematical errors Agreement. Any component of the calculations set forth in the computation Adjustment Statement that is not the subject of a delivered Dispute Notice by Seller shall be final and binding upon Seller and Buyer, unless the resolution of any Disputed Item affects an undisputed component of the Closing Cash-on-HandAdjustment Statement, in which case such undisputed component shall, notwithstanding the Closing Indebtednessfailure to object to such component in the Dispute Notice, be considered a “Disputed Item” to the Closing Net Working Capital or the Purchase Priceextent affected by such resolved Disputed Item.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement Disputed Items shall be revised to resolved as follows:
(i) In the extent necessary to reflect any resolution by event Seller delivers the Dispute Notice, Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek attempt in good faith to resolve each Disputed Item. Any resolution agreed by Buyer and Seller in writing any differences that they may have shall be final, binding and conclusive for all purposes of determining the payments in Section 2.5(e) with respect to the matters specified subject matter of such Disputed Item so resolved.
(ii) In the event that, for any reason, Seller and Buyer are unable to resolve in writing all of the Notice of Disagreement, and all Disputed Items within twenty (20) Business Days (or such discussions related thereto shall (unless otherwise agreed by other period as Buyer and Seller may agree in writing) after the Seller Representative) be governed by Rule 408 delivery of the Federal Rules of Evidence Dispute Notice (the “Resolution Period”), each unresolved Disputed Item shall be referred to Xxxxx Xxxxxxxx LLP. If Xxxxx Xxxxxxxx LLP is unwilling or unable to serve as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodIndependent Accountant, the Seller Representative and Buyer shall submit to jointly select and retain a nationally recognized accounting firm that is not the Arbiter for review and resolution auditor or independent accounting firm of Buyer or any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by BuyerAffiliates, on the one hand, nor of Seller or the Seller Representativeany of its Affiliates, on the other hand, and impartial to serve as the Independent Accountant (Xxxxx Xxxxxxxx LLP or less than such other accounting firm engaged in accordance with this Section 2.5(d), the smallest value for “Independent Accountant”).
(iii) If, (i) within ten (10) Business Days after the date Xxxxx Xxxxxxxx LLP informs Seller and Buyer that it is unable or unwilling to serve as the Independent Accountant and (ii) Seller and Buyer cannot mutually agree on an alternate Person to serve as the Independent Accountant, either Seller or Buyer may request the American Arbitration Association to appoint as the Independent Accountant, within fifteen (15) days from the date of such item assigned by Buyerrequest or as soon as practicable thereafter, on a partner in a nationally recognized accounting firm that is not the auditor or independent accounting firm of Buyer or any of its Affiliates, one the one hand, nor of Seller or the Seller Representativeany of its Affiliates, on the other hand, who is a certified public accountant and who is independent of Seller and Buyer and impartial to serve as the Independent Accountant.
(iv) If any Disputed Item is referred to the Independent Accountant, Buyer and Seller shall prepare separate written reports of each such Disputed Item and deliver such reports to the Independent Accountant and each other within fifteen (15) Business Days after the date the Independent Accountant is retained. Each of Buyer and Seller shall use commercially reasonable efforts to cause the Independent Accountant, acting as an expert and not as an arbitrator, as soon as reasonably practicable and in any event within thirty (30) days after receiving such written reports, to determine the manner in which the Disputed Items shall be treated in the Adjustment Statement; provided, however, that the dollar amount of each Disputed Item shall be determined within the range of dollar amounts proposed by Seller and Buyer. Buyer and Seller acknowledge and agree that (i) the review by and determination of the Independent Accountant shall be limited only to the Disputed Items in the reports prepared and submitted to the Independent Accountant by Buyer and Seller Representative and (ii) the determinations by the Independent Accountant shall also instruct the Arbiter to, and the Arbiter shall, make its determination be based solely on written presentations (1) such reports submitted by Buyer and Seller and the Seller Representative that are in accordance with basis for Buyer’s and Seller’s respective positions and (2) the guidelines and procedures set forth in terms of (including the definitions in) this Agreement Agreement, and not on the basis of an independent review. If requested by the Independent Accountant, each of Buyer and Seller shall enter into an engagement letter with the Independent Accountant containing customary terms and conditions for this type of engagement. The Closing Balance SheetIndependent Accountant shall be bound by the applicable provisions of this Agreement and shall be instructed to resolve only the Disputed Items and shall be instructed not to investigate any other matter independently.
(v) Each of Buyer and Seller shall use commercially reasonable efforts to cooperate with and provide information and documentation, including work papers, to assist the Closing Statement Independent Accountant. Any such information or documentation provided by any Party to the Independent Accountant shall be concurrently delivered to the other Party, subject, in the case of independent accountant work papers, to such other Party entering into a customary confidentiality agreement with respect thereto. Neither Buyer nor Seller shall disclose to the Independent Accountant, and the Closing Cash-on-HandIndependent Accountant shall not consider for any purposes, any settlement discussions or settlement offers made by any of the Closing IndebtednessParties related to any Disputed Item.
(vi) At any time, including following the Closing Net Working Capital Resolution Period, Buyer and Seller may agree to settle any Disputed Item, including any Disputed Item submitted to the Purchase Price set forth thereon Independent Accountant, which agreement shall become be in writing and final and binding on the parties hereto on Parties with respect to the date subject matter of the Arbiter delivers its final resolution Disputed Item so resolved; provided, that, if an Independent Accountant has been engaged, the Parties shall promptly provide a copy of such agreement to the Independent Accountant and instruct the Independent Accountant not to resolve such Disputed Item, it being agreed that if the Independent Accountant nonetheless resolves such Disputed Item for any reason, the agreement of the Parties shall control.
(vii) The determinations by the Independent Accountant as to the Disputed Items shall be in writing and shall, absent fraud, intentional misconduct or manifest error, be an expert determination that is final, binding and conclusive with respect to Buyer and the Seller Representative subject matter of the Disputed Items so resolved (which final resolution shall be requested by the parties subject to be delivered not more than thirty clause (30vi) days following submission of such disputed mattersabove), if any, and such resolution by the Arbiter shall not determination may be subject to entered and enforced in any court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementcompetent jurisdiction. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to Independent Accountant will be allocated between Buyer or Seller, as applicable, in the percentage by which same proportion that the portion aggregate amount of the disputed amounts in the Seller Representative’s submission items so submitted to the Arbiter not awarded to Independent Accountant that is unsuccessfully disputed by each such party (as finally determined by the Seller Representative Independent Accountant) bears to the aggregate total disputed amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees items so submitted. Subject to Section 7.2 with respect to Transaction Expenses and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfallabsent intentional fraud, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for process in this Section 1.05, 2.5 shall be the exclusive remedies remedy for the matters addressed or that could be addressed by this Section 1.05. For Parties for any disputes arising from the avoidance of doubt, and without limiting the generality calculation of the foregoingPurchase Price, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesincluding [***].
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a1) At least three (3) Business Days, but no more than five (5) Business Days, prior The Parties agree that the Purchaser will engage Deloitte to conduct specific due diligence on the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet total liabilities of the Target Company Entities and the Subsidiaries of the Target Company as of the Adjustment Calculation Time Closing Date (including without limitation, operation capital, accounts payable, financing loans and other liabilities to be borne by the Target Company or the Subsidiaries of the Target Company after the Closing Date as a result of facts and actions related to the operation of the Data Center before the Closing Date [REDACTED], the accounts receivable of the Target Company and the Subsidiaries of the Target Company as of the Closing Date, the cash of the Target Company and the Subsidiaries of the Target Company as of the Closing Date and [REDACTED], and the estimated preliminary due diligence results shall be issued at least [REDACTED] before the Closing Date (the “Estimated Preliminary Closing Balance SheetFinancial Due Diligence”), and (ii) a statement (the “Estimated cost of which shall be borne by the Purchaser. The Purchaser shall confirm the amount of Total Liabilities, Accounts Receivable for Closing Statement”) setting forth in reasonable detail and Cash according to the Company’s good faith estimates results of the Preliminary Closing Cash-on-Hand (Financial Due Diligence, and calculate the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation amount of the Purchase Price resulting therefrom according to Article 3.1, 3.2 (the “Estimated Purchase Price”3), in each case, based on the Estimated Closing Balance Sheet 3.2 (4) and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in 3.2 (5) of this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company The Purchaser shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays pay the Purchase Price in accordance with Article 3.3 of this Agreement
(2) The Parties agree that the amounts set forth Purchaser will engage Deloitte to issue a final report on the contents of the Preliminary Closing Financial Due Diligence (the “Final Closing Financial Due Diligence”) within [REDACTED] days after the Closing Date, and the cost of which shall be borne by the Purchaser. The Purchaser shall provide the above-mentioned report to the Sellers, and the Sellers shall confirm the result of Final Closing Financial Due Diligence within [REDACTED] after receiving the report (the “Confirmation Period of Final Closing Financial Due Diligence”). If the Sellers have any objection to the result of the Final Closing Financial Due Diligence, the objection shall be raised within the Confirmation Period of Final Closing Financial Due Diligence and the relevant supporting documents shall be provided, and such objection shall be settled by the Parties through negotiation; if the Sellers do not raise an objection in accordance with the above requirements before the expiration of the Confirmation Period of Final Closing Financial Due Diligence, it shall be deemed that the Sellers agree with the result of the Final Closing Financial Due Diligence. The Parties shall confirm the final amount of Total Liabilities, Accounts Receivable for Closing and Cash according to the result of the Final Closing Financial Due Diligence, and shall finally confirm the amount of Purchase Price according to the provisions of Article 3.1 and 3.2 (3), 3.2 (4) and 3.2 (5) of this Agreement. If such amount is different from the amount calculated in Item (1) above, the actual Purchase Price payable by the Purchaser shall be adjusted accordingly, and the amount of the adjustment shall be reflected in the Estimated Final Payment payable. The Parties further confirm that if the amount of item a) of the Cost to Complete cannot be finally confirmed before the completion of the Final Closing StatementFinancial Due Diligence, Buyer’s obligation to pay the final amount of the Purchase Price shall still be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect subject to the allocation adjustment of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare amount finally settled and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”)confirmed after [REDACTED], and (ii) a statement (the “Closing Statement”) setting forth adjustment shall be reflected in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated Final Payment payable in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in foregoing paragraph of this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementArticle.
(c3) [REDACTED]
(4) [REDACTED]
(5) The Closing Balance SheetParties acknowledge that, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and if adjustments to the Purchase Price set forth thereon shall become final and binding upon need to be made due to the parties hereto thirty (30) days following reasons of the Seller Representative’s receipt thereof unless Government Entity or the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance SheetApplicable Laws, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior Parties may separately agree in writing to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or adjust the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall Sellers will prepare and deliver to the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates good‑faith estimate of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each caseincluding, based on but not limited to, an estimate of the Closing Working Capital (the “Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase PriceWorking Capital”), the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each Buyer will have the right to review and approve such estimates (such approval not to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyerunreasonably withheld). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within As promptly as practicable after the Closing, but in no event later than ninety (90) days following after the Closing Date, the Buyer shall will prepare and deliver to the Seller Sellers Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail the Buyer’s calculation of the Closing Cash-on-HandPurchase Price, the Closing Indebtedness, the Closing Net Working Capital and the calculation including each of the Purchase Price resulting therefromcomponents thereof, in each case, based as of 12:01 a.m. Pacific Time on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementDate.
(c) The Estimated Purchase Price and Closing Balance SheetStatement will be prepared, and the Closing Purchase Price will be determined, in accordance with the accounting methods, policies, practices, procedures, conventions, categorizations, definitions, principles, judgments, assumptions, techniques or estimation methods with respect to financial statements, their classification or presentation or otherwise (including with respect to the nature of accounts, level of reserves or level of accruals) that are set forth in Exhibit C.
(d) The Buyer will (i) permit Roccat and its Representatives to have reasonable access to the documents (including work papers, schedules, financial statements, memoranda, etc.) pertaining to or used in connection with the preparation of the Closing Statement and the Closing Cash-on-Hand, Buyer’s calculation of the Closing Indebtedness, Purchase Price and provide Roccat with copies thereof (as reasonably requested by Roccat and subject to the entry into customary confidentiality and non-reliance agreements) and (ii) provide Roccat and its Representatives reasonable access to the Buyer’s employees and advisors. If Roccat disagrees with any part of the Buyer’s calculation of the Closing Net Working Capital and the Purchase Price as set forth thereon shall become final on the Closing Statement, Roccat will, within sixty (60) days after the receipt of the Closing Statement, notify the Buyer in writing of such disagreement by setting forth the Sellers Representative’s calculation of the Closing Purchase Price, including each of the components thereof, and binding upon describing in reasonable detail the parties hereto basis for such disagreement (an “Objection Notice”). If an Objection Notice is delivered to the Buyer, then the Buyer and Roccat will negotiate in good faith to resolve their disagreements with respect to the computation of the Closing Purchase Price. In the event that the Buyer and Roccat are unable to resolve all such disagreements within thirty (30) days following after the Seller RepresentativeBuyer’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance SheetObjection Notice, the Closing Statement Buyer and Roccat will submit such remaining disagreements to Ernst & Young, or if Ernst & Young is unavailable, such other valuation firm of national repute reasonably acceptable to the Closing Cash-on-Hand, Buyer and Roccat (the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become “Valuation Firm”).
(e) The Valuation Firm will make a final and binding upon the parties hereto upon the Seller Representative’s delivery, prior determination with respect to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement including each of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accountingcomponents thereof, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and in Exhibit C. The Buyer and Roccat will cooperate with the Valuation Firm during the term of its engagement and will use commercially reasonable efforts to cause the Valuation Firm to resolve all remaining disagreements with respect to the computation of the Closing Purchase Price, including each of the components thereof, as soon as practicable. The Valuation Firm will consider only those items and amounts in the respective calculations of the Closing Purchase Price of the Buyer and Roccat, including each of the components thereof, that are identified as being items and amounts to which the Buyer and Roccat have been unable to agree. In resolving any disputed item, the Valuation Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Valuation Firm’s determination of the Closing Purchase Price, including each of the components thereof, will be based solely on written materials submitted by the Buyer and Roccat (i.e., not on the basis of an independent review) and on the definitions included herein. The Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final Valuation Firm will be conclusive and binding on upon the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall will not be subject to court review appeal or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. further review.
(f) The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees costs and expenses of the Arbiter equal to Valuation Firm in determining the Closing Purchase Price, including each of the components thereof, will be borne by the Buyer, on the one hand, and the Sellers, on the other hand, based upon the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter contested amount not awarded to the Seller Representative each party bears to the aggregate amount actually disputed contested by such party. For example, if the Buyer claims the Closing Purchase Price is one thousand euros (€1,000) less than the amount determined by the Seller Representative in the Seller Representative’s submission to the ArbiterSellers, and the Company shall Sellers contest only five hundred euros (€500) of the amount claimed by the Buyer, and if the Valuation Firm ultimately resolves the dispute by awarding the Buyer three hundred euros (€300) of the five hundred euros (€500) contested, then the costs and expenses of the Valuation Firm will be allocated sixty percent (60%) (i.e., 300 ÷ 500) to the Sellers, in the aggregate, and forty percent (40%) (i.e., 200 ÷ 500) to the Buyer. Prior to the Valuation Firm’s determination of Closing Purchase Price, (i) the Buyer, on the one hand, and the Sellers, on the other hand, will each pay fifty percent (50%) of any retainer paid to the remaining portion Valuation Firm and (ii) during the engagement of the Valuation Firm, the Valuation Firm will xxxx fifty percent (50%) of the total charges to each of the Buyer, on the one hand, and the Sellers, on the other hand. In connection with the Valuation Firm’s determination of Closing Purchase Price, the Valuation Firm will also determine, pursuant to the terms of the first and second sentences of this Section 1.5(f), and taking into account all fees and expenses already paid by each of the Buyer, on the one hand, and the Sellers, on the other hand, as of the date of such determination, the allocation of its fees and expensesexpenses between the Buyer and the Sellers, which such determination will be conclusive and binding upon the parties hereto.
(eg) If Within five (5) Business Days after the Closing Purchase Price, including each of the components thereof, is finally determined pursuant to this Section 1.5:
(i) if the Closing Purchase Price as finally determined pursuant to this Section 1.5 is less than the Estimated Purchase Price, then the Buyer and the Sellers will cause the Escrow Agent to: (A) pay to the Buyer a portion of the Adjustment Escrow Amount (the “Buyer Adjustment Amount”) equal to such deficiency (and if the Adjustment Escrow Fund is insufficient, the Buyer may elect (at its sole discretion) to require that the Sellers or Stockholders pay the remainder of such deficiency), have the Sellers cause the Escrow Agent to pay the remainder of such deficiency from the Indemnification Escrow Amount or collect the remainder of such deficiency from the Holdback Amount (or some combination thereof), and (B) pay to the Sellers the amount (if any) by which the amount of the Adjustment Escrow Amount is greater than the Buyer Adjustment Amount; and
(ii) if the Closing Purchase Price as finally determined pursuant to this Section 1.5 is greater than the Estimated Purchase Price is less than (the Purchase Price (amount of such shortfalldeficiency, the “Seller Adjustment Amount”), then (iA) the Buyer shall, within two (2) Business Days after will pay to the Closing Balance Sheet, Sellers the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Seller Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (iiB) the Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to Sellers will cause the Escrow Agent to pay to the Remaining Sellers the Adjustment Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall Amount. All payments to be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall 1.5 will (x) be treated by all parties for tax purposes as an adjustment adjustments to the Closing Purchase Price for U.S. federal income tax purposesand (y) be made by wire transfer of immediately available funds to the account(s) designated by the Buyer or the Sellers, as applicable.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more No later than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer a certificate of an officer of Seller, or one of its Subsidiaries, on behalf of Seller, setting forth its good faith estimate as of the open of business on the Closing Date of (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time Net Working Capital (the “Estimated Closing Balance SheetNet Working Capital”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness other than the Travelport Facility which shall be repaid by Seller on the Closing Date pursuant to Section 4.24 (the “Estimated Closing Indebtedness”), (iii) the Closing Net Working Capital Company Portion Retention Payments (the “Estimated Closing Net Working CapitalCompany Portion Retention Payments”), (iv) and the calculation of the Purchase Price resulting therefrom GTA Bonus (the “Estimated Purchase PriceGTA Bonus”), in each case(v) the Project Austin Costs (the “Estimated PA Costs”), based on (vi) the Restructuring Costs (the “Estimated Closing Balance Sheet and including Restructuring Costs”), (vii) the M&A Costs (the “Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (xM&A Costs”) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (yviii) cooperate with Buyer and its Representatives in connection with their review of the Project Nova Costs (the “Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, BuyerProject Nova Costs”). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) The Initial Purchase Price shall be (i) (A) increased, if the Estimated Net Working Capital exceeds the Reference Net Working Capital, by an amount equal to the amount of such excess or (B) decreased, if the Reference Net Working Capital exceeds the Estimated Net Working Capital, by an amount equal to such excess (such increase or decrease, as the case may be, being the “Estimated Closing Adjustment”) and (ii) decreased by (w) the Estimated Closing Indebtedness, (x) an amount equal to the product of (A) 0.80 and (B) the Estimated Project Nova Costs (such product, the “Estimated Project Nova Cost Payment”), (y) an amount equal to the product of (A) 0.65 and (B) the Estimated Company Portion Retention Payments (such product, the “Estimated Company Portion Retention Payments Payment”) and (z) an amount equal to the sum of (1) the product of (A) 0.80 and (B) the Estimated GTA Bonus (such product, the “Estimated GTA Bonus Payment”), (2) the product of (A) 0.80 and (B) the Estimated PA Costs (such product, the “Estimated PA Cost Payment”), (3) the product of (A) 0.80 and (B) the Estimated Restructuring Costs (such product, the “Estimated Restructuring Cost Payment”) and (4) the product of (A) 0.65 and (B) the Estimated M&A Costs (such product, the “Estimated M&A Cost Payment”).
(c) Within ninety forty-five (9045) days following the Closing Date, Buyer and the Company shall prepare and deliver or cause to be delivered to Seller the Seller Representative following (collectively, the “Preliminary Closing Statement”):
(i) an unaudited consolidated combined balance sheet of the Company Entities as of Acquired Companies immediately prior to the Adjustment Calculation Time Closing (the “Preliminary Closing Balance Sheet”), and prepared by Buyer in accordance with GAAP applied on a consistent basis;
(ii) a statement certificate of an officer of Buyer, or one of its Subsidiaries, certifying that the Preliminary Closing Balance Sheet has been prepared in accordance with GAAP, applied on a consistent basis; and
(iii) (x) a reasonably detailed calculation by Buyer of the Net Working Capital as of the open of business on the Closing Date based on the Preliminary Closing Balance Sheet (the “Closing StatementPreliminary Net Working Capital”), and (y) a statement setting forth in reasonable detail Buyer’s calculation (1) the Company Portion Retention Payments as of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation open of the Purchase Price resulting therefrom, in each case, based business on the Closing Balance Sheet. The Closing Balance SheetDate (the “Preliminary Company Portion Retention Payments”), (2) the GTA Bonus as of the open of business on the Closing Cash-on-HandDate (the “Preliminary GTA Bonus”), (3) the Project Austin Costs as of the open of business on the Closing Date (the “Preliminary PA Costs”), (4) the Restructuring Costs as of the open of business on the Closing Date (the “Preliminary Restructuring Costs”) and (5) the Closing Indebtedness and as of the open of business on the Closing Net Working Capital Date other than the Travelport Facility (which shall each be calculated in accordance with repaid by Seller on the Agreed Accounting Principles Closing Date pursuant to Section 4.24) (the “Preliminary Closing Indebtedness”), (6) the M&A Costs as of the open of business on the Closing Date (the “Preliminary M&A Costs”) and in a manner consistent with (7) the applicable definitions contained in this Agreement. During Project Nova Costs as of the thirty open of business on the Closing Date (30the “Preliminary Project Nova Costs”).
(iv) days immediately Seller shall have fifteen (15) Business Days following the Seller Representative’s receipt of the Preliminary Closing Statement to review the Preliminary Closing Balance Sheet and the calculation of Preliminary Net Working Capital and to notify Buyer in writing if it disputes the amount of the Preliminary Net Working Capital, the Preliminary Company Portion Retention Payments, the Preliminary GTA Bonus, the Preliminary PA Costs, the Preliminary Closing StatementIndebtedness, Buyer shallthe Preliminary M&A Costs, and shall cause the Company Entities toPreliminary Project Nova Costs and/or the Preliminary Restructuring Costs set forth on the Preliminary Closing Statement (the “Dispute Notice”), specifying the reasons therefor in reasonable detail.
(xd) provide the In connection with Seller’s review, Seller Representative and its Representatives with shall have reasonable access at all reasonable times access, during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each casenotice, to the extent reasonably requested all relevant work papers, schedules, memoranda and other documents prepared by the Seller Representative Buyer or any of its Representatives in connection with their review its preparation of the Preliminary Closing Balance Sheet and/or its calculation of Preliminary Net Working Capital, the Preliminary Company Portion Retention Payments, the Preliminary GTA Bonus, the Preliminary PA Costs, the Preliminary Closing Indebtedness, the Preliminary M&A Costs, the Preliminary Project Nova Costs and the Closing StatementPreliminary Restructuring Costs and to finance personnel of Buyer and its Subsidiaries and any other information which Seller reasonably requests, and (y) Buyer shall, and shall cause its Subsidiaries to, cooperate reasonably with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementtherewith.
(ce) The In the event that Seller shall deliver a Dispute Notice to Buyer, Buyer and Seller shall cooperate in good faith to resolve such dispute as promptly as practicable and, upon such resolution, if any, any adjustments to the Preliminary Closing Balance Sheet, the Closing Statement and the Closing Cash-on-HandPreliminary Net Working Capital, the Preliminary Company Portion Retention Payments, the Preliminary GTA Bonus, the Preliminary PA Costs, the Preliminary Closing Indebtedness, the Closing Net Working Capital Preliminary M&A Costs, the Preliminary Project Nova Costs and the Purchase Price set forth thereon Preliminary Restructuring Costs shall become be made in accordance with the agreement of Buyer and Seller. If Buyer and Seller are unable to resolve any such dispute within ten (10) Business Days (or such longer period as Buyer and Seller shall mutually agree in writing) of Seller’s delivery of such Dispute Notice, such dispute shall be resolved by the Independent Accounting Firm, and such determination shall be final and binding on the parties. The Independent Accounting Firm shall consider only those items and amounts as to which Buyer and Seller have disagreed within the time periods and on the terms specified above. In making such determination, the Independent Accounting Firm may rely only upon information submitted to it by Buyer or Seller. The Independent Accounting Firm shall be instructed to use reasonable best efforts to deliver to Buyer and Seller a written report setting forth the parties hereto resolution of each disputed matter within thirty (30) days following of submission of the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Preliminary Closing Balance Sheet, the Closing Statement and the Closing Cash-on-HandPreliminary Net Working Capital, the Preliminary Company Portion Retention Payments, the Preliminary GTA Bonus, the Preliminary PA Costs, the Preliminary Closing Indebtedness, the Closing Net Working Capital Preliminary M&A Costs, the Preliminary Project Nova Costs and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior Preliminary Restructuring Costs to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capitalit and, in each any case, as reflected on promptly as practicable after such submission. Any expenses relating to the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation engagement of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice Independent Accounting Firm in respect of Disagreement is delivered by the Seller Representative its services pursuant to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x2.3(e) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution shared equally by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by BuyerSeller, on the one hand, or and Buyer and the Seller RepresentativeCompany, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representativejointly and severally, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Preliminary Closing Balance Sheet, the Closing Statement and the Closing Cash-on-HandPreliminary Net Working Capital, the Preliminary Company Portion Retention Payments, the Preliminary GTA Bonus, the Preliminary PA Costs, the Preliminary Restructuring Costs, the Preliminary Closing Indebtedness, the Closing Net Working Capital Preliminary M&A Costs and the Purchase Price set forth thereon shall become final and binding on Preliminary Project Nova Costs, (i) if no Dispute Notice has been timely delivered by Seller, as originally submitted by Buyer or (ii) if a Dispute Notice has been timely delivered by Seller, as determined pursuant to the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed mattersdispute in accordance with this Section 2.3(e), and such resolution by the Arbiter shall not be subject to court review or otherwise appealablebe, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfallrespectively, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Final Closing Balance Sheet, ,” the “Final Net Working Capital,” “Final Company Portion Retention Payments,” the “Final GTA Bonus,” the “Final PA Costs,” the “Final Restructuring Costs,” the “Final Closing Statement Indebtedness,” the “Final M&A Costs” and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess“Final Project Nova Costs”(collectively, the “Excess AmountFinal Amounts”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Purchase Agreement (Cendant Corp)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior The Seller Representative has delivered to the Closing, the Company shall prepare and deliver to Buyer Buyer: (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a reasonably detailed statement (the “Estimated Pre-Closing Statement”) setting forth in reasonable detail the Company’s Sellers’ good faith estimates calculation, as of the Closing Cash-on-Hand Date, of (A) the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”B) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including Inventory, (C) the Estimated Purchased Shares Purchase PriceWorking Capital, as well as the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net resulting Working Capital shall each be calculated in accordance with Excess (if any) or Working Capital Shortfall (if any), as the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statementcase may be, and (yD) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet Aggregate Consideration, and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesDistribution Schedule.
(b) Within ninety (90) days following after the Closing DateDate and no earlier than January 1, 2021, the Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a reasonably detailed statement (the “Post-Closing Statement”) setting forth in reasonable detail the Buyer’s good faith calculation of the Closing Cash-on-Hand, (i) the Closing Indebtedness, (ii) Closing Inventory, (iii) the Closing Net Working Capital and the resulting Working Capital Excess (if any) or Working Capital Shortfall (if any), as the case may be, (iv) the Closing Inventory Excess or the Closing Inventory Shortfall, as the case may be (as determined according to the Estimated Closing Inventory delivered in the Pre-Closing Statement), and (v) the Final Sales Tax Liability. For the avoidance of doubt, for purposes of the calculation of the Purchase Price resulting therefrom, in each case, based on Post-Closing Statement. Any actions taken by the Buyer at or after the Closing Balance Sheet. The shall not be taken into account for the purpose of preparing the Post-Closing Balance SheetStatement.
(c) After receipt of the Post-Closing Statement, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Seller Representative shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the have thirty (30) days immediately following (the Seller Representative’s receipt of “Review Period”) to review the Closing Balance Sheet and the Post-Closing Statement. During the Review Period, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable accountants shall have full access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities Company, the personnel of, and to senior management personnel of the Company Entitieswork papers prepared by, in each case, Buyer and/or Buyer’s accountants to the extent reasonably requested by that they relate to the Post-Closing Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Post-Closing Statement, as the Seller Representative or any may reasonably request for the purpose of its Representatives reviewing the Post-Closing Statement and to prepare a Notice of Disagreement (defined below); provided, that such access shall be in connection a manner that does not interfere with their review the normal business operations of the Closing Balance Sheet and Buyer or the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with Company or their review of the Closing Balance Sheet and the Closing Statementrespective businesses.
(cd) The Closing Balance Sheet, the Post-Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof expiration of the Review Period unless the Seller Representative gives delivers written notice of its disagreement with the Post-Closing Statement (a “Notice of Disagreement”) to the Buyer prior to such date, which notice . Any Notice of Disagreement shall describe specify in reasonable detail the nature of such disagreement; providedSeller Representative’s objections to the Post-Closing Statement, that (i) the Closing Balance Sheet, the Closing Statement indicating each disputed item or amount and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon basis for the Seller Representative’s delivery, disagreement therewith. If a Notice of Disagreement is received by the Buyer prior to the expiration of such the Review Period, then during the thirty (30)-day period, of written notice to Buyer of its acceptance of 30) day period (the Closing Balance Sheet, “Resolution Period”) following the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek negotiate in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all . If such discussions related thereto shall (unless otherwise agreed by Buyer and differences are so resolved within the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodResolution Period, the Seller Representative and Buyer shall submit to revised Post-Closing Statement with such changes as may have been previously agreed in writing by the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct be final and binding.
(e) If at the Arbiter toend of the Resolution Period the Seller Representative and the Buyer have not resolved in writing the matters specified in the Notice of Disagreement, the Seller Representative and the Buyer shall submit any amounts remaining in dispute to the Accounting Firm, who, acting as experts and not arbitrators, shall resolve such disputed amounts only and make any adjustments to the Post-Closing Statement. The Buyer and the Sellers agree that all adjustments shall be made without regard to the materiality of the amount at issue. The Accounting Firm shall render a written decision resolving the matters submitted to the Accounting Firm as soon as practicable, and the Arbiter shall, make a final determination in any event within thirty (30) days of the receipt of such submission (or such other time as the parties hereto shall agree in writing). The scope of the disputes to be resolved by the Accounting Firm shall be limited to fixing mathematical errors and determining whether the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) dispute were determined in accordance with GAAP and the guidelines and procedures set forth in terms of this Agreement, and no other matters. Buyer and The Accounting Firm’s decision shall be (w) limited to the specific items under dispute by the parties (x) based solely on written submissions by the Seller Representative will cooperate with and the Arbiter during the term of its engagement. Buyer and the Seller Representative their respective Representatives (and it shall instruct the Arbiter not topermit or authorize discovery or hear testimony) and not by independent review, (y) made strictly in accordance with GAAP and the Arbiter shall not, terms of this Agreement and (z) final and binding on all of the parties hereto absent fraud or manifest error. The Accounting Firm may not assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either party or the Seller Representative, on the other hand, or less smaller than the smallest value for such item assigned claimed by Buyereither party. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.4 shall be borne pro rata as between the Sellers according to each Seller’s Pro Rata Percentage, on the one hand, or and the Seller RepresentativeBuyer, on the other hand. , in proportion to the final allocation made by such Accounting Firm of the disputed items weighted in relation to the claims made by the Sellers and the Buyer, such that the prevailing party pays the lesser proportion of such fees, costs and expenses.
(f) Within five (5) Business Days after the parties mutual final determination of the Company’s GAAP net revenue and EBITDA for the Company’s fiscal year ending December 31, 2020 (“FY 2020”), in each case as verified by Parent’s auditor, the following payments shall be made, as applicable:
(i) If the Company reports GAAP revenue of at least $20,000,000.00 and at least $1,000,000.00 of EBITDA for the FY 2020 and (ii) at the Closing Date, the Company has Working Capital Target, Parent shall deliver to the Sellers in aggregate the Additional Consideration divided by the Parent Stock Purchase Price, in accordance with their respective Pro Rata Percentage; provided, that if (x) the Company’s final GAAP revenue or EBITDA, as verified by Parent’s auditor, is less than the targets set forth in this Section 2.4(f), or (y) the Estimated Working Capital is less than the Working Capital Target, the Additional Consideration shall be reduced on a dollar for dollar basis with respect to each such shortfall; provided, further, that any such reduced amount shall not be double counted for purposes of more than one such shortfall.
(g) Within five (5) Business Days after the parties mutual final determination of the Company’s Final Closing Indebtedness, the Final Transaction Expenses and Final Working Capital, and Parent’s determination of Final Closing Inventory and Final Sales Tax Liability, and the resulting Final Aggregate Consideration, the following payments shall be made, as applicable:
(i) If the Final Aggregate Consideration ((i) minus Additional Consideration, (ii) plus or minus the Closing Inventory Excess or the Closing Inventory Shortfall, as applicable, minus (iii) Final Sales Tax Liability) is greater than the Estimated Aggregate Consideration calculated at Closing (such excess amount expressed as shares of Parent Stock, calculated using the dollar amount of such excess amount, divided by the Parent Stock Purchase Price, the “Adjustment Surplus Amount”), then the Buyer shall deliver (or caused to be delivered), a number of shares of Parent Stock equal to the Adjustment Surplus Amount to (A) the Sellers (subject to Section 2.5), in each case, in accordance with their respective Pro Rata Percentage.
(ii) If the Final Aggregate Consideration ((i) minus Additional Consideration, (ii) plus or minus the Closing Inventory Excess or the Closing Inventory Shortfall, as applicable, minus (iii) Final Sales Tax Liability) is less than the Estimated Aggregate Consideration calculated at Closing (such excess amount expressed as shares of Parent Stock, calculated using the positive dollar amount of such excess amount, divided by the Parent Stock Share Price, the “Adjustment Deficit Amount”), then the Buyer and the Seller Representative shall also instruct the Arbiter to, execute and the Arbiter shall, make its determination based solely on deliver a joint written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere instruction to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, Escrow Agent within two (2) Business Days after following the Closing Balance Sheet, date on which the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Final Aggregate Consideration is finally determined pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to 2.4 directing the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds release from the Escrow AccountAccount and pay to Buyer a number of shares of Parent Stock equal to such Adjustment Deficit Amount, within two (2) Business Days after receipt of and in the event that such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price Adjustment Deficit Amount is greater than the Purchase Price (such excess, the “Excess Escrow Amount”), then Buyer and the Seller Representative shallSellers shall pay, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant or cause to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructionsbe paid, to Buyer, within ten (10) Business Days by wire transfer in of immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfallfunds, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions an amount equal to the Escrow Agent remaining portion of such Adjustment Deficit Amount to cause the Escrow Agent Buyer, payable by each Seller according to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representativesuch Seller’s Pro Rata Percentage.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At Sellers shall, at least three (3) Business Days, but no more than five (5) Business Days, business days prior to the ClosingClosing Date, the Company shall prepare cause to be prepared and deliver delivered to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Preliminary Statement”) ), setting forth in reasonable detail the Company’s Sellers’ good faith estimates estimate of each of the Modified Net Working Capital as of the Closing Cash-on-Hand Date (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Date Modified Net Working Capital”) and the calculation Capital Expenditure Account Balance as of the Purchase Price resulting therefrom Closing Date (the “Estimated Purchase PriceClosing Date Capital Expenditure Account Balance”). The estimate of Closing Date Modified Net Working Capital is referred to herein as the “Estimated Modified Net Working Capital” and the estimate of the Closing Date Capital Expenditure Account Balance is referred to herein as the “Estimated Closing Date Capital Expenditure Account Balance.” (b) Within forty-five (45) calendar days after the Closing Date, Buyer shall cause to be prepared and delivered to Sellers a statement (the “Statement”) setting forth Buyer’s calculations of Closing Date Modified Net Working Capital, the Closing Date Capital Expenditure Account Balance and the components and calculation of each, which comments and calculations shall be included and made in accordance with Section 1.2 of the Disclosure Letter and, to the extent not provided for therein, GAAP (in each casecase as and to the same extent determined pursuant to Section 1.2(c)(ii)). At the same time, based Buyer shall also cause to be prepared and delivered to Sellers a statement (the “Adjustment Statement”) setting forth the calculation (whether a positive or negative number) of (i) the amount of the Closing Date Modified Net Working Capital as shown on the Statement minus the Estimated Modified Net Working Capital plus (ii) the Closing Date Capital Expenditure Account Balance minus the Estimated Closing Date Capital Expenditure Account Balance Sheet and including (the Estimated Purchased Shares Purchase Pricesum of such amounts, whether a positive or negative number, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase “Adjustment Amount”). Buyer shall provide Sellers and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance their accountants with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the relevant books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, Sellers Employees to the extent reasonably requested by Buyer or any of its Representatives required in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers dispute with respect to the allocation Statement and the Adjustment Statement and shall furnish Sellers with any other information that might be relevant to the calculation of Closing Date Modified Net Working Capital or the Closing Date Capital Expenditure Account Balance. If, at any time prior to the final resolution of all disputed items on the Statement or the Adjustment Statement, additional information shall become known to Buyer or Sellers that would change the amount of the Purchase Price among Closing Date Modified Net Working Capital or the Closing Date Capital Expenditure Account Balance shown on the Statement or the calculation thereof, then Buyer shall amend the Statement and Adjustment Statement to reflect such additional information. Buyer or Sellers shall not interfere in promptly notify Sellers or Buyer, as applicable, upon becoming aware of any way with, or give rise additional information prior to any claim or right upon, Buyer’s ownership the end of the Purchased SecuritiesResolution Period.
(bc) Within ninety After receipt of the Statement and the Adjustment Statement, Sellers will have thirty (9030) calendar days following from receipt to review the Closing Date, Buyer shall prepare Statement and the Adjustment Statement together with the workpapers used in their preparation. Unless Sellers deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) Buyer written notice setting forth in reasonable detail Buyer’s the specific items disputed by Sellers and a written statement setting forth Sellers’ calculation of each line item shown on the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Statement so disputed and the calculation amount in dispute (the “Sellers’ Statement”) on or prior to the thirtieth (30th) day after receipt of the Purchase Price resulting therefromStatement and the Adjustment Statement, in each caseSellers will be deemed to have accepted and agreed to the Statement and the Adjustment Statement and such agreement will be final, based binding and conclusive. Any items on the Closing Balance SheetStatement or Adjustment Statement as to which Sellers have not given notice of their objection and provided an alternative calculation on Sellers’ Statement will be deemed to have been agreed upon by the Parties, subject to the penultimate sentence of Section 1.3(b). The Closing Balance SheetIf Sellers so notify Buyer of their objections to any of the Statement or the Adjustment Statement and provide Buyer with Sellers’ Statement in a timely manner, Buyer and Sellers will, within thirty (30) calendar days following such notice (the Closing Cash-on-Hand“Resolution Period”), attempt to resolve their differences. Any resolution by Buyer and Sellers during the Closing Indebtedness Resolution Period as to any disputed amounts will be final, binding and conclusive. If the Closing Net Working Capital amount claimed by Buyer on the Adjustment Statement to be owed by Sellers is less than the Escrow Amount, then, promptly after delivery of the Adjustment Statement, any amount on deposit in the Escrow Account that is in excess of the amount claimed by Buyer to be owed by Sellers under this Section shall each be calculated distributed from the Escrow Account to Sellers in accordance with the Agreed Accounting Principles Escrow Agreement, and Buyer agrees to reasonably cooperate with Sellers in a manner consistent any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to Sellers in accordance with the applicable definitions contained Sharing Percentages set forth on Annex A. If Buyer and Sellers do not resolve all disputed items by the end of the Resolution Period, then all items remaining in this Agreement. During the thirty dispute will be submitted within ten (3010) days immediately following after the Seller Representative’s receipt expiration of the Closing Balance Sheet Resolution Period to a national independent accounting firm mutually acceptable to Buyer and Sellers (the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records “Neutral Accounting Arbitrator”); it being understood that no member of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative Neutral Accounting Arbitrator’s engagement team shall have an existing professional relationship with Buyer or any of its Representatives Affiliates. The Neutral Accounting Arbitrator shall act as an arbitrator to determine only those items in connection with their review of the Closing Balance Sheet dispute. All fees and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior expenses relating to the expiration of such thirty (30)-day periodwork, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statementif any, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered performed by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall Neutral Accounting Arbitrator will be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by allocated between Buyer, on the one hand, or the Seller Representativeand Sellers, on the other hand, or less than the smallest value for such item assigned by Buyer, in inverse proportion as they shall prevail on the one hand, or amounts of such disputed items so submitted (as finally determined by the Seller Representative, on the other handNeutral Accounting Arbitrator). The Neutral Accounting Arbitrator will deliver to Buyer and the Seller Representative shall also instruct the Arbiter to, Sellers a written determination (such determination to include a work sheet setting forth all material calculations used in arriving at such determination and the Arbiter shall, make its determination to be based solely on written presentations information provided to the Neutral Accounting Arbitrator by Buyer Sellers and Buyer) of the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than disputed items within thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion receipt of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed items (or as soon as practicable thereafter), which determination will be final, binding and conclusive. The final, binding and conclusive Statement and Adjustment Statement, which either are agreed upon by Buyer and Sellers or are delivered by the Seller Representative Neutral Accounting Arbitrator in accordance with this Section 1.3, will be the Seller Representative’s submission to the Arbiter, “Conclusive Statement” and the Company shall pay “Conclusive Adjustment Statement,” respectively. In the event that either Buyer or Sellers fails to submit its statement regarding any items remaining portion of such fees and expenses.in dispute within the time determined by the Neutral Accounting Arbitrator, then the Neutral Accounting Arbitrator shall
(ed) If the Estimated Purchase Price Adjustment Amount as shown on the Conclusive Adjustment Statement (the “Conclusive Adjustment Amount”) is a negative number, then the Cash Consideration will be reduced by the amount of the Conclusive Adjustment Amount, but not in excess of the Escrow Amount, and Buyer shall be entitled to payment of such amount from the Escrow Account by wire transfer of immediately available funds to an account or accounts designated by the Party entitled to receive such funds (and Sellers agree to cooperate reasonably in facilitating such payment, including by executing and delivering an appropriate joint instruction to the Escrow Agent). If the Conclusive Adjustment Amount is a positive number, then the Cash Consideration will be increased by the amount of the Conclusive Adjustment Amount, but not in excess of the Escrow Amount, and Buyer shall pay to Sellers cash equal to such amount, to be paid to an account or accounts designated in writing by Sellers prior to the date when such payment is due. All payments to be made pursuant to this Section 1.3(d) will be made on the fifth business day following the date on which Buyer and Sellers agree to, or the Neutral Accounting Arbitrator delivers, the Conclusive Statement and the Conclusive Adjustment Statement and, in the case of payment to Buyer, instruct the Escrow Agent by joint written instruction accordingly. If the Conclusive Adjustment Amount is a positive number, or is a negative amount that is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding amount remaining on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer deposit in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days then, promptly after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds determination of the Excess Amount from the Escrow Funds Conclusive Adjustment Amount, any amount remaining on deposit in the Escrow Account. If Account that is in excess of the Excess lesser of the Conclusive Adjustment Amount is less than and the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds Amount shall be distributed from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account to Sellers in accordance with the Escrow Agreement Agreement, and Buyer agrees to reasonably cooperate with Sellers in any necessary joint instruction to the Escrow Agent. Money released from the Escrow Account to Sellers shall be distributed to Sellers in accordance with the Sharing Percentages set forth on Annex A.
(e) Buyer acknowledges and agrees that its sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made amount due to it pursuant to this Section 1.05 1.3 shall be treated as its right to payment from the Escrow Account in an adjustment amount not to exceed the Purchase Price Escrow Amount. Sellers acknowledge and agree that their sole and exclusive remedy for U.S. federal income tax purposesany amount due to them pursuant to this Section 1.3 shall be the right to payment from Buyer in an amount not to exceed the Escrow Amount.
Appears in 1 contract
Samples: Purchase and Sale Agreement
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, business days prior to the ClosingClosing Date, the Company Seller shall prepare prepare, or cause to be prepared, using then available information, and deliver to Buyer Purchaser a working capital statement, together with the detailed work papers which support such statement (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (collectively, the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Working Capital Statement”) setting forth in reasonable detail the CompanySeller’s good faith estimates estimate of the Net Working Capital as of the Closing Cash-on-Hand Date (the “Estimated Closing Cash-on-HandWorking Capital”), which statement shall be prepared in accordance with the Accounting Standards. The Purchase Price to be paid at the Closing Indebtedness shall (i) be decreased dollar for dollar by the “amount the Estimated Closing Indebtedness”), Working Capital is less than the Closing Net Target Working Capital or (ii) not be adjusted if the Estimated Working Capital is greater than the Target Working Capital (the “Estimated Closing Net Working Capital”) and Purchase Price, as decreased or not adjusted pursuant to this sentence, minus the calculation of the Asset Purchase Price resulting therefrom (Price, the “Estimated Share Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following from the Closing DateDate (or such reasonable extension thereof as approved by Seller, Buyer such approval not to be unreasonably withheld), the Purchaser shall prepare and deliver to a working capital statement setting forth the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities Net Working Capital as of the Adjustment Calculation Time Closing Date (the “Closing Balance SheetWorking Capital”), and (ii) a which statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated prepared in accordance with the Agreed Accounting Principles Standards (such statement, the “Closing Date Working Capital Statement”). To the extent necessary to verify and in a manner consistent with confirm the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt accuracy of the Closing Balance Sheet and the Closing Date Working Capital Statement, Buyer shall, and Seller shall cause have the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice right to review the books and records of the Company Entities and to senior management personnel Companies for a period of thirty (30) days following delivery by the Company Entities, in each case, Purchaser to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet Date Working Capital Statement (the “Objection Deadline”). The Closing Date Working Capital Statement shall be binding and conclusive upon, and deemed accepted by, Seller unless Seller shall have notified Purchaser in writing by the Objection Deadline of any good faith objection thereto, which objection can only be (i) that the Closing Working Capital, as reflected on the Closing Date Working Capital Statement, (A) has not been prepared in accordance with the Accounting Standards or (B) contains mathematical errors on its face and/or
(ii) that the underlying amounts used to calculate the Closing Working Capital, as reflected in the Closing Date Working Capital Statement, are incorrect (any such objection, the “Seller’s Objection”), indicating in reasonable detail the basis for its objections and the specific adjustments to the Closing Statement, Working Capital reflected on the Closing Date Working Capital Statement which Seller believes should be made. Purchaser and (y) cooperate Seller shall meet and confer in an effort to resolve such disagreement in good faith. Any items not disputed in a valid Seller’s Objection shall be deemed to have been accepted by Seller. If Seller and Purchaser are unable to resolve all of their disputes with respect to the Seller Representative and its Representatives in connection with their review calculation of the Closing Balance Sheet and Working Capital within thirty (30) days following Purchaser’s receipt of Seller’s Objection to the Closing Statement.
(c) The Closing Balance Sheet, the Closing Date Working Capital Statement and the Closing Cash-on-Handaggregate net effect of all amounts remaining in dispute is less than or equal to $50,000, such disputed amounts shall be deemed to have been resolved in favor of the calculation of the Closing Indebtedness, Working Capital set forth in the Closing Net Date Working Capital and Statement delivered by Purchaser to Seller, but if the Purchase Price set forth thereon aggregate net effect of all amounts remaining in dispute exceeds $50,000, then the parties shall become refer their remaining differences to an independent public accounting firm mutually agreed to by the parties (the “Accounting Firm”) for decision, which decision shall be final and binding upon on the parties hereto upon delivery of the Accounting Firm’s written opinion. Within thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature reference of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior dispute to the expiration Accounting Firm, Seller shall submit any unresolved elements of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except Seller’s Objection to the extent addressed by Accounting Firm in writing (with a duly delivered Notice of Disagreement prior copy to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(cPurchaser), then the Closing Balance Sheet and the Closing Statement (as revised in accordance supported by any documents and/or affidavits upon which it relies. Failure to do so without reasonable cause shall constitute a withdrawal by Seller of Seller’s Objection with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (respect to any unresolved element to which such firm, the “Arbiter”)failure relates. The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the Within thirty (30) days immediately following Seller’s submission of the delivery unresolved elements of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period Seller’s Objection as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice immediately preceding sentence, Purchaser shall submit its response to the Accounting Firm in writing (with a copy to Seller), supported by any documents and/or affidavits upon which it relies. The Accounting Firm shall act as an expert and not as an arbitrator to determine based solely on the provisions of Disagreementthis Section 1.04 and the submissions of Purchaser and Seller, and all such discussions related thereto shall (unless otherwise agreed not by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer periodindependent review, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain those issues still in dispute and which only as to whether: (i) such amounts were properly included arrived at in conformity with the Notice of Disagreement. Buyer Accounting Standards and Section 1.04(a) hereof; (ii) the Seller Representative shall instruct Closing Date Working Capital Statement contains mathematical errors on its face and/or (iii) the Arbiter to, and underlying amounts used to calculate the Arbiter shall, make a final determination of the items included Closing Working Capital as reflected in the Closing Balance Sheet Date Working Capital Statement were incorrect. The Accounting Firm shall review the written submissions from Seller and Purchaser and shall deliver its written opinion setting forth the proper amount of any disputed item within the scope of its review within a reasonable time following its receipt of such written submissions of Purchaser and Seller. The scope of the disputes to be resolved by the Accounting Firm is limited to the unresolved portion of the Seller’s Objection submitted by Seller and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter Accounting Firm may not to, and the Arbiter shall not, assign a value to any disputed item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, any party or less than the smallest lowest value for such item assigned claimed by Buyerany party. Purchaser and Seller shall make readily available to the Accounting Firm all relevant books and records and any work papers (including those of the parties’ respective accountants) relating to Seller’s Objection and the Closing Date Working Capital Statement, respectively, and all other items reasonably requested by the Accounting Firm. The fees and expenses of the Accounting Firm, if any, shall be paid by the parties based on the one handoutcome of the dispute referred to the Accounting Firm: the party whose calculation of the Net Working Capital as of the Closing Date is farthest from the calculation thereof by the Accounting Firm shall pay such fees and expense and if the difference between the calculations of the Net Working Capital as of the Closing Date by Purchase and Seller, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter torespectively, and the Arbiter shallcalculation thereof by the Accounting Firm is equal, make its determination based solely on written presentations by Buyer the parties shall equally split such fees and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. expenses.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Date Working Capital and the Purchase Price set forth thereon Statement shall become final and binding on the parties hereto on upon the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission earliest of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheetif no Seller’s Objection has been timely filed, the Closing Statement and the Closing Cash-on-HandObjection Deadline, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment date of an agreement in writing by Seller and Purchaser that the dispute resolution provisions provided for in this Section 1.05Closing Date Working Capital Statement, together with any modifications thereto agreed by Seller and Purchaser, shall be final and binding and (iii) the exclusive remedies for date on which the matters addressed Accounting Firm shall issue its written determination with respect to any dispute relating to the Closing Date Working Capital Statement. The Closing Date Working Capital Statement, (A) as submitted by Purchaser if no timely Seller’s Objection has been given, (B) as adjusted pursuant to any agreement between the parties or that could be addressed by this Section 1.05. For (C) as determined pursuant to the avoidance of doubt, and without limiting the generality decision of the foregoingAccounting Firm, no claim by Buyer for as the payment of case may be, is herein referred to as the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties“Final Working Capital Statement.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.”
Appears in 1 contract
Purchase Price Adjustment. (a) At least Not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closinganticipated Closing Date, the Company shall prepare and deliver to Buyer (i) an Purchaser a good faith estimate which shall set forth the estimated consolidated balance sheet Closing Cash, which shall reflect payment of the Company Entities as Transaction Expenses expected to be paid prior to Closing and Change of the Adjustment Calculation Time Control Payments expected to be paid prior to Closing (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the estimated Closing Indebtedness (the “Estimated Closing Indebtedness”), the estimated Closing Net Working Capital (the “Estimated Closing Net Working Capital”), the estimated Transaction Expenses to the extent not expected to be paid prior to the Closing and reflected in Estimated Cash (“Estimated Transaction Expenses”) and the calculation estimated Change of Control Payments to the Purchase Price resulting therefrom extent not expected to be paid prior to Closing and reflected in Estimated Cash (the “Estimated Purchase PriceChange of Control Payments”), in each case, based on the Estimated Closing Balance Sheet calculated in a manner consistent and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementPrinciples. From and after delivery of the Estimated The “Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company Date Amount” shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays equal the Purchase Price in accordance with minus the amounts set forth in Adjustment Escrow Amount minus the Indemnity Escrow Amount plus Estimated Cash minus Estimated Indebtedness plus Estimated Working Capital minus Target Working Capital minus Estimated Transaction Expenses minus the Estimated Closing Statement, Buyer’s obligation to pay Change of Control Payments minus the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesMember Representative Amount.
(b) Within ninety (90) 90 days following after the Closing Date, Buyer Purchaser shall prepare and deliver to the Seller Member Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) ), setting forth in reasonable detail Buyer’s calculation (i) Cash as of the Effective Time (“Closing Cash-on-Hand”), (ii) Working Capital as of the Effective Time (“Closing Working Capital”), (iii) the outstanding principal and accrued interest of all Indebtedness as of the Effective Time (“Closing Indebtedness”), (iv) Change of Control Payments to the extent not paid prior to the Closing Indebtedness(“Closing Change of Control Payments”) and (v) Transaction Expenses to the extent not paid prior to the Closing, the Closing Net Working Capital each determined in a manner consistent and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. Principles.
(c) During the thirty (30) days immediately -day period following the Seller Member Representative’s receipt of the Closing Balance Sheet Statement (as such period shall be extended if and the Closing Statementas required under Section 1.04(e)), Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Member Representative and its Representatives with reasonable access at all reasonable times during normal business hours accountants and upon reasonable prior notice advisors shall be permitted to review the working papers relating to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) . The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days on the 30th day following the Seller Representative’s receipt thereof delivery thereof, unless the Seller Member Representative gives written notice of its disagreement with the Statement (a “Notice of Disagreement”) to Buyer Purchaser on or prior to such date, which notice . Any Notice of Disagreement shall describe specify in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement any disagreement so asserted and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Member Representative’s delivery, prior to calculation (in accordance with the expiration Accounting Principles) of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) disputed items or amounts. If a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and is given by Member Representative in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)manner, then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon 1.04) shall become final and binding upon the parties hereto Member Representative and Purchaser on the earlier of (xi) the date Member Representative and Purchaser resolve in writing all differences they have with respect to the matters specified in the Notice of Disagreement or (ii) the date all disputed matters are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d)Accounting Firm. During the thirty (30) days immediately 60-day period following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Disagreement, Member Representative and Buyer may agree in writing, the Seller Representative and Buyer Purchaser shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of DisagreementDisagreement and agree on a final and binding determination of Closing Working Capital, Closing Indebtedness, Closing Change of Control Payments, Transaction Expenses and all Closing Cash, as applicable. During such discussions related thereto period, Purchaser and its accountants and advisors shall (unless otherwise agreed by Buyer and be permitted to review the Seller working papers prepared in connection with Member Representative) be governed by Rule 408 ’s preparation of the Federal Rules Notice of Evidence (as in effect as of the date of this Agreement)Disagreement. At the end of such thirty (30)-day period or such agreed60-upon longer day period, the Seller if no agreement on Closing Working Capital, Closing Indebtedness, Closing Change of Control Payments, Transaction Expenses or Closing Cash, as applicable, has been reached, Member Representative and Buyer Purchaser shall submit in writing their positions with respect to the Arbiter for review and resolution any and all matters (but only such matters) which that remain in dispute and which that were properly included in the Notice of Disagreement. Buyer Disagreement to an internationally recognized independent accounting firm (the “Accounting Firm”) to review the relevant portions of the Statement and the Seller disputed items or amounts for resolution of any and all such matters. In making such calculation, the Accounting Firm shall consider only those items or amounts in the Statement and Purchaser’s calculation of Closing Cash, Closing Indebtedness, Closing Change of Control Payments, Transaction Expenses and Closing Working Capital in respect of which Member Representative has delivered a Notice of Disagreement in accordance with this Section 1.04. The Accounting Firm shall be an internationally recognized independent public accounting firm as shall be agreed upon by Member Representative and Purchaser in writing. Member Representative and Purchaser shall jointly instruct the Arbiter toAccounting Firm that it (1), and subject to the Arbiter shalllimitations of this Section 1.04(c), make a final determination of shall act as an arbitrator, (2) shall review only the items matters that were properly included in the Closing Balance Sheet Notice of Disagreement and the Closing Statement (to the extent such amounts are properly that remain in dispute, (3) shall make its determination in accordance with the guidelines requirements of this Section 1.04 and procedures based solely on the written submissions of Member Representative and Purchaser and their respective accountants and advisors, disregarding any adjustments or arguments of Member Representative inconsistent with or not set forth in this Agreement. Buyer the Notice of Disagreement, and not by independent review, (4) shall, with respect to each disputed item and the Seller Representative will cooperate amounts submitted in writing to the Accounting Firm, determine whether and to what extent, if any, such disputed items are correct or require adjustment (provided that in all instances, the Accounting Firm’s determinations must be within the range of the amounts set forth in the written submissions of Purchaser and Member Representative) and (5) shall render its written decision as promptly as practicable, but in no event later than 30 days after submission to the Accounting Firm of all matters in dispute. The scope of the disputes to be resolved by the Accounting Firm shall be limited to whether there were mathematical errors in the Statement and whether the calculation of the Closing Working Capital, the Closing Indebtedness, the Closing Cash, the Closing Change of Control Payments or the Transaction Expenses was done in accordance with the Arbiter during definitions thereof, the term Accounting Principles and this Section 1.04. Any disputes regarding the scope of its engagementdisputes to be resolved by the Accounting Firm pursuant to this Section 1.04 shall not be resolved by the Accounting Firm but rather shall be resolved in accordance with Section 10.10. Buyer and Any determinations by the Seller Representative shall instruct the Arbiter not toAccounting Firm, and any work or analyses performed by the Arbiter Accounting Firm in connection with its resolution of any dispute under this Section 1.04, shall notnot be admissible in evidence in any proceeding between Member Representative and Purchaser, assign other than to the extent necessary to enforce payment obligations under Section 1.04(d). Without limiting the generality of the foregoing, the Accounting Firm is not authorized or permitted to make any determination as to the accuracy of Section 3.06 or any other representation or warranty set forth in Article II, Article III or Article IV of this Agreement or as to compliance by the parties to this Agreement with any of their respective covenants in this Agreement (other than in this Section 1.04). Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The Accounting Firm’s determination shall be accompanied by a value certificate of the Accounting Firm that it reached its decision in accordance with the provisions of this Section 1.04(c). The fees and expenses of the Accounting Firm pursuant to any item in dispute greater than the greatest value for such item assigned this Section 1.04 shall be borne by BuyerPurchaser, on the one hand, or the Seller and Member Representative, on the other hand, or less than in inverse proportion as they may prevail on matters resolved by the smallest value for such item assigned Accounting Firm, which proportionate allocations shall also be determined by Buyer, the Accounting Firm at the time its determination on the one handmerits of the matters submitted is rendered. The fees and disbursements of Member Representative incurred in connection with its review of the Statement, or its preparation of any Notice of Disagreement and its preparation of any written submissions to the Seller Accounting Firm shall be borne by Member Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shallfees and disbursements of Purchaser incurred in connection with its preparation of the Statement, make its determination based solely on review of any Notice of Disagreement and its preparation of any written presentations by Buyer and submissions to the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution Accounting Firm shall be requested borne by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesPurchaser.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (On Assignment Inc)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than Within forty-five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9045) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Equityholders’ Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a written statement (the “Closing Purchase Price Adjustment Statement”) setting forth in reasonable detail Buyer’s good faith calculation of the Closing Cash-on-HandDate Net Working Capital, the Closing IndebtednessCash, the Closing Net Working Capital Funded Indebtedness and the calculation Closing Transaction Expenses together with such schedules and data with respect to the determination thereof as may be appropriate to support the calculations set forth in the Purchase Price Adjustment Statement.
(b) Following the delivery of the Purchase Price resulting therefromAdjustment Statement, in each caseBuyer shall provide the Equityholders’ Representative and its representatives with reasonable access to the Business Records and relevant personnel and properties of the Constituent Companies to verify the accuracy of such amounts, based on all to the Closing Balance Sheetextent deemed reasonably necessary by the Equityholders’ Representative. The Closing Balance SheetFor the purposes of this Agreement, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Date Net Working Capital shall each be calculated in accordance with this Agreement (including the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30calculations set forth on Section 1.1(a) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet Constituent Company Disclosure Schedule) and with GAAP applied using the Closing Statementsame accounting methods, Buyer shallpolicies, practices and shall cause procedures, with consistent classifications, judgments and estimation methodology, as were used in the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records preparation of the Company Entities and to senior management personnel Financial Statements; provided, that if Section 1.1(a) of the Constituent Company EntitiesDisclosure Schedule is inconsistent with GAAP, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review this Agreement and/or Section 1.1(a) of the Closing Balance Sheet and the Closing Statement, and Constituent Company Disclosure Schedule (yas applicable) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementshall control (“GAAP Consistently Applied”).
(c) The Closing Balance Sheet, If the Closing Statement and Equityholders’ Representative disagrees with the Closing Cash-on-Hand, calculation of any of the Closing Indebtedness, the Closing Net Working Capital and items set forth in the Purchase Price set forth thereon Adjustment Statement, the Equityholders’ Representative shall become final and binding upon the parties hereto thirty notify Buyer in writing of such disagreement (30an “Objection Dispute”) within forty-five (45) days following after receipt of the Seller Purchase Price Adjustment Statement by the Equityholders’ Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice . Any Objection Dispute shall describe specify in reasonable detail the nature of such disagreement; providedany disagreement so asserted, that and include all supporting schedules, analyses, working papers and other documentation. If the Equityholders’ Representative fails to deliver written notice of an Objection Dispute to Buyer within forty-five (i45) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and days after delivery of the Purchase Price set forth thereon Adjustment Statement to the Equityholders’ Representative, the Purchase Price Adjustment Statement shall become be deemed final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheeton Buyer, the Closing Statement Constituent Companies, the Equityholders’ Representative and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice Equityholders for purposes of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceAgreement.
(d) If the Equityholders’ Representative timely delivers a timely Notice notice of Disagreement is delivered by the Seller Representative an Objection Dispute pursuant to Buyer in accordance with Section 1.05(c2.4(c), then the Closing Balance Sheet Buyer and the Closing Statement (as revised Equityholders’ Representative shall negotiate in accordance with this Section 1.05(d)), good faith to resolve any Objection Dispute and any resolution agreed to in writing by Buyer and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Equityholders’ Representative shall become be final and binding upon the parties hereto on Parties. If Buyer and the earlier Equityholders’ Representative are unable to resolve all Objection Disputes within twenty (20) days of (x) the date all matters specified in the Notice delivery of Disagreement are finally resolved in writing written notice of such Objection Disputes by the Seller Equityholders’ Representative and Buyer and (y) to Buyer, then the date all disputed matters specified in shall, at the Notice request of Disagreement not resolved by written agreement either the Equityholders’ Representative or Buyer, be referred for final determination to an Accounting Arbitrator from an accounting firm of national standing, that has no material relationships with any of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accountingParties, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually jointly selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller RepresentativeEquityholders’ Representative (the “Accounting Arbitrator”) be governed by Rule 408 of the Federal Rules of Evidence within fifteen (as in effect as of the date of this Agreement)15) days thereafter. At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. If Buyer and the Seller Equityholders’ Representative are unable to agree upon an Accounting Arbitrator within such time period, then the Accounting Arbitrator shall instruct be an accounting firm of national standing designated by the Arbiter toAmerican Arbitration Association in New York, New York. The Accounting Arbitrator shall only consider those items and amounts set forth on the Purchase Price Adjustment Statement as to which Buyer and the Arbiter shall, make a final determination of Equityholders’ Representative have disagreed within the items included time periods and amounts and on the terms specified in the Closing Balance Sheet Section 2.4(c) and the Closing Statement (to the extent such amounts are properly in disputethis Section 2.4(d) and must resolve all unresolved Objection Disputes in accordance with the guidelines terms and procedures provisions of this Agreement. The Accounting Arbitrator shall deliver to Buyer and the Equityholders’ Representative, as promptly as practicable and in any event within sixty (60) days after its appointment, a written report setting forth the resolution of any unresolved Objection Disputes determined in accordance with the terms herein. In resolving any disputed item, the Accounting Arbitrator shall be bound by the principles set forth in this AgreementSection 2.4. Buyer The Accounting Arbitrator resolution shall be based solely on presentations and supporting material provided by the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer Parties and the Seller Representative not pursuant to any independent review, shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either Buyer or the Seller Representative, on the other hand, Equityholders’ Representative or less than the smallest value for such item assigned claimed by Buyer, on the one hand, either Buyer or the Seller Equityholders’ Representative, on . Such report shall be final and binding upon all of the other handParties to this Agreement. Upon the agreement of Buyer and the Seller Equityholders’ Representative shall also instruct or the Arbiter todecision of the Accounting Arbitrator, and or if the Arbiter shallEquityholders’ Representative fails to deliver written notice of disagreement to Buyer within the forty-five (45) day period provided in Section 2.4(c), make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Adjustment Statement, as adjusted (if necessary) pursuant to the terms of this Agreement, shall become be deemed to be the final Purchase Price Adjustment Statement for purposes of this Section 2.4 (the “Final Purchase Price Adjustment Statement”) and shall be deemed to be final and binding on Buyer, the parties hereto on Constituent Companies, Largus, the date the Arbiter delivers its final resolution in writing to Buyer Equityholders’ Representative and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements Equityholders for purposes of this Agreement. The Seller Representative (Closing Date Net Working Capital, the Closing Cash, the Closing Funded Indebtedness and the Closing Transaction Expenses, each as shown on behalf the Final Purchase Price Adjustment Statement, shall be referred to as the “Final Closing Date Net Working Capital,” the “Final Closing Cash,” the “Final Closing Funded Indebtedness” and the “Final Closing Transaction Expenses” respectively. The fees, expenses and costs of the Sellers) Accounting Arbitrator shall pay a portion of be borne by Buyer and the fees and expenses of Equityholders’ Representative, respectively, in the Arbiter equal to proportion that the percentage by which the portion aggregate dollar amount of the disputed amounts in the Seller Representative’s submission items submitted to the Arbiter not awarded to Accounting Arbitrator by such Party that are unsuccessfully disputed by such Party (as finally determined by the Seller Representative Accounting Arbitrator) bears to the aggregate dollar amount actually of disputed items submitted by the Seller Representative in the Seller Representative’s submission to the Arbiter, Buyer and the Company shall pay the remaining portion of such fees and expensesEquityholders’ Representative.
(e) If (i) (A) the sum of the Final Closing Date Net Working Capital, plus the Final Closing Cash, minus (B) the sum of the Final Closing Funded Indebtedness plus the Final Closing Transaction Expenses, exceeds (ii) (A) the sum of the Estimated Purchase Price is less Closing Date Net Working Capital, plus the Estimated Closing Cash, minus (B) the sum of the Estimated Closing Funded Indebtedness, plus the Estimated Closing Transaction Expenses by an amount greater than $500,000 (the Purchase Price (sum of such shortfallexcess plus $500,000, the “Net Positive Purchase Price Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after shall pay the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Positive Purchase Price set forth thereon become final Adjustment Amount in cash in accordance with Section 2.4(g) to the account of each Equityholder as designated by the Equityholders’ Representative and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in of immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed byfunds. In addition, the Seller Representative, Equityholders will be entitled to receive the amount then held in the Adjustment Escrow Account and (ii) Buyer and the Seller Equityholders’ Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant shall deliver a Joint Direction instructing to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of such amount out of the Adjustment Escrow Funds from Account in accordance with Section 2.4(h) to the Escrow Account, within two (2) Business Days after receipt account of such instructions, to, or each Equityholder as directed by, designated by the Seller RepresentativeEquityholders’ Representative and by wire transfer of immediately available funds.
(f) If (i) (A) the sum of the Estimated Purchase Price is Closing Date Net Working Capital, plus the Estimated Closing Cash, minus (B) the sum of the Estimated Closing Funded Indebtedness, plus the Estimated Closing Transaction Expenses, exceeds (ii) (A) the sum of the Final Closing Date Net Working Capital, plus the Final Closing Cash, minus (B) the sum of the Final Closing Funded Indebtedness, plus the Final Closing Transaction Expenses by an amount greater than the Purchase Price $500,000 (such excessexcess plus $500,000, the “Excess Net Negative Purchase Price Adjustment Amount”), then Buyer shall be entitled to receive a payment in cash out of the Adjustment Escrow Account in an amount equal to the lesser of the Net Negative Purchase Price Adjustment Amount and the Seller Representative shallAdjustment Escrow Amount, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and Buyer and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, Equityholders’ Representative shall deliver joint written instructions to the Escrow Agent to cause a Joint Direction instructing the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, a payment to Buyer, by wire transfer Buyer in immediately available funds an amount equal to the lesser of the Excess Net Negative Purchase Price Adjustment Amount and the Adjustment Escrow Amount. Recovery from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Adjustment Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy with respect to any claims arising out of or relating to the Net Negative Purchase Price Adjustment Amount and source neither Buyer nor the Constituent Companies, Largus or any of recovery for Buyer for payment their respective Affiliates shall have any claim against any Equityholder in respect thereof. In addition, if the amount of the Excess Adjustment Escrow Amount is greater than the Net Negative Purchase Price Adjustment Amount, then Buyer and the Equityholders’ Representative shall deliver a Joint Direction instructing the Escrow Agent to make an aggregate payment equal to the difference between the Adjustment Escrow Amount and the Net Negative Purchase Price Adjustment Amount for distribution in accordance with Section 2.4(h) to the account of each Equityholder as designated by the Equityholders’ Representative and by wire transfer of immediately available funds.
(if anyg) If it is determined pursuant to (i) Section 2.4(e) that the Net Positive Purchase Price Adjustment is $500,000 or less and (ii) Section 2.4(f) that the purchase price adjustment Net Negative Purchase Price Adjustment is $500,000 or less, then Buyer and the dispute resolution provisions provided Equityholders’ Representative shall deliver a Joint Direction instructing the Escrow Agent to make an aggregate payment equal to the amount then held in the Adjustment Escrow Account for distribution in this accordance with Section 1.05, shall be 2.4(h) to the exclusive remedies for account of each Equityholder as designated by the matters addressed or that could be addressed Equityholders’ Representative and by this Section 1.05. For the avoidance wire transfer of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesimmediately available funds.
(h) Any Within two (2) Business Days following determination of the Final Purchase Price Adjustment Statement, Buyer shall pay the Net Positive Purchase Price Adjustment Amount, if any, and/or Buyer and the Equityholders’ Representatives shall cause the Escrow Agent to promptly pay from the Adjustment Escrow Account pursuant to the last sentence of Section 2.4(e), Section 2.4(f) or Section 2.4(g), as applicable, to each Equityholder, an amount equal to the sum of (A) such Equityholder’s Applicable Portion of the Net Positive Purchase Price Adjustment Amount, if any, plus (B) such Equityholder’s Applicable Portion of the Adjustment Escrow Release Amount.
(i) The Parties hereto agree to treat any payment made pursuant to this Section 1.05 shall be treated 2.4 as an adjustment to the Purchase Price purchase price for U.S. federal federal, state, local and foreign income tax Tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three four (34) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and will deliver to Buyer Purchaser a certificate (the “Initial Closing Date Certificate”), executed by the Vice President of Finance of the Company, setting forth the Company’s good faith estimate of (i) an estimated consolidated balance sheet all the Indebtedness of the Company Entities and its Subsidiaries outstanding as of the Adjustment Calculation Time Closing, (ii) the unpaid Company Transaction Expenses as of the Closing, (iii) the Cash balance of the Company and its Subsidiaries as of the Closing in excess of the Minimum Cash Amount (the “Estimated Excess Cash”), (iv) the Working Capital as of the Closing (the “Estimated Working Capital”), along with a copy of the Company’s good faith estimated unaudited balance sheet as of the Closing (the “Estimated Closing Date Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portionupon which such calculations are based. The Estimated Closing Date Balance Sheet shall be derived in good faith from the books and records of the Company and shall be prepared on a consolidated basis in accordance with GAAP using the same accounting methods, policies, principles, practices and procedures, with consistent classifications, judgments and estimation methodologies as were used in preparation of the Most Recent Balance Sheet, . The computation of Estimated Working Capital set forth in the Estimated Initial Closing Cash-on-Hand, the Estimated Closing Indebtedness Date Certificate and the Estimated Closing Net Working Capital Date Balance Sheet shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained Form Working Capital Statement and the procedures, practices, methodologies and standards as set forth, subject to, and in this Agreement. From and after delivery the manner described, reflected or implicit therein.
(b) If within two (2) Business Days following receipt of the Initial Closing Date Certificate, the Purchaser has not given the Company notice of its good faith objection to the Estimated Excess Cash or Estimated Working Capital calculations or the Estimated Closing Date Balance Sheet Sheet, the Purchase Price shall, in accordance with Section 2.2, be increased by the Estimated Excess Cash balance set forth on the Initial Closing Date Certificate and increased or decreased, as applicable, on a dollar-for-dollar basis by an amount equal to the Estimated Working Capital Excess (if any) or the Estimated Working Capital Deficit (if any), as applicable, as set forth in the Initial Closing Date Certificate. If Purchaser gives such notice of objection, the Company and Purchaser will work together in good faith to resolve the issues in dispute. If all disputed issues are resolved, the Estimated Excess Cash and the Estimated Closing Statement until the Closing, Working Capital as agreed upon by Purchaser and the Company shall be used, respectively, as the Estimated Excess Cash for purposes of the adjustment of the Purchase Price in accordance with Section 2.2 and to compute the Estimated Working Capital Deficit or the Estimated Working Capital Excess, as applicable. If the Purchaser and the Company are unable, after acting in good faith, to resolve all such disputed issues within two (x2) provide Buyer Business Days following Purchaser’s delivery of an objection to the Company’s Estimated Excess Cash or Estimated Working Capital calculations, the Estimated Excess Cash and its Representatives the Estimated Working Capital Deficit or Estimated Working Capital Excess, as applicable, shall be as determined by the Audit Firm; provided, however, that if the aggregate value of the issues in dispute is less than $100,000, the Estimated Excess Cash and the Estimated Working Capital Deficit or Estimated Working Capital Excess, as applicable, shall be determined by the Company.
(c) No later than ninety (90) calendar days after the Closing Date, the Purchaser shall cause to be delivered to the Seller a statement setting forth the Purchaser’s calculations of Cash and Working Capital as of the Closing (the “Closing Date Statement”) together with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the balance sheet of the Company prepared as of the Closing from which such Closing Date Statement was derived (the “Closing Date Balance Sheet”). The Closing Date Balance Sheet shall be derived in good faith from the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price shall be prepared on a consolidated basis in accordance with GAAP using the amounts same accounting methods, policies, principles, practices and procedures, with consistent classifications, judgments and estimation methodologies as were used in preparation of the Most Recent Balance Sheet. The computation of Working Capital set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Date Statement and the Closing Net Working Capital Date Balance Sheet shall each be calculated prepared by Purchaser in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained Form Working Capital Statement and the procedures, practices, methodologies and standards as set forth, subject to, and in this Agreementthe manner described, reflected or implicit therein.
(d) Purchaser shall permit the Seller and its representatives reasonable access to the books and records, accountant’s work papers, personnel, and facilities of the Company in order to complete its review of the Closing Date Statement, the calculations of the Cash balance of the Company as of the Closing, the Working Capital as of the Closing and any Excess Working Capital or Working Capital Shortfall therein and the Closing Date Balance Sheet and for the purpose of resolving any disputes with respect thereto. During Such access shall be at such times and in such a manner as shall not unreasonably interfere with Purchaser’s operation of the thirty Business.
(30e) Within sixty (60) calendar days after its receipt of the Closing Date Statement, the Seller may either inform Purchaser in writing that the Closing Date Statement is acceptable or object thereto in writing, setting forth its objections in reasonable detail (the “Seller Objections”). If the Seller delivers the Seller Objections and the Parties do not resolve all such Seller Objections on a mutually agreeable basis within twenty (20) days immediately following the Seller Representativeafter Purchaser’s receipt of the Closing Balance Sheet Seller Objections, any Seller Objections as to which Purchaser and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide Seller cannot agree upon may be submitted by either Purchaser or the Seller Representative to an Audit Firm, who shall act as an expert and its Representatives with reasonable access at all reasonable times during normal business hours not an arbitrator, for resolution as provided herein. The Audit Firm shall have the power, authority and upon reasonable prior notice duty to resolve any outstanding Seller Objections and the books and records decision of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Audit Firm shall become be final and binding upon the parties hereto Parties. Upon the agreement of the Parties or the decision of the Audit Firm, the Closing Date Statement, as adjusted in accordance with this Section 2.4, if necessary, shall be final and conclusive with respect to the calculation of the Cash balance of the Company and Working Capital as of the Closing. If the Members’ Representative fails to deliver any Seller Objections to Purchaser within the first sixty (60) day period referred to above, the Closing Date Statement delivered by Purchaser shall be final and binding on the Parties.
(f) In resolving any disputed item, the Audit Firm (i) shall be bound by the provisions of this Section 2.4, (ii) may not assign a value to any item greater than the highest value claimed for such item or less than the lowest value claimed for such item by either Purchaser or the Seller, (iii) shall restrict its decision to such items included in the Seller Objections which are then in dispute, (iv) may review only the written presentations of Purchaser and the Seller in resolving any matter which is in dispute and (v) shall use reasonable efforts to render its decision in writing within thirty (30) calendar days following after the disputed items have been submitted to it. Upon the resolution of all Seller Objections, the Closing Date Balance Sheet shall be revised to reflect the resolution. If the Seller Representative’s receipt thereof unless makes any Seller Objections, the Seller Representative gives written notice fees, costs and expenses of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice the Audit Firm shall describe in reasonable detail the nature of such disagreement; provided, that be paid (i) by the Closing Balance SheetSeller if the Seller Objections are resolved in favor of Purchaser, or (ii) by Purchaser if the Closing Statement Seller Objections are resolved in favor of the Seller. If the Seller Objections are resolved part in favor of the Seller and part in favor of Purchaser, such fees, costs and expenses shall be shared by Purchaser and the Closing Cash-on-HandSeller in proportion to the aggregate amount of the Seller Objections resolved in favor of the Seller compared to the aggregate amount of the Seller Objections resolved in favor of Purchaser. If the Seller is required to pay any fees, costs and expenses pursuant to this paragraph, then the Closing IndebtednessSeller shall satisfy the payment of all such fees and expenses solely from the Escrow Fund, the Closing Net Working Capital and the Purchase Price set forth thereon Seller shall become final and binding upon not be individually liable with respect to any such amounts.
(g) If the parties hereto upon Cash balance of the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance Company as of the Closing Balance Sheetin excess of the Minimum Cash Amount as finally determined in accordance with this Section 2.4 exceeds the Estimated Excess Cash (the amount of such excess, “Excess Cash”), Purchaser shall pay the Closing Statement amount in cash equal to the Excess Cash to the Seller and the Closing Cash-on-Hand, Buyback Sellers in cash within five (5) Business Days after such final determination. If the Closing Indebtedness, Cash balance of the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component Company as of the Closing Balance Sheetas finally determined in accordance with this Section 2.5 is less than the amount of Estimated Excess Cash (the amount of such shortfall, “Cash Shortfall”), the Closing Statement Cash Shortfall shall be paid from the Escrow Fund to Purchaser within five (5) Business Days after such final determination and Purchaser and the Closing Cash-on-Hand, Members’ Representative shall deliver a joint written instruction to the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated Escrow Agent in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation terms of the Closing Cash-on-Hand, Escrow Agreement instructing the Closing Indebtedness, the Closing Net Working Capital Escrow Agent to make such payment within such period. The Parties shall treat any payments of Excess Cash or Cash Shortfall in accordance with this Section 2.4(g) as an adjustment to the Purchase Price.
(dh) If a timely Notice the Working Capital as of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised finally determined in accordance with this Section 1.05(d)2.4 exceeds the amount of Estimated Working Capital (the amount of such excess, “Excess Working Capital”), Purchaser shall pay the amount in cash equal to the Excess Working Capital to the Seller and the Closing Cash-on-Hand, Buyback Sellers in cash within five (5) Business Days after such final determination. If the Working Capital as of the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are as finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter determined in accordance with this Section 1.05(d2.4 is less than the amount of Estimated Working Capital (the amount of such shortfall, “Working Capital Shortfall”). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Working Capital Shortfall shall be paid from the Escrow Fund to Purchaser within five (5) Business Days after such final determination and Purchaser and the Members’ Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect deliver a joint written instruction to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) Escrow Agent in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf terms of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause Agreement instructing the Escrow Agent to make such payment within such period. The Parties shall treat any payments of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account Working Capital Shortfall in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof2.4(h) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposesPrice.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Vantiv, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closing, the Company Timken shall prepare cause to be prepared and deliver delivered to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) certificate setting forth in reasonable detail the Company’s its good faith estimates reasonable estimate of the Working Capital as of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and prepared in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts Working Capital example set forth in Section 4.8(d) of the Disclosure Schedule (“Estimated Working Capital”). If the Working Capital Target exceeds the Estimated Closing StatementWorking Capital, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect reduced by an amount equal to the allocation of amount by which the Working Capital Target exceeds the Estimated Working Capital. If the Estimated Working Capital exceeds the Working Capital Target, the Purchase Price among shall be increased by an amount equal to the amount by which the Estimated Working Capital exceeds the Working Capital Target. The Estimated Working Capital shall be subject to review by Buyer, and Timken and Buyer will cooperate and negotiate in good faith to resolve any dispute regarding the Estimated Working Capital; provided that if any item of dispute regarding the Estimated Working Capital is not resolved by agreement in writing between Timken and Buyer prior to the Closing Date, then Timken’s reasonable estimate for such Sellers disputed item together with the resolved disputed items and the undisputed items contained in the Estimated Working Capital shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership be deemed the Estimated Working Capital for purposes of the Purchased Securitiesthis Section 2.10.
(b) Within ninety sixty (9060) days following the Closing Date, Buyer shall prepare cause to be prepared and deliver delivered to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Timken a working capital statement (the “Closing Working Capital Statement”) setting forth in reasonable detail Buyer’s calculation the Working Capital as of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and prepared in a manner consistent with the applicable definitions contained Working Capital example set forth in this AgreementSection 4.8(d) of the Disclosure Schedule. During Within forty-five (45) days following receipt by Timken of the Closing Working Capital Statement, Timken shall deliver written notice to Buyer containing a reasonably detailed description of any dispute it has with respect to the content of the Closing Working Capital Statement; provided, however, that Timken may not dispute the accounting principles and adjustments used in preparing the Closing Working Capital Statement if they are consistent with the Working Capital example set forth in Section 4.8(d) of the Disclosure Schedule. If Timken does not notify Buyer of a dispute with respect to the Closing Working Capital Statement within such forty-five (45) day period, the Closing Working Capital Statement will be final, conclusive and binding on the parties. In the event of such notification of a dispute, Buyer and Timken shall negotiate in good faith to resolve such dispute. If Buyer and Timken, notwithstanding such good faith effort, fail to resolve such dispute within thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, after Timken provides Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice objections, then Buyer and Timken jointly shall engage the firm of Disagreement”) PricewaterhouseCoopers LLP to Buyer prior to resolve such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreementdispute, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, if PricewaterhouseCoopers LLP is unwilling or unable to serve in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c)such capacity, then Buyer and Timken jointly shall engage the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d))firm of Deloitte & Touche LLP, and the Closing Cash-on-Handif Deloitte & Touche LLP is unwilling or unable to serve in such capacity, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative Timken and Buyer and shall select, within ten (y10) the date all matters specified days after notification that Deloitte & Touche LLP is unwilling or unable to serve in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by such capacity, a mutually acceptable nationally recognized accounting, consulting or valuation independent accounting firm to resolve such dispute (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (any such firm, firm serving in such capacity pursuant to this sentence is referred to herein as the “ArbiterIndependent Auditor”). The Closing Balance Sheet As promptly as practicable thereafter, Buyer and the Closing Statement Timken shall be revised each prepare and submit a presentation to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter Independent Auditor. As soon as practicable thereafter, but in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more no event later than thirty (30) days following submission after such presentation, Buyer and Timken shall cause the Independent Auditor to choose one of such the parties positions as to each disputed matters), item based solely upon the presentation by Buyer and such resolution Timken and any additional information requested by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this AgreementIndependent Auditor. The Seller Representative (on behalf of the Sellers) parties shall pay a portion of share equally the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.and
Appears in 1 contract
Samples: Stock Purchase Agreement (Timken Co)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more By not later than five (5) Business Days, prior to the Closing31 July 2008, the Company shall prepare and Purchaser will deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Vendors’ Representative a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the CompanyPurchaser’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet CIH EBITDA and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance Adjustment, together with the amounts set forth in the Estimated Closing such documents and information so as to enable Vendors’ Representative to verify such calculation (CIH EBITDA Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety ten (9010) days following Business Days after Vendors’ Representative receives the Closing DateCIH EBITDA Statement, Buyer shall prepare and Vendors Representative will deliver a notice (CIH EBITDA Response) to the Seller Purchaser that states that Vendors’ Representative either:
(i) an unaudited consolidated balance sheet of agrees with the Company Entities as of CIH EBITDA Statement and, if the Purchase Price Adjustment Calculation Time (is greater than zero, such CIH EBITDA Response will also set forth wire transfer instructions for each Vendor, together with the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation percentage of the Purchase Price resulting therefrom, in Adjustment to be paid to each case, based on Vendor; or
(ii) believes that the Closing Balance Sheet. The Closing Balance SheetCIH EBITDA Statement understated the CIH EBITDA, the Closing Cash-on-Handamount by which Vendors’ Representative believes the CIH EBITDA was understated, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated matters in accordance with respect of which Vendors’ Representative believes caused the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet understatement and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementgrounds therefor.
(c) The Closing Balance SheetIf the Purchaser receives a CIH EBITDA Response from the Vendors’ Representative in accordance with, and in the time specified in, clause 9.11(b)(i), then, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shallPurchaser will, within two ten (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (210) Business Days after receipt of such instructionsCIH EBITDA Response, topay to each Vendor, or as directed byin Immediately Available Funds, such Vendor’s respective percentage set forth in the Seller RepresentativeCIH EBITDA Response of the Purchase Price Adjustment in accordance with such Vendor’s wire transfer information.
(fd) If the Estimated Purchase Price is greater than Purchaser receives a CIH EBITDA Response from the Purchase Price (such excessVendors’ Representative in accordance with, and in the time specified in, clause 9.11(b)(ii), then, the “Excess Amount”), then Buyer Purchaser and Vendors’ Representative will attempt to resolve the Seller Representative shall, matter within two ten (210) Business Days after the Closing Balance SheetPurchaser’s receipt of such CIH EBITDA Response.
(i) If the Purchaser and Vendors’ Representative are able to resolve such dispute within such ten (10) Business Day period, then, the Closing Statement Purchaser and Vendors’ Representative will execute and deliver a certificate setting forth the Closing Cash-on-Handamount of CIH EBITDA and Purchase Price Adjustment upon which they agree and, Closing Indebtednessif such Purchase Price Adjustment is greater than zero, Closing Net Working Capital and the certificate will also set forth the Purchase Price set forth thereon become final Adjustment, wire transfer instructions for each Vendor, and binding on the parties pursuant percentage of the Purchase Price Adjustment to this Section 1.05, deliver joint written instructions be paid to the Escrow Agent to cause the Escrow Agent to make payment, within two each Vendor. Within ten (210) Business Days after receipt the execution and delivery of such instructionscertificate, the Purchaser will pay to Buyereach Vendor, by in Immediately Available Funds, such Vendor’s respective percentage set forth in the certificate of the Purchase Price Adjustment in accordance with such Vendor’s wire transfer information.
(ii) If the Purchaser and Vendors’ Representative are unable to resolve such dispute within such ten (10) Business Day period, then, the dispute will be referred to an Expert for resolution in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Accountaccordance with clause 9.12. If the Excess Amount Expert’s final written decision issued in accordance with clause 9.12(f) shows that the Purchase Price Adjustment is less greater than zero, then, within ten (10) Business Days after such written decision is delivered to Purchaser and Purchaser has received from Vendors’ Representative wire transfer information for each Vendor and the Escrow Funds (such shortfallpercentage of the Purchase Price Adjustment to be paid to each Vendor, the “Remaining Escrow Purchaser will pay to each Vendor, in Immediately Available Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery such Vendor’s respective percentage of the joint written instructions referred to Purchase Price Adjustment in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representativeaccordance with such wire transfer instructions.
(ge) Buyer agrees The Parties agree that (i) the payment of the Excess Amount (Purchase Price Adjustment, if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to increase the Purchase Price for U.S. federal income United States tax purposes, except to the extent that any portion thereof must be treated as interest for such purposes.
Appears in 1 contract
Samples: Share Sale and Purchase Agreement (Multi Color Corp)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more No later than five (5) Business Days, and no earlier than ten (10) Business Days, prior to the ClosingClosing Date, the Company A&P Parties shall prepare and deliver to Buyer the Metro Parties a certificate of an officer of A&P setting forth its good faith estimate of the Net Working Capital as of the Closing Date (the "ESTIMATED NET WORKING CAPITAL"). Such certificate shall include a reasonably detailed calculation and description of how the Estimated Net Working Capital was determined.
(b) The Cash Consideration shall be (i) increased, if the Estimated Net Working Capital exceeds the Reference Net Working Capital, by an estimated amount equal to the amount of such excess, or (ii) decreased, if the Reference Net Working Capital exceeds the Estimated Net Working Capital, by an amount equal to such excess (such increase or decrease, as the case may be, being the "ESTIMATED CLOSING ADJUSTMENT").
(c) Within 45 days following the Closing Date, the A&P Parties shall prepare and deliver to the Metro Parties the following (collectively, the "PRELIMINARY STATEMENT"):
(i) a consolidated balance sheet of the Company Entities as of at the Adjustment Calculation Effective Time (before giving effect to the “Estimated Closing Balance Sheet”Closing) (the "PRELIMINARY CLOSING BALANCE SHEET"), and prepared in accordance with GAAP, applied on a basis consistent with past practice, which shall be audited by the Company's Auditors, the cost of which will be assumed by Purchaser; and
(ii) a statement (calculation by the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates A&P Parties of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital as at the Effective Time (before giving effect to the “Estimated Closing Net Working Capital”Closing) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Preliminary Closing Balance Sheet and including (the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion"PRELIMINARY NET WORKING CAPITAL"). The Estimated Closing Balance Sheet, Preliminary Statement shall include a reasonably detailed calculation and description of how the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Preliminary Net Working Capital shall each be calculated in accordance was determined.
(d) In connection with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery preparation of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the ClosingPreliminary Statement, the Company A&P Parties and their representatives shall (x) provide Buyer and its Representatives with have reasonable access at all reasonable times access, during normal business hours and upon reasonable prior notice notice, to the books and records records, the financial systems and finance personnel and any other information of the Company Entities and its Subsidiaries that the A&P Parties reasonably request, and Metro shall, and shall cause its Subsidiaries, including the Company and its Subsidiaries, to senior management personnel cooperate reasonably with the A&P Parties and their representatives in connection therewith.
(e) The Metro Parties shall have 15 Business Days following receipt of the Company Entities, in each case, Preliminary Statement to review the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Preliminary Closing Balance Sheet and the Estimated Closing Statementcalculation of the Preliminary Net Working Capital, and to notify the A&P Parties in writing if it disputes the amount of the Preliminary Net Working Capital set forth on the Preliminary Statement (ythe "DISPUTE NOTICE"), specifying the reasons therefor in reasonable detail.
(f) cooperate with Buyer and its Representatives in In connection with their Metro Parties' review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and Preliminary Statement and/or the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance SheetPreliminary Net Working Capital, the Closing Cash-on-HandMetro Parties and their Representatives shall have reasonable access, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice notice, to all relevant work papers, schedules, memoranda and other documents prepared by the books and records of A&P Parties or their representatives (including the Company Entities Auditors), subject to customary indemnification and other agreements that may be requested by the A&P Parties' representatives that are external advisors (including the Company Auditors), and to senior management finance personnel of the Company EntitiesA&P Parties and their Subsidiaries and any other information which the Metro Parties reasonably request and the A&P Parties shall, in each caseand shall cause their Subsidiaries to, to cooperate reasonably with the extent reasonably requested by the Seller Representative or any of its Metro Parties and their Representatives in connection therewith, including discussing with their review and explaining to the Metro Parties and its Representatives any aspect of the Preliminary Statement.
(g) In the event that the Metro Parties shall deliver a Dispute Notice to the A&P Parties, the Metro Parties and the A&P Parties shall cooperate in good faith to resolve such dispute as promptly as practicable and, upon such resolution, if any, any adjustments to the Preliminary Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Preliminary Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated made in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet Metro Parties and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.A&
Appears in 1 contract
Samples: Stock Purchase Agreement (Great Atlantic & Pacific Tea Co Inc)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Purchaser a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-HandEstimates”), the Closing Indebtedness including reasonable supporting documentation, setting forth its good faith estimate of: (the “Estimated Closing Indebtedness”), i) the Closing Net Working Capital Items; (ii) the “Estimated Closing Net Working Capital”Date Cash; (iii) the Closing Date Debt; (iv) the Closing Date Company Expenses; and (v) the calculation of all outstanding Royalties attributable to the Purchase Price resulting therefrom (period prior to the “Estimated Purchase Price”)Closing and all Prepaid Royalties for all Franchise Locations, in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated all determined in accordance with the Agreed Accounting Principles Principles. The Purchaser shall be entitled to review, comment on, and request reasonable changes to the Closing Estimates and the Seller shall consider the Purchaser’s proposed changes in a manner consistent with good faith. If the applicable definitions contained in this Agreement. From Seller and after delivery the Purchaser are unable to reach agreement on any of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the ClosingPurchaser’s proposed changes, the Company Closing Estimates as proposed by the Seller shall (x) provide Buyer control solely for the purposes of calculating the Closing Payment, and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to shall not limit or otherwise affect the books and records Purchaser’s remedies under this Agreement or otherwise or constitute an acknowledgment by the Purchaser of the Company Entities and to senior management personnel accuracy of the Company Entities, in each case, to Closing Estimates or the extent reasonably requested by Buyer accounting methods or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth policies utilized in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiescalculation thereof.
(b) Within ninety forty-five (9045) calendar days following the Closing Date, Buyer the Purchaser shall prepare and deliver to the Seller Representative a statement of the Purchaser’s calculations of: (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Items; (ii) the Closing Date Cash; (iii) the Closing Date Debt; (iv) the Closing Date Company Expenses; and (v) the calculation of all outstanding Royalties attributable to the Purchase Price resulting therefrom, in each case, based on period prior to the Closing Balance Sheetand all Prepaid Royalties for all Franchise Locations (the “Adjustment Calculations”), all determined in accordance with the Accounting Principles. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Seller and the Purchaser agree that the calculation of Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and prepared in a manner format consistent with the applicable definitions contained in this Agreementsample calculations, which have been included for illustrative purposes only, set forth on Part 2 of Schedule 2.3. During If the Purchaser fails to timely deliver the Adjustment Calculations, the Purchaser will be deemed conclusively to have agreed to the Closing Estimates, which shall be final and binding upon the Purchaser as the definitive calculation of Closing Net Worth Capital.
(c) Within thirty (30) calendar days immediately following the Seller RepresentativePurchaser’s receipt delivery of the Closing Balance Sheet Adjustment Calculations, the Seller may deliver a written notice to the Purchaser of any disagreement with any item contained within the Adjustment Calculations (the “Objection Statement”). For each disputed item, the Seller shall include: (i) the basis for any disagreement, (ii) the nature and amount of such disagreement, and (iii) reasonable supporting documentation, information and calculations thereof for any disagreement. The Seller shall be deemed to have agreed with all other items and amounts contained in the Adjustment Calculations that are not disputed in the Objection Statement. If the Seller fails to timely deliver the Objection Statement, the Seller will be deemed conclusively to have agreed to the Adjustment Calculations, which shall be final and binding upon the Seller.
(d) If the Seller delivers an Objection Statement, the Purchaser and the Closing Seller shall, during the fifteen (15) calendar days following the Seller’s delivery of the Objection Statement, Buyer shalluse their commercially reasonable, good faith efforts to reach agreement on the disputed items and amounts in order to determine, as may be required, the Adjustment Calculations, which shall not be more favorable to the Purchaser than the amount thereof shown in the Purchaser’s calculation delivered pursuant to Section 2.3(b) nor more favorable to the Seller than the amount thereof shown in the Objection Statement. If, during such period, the Seller and the Purchaser are unable to reach such agreement, they shall promptly thereafter select an independent accounting firm of national standing mutually agreed to by the Seller and the Purchaser) (the “Accounting Referee”) to review this Agreement and the disputed items and amounts for the purpose of calculating the Adjustment Calculations. There shall be no ex parte communications between any party and the Accounting Referee. In making such calculation, the Accounting Referee shall consider only those still unresolved items and amounts in the Purchaser’s calculation of Adjustment Calculations as to which the Seller duly objected in accordance with Section 2.3(c) and the Accounting Referee shall not consider any settlement offers exchanged between the Purchaser and the Seller. The Accounting Referee’s calculation shall not be more favorable to the Purchaser than the amount thereof shown in the Purchaser’s calculation delivered pursuant to Section 2.3(b) nor more favorable to the Seller than the amount thereof shown in the Objection Statement. The Accounting Referee shall agree that, between the time the Seller delivered the Objection Statement to the Purchaser and the date thereof, the Purchaser and the Seller may have exchanged certain proposals relating to the disputed items, which were intended solely for purposes of facilitating settlement discussions, and such proposals were confidential and were provided solely on the condition and understanding that such proposals would not be permitted to be disclosed in any court or arbitration hearing, including with respect to the Accounting Referee’s engagement in the dispute. The Accounting Referee will be instructed to disregard any evidence of such settlement proposals and negotiations in its consideration of the disputed matters. The Accounting Referee shall deliver to the Seller and the Purchaser, as promptly as practicable (but in any case, no later than thirty (30) calendar days after the date of engagement of the Accounting Referee), a report setting forth calculations of the disputed amounts, and its reasonable basis for each of its determinations. Absent manifest error, such report shall be final and binding upon the Seller and the Purchaser. The cost of such review and report by the Accounting Referee shall be borne equally by the Seller and the Purchaser. Other than the fees and expenses of the Accounting Referee, the Purchaser and the Seller will each be responsible for its own costs and expenses in connection with any action taken pursuant to this Section 2.3(d).
(e) The Purchaser and the Seller each shall (and shall cause the Company Entities its respective representatives to, (x) provide the Seller Representative use commercially reasonable efforts to cooperate and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each caseassist, to the extent reasonably requested by the Seller Representative or any of its Representatives other, in connection with their review the preparation of the Closing Balance Sheet Adjustment Calculations and in the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review conduct of the Closing Balance Sheet and review referred to in this Section 2.3, including the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except making available to the extent addressed by a duly delivered Notice reasonably necessary of Disagreement prior to books, records, work papers and appropriate personnel. If the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon Purchaser claims that the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one handhas, or the Seller Representativeclaims that the Purchaser has, on as applicable, failed to comply with its obligation under this Section 2.3(e), it may refer such alleged non-compliance to the other hand, or less than Accounting Referee. The Accounting Referee shall have the smallest value for such item assigned by Buyer, on authority to determine if the one hand, or applicable party has complied with its obligations under this Section 2.3(e) and to order the Seller Representative, on the other handnon-compliant party to comply with its obligations under this Section 2.3(e). Buyer The Purchaser and the Seller Representative each shall also instruct the Arbiter to, and the Arbiter shall, make its comply with any such determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesAccounting Referee.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (BBQ Holdings, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior 3.3.1 Subsequent to the Closing, the Company Initial Purchase Price shall prepare and deliver be increased to Buyer (i) an estimated consolidated balance sheet the extent the amount of the Final Working Capital for the Company Entities as of the Adjustment Calculation Time is greater than EUR 8,356,000 (the “Estimated Closing Balance SheetReference Working Capital”), and (ii) or decreased if the amount of the Final Working Capital for the Company is less than the Reference Working Capital, in each case by the amount of such increase or decrease on a statement euro to euro basis (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-HandWorking Capital Adjustment”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until .
3.3.2 Subsequent to the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Initial Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability increased to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred byextent Closing Cash exceeds Closing Indebtedness, or at decreased if Closing Indebtedness exceeds Closing Cash, in each case such increase or decrease shall be on a euro to euro basis (the direction of“Cash/Indebtedness Adjustment”)
3.3.3 The Working Capital Adjustment and the Cash/Indebtedness Adjustment shall be determined in accordance with Clause 3.3.4 and paid in accordance with Clause 3.4.2. The Initial Purchase Price, Buyer). Any disputes among as adjusted by the Sellers with respect to Working Capital Adjustment and the allocation of Cash/Indebtedness Adjustment, is the “Final Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesPrice”.
(b) 3.3.4 Within ninety (90) 60 days following the Closing Date, Buyer the Purchaser shall prepare and deliver to the Seller Representative (i) an a copy of the unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time last day of the month immediately preceding the Closing Date (the “Closing Balance SheetAccounts”), ) and (ii) a statement setting forth Purchaser’s calculation of the Final Working Capital of the Company (the “Closing Working Capital Statement”) ). The Closing Accounts shall be prepared in accordance with IFRS accounting principles applied on a basis consistent with the methodology used in preparing the CLD Pro Forma Annual Accounts 2005. Within 60 days following the Closing Date, the Purchaser shall also prepare and deliver to the Seller a statement setting forth in reasonable detail Buyer’s calculation the Closing Cash and Closing Indebtedness (if any) as of the last day of the month immediately preceding the Closing Date (the “Closing Cash-on-Hand/Indebtedness Statement”). The Closing Accounts, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, /Indebtedness Statement shall be computed in Euros and calculated as of the last day of the month immediately preceding the Closing Indebtedness, the Date.
3.3.5 The Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon /Indebtedness Statement shall become be final and binding upon on the parties hereto upon Parties unless the Seller Representative’s deliveryshall, prior to within 20 days following the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance delivery of the Closing Balance SheetAccounts, Closing Working Capital Statement and Closing Cash/Indebtedness Statement, deliver to the Purchaser written notice of objection (the “Objection Notice”), specifying in reasonable detail each disputed item on the Closing Working Capital Statement and the Closing Cash-on-Hand/Indebtedness Statement (each, a “Disputed Item”) and describing in reasonable detail the basis for each Disputed Item, including the data that forms the basis thereof and the amount in dispute. Notwithstanding the delivery of an Objection Notice, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, /Indebtedness Statement shall become be final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by item is not a Disputed Item.
3.3.6 If the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Objection Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingis delivered, the Seller Representative and Buyer Parties shall seek in good faith to resolve in writing any differences that they may have consult with each other with respect to the matters specified in Disputed Items and use commercially reasonable efforts to resolve the Notice of Disagreement, and dispute. If the Parties are unable to reach agreement on all such discussions related thereto shall Disputed Items within 30 days (unless otherwise agreed subject to extension by Buyer and the Seller Representativemutual agreement) be governed by Rule 408 after delivery of the Federal Rules Objection Notice, either Purchaser or Seller may refer any unresolved Disputed Items to the Brussels office of Evidence Deloitte & Touche, or if the latter is conflicted out to the Brussels office of KPMG (as in effect as the “Independent Expert”). Not later than five days after the appointment of the date of this Agreement). At Independent Expert, (i) the end of such thirty (30)-day period or such agreed-upon longer periodPurchaser shall deliver the Closing Accounts, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Working Capital Statement and the Closing Cash-on-Hand/Indebtedness Statement to the Independent Expert and (ii) the Seller shall deliver a copy of the Objection Notice previously delivered to the Purchaser to the Independent Expert. The Independent Expert shall be directed to render a written report as promptly as practicable and, in any event within 30 days of the Independent Expert’s engagement, to strictly limit its inquiry to the Disputed Items set forth in the Objection Notice and to resolve those unresolved Disputed Items set forth in the Objection Notice. The Independent Expert may not resolve a Disputed Item in an amount that is either greater or less than the range of the dispute for such item established by the Working Capital Statement, the Closing Indebtedness, the Closing Net Working Capital Cash/Indebtedness Statement and the Purchase Price set forth thereon Objection Notice. The Independent Expert, acting as an expert and not an arbitrator, shall become resolve such Disputed Items in accordance with this Agreement. The resolution of all Disputed Items by the Independent Expert shall be final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this AgreementParties. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter Independent Expert shall be borne proportionately by Purchaser and Seller based on the extent to which Purchaser’s and Seller’s respective determinations as submitted to the Independent Expert differ from such Independent Expert’s determination.
3.3.7 The amount of the Final Working Capital shall be equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the amount of Final Working Capital set forth on the Closing Balance SheetWorking Capital Statement, if the Seller does not timely deliver an Objection Notice, or (ii) the amount (A) as agreed to by Seller and Purchaser, or (B) as determined by the Independent Expert, if the Seller timely delivers an Objection Notice. The amount of “Final Closing Cash” and “Final Closing Indebtedness” shall be equal to (i) the amount of Final Closing Cash and Final Closing Indebtedness set forth on the Closing Cash/Indebtedness Statement, if the Seller does not timely deliver an Objection Notice, or (ii) the amount (A) as agreed to by Seller and Purchaser, or (B) as determined by the Independent Expert, if the Seller timely delivers an Objection Notice.
3.3.8 The Parties shall give each other and their respective advisors and accountants and other appropriate personnel such assistance and access to the assets and books and records, including working papers and other data, and relevant personnel of the CLD Companies and the Acquired Operations as they may reasonably request during normal business hours in order to enable them to prepare or review the Closing Working Capital Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing /Indebtedness Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesobjections or proposed changes thereto, as applicable.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Sellers shall prepare and deliver to the Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a reasonably detailed statement (the “Estimated Pre-Closing Statement”) setting forth the Sellers’ calculation of (i) the Estimated Working Capital, as well as the resulting Estimated Working Capital Excess (if any) or Estimated Working Capital Shortfall (if any), as the case may be, and (ii) the Estimated Purchase Price. The Buyer shall have the right to review in good faith the Pre-Closing Statement and the Sellers shall consider in good faith any reasonable detail comments of the CompanyBuyer to the Pre-Closing Statement.
(b) No later than sixty (60) days after the Closing Date, the Buyer shall deliver to the Sellers a reasonably detailed statement (the “Post-Closing Statement”) setting forth the Buyer’s good faith estimates calculation of the Closing CashWorking Capital, as well as the resulting Closing Working Capital Excess (if any) or Closing Working Capital Shortfall (if any), as the case may be, together with copies of all work papers and other information and documentation reasonably required.
(c) After receipt of the Post-on-Hand Closing Statement, the Sellers shall have thirty (30) days (the “Estimated Review Period”) to review the Post-Closing Cash-on-Hand”)Statement. During the Review Period, the Closing Indebtedness (Buyer shall use commercially reasonable efforts to assist the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation Sellers in their review of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing CashPost-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until and shall grant to the Closing, the Company shall (x) provide Buyer Sellers and its their Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities Business, the personnel of, and to senior management personnel work papers prepared by, the Buyer and/or the Buyer’s accountants as the Sellers may reasonably request for the purpose of reviewing the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Post-Closing Statement; provided, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price such access shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent that does not interfere with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt normal business operations of the Closing Balance Sheet and Buyer or the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) Business. The Closing Balance Sheet, the Post-Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof expiration of the Review Period unless the Seller Representative gives Sellers deliver written notice of its disagreement with the Post-Closing Statement (a “Notice of Disagreement”) to the Buyer prior to such date, which notice . Any Notice of Disagreement shall describe specify in reasonable detail the nature of such disagreement; providedSellers’ objections to the Post-Closing Statement, that (i) the Closing Balance Sheet, the Closing Statement indicating each disputed item or amount and the Closing Cash-on-Hand, basis for the Closing Indebtedness, Sellers’ disagreement therewith. If a Notice of Disagreement is received by the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, Buyer prior to the expiration of such the Review Period, then during the thirty (30)-day period, of written notice to Buyer of its acceptance of 30) day period (the Closing Balance Sheet, “Resolution Period”) following the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness Sellers and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek negotiate in good faith to resolve in writing any differences that they may have with respect to the matters specified in such Notice of Disagreement. If such differences are so resolved within the Resolution Period, the revised Post-Closing Statement, with such changes as may have been previously agreed in writing by the Buyer and the Sellers shall be final and binding. If, at the end of the Resolution Period, the Sellers and the Buyer have not resolved in writing the matters specified in the Notice of Disagreement, the Sellers and all the Buyer shall submit any amounts remaining in dispute to the Accounting Firm, who, acting as experts and not arbitrators, shall resolve such discussions related thereto shall (unless otherwise agreed by disputed amounts only and make any adjustments to the Post-Closing Statement. The Buyer and the Seller RepresentativeSellers agree that all adjustments shall be made without regard to materiality. The Accounting Firm shall render a written decision resolving the matters submitted to the Accounting Firm as soon as practicable, and in any event within thirty (30) be governed by Rule 408 days of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end receipt of such thirty submission (30)-day period or such agreed-upon longer period, other time as the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative Sellers shall instruct the Arbiter to, and the Arbiter shall, make a final determination agree in writing). The scope of the disputes to be resolved by the Accounting Firm shall be limited to fixing mathematical errors and determining whether the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) dispute were determined in accordance with the guidelines Balance Sheet Rules and procedures set forth in the terms of this Agreement, and no other matters. The Accounting Firm’s decision shall be (w) limited to the specific items under dispute by the parties (x) based solely on written submissions by the Sellers and the Buyer and the Seller Representative will cooperate their respective Representatives (and it shall not permit or authorize discovery or hear testimony) and not by independent review, (y) made strictly in accordance with the Arbiter during the term of its engagement. Buyer Balance Sheet Rules and the Seller Representative shall instruct terms of this Agreement and (z) final and binding on all of the Arbiter parties hereto absent manifest error. The Accounting Firm may not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, either party or the Seller Representative, on the other hand, or less smaller than the smallest value for such item assigned claimed by Buyereither party. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.6 shall be borne pro rata as between the Sellers, on the one hand, or and the Seller RepresentativeBuyer, on the other hand. Buyer , in proportion to the final allocation made by such Accounting Firm of the disputed items weighted in relation to the claims made by the Sellers and the Seller Representative shall also instruct Buyer, such that the Arbiter toprevailing party pays the lesser proportion of such fees, costs and expenses.
(d) Within five (5) Business Days of the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Final Working Capital and the resulting Final Closing Purchase Price set forth thereon shall become becoming final and binding on the parties hereto on (it being understood that Final Closing Purchase Price shall reflect the date same reduction to the Arbiter delivers its final resolution Base Amount in respect of the Retention Bonus Amount and the Non-Accepting Employee Reduction Amount as set forth in the definition of Estimated Purchase Price), the following payments shall be made, as applicable:
(i) If the Final Closing Purchase Price is greater than the Estimated Purchase Price calculated at the Closing (such excess, the “Adjustment Surplus Amount”), then the Buyer shall pay, or caused to be paid, to the Sellers, by wire transfer of immediately available funds to a bank account designated in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Sellers, and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter an amount equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesAdjustment Surplus Amount.
(eii) If the Estimated Final Closing Purchase Price is less than the Estimated Purchase Price calculated at the Closing (such shortfallamount, expressed as a positive number, the “Adjustment Deficit Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) toSellers shall pay, or as directed bycause to be paid, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in of immediately available funds of to a bank account designated in writing by the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfallBuyer, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions an aggregate amount equal to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativeAdjustment Deficit Amount.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least Closing Date Adjustment.
(i) Not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller Parties’ Representative shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good its good-faith estimates calculation and estimate of the Closing Cash-on-Hand Adjustment Amount (the “Estimated Closing Cash-on-HandAdjustment Amount”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation including calculations of the Purchase Price resulting therefrom (the “Estimated Purchase Price”)May Commissions Received, in each case, based on the Estimated Closing Balance Sheet Effective Time Accounts Payable and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery undistributed Cash as of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the ClosingEffective Time, the Company shall (x) provide Buyer and its Representatives with reasonable access at supporting documentation, all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price which shall be deemed satisfied, Buyer shall not be responsible or have any liability reasonably acceptable to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or Buyer.
(ii) created or incurred byThe Cash Consideration shall, as applicable, (A) be reduced by the Estimated Adjustment Amount if the Estimated Adjustment Amount is less than zero, or at (B) be increased by the direction of, BuyerEstimated Adjustment Amount if the Estimated Adjustment Amount is a greater than zero. The Cash Consideration as adjusted pursuant to this Section 2.04(a)(ii) shall be referred to as the “Closing Date Payment”. The Closing Date Payment shall be subject to adjustment following the Closing Date pursuant to Section 2.04(b). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within Post-Closing Adjustment.
(i) As soon as practicable following the Closing Date, but in no event later than ninety (90) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Parties’ Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s its calculation of the Closing Cash-on-HandAdjustment Amount, including calculations of the May Commissions Received, Effective Time Accounts Payable and Cash as of the Effective Time, with reasonable supporting documentation. If Buyer fails to timely deliver the Closing IndebtednessStatement as required hereunder, Seller Parties’ Representative may elect to either (x) deliver a Closing Statement to Buyer within one hundred fifty days (150) days after the Closing Net Working Capital Date (and the calculation procedures below shall apply mutatis mutandis), in which case Buyer shall provide Seller Parties Representative with reasonable access to the records and work papers necessary to prepare the Closing Statement, or (y) accept the Estimated Closing Statement as the final Closing Statement and not adjust the Closing Date Payment.
(ii) Upon receipt of the Purchase Price resulting therefromClosing Statement, in each caseSeller Parties’ Representative and its Representatives will be given reasonable access to all relevant records, based on workpapers and calculations related to the Closing Balance Sheet. The Closing Balance Sheet, Statement during reasonable business hours for the purpose of verifying the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementStatement. During the Within thirty (30) days immediately following the Seller Representativeof Seller’s receipt of the Closing Balance Sheet Statement, Seller Parties’ Representative may deliver written notice (the “Dispute Notice”) to Buyer of any objections, specifying in reasonable detail any contested amounts and the basis therefor which Seller Parties’ Representative may have to the Closing Statement, Buyer shall, and shall cause . The failure of Seller Parties’ Representative to deliver such Dispute Notice within the Company Entities to, (x) provide the prescribed time period will constitute each Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review Party’s acceptance as final of the Closing Balance Sheet and Statement as determined by Buyer. Any amounts not disputed in the Closing Statement, and Dispute Notice (yif one is delivered) cooperate with the shall be deemed to be accepted by each Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementParty as final.
(ciii) The Closing Balance Sheet, If Seller Parties’ Representative and Buyer are unable to resolve any disagreement with respect to the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto within thirty (30) days following the Seller RepresentativeBuyer’s receipt thereof unless of a Dispute Notice, the Seller Representative gives written notice items and amounts in dispute shall be submitted for review to the Independent Accountant for final determination within forty-five (45) days after such referral. The review of its disagreement (a “Notice of Disagreement”) the Independent Accountant shall be limited solely to Buyer prior to such date, which notice the disputed items and amounts in the Dispute Notice. Any determination by the Independent Accountant shall describe not be outside the range defined by the respective amounts in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-HandDispute Notice proposed by Seller Parties’ Representative and Buyer, the Closing Indebtednessrespectively, the Closing Net Working Capital and the Purchase Price set forth thereon such determination shall become be final and binding upon the parties hereto upon the Seller Representative’s deliveryupon, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheetand non-appealable by, the Closing Statement Parties and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital their respective successors and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date assigns for all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date purposes of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, collateral attack for any reason absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementfraud. The Seller Representative (on behalf All expenses and fees of the Sellers) shall pay a portion of the fees Independent Accountant will be borne equally by Buyer and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Parties’ Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(eiv) If the Estimated Purchase Price Adjustment Amount as finally determined pursuant to this Section 2.04(b) is less greater than the Purchase Price Estimated Adjustment Amount such that the Closing Payment should have been higher that what was actually paid at Closing (the amount of such shortfallexcess, the an “Positive Adjustment Amount”), then (i) Buyer shallthe Closing Date Payment shall be increased by such Positive Adjustment Amount and, within two five (25) Business Days after of the Closing Balance Sheet, final determination of the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Adjustment Amount pursuant to this Section 1.052.04(b), make payment of the Adjustment AmountBuyer shall pay to Seller Parties’ Representative, by wire transfer in of immediately available funds (or other alternative delivery arrangement mutually agreed to the account designated by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Parties’ Representative, and an amount equal to the Positive Adjustment Amount.
(iiv) Buyer and If the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Adjustment Amount as finally determined pursuant to this Section 1.05, deliver joint written instructions to 2.04(b) is less than the Escrow Agent to cause Estimated Adjustment Amount such that the Escrow Agent to make payment of Closing Payment should have been lower than what was actually paid at Closing (the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt amount of such instructionsshortfall, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the a “Excess Negative Adjustment Amount”), then Buyer the Closing Date Payment shall be decreased by such Negative Adjustment Amount. Buyer’s right to payment of the Negative Adjustment Amount shall be satisfied as follows: (A) first, from the Adjustment Holdback Amount (on a joint and several basis), (B) second, solely at the option of Buyer, from the Holdback Amount (on a joint and several basis) and (B) third, by payment from the Seller Representative shallParties, on a several and not joint basis in accordance with the Pro Rata Percentages, within two five (25) Business Days after following determination of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Adjustment Amount pursuant to this Section 1.05, deliver joint written instructions 2.04(b) by wire transfer of immediately available funds to an account designated by Buyer. Any Adjustment Holdback Amount remaining after application of the Escrow Agent immediately preceding sentence will be paid by Buyer to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to BuyerSeller Parties’ Representative, by wire transfer in of immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the account designated by Seller Parties’ Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Health Insurance Innovations, Inc.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to As soon as reasonably practicable after the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)Date, and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within event within ninety (90) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Company Equityholders’ Representative a statement that shall set forth a good faith calculation of, in each case, as of the Closing: (i) an unaudited consolidated balance sheet the Closing Cash, (ii) the Closing Indebtedness, (iii) the Unpaid Closing Transaction Expenses, (iv) the Change of Control Payments to the Company Entities as of extent not paid prior to the Adjustment Calculation Time Closing (the “Unpaid Closing Balance SheetChange of Control Payments”), (v) the Closing Working Capital, and (iivi) a statement the resulting Closing Purchase Price derived therefrom (such statement, the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet). The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During , including the thirty (30) days immediately following defined terms herein, and the Seller Representative’s receipt Accounting Principles, and shall be duly certified by an officer of the Closing Balance Sheet and Company. Upon delivery of the Closing Statement, Buyer shall, and shall cause the Company Entities and the Company Subsidiaries to, (x) provide the Seller Company Equityholders’ Representative and its Representatives with reasonable supporting documentation for the calculations included therein, (y) provide the Company Equityholders’ Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books books, records (including work papers, schedules, memoranda and records other documents), supporting data, facilities and employees involved in the preparation of the Company Entities and to senior management personnel Closing Statement for purposes of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (yz) reasonably cooperate with the Seller Company Equityholders’ Representative and its Representatives in connection with their such review, including providing on a timely basis all other information the Company Equityholders’ Representative reasonably considers necessary or useful in connection with its review of the Closing Balance Sheet Statement. The parties hereto acknowledge that (i) the sole purpose of the determination of Closing Working Capital is to adjust the Closing Purchase Price so as to ensure compliance with GAAP and to reflect the change in Closing Working Capital resulting from the operation of the Company and the Closing StatementCompany Subsidiaries, and (ii) such change can be measured properly only if the calculation is done in accordance with the Accounting Principles.
(cb) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto Within thirty (30) days following delivery to the Seller Representative’s receipt thereof unless Company Equityholders’ Representative of the Seller Closing Statement, the Company Equityholders’ Representative gives shall deliver written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior of any dispute the Company Equityholders’ Representative in good faith has with respect to such date, which notice shall describe the calculation of any items set forth in reasonable detail the nature of such disagreementClosing Statement (the “Dispute Notice”); provided, however, that (i) if the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior Company Equityholders’ Representative does not deliver any Dispute Notice to the expiration of Buyer within such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement will be deemed final, conclusive and binding on the parties hereto. The Dispute Notice, if any, shall set forth in reasonable detail (i) each item on the Closing Cash-on-Hand, Statement that the Closing Indebtedness, the Closing Net Working Capital Company Equityholders’ Representative disputes and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration proposed correct amount of such thirty (30)-day perioditem. Upon receipt by Buyer of a Dispute Notice, each component of the Closing Balance Sheet, the Closing Statement Buyer and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Company Equityholders’ Representative shall negotiate in good faith to resolve any dispute set forth therein. If Buyer and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, Company Equityholders’ Representative fail to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (resolve any such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the dispute within thirty (30) days immediately after delivery of the Dispute Notice (the “Dispute Resolution Period”), then Buyer and the Company Equityholders’ Representative jointly shall engage, within ten (10) Business Days following the delivery expiration of a Notice of Disagreement in accordance with Section 1.05(c) the Dispute Resolution Period, Ernst & Young LLP or, if Ernst & Young LLP is unavailable or such longer period as the Seller Representative and Buyer may agree in writingis unwilling to serve, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed another recognized independent accounting firm selected jointly by Buyer and the Seller RepresentativeCompany Equityholders’ Representative (the “Independent Accounting Firm”) be governed by Rule 408 to resolve any such dispute; provided that, if Buyer and the Company Equityholders’ Representative are unable to agree on the Independent Accounting Firm, then each of Buyer and the Company Equityholders’ Representative shall select a recognized independent accounting firm, and the two (2) firms will mutually select a third (3rd) recognized independent accounting firm to serve as the Independent Accounting Firm hereunder. As promptly as practicable, and in any event not more than fifteen (15) days following the engagement of the Federal Rules Independent Accounting Firm, Buyer and the Company Equityholders’ Representative shall each prepare and submit a presentation detailing their respective complete statement of Evidence proposed resolution of each issue still in dispute to the Independent Accounting Firm (as in effect as and such presentation, and all other communications with the Independent Accounting Firm, will be simultaneously made or delivered to the other party). Within the five (5) day period after submission of the date presentations described in the foregoing sentence, each of this Agreement). At Buyer and the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Company Equityholders’ Representative may in their discretion prepare and Buyer shall submit a response to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreementother’s presentation. Buyer and the Seller Company Equityholders’ Representative shall instruct the Arbiter Independent Accounting Firm to, and as soon as practicable after the Arbiter shall, make a final determination submission of the items included presentations described in the Closing Balance Sheet two immediately preceding sentences and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered event not more than thirty (30) days following submission the engagement of the Independent Accounting Firm, make a final determination of the appropriate amount of each of the line items that remain in dispute as indicated in the Dispute Notice (and that have not been thereafter resolved by written agreement of Buyer and the Company Equityholders’ Representative). With respect to each disputed line item, such disputed matters)determination, and such resolution by if not in accordance with the Arbiter position of either Buyer or the Company Equityholders’ Representative, shall not be subject in excess of the higher, nor less than the lower, of the amounts advocated by Buyer and the Company Equityholders’ Representative, as applicable, in the Closing Statement and the Dispute Notice, respectively. Notwithstanding the foregoing, the scope of the disputes to court review or otherwise appealable, absent manifest error or manifest failure be resolved by the Arbiter Independent Accounting Firm shall be limited to adhere to those line items that remain in dispute as indicated in the requirements Dispute Notice (and that have not been thereafter resolved by written agreement of Buyer and the Company Equityholders’ Representative) and whether any disputed determinations were properly calculated in accordance with the provisions of this Agreement. All determinations made by the Independent Accounting Firm, and the Closing Statement, as modified by the Independent Accounting Firm and to reflect any items resolved by written agreement of Buyer and the Company Equityholders’ Representative, will be final, conclusive and binding on the parties absent manifest error. The Seller fees, costs and expenses of the Independent Accounting Firm will be allocated between Buyer, on the one hand, and the Company Equityholders’ Representative (on behalf of the Sellers) shall pay a portion of Company Equityholders), on the fees and expenses of the Arbiter equal to other hand, based upon the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter contested amount not awarded to Buyer, on the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiterone hand, and the Company shall pay Equityholders’ Representative (on behalf of the remaining portion of Company Equityholders), on the other hand, bears to the amount actually contested by such fees and expenses.
(e) If person, as determined by the Estimated Independent Accounting Firm. For example, if the Company Equityholders’ Representative submits a Dispute Notice that the Closing Purchase Price is less one thousand dollars ($1,000) greater than the Purchase Price amount determined by Buyer, and Buyer contests only five hundred dollars (such shortfall, the “Adjustment Amount”), then (i$500) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed amount claimed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Company Equityholders’ Representative, and if the Independent Accounting Firm ultimately resolves the dispute by awarding the Company Equityholders’ Representative (iion behalf of the Company Equityholders) three hundred dollars ($300) of the five hundred dollars ($500) contested, then the costs and expenses of the Independent Accounting Firm will be allocated sixty percent (60%) (i.e., 300 ÷ 500) to Buyer and the Seller Representative shallforty percent (40%) (i.e., within two (2200 ÷ 500) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment Company Equityholders’ Representative (on behalf of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeCompany Equityholders).
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Securities Purchase Agreement (Masonite International Corp)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company a. Target shall prepare and deliver to Buyer Acquiror at least two (i2) calendar days prior to the Closing an estimated consolidated unaudited balance sheet of the Company Entities Target as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates close of business on the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time Date (the “Closing Balance Sheet”), which Closing Balance Sheet shall (i) be true, correct and complete, (ii) a statement be derived from and be in accordance with the books and records of Target, (iii) fairly and accurately present in all material respects the “assets (including the Closing Statement”Cash Amount), liabilities (including all reserves and the unpaid Total Debt Amount, unpaid Change of Control Payments and unpaid Transaction Fees) setting forth in reasonable detail Buyer’s calculation and financial position of Target as of the date thereof and (iv) fairly and accurately present the Working Capital Amount. Target shall provide to Acquiror any information and back-up materials (including bank account information) reasonably requested by Acquiror with respect thereto. The Closing Cash-on-Hand, Balance Sheet shall set forth (A) the Closing IndebtednessWorking Capital Amount, (B) the unpaid Total Debt Amount, (C) all unpaid Transaction Fees, (D) all unpaid Change of Control Payments, and (E) the Closing Net Working Capital Cash Amount, and the calculation shall include a reasonably detailed summary of the Purchase Price resulting therefromcalculations made to arrive at such amounts, in each case, shall be based upon the amounts reflected on the Closing Balance Sheet, and shall be reasonably acceptable to Acquiror. The Closing Balance SheetSheet shall be used to make any preliminary adjustment to the Net Aggregate Consideration on the Closing Date pursuant to Section 2.13(b), subject to further adjustment in accordance with Section 2.13(e).
b. In the event that the Working Capital Adjustment is negative the Total Consideration shall be adjusted downward by such negative Working Capital Adjustment (each, the “Estimated Working Capital Adjustment”). There will be no preliminary adjustment to the Net Aggregate Consideration on the Closing Date for any Cash Adjustment.
c. Within ninety (90) days after the Closing Date, Acquiror may prepare and deliver to Stockholders’ Agent a certificate setting forth, in reasonable detail, (i) any proposed Cash Adjustment and (ii) any proposed adjustment to the Working Capital Amount compared to the Closing Working Capital Amount and any resulting Working Capital Adjustment (the “Closing Certificate”). Acquiror shall provide to Stockholders’ Agent any information and back-up materials used by Acquiror in preparing the Closing Certificate reasonably requested by Stockholders’ Agent with respect thereto. If Acquiror does not deliver the Closing Certificate within ninety (90) days after the Closing Date, Acquiror shall be deemed to have waived its right to any subsequent Working Capital Adjustment or Cash Adjustment, and the Estimated Working Capital Adjustment shall be the final Working Capital Adjustment and the final Cash Adjustment shall be $0.
d. Stockholders’ Agent shall have forty-five (45) days from the date on which the Closing Certificate have been delivered to it to raise any objection(s) to the Closing Certificate, by delivery of written notice to Acquiror setting forth such objection(s) in reasonable detail (the “Disputed Items”). In the event that Stockholders’ Agent shall not deliver any such objection(s) with respect to the Closing Certificate within such thirty-day period, then the Closing Certificate shall be deemed final for purposes of this Section 2.13. In the event that any such objection(s) is so delivered, the Closing Cash-on-HandCertificate shall not be deemed final and Acquiror and Stockholders’ Agent shall attempt, in good faith, to resolve the Closing Indebtedness and Disputed Items and, if they are unable to resolve all of the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the Disputed Items within thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statementdelivery of such notice, Buyer shall, and shall cause within five (5) Business Days thereafter (or such earlier date as mutually agreed), submit the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice Disputed Items to the books Independent Accounting Firm. Acquiror and records of Stockholders’ Agent shall provide to the Company Entities Independent Accounting Firm all work papers and back-up materials relating to senior management personnel of the Company Entities, in each case, Disputed Items requested by the Independent Accounting Firm to the extent reasonably requested available to Acquiror or its Representatives or Stockholders’ Agent or its Representatives, respectively. Acquiror and Stockholders’ Agent shall be afforded the opportunity to present to the Independent Accounting Firm any material related to the Disputed Items and to discuss the issues with the Independent Accounting Firm. The determination by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementIndependent Accounting Firm, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price as set forth thereon shall become final in a notice to be delivered to Acquiror and binding upon the parties hereto Stockholders’ Agent within thirty (30) days following after the Seller Representative’s receipt thereof unless submission of the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior Disputed Items to the expiration Independent Accounting Firm, shall be final, binding and conclusive on Acquiror, Stockholders’ Agent and all holders of such thirty (30)-day period, of written notice to Buyer of its acceptance Target Capital Stock and Target Options. The fees and expenses of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Independent Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement Firm shall be revised allocated to the extent necessary to reflect any resolution and borne proportionately by the Seller Representative Acquiror and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative Stockholders’ Agent (on behalf of the Sellersholders of Target Capital Stock and Target Options) to the extent Acquiror’s and Stockholders’ Agent’s respective determinations of the Disputed Items differ from the Independent Accounting Firm’s final determination of the Disputed Items (such proportional responsibility to be determined conclusively by the Independent Accounting Firm and included in its written determination). The Working Capital Amount and Cash Adjustment reflected in the Closing Certificate, as revised to reflect the resolution of any and all disputes by Acquiror and Stockholders’ Agent and/or the Independent Accounting Firm, shall be deemed to be the “Final Working Capital Amount” and “Final Cash Adjustment,” respectively.
e. At such time as the Closing Certificate shall become final in accordance with Section 2.13(c) or 2.13(d), the Estimated Working Capital Amount shall be compared to the Final Working Capital Amount to calculate the final Working Capital Adjustment. In the event the final Working Capital Adjustment exceeds the Estimated Working Capital Adjustment or the Final Cash Adjustment is greater than $0, the holders of Target Capital Stock and Target Options shall pay a portion of the fees and expenses of the Arbiter to Acquiror an amount equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
excess amounts within five (e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (25) Business Days after from the date that the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties Certificate is finally determined pursuant to this Section 1.05, make payment of the Adjustment Amount2.13(c) or 2.13(d), by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment Acquiror’s deduction of the Escrow Funds such amounts from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller RepresentativeFund.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following On the Closing Date, Buyer Seller shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) Purchaser a statement (the “Closing Statement”) setting forth in reasonable detail Buyercontaining Seller’s final calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Date Inventory Value and the shall be accompanied with reasonably detailed documentation supporting Seller’s calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheetthereof. The Closing Balance Sheet, Statement will be in the form as set forth in Schedule 2.7(a).
(b) The Purchaser will have a period of twenty (20) Business Days to review the Closing Cash-on-Hand, the Closing Indebtedness Statement and the Closing Net Working Capital all calculations set forth therein. Seller shall each be calculated in accordance with the Agreed Accounting Principles give Purchaser (upon reasonable advance notice and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon in a manner that does not materially interfere with Seller’s business) reasonable prior notice access to the applicable personnel and books and records of the Company Entities Seller and to senior management personnel of the Company Entities, in each case, to the extent its Affiliates as reasonably requested by Purchaser, as well as use commercially reasonable efforts to cause [***] to provide Purchaser reasonable access to the Seller Representative or any premises of its Representatives in connection with their review [***] and the records kept by them of the Closing Balance Sheet and Inventories, to reasonably enable Purchaser to fully review the Closing Statement, Statement and such access shall be provided in a timely manner to allow Purchaser to complete such review in such twenty (y20) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing StatementBusiness Day period.
(c) The Closing Balance SheetStatement shall be conclusive of the amount of the Closing Date Inventory Value and shall be final and binding upon the Parties unless on or before the twentieth (20th) Business Day after the date on which the Closing Statement is delivered to Purchaser, Purchaser delivers to Seller a notice of objection (an “Objection Notice”) to any matter stated in the Closing Statement. Any Objection Notice shall specify, in reasonable detail to the extent Purchaser has the available information, those items or amounts as to which Purchaser disputes in good faith and Purchaser shall be deemed to have agreed with all other items and amounts contained in the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance calculations of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Date Inventory Value set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Pricetherein.
(d) If a timely Purchaser fails to deliver an Objection Notice of Disagreement is delivered by the Seller Representative within such twenty (20) Business Day period, Purchaser shall be deemed to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and have waived its rights to contest the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, calculation of the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price Date Inventory Value set forth thereon therein shall become be deemed to be final and binding upon the parties hereto on Parties (the earlier “Final Inventory Value”) and such amount shall be used for the purposes of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement adjustment of the Maximum Milestone Payment Amount pursuant to Section 2.7(g).
(e) If Purchaser delivers an Objection Notice to Seller Representative on or before such twenty (20) Business Day period, then the Parties shall meet within ten (10) Business Days after Purchaser delivers an Objection Notice, by telephone or at a mutually agreeable location to discuss in good faith and Buyer are finally resolved in writing attempt to reconcile their differences with respect to the amount of the Closing Date Inventory Value that is being challenged by a nationally recognized accounting, consulting or valuation firm Purchaser (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “ArbiterChallenged Amount(s)”). The Closing Balance Sheet and In the Closing Statement shall be revised event the Parties are unable to reach agreement on the Challenged Amounts, either Party may at any time thereafter submit such remaining disagreements to the extent necessary Independent Accountant.
(f) The Parties shall use commercially reasonable efforts to reflect cause the Independent Accountant, once appointed, to resolve all remaining disagreements with respect to Challenged Amounts as soon as practicable, but in any resolution by event shall direct the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the Independent Accountant to render a determination within thirty (30) days immediately following after retention of the delivery Independent Accountant. Each Party will be afforded the opportunity to present to the Independent Accountant any material such Party deems relevant to the determination. The Independent Accountant shall consider only those items and amounts in Purchaser’s and Seller’s respective calculations of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period the Challenged Amounts that are identified as the being items and amounts to which Purchaser and Seller Representative and Buyer may agree in writinghave been unable to agree. In resolving any disputed item, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they Independent Accountant may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned claimed by Buyer, on the one hand, or the Seller Representative, on the other hand, either Party or less than the smallest value for such item assigned claimed by Buyereither Party. The Independent Accountant’s determination of the Challenged Amounts shall be based solely on written materials submitted by the Parties (i.e., not on independent review) and on the definitions included in this Agreement. The determination of the Independent Accountant shall be conclusive and binding upon the Parties and shall not be subject to appeal or further review and shall be deemed as the Final Inventory Value for all purposes hereunder. The costs and expenses of the Independent Accountant in determining any Challenged Amounts shall be borne equally by Purchaser, on the one hand, or the Seller Representativeand Seller, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that On the date of the binding determination of the Final Inventory Value pursuant to the terms of this Section 2.7, either (as applicable);
(i) the payment value of the Excess Maximum Milestone Payment Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement for all purposes hereunder shall be deemed decreased dollar for dollar by the sole and exclusive remedy and source of recovery for Buyer for payment of amount by which the Excess Amount Final Inventory Value is less than [***] (if anythe “Inventory Shortfall Amount”) and or
(ii) the purchase price adjustment and value of the dispute resolution provisions provided Maximum Milestone Payment Amount for in this Section 1.05, all purposes hereunder shall be increased dollar for dollar by the exclusive remedies for amount by which the matters addressed or that could be addressed by this Section 1.05. For Final Inventory Value exceeds [***] (the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the “Inventory Excess Amount (or any portion thereof) shall be asserted against any of the Seller PartiesAmount”).
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the ClosingClosing Date, the Company shall prepare and Sellers will deliver to Buyer a worksheet setting forth Sellers’ good faith reasonable estimate of (i) an estimated consolidated balance sheet of the Company Entities as of Capital Expenditures Adjustment Amount, if any, (ii) the Coal Inventory Adjustment Calculation Time Amount and (iii) the Aggregate Adjustment Amount (the “Estimated Closing Balance SheetAggregate Adjustment Amount”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in together with reasonable detail and supporting material regarding the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the computations thereof. The Base Purchase Price resulting therefrom (the “Estimated Purchase Price”)payable at Closing will be increased or decreased, in each caseas applicable, based on by an amount equal to the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesAggregate Adjustment Amount.
(b) Within ninety (90) days following after the Closing DateClosing, Buyer shall Sellers will prepare and deliver to Buyer a computation (the Seller Representative “Adjustment Statement”) of the actual (i) an unaudited consolidated balance sheet of the Company Entities as of the Capital Expenditures Adjustment Calculation Time Amount, if any, (ii) Coal Inventory Adjustment Amount and (iii) Aggregate Adjustment Amount (the “Closing Balance SheetActual Aggregate Adjustment Amount”), and (ii) a statement (the “Closing Statement”) setting forth in together with reasonable detail Buyer’s calculation of and supporting material regarding the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheetcomputations thereof. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the If within thirty (30) days immediately following the Seller Representative’s receipt delivery of the Closing Balance Sheet and the Closing such Adjustment Statement, Buyer shalldoes not object in writing thereto to Sellers, and then the Actual Aggregate Adjustment Amount shall cause be as reflected on the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Adjustment Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto If within thirty (30) days following delivery of the Seller RepresentativeAdjustment Statement, Buyer objects to any items set forth in the Adjustment Statement to Sellers in writing identifying with specificity the items on the Adjustment Statement to which Buyer objects, the basis for such objection and Buyer’s proposed revisions to the Adjustment Statement addressing such objections, then Buyer and Sellers shall negotiate in good faith and attempt to resolve their disagreement. Should such negotiations not result in an agreement within twenty (20) days after receipt thereof unless by Sellers of such written objection from Buyer, then the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) disputed items shall be submitted for resolution and determination to the Independent Accounting Firm. The Independent Accounting Firm will deliver to Buyer prior and Sellers a written determination of such disputed items (such determination to include a worksheet setting forth all material calculations used in arriving at such datedetermination and to be based solely on information provided to the Independent Accounting Firm by Buyer and Sellers) within thirty (30) days of the submission of the dispute to the Independent Accounting Firm, which notice shall describe in reasonable detail determination will be final, binding and conclusive on the nature of such Parties. In resolving any disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement Independent Accounting Firm may not assign any value to a disputed item greater than the greatest value claimed for such disputed item by any Party or lesser than the lowest value claimed for such disputed item by any Party. All fees and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior expenses relating to the expiration of such thirty (30)-day periodwork, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statementif any, to be calculated performed by the Independent Accounting Firm pursuant to this Section 2.2 will be allocated between Sellers and Buyer in accordance with the Agreed Accounting Principles and inverse proportion as each shall prevail in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation respect of the Closing Cash-on-Hand, dollar amount of disputed items so submitted (as finally determined by the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceIndependent Accounting Firm).
(d) If a timely Notice If, following the determination of Disagreement is delivered the Actual Aggregate Adjustment Amount (as agreed between the Parties or as determined by the Seller Representative to Buyer in accordance with Section 1.05(cIndependent Accounting Firm), the Estimated Aggregate Adjustment Amount less the Actual Aggregate Adjustment Amount is a positive number, then Sellers shall be obligated to pay Buyer a cash payment equal to such positive number. If the Estimated Aggregate Adjustment Amount less the Actual Aggregate Adjustment Amount is a negative number, then Buyer shall be obligated to pay Sellers a cash payment equal to the absolute value of such negative number. Any such payment, together with interest thereon at the rate of five percent (5%) per annum from the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of Date through the date of this Agreement). At the end of such thirty payment, will be due and payable within ten (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (210) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to Actual Aggregate Adjustment Amount is finally determined as provided in this Section 1.05, make payment of the Adjustment Amount, 2.2 and will be payable by wire transfer in of immediately available funds (to such account or accounts as shall be specified by Buyer or Sellers, as applicable, to the other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer Party in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make . Any such payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall will be treated as an adjustment to the Purchase Price for U.S. federal income tax all Tax purposes, to the maximum extent permitted by applicable Law.
(e) Following the Closing, Sellers and Buyer shall cooperate and provide each other and, if applicable, the Independent Accounting Firm, with reasonable access to such Books and Records and employees as are reasonably requested in connection with the preparation of the Adjustment Statement and the other matters addressed in this Section 2.2.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following after the Closing Date, Buyer shall prepare and deliver to the Seller Sellers’ Representative a certificate substantially in the form set forth in Exhibit C (the “Preliminary Closing Statement”), signed by the Buyer, which sets forth its calculation of Closing Working Capital.
(b) Sellers’ Representative shall have a period of thirty (30) days after the date she receives the Preliminary Closing Statement from Buyer to deliver to Buyer written notice of Sellers’ disagreement with any item contained in the Preliminary Closing Statement, which notice shall set forth in reasonable detail the basis for such disagreement (a “Notice of Disagreement”). Until the final determination of the Final Closing Statement, Buyer shall (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), permit Sellers’ Representative and her accountants to consult with Buyer’s accountants and (ii) a statement (provide to Sellers’ Representative and her accountants reasonable access during business hours and under reasonable circumstances to relevant books and records relating to the “preparation of the Preliminary Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on case as reasonably requested by Sellers’ Representative in connection with Sellers’ Representative’s review of the Preliminary Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementStatement. During the thirty (30) days immediately following the Seller RepresentativeBuyer’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Sellers’ Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that which they may have with respect to the matters specified in the Notice of Disagreement, and upon such resolution, the Buyer and Sellers’ Representative shall prepare a final statement (the “Final Closing Statement”) setting forth the Closing Working Capital and the Net Working Capital Deficit, if any, in accordance with the agreement of Buyer and Sellers’ Representative.
(c) If Buyer and Sellers’ Representative are unable to resolve the disputed items set forth in the Notice of Disagreement within thirty (30) days following Buyer’s receipt of such Notice of Disagreement (or such longer period as Buyer and Sellers’ Representative may mutually agree in writing), such dispute shall be submitted to, and all issues having a bearing on such discussions related thereto dispute shall be resolved by, (unless otherwise i) Xxxxx Xxxxxxxx or (ii) in the event such accounting firm is unable or unwilling to take such assignment, a nationally recognized accounting firm mutually agreed upon by Buyer and Sellers’ Representative or, if Buyer and Sellers’ Representative cannot agree on an accounting firm within forty-five (45) days after timely delivery of a Notice of Disagreement, each of Buyer and Sellers’ Representative shall select a nationally recognized accounting firm and such two accounting firms shall designate a third nationally recognized accounting firm that neither presently is, nor in the Seller Representative) be governed past three years has been, engaged by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end either party or any Affiliate of such thirty (30)-day period or such agreed-upon longer periodparty. Xxxxx Xxxxxxxx, the Seller accounting firm so agreed to by Buyer and Sellers’ Representative or the third accounting firm so selected by the two accounting firms is hereinafter referred to as the “Independent Accountant”. Buyer and Buyer Sellers’ Representative shall submit instruct the Independent Accountant to select one of its partners experienced in purchase price adjustment disputes to make a final determination of Net Working Capital and the Net Working Capital Deficit, if any, calculated with reference to the Arbiter for review and resolution any and all matters (but only such matters) which remain items that are in dispute and which were properly included as set forth in the Notice of Disagreement. Buyer and the Seller Sellers’ Representative shall instruct the Arbiter toIndependent Accountant that, and the Arbiter shall, make a final determination of in resolving the items included in the Closing Balance Sheet Notice of Disagreement that are still in dispute and in determining the Closing Statement Net Working Capital, the Independent Accountant shall (to the extent such amounts are properly in disputei) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute a value that is (A) greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Sellers’ Representative, on the other hand, or (B) less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Sellers’ Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, (ii) make its determination based solely on written presentations by Buyer and the Seller Representative that are an independent review (which will be in accordance with the guidelines and procedures set forth in this Agreement Agreement), and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its (iii) render a final resolution in writing to Buyer and the Seller Sellers’ Representative (which final resolution shall be requested by the parties Buyer and Sellers’ Representative to be delivered not more than thirty forty-five (3045) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealablewhich, absent manifest error or manifest failure by error, shall be final, conclusive and binding on the Arbiter to adhere parties with respect to the requirements of this AgreementClosing Working Capital and the Net Working Capital Deficit, if any. The Seller Representative (on behalf of the Sellers) shall pay a portion of the costs, fees and expenses of the Arbiter equal Independent Accountant shall be borne equally by Buyer, on one hand, and Sellers, on the other hand.
(d) The Preliminary Closing Statement (as revised in accordance with clause (ii) or (iii) below, if applicable) shall become the Final Closing Statement and be final for the purposes of this Section 2.05 upon the earliest of (i) the failure of Sellers’ Representative to deliver a Notice of Disagreement to Buyer within thirty (30) days after Sellers’ Representative receives the percentage Preliminary Closing Statement, (ii) the resolution of all disputes, pursuant to Section 2.05(b), by which Buyer and Sellers’ Representative and (iii) the portion resolution of the disputed amounts in the Seller Representative’s submission all disputes, pursuant to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed Section 2.05(c), by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesIndependent Accountant.
(e) If Within five (5) Business Days following the Estimated Purchase Price determination of the Final Closing Statement, in accordance with Section 2.05(d), (i) if there is less than the Purchase Price (such shortfall, the “Adjustment Amount”)a Net Working Capital Deficit, then (iA) Buyer shall, within two and Sellers’ Representative shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to (2I) Business Days after make payment of an amount equal to the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital Deficit from the Adjustment Escrow Amount to Buyer, and (II) if any funds remain of the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05Adjustment Escrow Amount, make payment of an amount equal to such remaining funds from the Adjustment Escrow Amount, by wire transfer to Sellers in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representativeaccordance with each Seller’s Pro Rata Percentage of such remaining funds, and (iiB) Buyer and if the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital Deficit is greater than the Adjustment Escrow Amount, Sellers shall pay to Buyer an amount equal to the Net Working Capital Deficit minus the Adjustment Escrow Amount; (ii) if the Closing Working Capital is equal to the Estimated Closing Working Capital, then Buyer and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, Sellers’ Representative shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the entire Adjustment Escrow Funds from Amount to Sellers in accordance with each Seller’s Pro Rata Percentage of the Adjustment Escrow Account, within two Amount; and (2iii) Business Days after receipt of such instructions, to, or as directed by, if the Seller Representative.
(f) If the Estimated Purchase Price Closing Working Capital is greater than the Purchase Price (such excess, the “Excess Amount”)Estimated Closing Working Capital, then (A) Buyer and the Seller Sellers’ Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, shall deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make paymentpayment of the entire Adjustment Escrow Amount to Sellers in accordance with each Seller’s Pro Rata Percentage of the Adjustment Escrow Amount and (B) no other payment shall be required. Buyer and Sellers agree that the Adjustment Escrow Amount shall not be the sole source of Buyer’s right to the Net Working Capital Deficit (if any), within two and that the Sellers shall be jointly and severally liable for any such shortfall.
(2f) All payments required by Buyer under this Section 2.05 shall be made in cash by wire transfer of immediately available funds to such bank account(s) as shall be designated in writing by Sellers’ Representative at least three (3) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions prior to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the applicable payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05date. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment payments made pursuant to this Section 1.05 2.05 shall be treated as an adjustment to the Purchase Price by the parties for U.S. federal income tax Tax purposes, unless otherwise required by Law.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Crawford & Co)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than Within forty-five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (9045) days following the Closing Date, Buyer Seller shall prepare and deliver furnish to Buyer a statement (the Seller Representative “Final Purchase Price Calculation”) consisting of (i) an unaudited consolidated a balance sheet showing Seller’s calculation of NAIC’s Adjusted Capital & Surplus of the Company Entities as of the Adjustment Calculation Effective Time (the “Closing Balance Sheet”), and (ii) a statement calculation of Closing Indebtedness and Transaction Expenses, (the “Closing Statement”iii) setting forth in reasonable detail Buyer’s a calculation of the Closing Cash-on-HandCertificate of Authority Amount, the Closing Indebtedness, the Closing Net Working Capital and the calculation of (iv) the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheetthereon. The Closing Balance SheetSheet shall be determined in accordance with the Agreed Accounting Principles; provided that, for purposes of the Final Purchase Price Calculation, the Adjusted Capital & Surplus will reflect any payment of Closing Cash-on-HandIndebtedness or Transaction Expenses made by NAIC between the Effective Time and the Closing. The Final Purchase Price Calculation will be accompanied by such other documentation substantiating in reasonably sufficient detail Seller’s calculation of NAIC’s Adjusted Capital & Surplus as of the Effective Time and a certificate prepared by Seller’s chief financial officer, given solely in his or her capacity as the chief financial officer (and not in his or her individual capacity), certifying that the Closing Balance Sheet was prepared in accordance with the Agreed Accounting Principles.
(b) Buyer shall have fifteen (15) Business Days after receipt of the Final Purchase Price Calculation to review such calculation (such period of time, the Closing Indebtedness “Review Period”). During the Review Period, Seller shall provide to Buyer and its representatives access to all books, records and working papers of NAIC relevant to the Closing Net Working Capital Final Purchase Price Calculation, and shall each be calculated request that NAIC’s auditors provide to Buyer and its auditors access to all their working papers relevant to the Final Purchase Price Calculation.
(c) If Buyer in good faith believes that the Final Purchase Price Calculation is not prepared in all material respects in accordance with the Agreed Accounting Principles or contains mathematical errors, Buyer shall, prior to the end of the Review Period, provide Seller with a written statement setting forth in reasonable detail those items in the Final Purchase Price Calculation that Buyer disputes, including the basis and amount of each item in a manner consistent with dispute (the applicable definitions contained “Statement of Deficiencies”), and the Parties will negotiate in this Agreement. During the good faith and use commercially reasonable efforts to resolve any such deficiencies within thirty (30) days immediately following Business Days after the receipt by Seller Representative’s receipt of the Closing Balance Sheet and Statement of Deficiencies from Buyer. Any items included in the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Final Purchase Price set forth thereon Calculation, but not specifically identified by Buyer in such Statement of Deficiencies, shall become be considered final and binding upon binding. If the parties hereto Parties are unable to resolve any deficiencies within such thirty (30) days following Business Day-period, Seller and Buyer shall submit all matters that remain in dispute to a nationally recognized independent public accounting firm as shall be mutually agreed by Seller and Buyer (the “Independent Accounting Firm”). Seller Representativeand Buyer shall jointly retain the Independent Accounting Firm and agree to enter into a customary engagement letter. Within thirty (30) Business Days after such firm’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such dateengagement, which notice shall describe in reasonable detail the nature or as soon as practicable after selection of such disagreement; provided, that (i) the Closing Balance Sheetfirm, the Closing Statement and the Closing Cash-on-HandIndependent Accounting Firm shall make a final determination, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed terms and provisions of this Agreement and not by way of an independent review, binding on the Parties to this Agreement, with respect to all matters in dispute. The cost of the Independent Accounting Principles Firm’s review and determination shall be paid (i) by Seller if the items in dispute are resolved in favor of Buyer or (ii) by Buyer if the items in dispute are resolved in favor of Seller. If the items in dispute are resolved in part in favor of Seller and in part in favor of Buyer, such costs shall be shared by Seller and Buyer in the inverse proportion to the aggregate dollar amount of items resolved in favor of Seller compared to the aggregate dollar amount of items resolved in favor of Buyer. For example, if Seller disputes a manner consistent total of $100 and the Independent Accounting Firm awards $60 in favor of Seller, Buyer shall pay 60% of such costs. During the review by the Independent Accounting Firm, Buyer and Seller will each make available to the Independent Accounting Firm interviews with such individuals, and such information, books and records and work papers, as may be reasonably required by the Independent Accounting Firm to fulfill its obligations under this Section 2.5(c). Buyer and Seller shall not have any ex parte communications with the applicable definitions contained in Independent Accounting Firm. In acting under this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-HandAgreement, the Closing IndebtednessIndependent Accounting Firm will be entitled to the privileges and immunities of an arbitrator; provided, however, that the Closing Net Working Capital or the Purchase PriceIndependent Accounting Firm will act as an expert in accounting, and not as arbitrator, to resolve any such deficiencies.
(d) If The Final Purchase Price Calculation as determined (i) by mutual agreement of the Parties, (ii) following the failure of Buyer to deliver a timely Notice Statement of Disagreement is delivered Deficiencies prior to the end of the Review Period, or (iii) by the Seller Representative to Buyer in accordance with Section 1.05(c)Independent Accounting Firm, then shall be the “Final Purchase Price.” To the extent the Final Purchase Price exceeds the Closing Balance Sheet and Purchase Price, Buyer shall deliver to Seller the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier difference between such amounts by wire transfer of (x) the date all matters specified in the Notice of Disagreement are finally resolved immediately available funds to a bank account designated in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”)Seller. The Closing Balance Sheet and the Closing Statement shall be revised to To the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Final Purchase Price is less than the Closing Purchase Price (Price, Seller shall deliver to Buyer the difference between such shortfall, the “Adjustment Amount”), then (i) amounts by wire transfer of immediately available funds to a bank account designated in writing by Buyer. All payments to Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties or Seller pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds 2.5(d) shall be made within five (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (25) Business Days after following the Closing Balance Sheet, determination of the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Final Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, otherwise agreed between the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase Agreement
Purchase Price Adjustment. (a) At least Not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closinganticipated Closing Date, the Company Seller shall prepare in good faith and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Purchaser a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company(i) Seller’s good faith estimates estimate of Closing Cash as of the Reference Time (“Estimated Cash”), (ii) Seller’s good faith estimate of Closing Cash-on-Hand Working Capital Excess or Closing Working Capital Shortfall as of the Reference Time (the “Estimated Closing Cash-on-HandWorking Capital Excess” or “Estimated Closing Working Capital Shortfall”, as applicable), (iii) Indebtedness as of the Closing Reference Time (but giving effect to any subsequent incurrence of Indebtedness prior to the Closing) (the “Estimated Closing Indebtedness”), (iv) Transaction Expenses incurred but not paid prior to the Closing Net Working Capital (“Closing Transaction Expenses”), (v) the Change of Control Payments to the extent not paid prior to the Closing (“Estimated Closing Net Working CapitalChange of Control Payments”) and (vi) the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Initial Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata PortionDate Amount. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Statement shall each be calculated prepared in accordance with the Agreed Accounting Principles and be accompanied with reasonable supporting information used by Seller in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery preparation of the Estimated estimates of each component of the Initial Closing Balance Sheet Date Amount and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives invoices or similar supporting documentation with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice respect to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts Transaction Expenses set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect Prior to the allocation of Closing, Purchaser shall have an opportunity to review the Purchase Price among Estimated Closing Statement and discuss such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of statement with the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”)persons responsible for its preparation, and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities Group Companies to, (x) provide reasonably cooperate with Purchaser in good faith to respond to any questions regarding the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Estimated Closing Statement, . If Purchaser and (y) cooperate with Seller mutually agree to any modifications to any items set forth in the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Estimated Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance SheetClosing, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Estimated Closing Statement shall be revised to reflect such modifications, and the extent necessary document so modified shall constitute the Estimated Closing Statement. Purchaser’s opportunity to reflect review shall in no event delay the Closing or the Closing Date and if Purchaser and Seller disagree on any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified items set forth in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At Estimated Closing Statement at the end of such thirty (30)-day period or such agreed-upon longer review period, the Seller Representative and Buyer without any prejudice to Purchaser’s rights under other clauses of this Section 1.04, Seller’s positions shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included be reflected in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Estimated Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesStatement.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated Exhibit M shows:
(A) the unaudited balance sheet of the Company Entities Business as of January 31, 2004, prepared based on unaudited trial balance information provided by Sellers together with adjustments to reflect the transaction contemplated by this Agreement (which balance sheet, after such adjustments, is referred to as the "Unaudited Transaction Balance Sheet as of 1/31/2004"); and
(B) the unaudited balance sheet of the Business as of May 1, 2004, prepared based on unaudited trial balance information provided by Sellers, together with adjustments to reflect the transaction contemplated by this Agreement (which balance sheet, after such adjustments, is referred to as the "Unaudited Transaction Balance Sheet as of 5/1/2004").
(ii) Prior to the Cut-Off Date, Sellers shall provide audited financial statements for the Business for the fiscal year ended January 31, 2004, accompanied by an unqualified opinion of Ernst & Young LLP, to the effect that the audited financial statements present fairly in all material respects the financial position and results of operations of the Business and have been prepared in accordance with generally accepted accounting principles in the United States, consistently applied, together with:
(A) adjustments to the audited balance sheet to reflect the transaction contemplated by this Agreement (which adjustments are referred to as "transaction adjustments"); and
(B) a summary of the adjustments, other than transaction adjustments, from the trial balance information referred to in Section 4(b)(i)(A) to the audited financial statements (which adjustments are referred to as the "audit adjustments")
(iii) Within 60 days after the Cut-Off Date, Sellers shall provide an unaudited balance sheet as of the Adjustment Calculation Time close of business on the Cut-Off Date reflecting the transaction adjustments, of the nature of the transaction adjustments set forth in the Unaudited Transaction Balance Sheet as of 5/1/2004, which will also reflect all audit adjustments as appropriate (the “Estimated Closing "Unaudited Transaction Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates Sheet as of the Closing CashCut-on-Hand (Off Date"). Buyer shall reasonably assist Sellers and their representatives in the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation preparation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Unaudited Transaction Balance Sheet as of the Cut-Off Date and including shall provide Sellers and their representatives access at all reasonable times to the Estimated Purchased Shares Purchase Pricepersonnel, properties and books and records of the Estimated CoVant Series LGS Purchased Units Purchase PriceBusiness for such purpose.
(iv) To the extent that the net assets, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained principles, policies and procedures used in this Agreement. From and after delivery preparing Exhibit M ("Net Assets"), reflected in the Unaudited Transaction Balance Sheet as of the Estimated Closing Cut-Off Date exceed the Net Assets reflected in the Unaudited Transaction Balance Sheet and the Estimated Closing Statement until the Closingas of 5/1/2004 by more than $40 million, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay then the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested increased by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05excess over $40 million. For the avoidance of doubt, and without limiting "Net Assets" shall not include any Excluded Asset or any Excluded Liability. Notwithstanding anything to the generality contrary in this Section 4(b), the book value of all assets on the Unaudited Transaction Balance Sheet as of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) Cut-Off Date shall be asserted against calculated without giving effect to any of the Seller Partiesdepreciation or amortization thereof after May 1, 2004.
(hv) Any To the extent that the Net Assets reflected in the Unaudited Transaction Balance Sheet as of 5/1/2004 exceed the Net Assets reflected in the Unaudited Transaction Balance Sheet as of the Cut-Off Date by more than $40 million, then the Purchase Price shall be decreased by the excess over $40 million.
(vi) If the Purchase Price is to be increased pursuant to Section 4(b)(iv), then Buyer shall, within five business days after the amount of such increase has been determined, pay Sellers an amount equal to such increase, together with interest thereon at an annual rate equal to the three-month LIBOR rate in effect as of the Closing Date, calculated on the actual number of days elapsed from the Closing Date to the date of payment made divided by 365. If the Purchase Price is to be decreased pursuant to Section 4(b)(v), then Sellers shall, within five business days after the amount of such decrease has been determined, pay Buyer an amount equal to such decrease, together with interest thereon at an annual rate equal to the three-month LIBOR rate in effect as of the Closing Date, calculated on the actual number of days elapsed from the Closing Date to the date of payment divided by 365.
(vii) Sellers represent that Sellers have not changed accounting policies or procedures, or application thereof, since January 31, 2004, and that the Unaudited Transaction Balance Sheet as of 5/1/2004 is prepared on a basis consistent with the Unaudited Transaction Balance Sheet as of 1/31/2004 (except for adjustments normally reflected only in year-end audited financial statements).
(viii) Sellers covenant that Sellers will not change accounting policies or procedures, or the application thereof, from those reflected in the Unaudited Transaction Balance Sheet as of 5/1/2004, and that the Unaudited Transaction Balance Sheet as of the Cut-Off Date will be prepared on a basis consistent with the Unaudited Transaction Balance Sheet as of 5/1/2004 (except for the audit adjustments, as appropriate, and except as otherwise provided in Sections 4(b)(iv) and 7(e)).
(ix) If Buyer in good faith objects, by notice in writing to Sellers, to the Net Assets set forth on the Unaudited Transaction Balance Sheet as of the Cut-Off Date ("Final Net Assets") within 30 days after Sellers' delivery thereof, setting forth in its written objection its determination of Final Net Assets, Sellers and Buyer shall attempt in good faith to resolve any such objections within 30 days after the Sellers' receipt of Buyer's objections. Buyer may object pursuant to this Section 1.05 shall 4(b)(ix) only if, assuming all of Buyer's objections were sustained, the Purchase Price, as adjusted by any adjustments pursuant to this Section 4(b), would be treated as an adjustment to lower than the Purchase Price based on Sellers' determination of Final Net Assets, and Buyer's objections must specify in reasonable detail the nature of any disagreement with Sellers. The only objections that Buyer may make pursuant to this Section 4(b)(ix) are those that relate to:
(A) any claimed inconsistencies between the principles, policies or procedures used in the preparation of the Unaudited Transaction Balance Sheet as of 5/1/2004 and the principles, policies or procedures used in the preparation of the Unaudited Transaction Balance Sheet as of the Cut-Off Date (except for U.S. federal income tax purposesaudit adjustments, as appropriate, and except as otherwise provided in Sections 4(b)(iv) and 7(e));
(B) the application of the audit adjustments; or
(C) errors in mathematical computation.
(x) If Sellers and Buyer are unable to resolve the matter within such 30-day period, they shall jointly appoint a mutually acceptable firm of independent accountants of national reputation that is one of the so-called "big four" (or, if they cannot agree on a mutually acceptable firm, they shall cause their respective accounting firms to select such firm) within three business days following the end of such 30-day period. Buyer and Sellers shall provide such accounting firm full cooperation. Such firm shall be instructed to reach its conclusion regarding the disputes as soon as reasonably possible. Such firm's resolution of the disputes shall be rendered in a written decision determining all disputes and shall be conclusive and binding upon Buyer and Sellers.
(xi) The Non-Prevailing Party (as defined below) in any determination by such accounting firm shall pay its own expenses incurred with respect to the submission to such accounting firm and shall pay a percentage of (A) the fees and expenses of such accounting firm plus (B) the reasonable out-of-pocket expenses (including reasonable attorneys' fees) of the other party incurred with respect to the submission, which percentage shall be calculated by dividing (1) an amount equal to the difference between the Non- Prevailing Party's determination of Final Net Assets, as submitted to such accounting firm, and such accounting firm's determination of Final Net Assets by (2) an amount equal to the difference between the parties' respective determinations of Final Net Assets, as submitted to such accounting firm. The other party shall pay the remainder of the fees and expenses of such accounting firm and its own expenses not required to be paid by the Non-Prevailing Party hereunder. A party is the "Non-Prevailing Party" if such accounting firm's determination of Final Net Assets is closer to the other party's determination of Final Net Assets, as submitted to such accounting firm, than it is to that party's determination of Final Net Assets, as submitted to such accounting firm. Notwithstanding anything to the contrary in this Section 4(b)(xi), if such accounting firm's determination of Final Net Assets does not result in a Purchase Price that is lower than the Purchase Price would have been based upon Sellers' determination of Final Net Assets (after giving effect to Section 4(b)(iv) or 4(b)(v)), Buyer shall pay all of the fees and expenses of such accounting firm plus all reasonable out-of-pocket expenses (including reasonable attorneys' fees) of Sellers incurred with respect to the submission.
Appears in 1 contract
Samples: Asset Purchase Agreement (May Department Stores Co)
Purchase Price Adjustment. (a) At least three (3Attached hereto is Schedule 2.03(a) Business Days, but no more than five (5) Business Days, prior to which sets forth the Closing, Net Working Capital of CTPG and the Company shall prepare adjustments agreed upon between Buyer and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities Seller for calculating such Net Working Capital as of the Adjustment Calculation Time September 30, 2004 (the “Estimated Closing Peg Balance Sheet”). As promptly as practicable, but no later than sixty (60) days after the Closing Date (the “Adjustment Date”), Seller shall cause to be prepared and delivered to Buyer the closing statement to be prepared in good faith using the same methodology set forth in the Peg Balance Sheet and using consistently applied accounting policies and the same foreign exchange rates used in preparation of the Peg Balance Sheet (the “Closing Statement”) and a certificate based on such Closing Statement setting forth Seller’s calculation of the Purchase Price Adjustment Amount (as defined below) calculated in accordance with 2.03(b) below.
(b) The Purchase Price Adjustment Amount shall be the sum of (i) and (ii) a statement below minus (iii):
(i) all cash on the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates balance sheet as of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”)Date, as set forth on the Closing Indebtedness Statement; and
(ii) the “Estimated Closing Indebtedness”), difference between (x) the Closing Net Working Capital set forth on the Closing Statement and (y) the Net Working Capital set forth on the Peg Balance Sheet; and
(iii) the amount of CPTG indebtedness, including all intercompany loan obligations other than those between or among the Acquired Companies and Subsidiaries, for principal, interest, fees and charges for borrowed money (excluding capital leases entered into in the Ordinary Course of Business), as of the Closing Date.
(c) If Buyer disagrees with Seller’s calculation of the Purchase Price Adjustment Amount delivered pursuant to Section 2.03(a), Buyer may, within thirty (30) days after delivery of the Closing Statement, deliver a notice to Seller disagreeing with such calculation and setting forth Buyer’s calculation of such amount, which calculation shall be prepared in good faith. Any such notice of disagreement shall specify those items or amounts as to which Buyer disagrees, and Buyer shall be deemed to have agreed with all other items and amounts contained in the Closing Statement delivered pursuant to Section 2.03(a).
(d) If a notice of disagreement shall be duly delivered pursuant to Section 2.03(c), Buyer and Seller shall, during the thirty (30) days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Purchase Price Adjustment Amount, which amount shall not be more than the amount shown in the calculation delivered by the party to which the Purchase Price Adjustment is due nor less than the amount thereof shown in the calculation delivered by the party required to pay the Purchase Price Adjustment. If during such period, Buyer and Seller are unable to reach such agreement, they shall promptly thereafter cause PricewaterhouseCoopers (or if unable or unwilling to accept its mandate, an independent accountant to be mutually agreed upon by Buyer and Seller) (PricewaterhouseCoopers or such other independent accountant, as the case may be, the “Estimated Closing Net Working CapitalAccounting Referee”) to review this Agreement and the disputed items or amounts for the purpose of calculating the Purchase Price Adjustment Amount. The Accounting Referee shall deliver to Buyer and Seller, as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accounting Referee), a report setting forth such calculation. Such report shall be final and binding upon Buyer and Seller. The cost of such review and report shall be borne equally by Buyer and Seller.
(e) Buyer and Seller shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of the Purchase Price resulting therefrom (Adjustment Amount and in the “Estimated Purchase Price”)conduct of the review referred to in this Section 2.03, in each caseincluding, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Pricewithout limitation, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised making available to the extent necessary to reflect any resolution by the Seller Representative of books, records, work papers and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representativepersonnel.
(f) If the Estimated Purchase Price Adjustment Amount is greater than a positive number, the Purchase Price (shall be increased by such excess, amount and Buyer shall pay such additional amount to Seller in the “Excess Amount”manner and with interest as provided in Section 2.03(g), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and . If the Purchase Price set forth thereon become final Adjustment Amount is a negative number, the Purchase Price shall be reduced by such amount and binding on the parties pursuant Seller shall remit such amount to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds Buyer in the Escrow Accountmanner and with interest as provided in Section 2.03(g). If “Final Purchase Price Adjustment Amount” means the Excess Purchase Price Adjustment Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment as shown in Seller’s calculation delivered pursuant to Section 2.03(a) if no notice of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance disagreement with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and respect thereto is duly delivered pursuant to Section 2.03(c); or (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05if such a notice of disagreement is delivered, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim (A) as agreed by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the and Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated 2.03(d) or (B) in the absence of such agreement, as an adjustment shown in the Accounting Referee’s calculation delivered pursuant to the Purchase Price for U.S. federal income tax purposesSection 2.03(d).
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business DaysSeller shall prepare and deliver to Buyer, but no more later than five (5) Business Days, Days prior to the Closing, Closing Date the Company shall prepare and deliver to Buyer following:
(i) an estimated consolidated a combined balance sheet of the Company Entities Devices & Services Business, as of the Adjustment Calculation Time Seller’s previous Monthly Period End (the “Estimated Closing Balance Sheet”), and prepared by Seller in accordance with the Accounting Principles;
(ii) a combined EBITDA and CAPEX statement for the Devices & Services Business, as of the Seller’s previous Monthly Period End (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-HandCash Earnings”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) prepared by Seller and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles Principles;
(iii) a detailed calculation by Seller of the Adjustment Amount (including the Net Cash Adjustment, Net Working Capital Adjustment, Cash Earnings Adjustment and in a manner consistent with Seller Transaction Expenses and the applicable definitions contained in this Agreement. From and after delivery Exhibit O Adjustment Amount) as of the Seller’s previous Monthly Period End based on the Estimated Closing Balance Sheet and the Estimated Closing Statement until Cash Earnings (the Closing“Estimated Adjustment Amount”) (an illustrative example of which is set forth on Exhibit A), together with such schedules and data as may be appropriate to support such calculation; and
(iv) a certificate of the Company shall chief executive officer or chief financial officer of Seller certifying that the Estimated Closing Balance Sheet, Estimated Closing Cash Earnings and Estimated Adjustment Amount have been prepared in accordance with the Accounting Principles.
(xb) provide In connection with Buyer’s review of the Estimated Closing Balance Sheet, Estimated Closing Cash Earnings and calculation of the Estimated Adjustment Amount, Buyer and its Representatives with shall have reasonable access at all reasonable times access, during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each casenotice, to the extent reasonably requested all relevant work papers, schedules, memoranda and other documents prepared by Buyer Seller or any of its Affiliates or any of their respective Representatives in connection with their review preparation of the Estimated Closing Balance Sheet and Sheet, the Estimated Closing StatementCash Earnings and/or calculation of Estimated Adjustment Amount, and (y) to finance personnel of Seller or any of its Affiliates and any other information which Buyer reasonably requests, and Seller shall, and shall cause its Subsidiaries and Representatives to, cooperate reasonably with Buyer and its Representatives in connection with their review therewith. Buyer shall have until two (2) Business Days prior to the Closing Date to provide Seller any comments on the statement of the Estimated Closing Balance Sheet Adjustment Amount and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts data and calculations set forth therein, which comments shall be considered by Seller in the Estimated Closing Statement, good faith (and if revised by Seller in response to Buyer’s obligation to pay comments, the revised statement shall be the statement of the Adjustment Amount hereunder).
(c) The Initial Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under increased by the Securities Act and applicable state securities Laws absolute value of the Estimated Adjustment Amount if it is positive, or (ii) created or incurred by, or at decreased by the direction of, Buyer). Any disputes among the Sellers with respect to the allocation absolute value of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesEstimated Adjustment Amount if it is negative.
(bd) Within ninety seventy-five (9075) days following the Closing Date, Buyer shall prepare and deliver to Seller the Seller Representative following (collectively, the “Preliminary Adjustment Statement”):
(i) an unaudited consolidated a combined balance sheet of the Company Entities Devices & Services Business as of the Adjustment Calculation Time Closing (the “Preliminary Closing Balance Sheet”), and prepared by Buyer in accordance with the Accounting Principles;
(ii) a combined EBITDA and CAPEX statement for the Devices & Services Business as of the Closing (the “Preliminary Closing StatementCash Earnings”), prepared by Buyer and in accordance with the Accounting Principles;
(iii) setting forth in reasonable detail Buyer’s a detailed calculation by Buyer of the Adjustment Amount (including the Net Cash Adjustment, Net Working Capital Adjustment, and Cash Earnings Adjustment and the Exhibit O Adjustment Amount) as of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Preliminary Closing Balance Sheet. The Sheet and the Preliminary Closing Cash Earnings (the “Preliminary Adjustment Amount”), together with such schedules and data as may be appropriate to support such calculation; and
(iv) a certificate of the chief executive officer or chief financial officer of Buyer certifying that the Preliminary Closing Balance Sheet and Preliminary Closing Cash Earnings have been prepared in accordance with the Accounting Principles; and
(e) Seller shall have sixty (60) days following receipt of the Preliminary Adjustment Statement to review the Preliminary Closing Balance Sheet, the Preliminary Closing Cash-on-HandCash Earnings and the calculation of Preliminary Adjustment Amount and to notify Buyer in writing of any dispute regarding the amount of the Preliminary Adjustment Amount set forth on the Preliminary Adjustment Statement (the “Dispute Notice”), specifying the reasons therefor in reasonable detail. If no Dispute Notice is delivered by Seller within such sixty (60) day review period or if Seller delivers a written acceptance of the Preliminary Closing Balance Sheet, the Preliminary Closing Indebtedness Cash Earnings and the Preliminary Adjustment Amount during such sixty (60) day period, then such Preliminary Closing Net Working Capital Balance Sheet, Preliminary Closing Cash Earnings and Preliminary Adjustment Amount shall each be calculated (i) conclusive and binding on the parties in accordance with the Agreed Accounting Principles all respects and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30ii) days immediately following the Seller Representative’s receipt final and non-appealable for all purposes hereunder, as of the end of the sixty (60) day review period or the date of receipt by Buyer of such written acceptance, as applicable. Any item set forth in the Preliminary Closing Balance Sheet Sheet, the Preliminary Closing Cash Earnings or the calculation of Preliminary Adjustment Amount and not specifically objected to by Seller within such sixty (60) day period shall be deemed (i) conclusive and binding on the parties in all respects and (ii) final and non-appealable for all purposes hereunder.
(f) In connection with Seller’s review, Seller and its Representatives shall have reasonable access, during normal business hours and upon reasonable notice, to all relevant work papers, schedules, memoranda and other documents prepared by Buyer, the Transferred Subsidiaries or any of their Affiliates, or any of their respective Representatives in connection with preparation of the Preliminary Closing StatementBalance Sheet, the Preliminary Closing Cash Earnings and/or its calculation of Preliminary Adjustment Amount, and to finance personnel of Buyer, the Transferred Subsidiaries or any of their Affiliates and any other information which Seller reasonably requests, and Buyer shall, and shall cause the Company Entities Transferred Subsidiaries and its other Affiliates to, (x) provide the cooperate reasonably with Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementtherewith.
(cg) The If Seller delivers a Dispute Notice to Buyer, Buyer and Seller shall cooperate in good faith to resolve such dispute as promptly as practicable and, upon such resolution, if any, any adjustments to the Preliminary Closing Balance Sheet, Preliminary Closing Cash Earnings and Preliminary Adjustment Amount shall be made as agreed upon by Buyer and Seller. If Buyer and Seller are unable to resolve any such dispute within twenty (20) Business Days (or such longer period as Buyer and Seller shall mutually agree in writing) of Seller’s delivery of such Dispute Notice, such dispute shall be resolved by the Closing Statement Independent Accounting Firm, and such determination by the Closing Cash-on-Hand, Independent Accounting Firm shall be (x) conclusive and binding on the Closing Indebtedness, the Closing Net Working Capital parties in all respects and the Purchase Price set forth thereon shall become (y) final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreementnon-appealable for all purposes hereunder; provided, however, that such determination may be reviewed, corrected or set aside by a court of competent jurisdiction, but only if and to the extent that the Independent Accounting Firm is found by such court of competent jurisdiction to have made mathematical errors with respect to its ruling or failed to follow the provisions of this Agreement; provided, further, that (i) the Closing Balance Sheet, Independent Accounting Firm may consider only those items and amounts (and related items and amounts) as to which Buyer and Seller have disagreed within the Closing Statement time periods and on the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereonterms specified above, (ii) except to the extent addressed Independent Accounting Firm shall be bound by a duly delivered Notice the provisions of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, this Section 2.10(g) and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure Independent Accounting Firm’s determination of the Closing Cash-on-HandPreliminary Adjustment Amount may neither be less than the lower, nor more than the Closing Indebtedness higher, of Buyer’s and Seller’s respective calculations of the Preliminary Adjustment Amount. Any expenses relating to the engagement of the Independent Accounting Firm in respect of its services pursuant to this Section 2.10(g) shall be borne by Buyer and Seller in a manner that is inversely proportionate to the relative difference between the calculation of Preliminary Adjustment Amount proposed by each of Buyer and Seller and the Closing Net Working CapitalPreliminary Adjustment Amount as finally determined by the Independent Accounting Firm. The Independent Accounting Firm shall be instructed to use commercially reasonable efforts to make its final determination within thirty (30) days of submission by the parties hereto of the dispute to it and, in each any case, as reflected on promptly as practicable after such submission. Buyer and Seller shall each furnish the Closing StatementIndependent Accounting Firm (such work papers and other documents and information relating to the disputed issues as the Independent Accounting Firm shall request). The Preliminary Adjustment Amount, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (Bi) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer if deemed final in accordance with Section 1.05(c2.10(d), then the Closing Balance Sheet and the Closing Statement as originally submitted by Buyer, or (as revised ii) if a Dispute Notice has been timely delivered by Seller in accordance with this Section 1.05(d)2.10(g), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised as determined pursuant to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter of such dispute in accordance with this Section 1.05(d2.10(g). During , shall be the thirty “Final Adjustment Amount”.
(30h) days immediately following The “Purchase Price” shall be equal to the delivery Closing Payment, as adjusted below:
(i) if the Final Adjustment Amount is greater than the Estimated Adjustment Amount (either of a Notice of Disagreement which may have been positive or negative), Buyer shall pay Seller the amount by which the Final Adjustment Amount is greater than the Estimated Adjustment Amount (in accordance with Section 1.05(cthe Purchase Price Apportionment);
(ii) if the Final Adjustment Amount is less than the Estimated Adjustment Amount (either of which may have been positive of negative), Seller shall pay to Buyer the amount by which the Final Adjustment Amount is less than the Estimated Adjustment Amount (in accordance with the Purchase Price Apportionment). Buyer or such longer period Seller, as the Seller Representative and Buyer case may agree in writingbe, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreementshall, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect promptly as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters reasonably practicable (but only such mattersin any event within five (5) which remain in dispute and which were properly included in Business Days) after the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement Final Adjustment Amount pursuant to Section 2.10(g), make payment (or cause an Affiliate to the extent such amounts are properly in disputemake payment) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing2.10(h) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim amount payable by Buyer for or Seller, as the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiescase may be.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closing, the Company Trimble shall prepare and deliver to Buyer AGCO a statement (the “Estimated Company Closing Statement”) in substantially the form and calculated in accordance with accounting principles, policies, practices, procedures, classifications and methodologies attached hereto as Exhibit G, setting forth its good faith estimates of the Company Closing Cash (the “Estimated Company Closing Cash”), the Company Closing Indebtedness (the “Estimated Company Closing Indebtedness”), the Company Closing Working Capital (the “Estimated Company Closing Working Capital”) and the Company Closing Transaction Expenses (the “Estimated Company Closing Transaction Expenses”), in each case, with such estimates calculated based on Cash, Indebtedness, Working Capital and Transaction Expenses as of the prior month’s end close, which statement shall contain (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time end of the prior month after giving effect to the Carve-Out Restructuring (but without giving effect to the “Estimated Closing Balance Sheet”JCA Contribution and excluding the Brazil Business), and (ii) a calculation of the Estimated Company Closing Cash, the Estimated Company Closing Indebtedness, the Estimated Company Closing Working Capital and the Estimated Company Closing Transaction Expenses, in each case, as of the prior month’s end close, together with reasonable supporting documentation. Following the delivery of the Estimated Company Closing Statement, Trimble shall make its representatives reasonably available to AGCO to discuss the calculations contained in the Estimated Company Closing Statement, and the Parties shall consider in good faith the other Party’s comments to the Estimated Company Closing Statement. If any adjustments are made to the Estimated Company Closing Statement by Trimble following the good faith discussion of the Parties prior to the Closing, such adjusted Estimated Company Closing Statement shall thereafter become the Estimated Company Closing Statement for all purposes of this Section 2.7. (b) At least five (5) Business Days prior to the Closing, AGCO shall prepare and deliver to Trimble a statement (the “Estimated JCA Closing Statement”) in substantially the form and calculated in accordance with accounting principles, policies, practices, procedures, classifications and methodologies attached hereto as Exhibit G, setting forth in reasonable detail the Company’s its good faith estimates of the JCA Closing Cash-on-Hand Cash (the “Estimated JCA Closing Cash-on-Hand”), the JCA Closing Indebtedness (the “Estimated JCA Closing Indebtedness”), the JCA Closing Net Working Capital (the “Estimated JCA Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom JCA Closing Transaction Expenses (the “Estimated Purchase PriceJCA Closing Transaction Expenses”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital which statement shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative contain (i) an unaudited consolidated estimated balance sheet of the Company JCA Entities as of the Adjustment Calculation Time (Closing and giving effect to the “Closing Balance Sheet”)JCA Contribution, and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Estimated JCA Closing Cash-on-Hand, the Estimated JCA Closing Indebtedness, the Estimated JCA Closing Net Working Capital and the calculation of the Purchase Price resulting therefromEstimated JCA Closing Transaction Expenses, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives together with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statementsupporting documentation.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least No fewer than three (3) Business DaysDays prior to the anticipated Closing Date, but no more earlier than five (5) Business Days, Days prior to the ClosingClosing Date, the Company Seller shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”)Buyer, and (ii) a statement (the “Estimated Closing Statement”) ), setting forth in reasonable detail the CompanySeller’s good faith estimates estimate, together with reasonable supporting detail and accompanied by a schedule setting forth the relevant calculations of the each of (i) Closing Cash-on-Hand , (ii) Closing Debt, (iii) Closing Transaction Expenses and the “Estimated Closing Cash-on-Hand”)payees thereof along with their respective wiring instructions, the Closing Indebtedness and (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net iv) Working Capital”) and , which amounts shall be used to determine the calculation of the Purchase Price, Net Cash Purchase Price resulting therefrom and other payments to be made pursuant to Section 2.2 at Closing (the “Estimated Net Cash Purchase Price”), in each case, Price calculated based upon the estimated amounts set forth on the Estimated Closing Balance Sheet and including Statement shall be referred to herein as the “Estimated Purchased Shares Purchase Cash Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion”). The Estimated Closing Balance SheetStatement shall also include the amount due to, the and wire instructions for, each Person entitled to receive any payment pursuant to Section 2.2. The Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Statement shall each be calculated in accordance with the Agreed Accounting Principles and prepared in a manner consistent with the applicable definitions contained set forth in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Prior to Closing, Seller shall provide to Buyer whatever information or documentation in Seller’s or the Company shall (x) provide Acquired Companies’ possession, custody or control that is reasonably necessary for Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays Prior to the Purchase Price Closing, Seller shall consider in accordance with the amounts set forth in good faith any reasonable comments to the Estimated Closing Statement, Statement made by Buyer’s obligation to pay ; provided that in no event shall any such comments delay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased SecuritiesClosing.
(b) Within ninety (90) As promptly as practicable, but in any event within 60 days following after the Closing Date, Buyer shall prepare will cause to be prepared and deliver delivered to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a draft statement (the “Draft Closing Statement”) ), setting forth in reasonable detail Buyer’s calculation good faith determination of the (i) Closing Cash-on-Hand, the (ii) Closing IndebtednessDebt, the (iii) Closing Net Transaction Expenses, and (iv) Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance SheetCapital. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities Acquired Companies to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records records, outside accounting firm, working papers (subject to the execution of the Company Entities customary access letters), and to senior management personnel of Buyer and the Company EntitiesAcquired Companies, in each case, to the extent case that is reasonably requested by Seller in order to enable Seller to confirm or dispute the Seller Representative or any of its Representatives in connection with their review accuracy of the information set forth on the Draft Closing Balance Sheet and Statement following the Closing Statement, and (y) cooperate with delivery thereof to Seller or to participate in the Seller Representative and its Representatives dispute resolution process set forth in connection with their review of the Closing Balance Sheet and the Closing Statementthis Section 2.5.
(c) If Seller disagrees with the Buyer’s computation of Closing Cash, Closing Debt, Closing Transaction Expenses, or Working Capital set forth on the Draft Closing Statement, then Seller may, within 45 days after receipt of the Draft Closing Statement, deliver a written notice (an “Objection Notice”) to Buyer setting forth Seller’s calculation of such items. The Closing Balance Sheet, Objection Notice shall specifically state Seller’s disagreement with the information set forth on the Draft Closing Statement and the basis therefor. If an Objection Notice is not delivered within such time period, then the amount of Closing Cash-on-Hand, the Closing IndebtednessDebt, the Closing Net Transaction Expenses, and Working Capital and the Purchase Price set forth thereon on the Draft Closing Statement shall become final be final, conclusive and binding upon the parties hereto thirty (30) days following Parties. If an Objection Notice is delivered and it does not object to one or more of the Seller Representative’s receipt thereof unless the Seller Representative gives written notice amount of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing IndebtednessDebt, the Closing Net Transaction Expenses, or Working Capital and the Purchase Price in each case as set forth thereon on the Draft Closing Statement, then the item(s) for which no objection was made shall become final be final, conclusive and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceParties.
(d) If a timely an Objection Notice of Disagreement is delivered within the 45-day period required by the Seller Representative to Buyer in accordance with Section 1.05(c2.5(c), Buyer and Seller shall, during the 30-day period following the receipt by Buyer of such notice, use their reasonable good faith efforts to reach agreement on the disputed items or amounts, but if they do not obtain a complete and final resolution within such 30-day period, then Buyer and Seller will jointly retain the Closing Balance Sheet dispute resolution group of BDO USA, LLC, with which the Parties acknowledge that they have no current engagement (unless another accounting firm is mutually agreed to in writing between Buyer and Seller prior to such time) (the Closing Statement (as revised “Independent Accountant”), to resolve any remaining disagreements. In connection with the retention by Buyer and Seller of the Independent Accountant, Buyer and Seller shall each execute an engagement letter with the Independent Accountant in accordance with this Section 1.05(d))a form reasonably satisfactory to each of Buyer and Seller. Buyer and Seller shall direct the Independent Accountant to render a determination within 30 Business Days of its retention, and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital Parties and the Purchase Price set forth thereon their respective employees shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter Independent Accountant during the term of its engagement. Buyer and The Independent Accountant shall consider only those items in dispute. The Independent Accountant’s determination shall be (i) based on the Seller Representative shall instruct the Arbiter not todefinitions of, and the Arbiter shall notmethodologies to calculate, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyereach of Closing Cash, on the one handClosing Debt, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter toClosing Transaction Expenses, and Working Capital, as the Arbiter shallcase may be, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and any related terms (i.e., not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by (ii) conclusive and binding upon the Arbiter shall Parties. The Independent Accountant’s determination of the matters raised in the Objection Notice cannot be subject more favorable to court review or otherwise appealable, absent manifest error or manifest failure by Buyer than the Arbiter related amount reflected on the Draft Closing Statement nor more favorable to adhere to Seller than the requirements of this Agreementrelated amount reflected in the Objection Notice. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to Independent Accountant will be allocated between Buyer, on the one hand, and Seller, on the other hand, based upon the percentage by which the portion of the disputed amounts matters raised in the Seller Representative’s submission to the Arbiter Objection Notice not awarded to the Seller Representative such Party bears to the aggregate amount actually disputed contested by such Party. For example, if Seller claims that the Seller Representative appropriate adjustments are, in the Seller Representative’s submission to the Arbiteraggregate, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is $1,000 greater than the Purchase Price (amount determined by Buyer and if the Independent Accountant ultimately resolves such excessmatters by awarding to Seller, in the “Excess Amount”)aggregate, $300 of the $1,000 contested, then the fees, costs and expenses of the Independent Accountant will be allocated 30% (i.e., $300 ÷ $1,000) to Buyer and the Seller Representative shall70% (i.e., within two (2$700 ÷ $1,000) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller RepresentativeSeller.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (a) At least Not less than three (3) Business Days, but no more than five (5) Business Days, Days prior to the Closinganticipated Closing Date, the Company Seller shall prepare in good faith and deliver to Buyer Purchaser (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (iix) a statement (the “Estimated Closing Statement”) ), in form and substance consistent with the illustrative example set forth on Exhibit C hereto (provided that in the event of any inconsistency between the illustrative example and the Accounting Principles or this Agreement, the Accounting Principles and this Agreement shall control), setting forth in reasonable detail the Company(i) Seller’s good faith estimates estimate of Closing Cash (“Estimated Cash”), (ii) Seller’s good faith estimate of Closing Working Capital (“Estimated Working Capital”), (iii) Seller’s good faith estimate of Closing Indebtedness (“Estimated Indebtedness”), (iv) Seller’s good faith estimate of the Closing Cash-on-Hand Required Payment Amount (the “Estimated Closing Cash-on-HandRequired Payment Amount”), the Closing Indebtedness (v) Seller’s good faith estimate of all Change of Control Payments (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working CapitalChange of Control Payments”) and (vi) the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Initial Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing StatementDate Amount, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Estimated Unfunded Employee Liability Statement”) setting forth in reasonable detail BuyerSeller’s calculation good faith estimate of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty Unfunded Defined Benefit Plan Liability Amount (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Unfunded Defined Benefit Plan Liability Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment Transferred Retiree Medical Liabilities (the “Estimated Retiree Medical Liability Amount”). The Estimated Closing Statement and the dispute resolution provisions Estimated Unfunded Employee Liability Statement shall be prepared in accordance with the Accounting Principles (to the extent applicable) and this Agreement and shall include a reasonably detailed summary of the calculations made to arrive at, and reasonable supporting documentation for, such amounts. Seller has previously provided for in or made available to Purchaser prior to the date of this Section 1.05Agreement (x) an illustrative calculation of the Estimated Unfunded Defined Benefit Plan Liability Amount as of December 31, 2018 consistent with the Pension Principles and (y) an illustrative calculation of the Estimated Retiree Medical Liability Amount as of December 31, 2018 consistent with the Retiree Medical Principles. In the event of any conflict between such illustrative calculations and the Pension Principles or Retiree Medical Principles, as applicable, the Pension Principles or Retiree Medical Principles, as applicable, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiescontrol.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Purchase Price Adjustment. (aA) At least three (3) Business DaysAs soon as practicable, but in no more event later than five thirty (530) Business Days, prior to days following the Closing, the Company Seller shall prepare and deliver to Buyer (i) an estimated consolidated a balance sheet of the Company Entities Business as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), ) and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, Working Capital of the Business as of the Closing Indebtedness, the Closing Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Sheet (the “Closing Balance SheetWorking Capital” and, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance together with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the “Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “ArbiterFinancial Data”). The Closing Balance Sheet and shall be prepared in accordance with GAAP, consistently applied with the manner in which Seller’s Most Recent Financial Statements were prepared.
(B) Seller shall deliver a copy of the Closing Statement Financial Data to Buyer promptly after it has been prepared. After receipt of the Closing Financial Data, Buyer shall be revised have fifteen (15) days to review the Closing Financial Data. Buyer and its authorized representatives shall have reasonable access during normal business hours to all relevant books and records of Seller to the extent necessary required to reflect any resolution by complete their review of the Closing Financial Data. Unless Buyer delivers written notice to Seller Representative on or prior to the thirtieth (30th) day after Buyer’s receipt of the Closing Financial Data specifying in reasonable detail the amount, nature and basis of all disputed items, Buyer shall be deemed to have accepted and agreed to the calculation of the Closing Working Capital. If Buyer timely notifies Seller of its objection to the calculation of the Closing Working Capital as described above, Seller and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the shall, within thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) (or such longer period as the Seller Representative and Buyer Parties may agree in writing) following such notice (the “Resolution Period”), attempt to resolve their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive.
(C) If, at the conclusion of the Resolution Period, there are any amounts remaining in dispute, then such amounts remaining in dispute shall be submitted to a firm of nationally recognized independent certified public accountants (the “Neutral Auditors”) selected by Seller Representative and Buyer within ten (10) days after the expiration of the Resolution Period. If Seller and Buyer are unable to agree on the Neutral Auditors, then each of Seller and Buyer shall seek in good faith have the right to resolve in writing any differences that they may have with respect to request the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 office of the Federal Rules American Arbitration Association to appoint the Neutral Auditors, which Neutral Auditors shall not have had a material relationship with Seller, Buyer or any of Evidence (as in effect as their respective Affiliates within the past two years. Each of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit agree to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter toexecute, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be if requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters)Neutral Auditors, and such resolution by the Arbiter shall not be subject to court review or otherwise appealablea reasonable engagement letter, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreementincluding customary indemnities. The Seller Representative (on behalf of the Sellers) shall pay a portion of the All fees and expenses of the Arbiter equal relating to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiterwork, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructionsif any, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed be performed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Asset Purchase Agreement (New Horizons Worldwide Inc)
Purchase Price Adjustment. (ai) At least five (5) business days before the Closing, Target shall prepare in good faith and shall deliver to Buyer an Estimated Closing Date Net Working Capital Statement and a statement setting forth the Estimated Working Capital Adjustment, together with supported documentation for such estimates and any additional information reasonably requested by Buyer. The Estimated Closing Date Net Working Capital Statement shall be prepared in consultation with Buyer and shall be reasonably acceptable to Buyer, and the Estimated Working Capital Adjustment shall be determined using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies, all in accordance with GAAP, that were used in preparation of the Annual Financial Statements as if such determination of Closing Date Net Working Capital was being prepared as of a fiscal year end.
(ii) At least three (3) Business Days, but no more than five (5) Business Days, prior to business days before the Closing, the Company Target shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time allocation certificate (the “Estimated Closing Balance Sheet”), and (ii) a statement (the “Estimated Closing StatementAllocation Certificate”) setting forth in reasonable detail forth: (A) the Company’s good faith estimates of Purchase Price; (B) the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital Adjustment; (C) Existing Debt; (D) the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, as divided between the Estimated CoVant Series LGS Purchased Units Escrow Amount and the Transaction Expenses to be paid by Buyer at the Closing on behalf of Target; (E) the portion of the Net Purchase PricePrice payable to each Seller and to each Target option holder at Closing, the Estimated Legos Holdings Purchased Units Purchase and (F) wiring instructions for each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, ; and (yG) cooperate with Buyer addresses and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person phone numbers for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitieseach Seller.
(biii) Within ninety As promptly as practicable after the Closing Date (90but in no event later than sixty (60) days following after the Closing Date, ) Buyer shall will prepare and deliver to the Seller Sellers’ Representative (i) an unaudited consolidated balance sheet a final net Working Capital statement of the Company Entities as of the Adjustment Calculation Time Target (the “Closing Balance SheetDate Net Working Capital Statement”), and (ii) a statement (the “Closing Statement”) setting forth in the Closing Date Net Working Capital, which shall include reasonable supporting detail Buyer’s to support the calculation of the Closing Cash-on-Hand, the Date Net Working Capital. The Closing Indebtedness, the Closing Date Net Working Capital and the calculation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Statement shall be prepared and the Closing Date Net Working Capital shall each be calculated determined on a consistent basis with the methodology of the Estimated Closing Date Net Working Capital Statement (without giving effect to the consummation of the Transactions contemplated by this Agreement) using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies, all in accordance with the Agreed Accounting Principles and GAAP, that were used in a manner consistent with the applicable definitions contained in this Agreement. During the thirty (30) days immediately following the Seller Representative’s receipt preparation of the Annual Financial Statements as if such determination of Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records Date Net Working Capital was being prepared as of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheeta fiscal year end. If Target’s tax returns for 2013 have been prepared, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Date Net Working Capital and Statement shall use the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s receipt thereof unless the Seller Representative gives written notice actual amount of its disagreement (a “Notice of Disagreement”) to Buyer prior to such date, which notice shall describe taxes payable by Target in reasonable detail the nature of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance calculation of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment of the Escrow Funds from the Escrow Account, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made pursuant to this Section 1.05 shall be treated as an adjustment to the Purchase Price for U.S. federal income tax purposes.
Appears in 1 contract
Samples: Stock Purchase Agreement (Westell Technologies Inc)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to the Closing, the Company shall prepare and deliver to Buyer (i) an estimated consolidated balance sheet of Within one-hundred-twenty (120) days following the Company Entities as of Closing Date, the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”), and (ii) Non-Real Estate Buyer shall deliver to Sellers a statement (in its final and binding form, the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates Net Working Capital as of 11:59 p.m. Central Time, on the date immediately preceding the Closing Cash-on-Hand Date (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of Cash Portion calculated therefrom. The Closing Statement shall be prepared (A) using the Purchase Price resulting therefrom same quarterly and year-end accounting closing practices as those used for Sellers’ consolidated quarterly and year-end accounting closings presented by Sellers to the Non-Real Estate Buyer from the period between January 1, 2010 and June 30, 2011 and (B) consistent with the accounting principles, methods, policies, practices, procedures, estimation methods, treatments and categorizations (collectively, the “Estimated Purchase PriceAccounting Principles”), in each case, based ) set forth on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness and the Estimated Closing Net Working Capital Schedule. Sellers shall each be calculated in accordance with give the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Non-Real Estate Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the Sellers’ books and records of and shall cooperate with the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by Non-Real Estate Buyer or any of its Representatives in connection with their review the preparation of the Estimated Closing Balance Sheet and Statement. Following Sellers’ receipt of the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere in any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securities.
(b) Within ninety (90) days following the Closing Date, Buyer shall prepare and deliver to the Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation of the Closing Cash-on-Hand, the Closing Indebtedness, until the Closing Net Working Capital and the calculation resulting Cash Portion are finally determined pursuant to this Section 2.7(c), Sellers and their representatives and agents shall be permitted to review the Non-Real Estate Buyer’s books and records related to the Non-Real Estate Buyer’s preparation of the Purchase Price resulting therefrom, in each case, based on the Closing Balance Sheet. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness Statement and determination of the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this AgreementCapital. During the thirty (30) days immediately following the Seller Representative’s receipt of the Closing Balance Sheet and the Closing Statement, Buyer shall, and shall cause the Company Entities to, (x) provide the Seller Representative and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities and to senior management personnel of the Company Entities, in each case, to the extent reasonably requested by the Seller Representative or any of its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement, and (y) cooperate with the Seller Representative and its Representatives in connection with their review of the Closing Balance Sheet and the Closing Statement.
(c) The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto thirty (30) days following the Seller Representative’s Sellers’ receipt thereof thereof, unless the Seller Representative gives Sellers give written notice of its their disagreement (a “Notice of Disagreement”) to the Non-Real Estate Buyer prior to such date, which notice . Any Notice of Disagreement shall describe specify in reasonable detail the nature and dollar amount of such disagreement; provided, that (i) the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto upon the Seller Representative’s delivery, prior to the expiration of such thirty (30)-day period, of written notice to Buyer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except to the extent addressed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase Price.
(d) any disagreement so asserted. If a timely Notice of Disagreement is delivered received by the Seller Representative to Buyer in accordance with Section 1.05(c)Non-Real Estate Buyer, then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon clause (x) or (y) below) shall become final and binding upon the parties hereto on the earlier earliest of (x) the date all the parties hereto resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (y) the date all matters in dispute are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d)Accounting Firm. During the thirty (30) days immediately following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writingDisagreement, the Seller Representative Non-Real Estate Buyer and Buyer Sellers shall seek in good faith to resolve in writing any differences that which they may have with respect to the matters specified in the Notice of Disagreement. During such period, and all such discussions related thereto the Non-Real Estate Buyer shall (unless otherwise agreed by Buyer and be permitted to review Sellers’ working papers relating to the Seller Representative) be governed by Rule 408 Notice of the Federal Rules of Evidence (as in effect as of the date of this Agreement)Disagreement. At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative Non-Real Estate Buyer and Buyer Sellers shall submit to Xxxxxxxx Xxxxx, Inc. or, if Xxxxxxxx Xxxxx, Inc. is not available, then to Mesirow Financial Holdings, Inc. or, if Mesirow Financial Holdings, Inc. is not available, then to a nationally recognized valuation or consulting firm as is acceptable to Sellers and the Arbiter Non-Real Estate Buyer (the “Valuation Firm”), for review and resolution any and of all matters (but only such matters) which that remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter todispute, and the Arbiter shall, Valuation Firm shall make a final determination of the items included in the Closing Balance Sheet Net Working Capital and the Closing Statement (to the extent such amounts are properly in dispute) resulting Cash Portion in accordance with the guidelines and procedures set forth in this Agreement. The Non-Real Estate Buyer and the Seller Representative Sellers will cooperate with the Arbiter Valuation Firm during the term of its engagement. The Valuation Firm’s determination of the Closing Net Working Capital and the resulting Cash Portion shall be based solely on written presentations submitted by the Non-Real Estate Buyer and Sellers which are in accordance with the Seller Representative guidelines and procedures (including the definition of the Net Working Capital) set forth in this Agreement (i.e., not on the basis of an independent review) and in the Net Working Capital Schedule. The Valuation Firm shall instruct consider only the Arbiter not to, disputed matters that were included in the Notice of Disagreement and the Arbiter shall not, Valuation Firm may not assign a value to any item in dispute greater than the greatest value for such item assigned by the Non-Real Estate Buyer, on the one hand, or the Seller RepresentativeSellers, on the other hand, or less than the smallest value for such item assigned by the Non-Real Estate Buyer, on the one hand, or the Seller RepresentativeSellers, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto Parties on the date the Arbiter Valuation Firm delivers its final resolution in writing to Buyer and the Seller Representative Parties (which final resolution the Valuation Firm shall be requested by the parties instructed to be delivered deliver not more than thirty forty-five (3045) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to Valuation Firm shall be allocated based upon the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter contested amount not awarded to the Seller Representative each Party bears to the aggregate amount actually disputed contested by such Party in the written presentation to the Valuation Firm. For example, if the Non-Real Estate Buyer submits a Notice of Disagreement for $1,000, and if Sellers contest only $500 of the amount claimed by the Seller Representative in Non-Real Estate Buyer, and if the Seller Representative’s submission Valuation Firm ultimately resolves the dispute by awarding Non-Real Estate Buyer $300 of the $500 contested, then the costs and expenses of the Valuation Firm will be allocated 60% (i.e., 300/500) to Sellers and 40% (i.e., 200/500) to the Arbiter, and the Company shall pay the remaining portion of such fees and expensesNon-Real Estate Buyer.
(eii) If the Estimated Purchase Price Cash Portion is less greater than the Purchase Price (such shortfallCash Portion, Eyelematic and Echo shall, and if the Cash Portion is greater than the Estimated Cash Portion, the “Adjustment Amount”), then (i) Non-Real Estate Buyer shall, within two three (23) Business Days business days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become becomes final and binding on the parties pursuant to this Section 1.05Parties, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause Non-Real Estate Buyer or Eyelematic and Echo, as the Escrow Agent to make payment of the Escrow Funds from the Escrow Accountcase may be, within two (2) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (2) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount amount of such difference, together with interest thereon at a rate per annum equal to the prime rate of interest announced from time to time in The Wall Street Journal, calculated on the basis of the actual number of days elapsed over 365, from the Escrow Funds in Closing Date to the Escrow Accountdate of payment. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer Eyelematic and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent Echo are obligated to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Parties.
(h) Any payment made amount pursuant to this Section 1.05 shall be treated as an adjustment 2.7(c)(ii), then the Non-Real Estate Buyer can collect the total amount owed pursuant to the Purchase Price for U.S. federal income tax purposesthis Section 2.7(c)(ii) severally from either Eyelematic and Echo. Eyelematic and Echo covenant to maintain a reasonable amount of funds in their retained bank accounts to satisfy any amounts owed under this Section 2.7(c)(ii).
Appears in 1 contract
Samples: Revolving Credit, Term Loan and Security Agreement (Twist Beauty S.a r.l. & Partners S.C.A.)
Purchase Price Adjustment. (a) At least three (3) Business Days, but no more than five (5) Business Days, prior to Days before the Closing, the Company Seller shall prepare and deliver to Buyer a statement certified by a duly authorized officer of Seller (the “Preliminary Closing Statement”) setting forth its good faith (i) an estimated consolidated balance sheet estimates, together with reasonably detailed supporting documentation, of (w) the Company Entities Closing Net Capital Assets as of the Adjustment Calculation Time Time, (x) the Closing Working Capital as of the Adjustment Time, (y) the aggregate amount of Indebtedness outstanding as of immediately prior to the Closing, and (z) the aggregate amount of Transaction Expenses (the “Estimated Closing Balance SheetTransaction Expenses”), and (ii) a statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of the Closing Cash-on-Hand (the “Estimated Closing Cash-on-Hand”), the Closing Indebtedness (the “Estimated Closing Indebtedness”), the Closing Net Working Capital (the “Estimated Closing Net Working Capital”) and the calculation of the Purchase Price resulting therefrom under Section 2.02 based on such estimates (the “Estimated Purchase Price”), in each case, based on the Estimated Closing Balance Sheet and including the Estimated Purchased Shares Purchase Price, the Estimated CoVant Series LGS Purchased Units Purchase Price, the Estimated Legos Holdings Purchased Units Purchase and each Seller’s Pro Rata Portion. The Estimated Closing Balance Sheet, the Estimated Closing Cash-on-Hand, the Estimated Closing Indebtedness Such statement and the Estimated Closing Net Working Capital estimates and calculations contained therein shall each be calculated prepared in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. From and after delivery of the Estimated Closing Balance Sheet and the Estimated Closing Statement until the Closing, the Company shall (x) provide Buyer and its Representatives with reasonable access at all reasonable times during normal business hours and upon reasonable prior notice to the books and records of the Company Entities Group, this Agreement and to senior management personnel of the Company Entities, in each case, accounts and methodology set forth on Exhibit A attached hereto. Prior to the extent reasonably requested Closing, Seller shall review any comments proposed by Buyer or any of its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement, and (y) cooperate with Buyer and its Representatives in connection with their review of the Estimated Closing Balance Sheet and the Estimated Closing Statement. Provided that Buyer pays the Purchase Price in accordance with the amounts set forth in the Estimated Closing Statement, Buyer’s obligation to pay the Purchase Price shall be deemed satisfied, Buyer shall not be responsible or have any liability to any Person for the division of such proceeds and Buyer shall own the Purchased Securities, free and clear of all Liens (other than Liens (i) arising under the Securities Act and applicable state securities Laws or (ii) created or incurred by, or at the direction of, Buyer). Any disputes among the Sellers with respect to the allocation of the Purchase Price among such Sellers shall not interfere Preliminary Closing Statement and consider in good faith any way with, or give rise to any claim or right upon, Buyer’s ownership of the Purchased Securitiesappropriate changes thereto.
(b) Within ninety (90) 90 days following after the Closing Date, Buyer shall prepare and deliver deliver, or cause to the be prepared and delivered, to Seller Representative (i) an unaudited consolidated balance sheet of the Company Entities as of the Adjustment Calculation Time (the “Closing Balance Sheet”), and (ii) a statement certified by a duly authorized officer of Buyer (the “Closing Statement”) setting forth in reasonable detail Buyer’s calculation its good faith (i) determination, together with reasonably detailed supporting documentation, of the Closing Cash-on-Hand, the Closing Indebtedness, actual amounts of (w) the Closing Net Capital Assets as of the Adjustment Time, (x) the Closing Working Capital as of the Adjustment Time, (y) the aggregate amount of Indebtedness outstanding as of immediately prior to the Closing, and (z) the aggregate amount of Transaction Expenses, and (ii) calculation of the Purchase Price resulting therefrom, in each case, under Section 2.02 based on the Closing Balance Sheetsuch actual amounts. The Closing Balance Sheet, the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital shall each be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement. During the thirty 13
(30i) days immediately following the Seller Representative’s After receipt of the Closing Balance Sheet and Statement, Seller shall have 45 days (the “Review Period”) to review the Closing Statement. During the Review Period, Buyer shall, and shall cause the Company Entities to, (x) to provide the Seller Representative and its Seller’s Representatives with reasonable access at all reasonable times during normal business hours and access, upon reasonable prior notice advance notice, to the books and records of the Company Entities Group, the personnel of, and (subject to execution of customary access letters) work papers prepared by, Buyer and/or Buyer’s Representatives to the extent that they relate to the Closing Statement and to senior management personnel such historical financial information (to the extent in Buyer’s possession or control) relating to the Closing Statement as Seller may reasonably request for the purpose of reviewing the Closing Statement and to prepare a Statement of Objections; provided, that such access shall not interfere with the normal business operations of Buyer or the Company Group. On or prior to the last day of the Company EntitiesReview Period, Seller may object to any component of the Closing Statement by delivering to Buyer a written statement setting forth Seller’s objections in reasonable detail, indicating each disputed line item or amount and the basis for Seller’s disagreement therewith (the “Statement of Objections”). If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, then the Closing Statement and Buyer’s calculations of the amounts set forth in the Closing Statement shall be deemed to have been accepted by Seller and shall be final and binding. If Seller delivers the Statement of Objections before the expiration of the Review Period, (x) any line item or amount set forth in the Closing Statement and not objected to with reasonable specificity in such Statement of Objections shall be deemed to have been accepted by Seller and shall be final and binding upon delivery thereof and (y) Buyer and Seller shall negotiate in good faith to attempt to resolve such objections within 30 days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Closing Statement, with such changes as may have been previously agreed in writing by Buyer and Seller, shall be final and binding. If Seller and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any line items or amounts, in each case, taking into account any updates by Buyer and Seller to their respective calculations of such line items or amounts following the extent reasonably requested resolution process described in the foregoing sentence of this Section 2.04(b), remaining in dispute (“Disputed Amounts”) shall be submitted for resolution to BDO USA LLP or, if BDO USA LLP is unable to serve, Buyer and Seller shall appoint by mutual agreement an impartial nationally recognized firm of independent certified public accountants other than Seller’s accountants or Buyer’s accountants (the Seller Representative or “Independent Accountants”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any of its Representatives in connection with their review of the Closing Balance Sheet and corresponding adjustments to the Closing Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountants shall only decide the specific Disputed Amounts under dispute by the parties and, and (y) cooperate with in resolving any such Disputed Amounts, the Seller Representative and its Representatives Independent Accountants shall adopt a position in connection with their review respect of such Disputed Amounts by determining which of the Closing Balance Sheet and positions of Buyer or Seller submitted to the Closing Statement.
(c) The Closing Balance SheetIndependent Accountants is, in the aggregate, more accurate pursuant to the terms of this Section 2.04 and, based on such determination, adopt either the aggregate amount claimed by Buyer or the aggregate amount claimed by Seller with respect to such Disputed Amounts in the Closing Statement and the Closing Cash-on-HandStatement of Objections, respectively. All fees and expenses of the Independent Accountants will be borne solely by the party whose position was not adopted by the Independent Accountants. The Independent Accountants shall make a determination as soon as practicable within 30 days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon Statement shall become final be conclusive and binding upon the parties hereto thirty hereto. The Purchase Price, as finally determined pursuant to this Section 2.04(b), shall be referred to herein as the “Final Purchase Price”. 14
(30c) days If the Final Purchase Price exceeds the Estimated Purchase Price, then Buyer shall, within five Business Days following the final determination of the Final Purchase Price, pay or cause to be paid to Seller Representative’s receipt thereof unless the Seller Representative gives written notice of its disagreement (a “Notice of Disagreement”) to Buyer prior an amount equal to such dateexcess by wire transfer of immediately available funds to such account as is directed by Seller. If the Estimated Purchase Price exceeds the Final Purchase Price, which notice then Buyer and Seller shall describe deliver joint written instructions to the Escrow Agent, within five Business Days following the final determination of the Final Purchase Price, instructing the Escrow Agent to pay to Buyer, from the funds available in reasonable detail the nature of Adjustment Escrow Account, an amount equal to such disagreementexcess; provided, that (i) that, if the Closing Balance Sheet, amount of funds available in the Closing Statement and Adjustment Escrow Account is less than the Closing Cash-on-Hand, amount by which the Closing Indebtedness, the Closing Net Working Capital and the Estimated Purchase Price set forth thereon shall become exceeds the Final Purchase Price, then, in addition to delivering such joint written instructions, Seller shall, within five Business Days following the final and binding upon determination of the parties hereto upon the Seller Representative’s deliveryFinal Purchase Price, prior to the expiration of such thirty (30)-day period, of written notice pay to Buyer an amount equal to such shortfall by wire transfer of its acceptance of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, (ii) except immediately available funds to the extent addressed such account as is directed by a duly delivered Notice of Disagreement prior to the expiration of such thirty (30)-day period, each component of the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon, shall become final and binding upon the parties hereto upon the Seller Representative’s delivery of a Notice of Disagreement, and (iii) a Notice of Disagreement may only include disagreements based on (A) the failure of the Closing Cash-on-Hand, the Closing Indebtedness and the Closing Net Working Capital, in each case, as reflected on the Closing Statement, to be calculated in accordance with the Agreed Accounting Principles and in a manner consistent with the applicable definitions contained in this Agreement and/or (B) mathematical errors in the computation of the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital or the Purchase PriceBuyer.
(d) If a timely Notice of Disagreement is delivered by the Seller Representative to Buyer in accordance with Section 1.05(c), then the Closing Balance Sheet and the Closing Statement (as revised in accordance with this Section 1.05(d)), and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding upon the parties hereto on the earlier of (x) the date all matters specified in the Notice of Disagreement are finally resolved in writing by the Seller Representative and Buyer and (y) the date all matters specified in the Notice of Disagreement not resolved by written agreement of the Seller Representative and Buyer are finally resolved in writing by a nationally recognized accounting, consulting or valuation firm (other than a so-called “Big Four” accounting firm) mutually selected by the Seller Representative and Buyer (such firm, the “Arbiter”). The Closing Balance Sheet and the Closing Statement shall be revised to the extent necessary to reflect any resolution by the Seller Representative and Buyer and/or any final resolution made by the Arbiter in accordance with this Section 1.05(d). During the thirty (30) days immediately Within five Business Days following the delivery of a Notice of Disagreement in accordance with Section 1.05(c) or such longer period as the Seller Representative and Buyer may agree in writing, the Seller Representative and Buyer shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and all such discussions related thereto shall (unless otherwise agreed by Buyer and the Seller Representative) be governed by Rule 408 of the Federal Rules of Evidence (as in effect as of the date of this Agreement). At the end of such thirty (30)-day period or such agreed-upon longer period, the Seller Representative and Buyer shall submit to the Arbiter for review and resolution any and all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement. Buyer and the Seller Representative shall instruct the Arbiter to, and the Arbiter shall, make a final determination of the items included in the Closing Balance Sheet and the Closing Statement (to the extent such amounts are properly in dispute) in accordance with the guidelines and procedures set forth in this Agreement. Final Purchase Price, Buyer and the Seller Representative will cooperate with the Arbiter during the term of its engagement. Buyer and the Seller Representative shall instruct the Arbiter not to, and the Arbiter shall not, assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or the Seller Representative, on the other hand. Buyer and the Seller Representative shall also instruct the Arbiter to, and the Arbiter shall, make its determination based solely on written presentations by Buyer and the Seller Representative that are in accordance with the guidelines and procedures set forth in this Agreement and not on the basis of an independent review. The Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, the Closing Indebtedness, the Closing Net Working Capital and the Purchase Price set forth thereon shall become final and binding on the parties hereto on the date the Arbiter delivers its final resolution in writing to Buyer and the Seller Representative (which final resolution shall be requested by the parties to be delivered not more than thirty (30) days following submission of such disputed matters), and such resolution by the Arbiter shall not be subject to court review or otherwise appealable, absent manifest error or manifest failure by the Arbiter to adhere to the requirements of this Agreement. The Seller Representative (on behalf of the Sellers) shall pay a portion of the fees and expenses of the Arbiter equal to the percentage by which the portion of the disputed amounts in the Seller Representative’s submission to the Arbiter not awarded to the Seller Representative bears to the aggregate amount actually disputed by the Seller Representative in the Seller Representative’s submission to the Arbiter, and the Company shall pay the remaining portion of such fees and expenses.
(e) If the Estimated Purchase Price is less than the Purchase Price (such shortfall, the “Adjustment Amount”), then (i) Buyer shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, make payment of the Adjustment Amount, by wire transfer in immediately available funds (or other alternative delivery arrangement mutually agreed by the Seller Representative and Buyer in writing) to, or as directed by, the Seller Representative, and (ii) Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause instructing the Escrow Agent to make payment deliver any portion of the Adjustment Escrow Funds from the Escrow Account, within two Amount not distributed (2or required to be distributed) Business Days after receipt of such instructions, to, or as directed by, the Seller Representative.
(f) If the Estimated Purchase Price is greater than the Purchase Price (such excess, the “Excess Amount”), then to Buyer and the Seller Representative shall, within two (2) Business Days after the Closing Balance Sheet, the Closing Statement and the Closing Cash-on-Hand, Closing Indebtedness, Closing Net Working Capital and the Purchase Price set forth thereon become final and binding on the parties pursuant to this Section 1.05, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to make payment, within two (22.04(c) Business Days after receipt of such instructions, to Buyer, by wire transfer in immediately available funds of the Excess Amount from the Escrow Funds in the Escrow Account. If the Excess Amount is less than the Escrow Funds (such shortfall, the “Remaining Escrow Funds”), then Buyer and the Seller Representative shall, simultaneously with the delivery of the joint written instructions referred to in the immediately preceding sentence, deliver joint written instructions to the Escrow Agent to cause the Escrow Agent to pay the Remaining Escrow Funds from the Escrow Account to, or as directed by, the Seller Representative.
(g) Buyer agrees that (i) the payment of the Excess Amount (if any) from the Escrow Funds in the Escrow Account in accordance with the Escrow Agreement shall be the sole and exclusive remedy and source of recovery for Buyer for payment of the Excess Amount (if any) and (ii) the purchase price adjustment and the dispute resolution provisions provided for in this Section 1.05, shall be the exclusive remedies for the matters addressed or that could be addressed by this Section 1.05. For the avoidance of doubt, and without limiting the generality of the foregoing, no claim by Buyer for the payment of the Excess Amount (or any portion thereof) shall be asserted against any of the Seller Partiesto Seller.
(he) Any payment payments made pursuant to this Section 1.05 2.04 shall be treated as an adjustment to the Purchase Price by the parties for U.S. federal income tax Tax purposes, unless otherwise required by Law.
Appears in 1 contract
Samples: Stock Purchase Agreement (Gatx Corp)
