Contingent Payments (a) Following the Closing and as additional consideration for the Securities, Buyer shall make, or cause the Acquired Entities to make, to Sellers (subject to the terms and conditions set forth in this Section 1.4) additional cash payments based on the performance of the Acquired Entities during each of the twelve month periods ending (i) December 31, 2006, (ii) December 31, 2007, (iii) December 31, 2008 and (iv) December 31, 2009 (each, a “Contingent Payment Period”). With respect to each Contingent Payment Period, Buyer shall make, or cause the Acquired Entities to make, to Sellers cash payments in an aggregate amount equal to the amount, if any, by which EBITDA during such Contingent Payment Period exceeds $8,000,000 (each such excess, if and to the extent earned for any such Contingent Payment Period, a “Contingent Payment”). The Contingent Payment, if any, for each Contingent Payment Period shall be paid by Buyer or (at Buyer’s direction) the Acquired Entities as follows:
(A) Buyer or (at Buyer’s direction) the Acquired Entities shall pay to each Seller an amount equal to 50% of such Seller’s Pro Rata Share of such Contingent Payment in accordance with Section 1.4(b) below and (B) Buyer or (at Buyer’s direction) the Acquired Entities shall pay to each Seller an amount equal to 50% of such Seller’s Pro Rata Share of such Contingent Payment on April ___, 2012.
(b) Within five (5) Business Days following Buyer’s receipt of its audited consolidated financial statements for a particular Contingent Payment Period, but in any event within 95 days following the last day of each Contingent Payment Period, Buyer’s board of directors (the “Board”) shall deliver to each Seller (i) a copy of such financial statements, if such financial statements have been delivered to Buyer as of such date, (ii) a statement (a “Calculation Notice”) setting forth in reasonable detail Buyer’s calculation of the Contingent Payment (if any) for such Contingent Payment Period and
Developer Payments Not Taxable The Developer and Connecting Transmission Owner intend that all payments or property transfers made by Developer to Connecting Transmission Owner for the installation of the Connecting Transmission Owner’s Attachment Facilities and the System Upgrade Facilities and the System Deliverability Upgrades shall be non-taxable, either as contributions to capital, or as an advance, in accordance with the Internal Revenue Code and any applicable state income tax laws and shall not be taxable as contributions in aid of construction or otherwise under the Internal Revenue Code and any applicable state income tax laws.
Contingent Payment (a) In the event that Purchaser consummates a Change of Control Transaction prior to the second anniversary of the Closing Date (a “Qualifying Sale Transaction”), then Seller shall be entitled to receive a payment in an amount equal to twenty percent (20%) of the Net Sale Proceeds, valuing any non-cash consideration included in the Net Sale Proceeds at fair market value (as determined in good faith by the board of directors of Purchaser) (such payment, the “Contingent Payment”), payable in accordance with the provisions of this Section 2.7.
(b) No later than five (5) days following the final determination of the Qualifying Sale Proceeds pursuant to the post-closing purchase price adjustment provisions of the definitive agreement for such Qualifying Sale Transaction (the “Qualifying Sale Agreement”) Purchaser shall deliver to Seller, along with reasonable supporting documentation, a statement setting forth in reasonable detail Purchaser’s good faith calculation of the Net Sale Proceeds and the resulting Contingent Payment (the “Contingent Payment Statement”). Purchaser’s calculation of the Contingent Payment set forth in the Contingent Payment Statement shall be final and binding for all purposes of this Agreement unless Seller delivers to Purchaser a written objection to such calculation within twenty (20) days following the date of delivery of the Contingent Payment Statement setting forth in reasonable detail Seller’s basis for its objection. In the event that Seller timely submits any such written objection, then Purchaser and Seller shall negotiate in good faith to resolve their dispute with respect to the calculation of the Contingent Payment; provided, that if such dispute is not resolved within twenty (20) days after delivery of such written objection, then the dispute resolution provisions of Section 2.4(b) shall apply, mutatis mutandis.
(c) No later than three (3) Business Days after final determination of the amount of the Contingent Payment pursuant to Section 2.7(b), Purchaser shall pay to Seller the Contingent Payment by wire transfer of immediately available funds to the bank account designated by Seller at least one (1) Business Day prior to the end of such three (3) Business Day period; provided, that in the event that any portion of the consideration to be received by Cerberus pursuant to such Qualifying Sale Transaction (i) is subject to any escrow, holdback or other contingency, then the proportionate amount of the Contingent Payment shall be withheld and not paid to Seller unless, until and only to the extent that such portion of Cerberus’s consideration is released to Cerberus from any such escrow or holdback, or such contingency lapses or is satisfied (or any portion of the amounts withheld in respect of such contingency is distributed to the limited partners or other investors of Cerberus), as applicable, and (ii) is non-cash consideration, then the Contingent Payment shall be made in the same proportion of cash and non-cash consideration as the proportion of cash and non-cash consideration comprising the Qualifying Sale Proceeds; provided further that, to the extent receipt of any non-cash consideration would cause Seller or any of its Affiliates to be bound by, or otherwise subject to, any noncompetition, nonsolicitation or other material restrictive covenant (other than a customary confidentiality covenant, and expressly excluding any shareholder restrictions on transfer that apply equally to Cerberus), Seller instead shall be entitled to receive from Purchaser cash with a value equivalent to such non-cash consideration, valuing such non-cash consideration at fair market value (as determined in good faith by the board of directors of Purchaser).
(d) Notwithstanding anything to the contrary in this Section 2.7 or otherwise, but subject to any rights Seller or any of its Affiliates may have under the Ancillary Agreements, (i) Seller shall have no rights with respect to any Change of Control Transaction, Qualifying Sale Transaction or Qualifying Sale Agreement (including, without limitation, no information rights or rights to object or consent to any such transaction or agreement) other than the rights expressly set forth herein to receive the Contingent Payment if and when payable pursuant to the terms of this Section 2.7 and (ii) Purchaser shall not be permitted in connection with any Qualifying Sale Transaction to bind Seller or any of its Affiliates to sell any equity interests to, or to make any agreement, covenant or restriction with or in favor of, any third party.
License Contingent Upon Payment While you may exercise the rights licensed immediately upon issuance of the license at the end of the licensing process for the transaction, provided that you have disclosed complete and accurate details of your proposed use, no license is finally effective unless and until full payment is received from you (either by publisher or by CCC) as provided in CCC's Billing and Payment terms and conditions. If full payment is not received on a timely basis, then any license preliminarily granted shall be deemed automatically revoked and shall be void as if never granted. Further, in the event that you breach any of these terms and conditions or any of CCC's Billing and Payment terms and conditions, the license is automatically revoked and shall be void as if never granted. Use of materials as described in a revoked license, as well as any use of the materials beyond the scope of an unrevoked license, may constitute copyright infringement and publisher reserves the right to take any and all action to protect its copyright in the materials.
Indemnity for Returned Payments If, after receipt of any payment of, or proceeds applied to the payment of, all or any part of the Obligations, the Agent or any Lender is for any reason compelled to surrender such payment or proceeds to any Person, because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continue and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Agent or such Lender, and the Borrower shall be liable to pay to the Agent, and hereby does indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless for, the amount of such payment or proceeds surrendered. The provisions of this Section 4.9 shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or any Lender in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Agent's and the Lenders' rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this Section 4.9 shall survive the termination of this Agreement.
Earn-Out Payments (i) Pursuant to the Purchase Agreement, the WME Member or the Company, as applicable, are the obligors in respect of a portion of the Earn-Out Payment. Subject to Section 7.03(g)(ii), the Earn-Out Payments may be funded in any of the following manners (or any combination thereof) as determined by unanimous Board approval (provided that if unanimous Board approval is not obtained, the WME Member or the Company, as applicable, shall nevertheless be permitted to comply with their respective obligations to the Earn-Out Recipients under the Purchase Agreement): (A) for so long as the January Capital Member is a Member, a special cash distribution by the Company to the January Capital Member in consideration of that portion of the Earn-Out Payment due to the January Capital Member, (B) a cash distribution to all Common Members on a pro rata basis to enable the Common Members (other than the Class B Members) to make Earn-Out Payments to the Earn-Out Recipients (provided that all such Common Members shall be required to make such Earn-Out Payment following receipt of such distribution), (C) a special cash distribution by the Company to the WME Member to fund Earn-Out Payments by the WME Member to the Earn-Out Recipients (provided that the WME Member shall be required to make such Earn-Out Payment following receipt of such distribution), and (D) funding by the WME Member (and to the extent agreed to by the Sponsor Members, the Sponsor Members) for Earn-Out Payments to the Earn-Out Recipients.
(ii) The Earn-Out Payments shall be subject to the following rules: (A) Earn-Out Payments to the January Capital Member will, to the extent permitted under the terms of any indebtedness and Senior Equity of the Company and its Subsidiaries and Annex A, and to the extent the WME Directors reasonably determine (after meaningful consultation with the full Board) that doing so would not have an adverse impact on the Company or its Subsidiaries, for so long as the January Capital Member is a Member, be distributed by the Company to the January Capital Member (subject, in each case, to clause (B) below) (provided that, for purposes of clarification, the January Capital Member shall not lose or waive its right to receive unpaid Earn-Out Payments solely because it ceases to be a Member; provided further that, if the Company is prohibited under the terms of any indebtedness or Senior Equity of the Company or its Subsidiaries or Annex A, or the Board otherwise determines that doing so would have an adverse impact on the Company or its Subsidiaries, and accordingly does not distribute Earn-Out Payments to the January Capital Member in accordance with this clause (A), then the January Capital Member shall have the right, but not the obligation, to elect in writing to defer the payment of such Earn-Out Payment for a period of up to 24 months (the “Outside Earn-Out Payment Date”); provided further that the deferred Earn-Out Payment will be made to the January Capital Member on the earliest to occur of (A) the date on which the deferred Earn-Out Payment may be made by the Company in accordance with, and subject to the terms and conditions of, this clause (A), (2) the date specified in writing by the January Capital Member (provided the January Capital Member provides written notice to the WME Member at least 60 days prior to the date on which the January Capital Member would like to receive the deferred Earn-Out Payment if such date is prior to the Outside Earn-Out Payment Date) and (3) the Outside Earn-Out Payment Date, (B) the Class B Members shall be grossed up so that they do not bear the effect of any Dilutive Adjustment (as defined below) or the Economic Cost of any Earn-Out Payments that are funded by distributions by the Company, (C) the Class B Members shall not bear any dilution arising from (x) the issuance of any Units that are issued in connection with the Earn-Out Payments or (y) any adjustment to the exercise price (a “Dilutive Adjustment”) of any securities or other interests convertible into Equity Securities of the Company resulting from any gross-up or true-up payment made in connection with, or that constitutes, any Earn-Out Payment, and (D) if any portion of the Earn-Out Payments are paid pursuant to clause (D) of Section 7.03(g)(i) by the WME Member and, if applicable, any Sponsor Members, the WME Member and such Sponsor Members (if any), will be issued Class A Common Units in respect of the amounts so paid thereby pursuant to such clause (D) at a price to be unanimously determined by the Board, which shall in no event be greater than Fair Market Value; provided, that if the Board does not unanimously agree on the price per Class A Common Unit, such Class A Common Units will be issued at Fair Market Value, as unanimously determined by the Board; provided, further, that if the Board does not unanimously agree on Fair Market Value, such value shall be determined by an investment banking firm of national reputation selected by the WME Member and reasonably acceptable to the SL Member, the KKR Member and the Company, whose expenses shall be borne by the Company.
(iii) Solely for purposes of this Section 7.03(g), “Economic Cost”, means, with respect to a Class B Member, such Member’s direct or indirect Percentage Interest of any Company cash or other Company asset that is distributed in a non-pro rata distribution to fund all or any portion of any Earn-Out Payment; provided, that, “Economic Cost” shall not include any diminution in value, lost profits or similar cost not relating to the immediate economic effect of the applicable non-pro-rata distribution.
Royalty Reports and Payments After the first sale of a Product on which royalties are payable by a Party hereunder, such Party shall make quarterly written reports to the other Party within sixty (60) days after the end of each calendar quarter, stating in each such report, separately the number, description, and aggregate Net Sales, by territory, of each such Product sold during the calendar quarter upon which a royalty is payable under Section 6.3 or Section 6.4 above, as applicable. Concurrently with the making of such reports, such Party shall pay to the other Party royalties due at the rates specified in Section 6.3 or Section 6.4 above, as applicable.
Earnout Payments (a) The Constituents shall be eligible to receive earnout consideration up to a maximum of three million dollars ($3,000,000) for all such earnout payments, based on the performance of the Surviving Corporation following the Closing as set forth in this Section 1.7.
(i) For the period beginning immediately after the Closing and ending on the first anniversary of the Closing (the “First Earnout Period”), the Constituents shall receive $3 for every $1 of Post-Closing Net Income in excess of one hundred ten percent (110%) of the Adjusted Forecast for such First Earnout Period (the “First Earnout Period Payment”).
(ii) For the period beginning on the day after the first anniversary of the Closing and ending on the second anniversary of the Closing (the “Second Earnout Period”), the Constituents shall receive $3 for every $1 of Post-Closing Net Income in excess of one hundred ten percent (110%) of the Adjusted Forecast for such Second Earnout Period until the Post-Closing Net Income results in an aggregate of $1.5 million of earnout consideration being earned during the Second Earnout Period (such amount of Post-Closing Net Income, the “Second Earnout Threshold”), at which point the amount earned thereafter shall change to $1.50 for every $1 of Post-Closing Net Income in excess of the Second Earnout Threshold for such Second Earnout Period (collectively, the “Second Earnout Period Payment”).
(b) Earnout amounts shall be calculated promtly after the preparation of the Parent’s financial statements following the accounting period in which the end of such earnout period occurs. The First Earnout Period Payment, if any, shall be deposited with Escrow Agent and made part of the Escrow Amount. The calculation of the amount earned in the First Earnout Period Payment or Second Earnout Period Payment, as the case may be, may be referred to as the “Earnout Payment” for such period. Such Earnout Payments shall be delivered to the Escrow Agent or paid to the Constituents in accordance with Section 1.5(a), as the case may be, within the later of (i) ninety (90) days after the Parent’s delivery to the Stockholder Representatives of the applicable Earnout Certificate, or (ii) if disputed pursuant to Section 1.7(f) below, ten (10) Business Days after final determination of the applicable Earnout Payment pursuant to the provisions of Section 1.7(f).
(c) [intentionally omitted]
(d) In no case shall the aggregate amounts paid pursuant to this Section 1.7 exceed $3 million.
(e) As soon as reasonably practicable following Parent’s determination of the Earnout Payment for each of the First Earnout Period and Second Earnout Period (but in no event prior to the date the Parent’s financial statements for the periods to which such Earnout Payments relate have been publicly disclosed by Parent), Parent will deliver to the Stockholder Representatives (i) a statement that includes each element of the calculation of the Earnout Payment; and (ii) a certificate of the Parent’s Chief Financial Officer certifying on behalf of the Parent that the calculation of the Earnout Payment was made in accordance with the terms of this Section 1.7 (such statement and certificate being referred to as the “Earnout Certificate”). The Stockholder Representatives and their professional advisors will be given reasonable access to only those books and records of the Surviving Corporation that are necessary to confirm the calculation of the Earnout Payment. All information obtained by the Stockholder Representatives shall be deemed to be confidential information of the Parent subject to the restrictions of the Confidentiality Agreement attached hereto as Exhibit I.
Indemnity Payments 4.1. Any indemnity payments pursuant to this Agreement shall be made by the Indemnifying Parties to the Indemnified Party in full, without any set off, counterclaim, restriction or condition and without any deduction or withholding (save as may be required by applicable Law or as otherwise agreed in this Agreement or in writing between the Parties). If Tax must be withheld / deducted, or any other Tax is payable in relation to indemnity payments, such additional amounts must be paid by the Indemnifying Party as may be necessary to ensure that the Indemnified Party receives a net amount equal to the full amount which it would have received had payment not been made subject to such Tax or withholding or deductions.
4.2. Any indemnity payments made by the Indemnifying Parties pursuant to this Agreement shall be effected by crediting for same day value the account specified by the Indemnified Party on behalf of the party entitled to the payment (reasonably in advance and in sufficient detail to enable payment by electronic transfer to be effected) on or before the due date for payment.
4.3. The Parties agree that the Indemnified Party shall be indemnified by the Company with respect to its indemnification event (in its capacity as the Indemnifying Party) and the amount of such indemnification payment shall be grossed-up by the Company to take into account the fact that the Indemnified Party as a shareholder of the Company may be indirectly paying a portion of such indemnification payment.
4.4. To the extent the payment by the Indemnifying Party of any indemnification payment pursuant to the provisions of Clause 7 (Indemnification) shall be subject to receipt of approvals from any Governmental Authority (if required), the Indemnifying Party and the Indemnified Party shall be responsible for obtaining all such approvals from any Governmental Authority and shall make all applications and take all steps required to obtain the same. Alternatively, if mutually agreed between the Parties, with both Parties acting reasonably, the claim amount (that is, the Loss) shall be paid to any Affiliate or nominee of the Indemnified Party.
Third Party Payments (a) Subject to Section 6.4.4(c), the Applicable Commercialization Party shall be entitled to credit against the royalties due to the other Party on Net Sales of a Licensed Product in a country an amount equal to [**] percent ([**]%) of all upfront payments, milestone payments, royalties, and other amounts paid by the Applicable Commercialization Party, its Affiliates or Sublicensees to Third Parties with respect to license rights to Third Party intellectual property licensed by the Applicable Commercialization Party, its Affiliates or Sublicensees from the applicable Third Party that the Applicable Commercialization Party reasonably believes are necessary for the Development, Manufacture, or Commercialization of such Licensed Product in such country; provided, however, that, to the extent that any such Third Party license includes a license to Third Party intellectual property that is applicable to products being or to be developed or commercialized by the Applicable Commercialization Party or its Affiliates other than such Licensed Product in such country, then the Applicable Commercialization Party shall reasonably allocate all upfront payments, milestone payments and other non-royalty amounts between the Licensed Product and such other products, and the Applicable Commercialization Party shall only be entitled to credit against the royalties due to the other Party hereunder on Net Sales of such Licensed Product [**] percent ([**]%) of the amounts that are reasonably allocable to the Licensed Product. In addition, the Applicable Commercialization Party shall be entitled to credit against the royalties due to the other Party hereunder defense costs in accordance with Section 8.4.
(b) In the event a Party enters into any Third Party intellectual property license necessary for the Development, Manufacture, or Commercialization of a Licensed Product in a country in the other Party’s part of the Territory after the Restatement Date (EPIZYME represents and warrants to EISAI that EPIZYME is not a party to any such relevant Third Party licenses as of the Restatement Date), under which such Party is entitled to grant a sublicense to the other Party, the other Party will have the right to obtain such sublicense from such sublicensor Party; provided that, if such other Party elects to obtain such sublicense, such other Party shall pay [**] percent ([**]%) of the amounts payable to the Third Party on account of such sublicense (either directly to the Third Party licensor or to the sublicensor Party, as the Parties shall reasonably agree with the goal of ensuring timely payment to the Third Party) and such other Party shall be entitled to credit against the royalties due to the sublicensor Party on Net Sales of such Licensed Product in such country in an amount equal to [**] percent ([**]%) of the amounts paid by such other Party (either directly or indirectly through the sublicensor Party) to such Third Party with respect to such license rights for such Licensed Product in such country.
(c) If any amount is or becomes payable to UNC under the UNC License Agreement (or under any other agreement entered into by EPIZYME or any Affiliate and UNC with respect to the intellectual property that is the subject of the UNC License Agreement) with respect to the Development, Manufacture, or Commercialization of a Licensed Product in any country in the world, EPIZYME shall be solely responsible for and shall pay all such amounts, and no such amounts shall be creditable against any royalties payable to EISAI hereunder.
