Shareholders’ Equity Adjustment Clause Samples
A Shareholders Equity Adjustment clause defines how changes in a company's shareholders' equity are handled, typically in the context of a transaction or agreement. This clause outlines the method for recalculating purchase price, ownership percentages, or other financial terms if the equity position changes between signing and closing, such as through dividends, new share issuances, or buybacks. Its core function is to ensure that both parties are protected from unexpected shifts in value, maintaining fairness and accuracy in the deal's financial terms.
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Shareholders’ Equity Adjustment. 6 1.9. Post-Closing Adjustment....................................... 8 1.10. Additional Issuances; Purchase Price Adjustment.............. 12
Shareholders’ Equity Adjustment. (a) As promptly as practicable, but in no event more than 45 days after the Closing Date, the Corporation shall cause its independent public accounting firm to prepare and deliver to the Investors a statement (the "Post-Closing Statement") setting forth in reasonable detail the accounting firm's calculation of the Shareholders Equity Amount. The "Shareholders Equity Amount"
Shareholders’ Equity Adjustment. The shareholders’ equity adjustment shall be equal to the amount, if any, by which the Shareholders’ Equity as of the close of business on September 30, 2007 (“Closing Shareholders’ Equity”) differs from $24,124,711.00, which is the Shareholders’ Equity set forth in the 2006 Company Financial Statements (the “Shareholders’ Equity Adjustment”). The Shareholders’ Equity Adjustment shall exclude any profit, loss, assets or liabilities accrued, recorded or otherwise applied to Total Assets or Total Liabilities in respect of the 2008 Underwriting Year, including but not limited to premiums, expense reimbursement allowances, agents’ commission expense and losses. The Shareholders’ Equity Adjustment shall be decreased by the amount, if any, that the Companies’ actual operating expenses (determined in accordance with GAAP, applied on a basis consistent with the Companies’ accounting principles, practices, methodologies and policies used in the preparation of the Company Financial Statements and accounting for the accrual, deferral and recognition of items of income and expense including without limitation administration and overhead and loss adjustment expense in the same manner as the 2006 Company Financial Statements) exceed, in the aggregate and not on a line item basis, the budgeted operating expenses set forth in Schedule 2.2(b) for the period from October 1, 2007 to the date of Closing. In the event the Closing Shareholders’ Equity is less than $24,124,711.00, the Shareholders’ Equity Adjustment shall be negative and shall reduce the amount of the Purchase Price. In the event the Closing Shareholders’ Equity is greater than $24,124,711.00, the Shareholders’ Equity Adjustment shall be positive and shall increase the amount of the Purchase Price. Payment of the Shareholders’ Equity Adjustment shall be made in accordance with Section 2.3(b).