Additional Consideration. (a) As soon as practicable after the end of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue. (b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company. (c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii). (d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015. (e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Sources: Merger Agreement (Harman International Industries Inc /De/)
Additional Consideration. Buyer agrees to pay to Yergos, H▇▇▇▇▇▇▇▇, K▇▇▇▇▇▇ and H▇▇▇ (athe "Additional Consideration Sellers") As soon additional purchase price consideration ("Additional Consideration") based on this Section 2(d). Additional Consideration to be paid by the Buyer to the Additional Consideration Sellers shall be contingent upon the Companies meeting certain earnings before interest and tax ("EBIT") goals during the 12 consecutive month period commencing as practicable of the Closing (the "EBIT Bonus Period") as set forth below. The Additional Consideration shall be paid by the Buyer to the Additional Consideration Sellers in accordance with the percentage interests as set forth on Schedule 2(d). Additional Consideration to be paid shall be: (i) an aggregate of $500,000.00 if the Companies achieve at least $1,600,000.00 of EBIT during the EBIT Bonus Period, or (ii) an aggregate of $1,000,000.00 if the Companies achieve at least $2,000,000.00 of EBIT during the EBIT Bonus Period. The proportionate share of the Additional Consideration to be paid to each of H▇▇▇▇▇▇▇▇, K▇▇▇▇▇▇ and H▇▇▇ shall be paid out over a period of 24 months in accordance with the terms and conditions set forth in promissory notes to be delivered by Buyer to H▇▇▇▇▇▇▇▇, Hall and K▇▇▇▇▇▇ respectively and in the form which is set forth on Exhibit "E-1." The proportionate share of the Additional Consideration to be paid to Yergos shall be added to the then outstanding principal balance on Yergos' Buyer Note, with such Additional Consideration to be paid to Yergos paid over the balance of the then remaining term of Yergos' Buyer Note. EBIT, for purposes of calculating Additional Consideration shall be calculated consistent with the methodology set forth on Schedule 2(d), which methodology shall, except where otherwise reflected on Schedule 2(d) to be consistent with GAAP and Buyer's audited financial statements.
(i) Within 90 days after the end one year anniversary of the Earn-Out Period (but in no event later than January 30Closing, 2016)Buyer shall prepare and deliver, Parent shall or cause to be prepared and delivered to the Representative a statement Additional Consideration Sellers, the calculation of the Revenue EBIT (the “2015 Revenue”"EBIT Statement") setting forth the calculation of EBIT during the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out EBIT Bonus Period”), which . The EBIT Statement shall be prepared in accordance with the definition of 2015 Revenue contained in this AgreementGAAP, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative principles of preparation and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to consistent with the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as calculations set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(iiSchedule 2(d).
(dii) From and after Within 30 days following receipt by the Effective Time until December 31, 2015, and subject to Additional Consideration Sellers of the Employment AgreementsEBIT Statement, the Surviving Company shall be operated as an autonomous business unit of ParentAdditional Consideration Sellers, in a manner consistent with Annex IIIthrough Additional Consideration Sellers' representative, led by M▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Additional Consideration Sellers' Representative"), shall deliver written notice (an "Objection Notice") to Buyer of any dispute the Additional Consideration Sellers have with respect to the preparation or content of such EBIT Statement. An Objection Notice must describe in reasonable detail the items contained in the EBIT Statement that the Additional Consideration Sellers dispute and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ the basis for so long as any such individuals remain employed disputes. Any items not disputed in the Objection Notice will be deemed to have been accepted by Parent or its Subsidiariesthe Additional Consideration Sellers. From If the Additional Consideration Sellers do not deliver an Objection Notice with respect to the EBIT Statement within such 30-day period, such EBIT Statement will be final, conclusive and binding on the parties. If the Additional Consideration Sellers deliver a timely Objection Notice, Buyer and the Additional Consideration Sellers agree to negotiate in good faith to resolve such dispute. If Buyer and the Additional Consideration Sellers, notwithstanding such good faith effort, fail to resolve such dispute within 30 days after the Effective Time until December 31Additional Consideration Sellers' Representative delivers an Objection Notice, 2015Buyer and the Additional Consideration Sellers, Parent jointly, shall use commercially reasonable efforts have their respective accounting firms select an third accounting firm (the "Accounting Firm") to subcontract internal development work resolve such dispute, unless Buyer and the Additional Consideration Sellers agree to select such Accounting Firm otherwise in writing. As promptly as practicable thereafter (and, in any event, within 15 days after the Accounting Firm's engagement), the Additional Consideration Sellers shall submit any unresolved elements of it or its other Affiliates utilizing at least 200 employees their objection to the Surviving Company Accounting Firm in writing (with a copy to the Buyer), supported by December 31any documents and arguments upon which it relies. As promptly as practicable thereafter (and, 2015in any event, within 15 days following the Additional Consideration Sellers submission of such unresolved elements), the Buyer shall submit its response to the Accounting Firm (with a copy to the Additional Consideration Sellers' Representative) supported by any documents and arguments upon which the Additional Consideration Sellers rely. The Buyer and the Additional Consideration Sellers shall request that the Accounting Firm render its determination within 15 days following its receipt of the Buyer's response. The scope of the disputes to be resolved by the Accounting Firm shall be limited to the unresolved items on the Objection Notice and items directly affected by such unresolved items. The Accounting Firm shall base its decision solely upon the written presentations by the Buyer and the Additional Consideration Sellers. The Buyer and the Additional Consideration Sellers each shall be responsible for one-half of the fees and expenses of the Accounting Firm. All determinations made by the Accounting Firm will be final, conclusive and binding on the parties.
(eiii) IfFor purposes of complying with the terms set forth in this Section 2(d), each party shall cooperate with and make available to the other party and its representatives all information, records, data and working papers and shall permit access to its facilities and personnel, upon advance notice and during normal business hours, as may be reasonably required in connection with the Earn-Out Periodpreparation and analysis of the EBIT Statement and the resolution of any disputes under the EBIT Statement, Parent provided that (i) effects a Change the provision of Control any information or access pursuant to this Section 2(d) shall be subject to appropriate confidentiality undertakings and, if applicable, execution of customary release letters requested by auditors in connection with the Company, sharing of work papers and (ii) terminates the employment of nothing in this Section 2(d) shall require any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date party to disclose information that is one year prior subject to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00)legal privilege.
Appears in 1 contract
Additional Consideration. (a) As soon additional consideration, and regardless of Net Proceeds actually received, Purchaser shall be responsible for, and shall reimburse Seller or pay directly, the Carrying Costs, which are incurred for each of the Properties during the Carrying Cost Period; provided, that, the Auction described in Section 6.5 has occurred by such date and Purchaser has been selected as practicable the successful bidder for the Designation Rights for all of the Properties at the Auction. Purchaser's obligation for Carrying Costs of the Properties shall terminate on the dates described above in the definition of the term "Carrying Cost Period." During the Carrying Cost Period, Purchaser shall be entitled to receive and retain all unencumbered sublease rentals, and all other income generated from any of the Properties (the "Property Income"), provided that such Property Income received shall be accounted for by Purchaser and shall constitute an offset against Carrying Costs, and Purchaser shall have no other entitlement to such Property Income until the Property generating the Property Income is conveyed to Newco, in which case such Property Income shall become a Newco Asset. Nothing herein shall constitute an assignment or sale of any claims or rights of Seller under any agreement relating to the Properties including, without limitation, rent credits, security deposits, refunds or other rebates, or causes of action relating thereto. Other than pre-paid expenses relating to the Carrying Cost Period, Purchaser's Carrying Cost obligations shall not include any indebtedness or any obligations incurred prior to the Effective Date (regardless of when the ▇▇▇▇ for payment may be received for such taxes or other indebtedness). Notwithstanding the foregoing, the portion of the adequate protection payments for the SPE Properties and for the LTCB Properties which are incurred or arise commencing as of the Closing Date (and regardless of when possession of any such SPE Property or LTCB Property is actually delivered to Purchaser) shall become a reimbursement obligation of Purchaser to be paid to Seller or, at Seller's request, directly to the trustees for the holders of the mortgages relating to the SPE Properties or the LTCB Properties, provided that (i) Purchaser shall retain the right, in its sole discretion, to exclude the LTCB Properties or SPE Properties thereafter at any time in accordance with Section 2.4 (but subject to the portion of Section 11.2(b) which relates to the exclusion of the LTCB Properties or the SPE Properties) and (ii) Purchaser shall be reimbursed (or, at Purchaser's election, may be treated as "Property Income" hereunder) for all occupancy costs paid by any GOB liquidator or FF&E liquidator after the end Effective Date for any of the EarnLTCB Properties or the SPE Properties.
(b) If the Designation Order is not yet final on the Effective Date for any Property, then Purchaser will be responsible for the payment of all Carrying Costs for such Property as of the Effective Date, provided that if the Designation Order is overturned, appealed or does not become a Final Order, Purchaser shall have an allowed superpriority administrative claim and lien for any and all Carrying Costs paid by Purchaser, together with interest at 10%, junior solely to any existing superpriority claim in the Bankruptcy Case and existing liens, and subject to the carve-Out Period (outs and professional fees for the Seller and the Committee as approved by the Court, but in no event later than January 30shall such carve-out exceed the cap imposed on such fees consistent with the current wind-down budget contained in Seller's DIP facility.
(c) On or about ten (10) days prior to the end of each month, 2016)Seller shall advise Purchaser in writing of the aggregate amount of (i) the total Carrying Costs (broken down by category and containing information in sufficiently reasonable detail) that will be due and owing for the Properties in the following month, Parent shall cause (ii) the Property Income to be prepared received in the following month and delivered which will be applied in reduction of the Carrying Costs and (iii) a calculation of the net Carrying Costs to be paid by Purchaser after application of the Property Income to be received (the "Carrying Cost Schedule"). Any "true-ups" with respect to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which Carrying Cost Schedule shall be prepared made in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject a manner reasonably acceptable to the Representative parties. Purchaser shall timely pay the net Carrying Costs set forth on the Carrying Cost Schedule to Seller without offset or deduction of any kind and its representatives entering into notwithstanding any reasonable undertakings required by Parent’s accountants in connection therewith) related objection that Purchaser may interpose to such amounts; provided that Purchaser may object to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution Carrying Costs within fifteen (15) days after the delivery of the Objections Statementsuch notification. If Purchaser makes a timely objection, the Representative and Parent parties shall submit first attempt to resolve the dispute consensually and, absent resolution, such dispute shall be submitted to the Dispute Resolution ArbiterBankruptcy Court. Any further submissions resolution in favor of Purchaser of a disputed Carrying Cost which has previously been paid by Purchaser shall be recovered by Purchaser from subsequent Net Proceeds, together with interest at the Interest Rate from the date of payment by Purchaser. Purchaser's obligation to pay the net Carrying Costs shall be secured by an irrevocable letter of credit in the amount of $6 million drawn on a bank and in a form reasonably acceptable to Seller, Purchaser and the Committee (the "Letter of Credit"). The Letter of Credit shall be delivered to Seller prior to the Dispute Resolution Arbiter must Closing and may be written and delivered reduced, from time to each time, by agreement between the parties as Carrying Costs are reduced due to the transfer of Parent Properties to Purchaser's designees and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified exclusion of Properties in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and accordance with the provisions of this Agreement.
(d) Seller and the Committee shall have the right to review and audit all costs and expenses paid directly by Purchaser and to determine whether such costs are actual, including this Section 1.07reasonable or necessary for the disposition of the Properties and whether any such costs and expenses should be treated as a Deduction. The Representative and Parent If Seller and/or the Committee makes an objection, the parties shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter first attempt to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in dispute consensually and, absent resolution, the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination dispute shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved Bankruptcy Court. Any resolution in favor of Seller of a manner further disputed Deduction which has previously been paid by Purchaser shall be recovered by Seller from the position submitted to the Dispute Resolution Arbiter subsequent Net Proceeds (or reimbursed directly by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution ArbiterPurchaser), and together with interest at the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submittedInterest Rate; provided, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubthowever, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, apply if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system Deduction was on the next normal payroll date of the Surviving Company and (D) pay Carrying Cost Schedule provided by Seller to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving CompanyPurchaser.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii).
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Sources: Asset Purchase Agreement (Service Merchandise Co Inc)
Additional Consideration. (a) As soon Following the Closing, the Company shall conduct its business in accordance with the budget and expense structure previously agreed between the Buyer and the Company and summarized on Schedule 1.6(a) (the “Business Plan”). The Chief Operating Officer of the Buyer shall have the right to adjust the Business Plan in good faith based on the interim results of the Company or in light of the business of the Buyer as practicable a whole, it being understood that after the end Closing Date the business of the Company will be controlled by, and subject to the overall management of, the Buyer. The Company acknowledges that as of the date hereof, all of the products (including intellectual property) necessary for the Business Plan have either been developed by the Company or are under development by the Company and can be developed in their entirety with the employees of the Company and its Subsidiaries existing as of the Closing Date and in accordance with the Business Plan.
(b) If, for the period commencing on the Closing Date and ending on June 30, 2004, the Company achieves both Revenue and Operating Income on a level set forth on Schedule 1.6(b) (a “Dual Achievement Level”), then, subject to the provisions of this Section 1.6, the Buyer shall deliver to the Company Stockholders their pro rata portion of the number of Contingent Shares corresponding to the Dual Achievement Level (with no cumulative benefit for any lower level).
(c) No later than August 15, 2004, the Buyer shall prepare (or cause to be prepared) and deliver to the Stockholder Representatives, a calculation of Revenue and Operating Income and a related calculation of the number, if any, of the Contingent Shares issuable in accordance with Section 1.6(b), together with any documentation as may be reasonably necessary to enable the Stockholder Representatives to assess such calculation. After receipt of the calculation of the Revenue and Operating Income from the Buyer, the Stockholder Representatives shall have the right, at the expense of the Stockholder Representatives and upon not less than five days’ prior notice to the Buyer, to meet with the Buyer to discuss the Buyer’s calculation and have reasonable access during normal business hours to inspect the records and working papers relating to the calculation of such Revenue and Operating Income and in each case solely for the purpose of verifying the calculation amount of Revenue and Operating Income hereunder. Unless the Stockholder Representatives challenge the Buyer’s determination of Revenue or Operating Income within 30 days after delivery of the calculation, the Buyer’s determination shall be conclusive and binding for all purposes of this Agreement. Notwithstanding any other provision of this Agreement, the Stockholder Representatives shall have all the rights and powers of the Company Stockholders and the remedies available to the Company Stockholders to enforce the obligations of the Buyer under this Agreement including, without limitation, the provisions of this Section 1.6.
(d) In the event that the Stockholder Representatives dispute the Buyer’s determination of Revenue or Operating Income, or there is a dispute with regard to any other provision of this Section 1.6, they shall so notify the Buyer by delivering an Earn-Out Dispute Notice to the Buyer. With respect to disputes regarding the Buyer’s determination of Revenue or Operating Income, the Stockholder Representatives shall deliver the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to Dispute Notice within 30 days after delivery by the Representative a statement Buyer of the Buyer’s written calculation of Revenue (and Operating Income. In the “2015 Revenue”) event of the Company (such statementa dispute, the “Revenue Statement”) for Buyer and the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which Stockholder Representatives shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times first use diligent good faith efforts to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statementresolve such dispute among themselves. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith they are unable to resolve any Disputed Items, but if they do not reach a final resolution the dispute within fifteen (15) 30 calendar days after the delivery of the Objections StatementEarn-Out Dispute Notice, then the Representative and Parent dispute shall submit such dispute be submitted to the Dispute Resolution Arbiter. Any further submissions Earn-Out Arbitrator.
(i) All determinations by the Earn-Out Arbitrator pursuant to this paragraph (d) shall be in writing and shall be delivered to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representativeparties. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in determination by the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination Earn-Out Arbitrator to the resolution of any dispute shall be based solely on binding and conclusive upon the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07parties. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution A judgment of the dispute determination made by the Dispute Resolution Arbiter shall Earn-Out Arbitrator pursuant to this paragraph (d)(i) may be final entered into and binding on and nonappealable enforced by the Parties hereto. any court having jurisdiction thereover.
(ii) The fees and expenses of the Dispute Resolution Arbiter Earn-Out Arbitrator in connection with the resolutions of disputes pursuant to this paragraph (d) shall be allocated between Parent shared equally by the Stockholder Representatives on the one hand and the Representative Buyer on the other, provided that, if the Earn-Out Arbitrator determines that one party has adopted a position(s) that is frivolous or clearly without merit, the Earn-Out Arbitrator may, in such manner that the Representative shall be responsible for that its discretion, assign a greater portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii).
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015party.
(e) IfThe Company and the Company Stockholders agree and acknowledge that, during subject to Section 1.6(a), the EarnBuyer may make from time to time such business decisions as it deems appropriate in the conduct of the Buyer’s and business, including actions that may have an impact on Revenue or Operating Income, and the Company and the Company Stockholders will have no right to claim any lost earn-Out Periodout or other damages as a result of such decisions so long as the actions were not taken by the Buyer in bad faith for the principal purpose of frustrating the provisions of this Section.
(f) Notwithstanding any other provision of this Agreement, Parent if (i) effects the Buyer has made a Change of Control of the Companyclaim(s) for indemnity pursuant to Article VI or Article VII, (ii) terminates such claim(s) have not been paid in full by the employment of Indemnifying Stockholders or otherwise resolved on the date any of Contingent Shares would otherwise be due to the Executives without Cause or any of the Executives terminates his employment for Good Reason or Indemnifying Stockholders and (iii) materially breaches its obligations set forth in Section 1.07(d) the good faith estimation of the Buyer, the aggregate amount of any unpaid or unresolved claim for indemnity exceeds the amount of any remaining portion of the Applicable Escrow Fund, then the Buyer may retain a portion of the Contingent Shares otherwise due to the Indemnifying Stockholders in excess of the remaining portion of the Applicable Escrow Fund necessary to satisfy the amount of any indemnification obligation as provided in Article VI or Article VII below. For the purposes of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (iSection 1.6(f), the value of a Contingent Share shall be $7.677 (ii) and (iii), an “Annualization Event”), then (A) subject to equitable adjustment in the event of an Annualization Event described in clause (i)any stock split, 2015 Revenue shall be calculated as stock dividend, reverse stock split or similar event affecting the product of (x) Revenue during the period from January 1, 2015 through Buyer Common Stock since the date of this Agreement). Upon the Annualization Event multiplied by (y) resolution of any claim for indemnity that was subject to a ratio (hold back under this Article I) , the numerator of which is total Revenue in 2014 and (II) Buyer shall release the denominator of which is Revenue in 2014 during the period amount held back from January 1, 2014 through the date that is one year prior to such claim within 10 business days after the date of such resolution and shall (i) retain such portion (if any) of such amount as the Annualization Event Buyer is entitled to receive pursuant to the resolution of such claim of indemnity, which shall release the Indemnifying Stockholders of any obligation to pay such amount to the Buyer under Article VI or Article VII and (B) in shall release the event Buyer of an Annualization Event described in clause its obligation to pay any such amount to the Indemnifying Stockholders under this Article I, as the case may be and (ii) or pay to the Indemnifying Stockholders the remaining portion (iiiif any) that occurs prior to an Annualization Event described in clause (i), of such amount. Nothing herein shall limit the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date obligations of the Annualization Event Indemnifying Stockholders to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (the Buyer set forth in Article VI and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00)Article VII hereof.
Appears in 1 contract
Sources: Merger Agreement (Bottomline Technologies Inc /De/)
Additional Consideration. (a) As soon as practicable after the end of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii).
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent the Buyer achieves Revenue from the Business Unit equal to or exceeding the Earn-Out Threshold, then, subject to the provisions of this Section 1.14, the Sellers shall be entitled to receive Earn-Out Consideration in accordance with the provisions of this Section 1.14. No Seller shall be permitted to assign such Seller's right to receive the Earn-Out Consideration to any third party, except: (i) effects a Change by operation of Control of the Companylaw, (ii) terminates to a trust in which the employment of any of Seller is the Executives without Cause or any of grantor, the Executives terminates his employment for Good Reason trustee and the primary intervivos beneficiary, or (iii) materially breaches its obligations set forth upon the death of a Seller, pursuant to the terms of such Seller's will, in Section 1.07(deach case to the extent permitted by applicable securities laws.
(b) No later than the date that is 90 days after the end of this Agreement which breach is the Earn-Out Period, the Buyer shall prepare (or cause to be prepared) and deliver to the Representatives a calculation of the Revenue for the Earn-Out Period and a statement of the amount, if any, of the Earn-Out Consideration payable based on such Revenue, together with such documentation, if any, as may be reasonably necessary to enable the Representatives to assess such calculation. After receipt from the Buyer of the calculation of the Revenue for the Earn-Out Period, the Representatives shall have the right, at the expense of the Sellers and upon not cured within less than ten (10) Business Days following receipt days' prior notice to the Buyer, to meet with the Buyer to discuss the Buyer's calculation and have reasonable access during normal business hours to inspect the records and working papers relating to the calculation of such Revenue, solely for the purpose of verifying the calculation of the Revenue hereunder. Unless the Representatives challenge the Buyer's determination of the Revenue by Parent the delivery of written notice from an Earn-Out Dispute Notice within 60 days after the Representative Buyer's delivery of the calculation of the Revenue for the Earn-Out Period, the Buyer's determination shall be conclusive and binding for all purposes of this Agreement.
(c) In the event that the Representatives dispute the Buyer's determination of the Revenue for the Earn-Out Period, the Representatives shall so notify the Buyer by delivering an Earn-Out Dispute Notice to the Buyer within the period provided in paragraph (b) above. In the event of such a material breach dispute, the Buyer and the Representatives shall first use diligent good faith efforts to resolve such dispute among themselves. If they are unable to resolve the dispute within thirty (each 30) days after the delivery of clause the Earn-Out Dispute Notice, then the dispute shall be submitted to the Neutral Accountant for determination in accordance with the following provisions:
(i)) The Buyer and the Representatives shall submit to the Neutral Accountant, (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through within 10 days after the date of the Annualization Event multiplied engagement of the Neutral Accountant (as evidenced by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and engagement letter), copies of
(A) the Buyer's calculation of the Revenue for the Earn-Out Period, (B) in the event Earn-Out Dispute Notice and (C) a list of an Annualization Event described in clause all unresolved objections raised by the Representatives with respect to the calculation of the Revenue for the Earn-Out Period (ii) or the "Unresolved Earn-Out Objections"). Each of the Buyer and the Representatives shall submit to the Neutral Accountant (iii) that occurs prior with a copy delivered to an Annualization Event described in clause (ithe other Party on the same day), within 30 days after the Representative date of the engagement of the Neutral Accountant, a memorandum (which may include supporting exhibits) setting forth their respective positions on the Unresolved Earn-Out Objections. Each of the Buyer and the Representatives may (but shall not be required to) submit to the Neutral Accountant (with a copy delivered to the other Party on the same day), within 60 days after the date of the engagement of the Neutral Accountant, a memorandum responding to the initial memorandum submitted to the Neutral Accountant by the other Party. Unless requested by the Neutral Accountant in writing, neither the Buyer nor the Representatives may present any additional information or arguments to the Neutral Accountant, either orally or in writing; provided, however, that each party shall have the right to electrespond to the Neutral Accountant's requests directed to the other party.
(ii) The Neutral Accountant shall prepare and distribute to the parties a writing setting forth the Neutral Accountant's determination of the Revenue for the Earn-Out Period and the Neutral Accountant's reasons therefor. Any decision rendered by the Neutral Accountant shall be final, by giving written notice conclusive and binding upon the parties, and judgment thereon may be entered and enforced in any court of competent jurisdiction.
(iii) The Neutral Accountant shall have no power or authority to Parent not later (A) modify or disregard any provision of this Agreement, including the provisions of this Section 1.14(c), or (B) address or resolve any issues other than the thirtieth Unresolved Earn-Out Objections.
(30thiv) day following the first date The fees and expenses of the Annualization Event Neutral Accountant in connection with the resolution of disputes pursuant to occurthis paragraph (c) shall be shared equally by the Sellers on the one hand and the Buyer on the other hand, provided that, if the Neutral Accountant determines that 2015 Revenue one party has adopted a position or positions that is frivolous or clearly without merit, the Neutral Accountant may, in its discretion, assign a greater portion of such fees and expenses to such party.
(d) The Earn-Out Consideration, if any, payable pursuant to this Section 1.14 shall be calculated based on actual 2015 Revenue paid by the payment by the Buyer of (i) 12.5% of the Earn-Out Consideration to the Escrow Fund and in (ii) 87.5% of the Earn-Out Consideration to the Representatives, for distribution to the Sellers. Any such event payment shall be made immediately upon the expiration of the 30-day period for giving the Earn-Out Dispute Notice, if no Earn-Out Dispute Notice is given, or upon notification by the Representatives that no Earn-Out Dispute Notice will be given, or immediately upon final resolution of any dispute in connection with the determination of the Earn-Out Consideration. Any and all Earn-Out Consideration shall be distributed by the Representatives to each Seller pro rata in the same proportion as the total amount of Transaction Consideration and Option Consideration payable to such notice is validly given 2015 Seller under this Agreement bears to the total amount of Transaction Consideration and Option Consideration payable to all Sellers pursuant to this Agreement.
(e) The Sellers agree and acknowledge that the Buyer may make from time to time such business decisions as it deems appropriate in the conduct of the Business Unit's business, including actions that may have an impact on Revenue, and the Sellers will have no right to claim any lost earn-out or other damages as a result of such decisions so long as the actions were not taken by the Buyer outside of the Ordinary Course of Business (except for any Permitted Actions) or for the principal purpose of decreasing Revenue, in bad faith or for the principal purpose of frustrating the provisions of this Section. If the Buyer (i) takes any action outside of the Ordinary Course of Business (except for any Permitted Actions), for the principal purpose of decreasing Revenue, in bad faith or for the principal purpose of frustrating the provisions of this Section, (ii) does not continue to offer turn-key projects (specifically including any or all of installation work, engineering and ancillary products) in the Ordinary Course of Business or (iii) implements any purchase accounting measures as a result of the acquisition of the Company resulting in a reduction of Revenue, then the Revenue during the Earn-out Period shall be calculated as provided in clause (A))if such action had not been taken. For If at any time prior to the avoidance of doubtClosing the Sellers, in no event will the occurrence of an Annualization Event accelerate Company or otherwise change any Subsidiary shall take any Prohibited Action, then the date of payment of Revenue during the Adjusted Earn-Out. For purposes of illustration only, out Period shall be calculated as if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, such Prohibited Action had not $100.00)been taken.
Appears in 1 contract
Sources: Purchase Agreement (Kadant Inc)
Additional Consideration. (a) As soon The Parties acknowledge that, as practicable after at the end date of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including production of new batches of Triesence is not possible due to on-going supply chain interruptions. The Parties agree that, in addition to the Accounting Principles. After delivery of the Revenue StatementInitial Purchase Price, the Representative and its accountants and other representatives Purchaser shall be permitted reasonable access at reasonable times pay the additional consideration (“Additional Consideration”) following the first Triesence Commercial Batch Release to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days occur following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between amount of the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination Additional Consideration shall be based solely as follows:
(i) if the first Triesence Commercial Batch Release occurs on or before the presentations by Parent and first anniversary of the Representative that are in accordance Closing Date, the Additional Consideration shall be USD $45,000,000 (forty five million US dollars);
(ii) if the first Triesence Commercial Batch Release occurs after the first anniversary of the Closing Date but on or before the second anniversary of the Closing Date, the Additional Consideration shall be USD $37,000,000 (thirty seven million US dollars);
(iii) if the first Triesence Commercial Batch Release occurs after the second anniversary of the Closing Date but on or before the third anniversary of the Closing Date, the Additional Consideration shall be USD $32,000,000 (thirty two million US dollars);
(iv) if the first Triesence Commercial Batch Release occurs after the third anniversary of the Closing Date no Additional Consideration shall be payable.
(i) If the first Triesence Commercial Batch Release after the date of this Agreement occurs prior to Closing, Purchaser shall pay the Additional Consideration to Novartis at Closing along with the terms and procedures set forth in Initial Purchase Price (so that the amount transferred pursuant to Section 6.2(c) is equal to the Initial Purchase Price plus the Additional Consideration).
(ii) If the first Triesence Commercial Batch Release after the date of this Agreement (i.e.occurs after Closing, not on the basis of an independent review). The resolution Purchaser shall, within 10 Business Days of the dispute by first Triesence Commercial Batch Release, (i) pay the Dispute Resolution Arbiter shall be final Additional Consideration to Novartis, free and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter)clear of, and without deduction for, withholdings, Taxes, or other charges of any kind and of any country, by wire transfer into the denominator of which is the total aggregate dollar amount bank account specified in dispute in respect of the Disputed Items so submittedSection 6.2(c) below, and Parent shall be responsible for the remainder (ii) deliver to Novartis a U.S. Federal Reserve reference or similar number evidencing execution of such fees and expenses. payment.
(c) For the avoidance of doubt, the foregoing Additional Consideration shall not limit claims for Losses under be payable only once pursuant to this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage amount of the Additional Non-Rollover Stockholder Consideration, Consideration shall not exceed USD $45,000,000 (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (iforty five million US dollars) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii)circumstances.
(d) From and after In the Effective Time until December 31, 2015, and subject to event that the Employment Agreements, first Triesence Commercial Batch Release has not occurred as of the Surviving Company third anniversary of the Closing Date no Additional Consideration shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led payable by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts Purchaser to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015Novartis.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Additional Consideration. (a) As soon as practicable after the end of the EarnThe Buyer agrees to pay to Inso royalties equal to two and one-Out Period half percent (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”2 1/2%) of the Company gross revenues recognized by the Buyer (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared as determined in accordance with United States generally accepted accounting principles) (the definition of 2015 Revenue contained in this Agreement, including "Quest Royalties") from the Accounting Principles. After delivery licensing or sale of the Revenue StatementQuest Software Product listed on Schedule 1.1(i) hereto (or any upgrades, modifications or enhancements thereto) (the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and "Quest Product") or of any work papers (subject to the Representative and its representatives entering into product which incorporates any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation part of the Revenue Statement. If Quest Product, during the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and nonfour-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely year period commencing on the Accounting Principles, the definition of 2015 Revenue contained herein Closing Date and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely ending on the presentations by Parent and fourth anniversary thereof (the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review"Royalty Period"). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject The Buyer shall pay the Quest Royalties to Sections 1.08Inso on a quarterly basis, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, with each such payment being made within forty-five (545) Business Days days following determination the last day of the Final Base Purchase Price)fiscal quarter within the Royalty Period (and with the last such payment being made within forty-five (45) days following the end of the fiscal quarter during which the Royalty Period expires. Each such payment shall be accompanied by a summary signed by the Chief Financial Officer of the Buyer setting forth in reasonable detail the gross revenues recognized by the Buyer during the period to which such payment relates and including a calculation of the Quest Royalties payable by the Buyer. Not less frequently than annually, the Securityholders Buyer's independent public accountants shall deliver a certificate to the Sellers showing the calculation of the gross revenues to which the Quest Royalties relate recognized by the Buyer during the year covered by its audit and a calculation of the Quest Royalties payable by the Buyer during such year.) Inso's right to receive the Quest Royalties shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held assignable by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving CompanyInso.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii).
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative Sellers shall have the right to electconduct annually, by giving written upon reasonable notice to Parent not later than the thirtieth (30th) day following the first date and during normal business hours, an audit of the Annualization Event Buyer's books and records to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in the extent necessary to verify the calculation of the Quest Royalties. The cost of such event if no such notice is validly given 2015 Revenue audit shall be calculated as provided borne by the Sellers, unless the audit shows an underpayment of Quest Royalties in clause which case the cost of such audit shall be borne by the Buyer. Any payment not made when due (A)). For the avoidance of doubt, in no event will the occurrence either on account of an Annualization Event accelerate underpayment of Quest Royalties or otherwise change otherwise) shall bear interest at the date of payment of the Adjusted Earn-Out. For purposes of illustration onlyprime rate charged from time to time by Citibank N.A., if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00)plus 3% per annum.
Appears in 1 contract
Sources: Asset Purchase Agreement (Inso Corp)
Additional Consideration. (a) As soon In addition to the Base Purchase Price, upon the attainment by Buyer of the Net Sales milestones of the Product in the Territory set forth below (each a “Net Sales Milestone” and collectively the “Net Sales Milestones”), Buyer shall pay to Seller the respective amounts set forth below (each a “Net Sales Milestone Payment” and collectively the “Net Sales Milestone Payments”):
(i) [**] if cumulative Net Sales of the Product in the Territory after the Closing Date and prior to the Net Sales Milestone Termination Date equal [**];
(ii) [**] (not to exceed [**] in the aggregate) for each additional [**] of cumulative Net Sales of the Product in the Territory after the Closing Date and prior to the Net Sales Milestone Termination Date in excess of [**];
(iii) [**] (not to exceed [**] in the aggregate) for each additional [**] of cumulative Net Sales of the Product in the Territory after the Closing Date and prior to the Net Sales Milestone Termination Date in excess of [**]; and **Portions of the Exhibit have been omitted and have been filed separately pursuant to an application for confidential treatment filed with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as practicable amended.
(iv) [**] (not to exceed [**] in the aggregate) for each additional [**] of cumulative Net Sales of the Product in the Territory after the Closing Date and prior to the Net Sales Milestone Termination Date in excess of [**]. No additional payments will be due and payable by Buyer to Seller following the attainment of cumulative Net Sales of the Product in the Territory after the Closing Date and prior to the Net Sales Milestone Termination Date in excess of [**].
(b) The Net Sales Milestone Payments, if any, shall be payable within sixty (60) days of the end of the Earn-Out Period calendar quarter in which the relevant Net Sales Milestone is achieved by wire transfer of immediately available funds to an account designated by Seller in writing within two (but in no event later than January 30, 2016), Parent shall cause 2) Business Days after Seller becomes entitled to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (receive such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principlespayment. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access Upon at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within least thirty (30) days following prior written notice to Buyer, Seller and its agents shall have the date of delivery right to inspect and audit Buyer’s books and records related to Net Sales of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent Product and the Representative. The Dispute Resolution Arbiter shall consider only those items calculation of any such payments due and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts payable to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible Seller for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination year period prior to the end of the Final Base Purchase Price)last fiscal quarter of Buyer ending prior to the date of commencement of such audit during Buyer’s normal business hours; provided, the Securityholders that Seller shall not inspect and audit such books and records more than once during any calendar year. The costs of any such audit shall be entitled to borne by Seller, unless the audit reveals an amount, if anyunderpayment of [**] or more of the amount actually due, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excesswhich case, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company Buyer shall (reimburse Seller for any and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, all reasonable costs associated with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Companyaudit.
(c) Subject From and after the Closing until the Net Sales Milestone Termination Date, Buyer hereby agrees to Sections 1.08use, 1.09or to cause its Affiliates to use, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance Commercially Reasonable Efforts with Section 1.07(a) (but in no event prior respect to the marketing and sale of the Product. If at any time between the Closing Date and the Net Sales Milestone Termination Date the business strategy of (i) Buyer or Parent or (ii) following a Change of Control, any Successor Entity changes such that Merger Sub is required Buyer or its Affiliates or such Successor Entity fails to make payments pursuant use Commercially Reasonable Efforts with respect to Section 1.07(b))the marketing and sale of the Product, the Securityholders then Seller shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), receive an amount equal to [**], which amount shall be paid within sixty (60) days of Seller becoming entitled thereto by wire transfer of immediately available funds to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied account designated by Seller in writing within two (2) Business Days after Seller becomes entitled to receive such payment. As used in this Section 4.02(c), “Commercially Reasonable Efforts” means, with respect to any Person, the Stockholder Percentageefforts and resources that would be used (including the promptness in which such efforts and resources would be applied) by such Person consistent with its normal business practices, which in no event shall be less than the level of efforts and resources standard in the pharmaceutical industry for a company similar in size and scope to such Person, with respect to a product at a similar stage in its development or product life taking into account efficacy, safety, commercial value, the competitiveness of alternative products of third parties that are in the marketplace or under development, and the Exchange Agent shall distribute to each Patent and other proprietary position of such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay product. Notwithstanding anything herein to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such timecontrary, the “Missing Aditi Shares”), an amount equal Commercially Reasonable Efforts” to the product of (1be used by Buyer under this Section 4.02(c) the Adjusted Earn-Out Amount, (2shall not be less than those efforts Parent would be obligated to take under this Section 4.02(c) the quotient if Parent had executed and delivered this Agreement as Buyer. **Portions of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, Exhibit have been omitted and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made have been filed separately pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance an application for confidential treatment filed with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial Securities and record ownership of additional shares since the last payment Exchange Commission pursuant to this Section 1.07(b) (Rule 24b-2 under the “Partial Closing Shares”) constituting at least five percent (5%) Securities Exchange Act of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders1934, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii)amended.
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Additional Consideration. (a) As soon as practicable after the end of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered Subject to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative terms and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions conditions of this Agreement, including this the Shareholders entitled to receive Merger Consideration pursuant to Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b3.01(a)(i) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in receive additional contingent cash equal to consideration for their Common Shares (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its their Pro Rata Stock Percentage Share of the Deliverable Adjusted Earn-Out Amount, and (B) pay up to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (orGross Gathering Revenue for each Qualifying New Midstream Development; provided, if less, that the number aggregate amount of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties Additional Consideration payable pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and this Section 3.06 shall not exceed $15,000,000. The Additional Consideration shall be calculated in accordance with the resolution schedule attached hereto as Exhibit E, which Exhibit also sets forth examples of such Additional Consideration opportunities.
(b) Any Additional Consideration shall be calculated on a quarterly basis, in arrears, commencing the first calendar quarter following the calendar quarter during which any Gross Gathering Revenues are first received by Parent or the Surviving Entity and continuing on a quarterly basis thereafter following any quarter during which Gross Gathering Revenues are actually received by Parent or the Surviving Entity until expiration of the applicable Additional Consideration Period. With respect to each such claim pursuant quarterly calculation, Parent (or its successor or assign) shall deliver a certificate, signed by the chief financial officer or other authorized officer of Parent (or such successor or assign), to the terms Shareholder Agent setting forth Parent’s good faith calculation of the Additional Consideration payable with respect to the applicable quarterly period (each, an “Additional Consideration Certificate”) and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, such Additional Consideration shall be paid pursuant to Section 8.04(h)(ii3.06(i) after the amount of such Additional Consideration is finally resolved pursuant to this Section 3.06.
(c) The Shareholder Agent may object to Parent’s determination of the Gross Gathering Revenue or Additional Consideration set forth in any Additional Consideration Certificate by delivery of a written statement of objections (indicating each disputed item or amount, stating the basis thereof with reasonable specificity and setting forth the Shareholder Agent’s calculation of the Gross Gathering Revenue and Additional Consideration) to Parent within 30 days following delivery to the Shareholder Agent of any Additional Consideration Certificate (each, an “Additional Consideration Objection Period”).. After Parent’s delivery of any Additional Consideration Certificate, the Shareholder Agent shall be given reasonable access to the books and records of Parent and the Surviving Entity and shall be permitted to reasonably inquire of the officers and accountants of the Surviving Entity and Parent who were responsible for the preparation of the Additional Consideration Certificate, in each case to the extent related to questions or otherwise concerning such Additional Consideration Certificate, provided, that such access and inquiries shall be in a manner that does not interfere with the normal business operations of Parent or the Surviving Entity
(d) From and after If the Effective Time until December 31Shareholder Agent does not make such an objection during such Additional Consideration Objection Period, 2015, and subject the calculations set forth in the Additional Consideration Certificate with respect to the Employment Agreements, Additional Consideration and the Surviving Company Gross Gathering Revenue shall be operated as an autonomous business unit considered final, conclusive and binding upon the parties and each of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015Shareholders.
(e) If, If the Shareholder Agent makes such an objection during the Earn-Out Additional Consideration Objection Period, only those disputed items or amounts specified in the Shareholder Agent’s written statement of objections shall be deemed to be in dispute (the “Additional Consideration Disputed Items”), and all other matters included in the Additional Consideration Certificate shall be considered final, conclusive and binding upon the parties and each of the Shareholders. If the Shareholder Agent makes such an objection during any Additional Consideration Objection Period, Parent (i) effects a Change of Control of and the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations Shareholder Agent shall seek in good faith to resolve all Additional Consideration Disputed Items set forth in Section 1.07(d) the Shareholder Agent’s written statement of this Agreement which breach is not cured objections within ten (10) 10 Business Days following receipt by delivery to Parent of the Shareholder Agent’s written notice from the Representative statement of objections with respect to such a material breach Additional Consideration Certificate or any mutually agreed upon extension thereof (each of clause (i), (ii) and (iii)each, an “Annualization EventAdditional Consideration Resolution Period”).
(f) If Parent and the Shareholder Agent cannot agree on all of the Additional Consideration Disputed Items during the Additional Consideration Resolution Period, either Parent (on the one hand) or the Shareholder Agent (on the other hand) may elect, by written notice given to the other within five Business Days after conclusion of such Additional Consideration Resolution Period (the “Additional Consideration Election Period”), then (A) in to have such the event of an Annualization Event described in clause (i)unresolved Additional Consideration Disputed Items resolved by the Independent Accountant, 2015 Revenue whose determination shall be calculated as final, conclusive and binding upon the product of (x) Revenue during the period from January 1, 2015 through the date parties and each of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-OutShareholders. For purposes of illustration onlyclarity, the parties may submit to the Independent Accountant any or all of the unresolved Additional Consideration Disputed Items; and the Independent Accountant shall make no investigation or determination regarding any items other than the Additional Consideration Disputed Items submitted to it. If any Additional Consideration Disputed Items is submitted to the Independent Accountant, Parent and the Shareholder Agent shall promptly execute in favor of the Independent Accountant such engagement letters and related agreements, and shall provide all documentation, in each case, reasonably requested by the Independent Accountant, to enable the Independent Accountant to perform its duties under this Section.
(g) If neither Parent nor the Shareholder Agent makes such an election during the Additional Consideration Election Period, the calculations proposed by Parent in the applicable Additional Consideration Certificate and, based thereupon, the amount of Additional Consideration set forth in such Additional Consideration Certificate shall be considered final, conclusive and binding upon the parties and each of the Shareholders.
(h) If either Parent or the Shareholder Agent makes an election during the Additional Consideration Election Period to have the determination made by the Independent Accountant, the Independent Accountant shall make determinations of the Additional Consideration Disputed Items and, based thereupon, the calculations of Gross Gathering Revenues and Additional Consideration using the methodology set forth in Exhibit E attached hereto with respect to the Additional Consideration Certificate in question, which determinations shall be final, conclusive and binding upon the parties and each of the Shareholders. No appeal from any such determination shall be permitted. The Independent Accountant shall be instructed to (i) determine solely with respect to the Additional Consideration Disputed Items submitted to it whether it agrees with Parent’s calculations of Gross Gathering Revenues and Additional Consideration or the Shareholder Agent’s calculations of Gross Gathering Revenues and Additional Consideration and (ii) use every reasonable effort to make such determination within 10 Business Days (and in any case as soon as practicable) after its receipt of the Additional Consideration Certificate and the Shareholder Agent’s written statement of objections to such certificate. The fees and expenses for the services of the Independent Accountant shall be borne by the party against whom the dispute is resolved (and, if the Annualization Event occurred dispute is resolved against the Shareholder Agent, such fees and expenses shall be payable by the Shareholders and the amount thereof shall be offset and taken from the amount of Additional Consideration being paid to the Shareholders pursuant to such Additional Consideration Certificate, if any, and if the amount of any such Additional Consideration shall be insufficient to pay such fees and costs owed by the Shareholders to the Independent Accountant, Parent may, at its sole discretion, withhold and set off such amount against future payments of Additional Consideration, if any, without limiting any other rights and remedies available to Parent at law or in equity). In making its decision, the Independent Accountant shall be limited by the amounts proposed by the parties and shall not award an amount higher than the highest amount proposed by a party or lower than the lowest amount proposed by a party. Judgment upon any award or decision by the Independent Accountant may be enforced by any court having jurisdiction thereof.
(i) Parent shall pay the amount of any quarterly Additional Consideration as finally determined pursuant to this Section 3.06 by wire transfer of immediately available funds to the Paying Agent, with instructions to the Paying Agent to distribute to each Shareholder such Shareholder’s Pro Rata Share of such Additional Consideration based on June 30the number of Common Shares for which such Shareholder received Merger Consideration, 2015and with respect to any Common Shares for which the Certificates and other required documents have not been delivered, Revenue upon delivery of such Certificates and other documents in accordance with Section 3.04. The Shareholders shall be responsible for all fees, costs and expenses payable to the first six Paying Agent in connection with its distribution of Additional Consideration to the Shareholders, including fees, costs and expenses associated with maintaining the Exchange Agent Agreement in effect throughout the period during which the Shareholders may be entitled to Additional Consideration.
(6j) months of 2014 was $40.00The Parties acknowledge that the dispute resolution mechanism established pursuant to this Section 3.06 may be applicable simultaneously to more than one Additional Consideration Certificate.
(k) Throughout the period during which the Shareholders may be entitled to Additional Consideration, Revenue for the second six Surviving Entity and Parent (6including any successor or assign) months of 2014 was $60.00 shall conduct their respective businesses and Revenue for operations in good faith, in a commercially reasonable manner and without any specific intent to prejudice the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00)Shareholders’ right to receive Additional Consideration.
Appears in 1 contract
Additional Consideration. (a) As soon as practicable after If, prior to the end tenth anniversary of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue Closing Date (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Additional Consideration Period”), which Buyer consummates a Qualifying Exit, Buyer shall pay, or cause to be prepared in accordance paid, to Seller an amount equal to $5,000,000 (the “Additional Consideration”) substantially concurrently with the definition consummation of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter)Qualifying Exit, and the denominator in any event no later than five Business Days following such consummation, by wire transfer of which is the total aggregate dollar amount immediately available funds to an account designated in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenuewriting by Seller.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii).
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent Buyer shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees pursue and consummate a Qualifying Exit during the Additional Consideration Period; provided, however, that if no Qualifying Exit is consummated prior to the Surviving Company by December 31expiration of the Additional Consideration Period, 2015Buyer shall have no obligation to pay the Additional Consideration.
(c) Buyer shall provide Seller with written notice of the anticipated closing date of any Qualifying Exit no later than ten Business Days prior to such anticipated closing date.
(d) During the Additional Consideration Period, Buyer shall not take any action, or fail to take any action, the primary purpose of which is to structure any transaction so as to avoid the characterization of such transaction as a Qualifying Exit.
(e) If, during the Earn-Out Additional Consideration Period, Parent Buyer consummates any transaction that would be a Qualifying Exit but for the fact that the Aggregate Transaction Value is less than $[***], as determined by Buyer in good faith, Buyer shall deliver written notice of such determination to Seller no later than ten Business Days prior to the consummation of such transaction (a “Non-Qualifying Transaction Notice”). Each Non-Qualifying Transaction Notice shall (i) effects a Change of Control of describe the Companyapplicable transaction in reasonable detail, (ii) terminates the employment of any set forth Buyer’s determination of the Executives without Cause or any of the Executives terminates his employment Aggregate Transaction Value for Good Reason or such transaction and (iii) materially breaches its obligations explain in reasonable detail the basis for such determination, including by providing reasonable supporting documentation of such determination.
(f) Upon receipt of a Non-Qualifying Transaction Notice, Seller shall have thirty days to deliver written notice to Buyer contesting Buyer’s determination of the Aggregate Transaction Value set forth therein (a “Non-Qualifying Transaction Dispute Notice”). If Seller does not deliver a Non-Qualifying Transaction Dispute Notice to Buyer within such thirty day period, Seller shall be deemed to have accepted Buyer’s determination as set forth in Section 1.07(d) the applicable Non-Qualifying Transaction Notice, and such determination shall be final and binding on the parties. If Seller timely delivers a Non-Qualifying Transaction Dispute Notice, the Parties shall negotiate in good faith to resolve the dispute set forth therein. If the Parties determine that the applicable transaction constitutes a Qualifying Exit, Buyer shall pay, or cause to be paid, to Seller the Additional Consideration by wire transfer of this Agreement which breach is not cured within ten (10) immediately available funds to an account designated in writing by Seller no later than five Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00)determination.
Appears in 1 contract
Sources: Share and Asset Purchase Agreement (Standard Biotools Inc.)
Additional Consideration. (a) As soon as practicable after the end of the Earn-Out Period (but in no event later than January On June 30, 20161999 (the "Earnout Payment Date"), Parent Buyer shall cause pay to be prepared and delivered Seller, by wire transfer of same day Dollar funds to an account designated by Seller, as additional consideration for the Shares, an amount equal to the Representative a statement of amount specified below opposite the Revenue applicable Nisaplin Sales Amount (the “2015 Revenue”"Earnout Amount"): Nisaplin Sales Amount in Earnout Amount in Millions Millions of Dollars of Dollars ------------------------ -------------------------- < 7 0.0 7 to 8 0.5 8 to 11 1.0 11 to 14 1.5 14 to 17 2.0 > 17 2.5
(b) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative Buyer shall deliver to Parent an Objections Statement stating that Seller on the Representative believes Earnout Payment Date, a statement, certified by the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying Buyer's Chief Financial Officer, setting forth in reasonable detail the aggregate Nisaplin Sales Amount, together with the name of the Corporation's Nisaplin customers to which sales included in the Nisaplin Sales Amount were made, the aggregate amount of Nisaplin purchased by each Disputed Item such customer and the aggregate amount in dispute for of Nisaplin Sales Amount attributable to each Disputed Item and such customer. Seller shall review the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement Buyer's statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution notify Buyer within fifteen (15) days after receipt thereof if Seller has any objections to the delivery amount of the Objections StatementEarnout Amount as determined by Buyer. If Buyer and Seller are unable to resolve any dispute as to the Earnout Amount within fifteen (15) days after receipt by Buyer of Seller's objections, the Representative dispute shall be referred to Price Waterhouse (UK Bristol office) for a final and Parent shall submit such dispute to conclusive determination of the Dispute Resolution ArbiterEarnout Amount. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s Such determination shall be based solely on made within thirty (30) days after the Accounting Principles, referral. Seller and Buyer shall bear equally the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than arising in connection with such determination. If the determination Earnout Amount as determined by Buyer is less than the Earnout Amount determined by Price Waterhouse (UK Bristol office) as provided herein, Buyer shall pay Seller the difference between such amounts within three (3) days after receipt of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) the Earnout Amount by Price Waterhouse (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)UK Bristol office), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit plus interest on such amount at a rate of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), an amount interest per annum equal to the product of Citibank Prime Rate from and including the Earnout Payment Date to but excluding the date such payment is made. If the Earnout Amount as determined by Buyer is more than the Earnout Amount determined by Price Waterhouse (1UK Bristol office) as provided herein, Seller shall pay Buyer the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount difference between such amounts within three (the “Deliverable Adjusted Earn-Out Amount”3) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage days after receipt of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as final determination of the Reference TimeEarnout Amount by Price Waterhouse (UK Bristol office), an plus interest on such amount at a rate of interest per annum equal to the product of (1) Citibank Prime Rate from and including the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company Earnout Payment Date to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of but excluding the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last such payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii)is made.
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Sources: Share Purchase Agreement (Ambi Inc)
Additional Consideration. In addition to the Purchase Price, Buyer shall make additional payments for the Assets (the "Additional Consideration") to the extent required by this Section 1.7.
(a) Seller Parties jointly and severally represent and warrant that Section 1.7(a) of the Seller Disclosure Schedule contains a complete and accurate list of those Dealers who are licensees of LeaseLink lease comparison tool 4.5, 6.0, or Direct (referred to collectively as "LeaseLink" and, for avoidance of doubt, excluding "GuestTrack," "Wizard," and "Forms by Superior" or any other product of the Seller Entities) Dealers (collectively, the "Seller Rooftops") including (i) the number of LeaseLink licenses held by each such Seller Rooftop and (ii) the unique address of such Dealer. Except as disclosed in Section 1.7(a) of the Seller Disclosure Schedule, none of the Seller Rooftop licenses has been sold, transferred, factored or otherwise disposed of. The terms of each factored Seller Rooftop license shown on Section 1.7(a) of the Seller Disclosure Schedule is coterminous with or exceeds the duration of the agreement under which such license was factored. As soon as practicable after the end of the Earn-Out Period (but in no event later than January 30, 2016), Parent shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December July 31, 2015 2004, Seller Parties shall prepare a revised Schedule 1.7
(the “Earn-Out Period”)a) that shall contain a complete and accurate list of Seller Rooftops as of July 31, 2004, which shall be prepared in accordance subject to review and approval by Buyer, such approval not to be unreasonably withheld.
(b) If the aggregate number of Seller Rooftops together with any Dealers purchasing any successor product to LeaseLink or product(s) offering substantially equivalent replacement functionality to LeaseLink from Buyer or an Affiliate of Buyer (collectively, the definition "LeaseLink Dealers") of 2015 Revenue contained in this Agreementthe Seller Entities and the Buyer on the third anniversary of the Effective Date, including the Accounting Principles. After delivery new Dealers and Dealer renewals during such three-year period, net of the Revenue StatementDealers which are cancelled, the Representative terminated, abandoned, bought out or expire without renewal during such period and excluding Dealers that become such through acquisitions by Buyer or any of its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and Affiliates of any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statementassets, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors shares or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis business other than the Assets, is greater than the number of LeaseLink Dealers on July 31, 2004 as set forth in on Schedule 1.7(a) of the timely delivered Objections Statement and shall be deemed Seller Disclosure Schedule, subject to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent adjustment within thirty (30) days following of July 31, 2004 (such greater number of LeaseLink Dealers being the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price"Incremental Third Year Dealers"), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) Buyer will pay the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage of the Additional Non-Rollover Stockholder Consideration, (B) deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled to an amount, if any, in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held by them as of the Reference Time (other than Dissenting Shares), Seller Parties an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, $2,000.00 and the Exchange Agent shall distribute to each number of Incremental Third Year Dealers.
(c) If the aggregate number of LeaseLink Dealers of the Seller Entities and the Buyer on the fourth anniversary of the Effective Date is greater than such Common Stockholder aggregate number of LeaseLink Dealers on the third anniversary of the Effective Date, including new Dealers and Preferred Stockholder (Dealer renewals during such year, net of Dealers which are cancelled, terminated, abandoned, bought out or expire without renewal during such year and excluding Dealers that become such during such year through acquisitions by Buyer or any of its Affiliates of any assets, shares or business other than holders the Assets (such greater number of Dissenting Shares) its Pro Rata Stock Percentage of LeaseLink Dealers being Asset Purchase Agreement the Deliverable Adjusted Earn-Out Amount"Incremental Fourth Year Dealers"), and (B) the Buyer will pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, Seller Parties an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial $2,000.00 and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii)Incremental Fourth Year Dealers.
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
Appears in 1 contract
Sources: Asset Purchase Agreement (DealerTrack Holdings, Inc.)
Additional Consideration. In addition to the Purchase Price, the ------------------------ parties acknowledge that Seller is entitled to receive an amount equal to (x) the DOE Subcontract Fee less (y) the sum of remaining amounts, if any, to be ---- setoff pursuant to Part II, Section 11 and Part II, Section 12 of the DOE Subcontract with relation to GFY 1999 (the "Fee Sharing Commitments") but that the DOE Subcontract Fee has not been determined as of the date of this Agreement. In the event that the DOE Subcontract Fee is determined prior to the Closing Date, Seller shall cause the Company to pay an amount equal to (x) such DOE Subcontract Fee less (y) the sum of remaining amounts, if any, to be setoff ---- pursuant to the Fee Sharing Commitments to Seller, whether by dividend, loan or otherwise. In the event that the DOE Subcontract Fee has not been determined and paid to Seller prior to the Closing Date, the following provisions shall be applicable:
(a) Purchaser shall cause the Company to, and the Company shall, (A) conduct negotiations related to the determination of the DOE Subcontract Fee in a diligent manner consistent with the past practices of the Company, (B) reasonably inform Seller as to the status of the negotiations and (C) allow Seller to advise the Company with regard to the negotiations. Purchaser and the Company shall not be responsible for the outcome of the DOE Subcontract Fee negotiation provided that they satisfy the obligations contained in the preceding sentence.
(b) Within two (2) business days of the determination of the DOE Subcontract Fee in accordance with Part III, Section 46 of the DOE Subcontract, Purchaser shall notify Seller as to the results of such determination.
(c) Within five (5) business days, Seller may notify Purchaser that Seller either (A) desires to dispute the amount of such DOE Subcontract Fee or (B) accepts the determination of the DOE Subcontract Fee. In the event that Seller notifies Purchaser that Seller does not accept the determination of the DOE Subcontract Fee, the Company and Purchaser shall allow Seller, at Seller's expense, to challenge such determination in the name of the Company and Purchaser by any reasonable means. Purchaser and its Affiliates shall cooperate with Seller, at Seller's expense, with relation to any such challenge and shall provide Seller with reasonable access to, and assistance of, the Company's management personnel as well as access to pertinent records, materials and information in the possession of Purchaser or its Affiliates. Seller shall pay for such assistance on a time and materials basis at the Company's prevailing rates. As soon as practicable after (i) Seller accepts the end determination of the Earn-Out Period DOE Subcontract Fee or (but in no event later than January 30ii) Seller's challenge to the determination of the DOE Subcontract Fee is resolved, 2016), Parent Purchaser shall cause to be prepared and delivered to the Representative a statement of the Revenue (the “2015 Revenue”) of the Company (such statement, the “Revenue Statement”) for the twelve (12) months ended December 31, 2015 (the “Earn-Out Period”), which shall be prepared in accordance with the definition of 2015 Revenue contained in this Agreement, including the Accounting Principles. After delivery of the Revenue Statement, the Representative and to use its accountants and other representatives shall be permitted reasonable access at reasonable times to review the Surviving Company’s and its Subsidiaries’ books and records and any work papers (subject to the Representative and its representatives entering into any reasonable undertakings required by Parent’s accountants in connection therewith) related to the preparation of the Revenue Statement. If the Representative has any objections to the Revenue Statement, the Representative shall deliver to Parent an Objections Statement stating that the Representative believes the Revenue Statement contains mathematical errors or was not prepared in accordance with this Agreement and specifying in reasonable detail each Disputed Item and the amount in dispute for each Disputed Item and the reasons supporting the Representative’s positions. The Representative shall not challenge the Revenue Statement on any basis other than as set forth in the timely delivered Objections Statement and shall be deemed to have agreed with all other items and amounts contained in the Revenue Statement. If an Objections Statement is not delivered to Parent within thirty (30) days following the date of delivery of the Revenue Statement, the Revenue Statement shall be final and binding on and non-appealable by the Parties. The Representative and Parent shall negotiate in good faith to resolve any Disputed Items, but if they do not reach a final resolution within fifteen (15) days after the delivery of the Objections Statement, the Representative and Parent shall submit such dispute to the Dispute Resolution Arbiter. Any further submissions to the Dispute Resolution Arbiter must be written and delivered to each of Parent and the Representative. The Dispute Resolution Arbiter shall consider only those items and amounts that are identified in the Objections Statement as Disputed Items. The Dispute Resolution Arbiter’s determination shall be based solely on the Accounting Principles, the definition of 2015 Revenue contained herein and the provisions of this Agreement, including this Section 1.07. The Representative and Parent shall use their commercially reasonable efforts to cause receive the Dispute Resolution Arbiter to resolve all disagreements as soon as practicable in amounts between the disputed amounts set forth in the Revenue Statement DOE Subcontract Fee and the Objections Statement. The Dispute Resolution Arbiter’s determination shall be based solely on the presentations by Parent and the Representative that are in accordance with the terms and procedures set forth in this Agreement (i.e.shall, not on the basis of an independent review). The resolution of the dispute by the Dispute Resolution Arbiter shall be final and binding on and nonappealable by the Parties hereto. The fees and expenses of the Dispute Resolution Arbiter shall be allocated between Parent and the Representative in such manner that the Representative shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction the numerator of which is the aggregate dollar amount in dispute in respect of Disputed Items submitted to the Dispute Resolution Arbiter that are resolved in a manner further from the position submitted to the Dispute Resolution Arbiter by the Representative and closer to the position submitted to the Dispute Resolution Arbiter by Parent (as finally determined by the Dispute Resolution Arbiter), and the denominator of which is the total aggregate dollar amount in dispute in respect of the Disputed Items so submitted, and Parent shall be responsible for the remainder of such fees and expenses. For the avoidance of doubt, the foregoing shall not limit claims for Losses under this Agreement to the extent that a Party has a claim for Losses under this Agreement other than in connection with the determination of 2015 Revenue.
(b) Subject to Sections 1.08, 1.09, 1.10, 1.12, 7.01(e) and 8.04, no later than February 5, 2016 (or, if later, five (5) Business Days following determination of the Final Base Purchase Price), the Securityholders shall be entitled to an amount, if any, in cash equal to (i) the Floor Adjustment Amount plus (ii) the Base Purchase Price Excess, if a positive number, less (iii) the Base Purchase Price Shortfall, if a positive number (clauses (i) through (iv), the “Additional Consideration”), subject to reduction as set forth in this Agreement. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of shares of Company Stock other than Rollover Shares (and Dissenting Shares) held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by within two (2) the Non-Rollover Stockholder Percentage (such product, the “Additional Non-Rollover Stockholder Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders business days of Dissenting Shares) its Pro Rata Non-Rollover Stock Percentage receipt of the Additional Non-Rollover Stockholder ConsiderationDOE Subcontract Fee, (B) deliver pay to Seller the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of Rollover Shares held by them as amount of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, DOE Subcontract Fee less the sum Fee Sharing Commitments by bank wire transfer of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the Rollover Stockholder Percentage (such product, the “Additional Rollover Stockholder Cash Consideration”), and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder its Pro Rata Rollover Stock Percentage of the Additional Rollover Stockholder Cash Consideration, (C) pay to the holders of First Tier In-the-Money Options and Restricted Stock Units in respect of First Tier In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount in cash equal to the product of (1) the Additional Consideration, less the sum of the Reduction Amount and the Second Tier Aggregate Catch-Up Option Consideration, if any, multiplied by (2) the First Tier Award Holder Percentage (such product, the “Additional Award Holder Consideration”), less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such First Tier In-the-Money Options and Restricted Stock Units its First Tier Pro Rata Award Percentage of the Additional Award Holder Consideration (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company and (D) pay to each holder of Second Tier In-the-Money Options in respect of the Second Tier In-the-Money Options held by them as of the Reference Time, an amount in cash equal to the Second Tier Option Catch-Up Consideration with respect to such Second Tier In-the-Money Options, with payment to be made through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company.
(c) Subject to Sections 1.08, 1.09, 1.10 and 1.12, 7.01(e) and 8.04, promptly following the final determination of 2015 Revenue in accordance with Section 1.07(a) (but in no event prior to the time that Merger Sub is required to make payments pursuant to Section 1.07(b)), the Securityholders shall be entitled immediately available funds to an amount, if any, account designated in cash, subject to reduction pursuant to Section 1.06(c) and Section 10.04(c), (the “Adjusted Earn-Out Amount”) equal to (i) the Earn-Out Amount, less (ii) the Floor Adjustment Amount. The Surviving Company shall (and Parent shall cause the Surviving Company to) (A) subject to Section 1.12 deliver to the Exchange Agent, for the benefit of Common Stockholders and Preferred Stockholders in respect of the shares of Company Stock held writing by them as of the Reference Time (other than Dissenting Shares), an amount equal to the product of (1) the Adjusted Earn-Out Amount less the Earn-Out Holdback Amount (the “Deliverable Adjusted Earn-Out Amount”) multiplied by (2) the Stockholder Percentage, and the Exchange Agent shall distribute to each such Common Stockholder and Preferred Stockholder (other than holders of Dissenting Shares) its Pro Rata Stock Percentage of the Deliverable Adjusted Earn-Out Amount, and (B) pay to the holders of In-the-Money Options and Restricted Stock Units in respect of In-the-Money Options and Restricted Stock Units held by them as of the Reference Time, an amount equal to the product of (1) the Deliverable Adjusted Earn-Out Amount, multiplied by (2) the Award Holder Percentage, less the aggregate applicable Forfeited Amounts, with the Surviving Company to distribute to each such holder of such In-the-Money Options or Restricted Stock Units its Pro Rata Award Percentage of the Deliverable Adjusted Earn-Out Amount (less any applicable Forfeited Amounts) through the Surviving Company’s payroll system on the next normal payroll date of the Surviving Company; provided, that if the Group Companies have not acquired beneficial and record ownership of 100% of the Fully Diluted Aditi Shares by the time of the payment of the Adjusted Earn-Out Amount (the number of Fully Diluted Aditi Shares not so acquired at such time, the “Missing Aditi Shares”), an amount equal to the product of (1) the Adjusted Earn-Out Amount, (2) the quotient of the 2015 Revenue of Aditi Technologies Private Limited over the total 2015 Revenue, and (3) the quotient of the Missing Aditi Shares over the Fully Diluted Aditi Shares, shall be withheld by the Surviving Company from the payments to be made pursuant to this Section 1.07(c) (such unpaid amount, the “Unpaid Aditi Earn-Out”), and shall be paid in accordance with the second sentence of this Section 1.07(c) (i) in the event the “Second Closing Sale Shares” (as defined in the Aditi Stock Purchase Agreement) are acquired by the Company at one time, in its entirety within ten (10) Business Days of the date of the Second Closing (as defined in the Aditi Stock Purchase Agreement) or (ii) otherwise, within ten (10) Business Days of each date on which the Company acquires beneficial and record ownership of additional shares since the last payment pursuant to this Section 1.07(b) (the “Partial Closing Shares”) constituting at least five percent (5%) of the Fully Diluted Aditi Shares (or, if less, the number of shares constituting the remaining number of Missing Aditi Shares (excluding shares held by the Missing Shareholders (as defined below))), the payment on such date equal to the applicable Unpaid Aditi Earn-Out Amount (for the avoidance of doubt, in the case of each of clauses (i) and (ii), whether or not the Fully Diluted Aditi Shares held by the Missing Shareholders, as defined in the Aditi Stock Purchase Agreement, have heretofore been acquired by the Company). Until paid, the Unpaid Aditi Earn-Out may be subject to set-off or holdback in respect of claims by the Parent Indemnified Parties pursuant to Article X or Article VIII (with the final disposition of any amount so held back or set off to occur only following and in accordance with the resolution of any such claim pursuant to the terms and conditions of Article X or Article VIII, as applicable), including, for the avoidance of doubt, pursuant to Section 8.04(h)(ii)Seller.
(d) From and after the Effective Time until December 31, 2015, and subject to the Employment Agreements, the Surviving Company shall be operated as an autonomous business unit of Parent, in a manner consistent with Annex III, led by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for so long as such individuals remain employed by Parent or its Subsidiaries. From and after the Effective Time until December 31, 2015, Parent shall use commercially reasonable efforts to subcontract internal development work of it or its other Affiliates utilizing at least 200 employees to the Surviving Company by December 31, 2015.
(e) If, during the Earn-Out Period, Parent (i) effects a Change of Control of the Company, (ii) terminates the employment of any of the Executives without Cause or any of the Executives terminates his employment for Good Reason or (iii) materially breaches its obligations set forth in Section 1.07(d) of this Agreement which breach is not cured within ten (10) Business Days following receipt by Parent of written notice from the Representative of such a material breach (each of clause (i), (ii) and (iii), an “Annualization Event”), then (A) in the event of an Annualization Event described in clause (i), 2015 Revenue shall be calculated as the product of (x) Revenue during the period from January 1, 2015 through the date of the Annualization Event multiplied by (y) a ratio (I) the numerator of which is total Revenue in 2014 and (II) the denominator of which is Revenue in 2014 during the period from January 1, 2014 through the date that is one year prior to the date of the Annualization Event and (B) in the event of an Annualization Event described in clause (ii) or (iii) that occurs prior to an Annualization Event described in clause (i), the Representative shall have the right to elect, by giving written notice to Parent not later than the thirtieth (30th) day following the first date of the Annualization Event to occur, that 2015 Revenue be calculated based on actual 2015 Revenue (and in such event if no such notice is validly given 2015 Revenue shall be calculated as provided in clause (A)). For the avoidance of doubt, in no event will the occurrence of an Annualization Event accelerate or otherwise change the date of payment of the Adjusted Earn-Out. For purposes of illustration only, if the Annualization Event occurred on June 30, 2015, Revenue for the first six (6) months of 2014 was $40.00, Revenue for the second six (6) months of 2014 was $60.00 and Revenue for the first six (6) months of 2015 was $50.00, annualized 2015 Revenue following the June 30, 2015 Annualization Event would be $125.00 (and for the avoidance of doubt, not $100.00).
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