Common use of Debt Adjustment Clause in Contracts

Debt Adjustment. The Purchase Price shall be adjusted downward on a dollar-for-dollar basis by the amount of any Indebtedness of the Company as of the Business Day before the Closing Date as set forth below: (i) Within two (2) Business Days prior to the Closing, the Sellers shall cause the Company to prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and reasonable best estimate of the Indebtedness of the Company as of the close of business on the Business Day before the Closing Date (the “Estimated Closing Date Debt”), which Estimated Closing Date Debt shall be prepared using the same methodologies provided for in Section 2.3.1(i). The Purchase Price payable to the Sellers at the Closing pursuant to Section 2.2 shall be decreased by an amount equal to the Estimated Closing Date Debt (the “Estimated Closing Date Debt Adjustment”). (ii) The Estimated Closing Date Debt shall be reconciled after the Closing Date using the same methodologies provided for in Section 2.3.1(ii) to determine the actual Indebtedness as of the Business Day before the Closing Date (“Closing Date Debt Calculation”). (iii) The mechanisms for dispute resolution provided for in Section 2.3.1 shall also govern any dispute as to the Closing Date Debt Calculation. (iv) If the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, then Buyer shall have the right to be paid out of the Adjustment Escrow, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of payment. If the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation, then Buyer shall pay to the Seller Representative on behalf of the Sellers by wire transfer of immediately available funds, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation (Buyer to pay each Seller his or its pro rata share of such shortfall), together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of payment.

Debt Adjustment. The Initial Purchase Price shall be adjusted downward on a dollar-for-dollar basis by the amount of any Indebtedness of the Company as of the Business Day before the Closing Date as set forth below: (i) Within two (2) Business Days prior to the Closing, the Sellers shall cause the Company to prepare and deliver to Buyer an officer’s certificate of the Company that contains a good faith and reasonable best estimate of the Indebtedness of the Company as of the close of business on the Business Day before the Closing Date (the “Estimated Closing Date Debt”), which Estimated Closing Date Debt shall be prepared using the same methodologies provided for in Section 2.3.1(i). The Purchase Price payable to the Sellers at the Closing pursuant to Section 2.2 shall be decreased by an amount equal to the Estimated Debt Adjustment, if any. For purposes of determining the Debt Adjustment, not later than 150 days after the Closing Date, Purchaser shall prepare and deliver to the Shareholders the calculation of the Debt Adjustment, showing only the Total Liabilities, Cash and Cash Equivalents and Collected Accounts Receivable as of the Closing Date ("Debt Adjustment Calculation"). The parties hereto agree that the Company shall have expensed fully in the month ending October 31, 1996 (i) an amount equal to the aggregate of Wholesale Bad Debt (and the “Estimated Company's accounts receivable as of October 31, 1996 and thereafter shall not reflect the accounts receivable to which such Wholesale Bad Debt relates), and (ii) the Audit Bid Amount. Within 20 days after the receipt by Shareholders of the Debt Adjustment Calculation, the Shareholder Agent shall notify Purchaser and the Company of any objections the Shareholders may have to the Debt Adjustment Calculations, and Purchaser and the Shareholder Agent will endeavor promptly to discuss and resolve such objections. In the absence of such objections within such 20 day period, or following resolution of them between Purchaser and the Shareholder Agent, the Shareholders shall be deemed to have approved the Debt Adjustment Calculation and agreed to all amounts set forth therein for purposes of the adjustments to be made pursuant to this Section 1.5, but subject to any rights of indemnification which Purchaser may have pursuant hereto with respect to the accuracy or completeness of the information on the basis of which the Debt Adjustment Calculations was prepared and any other rights Purchaser may have under this Agreement. If after the Debt Adjustment Date, there remain Disputed Debt Adjustment amounts, and Purchaser and the Shareholder Agent have not mutually agreed in writing to continue negotiating, such Disputed Debt Adjustment amounts shall be referred within 15 days to Ernst & Young or such other independent public accounting firm of national stature not used by any of the parties hereto or their respective Affiliates during the prior 2 years as is mutually satisfactory to Purchaser and the Shareholder Agent for resolution within 30 days of the submission to such firm. The determination of such firm with respect to the Disputed Debt Adjustment Amounts shall be conclusive and binding, subject however, to any rights of Purchaser hereunder with respect to the accuracy or completeness of the information on the basis of which such calculation was determined. The fees and expenses of such firm shall be borne equally between Purchaser on the one hand, and the Shareholders on the other hand, in accordance with the Shareholder Percentages. Upon the date of the earlier to occur of resolution of the Disputed Debt Adjustment amounts by (i) mutual written agreement between Purchaser and the Shareholder Agent, or (ii) the determination of the independent accounting firm, the amounts agreed upon or determined shall be appropriately applied to the Debt Adjustment by each party as if such amounts were applied to the Debt Adjustment as of the Debt Adjustment Date, and any amounts due any party hereto shall be paid. (a) On the Debt Adjustment Date, the Initial Purchase Price and the Escrow Amount shall be decreased by an amount ("Undisputed Debt Adjustment") if any, equal to the difference between the Debt Adjustment, if any, and the Disputed Debt Adjustment, if any as follows: (i) The Undisputed Debt Adjustment, if any, shall first be applied against the portion of the Initial Purchase Price consisting of the Undisputed Escrow Amount as of the Debt Adjustment Date. In the event that the Undisputed Escrow Amount as of the Debt Adjustment Date exceeds the Undisputed Debt Adjustment, the parties hereto agree that Purchaser shall be entitled to reduce the Undisputed Escrow Amount held in escrow by Purchaser as of the Debt Adjustment Date pursuant to Section 1.7 by the amount of such Undisputed Debt Adjustment and thereafter such Undisputed Debt Adjustment shall be owned by Purchaser free of the escrow provisions hereunder. (ii) In the event that the Undisputed Debt Adjustment exceeds the Undisputed Escrow Amount on the Debt Adjustment Date, the Initial Purchase Price shall be reduced by such excess, and each Shareholder shall pay to Purchaser on the Debt Adjustment Date a sum ("Debt Adjustment Shortfall") equal to the product of (a) the amount equal to the Undisputed Debt Adjustment minus the Undisputed Escrow Amount on the Debt Adjustment Date and (b) such Shareholder's Shareholder Percentage; provided, however, that each Shareholder shall be jointly and severally liable for payment of the entire Debt Adjustment Shortfall to Purchaser, which amount shall be due and payable on the Debt Adjustment Date. (b) For purposes of collection of the Company"s Closing Date Accounts Receivable for calculation of the Debt Adjustment”), the following procedures shall apply: (i) All collections during the Settlement Period received from the account debtors of the Company shall be applied to the invoice intended to be paid by such account debtor if such intent can be determined. If such intent cannot be determined, then payment shall be applied on a "first in, first out" basis". (ii) The Estimated Company will continue to utilize its standard credit and collection policies, procedures and practices, but without responsibility to institute legal or collection proceedings. (c) Upon the later to occur of (i) receipt of full payment of the Debt Adjustment Shortfall by Purchaser or (ii) the Settlement Date, Purchaser shall transfer to the Shareholders in accordance with the Shareholder Percentages the Company's rights to any Closing Date Debt shall be reconciled Accounts Receivable which remain uncollected by the Company on the 121st day after the Closing Date using the same methodologies provided for in Section 2.3.1(ii) to determine the actual Indebtedness as so that each of the Business Day before Shareholders may then take his own steps, including, without limitation, the Closing Date (“Closing Date Debt Calculation”)use of collection agencies and litigation, to collect the full unpaid balances thereof in due course. (iiid) The mechanisms for dispute resolution provided for in Section 2.3.1 shall also govern any dispute as to Upon the Closing Date Debt Calculation. (iv) If the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, then Buyer shall have the right to be paid out date of the Adjustment Escrow, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period statute of limitations with respect to any Tax for which there was a related accrued Tax accrual used in the Seller Representative to deliver an Objection Notice, an amount equal to the amount by which the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, together with interest thereon at the Prime Rate (as calculation of the Closing Date) from Debt Adjustment Amount ("Tax Accrual Amount"), or alternatively, the Closing Date to and including the date of payment. If the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation, then Buyer shall pay to the Seller Representative on behalf of the Sellers by wire transfer of immediately available funds, within five (5) Business Days of a final determination reversal or reduction by the Accounting Arbitrator Company or expiration Purchaser of the thirty (30) day period for the Seller Representative to deliver an Objection Noticeany Tax Accrual Amount, an amount equal to the amount Purchaser shall return any Tax Accrual Amount which was reversed or which was not actually used by which the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation (Buyer Purchaser to pay each Seller his or its pro rata share of the related Tax to which such shortfall), together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of paymentTax Accrual Amount relates.

Debt Adjustment. The Purchase Price Closing Payment shall be adjusted downward on a dollar-for-dollar basis by the amount of any Indebtedness of the Company Acquired Companies as of the Business Day before the Closing Date as set forth below; provided, however, that any Indebtedness of the Acquired Companies satisfied by the Sellers or the Acquired Companies prior to the Closing shall not constitute “Indebtedness” for purposes of this Section 1.7: (ia) Within two three (23) Business Days prior to the Closing, the Sellers shall cause the Company to prepare and deliver to Buyer an officer’s a certificate of the Company that contains a good faith and reasonable best estimate of the Indebtedness of the Company Acquired Companies as of the close of business on the Business Day before the Closing Date (the collectively, “Estimated Closing Date Debt”), which Estimated Closing Date Debt shall be prepared using the same methodologies provided for in Section 2.3.1(i1.5(a). The Purchase Price Closing Payment payable to the Sellers at the Closing pursuant to Section 2.2 1.4 shall be decreased by an amount equal to the Estimated Closing Date Debt (the “Estimated Closing Date Debt Adjustment”)Debt. (iib) The Estimated Closing Date Debt shall be reconciled after the Closing Date using the same methodologies provided for in Section 2.3.1(ii1.5(b) to determine the actual Indebtedness as of the Business Day before the Closing Date (the “Closing Date Debt Calculation”). (iiic) The mechanisms for dispute resolution provided for in Section 2.3.1 1.5 shall also govern any dispute as to the Closing Date Debt Calculation. (ivd) If Subject to Section 1.8, if the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, then Buyer shall have the right to be paid out of the Adjustment Escrow, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, an amount equal to the full amount by which the Closing Date Debt Calculation exceeds the Estimated Closing Date Debt, together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of payment. If . (e) Subject to Section 1.8, if the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation, then Buyer shall pay to the Seller Representative on behalf of the Sellers in proportion to their Pro Rata Shares by wire transfer of immediately available funds, within five (5) Business Days of a final determination by the Accounting Arbitrator or expiration of the thirty (30) day period for the Seller Representative to deliver an Objection Notice, funds an amount equal to the amount by which the Estimated Closing Date Debt exceeds the Closing Date Debt Calculation (Buyer to pay each Seller his or its pro rata share of such shortfall)Calculation, together with interest thereon at the Prime Rate (as of the Closing Date) from the Closing Date to and including the date of payment. (f) Any adjustment amount due under this Section 1.7 shall be paid pursuant to Section 1.8. The Parties shall treat any payments made pursuant to this Section 1.7 as an adjustment to the Closing Payment and the Purchase Price for all purposes. (g) The Sellers shall deliver to Buyer all appropriate payoff letters and shall make arrangements reasonably satisfactory to Buyer to deliver all applicable UCC-3 termination statements, applications of discharge from the Latvian Commercial Pledges Registry or other documents evidencing the termination of all Liens held by the lenders under the Indebtedness, all in form and substance reasonably acceptable to Buyer.