Earnout Consideration. (a) Upon the terms and subject to the conditions set forth in this Section 2.04, following the Closing, the Sellers may be entitled to additional consideration (the “Earnout Consideration”) based on the Company’s Revenue for the 12-month period ending December 31, 2029 as compared to the Company’s Revenue for the 12-month period ended December 31, 2024 (the “Earnout Period”). The Earnout Consideration, if any, to be paid with respect to the Earnout Period shall be: (i) determined in accordance with this Section 2.04; and (ii) paid: (A) in cash, by wire transfer of immediately available funds, within 10 Business Days after the Earnout Consideration, if any, has been finally determined pursuant to Section 2.04(c); and (B) in the manner directed by the Sellers’ Representative, including as provided in, and contemplated by, Section 6.22. (b) The Earnout Consideration with respect to the Earnout Period, as finally determined in accordance with Section 2.04(c), shall be an aggregate amount equal to the following: (i) If the Revenue CAGR for the Earnout Period is equal to or less than 12%, then, the aggregate amount of the Earnout Consideration shall be $0. (ii) If the Revenue CAGR for the Earnout Period is greater than 12% but less than 22%, then, the aggregate amount of the Earnout Consideration shall be pro-rated using straight-line interpolation between $0 and $225,000,000. (iii) If the Revenue CAGR for the Earnout Period is equal to or greater than 22%, then, the aggregate amount of the Earnout Consideration shall be $225,000,000. An illustrative calculation of the Earnout Consideration, if any, is attached hereto as Exhibit K, and the parties hereto acknowledge and agree that, for purposes of calculating the Earnout Consideration, if any, the Starting Revenue shall be the amount identified as the Starting Revenue in Exhibit K. For the avoidance of doubt, in no event shall the aggregate amount of the Earnout Consideration exceed $225,000,000. (c) During the Earnout Period, within 90 days following the end of the calendar year for each of 2026, 2027 and 2028, the Buyer shall prepare in good faith a schedule setting forth, in reasonable detail and with reasonable support, the Buyer’s good faith calculations of the Revenue CAGR for such calendar year and the cumulative Revenue CAGR for the period beginning on January 1, 2025 and ending on December 31 of 2026, 2027, or 2028, as applicable (each, an “Unofficial Interim Earnout Annual Statement”), and shall deliver such Unofficial Interim Earnout Annual Statement to the Sellers’ Representative. Following the delivery of such Unofficial Interim Earnout Annual Statement, and upon the Sellers’ Representative’s reasonable request and for purposes of the Sellers’ Representative’s review of such Unofficial Interim Earnout Annual Statement, the Buyer shall promptly make the work papers, back-up materials, books, records and supporting data used in preparing, and the employees of WisdomTree Asset Management who participated in the preparation of, such Unofficial Interim Earnout Annual Statement available to the Sellers’ Representative and its Representatives during normal business hours and upon reasonable notice. Notwithstanding the foregoing or any contrary provision contained in this Agreement, the parties hereto hereby acknowledge and agree that, in each case: (i) the calculations set forth on any such Unofficial Interim Earnout Annual Statement will be preliminary and will not: (A) be based on audited financials; (B) will not cover the applicable measurements periods of the Earnout Period; and (C) will not accurately set forth or reflect the calculation of the final Earnout Consideration, if any; (ii) the calculation of the final Earnout Consideration, if any, may vary materially from the calculations set forth on any such Unofficial Interim Earnout Annual Statement; and (iii) in no event and under no circumstances shall: (A) any such Unofficial Interim Earnout Annual Statement be used to challenge or dispute, or be a basis for challenging or disputing, the calculation of the final Earnout Consideration, if any; and/or (B) the Buyer, any of its Affiliates, or any of their respective Representatives have any direct or indirect Liability arising out of, resulting from, or relating to any such Unofficial Interim Earnout Annual Statement or any work papers, back-up materials, books, records, supporting data and/or discussions relating thereto. (d) Within 30 days following the issuance of the audited financial statements for Ceres Farms for the fiscal year ending December 31, 2029, the Buyer shall prepare in good faith a schedule setting forth, in reasonable detail and with reasonable support, the Buyer’s good faith calculations of the Revenue CAGR and the resulting Earnout Consideration for the Earnout Period (the “Earnout Consideration Statement”), and shall deliver the Earnout Consideration Statement to the Sellers’ Representative. Following the delivery of the Earnout Consideration Statement, and upon the Sellers’ Representative’s reasonable request and for purposes of the Sellers’ Representative’s review of the Earnout Consideration Statement, the Buyer shall promptly make the work papers, back-up materials, books, records and supporting data used in preparing, and the employees of WisdomTree Asset Management who participated in the preparation of, the Earnout Consideration Statement available to the Sellers’ Representative and its Representatives during normal business hours and upon reasonable notice. Within 90 days following the delivery of the Earnout Consideration Statement, the Sellers’ Representative shall either: (i) inform the Buyer in writing that the Earnout Consideration Statement is acceptable; or (ii) object to the Earnout Consideration Statement in writing, setting forth, in reasonable detail and with reasonable supporting information, a description of the Sellers’ Representative’s objections and an alternate calculation of each such objected item. If the Sellers’ Representative does not timely so object to the Earnout Consideration Statement, then, the Sellers’ Representative (on behalf of the Sellers) shall be deemed to have accepted the Earnout Consideration Statement. If the Sellers’ Representative objects to, or disagrees with, any of the calculations set forth in the Earnout Consideration Statement in accordance with this Section 2.04(d), the dispute resolution procedures set forth in Section 2.03(c) shall apply to the resolution of such dispute, and the Earnout Consideration shall be determined by the Accounting Firm in accordance with the procedures set forth in Section 2.03(c), mutatis mutandis. (e) The right of a Seller to receive any portion of any Earnout Consideration: (i) is not a security for purposes of any federal or state securities Laws; (ii) shall not be represented by any form of certificate or instrument, other than this Agreement; and (iii) shall be payable to such Seller’s heirs, executors, administrators, legal representatives, successors and permitted assigns (including, in the case of any Seller who is an individual, in the event of such Seller’s death prior to any Earnout Consideration becoming payable hereunder, if any). (f) The parties hereto agree that, subject to Section 6.22 (as applicable), for all income Tax purposes, any payment of the Earnout Consideration to the Sellers with respect to their Company Interests shall be treated as deferred contingent purchase price eligible for installment sale treatment under Section 453 of the Code and any corresponding provision of state, local, or non-U.S. law, as appropriate (subject to imputation of interest under Section 483 or Section 1274 of the Code). (g) During the Earnout Period, the parties hereto further agree to act in compliance with the terms set forth on Schedule 2.04(g).
Appears in 1 contract
Earnout Consideration. (a) Upon If the terms and subject EBITDA attributable to the conditions set forth in this Section 2.04, Business during the period beginning on the first day of the first calendar month following the Closing, Closing Date and ending on the Sellers may be entitled to additional consideration date six months thereafter (the “"Earnout Consideration”Period") based equals or exceeds $600,000, then Purchaser shall, at the Purchaser's option, either (i) pay $500,000 in cash to the Shareholders, on a pro rata basis or (ii) issue to the Company’s Revenue Shareholders, on a pro rata basis, certificates representing the number of shares of Purchaser Common Stock determined by dividing $500,000 by the greater of (A) the average NASDAQ closing price of Purchaser Common Stock for the 12-month period 10 business days ending December 31, 2029 as compared immediately prior to the Company’s Revenue for the 12-month period ended December 31, 2024 (the “Earnout Period”). The Earnout Consideration, if any, to be paid with respect to end of the Earnout Period shall be: (i) determined in accordance with this Section 2.04; and (ii) paid: (A) in cash, by wire transfer of immediately available funds, within 10 Business Days after the Earnout Consideration, if any, has been finally determined pursuant to Section 2.04(c); and (B) in $2.75 (the manner directed by the Sellers’ Representative, including as provided in, and contemplated by, Section 6.22.
(b) The Earnout Consideration with respect amounts payable to the Earnout Period, as finally determined in accordance with Shareholders pursuant to this Section 2.04(c3.2(a), shall be the "Initial Earnout Consideration"). For each $1.00 of the EBITDA attributable to the Business during the Earnout Period in excess of $600,000, the Purchaser shall, at the Purchaser's option, either (i) pay to the Shareholders, on a pro rata basis, cash in an aggregate amount equal to 30% of such excess, or, (ii) issue to the following:
Shareholders, on a pro rata basis, certificates representing the number of shares of Purchaser Common Stock determined by dividing 30% of such excess by the greater of (ix) If the Revenue CAGR average NASDAQ closing price of Purchaser Common Stock for the 10 business days ending immediately prior to the end of the Earnout Period is equal and (y) $2.75, (the amounts payable to or less than 12%, thenthe Shareholders pursuant to this Section 3.2(b), the aggregate amount of "Additional Earnout Consideration" and together with the Earnout Consideration shall be $0.
(ii) If the Revenue CAGR for the Earnout Period is greater than 12% but less than 22%, then, the aggregate amount of the Earnout Consideration shall be pro-rated using straight-line interpolation between $0 and $225,000,000.
(iii) If the Revenue CAGR for the Earnout Period is equal to or greater than 22%, then, the aggregate amount of the Earnout Consideration shall be $225,000,000. An illustrative calculation of the Initial Earnout Consideration, if any, is attached hereto as Exhibit K, and the parties hereto acknowledge and agree that, for purposes of calculating the "Earnout Consideration"); provided, if anyhowever, the Starting Revenue shall be the amount identified as the Starting Revenue in Exhibit K. For the avoidance of doubt, that in no event shall the aggregate amount value of the Additional Earnout Consideration exceed $225,000,000.
200,000 (cdetermined in accordance with clause (ii) During above). As used herein the Earnout Period, within 90 days following term "EBITDA" means net income as determined in accordance with GAAP applied in a manner consistent with the end application of the calendar year for each of 2026, 2027 and 2028, the Buyer shall prepare in good faith a schedule setting forth, in reasonable detail and with reasonable support, the Buyer’s good faith calculations of the Revenue CAGR for such calendar year and the cumulative Revenue CAGR for the period beginning on January 1, 2025 and ending on December 31 of 2026, 2027, or 2028, as applicable (each, an “Unofficial Interim Earnout Annual Statement”), and shall deliver such Unofficial Interim Earnout Annual Statement to the Sellers’ Representative. Following the delivery of such Unofficial Interim Earnout Annual Statement, and upon the Sellers’ Representative’s reasonable request and for purposes of the Sellers’ Representative’s review of such Unofficial Interim Earnout Annual Statement, the Buyer shall promptly make the work papers, back-up materials, books, records and supporting data used in preparing, and the employees of WisdomTree Asset Management who participated those principles in the preparation of, such Unofficial Interim Earnout Annual Statement available to the Sellers’ Representative and its Representatives during normal business hours and upon reasonable notice. Notwithstanding the foregoing or any contrary provision contained in this Agreement, the parties hereto hereby acknowledge and agree that, in each case: Balance Sheet (i) the calculations set forth on less any such Unofficial Interim Earnout Annual Statement will be preliminary applicable interest income and will not: (A) be based on audited financials; (B) will not cover the plus any applicable measurements periods of the Earnout Period; interest expense and (C) will not accurately set forth or reflect the calculation of the final Earnout Consideration, if any; (ii) plus the calculation of the final Earnout Consideration, if any, may vary materially from the calculations set forth on any such Unofficial Interim Earnout Annual Statement; income tax expenses and less any income tax credits and (iii) in no event plus any applicable depreciation and under no circumstances shall: (A) any such Unofficial Interim Earnout Annual Statement be used to challenge or dispute, or be a basis for challenging or disputing, the calculation of the final Earnout Consideration, if any; and/or (B) the Buyer, any of its Affiliates, or any of their respective Representatives have any direct or indirect Liability arising out of, resulting from, or relating to any such Unofficial Interim Earnout Annual Statement or any work papers, back-up materials, books, records, supporting data and/or discussions relating theretoamortization expense.
(d) Within 30 days following the issuance of the audited financial statements for Ceres Farms for the fiscal year ending December 31, 2029, the Buyer shall prepare in good faith a schedule setting forth, in reasonable detail and with reasonable support, the Buyer’s good faith calculations of the Revenue CAGR and the resulting Earnout Consideration for the Earnout Period (the “Earnout Consideration Statement”), and shall deliver the Earnout Consideration Statement to the Sellers’ Representative. Following the delivery of the Earnout Consideration Statement, and upon the Sellers’ Representative’s reasonable request and for purposes of the Sellers’ Representative’s review of the Earnout Consideration Statement, the Buyer shall promptly make the work papers, back-up materials, books, records and supporting data used in preparing, and the employees of WisdomTree Asset Management who participated in the preparation of, the Earnout Consideration Statement available to the Sellers’ Representative and its Representatives during normal business hours and upon reasonable notice. Within 90 days following the delivery of the Earnout Consideration Statement, the Sellers’ Representative shall either: (i) inform the Buyer in writing that the Earnout Consideration Statement is acceptable; or (ii) object to the Earnout Consideration Statement in writing, setting forth, in reasonable detail and with reasonable supporting information, a description of the Sellers’ Representative’s objections and an alternate calculation of each such objected item. If the Sellers’ Representative does not timely so object to the Earnout Consideration Statement, then, the Sellers’ Representative (on behalf of the Sellers) shall be deemed to have accepted the Earnout Consideration Statement. If the Sellers’ Representative objects to, or disagrees with, any of the calculations set forth in the Earnout Consideration Statement in accordance with this Section 2.04(d), the dispute resolution procedures set forth in Section 2.03(c) shall apply to the resolution of such dispute, and the Earnout Consideration shall be determined by the Accounting Firm in accordance with the procedures set forth in Section 2.03(c), mutatis mutandis.
(e) The right of a Seller to receive any portion of any Earnout Consideration: (i) is not a security for purposes of any federal or state securities Laws; (ii) shall not be represented by any form of certificate or instrument, other than this Agreement; and (iii) shall be payable to such Seller’s heirs, executors, administrators, legal representatives, successors and permitted assigns (including, in the case of any Seller who is an individual, in the event of such Seller’s death prior to any Earnout Consideration becoming payable hereunder, if any).
(f) The parties hereto agree that, subject to Section 6.22 (as applicable), for all income Tax purposes, any payment of the Earnout Consideration to the Sellers with respect to their Company Interests shall be treated as deferred contingent purchase price eligible for installment sale treatment under Section 453 of the Code and any corresponding provision of state, local, or non-U.S. law, as appropriate (subject to imputation of interest under Section 483 or Section 1274 of the Code).
(g) During the Earnout Period, the parties hereto further agree to act in compliance with the terms set forth on Schedule 2.04(g).
Appears in 1 contract