Earnout. (a) Following the Closing, upon the terms and subject to the conditions set forth herein, the Sellers shall have the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to (i) the number of Earnout Shares, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout Shares”). (b) The Sellers shall have the contingent right to receive the Delta Earnout Shares if: (i) the 2025 Revenue is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and (ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000). (c) The Delta Earnout Shares shall be issued to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing. (d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4.
Appears in 1 contract
Sources: Merger and Share Exchange Agreement (Kaival Brands Innovations Group, Inc.)
Earnout. (a) Following the ClosingIn connection with this Section 2.5, upon the terms and subject Acquisition Sub shall deliver to the conditions set forth hereinRepresentative no later than sixty (60) days following the end of the twelfth (12th) full calendar month following the Closing Date (such twelve (12) full month period beginning with the first day of the first month following the Closing Date and ending on the end of the twelfth (12th) full calendar month of such date, the Sellers shall have "Earnout Period"), financial statements of Acquisition Sub setting forth the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to aggregate Net Income of Acquisition Sub (the "Acquisition Sub Financial Statements"), along with a reasonably detailed description of the calculations of the amount of the aggregate Net Income. In the event Net Income of Acquisition Sub: (i) equals or exceeds the number of Earnout SharesBonus Amount, multiplied by (ii) a percentage equal to Acquisition Sub shall (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout Shares”).
(b) The Sellers shall have the contingent right pay to receive the Delta Earnout Shares if:
(i) the 2025 Revenue is equal to or exceeds Seven Hundred Million Dollars (IVonyx $700,000,000); and
(ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars (2,000,000, of which $20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000).
(c) The Delta Earnout Shares 1,000,000 shall be issued to paid in four equal quarterly installments with the Sellers within ten (10) calendar days first installment due on the first day of the month following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as end of the Closing.
(d) If (i) Delta third Earnout Shares are issued pursuant to this Section 2.4Period, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 issue to IVonyx 7,500,000 shares of Common Stock (the "Bonus Earnout Payment"); (ii) equals or exceeds the Target Amount and is less than the Bonus Amount, Acquisition Sub shall (A) pay to IVonyx $2,000,000, of which $1,000,000 shall be paid in four equal quarterly installments with the first installment due on the first day of the month following the three month period after the end of the Earnout Period, and (B) issue to IVonyx 2,500,000 shares of Common Stock (the "Target Earnout Payment"); or (iii) does not equal or exceed the Target Amount but equals or exceeds the Reduced Target Amount, Acquisition Sub shall (A) pay to IVonyx $666,667 plus an incremental 33% of the amount by which Net Income (as restatedexceeds the Reduced Target Amount, to be paid in four equal quarterly installments with the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to first installment due on the greatest first day of the 2025 Revenue Shortfall Percentage, month following the 2025 EBITDA Shortfall Percentage three month period after the end of the Earnout Period (the "Reduced Target Earnout Payment," with each of the Bonus Earnout Payment and the 2025 Net Income Shortfall PercentageTarget Earnout Payment referred to herein as an "Earnout Payment"), in each case, case in accordance with the terms of this Section 2.5. Unless the Representative gives written notice to Acquisition Sub on or before the twentieth (20th) calendar day after the Representative's receipt of the number of Delta Earnout Shares Acquisition Sub Financial Statements, specifying in reasonable detail all disputed items and the basis therefor, the Representative shall be returned by deemed to have accepted the Sellers Acquisition Sub Financial Statements and Acquisition Sub shall have (i) no obligation to Pubco and cancelled; provided, that in lieu pay any Earnout Payment to IVonyx if Net Income is less than the Reduced Target Amount or (ii) an obligation to pay the applicable Earnout Payment if Net Income is above the Reduced Target Amount. If the Representative so notifies Acquisition Sub of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal his objection to the number of Delta Earnout Shares so required to be returnedAcquisition Sub Financial Statements, multiplied by the VWAP of Pubco Ordinary Shares for the Representative and Acquisition Sub shall, within twenty (20) Trading Days ending immediately prior days following such notice, attempt to resolve their differences in good faith, and any resolution by them as to any disputed amounts shall be final, binding and conclusive. If, at the date end of such payment. For the avoidance of doubttwenty (20) day period, the foregoing provisions Representative and Acquisition Sub are unable to resolve such disagreements, the independent accountants of this Section 2.4(d) (I) Acquisition Sub and the Representative shall not apply if Pubco changes it jointly select a third independent auditor after the filing of the 2025 Annual Report and prior recognized national standing to such restatement, and (II) will not impose resolve any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4.remaining
Appears in 1 contract
Earnout. (a) Following After the Closing, upon subject to the terms and subject to the conditions set forth herein, the Sellers shall have Class B Sellers’ rights to the contingent right Earnout Escrow Property may vest and no longer become subject to receive potential forfeiture based on the performance of Pubco and its Subsidiaries, including the Target Companies, during the calendar years 2021 and 2022 (each such calendar year, an “Earnout Year”, and such two-year calendar period, the “Earnout Period”) if the requirements as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to set forth in this Section 2.6 are met.
(i) In the number event that the Net Income for the calendar year ended December 31, 2021 (the “2021 Net Income”), as set forth in the audited consolidated income statement of Pubco filed with its Form 20-F or Form 10-K for such calendar year, is equal to or greater than Nineteen Million U.S. Dollars ($19,000,000) (the “First Net Income Target”), then, subject to the terms and conditions of this Agreement, the Class B Sellers’ rights to fifty percent (50%) of the Earnout SharesEscrow Property (the “First Half Earnout Property”) shall vest and shall no longer be subject to forfeiture. If the 2021 Net Income is less than the First Net Income Target, multiplied by but is equal to or greater than Nine Million Five Hundred Thousand U.S. Dollars ($9,500,000), then the Sellers’ rights to fifty percent (50%) of the First Half Earnout Property shall vest and shall no longer be subject to forfeiture. In all other cases, the First Half Earnout Property will be forfeited.
(ii) a percentage equal to (A) 100% minus (B) In the Maxim Fee Percentage event that the Net Income for the calendar year ended December 31, 2022 (the “Delta Earnout Shares2022 Net Income”), as set forth in the audited consolidated income statement of Pubco filed with its Form 20-F or Form 10-K for such calendar year, is equal to or greater than Twenty-One Million, Eight Hundred Fifty Thousand U.S. Dollars ($21,850,000) (the “Second Net Income Target”, and together with the First Net Income Target, the “Earnout Target”), then, subject to the terms and conditions of this Agreement, the Class B Sellers’ rights to the remaining Earnout Escrow Property (after giving effect to any forfeitures under clause (i) above for the 2021 Net Income being less that the First Net Income Target, the “Second Half Earnout Property”) shall vest and shall no longer be subject to forfeiture. If the 2022 Net Income is less than the Second Net Income Target, but is equal to or greater than Ten Million Nine Hundred Twenty Five Thousand U.S. Dollars ($10,925,000), then the Class B Sellers’ rights to fifty percent (50%) of the Second Half Earnout Property shall vest and shall no longer be subject to forfeiture. In all other cases, the Second Half Earnout Property will be forfeited.
(b) The If for any Earnout Year the Class B Sellers shall have the contingent right are entitled to receive any Earnout Escrow Property for such Earnout Year, then such Earnout Escrow Property will be due within three (3) Business Days after the Delta filing of Pubco’s Form 20-F or Form 10-K with the SEC, and the Purchaser Representative on behalf of Pubco shall provide written instructions to the Escrow Agent to release to the Class B Sellers such Earnout Escrow Property within three (3) Business Days thereafter. In the event the Class B Sellers are not entitled to receive any or all of the Earnout Escrow Property for such Earnout Year, then the applicable Earnout Escrow Property will be forfeited by the Class B Sellers within three (3) Business Days after the filing of Pubco’s Form 20-F or Form 10-K with the SEC, and the Purchaser Representative on behalf of Pubco will provide written instructions to the Escrow Agent within three (3) Business Days thereafter to release and surrender such forfeited Earnout Escrow Property to Pubco. Pubco will cancel any such Earnout Escrow Shares if:
(i) the 2025 Revenue is equal distributed to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000)Pubco.
(c) The Delta Following the Closing (including during the Earnout Shares shall Period), Pubco and its Subsidiaries, including the Target Companies, will be issued entitled to operate their respective businesses based upon the Sellers within ten (10) calendar days business requirements of Pubco and its Subsidiaries. Each of Pubco and its Subsidiaries, including the Target Companies will be permitted, following the date on which Pubco files Closing (including during the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based Period), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated2021 Net Income and/or 2022 Net Income, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP share price of Pubco Ordinary Shares for and the twenty (20) Trading Days ending immediately prior ability of the date Class B Sellers to earn the Earnout Escrow Property, and the Class B Sellers will not have any right to claim the loss of all or any portion of any Earnout Escrow Property or other damages as a result of such paymentdecisions. For Notwithstanding the avoidance of doubtforgoing, Pubco shall not, and shall cause it Subsidiaries not to, take any action, or omit to take any action that is primarily in bad faith and designed for, or has the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after primary purpose of, avoiding, reducing or preventing the filing achievement or attainment of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer First Net Income Target or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Second Net Income Target.
Appears in 1 contract
Sources: Business Combination Agreement (Proficient Alpha Acquisition Corp)
Earnout. (a) Following Subject to the ClosingBusiness achieving mutually agreed upon financial results during the period from January 1, upon 2005 through and including December 31, 2005 (the "Earnout Period"), an additional amount of consideration in the maximum aggregate amount of $4,000,000 (the "Earnout") will become payable to the Seller and will be treated by the Parties as an adjustment to the Initial Purchase Price. The formula for calculating the Earnout, subject to the terms and subject to the conditions set forth contained herein, the Sellers shall have the contingent right to receive is as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to follows:
(i) if the number Earnout Revenues of the Business are $35,000,000 or greater, an Earnout Shares, multiplied by in an amount equal to $4,000,000 will become due and payable to the Seller;
(ii) a percentage if the Earnout Revenues are equal to or greater than $34,000,000 but less than $35,000,000, an Earnout in an amount equal to $3,000,000 will become due and payable to the Seller;
(Aiii) 100% minus if the Earnout Revenues are equal to or greater than $33,000,000 but less than $34,000,000, an Earnout in an amount equal to $2,000,000 will become due and payable to the Seller;
(Biv) if the Maxim Fee Percentage Earnout Revenues are equal to or greater than $32,000,000 but less than $33,000,000, an Earnout in an amount equal to $1,000,000 will become due and payable to the Seller; or
(v) if the “Delta Earnout Shares”)Revenues are less than $32,000,000, no Earnout will be due and payable.
(b) On or prior to February 15, 2006, the Buyer will prepare and deliver to the Seller a statement setting forth the sales, net of returns, of the Business for the Earnout Period, together with the adjustments thereto used in calculating the Earnout Revenues (the "Earnout Statement"). The Sellers shall Earnout Statement will be derived from the financial statements of the Business as of and for the year ending December 31, 2004, using accounting principles consistent with the preparation of the Financial Statements, and prepared in good faith.
(c) For a period of 30 days following delivery of the Earnout Statement (the "Review Period"), the Buyer will permit the Seller and its representatives to have access at all reasonable times to all appropriate and relevant books, records, facilities, personnel and accountants of the contingent right Buyer reasonably necessary for the purpose of reviewing and verifying the Buyer's determination of the Earnout Statement and the Earnout. If within such 30 days, the Seller delivers written notice to receive the Delta Buyer of its objection to the Buyer's determination of the Earnout Shares ifStatement or the Earnout, which notice will specify in reasonable detail the grounds for objection, the Buyer and the Seller will attempt in good faith to reach an agreement as to any matters in dispute. If the Buyer and the Seller fail to agree upon the Earnout Statement or the Earnout within 10 days after the Seller advises the Buyer of its objections, then, at the election of either Party, the matters identified in such written notice that remain in dispute will be finally and conclusively determined by an independent auditing firm of recognized national standing (the "Arbiter") selected by the Buyer and the Seller, which firm will not be the regular auditing firm of the Buyer or the Seller or any of their respective Affiliates. The Buyer and the Seller will each deliver to the other Party within two business days after submission to the Arbiter a copy of its written presentation submitted to the Arbiter setting forth such Party's determination of the Earnout Statement and the Earnout. The Buyer and the Seller will have two business days following their respective receipt of the other Party's presentation to provide a written response to the Arbiter with regard to the other Party's presentation. Promptly, but not later than 30 days after its acceptance of its appointment, the Arbiter will determine (based solely on written presentations by the Seller and the Buyer and not by independent review) only those matters in dispute and will render a written report as to the disputed matters and the resulting calculation of the final Earnout Statement and the Earnout, which report will thereupon be conclusive and binding upon the Parties. The fees and expenses of the Arbiter will be shared equally by the Buyer and the Seller. If the Seller fails to notify the Buyer of any disputes in accordance with the aforementioned procedures, the Earnout Statement and the Earnout reflected thereon will be conclusive and binding on all Parties upon the expiration of the Review Period.
(d) Any payment pursuant to this Section 3.4 will be made within fifteen business days following the final determination of the Earnout Statement in accordance with this Section 3.4 by wire transfer of immediately available funds to the account designated in writing by the Seller.
(e) During the Earnout Period the Buyer will dedicate sufficient resources and funds to support the level of growth anticipated to be necessary to achieve the targeted gross revenues. Without limiting the generality of the foregoing, during the Earnout Period, Buyer will comply with the following covenants with respect to the conduct of the Business:
(i) The Buyer will use commercially reasonable efforts to manage and operate the 2025 Revenue is equal Business, including reasonable product pricing practices, lead times and production planning;
(ii) The Buyer will account for the Business as a stand-alone operation for purposes of preparing the Earnout Statement and calculating any Earnout that may become due and payable;
(iii) The Buyer will not take or fail to take any action for the purpose of unfairly or exceeds Seven Hundred Million Dollars ($700,000,000)prejudicially affecting the Seller's ability to prepare the Earnout Statements consistent with Section 3.4(b) or to achieve and receive the Earnout; and
(iiiv) either (A) The Buyer will not take any action or cause the 2025 EBITDA is equal Business to take any action outside of the ordinary course of business that has the effect of shifting revenues into or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000)out of any periods in which such revenues would otherwise be recognized.
(cf) The Delta If a Change of Control occurs at any time during the Earnout Shares shall be issued Period, the maximum Earnout of $4,000,000 will become immediately due and payable to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to in cash at the time of such restatement Pubco has not changed its auditor that conducted the audit Change of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Control.
Appears in 1 contract
Earnout. (a) Following Purchaser shall pay to Seller an additional amount (the Closing“Earnout”), upon based on the terms EBITDA, if any, generated by the Business during the period commencing on January 1, 2006 and subject to ending on December 31, 2006 (the conditions set forth herein, the Sellers shall have the contingent right to receive “Earnout Period”) as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to follows:
(i) If the number Business generates EBITDA during the Earnout Period of Earnout Sharesless than or equal to $7,500,000 but more than $0, multiplied by then Purchaser shall pay to Seller $800,000;
(ii) a percentage If the Business generates EBITDA during the Earnout Period of less than or equal to $8,000,000 but more than $7,500,000, then Purchaser shall pay to Seller $1,200,000;
(Aiii) 100% minus If the Business generates EBITDA during the Earnout Period of less than or equal to $8,400,000 but more than $8,000,000, then Purchaser shall pay to Seller $1,600,000; or
(Biv) If the Maxim Fee Percentage (Business generates EBITDA during the “Delta Earnout Shares”)Period of more than $8,400,000, then Purchaser shall pay to Seller $2,000,000.
(b) The Sellers Within 90 days following the end of the Earnout Period, Purchaser shall have deliver to Seller a notice specifying the contingent right EBITDA for such period (the “Earnout Notice”) showing in reasonable detail the computation thereof, all to receive be accompanied by a certification by Purchaser’s chief financial officer that such computation was based on Purchaser’s books and records and performed in a manner consistent with the Delta Earnout Shares if:
(i) preparation of the 2025 Revenue is equal Annual Financial Statements to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000)extent they were prepared in accordance with GAAP.
(c) The Delta During the preparation of the Earnout Shares Notice and the period of any review contemplated by this Section 4.2, Purchaser shall (i) provide Seller, upon reasonable notice, full access during normal business hours to the books, records, facilities and employees of Purchaser involved with or related to the Business to review the preparation of the Earnout Notice and (ii) cooperate with Seller, including the provision on a timely basis of all information reasonably requested by Seller and necessary or useful in reviewing the preparation of the Earnout Notice.
(d) After receipt of the Earnout Notice, Seller shall have 30 days to review the Earnout Notice, together with all the work papers used in preparation thereof. Unless Seller delivers a written notice to Purchaser on or before the 30th day after Seller’s receipt of the Earnout Notice specifying, in reasonable detail, all disputed items and the basis therefore, the Seller shall be issued deemed to have accepted and agreed to the Sellers Earnout Notice. If Seller notifies Purchaser of an objection to the Earnout Notice, Seller and Purchaser shall, within 30 days following such notice, attempt to resolve their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive for Purchaser and Seller. If, at the end of such 30-day period, any amounts shall remain in dispute, then all amounts remaining in dispute with respect to the calculation of EBITDA shall be submitted to a firm of reputable independent accountants (the “Neutral Auditor”) selected by Purchaser and Seller within ten (10) calendar days following after the date expiration of the 30-day period. If Purchaser and Seller are unable to agree on which Pubco files the 2025 Annual Report Neutral Auditor, then Purchaser and Seller shall each have the right to request the American Arbitration Association to appoint the Neutral Auditor, who shall not have had a material business relationship with Seller, Purchaser or any of their respective Affiliates within the SECpast two (2) years. Purchaser and Seller agree to execute, if requested by the Neutral Auditor, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditor shall be borne 50% by Purchaser and 50% by Seller. The Delta Earnout Shares Neutral Auditor shall act as an arbitrator to determine only those issues that remain in dispute between Purchaser and Seller, and each of them shall submit to the Neutral Auditor a statement of its position within five (5) business days the selection of the Neutral Auditor. The Neutral Auditor’s determination shall be allocated amongst made within 30 days of its selection, shall be set forth in a written statement delivered to Seller and Purchaser, and shall be final, binding and conclusive on Purchaser and Seller. Judgment upon the Sellers pro rata based on the number of Purchased Shares owned by each Seller as decision of the ClosingNeutral Auditor may be entered by Purchaser or Seller in any court of competent jurisdiction.
(de) If (iOther than a determination by the Neutral Auditor as provided under Section 4.2(d) Delta Earnout Shares are issued hereof, when the amount payable to Seller, if any, under this Section 4.2 has been determined in accordance with the terms and procedures set forth in this Section 4.2, Purchaser shall prepare, and Purchaser and Seller shall execute, a written statement setting forth the amount of such payment which shall be final, binding and conclusive on Purchaser and Seller. The amounts, if any, payable to Seller pursuant to this Section 2.44.2 shall be paid by Purchaser within five (5) business days following the final determination of the amount payable in accordance with this Section 4.2.
(f) Purchaser covenants and agrees for the benefit of the Seller that during the period from the date of the Closing until the end of the Earnout Period, it will: (i) cause separate books of account and financial statements of the Business to be maintained consistent with the preparation of the Annual Financial Statements to the extent they were prepared in accordance with GAAP, for purposes of determining whether the Business has achieved the EBITDA targets set forth in Section 4.2(a); (ii) within one (1) year if requested by the Seller, provide the Seller with copies of filing the 2025 Annual Report with the SEC, Pubco’s annual financial statements that are set forth therein are restated, of the Business covering the Earnout Period prepared in accordance with (i) above promptly after such financial statements become available; and (iii) operate or cause to be operated the Business in substantially the same manner as operated by Seller as of immediately prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Closing.
Appears in 1 contract
Sources: Asset Purchase Agreement (Gametech International Inc)
Earnout. (a) Following In connection with this Section 2.7, Acquiror shall deliver to the ClosingSeller no later than sixty (60) days following the end of each of the first four calendar quarters following the Closing Date (it being understood that if the Closing occurs in June, upon the first of such calendar quarters shall be the calendar quarter ending September 30, 2002), financial statements of the Upshot Business setting forth the amount of aggregate Net Revenue of the Upshot Business for each month in such calendar quarter beginning with the first full calendar month following the Closing Date and ending with the twelfth full calendar month following the Closing Date (the "Upshot Business Financial Statements"). The Upshot Business Financial Statements shall set forth the Net Revenue attributable to the Upshot Business on a client by client basis and shall specify the amount of each adjustment to Net Revenues contemplated by clauses (a)-( ) of Schedule 2.5(a). In the event Net Revenue of the Upshot Business for the first full twelve calendar month period following the Closing Date equals or exceeds the Target Amount, Acquiror shall pay to Seller an amount equal to fifty percent (50%) of the amount by which Net Revenue exceeds the Target Amount in accordance with the terms and subject of this Section 2.7, up to a maximum aggregate payment of Two Million Dollars ($2,000,000.00) pursuant to this sentence. In the event Net Revenue of the Upshot Business for the first twelve calendar month period following the Closing Date exceeds the Bonus Amount, Acquiror shall pay to Seller an amount equal to thirty three percent (33%) of the amount by which Net Revenue exceeds the Bonus Amount (in addition to the conditions set forth hereinamount paid pursuant to the preceding sentence) in accordance with the terms of this Section 2.7. Any amounts required to be paid pursuant to either of the preceding two sentences are collectively referred to as "Earnout Payments". Notwithstanding the foregoing, in the Sellers event a Change of Control of Acquiror occurs and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ responsibilities are expanded beyond the Upshot Business, then the maximum aggregate Earnout Payments that Acquiror will be required to make under this Section 2.7 will equal Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000.00). If Net Revenue for the first full twelve calendar month period following the Closing Date equals or is less than the Target Amount, Acquiror shall have the contingent right no obligation to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to (i) the number of pay any Earnout Shares, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout Shares”)Payment.
(b) The Sellers Unless Seller gives written notice to Acquiror on or before the twentieth (20th) calendar day after Seller's receipt of the final Upshot Business Financial Statement to be delivered pursuant to this Section 2.7(b), specifying in reasonable detail all disputed items and the basis therefor, Seller shall be deemed to have accepted the contingent right to receive the Delta Earnout Shares if:
Upshot Business Financial Statements and Acquiror shall (i) have no obligation to pay any Earnout Payment to Seller if Net Revenue for the 2025 Revenue first full twelve calendar month period following the Closing Date is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
less than the Target Amount or (ii) either have an obligation to pay the applicable Earnout Payment(s) if Net Revenue exceeds the Target Amount. If Seller so notifies Acquiror of its objection to the Upshot Business Financial Statements, Seller and Acquiror shall, within twenty (A20) days following such notice, attempt to resolve their differences in good faith, and any resolution by them as to any disputed amounts shall be final, binding and conclusive. If, at the 2025 EBITDA end of such twenty (20) day period, Seller and Acquiror are unable to resolve such disagreements, Acquiror and Seller shall jointly select an independent auditor of recognized national standing that is equal not ▇▇▇▇▇▇▇▇ to or exceeds Twenty Million Dollars resolve any remaining disagreements; provided that PricewaterhouseCoopers LLP will be the independent auditor if Acquiror and Seller cannot agree on the selection of such independent auditor (the "Independent Accountant"). Acquiror and Seller shall use their reasonable efforts to cause the Independent Accountant to make its determination within thirty (30) calendar days of accepting its selection. The determination by the Independent Accountant shall be final, binding and conclusive on the parties. The fees and expenses of the Independent Accountant shall be borne by Acquiror and Seller Parties in proportion to the aggregate amount of all disputed items as to which such party's claim was unsuccessful (i.e., if there is a $20,000,0001,000,000 dispute regarding the amount of the Earnout Payment and the Independent Accountant determines that Seller's claim prevails with respect to $250,000 of such disputed amount and Acquiror's claim prevails with respect to $750,000 of such disputed amount, then Seller Parties would be obligated to pay seventy five percent (75%) or of the fees and expenses and Acquiror would be obligated to pay twenty five percent (B25%) of the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000fees and expenses).
(c) The Delta Earnout Shares shall be issued Subject to the Sellers Section 10.9 below, within ten (10) calendar days after (i) receipt by Seller of Upshot Business Financial Statements which reflect aggregate Net Revenue for the first twelve month period following the Closing Date equal to or in excess of the Target Amount, or (ii) in the event of a disagreement, the date on which Pubco files of resolution of such disagreement by the 2025 Annual Report with Parties or the SEC. The Delta date of determination by the Independent Accountant pursuant to Section 2.7(c) (it being understood that this clause (ii) shall only apply to any disputed portion of the Earnout Shares Payments), the applicable Earnout Payment shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned paid by each Seller Acquiror as follows:
(i) Acquiror shall pay ninety percent (90%) of the ClosingEarnout Payment to an account designated by Seller in writing; and
(ii) Acquiror shall deposit ten percent (10%) of the Earnout Payment to the Holdback Fund, which amount shall become part of the Holdback Amount.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report In connection with the SECoperation of the Upshot Business after the Closing, Pubco’s financial statements that are set forth therein are restatedAcquiror agrees to maintain separate divisional books and records for the Upshot Business in accordance with GAAP, (iii) prior consistently applied. Acquiror and each of the Seller Parties agree to act in good faith during the Earnout Period relative to the time Upshot Business and not to take actions that would be unfairly prejudicial or discriminatory to the Upshot Business for the purpose of adversely affecting Seller's interest in receiving an Earnout Payment.
(e) Upon delivery of the Upshot Business Financial Statements, Acquiror shall afford to Seller and its accounting representatives prompt and reasonable access upon reasonable notice to all information reasonably necessary to verify calculation of the Net Revenue. Acquiror shall make its employees who are familiar with such matters, its independent outside accounting firm available to Seller and its representatives on a mutually convenient basis at reasonable times during normal business hours to provide an explanation of such restatement Pubco has not changed materials and to provide such other information as Seller and its auditor that conducted the audit of Pubco’s audited financial statements set forth representatives may reasonably request in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest connection with its review of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Upshot Business Financial Statements.
Appears in 1 contract
Earnout. (a) Following In addition to the ClosingCash Payment, upon Sellers will be entitled to certain additional consideration from Buyer after the Closing pursuant to the terms and subject conditions of this Section 1.8.
(b) With respect to the conditions set forth hereintwelve-month period beginning on the Closing Date and each of the two succeeding twelve-month periods (each of such three twelve-month periods, an “Earnout Period”), the Sellers (taken together) shall have the contingent right be entitled to receive as additional consideration for the Share Exchange a cash payment from Buyer in an aggregate amount of additional Pubco Ordinary Shares (such amount, an “Earnout Amount”) equal to (ix) the number of Earnout Shares1.25%, multiplied by (y) the sum of (A) the Company’s Written Premium for such Earnout Period and (B) the Company’s Fees for such Earnout Period; provided, however, that if at any time prior to the end of the final Earnout Period, the Company or any material portion of its assets or business is sold (whether pursuant to a merger, stock sale, sale of all or substantially all of the Company’s assets, or otherwise, and whether in a single transaction or a series of transactions) (such a sale, a “Sale of the Company”), then the total Earnout Amount payable by Buyer to Sellers in respect of all three Earnout Periods shall instead be calculated as follows:
(i) if the Sale of the Company occurs prior to the end of the first Earnout Period, then the total Earnout Amount shall be an amount equal to (x) 1.25%, multiplied by (y) the sum of (A) the Company’s Written Premium for the period of twelve calendar months ending as of the last day of the month preceding the month in which the Sale of the Company occurs and (B) the Company’s Fees for such twelve calendar month period, multiplied by (z) three (3); or
(ii) a percentage if the Sale of the Company occurs after the end of the first Earnout Period, but prior to the end of the second Earnout Period, then the total Earnout Amount shall be an amount equal to (x) the Earnout Amount paid or payable with respect to the first Earnout Period, plus (y) an amount equal to (A) 100% minus 1.25%, multiplied by (B) the Maxim Fee Percentage sum of (I) the “Delta Earnout Shares”Company’s Written Premium for the period of twelve calendar months ending as of the last day of the month preceding the month in which the Sale of the Company occurs and (II) the Company’s Fees for such twelve calendar month period, multiplied by (C) two (2).; or
(biii) The Sellers if the Sale of the Company occurs after the end of the second Earnout Period, but prior to the end of the third Earnout Period, then the total Earnout Amount shall have the contingent right be an amount equal to receive the Delta Earnout Shares if:
(ix) the 2025 Revenue is Earnout Amounts paid or payable with respect to each of the first and second Earnout Periods, plus (y) an amount equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or 1.25%, multiplied by (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars sum of ($10,000,000).
(cI) The Delta Earnout Shares shall be issued to the Sellers within ten (10) Company’s Written Premium for the period of twelve calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller months ending as of the Closing.
last day of the month preceding the month in which the Sale of the Company occurs and (dII) If the Company’s Fees for such twelve calendar month period. Any and all amounts payable to Sellers pursuant to clause (i) Delta Earnout Shares are issued pursuant to this Section 2.4), (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, or (iii) above shall be paid at or prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest closing of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, Sale of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such paymentCompany. For the avoidance of doubt, if any amount is paid to Sellers pursuant to clause (i), (ii) or (iii) above in connection with a Sale of the foregoing provisions Company, no additional Earnout Amount shall be payable to Sellers at any time following the date of such payment.
(c) Buyer shall deliver to Sellers within sixty (60) days after the end of each Earnout Period a worksheet setting forth Buyer’s calculation of the Earnout Amount for such Earnout Period (such worksheet, the “Earnout Statement”). The Earnout Statement shall be accompanied by all records and work papers necessary for Sellers to compute and otherwise review the information set forth therein. Sellers shall have thirty (30) days after receipt of an Earnout Statement to review such Earnout Statement delivered by Buyer. Unless Sellers deliver written notice to Buyer on or prior to the thirtieth (30th) day after Sellers’ receipt of an Earnout Statement specifying in reasonable detail Sellers’ objections to the Earnout Statement, Sellers shall be deemed to have accepted and agreed to the Earnout Amount as set forth in such Earnout Statement delivered by Buyer. If Sellers so notify Buyer of an objection to an Earnout Statement and the applicable Earnout Amount as set forth in such Earnout Statement, Sellers and Buyer shall, within thirty (30) days (or such longer period as they may agree) following such notice (the “Earnout Resolution Period”), attempt to resolve their differences, and any resolution by them as to any disputed amounts shall be final, binding and conclusive. At the conclusion of the Earnout Resolution Period, (i) if any amounts remain in dispute, then all amounts remaining in dispute shall be submitted to the Accountants for resolution in accordance with the procedures set forth in Section 1.5(b) mutatis mutandis, and (ii) all amounts not in dispute, if not previously paid, shall be paid as provided herein.
(d) For purposes of this Section 2.4(d1.8, (i) (I) shall not apply if Pubco changes it auditor after the filing “Written Premium” of the 2025 Annual Report Company means the amount of total private passenger and prior commercial assigned risk, voluntary take out and mandatory take out premium managed and administered by the Company on behalf of a servicing carrier (the “Managed Business”), plus the total amount of private passenger and commercial auto premium managed and administered by the Company on behalf of state departments of insurance, assigned risk plans and other agencies; and (ii) “Fees” means the amount of buyout fees and proceeds from the sale of take out, territorial and other credits received by such Company servicing carriers from insurance carriers with respect to such restatementthe Managed Business. For illustrative purposes, attached as Exhibit B hereto is a statement of the Company’s Written Premium and Fees for the year ended December 31, 2014, and (II) will not impose any restrictions on transfer or disposition a sample calculation of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Amount that would have been payable based thereon.
Appears in 1 contract
Sources: Stock Purchase Agreement (Kingsway Financial Services Inc)
Earnout. (a) Following the Closing, upon the terms and subject to the conditions set forth herein, the Sellers shall have the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to (i) At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout (the “Earnout Units”) and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum ▇▇▇▇▇▇▇▇▇ Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout Shares”), in each case, to be held in escrow in accordance with the terms of the Escrow Agreement and this Section 3.01(c).
(b) The Sellers shall have the contingent right to receive the Delta Earnout Shares if:
(i) the 2025 Revenue is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either Upon receipt of the Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows:
(A) On the 2025 EBITDA is occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to or exceeds Twenty Million Dollars ($20,000,000x) or fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(B) On the 2025 Net Income is occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to or exceeds Ten Million Dollars ($10,000,000)x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(cC) The Delta On the occurrence of Earnout Shares Triggering Event III, Pubco and the Company shall be issued cause the Escrow Agent to the Sellers within ten release to each Earnout Participant (101) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the a number of Purchased Shares owned New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by each Seller as (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the Closing“Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(dD) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4Promptly following the filing of Pubco’s Form 10-K with the SEC for the fiscal year ending December 31, (ii) within one 2023:
(1) year If the Pubco EBITDA for all of filing the 2025 Annual Report with the SEC2023 is less than $12,416,530, Pubco’s financial statements that are set forth therein are restated, (iii) prior no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the time Pubco EBITDA targets for the 2023 Earnout Measurement Periods. If the Pubco EBITDA for all of such restatement 2023 is at least $12,416,530, and:
(I) The Pubco has EBITDA for one (but not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (ivboth) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (yperiod listed on Schedule 3.01(c)(ii)(D) (A) 2025 EBITDA (as restatedeach such period, the a “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income2023 Earnout Measurement Period”) is equal to or exceeds $10,000,000greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage Pubco and the 2025 Net Income Shortfall Percentage, in Company shall cause the Escrow Agent to release to each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) Participant (I) shall not apply if Pubco changes it auditor after the filing a number of the 2025 Annual Report and prior New Company Units equal to such restatement, (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) will a number of shares of Pubco Class B Common Stock equal to (x) seven million five hundred thousand (7,500,000) multiplied by (y) its Earnout Pro Rata Portion.
(II) The Pubco EBITDA for both 2023 Earnout Measurement Periods is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) multiplied by (y) its Earnout Pro Rata Portion.
(III) The Pubco EBITDA for neither 2023 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco EBITDA targets for the 2023 Earnout Measurement Periods.
(2) If the Pubco Revenue for all of 2023 is less than $70 million, no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods. If the Pubco Revenue for all of 2023 is at least $70 million, and:
(I) The Pubco Revenue for one (but not impose any restrictions both) 2023 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such 2023 Earnout Measurement Period on transfer Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion.
(II) The Pubco Revenue for both 2023 Earnout Measurement Periods is equal to or disposition greater than the Pubco Revenue listed for such 2023 Earnout Measurement Periods on Schedule 3.01(c)(ii)(D), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (I) a number of New Company Units equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) five million (5,000,000) multiplied by (y) its Earnout Pro Rata Portion.
(III) The Pubco Revenue for neither 2023 Earnout Measurement Period is equal to or greater than the Delta Pubco Revenue listed for such 2023 Earnout Measurement Period on Schedule 3.01(c)(ii)(D), no New Company Units or shares of Pubco Class B Common Stock shall be released from escrow in relation to the Pubco Revenue targets for the 2023 Earnout Measurement Periods.
(E) Promptly following the filing of Pubco’s Form 10-Q or 10-K with the SEC for each period listed on Schedule 3.01(c)(ii)(E) (each, a “2024 Earnout Measurement Period” and, together with the 2023 Earnout Measurement Periods, a “Earnout Measurement Period”):
(1) if the Pubco EBITDA for such 2024 Earnout Measurement Period is equal to or greater than the Pubco EBITDA listed for such 2024 Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco EBITDA target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion.
(2) if the Pubco Revenue for such 2024 Earnout Measurement Period is equal to or greater than the Pubco Revenue listed for such Earnout Measurement Period on Schedule 3.01(c)(ii)(E), Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant, with respect to each such 2024 Earnout Measurement Period for which the Pubco Revenue target was met: (I) a number of New Company Units equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion and (II) a number of shares of Pubco Class B Common Stock equal to (x) two million five hundred thousand (2,500,000) multiplied by (y) its Earnout Pro Rata Portion.
(iii) Notwithstanding the foregoing:
(A) Until a number of Earnout Shares by equal to the Sellers after Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 3.01(c)(ii), each time the issuance Sponsor is entitled to be delivered a New Company Unit and share of such Delta Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to Sponsor one Pubco Earnout Share.
(B) After a number of Earnout Shares pursuant equal to this the Maximum Sponsor Earnout have been earned, released and delivered to Sponsor in accordance with Section 2.43.01(c)(ii), each time the Sponsor is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), the Earnout Units and Earnout Shares shall instead be delivered to the other Earnout Participants (excluding ▇▇▇▇▇▇▇▇▇) in proportion to their Earnout Pro Rata Portions.
(C) Each time ▇▇▇▇▇▇▇▇▇ is entitled to be delivered a New Company Unit and share of Pubco Class B Common Stock in accordance with Section 3.01(c)(ii), Pubco and the Company shall instead cause the Escrow Agent to release to ▇▇▇▇▇▇▇▇▇ one Pubco Earnout Share.
(iv) In the event that Earnout Triggering Event II occurs prior to the occurrence of Earnout Triggering Event I, Earnout Triggering Event I will be deemed to have been achieved, the First Earnout Units and First Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares in accordance with Section 3.01(c)(ii). In the event that Earnout Triggering Event III occurs prior to the occurrence of Earnout Triggering Event I or Earnout Triggering Event II, Earnout Triggering Event I and Earnout Triggering Event II, as applicable, will be deemed to have been achieved, and the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares shall also be deemed to have vested, and Pubco and the Company shall cause the Escrow Agent to release the First Earnout Units and First Earnout Shares and Second Earnout Units and Second Earnout Shares in accordance with Section 3.01(c)(ii).
(v) Promptly following the filing of Pubco’s 10-K with the SEC for the 2023 fiscal year and 2024 fiscal year:
Appears in 1 contract
Sources: Agreement and Plan of Merger (FAST Acquisition Corp. II)
Earnout. (a) Following After the Closing, upon subject to the terms and subject to the conditions set forth herein, the Sellers shall have the contingent right Designated Share Recipients rights to receive some or all of the Earnout Escrow Property may vest and no longer become subject to potential forfeiture based on the performance of Pubco and its Subsidiaries, including the Company and the Target Companies, during the period commencing after the Closing and ending on the fiscal year ending June 30, 2022 (the “Earnout Period”) if the requirements as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to (iset forth in either Section 2.5(a)(i) the number of Earnout Shares, multiplied by or (ii) a percentage equal to (A) 100% minus (B) are met. Each Designated Share Recipient Share shall receive its share of the Maxim Fee Percentage (Earnout Escrow Shares based on the “Delta Earnout Shares”).
(b) The Sellers shall have proportion of the contingent right to receive the Delta Earnout Shares if:allocated to such Designated Share Recipient in Annex II.
(i) In the 2025 event that the Revenue is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) for the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000).
(c) The Delta Earnout Shares shall be issued to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller Period as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and audited consolidated income statement of Pubco filed with its Form 20-F or Form 10-K (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Earnout Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $greater than One Billion Four Hundred Million Renminbi (RMB 1,400,000,000) (the “First Tier Revenue Target”), but less than One Billion Seven Hundred Fifty Million Renminbi (RMB 1,750,000,000),while maintaining a gross margin at or greater than Eighty-Five percent (85%), then, subject to the terms and conditions of this Agreement, the Designated Share Recipients’ rights to receive Ten Million (10,000,000) Earnout Exchange Shares of the Earnout Escrow Property (the “First Tier Earnout Payment”) shall vest and shall no longer be subject to forfeiture and Five Million Earnout Exchange Shares will be forfeited. In all other cases, then a percentage the First Tier Earnout Payment will be forfeited.
(ii) In the event that the Earnout Revenue is equal to or greater than One Billion Seven Hundred Fifty Million Renminbi (RMB 1,750,000,000) (the greatest “Second Tier Revenue Target”, and together with the First Tier Revenue Target, the “Earnout Target”), while maintaining a gross margin at or greater than Eighty-Five percent (85%), then, subject to the terms and conditions of this Agreement, the Designated Share Recipients’ rights to receive Fifteen Million (15,000,000) Earnout Exchange Shares of the 2025 Revenue Shortfall PercentageEarnout Escrow Property (the “Second Tier Earnout Payment”, and together with the First Tier Earnout Payment, the 2025 EBITDA Shortfall Percentage “Earnout Payments”) shall vest and shall no longer be subject to forfeiture. In all other cases, the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Second Tier Earnout Shares shall Payment will be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such paymentforfeited. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) Earnout Targets are mutually exclusive. If the Second Tier Revenue Target is met, the Designated Share Recipients, shall receive and only receive the Second Tier Earnout Payment and shall not apply if Pubco changes it auditor be entitled to also receive the First Tier Earnout Payment.
(b) If, during the Earnout Period, the Designated Share Recipients are entitled to receive either the First Tier Earnout Payment or the Second Tier Earnout Payment, then such Earnout Payment will be due within three (3) Business Days after the filing of Pubco’s Form 20-F or Form 10-K with the 2025 Annual Report and prior to such restatementSEC for the fiscal year ended June 30, 2022, and the Purchaser Representative on behalf of Pubco shall provide written instructions to the Escrow Agent to release to the Designated Share Recipients such Earnout Escrow Payment within three (II3) will Business Days thereafter. In the event the Designated Share Recipients are not impose entitled to receive any restrictions on transfer or disposition all of the Delta Earnout Shares Payment, then the applicable Earnout Escrow Property will be forfeited by the Sellers Seller within three (3) Business Days after the issuance filing of Pubco’s Form Form 20-F or Form 10-K with the SEC for the fiscal year ended June 30, 2022, and the Purchaser Representative on behalf of Pubco will provide written instructions to the Escrow Agent within three (3) Business Days thereafter to release and surrender such forfeited Earnout Escrow Property to Pubco. Pubco will cancel any such Earnout Escrow Property distributed to Pubco.
(c) Following the Closing (including during the Earnout Period), Pubco and its Subsidiaries, including the Company and the Target Companies, will be entitled to operate their respective businesses based upon the business requirements of Pubco and its Subsidiaries. Each of Pubco and its Subsidiaries, including the Company and the Target Companies will be permitted, following the Closing (including during the Earnout Period), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the First Tier Revenue Target and Second Tier Revenue Target, the share price of Pubco Ordinary Shares and the ability of Seller to earn the Earnout Payment, and neither Seller nor any Designated Share Recipient will have any right to claim the loss of all or any portion of any Earnout Payment or other damages as a result of such Delta Earnout Shares pursuant decisions. Notwithstanding the forgoing, Pubco shall not, and shall cause it Subsidiaries not to, take any action, or omit to this Section 2.4take any action that is primarily in bad faith and designed for, or has the primary purpose of, avoiding, reducing or preventing the achievement or attainment of the First Revenue Target and Second Revenue Target.
Appears in 1 contract
Sources: Business Combination Agreement (East Stone Acquisition Corp)
Earnout. (a) Following the Closing, upon Subject to the terms and subject to the conditions set forth hereinof this Section 2.6, the Sellers shall have the contingent right to receive as additional consideration for the Share Exchange purchase of the Acquired Assets, Sellers shall be eligible to receive an additional earnout payment in an aggregate amount of additional Pubco Ordinary Shares equal not to exceed Two Million Dollars ($2,000,000) (the “Earnout Payment”), based upon the Case Volume for the period beginning on the First Closing Date and ending on the date that is twelve (12) months after the First Closing Date (the “Earnout Period”), as set forth below (as applicable, the “Earnout Target”):
(i) If the number of Case Volume for the Earnout SharesPeriod is more than 8,000 but less than 10,000, multiplied by then Sellers will receive an Earnout Payment in an amount equal to Seven Hundred Fifty Thousand Dollars ($750,000); or
(ii) a percentage If the Case Volume for the Earnout Period is more than 10,000 but less than 11,000, then Sellers will receive an Earnout Payment in an amount equal to One Million Five Hundred Thousand Dollars (A$1,500,000); or
(iii) 100% minus If the Case Volume for the Earnout Period is more than 11,000, then Sellers will receive an Earnout Payment in an amount equal to Two Million Dollars (B) the Maxim Fee Percentage (the “Delta Earnout Shares”$2,000,000).
(b) The Sellers shall have Purchaser will provide to Parent or its designee or assigned beneficiary hereunder, a report within ten (10) Business Days after the contingent right to receive end of each month during the Delta Earnout Shares if:
(i) Period, excepting the 2025 Revenue is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) last month of the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) Earnout Period, setting forth in reasonable detail the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000)Purchaser’s good faith calculation of the Case Volume during such month and cumulative Case Volume during the Earnout Period.
(c) The Delta Not later than thirty (30) Business Days after the end of the Earnout Shares Period, Purchaser shall prepare and deliver (or cause to be prepared and delivered) to Sellers a written statement (the “Earnout Statement”) setting forth Purchaser’s good faith calculation of the Case Volume during the Earnout Period. If Sellers objects to Purchaser’s calculation of the Case Volume set forth in the Earnout Statement, then Sellers shall notify Purchaser in writing of such objection within twenty (20) days following its receipt of the Earnout Statement. If, for any reason, Sellers fail to give Purchaser notice of any such objection within such 20-day period, then, for purposes of this Section 2.6(b), Purchaser’s calculation of the Case Volume set forth in the Earnout Statement shall be issued conclusive and binding upon the parties. If Sellers notify Purchaser in writing of such an objection within such 20-day period, then Purchaser and Sellers shall, for a period not to exceed thirty (30) days (unless otherwise agreed in writing by the parties) after the date upon which Purchaser receives Sellers’ objection notice (such period of time being hereinafter referred to as the “Objection Period”), work together diligently and in good faith to resolve any and all such objections. If, at or before the end of the Objection Period, Sellers and Purchaser resolve their disputes regarding the calculation of the Case Volume set forth in the Earnout Statement, then the calculation as so agreed to by Sellers and Purchaser shall be conclusive and binding upon the parties. If, at the end of the Objection Period, Sellers and Purchaser have not resolved their disputes regarding the calculation of the Case Volume, then such disputes shall, within five (5) Business Days after the expiration of the Objection Period, be submitted to arbitration pursuant to the Sellers within ten (10) calendar days following procedure set forth in Section 10.2. The arbitrator shall only have the date on which Pubco files the 2025 Annual Report authority to resolve matters expressly submitted to it for resolution. The parties and their respective employees shall cooperate with the SECarbitrator during its engagement by promptly complying with all reasonable requests by the arbitrator for information, books, records and similar items. The Delta Sellers shall bear the fees and expenses of the arbitration for such determination unless it is determined by the arbitrator that the Earnout Shares Target has been achieved, in which case, such fees and expenses shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned paid by each Seller as of the ClosingPurchaser.
(d) If (i) Delta Earnout Shares are issued Sellers hereby acknowledge that the contingent right of Sellers to receive any amounts pursuant to this Section 2.42.6 is solely a contractual right and is not a security for purposes of any federal or state securities laws (and shall confer upon Sellers only the rights of a general, unsecured creditor under Applicable Law), (ii) within one (1) year will not be represented by any form of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restatedcertificate or instrument, (iii) prior to the time does not give Sellers any distribution rights, voting rights, liquidation rights, preemptive rights or other rights of such restatement Pubco has holders of equity securities, (iv) is not changed its auditor that conducted the audit assignable or otherwise transferable by Sellers except by operation of Pubco’s audited financial statements set forth law or otherwise permitted under this Agreement (and any purported assignment or transfer in the 2025 Annual Reportviolation hereof shall be null and void ab initio), and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”v) is below $700,000,000 or (y) (A) 2025 EBITDA (as restatedspeculative in nature and is not guaranteed until earned. Sellers further acknowledge and agree that during the Earnout Period, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal Purchaser shall have sole discretion with regard to or exceeds $10,000,000, then a percentage equal all matters relating to the greatest operations of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelledBusiness; provided, however, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) Purchaser shall not apply if Pubco changes it auditor after take any action in bad faith with the filing intention of the 2025 Annual Report and prior to such restatement, and (II) will not impose reducing Case Volume or any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares amounts that may be payable pursuant to this Section 2.42.6.
(e) In the event of one or more Indemnifiable Claims by any Purchaser Indemnified Party against Sellers or Parent for Damages pursuant to Section 8.2, subject to the limitations set forth in Section 8.4, Purchaser shall have the right to reduce any amount payable pursuant to this Section 2.6 up to the aggregate amount of Damages that have been or may be sustained by the Purchaser Indemnified Parties in connection with such Indemnifiable Claims. The parties agree that any reduction of any amounts payable pursuant to this this Section 2.6 pursuant to the right of set-off in the immediately preceding sentence shall be treated as a decrease to the Purchase Price.
Appears in 1 contract
Earnout. (ai) Following the ClosingIn accordance with Section 2.1(e)(ii), upon the terms (iii) and (iv), as additional consideration, Purchaser will pay to Seller a cash amount of up to $26,300,000, subject to the conditions downward adjustment as set forth hereinherein (as adjusted, the Sellers “Earnout Payment”). If the Purchaser Revenue Run Rate on the Test Date (such amount, the “Test Date Revenue Run Rate”) is:
(A) greater than or equal to $28,900,000 (the “Base Revenue Run Rate”), then Purchaser shall have pay Seller an Earnout Payment in the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares $26,300,000; or
(B) less than the Base Revenue Run Rate, then Purchaser shall pay Seller an Earnout Payment in an amount equal to (i1) $26,300,000, less (2) a dollar amount equal to (I x $1,000,000) (the “Earnout Reduction”), where: I = an integer, calculated as (BR-TDR)/BR x 100, provided, that this number of Earnout Sharesshall be rounded down to the nearest whole number (so that, multiplied by for example, 1.14 becomes 1; 1.18 becomes 1; 3.85 becomes 3 and so on); BR = Base Revenue Run Rate; and TDR = Test Date Revenue Run Rate.
(ii) No later than 20 Business Days after the first anniversary of the Closing Date, Purchaser will prepare and deliver to Seller a percentage equal to (A) 100% minus (B) written notice setting forth the Maxim Fee Percentage Earnout Payment, specifying in reasonable detail the manner in which the Earnout Payment was calculated, as determined by Purchaser (the “Delta Earnout SharesNotice”). Seller shall have 20 Business Days from the date of its receipt of the Earnout Notice to review it, together with the work papers used in the preparation thereof in accordance with Section 2.1(e)(v) (the “Review Period”). At any time within the Review Period, Seller may notify Purchaser in writing of Seller’s acceptance of the Earnout Payment (the “Acceptance Notice”) set forth in the Earnout Notice, in which case Purchaser shall pay, by wire transfer of immediately available funds to an account specified by Seller in the Acceptance Notice, the Earnout Payment set forth in the Earnout Notice within three Business Days of receipt by Purchaser of the Acceptance Notice. If, within the Review Period, Seller has not given Purchaser notice of Seller’s objection to the Earnout Notice, then the Earnout Payment reflected in the Earnout Notice shall be final and Purchaser shall pay, by wire transfer of immediately available funds to an account specified by Seller at least three Business Days prior thereto, the Earnout Payment set forth in the Earnout Notice within three Business Days after the expiration of the Review Period. If Seller has given a notice of objection within the Review Period to the Earnout Notice (such notice to include a reasonably detailed statement of the basis of Seller’s objection, which may include an objection that the Earnout Notice does not specify in sufficient detail the calculation of the Earnout Payment) (the “Dispute Notice”), then Purchaser shall pay, by wire transfer of immediately available funds to an account specified by Seller in the Dispute Notice, any amounts not in dispute in respect of the Earnout Payment within three Business Days after the expiration of the Review Period.
(iii) If Seller gives a Dispute Notice, the parties shall in good faith attempt to resolve, within 15 Business Days (or such longer period as the parties may agree in writing) following such notice (the ”Resolution Period”), their differences with respect to such objections and any resolution by them as to any disputed amounts shall be final, binding and conclusive. Upon any resolution of the dispute by the parties, Purchaser shall pay within three Business Days after the date of such resolution, by wire transfer of immediately available funds to an account specified by Seller in the Dispute Notice, the Earnout Payment resolved by the parties (other than any amounts not in dispute that Seller had previously been paid in accordance with Section 2.1(e)(ii)).
(biv) The Sellers shall have If Seller and Purchaser cannot reach agreement concerning the contingent right Earnout Amount during the Resolution Period, then the issues in dispute will be submitted to receive an independent financial expert agreed upon by the Delta Earnout Shares if:
parties hereto prior to the Closing (the “Expert”) for resolution. If the issues in dispute are submitted to the Expert for resolution, (i) each party will furnish to the 2025 Revenue is equal Expert such workpapers and other documents and information relating to the disputed issues as the Expert may request and are available to that party (or exceeds Seven Hundred Million Dollars ($700,000,000its independent public accountants), and each party will be afforded the opportunity to present to the Expert any material relating to the determination and to discuss the determination with the Expert; and
(ii) either the determination by the Expert, as set forth in a notice delivered to both parties by the Expert, will be binding and conclusive on the parties; and (iii) Purchaser and Seller will each bear 50% of the fees and expenses of the Expert for such determination. Upon resolution of the dispute by the Expert, Purchaser shall pay within three Business Days after the date of resolution by the Expert, by wire transfer of immediately available funds to an account specified by Seller in the Dispute Notice, (1) the Earnout Payment determined by the Expert (other than any amounts not in dispute that Seller had previously been paid in accordance with Section 2.1(e)(ii)), plus (2) if the date of payment for the amount specified in clause (1) occurs more than 14 months following the Closing Date, interest on such amount computed from and including the date that is 14 months following the Closing Date to but excluding the payment date at a rate equal to the rate of six-month U.S. treasury bills as of the date of the Earnout Notice.
(v) Subject to the confidentiality provisions in Section 5.2(c), after the Earnout Notice has been delivered pursuant to Section 2.1(e)(ii), and during the Review Period, the Resolution Period, and any other period of review or dispute within the contemplation of this Section 2.1(e), the parties shall (A) provide each other upon reasonable advance request with full access for review and copying by the 2025 EBITDA is equal other party, its agents and representatives at all reasonable times, and in a manner so as not to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000).
(c) The Delta Earnout Shares shall be issued to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report interfere unreasonably with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number normal business operations of Purchased Shares owned by each Seller as of the Closing.
party, to all relevant books, records (d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4whether in paper or electronic form), (ii) within one (1) year of filing the 2025 Annual Report with the SECwork papers, Pubco’s financial statements that are set forth therein are restatedinformation and employees, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (cooperate fully with each other as restatednecessary for the preparation, calculation and review of the Earnout Notice, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage Acceptance Notice and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares Dispute Notice or for the twenty contemplated resolution of any dispute between the parties relating thereto.
(20vi) Trading Days ending immediately prior the date Purchaser waives any right of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes setoff it auditor after the filing of the 2025 Annual Report and prior to such restatementmay have for claims made under Article IX or any Ancillary Agreement or for any other reason whatsoever, and (II) will not impose agrees that it shall pay the Earnout Payment when due without setoff of any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4kind.
Appears in 1 contract
Earnout. (a) Following On the Closing, upon the terms and subject to the conditions set forth hereinEarnout Payment Date, the Sellers Partnership shall have pay Contributor the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to following amounts (i) the number of Earnout Sharestogether, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout SharesEarnout”).
(b) The Sellers shall have the contingent right to receive the Delta Earnout Shares if:):
(i) If the 2025 Revenue Earnout Base Amount is equal greater than zero, and the Partnership has made any claims for breaches of representations and warranties pursuant to Section 8.5(a)(i) which have been actually paid by Contributor to or exceeds Seven for the account of the Partnership prior to the Earnout Payment Date, then the Partnership shall pay to Contributor the aggregate amount of such payments up to the lesser of (x) the Earnout Base Amount and (y) Eight Million Two Hundred Million and Fifty Thousand Dollars ($700,000,0008,250,000.00); and
(ii) either The Partnership shall pay Contributor an amount equal to fifty percent (50%) of the excess, if any, of the Earnout Base Amount over the amount payable to Contributor pursuant to Section 3.5(a)(i). The “Earnout Base Amount” shall be equal to the excess, if any, of (i) the quotient of (x) the Property’s Net Operating Income as of the Earnout Calculation Date divided by (y) five and one-half percent (5.5%), over (ii) Four Hundred Sixty-Five Million and No/100 Dollars ($465,000,000.00). The Earnout shall be payable in Preferred Units, valued at the per-unit liquidation preference of the Preferred Units. Notwithstanding the foregoing, if an MR Event occurs before the Closing Date, Contributor shall receive the entire Earnout in cash. If Contributor receives the Earnout in Units, (A) Contributor shall be deemed to have remade the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000representations and warranties in Section 3.4(d) or effective on the date on which Contributor delivers the notice of election and on the Earnout Payment Date, and (B) on the 2025 Net Income is Earnout Payment Date, the Partnership shall deliver to Contributor opinions of counsel as to the matters covered in the opinions delivered at Closing pursuant to Section 10.2(m).
(b) If Contributor’s calculation of the Earnout exceeds the Partnership’s calculation of the Earnout, then the Partnership shall pay Contributor the amount of the Partnership’s calculation of the Earnout on the Earnout Payment Date, and the Parties will submit the dispute over the balance of the Earnout amount to arbitration as provided in Section 17.4. If the arbitration panel decides that the Partnership’s calculation was incorrect, the Partnership shall pay or, to the extent permitted by the proviso in Section 3.5(a), deliver Units to Contributor (valued as of the Earnout Payment Date at and in the manner provided in Section 3.5(a)), as applicable, in the amount determined by the arbitration panel, plus interest on the balance equal to or exceeds Ten Million Dollars the prime rate ($10,000,000)as published in The Wall Street Journal, Money Rates) plus five percent (5%) per annum, from the Earnout Payment Date until the date paid.
(c) The Delta Earnout Shares shall be issued to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) 3.5 shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4survive Closing.
Appears in 1 contract
Sources: Contribution Agreement (Pennsylvania Real Estate Investment Trust)
Earnout. (a) Following If the ClosingFirst Year EBITDA exceeds $8,500,000, upon then the terms and subject Buyer shall pay, or cause to be paid, to Seller aggregate consideration equal to the conditions set forth herein, the Sellers shall have the contingent right to receive as additional consideration for the Share Exchange an aggregate amount product of additional Pubco Ordinary Shares equal to (i) the number excess of Earnout Shares, the First Year EBITDA over $8,500,000 multiplied by (ii) a percentage four (the "Excess Earnout Amount"). If the First Year EBITDA is less than $8,500,000, then the Seller shall pay, or cause to be paid, to Buyer aggregate consideration equal to the product of (A) 100% minus (Bi) the Maxim Fee Percentage excess of $8,500,000 over the First Year EBITDA multiplied by (ii) four (the “Delta "Shortfall Earnout Shares”Amount"). The Excess Earnout Amount and the Shortfall Earnout Amount shall hereinafter be referred to, as the context requires, as the "Earnout Amount". Notwithstanding the foregoing, in no event shall the Excess Earnout Amount exceed $28,000,000 or the Shortfall Earnout Amount exceed $15,000,000.
(b) The Sellers shall have On the contingent right to receive the Delta Earnout Shares ifPayment Date:
(i) In the 2025 Revenue is case of an Excess Earnout Amount, Buyer shall pay or cause to be paid to Seller one-half of the Excess Earnout Amount in cash, and Parent, on behalf of Buyer, shall issue or cause to be issued to Seller an aggregate number of shares of Parent Common Stock equal to (1) one-half of the Excess Earnout Amount divided by (2) the greater of (A) $14.00 or (B) to the extent the Average Closing Price exceeds Seven Hundred Million Dollars $14.50, the Average Closing Price; provided, however, that in no event shall the number of shares of Parent Common Stock issued pursuant to this clause ($700,000,000i) exceed 1,000,000 shares (the "Parent Common Stock Cap"); and. If the number of shares of Parent Common Stock to be issued pursuant to this clause (i) exceeds the Parent Common Stock Cap then the portion of the Excess Earnout Amount that would have been payable in Parent Common Stock shall be paid in cash.
(ii) either In the case of a Shortfall Earnout Amount, Seller shall pay or cause to be paid to Buyer one-half of the Shortfall Earnout Amount in cash and transfer or cause to be transferred to Buyer, an aggregate number of shares of Parent Common Stock equal to (1) one-half of the Shortfall Earnout Amount divided by (2) the greater of (i) $14.00 or (ii) to the extent the Average Closing Price exceeds $14.50, the Average Closing Price.
(iii) The cash portion of any Earnout Amount shall be payable by wire transfer of immediately available funds to such bank account or accounts as per written instructions of Seller or Buyer, as the case may be, given to the other party at least five days prior to the Earnout Payment Date. No fractional shares of Parent Common Stock shall be issued or transferred pursuant to clause (i) or (ii) above. If any party would be entitled to a fractional share of Parent Common Stock pursuant to clause (i) or (ii) above, such party shall receive an amount in cash equal to the product of (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or such fractional share multiplied by (B) the 2025 Net Income is equal greater of (i) $14.00 or (ii) to or the extent the Average Closing Price exceeds Ten Million Dollars ($10,000,000)14.50, the Average Closing Price.
(civ) The Delta Buyer shall have the right to withhold and set-off against any Excess Earnout Shares shall be issued Amount the amount of any claim for indemnification or payment of Losses provided for in Section 9.1 or any amounts payable by Seller to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued Buyer pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.44.
Appears in 1 contract
Earnout. Within three (3) business days following execution of this Amendment by the parties hereto, Parent shall pay $12,250,000 (the “Earnout Payment”) to the Shareholders and to the holders of the Options terminated prior to the Closing set forth on Part II of Exhibit B (the “Option Holders”) as follows:
(a) Following Until Total Consideration equals or exceeds the ClosingOption Holder Threshold, upon the terms and subject Earnout Payment shall be payable to the conditions Shareholders in accordance with the percentages set forth hereinin Part I of Exhibit B. When Total Consideration is greater than the Option Holder Threshold, to the extent the Earnout Payment causes Total Consideration to be greater than the Option Holder Threshold, the Sellers shall have the contingent right to receive as additional consideration for the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal the Earnout Payment in excess of the Option Holder Threshold shall be payable to (i) the number Shareholders and Option Holders in accordance with the percentages set forth in Part II of Exhibit B. For the avoidance of doubt, the parties acknowledge and agree that the Earnout Shares, multiplied by (ii) a percentage equal Payment shall be payable in accordance with Schedule I to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout Shares”)this Amendment.
(b) The Sellers All payments due to the Shareholders pursuant to Sections 1.8(a) and (b) shall have be made by the contingent right issuance to receive each Shareholder of a number of Parent Shares (the Delta “Earnout Shares if:
Shares”) equal in value to the amount due to such Shareholder (ivaluing the Parent Shares, for purposes of this Section 1.8, using the No Collar Share Valuation Method on March 29, 2011). Parent shall pay any amount due to the Option Holders under Section 1.8(b) the 2025 Revenue is equal by delivery of cash or check for good funds, subject to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000)any applicable withholding.
(c) The Delta Earnout Shares Healthcare Growth Partners, LLC shall be issued entitled to the Sellers within ten receive an amount (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 RevenueBroker Fee”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000200,000. Parent shall pay the amount due to Healthcare Growth Partners, then a percentage equal LLC by wire transfer of immediately available funds to the greatest of the 2025 Revenue Shortfall Percentagean account designated by Healthcare Growth Partners, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such paymentLLC. For the avoidance of doubt, the foregoing provisions Broker Fee shall be paid by Parent and shall not be deducted from the Earnout Payment.
(d) For purposes of this Section 2.4(d) (I) Amendment, “No Collar Share Valuation Method” shall not apply if Pubco changes it auditor after mean the filing valuation of the 2025 Annual Report and Parent Shares based upon the average closing price of Parent’s common stock as reported by the NASDAQ Global Select Market over the forty-five (45) trading days ending on the close of the trading day immediately prior to such restatement, and (II) will not impose any restrictions on transfer or disposition the date of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Amendment.
Appears in 1 contract
Sources: Agreement and Plan of Merger (Quality Systems, Inc)
Earnout. (a) Following After the Closing, upon subject to the terms and subject to the conditions set forth herein, the Sellers shall have the contingent right to receive in the aggregate up to an additional Three Million Two Hundred Thousand (3,200,000) Pubco Ordinary Shares (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “Earnout Shares” and, together with the Exchange Shares, the “Consideration Shares”) as additional consideration based on Pubco achieving certain Net Revenue milestones for each of the Share Exchange an aggregate amount of additional Pubco Ordinary Shares equal to fiscal years 2023 and 2024 (i) the number of each, a “Net Revenue Earnout SharesYear”; such period, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage (the “Delta Earnout SharesPeriod”).
(b) . The Sellers shall have the contingent Sellers’ right to receive the Delta Earnout Shares ifshall vest and become due and issuable as follows:
(i) In the 2025 event that the Net Revenue is equal to or exceeds Seven Hundred Million Dollars ($700,000,000); and
(ii) either (A) of Pubco as reported in the 2025 EBITDA is equal to or exceeds Twenty Million Dollars ($20,000,000) or (B) the 2025 Net Income is equal to or exceeds Ten Million Dollars ($10,000,000).
(c) The Delta Earnout Shares shall be issued to the Sellers within ten (10) calendar days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as of the Closing.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Reportannual report of Pubco for the fiscal year ended December 31, and (iv) in such restatement, either (x) 2025 Revenue (as restated, 2023 filed with the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) SEC is equal to or exceeds One Hundred Seventy Million Dollars ($10,000,000170,000,000) (the “2023 Net Revenue Earnout Milestone”), then a percentage then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million Six Hundred Thousand (1,600,000) of the Earnout Shares (the “First Tranche”), with each Seller receiving its Pro Rata Share thereof.
(ii) In the event that the Net Revenue of Pubco as reported in the audited financial statements set forth in the annual report of Pubco for the fiscal year ended December 31, 2024 filed with the SEC is equal to or exceeds Two Hundred Million Dollars ($200,000,000) (the greatest “2024 Net Revenue Earnout Milestone” and, together with the 2023 Net Revenue Earnout Milestone, the “Net Revenue Earnout Milestones”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million Six Hundred Thousand (1,600,000) of the 2025 Revenue Shortfall PercentageEarnout Shares (the “Second Tranche”), with each Seller receiving its Pro Rata Share thereof. In the event that the applicable Earnout Milestones are not met during the applicable periods, the 2025 EBITDA Shortfall Percentage and Sellers shall not be entitled to receive the 2025 Net Income Shortfall Percentage, in each case, applicable portion of the number of Delta Earnout Shares.
(b) Any Earnout Shares issued hereunder to Sellers shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal subject to the number of Delta Earnout Shares so required same restrictions and lock-up period(s) applicable to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the Exchange Shares.
(c) As soon as practicable (but in any event within twenty (20) Trading Days ending immediately prior Business Days) after the date completion of such payment. For the avoidance of doubtaudited consolidated financial statements for Pubco and its Subsidiaries for each Net Revenue Earnout Year, Pubco’s Chief Financial Officer (the foregoing provisions “CFO”) will prepare and deliver to the deliver to the Post-Closing Pubco Board for approval by a Disinterested Independent Director Majority a written statement (each, an “Earnout Statement”) that sets forth the CFO’s determination in accordance with the terms of this Section 2.4(d2.4 of the Net Revenue for such Net Revenue Earnout Year and whether the applicable Net Revenue Earnout Milestone has been satisfied for such Net Revenue Earnout Year. If a Disinterested Independent Director Majority determines in good faith that the Sellers are entitled to receive Earnout Consideration for having achieved a Net Revenue Earnout Milestone pursuant to an Earnout Statement, the applicable portion of the Earnout Consideration will be due upon such final determination and Pubco shall deliver such Earnout Shares within ten (10) Business Days thereafter.
(Id) Following the Closing (including during the Earnout Period), Pubco and its Subsidiaries, including the Target Companies, shall be entitled to operate their respective businesses based upon the business requirements of Pubco and its Subsidiaries, consistent with past practice. Each of Pubco and its Subsidiaries, including the Target Companies, shall be permitted, following the Closing (including during the Earnout Period), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the ability of the Sellers to earn the Earnout Shares, and the Sellers shall not apply if have any right to claim the loss of all or any portion of any Earnout Shares or other damages as a result of such decisions. Notwithstanding the foregoing, Pubco changes it auditor after shall not, and shall cause its Subsidiaries, including the filing Target Companies, not to, take or omit to take any action that is in bad faith and has the primary purpose of avoiding, reducing or preventing the achievement or attainment of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Net Revenue Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4Milestones.
Appears in 1 contract
Sources: Business Combination Agreement (Hainan Manaslu Acquisition Corp.)
Earnout. (a) Following BNC shall cause the Closing, upon the terms and subject Agency to the conditions set forth herein, the pay to Sellers shall have the contingent right to receive as in accordance with Section 2.5 additional consideration for the Share Exchange an up to a maximum aggregate amount of additional Pubco Ordinary Shares equal to (i) the number of Earnout Shares, multiplied by (ii) a percentage equal to (A) 100% minus (B) the Maxim Fee Percentage $8,500,000 (the “Delta Earnout Shares”"Earnout").
(b) The Sellers shall have , based on the contingent right to receive EBITDA, if any, generated by Milne ▇▇▇▇▇ in the Delta Earnout Shares iffuture as follows:
(i) For each consecutive twelve (12) month segment of the 2025 Revenue is sixty (60) month period commencing on the last day of the month in which the Closing occurs (each such twelve-month segment, an "Earnout Period") that Milne ▇▇▇▇▇ generates EBITDA of more than $2,500,000, then BNC shall cause the Agency to pay the Sellers a fixed minimum Earnout amount (the "Base Earnout") of $1,700,000 plus an Earnout premium (the "Earnout Premium") equal to or 50% of the amount by which EBITDA for such Earnout Period exceeds Seven Hundred Million Dollars $2,500,000; provided, however, (A) that the sum of the Base Earnout and Earnout Premium for each Earnout Period shall not exceed an aggregate of $700,000,0003,400,000, and (B) the amount of the Earnout Premium for the particular Earnout Period shall be credited against and reduce the remaining balance of the Earnout that may be earned in future Earnout Periods, in inverse order of payment. For example, if EBITDA for each of the five Earnout Periods is $4,000,000, then the sum of the Base Earnout and Earnout Premium payable for each of the first three Earnout Periods would be $2,450,000, the Base Earnout payable for the fourth Earnout Period would be $1,150,000 (with no Earnout Premium payable for the fourth Earnout Period); and, and the remaining balance of the Earnout that may be earned in the fifth Earnout Period would be $0.00, such that no Earnout payments would be payable with respect to the fifth Earnout Period.
(ii) either For each Earnout Period that Milne ▇▇▇▇▇ generates annual EBITDA less than or equal to $2,500,000 but more than $2,000,000, BNC shall cause the Agency to pay to Sellers a Base Earnout of $1,360,000 for that Earnout Period;
(Aiii) For each Earnout Period that Milne ▇▇▇▇▇ generates annual EBITDA less than or equal to $2,000,000, then neither BNC nor the Agency shall pay any Base Earnout or Earnout Premium to the Sellers for that Earnout Period;
(b) Within 20 days after the end of each Earnout Period, BNC shall deliver to the Sellers' Representatives a notice (the "Earnout Notice") specifying (i) the 2025 EBITDA is equal to or exceeds Twenty Million Dollars for such Earnout Period, ($20,000,000) or (Bii) the 2025 Net Income is equal to or exceeds Ten Million Dollars Base Earnout and Earnout Premium then due, if any, and ($10,000,000)iii) the remaining balance of the Earnout that may be earned in future periods, if any, showing in reasonable detail the computation thereof, and a certification by BNC's chief financial officer that such computation was based on Milne ▇▇▇▇▇'▇ books and records and performed in a manner consistent with GAAP.
(c) The Delta Earnout Shares shall be issued amounts, if any, payable to the Sellers for each Earnout Period pursuant to this Section 2.3 shall be paid by the Agency within 30 days following the end of the Earnout Period, subject to Section 2.3(e) below if the Sellers' Representatives notify BNC of their objection to the Earnout Notice for the Earnout Period.
(d) During the preparation of each Earnout Notice and the period of any review contemplated by this Section 2.3, BNC shall cause Milne ▇▇▇▇▇ to (i) provide the Sellers' Representatives, upon reasonable notice, full access during normal business hours to the books, records, work papers, facilities and employees of Milne ▇▇▇▇▇ to review the preparation of the Earnout Notice and (ii) cooperate with the Sellers' Representatives, including the provision on a timely basis of all information reasonably requested by the Sellers' Representatives and necessary or useful in reviewing and validating the contents of the Earnout Notice. After receipt of an Earnout Notice, the Sellers' Representatives shall have 10 days to review the Earnout Notice, together with all the work papers used in preparation thereof. Unless the Sellers' Representatives deliver a written notice to BNC on or before the 10th day after receipt by the Sellers' Representatives of the Earnout Notice specifying, in reasonable detail, all disputed items and the basis therefor (an "Objection"), the Sellers shall be deemed to have accepted and agreed to the Earnout Notice. If the Sellers' Representatives notify BNC of an Objection to an Earnout Notice, (i) the undisputed portion of the Base Earnout and Earnout Premium, as applicable, shall be paid within thirty (30) days following the end of the Earnout Period, and (ii) the Sellers' Representatives and BNC shall, within 10 days following such Objection, attempt to resolve the Objection. Any resolution as to any disputed items shall be final, binding and conclusive for BNC, the Agency and all Sellers, and any sums payable as a result of the resolution shall be paid by the Agency within ten (10) calendar days of the resolution. At the end of such 10-day resolution period, any items remaining in dispute, including without limitation, exclusions of or additions to revenue and any allocations of expenses contemplated by the definition of EBITDA shall be submitted to a firm of nationally recognized, independent accountants with an office in Maricopa County, Arizona (the "Neutral Auditors") selected by BNC and the Sellers' Representatives within ten (10) days after the expiration of the 10-day resolution period. If BNC and the Sellers' Representatives are unable to agree on the Neutral Auditors, then BNC and the Sellers' Representatives shall each have the right to request the American Arbitration Association to appoint the Neutral Auditors, who shall not have had a material business relationship with any of the Sellers, the Sellers' Representatives, BNC, the Agency or any of their respective Affiliates within the past two years. BNC and each of the Sellers agree to execute, if requested by the Neutral Auditors, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Neutral Auditors shall be borne 50% by BNC and 50% by the Sellers. The Neutral Auditors shall act as an arbitrator to determine only those items still in dispute between BNC and the Sellers' Representatives. The Neutral Auditors' determination shall be made within 30 days of their selection, shall be set forth in a written statement delivered to Sellers and BNC, and shall be final, binding and conclusive on BNC, the Agency, the Sellers' Representatives and each of the Sellers. The amount payable shall then be paid by the Agency within 10 days following the date on which Pubco files the 2025 Annual Report with the SEC. The Delta Earnout Shares shall be allocated amongst the Sellers pro rata based on the number of Purchased Shares owned by each Seller as final determination of the ClosingNeutral Auditors.
(d) If (i) Delta Earnout Shares are issued pursuant to this Section 2.4, (ii) within one (1) year of filing the 2025 Annual Report with the SEC, Pubco’s financial statements that are set forth therein are restated, (iii) prior to the time of such restatement Pubco has not changed its auditor that conducted the audit of Pubco’s audited financial statements set forth in the 2025 Annual Report, and (iv) in such restatement, either (x) 2025 Revenue (as restated, the “Restated 2025 Revenue”) is below $700,000,000 or (y) (A) 2025 EBITDA (as restated, the “Restated 2025 EBITDA”) is below $20,000,000 and (B) 2025 Net Income (as restated, the “Restated Net Income”) is equal to or exceeds $10,000,000, then a percentage equal to the greatest of the 2025 Revenue Shortfall Percentage, the 2025 EBITDA Shortfall Percentage and the 2025 Net Income Shortfall Percentage, in each case, of the number of Delta Earnout Shares shall be returned by the Sellers to Pubco and cancelled; provided, that in lieu of returning such Delta Earnout Shares the Sellers may, in their sole discretion, either (A) return other Pubco Ordinary Shares to Pubco and/or (B) pay an amount in cash to Pubco equal to the number of Delta Earnout Shares so required to be returned, multiplied by the VWAP of Pubco Ordinary Shares for the twenty (20) Trading Days ending immediately prior the date of such payment. For the avoidance of doubt, the foregoing provisions of this Section 2.4(d) (I) shall not apply if Pubco changes it auditor after the filing of the 2025 Annual Report and prior to such restatement, and (II) will not impose any restrictions on transfer or disposition of the Delta Earnout Shares by the Sellers after the issuance of such Delta Earnout Shares pursuant to this Section 2.4.
Appears in 1 contract