Common use of Merger Consideration Adjustments Clause in Contracts

Merger Consideration Adjustments. (A) The Parties agree that the determination of the amount of Merger Consideration that is payable at Closing was based on (i) an assumed Closing Net Working Capital in the amount of $7,400,000 (“Target Net Working Capital”) and (ii) an assumed Closing Outstanding Net Debt equal to the Reference Date Net Debt. (B) No less than five (5) Business Days prior to the Closing Date the Company shall prepare and deliver to Parent for Parent’s review, and the Company and Parent shall mutually agree in good faith on, estimates of (i) the Existing Company Indebtedness as of the Closing Date, the Closing Cash, and the Closing Outstanding Net Debt (the last of such estimates, the “Estimated Closing Outstanding Net Debt”) (ii) Estimated Closing Taxes, and (iii) Closing Net Working Capital (such estimate, the “Estimated Closing Working Capital”). If Parent and the Company cannot agree on the Estimated Closing Outstanding Net Debt, Estimated Closing Taxes, and/or the Estimated Closing Working Capital, then the amount(s) of such item(s) shall be as set forth in the Sample Merger Consideration Calculation. For purposes of the payments to be made by Parent (upon surrender of the Certificates representing shares in accordance with Section 2.02(b)) at or following the Closing until the Final Closing Outstanding Net Debt, Closing Taxes, and Final Closing Working Capital are determined pursuant to this Agreement, such payments shall be made on the basis of estimated Merger Consideration calculated on the assumption that the Final Closing Outstanding Net Debt will be equal to the Estimated Closing Outstanding Net Debt, Closing Taxes will be equal to Estimated Closing Taxes, and the Final Closing Working Capital will be equal to the Estimated Closing Working Capital. Such estimated Merger Consideration shall be subject to adjustment as provided in Sections 2.01(d)(C) through (I) below. (C) As promptly as practicable, but no later than 60 days after the Closing Date, Parent and the Surviving Corporation shall prepare and deliver to the Representative a closing statement (the “Closing Statement”) and a certificate signed by an executive officer of the Parent (the “Closing Certificate”) based on such Closing Statement setting forth the Surviving Corporation’s calculation of Closing Outstanding Net Debt, Closing Taxes, and Closing Net Working Capital. Parent and the Surviving Corporation will permit a person designated by the Representative to participate in the preparation of the Closing Statement (solely for purposes of understanding the process and without any right to specify the content of the Closing Statement). Closing Net Working Capital shall be determined on the same basis and using the same accounting principles, practices, assumptions, methodologies, and policies used in the preparation of the December 31, 2005, audited consolidated financial statements of ECCA and its Subsidiaries, including the notes thereto, included in the ECCA SEC Documents (collectively, the “Working Capital Principles”). A sample calculation of Net Working Capital is set forth on Exhibit C (the “Sample Working Capital Calculation”). The Sample Working Capital Calculation was determined in accordance with the Working Capital Principles. (D) Upon the Representative’s review of the Closing Statement, if the Representative disagrees with the Surviving Corporation’s calculation of the Closing Outstanding Net Debt, Closing Taxes, and/or the Closing Net Working Capital set forth in the Closing Certificate, the Representative may, within 15 days after delivery of the Closing Statement, deliver a written notice to the Surviving Corporation, with a copy to Parent, disagreeing with any such calculation and setting forth the Representative’s calculation of such amount (a “Notice of Disagreement”). Any such Notice of Disagreement shall specify, in reasonable detail, those items or amounts as to which the Representative disagrees. (E) If a Notice of Disagreement shall be duly delivered pursuant to Section 2.01(d)(D), the Representative and the Surviving Corporation shall, during the 15 days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Closing Outstanding Net Debt and/or the Closing Net Working Capital, as applicable. If during such period, the Representative and the Surviving Corporation are unable to reach such agreement, they shall promptly thereafter cause KPMG LLP (the “Accounting Referee”) to review this Agreement and the disputed items or amounts for the purpose of calculating the Closing Outstanding Net Debt, Closing Taxes, and/or the Closing Net Working Capital, as applicable. If such firm is unable to serve in such capacity, another firm of independent accountants of nationally recognized standing reasonably satisfactory to Parent, the Surviving Corporation and the Representative (which shall not have or have had any material relationship with Parent, the Surviving Corporation or the Representative) shall be selected in its stead. If Parent, the Surviving Corporation and the Representative cannot agree upon an independent accounting firm to be the firm that will act to determine the Closing Outstanding Net Debt, Closing Taxes and/or the Closing Net Working Capital, as provided in the immediately preceding sentence, within 30 days after the end of the aforesaid 30-day period, then the Supreme Court of the County and State of New York, in a proceeding brought in accordance with Article 76 of the New York Civil Practice Law and Rules (“CPLR”), shall be empowered to select such an accounting firm. In any such case, a single partner of the selected accounting firm shall act for the firm in the determination proceeding, and such partner shall render a written decision as to each such disputed matter, as promptly as practicable, but, in any case, no later than 30 days from the date of the engagement of the Accounting Referee, including a statement in reasonable detail of the basis for each such decision. In making such calculation, the Accounting Referee shall consider only those items or amounts in the Closing Statement and the Surviving Corporation’s calculation of Closing Outstanding Net Debt, Closing Taxes, and/or Closing Net Working Capital as to which Representative has disagreed. The Accounting Referee’s determination as to any item or amount disputed by the Representative shall not be more beneficial to the Surviving Corporation than the determination of that item or amount by the Surviving Corporation in the Closing Statement nor more beneficial to the Representative than the determination of that item or amount in the Notice of Disagreement. Such report shall be final and binding upon the Representative and the Surviving Corporation, and will be fully enforceable under and pursuant to CPLR Article 76. The cost of such review and report shall be borne equally by the Company Series B-1 Shareholders, on the one hand, and the Surviving Corporation, on the other hand. The portion of the costs to be borne by the Company Series B-1 Shareholders shall be paid by the Representative on behalf of the Company Series B-1 Shareholders, solely from the Holdback that would otherwise be payable to the Company Series B-1 Shareholders in accordance with Section 2.01(f). (F) The Representative, Parent and the Surviving Corporation shall, and shall cause their Subsidiaries and respective representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of Closing Outstanding Net Debt, Closing Taxes, and Closing Net Working Capital and in the conduct of the review of the Representative and, if necessary, the Accounting Referee. Within the 15-day period specified in Section 2.01(d)(D), Parent and the Surviving Corporation shall, and during the 15-day period specified in Section 2.01(d)(E), the Representative shall, subject to normal procedures associated with such review, make available, on reasonable notice and during normal working hours, books, accounting records, work papers and personnel to the extent necessary or reasonably requested to verify the amounts set forth in the Closing Statement. (G) If Final Outstanding Net Debt is more than Estimated Closing Outstanding Net Debt, then the Merger Consideration shall be decreased on a dollar-for-dollar basis by the full amount of such excess and such amount shall be paid to the Surviving Corporation in accordance with Section 2.01(d)(I). If Final Outstanding Net Debt is less than Estimated Closing Outstanding Net Debt, then the Merger Consideration shall be increased on a

Merger Consideration Adjustments. (Aa) The Parties agree that the determination of the amount of Merger Consideration that is payable at Closing was based on At least two (i) an assumed Closing Net Working Capital in the amount of $7,400,000 (“Target Net Working Capital”) and (ii) an assumed Closing Outstanding Net Debt equal to the Reference Date Net Debt. (B) No less than five (52) Business Days prior to the Closing Date Date, the Company shall prepare (or cause to be prepared), issue and deliver to Parent for Parent’s review, and the Company and Parent shall mutually agree in its good faith on, estimates of estimate of: (i) balance sheet of the Existing Company Indebtedness setting forth the assets and liabilities of the Company as of the Closing Date, the Closing Cash, and the Closing Outstanding Net Debt Effective Time (the last of such estimates, the “Estimated Closing Outstanding Net DebtBalance Sheet”) ), and (ii) Estimated Closing Taxes, and (iii) Closing the Net Working Capital (such estimate, the “Estimated Closing Net Working Capital”). Parent and its Representatives shall have the right to review and copy the computations and work papers (including accountants’ work papers) and the Company’s underlying books and records used in connection with the Company’s computation and preparation of its proposed drafts of the Estimated Closing Balance Sheet and the Estimated Net Working Capital. If Parent disputes the Estimated Closing Balance Sheet (or any portion thereof) or the Estimated Net Working Capital prior to the Closing, then Parent and the Company canwill negotiate in good faith to resolve any such dispute at or prior to Closing, but the resolution of any such dispute is not agree on a condition to Closing. Each of the Estimated Closing Outstanding Net Debt, Estimated Closing Taxes, and/or Balance Sheet and the Estimated Closing Net Working CapitalCapital shall be prepared in accordance with the methodology and the accounting principles set forth in Exhibit D (the “Merger Consideration Adjustment Methodology”). In the event the Estimated Net Working Capital (i) exceeds the Net Working Capital Target, then the amount(s) of such item(s) shall be as set forth in the Sample Merger Consideration Calculation. For purposes of the payments to be made by Parent (upon surrender of the Certificates representing shares in accordance with Section 2.02(b)) at or following the Closing until the Final Closing Outstanding Net Debt, Closing Taxes, and Final Closing Working Capital are determined pursuant to this Agreement, such payments shall be made on the basis of estimated Merger Consideration calculated on the assumption that the Final Closing Outstanding Net Debt will be equal to the Estimated Closing Outstanding Net Debt, Closing Taxes will be equal to Estimated Closing Taxes, and the Final Closing Working Capital will be equal to the Estimated Closing Working Capital. Such estimated Merger Consideration shall be subject to increased, dollar for dollar, by the amount that the Estimated Net Working Capital exceeds the Net Working Capital Target; or (ii) is less than the Net Working Capital Target, then the Closing Merger Consideration shall be decreased, dollar for dollar, by the amount that the Net Working Capital Target exceeds the Estimated Net Working Capital (with such adjustment as provided in Sections 2.01(d)(Camount under (i) through and (Iii) belowof the preceding sentence immediately above being the “Working Capital Adjustment Amount”). (Cb) As promptly as practicable, but in no event later than 60 sixty (60) days after following the Closing Date, Parent and the Surviving Corporation shall shall, in good faith, prepare (or cause to be prepared), issue and deliver to the Shareholder Representative a closing statement its proposed: (i) balance sheet of the Company setting forth the assets and liabilities of the Company as of the Effective Time (as finalized in accordance with Section 2.6(d), the “Closing StatementBalance Sheet”), (ii) and a certificate signed by an executive officer statement of the Parent (the “Closing Certificate”) based on such Closing Statement setting forth the Surviving Corporation’s calculation of Closing Outstanding Net Debt, Closing Taxes, and Closing Net Working Capital. Parent and the Surviving Corporation will permit a person designated by the Representative to participate in the preparation of the Closing Statement (solely for purposes of understanding the process and without any right to specify the content of the Closing Statement). Closing Net Working Capital shall be determined on the same basis and using the same accounting principles, practices, assumptions, methodologies, and policies used (as finalized in the preparation of the December 31, 2005, audited consolidated financial statements of ECCA and its Subsidiaries, including the notes thereto, included in the ECCA SEC Documents (collectivelyaccordance with Section 2.6(d), the “Working Capital Principles”). A sample calculation of Net Working Capital is set forth on Exhibit C Statement”), and (iii) statement of the calculation of the Merger Consideration Adjustment Amount (as finalized in accordance with Section 2.6(d), the “Sample Working Capital CalculationAdjustment Amount Statement”). The Sample Working Capital Calculation was determined in accordance with the Working Capital Principles. (D) Upon the Representative’s review of the Closing Statement, if the Representative disagrees with the Surviving Corporation’s calculation of the Closing Outstanding Net Debt, Closing Taxes, and/or the Closing Net Working Capital set forth in the Closing Certificate, the Representative may, within 15 days after delivery of the Closing Statement, deliver a written notice to the Surviving Corporation, with a copy to Parent, disagreeing with any such calculation and setting forth the Representative’s calculation of such amount (a “Notice of Disagreement”). Any such Notice of Disagreement shall specify, in reasonable detail, those items or amounts as to which the Representative disagrees. (E) If a Notice of Disagreement shall be duly delivered pursuant to Section 2.01(d)(D), the Shareholder Representative and its Representatives shall have the Surviving Corporation shall, during the 15 days following such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Closing Outstanding Net Debt and/or the Closing Net Working Capital, as applicable. If during such period, the Representative and the Surviving Corporation are unable to reach such agreement, they shall promptly thereafter cause KPMG LLP (the “Accounting Referee”) right to review this Agreement and copy the disputed items or amounts for the purpose of calculating the Closing Outstanding Net Debt, Closing Taxes, and/or the Closing Net Working Capital, as applicable. If such firm is unable to serve in such capacity, another firm of independent accountants of nationally recognized standing reasonably satisfactory to Parent, the Surviving Corporation computations and the Representative work papers (which shall not have or have had any material relationship with Parent, the Surviving Corporation or the Representativeincluding accountants’ work papers) shall be selected in its stead. If Parent, the Surviving Corporation and the Representative cannot agree upon an independent accounting firm to be the firm that will act to determine the Closing Outstanding Net Debt, Closing Taxes and/or the Closing Net Working Capital, as provided in the immediately preceding sentence, within 30 days after the end of the aforesaid 30-day period, then the Supreme Court of the County and State of New York, in a proceeding brought in accordance with Article 76 of the New York Civil Practice Law and Rules (“CPLR”), shall be empowered to select such an accounting firm. In any such case, a single partner of the selected accounting firm shall act for the firm in the determination proceeding, and such partner shall render a written decision as to each such disputed matter, as promptly as practicable, but, in any case, no later than 30 days from the date of the engagement of the Accounting Referee, including a statement in reasonable detail of the basis for each such decision. In making such calculation, the Accounting Referee shall consider only those items or amounts in the Closing Statement and the Surviving Corporation’s calculation underlying books and records used in connection with Parent’s computation and preparation of its proposed drafts of the Closing Outstanding Net DebtBalance Sheet, Closing Taxes, and/or Closing the Net Working Capital as Statement and the Adjustment Amount Statement. Each of the Closing Balance Sheet, the Net Working Capital Statement and the Adjustment Amount Statement shall be prepared in accordance with the Merger Consideration Adjustment Methodology. (c) Within thirty (30) days following Parent’s delivery of its proposed Closing Balance Sheet, Net Working Capital Statement and Adjustment Amount Statement, the Shareholder Representative shall, in a written notice to Parent, either accept Parent’s proposed Closing Balance Sheet, Net Working Capital Statement and Adjustment Amount Statement, or, in the event that the Shareholder Representative believes that Parent’s proposed Closing Balance Sheet, Net Working Capital Statement and/or Adjustment Amount Statement were not prepared in accordance with the Merger Consideration Adjustment Methodology, deliver a notice (a “Dispute Notice”) in writing prior to the expiration of such thirty (30) day period. The Dispute Notice shall describe in reasonable detail any proposed adjustments to Parent’s proposed Closing Balance Sheet, Net Working Capital Statement and/or Adjustment Amount Statement which the Shareholder Representative believes should be made and the basis therefor. If the Shareholder Representative has disagreednot delivered such notice of proposed adjustments within such thirty (30) day period, the Shareholder Representative will be deemed to have accepted Parent’s proposed Closing Balance Sheet, Net Working Capital Statement and Adjustment Amount Statement and such statements shall be final, binding, conclusive and non-appealable. (d) If the Shareholder Representative delivers a Dispute Notice to Parent in a timely manner pursuant to Section 2.6(c) above, then the Shareholder Representative and Parent shall negotiate in good faith to resolve any dispute over the Shareholder Representative’s proposed adjustments to Parent’s proposed Closing Balance Sheet, Net Working Capital Statement and/or Adjustment Amount Statement, provided that if any such dispute is not fully resolved within fifteen (15) days following delivery by the Shareholder Representative of the Dispute Notice (or such longer period as Parent and the Shareholder Representative may mutually agree in writing), then at the request of either the Shareholder Representative or Parent, such dispute shall be submitted to the CPA Firm to resolve any remaining dispute over the Shareholder Representative’s proposed adjustments in accordance with the Merger Consideration Adjustment Methodology, which resolution shall be final, binding, conclusive and non-appealable. The Accounting Referee’s CPA Firm shall be instructed to deliver its written determination as to any item or amount disputed by not later than the Representative shall not be more beneficial thirtieth (30th) day after the dispute is referred to the Surviving Corporation CPA Firm. The CPA Firm shall address only those items in dispute and may not assign a value greater than the determination of that greatest value for such item claimed by either party or amount smaller than the smallest value for such item claimed by the Surviving Corporation in the Closing Statement nor more beneficial either party. The CPA Firm’s fees and expenses shall be allocated to the Shareholders from the Shareholder Representative than the determination of that item or amount in the Notice of Disagreement. Such report shall be final and binding upon the Representative and the Surviving Corporation, and will be fully enforceable under and pursuant to CPLR Article 76. The cost of such review and report shall be borne equally by the Company Series B-1 ShareholdersFund Amount, on the one hand, and Parent and the Surviving Corporation, on the other hand, based on the inverse of the percentage that the CPA Firm’s determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the CPA Firm. The portion For example, should the items in dispute total in amount to One Thousand Dollars ($1,000) and the CPA Firm awards Six Hundred Dollars ($600) in favor of the Shareholder Representative’s position, sixty percent (60%) of the costs to of its review would be borne by Parent and forty percent (40%) of the costs would be borne by the Company Series B-1 Shareholders shall be paid by the Representative on behalf of the Company Series B-1 Shareholders, solely from the Holdback that would otherwise be payable to the Company Series B-1 Shareholders in accordance with Section 2.01(f)Shareholder Representative Fund Amount. (Fe) The RepresentativeClosing Balance Sheet, Parent and the Surviving Corporation shall, and shall cause their Subsidiaries and respective representatives to, cooperate and assist in the preparation of the Closing Net Working Capital Statement and the calculation Adjustment Amount Statement shall become final and binding on all parties upon the earliest of Closing Outstanding Net Debt(i) the Shareholder Representative’s delivery of written notice to Parent of its acceptance of Parent’s proposals thereof, Closing Taxes, and Closing Net Working Capital and in (ii) the conduct of Shareholder Representative’s failure to deliver a Dispute Notice within the review of the Representative and, if necessary, the Accounting Referee. Within the 15-thirty (30) day period specified in Section 2.01(d)(D)2.6(c) above, (iii) the mutual written agreement of the Shareholder Representative and Parent and with respect to any of the Surviving Corporation shallShareholder Representative’s proposed adjustments to Parent’s proposals thereof, and during or (iv) the 15-day period specified in Section 2.01(d)(E), the Representative shall, subject to normal procedures associated with such review, make available, on reasonable notice and during normal working hours, books, accounting records, work papers and personnel CPA Firm’s final resolution of any disputes submitted to the extent necessary or reasonably requested CPA Firm with respect to verify the amounts Shareholder Representative’s proposed adjustments to Parent’s proposals thereof. For purposes hereof, (A) the “Final Net Working Capital” shall mean the Net Working Capital as reflected on the Net Working Capital Statement, (B) the “Final Indebtedness” shall mean the value of the Indebtedness set forth in on the Closing StatementBalance Sheet and (C) the “Final Closing Cash” shall mean the value of the Closing Cash set forth on the Closing Balance Sheet, in each case, as deemed final pursuant to this Section 2.6(e). (G) If Final Outstanding Net Debt is more than Estimated Closing Outstanding Net Debt, then the Merger Consideration shall be decreased on a dollar-for-dollar basis by the full amount of such excess and such amount shall be paid to the Surviving Corporation in accordance with Section 2.01(d)(I). If Final Outstanding Net Debt is less than Estimated Closing Outstanding Net Debt, then the Merger Consideration shall be increased on a