Common use of Performance Payments Clause in Contracts

Performance Payments. (a) The Sellers shall be entitled to receive Performance Payments in an amount up to a maximum of $17,000,000, in the aggregate, contingent upon attainment of certain performance targets as follows: (i) if EBIT for the fiscal year ending March 31, 2006 (the “First Pay-Out Period”), is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive an additional Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (ii) if EBIT for the fiscal year ending March 31, 2007 (the “Second Pay-Out Period”), is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive an additional Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (iii) if EBIT for the fiscal year ending March 31, 2008 (the “Third Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive a Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (iv) if EBIT for the fiscal year ending March 31, 2009 (the “Fourth Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (v) if EBIT for the fiscal year ending March 31, 2010 (the “Fifth Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (b) Notwithstanding the foregoing, in the event that Sellers fail to earn the Performance Payments described in subsections 1.5(a)(i)(2) or 1.5(a)(ii)(2) above, Sellers may carry back any EBIT amounts in excess of the performance targets described in subsections 1.5(a)(ii)2 and 1.5(a)(iii)2 above and allocate such excess amounts to the EBIT at the close of the First Pay-Out Period and/or Second Pay-Out Period in order to earn the Performance Payments described in subsections 1.5(a)(i)2 or 1.5(a)(ii)2 that were not earned by Sellers at the close of the First Pay-Out Period and/or Second Pay-Out Period. (c) Notwithstanding anything to the contrary contained in Section 1.5(a), the Performance Payments described in subsections 1.5(a)(i)(1), 1.5(a)(ii)(1), 1.5(a)(iii)(1), 1.5(a)(iv)(1) and 1.5(a)(v)(1) above shall only be payable for those years in which G▇▇ ▇▇▇▇▇▇▇▇ has acted as President of Productions Company. (d) The following items shall be disregarded in the calculation of EBIT for purposes of determining Performance Payments for any Pay-Out Period: (i) all Transaction Expenses incurred by the Companies; (ii) acquisitions of more than 50% of the equity interests or all or substantially all of the assets of an entity by either Company following the Closing Date and any and all costs and expenses associated therewith; and (iii) borrowings of either Company following the Closing Date outside the ordinary course of business and any and all principal amortization, costs and expenses associated therewith. (e) As promptly as practicable, but in any event within 30 days after receipt by Buyers of audited financial statements for the Pay-Out Period in question (but not later than 120 days after the end of such Pay-Out Period), Buyers shall prepare and deliver to the Seller Representative a statement setting forth in reasonable detail Buyers calculation of EBIT for such Pay-Out Period (a “Calculation Statement”). Buyers will give the Seller Representative (or its representatives) reasonable access to any computations and workpapers used in connection with the preparation of the Calculation Statement. Buyers’ calculation of EBIT shall be prepared in accordance with GAAP, subject to Section 1.5(d). If Buyers employ a firm of independent accountants in connection with the preparation of EBIT, Buyers shall cause such independent accountants to give reasonable access to the Seller Representative (or its representatives) to any computations and workpapers used in the preparation of EBIT subject, in the case of accountants’ workpapers, to execution of a customary access agreement by the Seller Representative (or its representatives) if required by such independent accountants. On not less than 5 days prior written notice, Buyers will also give the Seller Representative (and its representatives) access, during the normal business hours of Buyers and the Companies, to all personnel, books and records of the Companies as reasonably requested by the Seller Representative to assist it, if applicable, in the preparation of a Performance Payment Dispute Notice (as defined below). The Seller Representative and its representatives shall be permitted to ask questions of and receive answers from Buyers and the Companies and request such other books and records of the Companies as is reasonably requested by them to assist them in the review of the Calculation Statement. The Seller Representative will deliver to Buyers a notice (“Performance Payment Dispute Notice”) within 30 days after receiving a Calculation Statement if the Seller Representative believes that Buyers’ calculation of EBIT as set forth in the Calculation Statement (i) has not been prepared in accordance with GAAP, subject to Section 1.5(d) or (ii) is not mathematically correct, which notice shall set forth in reasonable detail all disputed items, the basis for such disagreement, the dollar amounts involved (the “Performance Payment Disputed Items”) and the Seller Representative’s calculation of EBIT. The Seller Representative will give Buyers (or their representatives) reasonable access to any computations and workpapers used by the Seller Representative or its representative in connection with the review of the Calculation Statement or the preparation of the Performance Payment Dispute Notice, subject, in the case of accountants’ workpapers, to execution of a customary access agreement by Buyers (or their representatives) if required by such accountants. Buyers and their representatives shall be permitted to ask questions of and receive answers from any Person including, without limitation, the Seller Representative and request such other books and records as are reasonably requested by Buyers to assist it in the review of a Performance Payment Dispute Notice. The Seller Representative shall be deemed to have agreed with all other items other than the Performance Payment Disputed Items contained in the Calculation Statement, and if no Performance Payment Dispute Notice is received by Buyers within such 30-day period, Buyers’ calculation of EBIT as set forth in the Calculation Statement shall be final and binding upon the parties hereto. (f) Upon receipt by Buyers of a Performance Payment Dispute Notice, if any, the Seller Representative and Buyers shall negotiate in good faith to resolve any disagreement with respect to the Performance Payment Disputed Items set forth in the Performance Payment Dispute Notice. To the extent Buyers and the Seller Representative are unable to agree within 30 days after receipt by Buyers of a Performance Payment Dispute Notice, Buyers and the Seller Representative shall jointly engage the Accounting Firm and promptly submit any unresolved Performance Payment Disputed Items (and their respective proposed calculations) to the Accounting Firm for a binding resolution (it being understood the Accounting Firm shall be functioning as an expert and not an arbitrator). The reasonable fees and expenses of the Accounting Firm shall be borne by the party whose calculation of the aggregate dollar amount of all Performance Payment Disputed Items is the furthest from the aggregate dollar amount of such Performance Payment Disputed Items as finally determined by the Accounting Firm. (g) The Seller Representative and Buyers shall instruct the Accounting Firm to render its decision resolving the Performance Payment Disputed Items within 30 days after its engagement. Buyers, Sellers and the Seller Representative agree that the determination of the Accounting Firm shall be final and binding upon the parties absent manifest error and that judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party or parties against which such determination is to be enforced. The Accounting Firm shall determine, based solely on presentations by Buyers and the Seller Representative and their respective representatives, and not by independent review, only those Performance Payment Disputed Items and shall prepare a written report as to the dispute and the resulting calculation of EBIT which shall be conclusive and binding upon the parties absent manifest error. In resolving any Performance Payment Disputed Item, the Accounting Firm: (x) shall be bound by the principles set forth in this Section 1.5 and the definition of EBIT, (y) shall limit its review to matters specifically set forth in the Calculation Statement and the Performance Payment Dispute Notice, and (z) shall further limit its review solely to whether the Calculation Statement is mathematically accurate and has been prepared in accordance with GAAP and Section 1.5(d). The determination of the Accounting Firm for any Performance Payment Disputed Item cannot, however, be in excess of, nor less than, the greatest or lowest value, respectively, claimed for that particular item in the proposed calculations submitted to the Accounting Firm.

Performance Payments. (a) The Following the Closing and as additional consideration for the Acquired Assets, Sellers shall be entitled to receive Performance Payments from the Purchaser (subject to the terms and conditions set forth in an amount up to a maximum of $17,000,000, in this Section 2.3) additional amounts based on the aggregate, contingent upon attainment of certain Business' performance targets as follows: (i) if EBIT for during the fiscal year ending March 31twelve-month period commencing February 1, 2006 (the “First Pay-Out Period”), is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive an additional Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (ii) if EBIT for the fiscal year and ending March January 31, 2007 (the “Second Pay-Out "Performance Period”"), is equal . The amount (if any) paid with respect to or greater than: the Performance Period (1the "Performance Payment") $15,000,000, the Sellers shall be entitled determined in accordance with this Section 2.3 and the payment of any Performance Payments shall otherwise be subject to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i6.2(g) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive an additional Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (iii) if EBIT for the fiscal year ending March 31, 2008 (the “Third Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter; and (2) $25,000,000, the Sellers shall be entitled to receive a Performance Payment of $5,000,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (iv) if EBIT for the fiscal year ending March 31, 2009 (the “Fourth Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letter. (v) if EBIT for the fiscal year ending March 31, 2010 (the “Fifth Pay-Out Period”) is equal to or greater than: (1) $15,000,000, the Sellers shall be entitled to receive a Performance Payment of $400,000, payable to the order of Sellers as provided in Section 1.1(c)(i) of the Disclosure Letterhereof. (b) Notwithstanding the foregoing, in the event that Sellers fail to earn If Net Premiums Written during the Performance Payments described in subsections 1.5(a)(i)(2Period is (A) equal to or 1.5(a)(ii)(2less than $30,000,000, the Performance Payment will be equal to $0, (B) abovegreater than $30,000,000 but less than $36,000,000, Sellers may carry back any EBIT amounts in excess the Performance Payment with respect to such Net Premiums Written will be equal to 66 2/3% of the performance targets described in subsections 1.5(a)(ii)2 and 1.5(a)(iii)2 above and allocate amount by which such excess amounts Net Premiums Written exceeds $30,000,000 or (C) equal to the EBIT at the close of the First Pay-Out Period and/or Second Pay-Out Period in order to earn or greater than $36,000,000, the Performance Payments described in subsections 1.5(a)(i)2 or 1.5(a)(ii)2 that were not earned by Sellers at Payment will be equal to $4,000,000. In no event shall the close of the First Pay-Out Period and/or Second Pay-Out PeriodPerformance Payment made pursuant to this Section 2.3 exceed $4,000,000. (c) Notwithstanding anything Within 20 days following the end of each month during the Performance Period, the Purchaser shall deliver to the contrary contained in Section 1.5(a), Stockholder an unaudited statement which sets forth the Performance Payments described in subsections 1.5(a)(i)(1), 1.5(a)(ii)(1), 1.5(a)(iii)(1), 1.5(a)(iv)(1) Purchaser's calculation of Net Premiums Written for such month and 1.5(a)(v)(1) above shall only be payable for those years in which G▇▇ ▇▇▇▇▇▇▇▇ has acted as President the period from the beginning of Productions Companythe fiscal year to the end of such month. (d) The Within 45 days following items shall be disregarded in the calculation of EBIT for purposes of determining Performance Payments for any Pay-Out Period: (i) all Transaction Expenses incurred by the Companies; (ii) acquisitions of more than 50% last day of the equity interests or all or substantially all of Performance Period, the assets of an entity by either Company following the Closing Date and any and all costs and expenses associated therewith; and (iii) borrowings of either Company following the Closing Date outside the ordinary course of business and any and all principal amortization, costs and expenses associated therewith. (e) As promptly as practicable, but in any event within 30 days after receipt by Buyers of audited financial statements for the Pay-Out Period in question (but not later than 120 days after the end of such Pay-Out Period), Buyers Purchaser shall prepare and deliver to the Seller Representative Stockholder a statement setting (the "Performance Payment Statement") that sets forth in reasonable detail Buyers calculation of EBIT Net Premiums Written for such Pay-Out Period (a “Calculation Statement”). Buyers will give the Seller Representative (or its representatives) reasonable access to any computations and workpapers used in connection Performance Period, together with the preparation payment to Sellers of any Performance Payment due pursuant to the Performance Payment Statement. During the 30-day period immediately following the Stockholder's receipt of the Calculation Performance Payment Statement. Buyers’ calculation of EBIT shall be prepared in accordance with GAAP, subject to Section 1.5(d). If Buyers employ a firm of independent accountants in connection with the preparation of EBIT, Buyers shall cause such independent accountants to give reasonable access to the Seller Representative (or its representatives) to any computations and workpapers used in the preparation of EBIT subject, in the case of accountants’ workpapers, to execution of a customary access agreement by the Seller Representative (or its representatives) if required by such independent accountants. On not less than 5 days prior written notice, Buyers will also give the Seller Representative Stockholder (and its representativesagents) access, during the normal business hours of Buyers and the Companies, to all personnel, books and records of the Companies as reasonably requested by the Seller Representative to assist it, if applicable, in the preparation of a Performance Payment Dispute Notice (as defined below). The Seller Representative and its representatives shall be permitted to ask questions of and receive answers from Buyers and review the Companies and request such other Purchaser's books and records of the Companies as is reasonably requested by them to assist them in the review of the Calculation Statement. The Seller Representative will deliver to Buyers a notice (“Performance Payment Dispute Notice”) within 30 days after receiving a Calculation Statement if the Seller Representative believes that Buyers’ calculation of EBIT as set forth in the Calculation Statement (i) has not been prepared in accordance with GAAP, subject to Section 1.5(d) or (ii) is not mathematically correct, which notice shall set forth in reasonable detail all disputed items, the basis for such disagreement, the dollar amounts involved (the “Performance Payment Disputed Items”) and the Seller Representative’s calculation of EBIT. The Seller Representative will give Buyers (or their representatives) reasonable access Purchaser's working papers related to any computations and workpapers used by the Seller Representative or its representative in connection with the review of the Calculation Statement or the preparation of the Performance Payment Dispute Notice, subject, in Statement and determination of Net Premiums Written for the case of accountants’ workpapers, to execution of a customary access agreement by Buyers (or their representatives) if required by such accountantsPerformance Period. Buyers and their representatives shall be permitted to ask questions of and receive answers from any Person including, without limitation, the Seller Representative and request such other books and records as are reasonably requested by Buyers to assist it in the review of a The Performance Payment Dispute Notice. The Seller Representative shall be deemed to have agreed with all other items other than the Performance Payment Disputed Items contained in the Calculation Statement, and if no Performance Payment Dispute Notice is received by Buyers within such 30-day period, Buyers’ calculation of EBIT as set forth in the Calculation Statement shall be become final and binding upon the parties hereto. 30 days following Sellers' Representative's receipt thereof, unless the Stockholder disputes the calculation of Net Premiums Written set forth on the Performance Payment Statement by delivering a notice of its objection (fa "Notice of Objection") Upon receipt by Buyers to the Purchaser within 30 days following delivery of the Performance Payment Statement. Any Notice of Objection delivered pursuant to this Section 2.3(d) shall specify in reasonable detail the nature and dollar amount of any disagreement so asserted and shall be delivered only if (and to the extent that) the Stockholder reasonably and in good faith determines that Net Premiums Written set forth on the Performance Payment Statement has not been determined in accordance with the guidelines and procedures set forth in this Agreement and the definition of Net Premiums Written. During the 30 days following delivery of a Performance Payment Dispute Notice, if anyNotice of Objection, the Seller Representative and Buyers parties shall negotiate seek in good faith to resolve in writing any disagreement differences which they may have with respect to the matters specified in the Notice of Objection. At the end of the 30-day period referred to above, the parties shall submit to the Oak Brook, Illinois office of Crowe Chizek and Company, LLC (the "Performance Payment Disputed Items Arbitration F▇▇▇") ▇▇▇ ▇▇view and resolution of all matters (but only such matters) which were included in the Notice of Objection, and the Performance Payment Arbitration Firm shall make a final determination of Net Premiums Written in accordance with the guidelines and procedures set forth in this Agreement. The parties will cooperate with the Performance Payment Dispute NoticeArbitration Firm during the term of its engagement. To the extent Buyers and the Seller Representative are unable to agree within 30 days after receipt by Buyers of a Performance Payment Dispute NoticeIn resolving any matters in dispute, Buyers and the Seller Representative shall jointly engage the Accounting Firm and promptly submit any unresolved Performance Payment Disputed Items (and their respective proposed calculations) to the Accounting Firm for a binding resolution (it being understood the Accounting Firm shall be functioning as an expert and not an arbitrator). The reasonable fees and expenses of the Accounting Firm shall be borne by the party whose calculation of the aggregate dollar amount of all Performance Payment Disputed Items is the furthest from the aggregate dollar amount of such Performance Payment Disputed Items as finally determined by the Accounting Firm. (g) The Seller Representative and Buyers shall instruct the Accounting Firm to render its decision resolving the Performance Payment Disputed Items within 30 days after its engagement. BuyersArbitration Firm may not assign a value to any item in dispute greater than the greatest value for such item assigned by the Purchaser, Sellers and on the Seller Representative agree that one hand, or the determination of Stockholder, on the Accounting Firm shall be final and binding upon other hand, or less than the parties absent manifest error and that judgment may be entered upon smallest value for such item assigned by the determination of Purchaser, on the Accounting Firm in any court having jurisdiction over one hand, or the party or parties against which such determination is to be enforcedStockholder, on the other hand. The Accounting Firm shall determine, Performance Payment Arbitration Firm's determination will be based solely on presentations by Buyers the Purchaser and the Seller Representative and Stockholder or their respective representatives, representatives which are in accordance with the guidelines and not by independent review, only those Performance Payment Disputed Items and shall prepare a written report as to the dispute and the resulting calculation of EBIT which shall be conclusive and binding upon the parties absent manifest error. In resolving any Performance Payment Disputed Item, the Accounting Firm: (x) shall be bound by the principles procedures set forth in this Section 1.5 and Agreement (i.e., not on the definition basis of EBIT, (y) shall limit its review to matters specifically set forth in the Calculation Statement and the Performance Payment Dispute Notice, and (z) shall further limit its review solely to whether the Calculation Statement is mathematically accurate and has been prepared in accordance with GAAP and Section 1.5(dan independent review). The determination of Net Premiums Written shall become final and binding on the Accounting Firm for any parties on the date the Performance Payment Disputed Item canArbitration Firm delivers its final resolution in writing to the parties (which final resolution shall be delivered not more than 45 days following submission of such disputed matters), or Purchaser and Stockholder otherwise jointly agree. Within two business days of such final determination of the Performance Payment, Purchaser shall pay Sellers any amounts of the Performance Payment not previously paid. The costs and expenses of the Performance Payment Arbitration Firm shall (unless otherwise provided herein) be allocated between the Purchaser, on the one hand, and the Stockholder, on the other hand, based upon the percentage which the portion of the contested amount not awarded to the Stockholder bears to the Performance Payment, as determined by the Performance Payment Arbitration Firm. (e) From the Closing Date until the termination of the Performance Period, the Purchaser (or its Affiliates) shall not, howeverwithout the prior written consent of the Stockholder, be in excess of(i) open any new locations within any of the following Illinois counties: Cook County, nor less thanDupage County, the greatest Kane County, Lake County, or lowest value, respectively, claimed for that particular item in the proposed calculations submitted Will County ▇▇ (ii) breach any of its ob▇▇▇▇tions with respect to the Accounting Firmrendering of services to the Business's existing customers pursuant to the terms of the Transition Services Agreement.