Post-Closing Operation. Following the Closing, the Parent and the Buyer shall have sole discretion with regard to all matters relating to the operation of the Company and its Subsidiaries; provided, however, that until the end of the Second Milestone Period: (i) Neither the Parent nor the Buyer will take any action, or refrain from taking any action, that would reasonably be expected to materially reduce the amount of, or avoid or delay, the issuance of the Milestone Shares (or the making of cash payments under Section 1.12(d)), including, for the avoidance of doubt, causing or permitting the Surviving Company or any of the Subsidiaries to alter the Surviving Company’s percentage ownership in a Subsidiary in a way that would exclude such Subsidiary’s earnings from the calculation of Adjusted EBITDA. Notwithstanding the foregoing, nothing in this Section 1.12(e)(i) shall prevent or restrict (A) the directors of the Parent and the Buyer from taking (or refraining from taking) any actions that they determine in good faith are necessary to satisfy their fiduciary duties or (B) the Parent or the Buyer from taking (or refraining from taking) any action that is required under applicable Law or stock exchange rules, or is taken (or not taken) by it, with the consent of or at the direction of the Founders. (ii) Subject to the Employment Agreements, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the “Founders”) shall continue to operate the business of the Company, and shall have reasonable authority with respect to day-to-day operations of the Company, including the authority to hire, fire and set compensation of Employees, subject to thresholds mutually agreed upon with the Buyer, and in consultation with the Buyer. (iii) The Buyer and the Founders shall mutually agree on an annual budget for the Company for the years 2021-2023, no later than 30 days following the Closing with respect to 2021 and no later than November 30 of the prior year with respect to 2022 and 2023, pursuant to which the Company shall be funded by the Buyer or the Parent as necessary, which funding, for the avoidance of doubt, shall include additional funding from Buyer or the Parent each year (whether through additional capital contributions or debt financing, with no return of any such capital contributions being made and no interest or principal payments with respect to such debt financing being due until after June 30, 2023) of no less than $4,000,000 each year. This budget shall include, but not be limited to, those expenses set forth on Schedule 1.12(e)(iii).
Appears in 1 contract
Post-Closing Operation. Following The Purchaser acknowledges the Closinginterest of the Seller in the Company earning the profits of which it is fairly able during the Fiscal Year 2021. To facilitate the Company’s expected revenue target for the Fiscal Year 2021, the Parent Seller shall prepare and the Buyer shall have sole discretion submit to Purchaser on or before December 15, 2020, an operating budget with regard to all matters relating respect to the operation Company for the Fiscal Year 2021, which budget shall include Operating Income of at least 37.5% of the Company’s Revenue for such period (the “Operating Budget”). Subject to timely receipt of the Operating Budget, Purchaser undertakes that during Fiscal year 2021, Purchaser shall do the following, except as otherwise agreed, or as a result of any breach of Seller’s represntations and warranties hereunder, or to the extent that any covenant, obligation, or restriction set forth below may reasonably be expected to have an adverse effect on the operations, business, or financial condition of the Company:
(a) permit (and not take or authorize any action to materially and adversely affect the ability of) the Company to conduct business operations in the Ordinary Course, and further covenant to use all reasonable efforts to procure (so far as they are respectively able) that the business of the Company will continue to be carried out in the Ordinary Course; and
(b) ensure that all transactions between the Company and its Subsidiaries; providedany affiliate of Purchaser shall be carried out on an arm’s length basis and upon normal commercial terms, howeverprovided that, that until in the end case of Purchaser providing services or products to the Company, the terms of such transactions shall be no less favorable to the Company than the terms of any similarly-situated customer of Purchaser. Without prejudice to the generality of the Second Milestone Periodforegoing, and except as otherwise agreed or to the extent that this provision may have a material adverse effect on the Purchaser’s operations, business or financial condition, the Purchaser agrees that during Fiscal Year 2021, the Purchaser shall not, and will exercise its equity holdings in the Company so that the Company shall not, permit the Company to take any action or cause or permit anything to be done with the principal purpose of avoiding or reducing the amount of the Earnout. Notwithstanding any other provision of this Agreement, the Company will not be permitted to, and the Purchaser has no any obligation to cause the Company to:
(ia) Neither the Parent nor the Buyer will take any action, or refrain from taking any action, that would reasonably be expected where such action or inaction is contrary to materially reduce the amount written corporate policies of the Purchaser, as applied generally to its group;
(b) directly or indirectly breach or violate, or actively or passively contribute to the breach or violation of any Law applicable to it, the Purchaser or any other Affiliate of Purchaser, or violate or infringe, any contract to which the Company is party and such violation or infringement is not tolerated by the counterparty to such contract, or actively or passively contribute to the violation or infringement of, or avoid or delay, the issuance Intellectual Property Rights of the Milestone Shares any other Person;
(or the making of cash payments under Section 1.12(d)), including, for the avoidance of doubt, causing or permitting the Surviving Company or any of the Subsidiaries to alter the Surviving Company’s percentage ownership in a Subsidiary in a way that would exclude such Subsidiary’s earnings from the calculation of Adjusted EBITDA. Notwithstanding the foregoing, nothing in this Section 1.12(e)(ic) shall prevent or restrict (A) the directors of the Parent and the Buyer from taking (or refraining from taking) any actions that they determine in good faith are necessary to satisfy their fiduciary duties or (B) the Parent or the Buyer from taking (or refraining from taking) take any action that is required under applicable Law or stock exchange rules, or is taken (or not taken) by it, with provided for in the consent of or at the direction of the Founders.
(ii) Subject to the Employment Agreements, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the “Founders”) shall continue to operate the business budget of the Company, as will be adopted by the Board of the Company from time to time, provided, that any operating expenses identified therein can be increased proportionately to the increase in Revenue over and shall have reasonable authority with respect to day-to-day operations above the budgeted amount, and provided, further, that such budget was adopted by the Board of the Company;
(d) take any action to accelerate Revenue (including but not limited to by way of changing payment terms), or any other action, in each case where its intended effect would be to preclude the Seller from receiving the Earn-Out or where its intended effect is to manipulate the Working Capital Adjustment Amount; or
(e) take any action outside of the Ordinary Course, including selling all or substantially all the authority to hire, fire and assets of the Company or discontinuing or reducing the scale of the business. Seller acknowledges that the Company’s achievement of the Earnout thresholds set compensation of Employees, forth in this Agreement is subject to various unforeseeable risks and uncertainties that could put at risk the possibility that the Earnout becomes due from Purchaser. Moreover, absent the Company’s achievement of the Earnout thresholds mutually agreed upon with the Buyer, and set forth in consultation with the Buyer.
(iii) The Buyer and the Founders shall mutually agree on an annual budget for the Company for the years 2021-2023this Agreement, no later than 30 days following the Closing with respect to 2021 and no later than November 30 provision of the prior year with respect to 2022 and 2023Agreement, pursuant to which or any other agreement between the Company parties shall be funded deemed to be a guarantee by Purchaser of the Buyer or payment of the Parent as necessary, which funding, for the avoidance of doubt, shall include additional funding from Buyer or the Parent each year (whether through additional capital contributions or debt financing, with no return of any such capital contributions being made and no interest or principal payments with respect to such debt financing being due until after June 30, 2023) of no less than $4,000,000 each year. This budget shall include, but not be limited to, those expenses set forth on Schedule 1.12(e)(iii)Earn-Out Amount.
Appears in 1 contract