Working Capital Adjustment Amount Clause Samples
The Working Capital Adjustment Amount clause defines how the purchase price in a transaction will be adjusted based on the difference between the target working capital and the actual working capital at closing. Typically, this involves comparing a pre-agreed benchmark level of working capital to the amount present at the time of closing, with the purchase price increasing if actual working capital exceeds the target, or decreasing if it falls short. This mechanism ensures that the buyer receives a business with an appropriate level of working capital, thereby preventing either party from being unfairly advantaged or disadvantaged due to fluctuations in short-term assets and liabilities.
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Working Capital Adjustment Amount. Working Capital" as of a given date shall mean the amount calculated by subtracting the current liabilities of the Companies and their Subsidiaries (including "outstanding checks (issued by Seller in payment of obligations of the Companies and Subsidiaries) in excess of deposits," but excluding (i) liabilities for income taxes, (ii) capital lease obligations, (iii) interest payable, (iv) the current portion of long-term debt, (v) intercompany payables owing to Seller or its Subsidiaries and (vi) any Seller insurance allocation accrual), as of that date from the current assets of the Companies and their Subsidiaries (other than (i) cash, (ii) current deferred income tax assets, (iii) any other income Tax assets and (iv) intercompany receivables owed by Seller or its Subsidiaries) as of that date; provided, that, for the avoidance of doubt, calculations of inventory and accounts receivable shall be net of the applicable reserve. The "Average Working Capital" of the Companies and their Subsidiaries shall be equal to the average of the Working Capital as of the last day of each of the 12 most recently completed four or five-week fiscal periods prior to the Closing Date for which internally prepared financial statements of the Companies and their Subsidiaries prepared in accordance with GAAP consistently applied with the Financial Statements are available. The "WC Adjustment Amount" (which may be a positive or negative number) will be equal to the amount determined by subtracting the Closing Date Working Capital (as defined below) from the Average Working Capital. For the avoidance of doubt, Seller shall be fully responsible for the payment of, and shall make payment when due on, any "outstanding checks in excess of deposits" as of the Closing Date to the extent such amount has been included in the Estimated Payment and the Actual Payment Amount. An example of the internally prepared financial statements and calculation of Working Capital as of January 1, 2005 is attached as Section 2.2(b) of the Disclosure Schedule.
Working Capital Adjustment Amount. (A) If the Net Working Capital is zero or is a positive number, then the "Working Capital Adjustment Amount" shall be a positive number and shall be equal to the Net Working Capital plus the Reference Net Working Capital Amount (taken as a positive number),
(B) If the Net Working Capital is a negative number but is greater (i.e., closer to zero) than the Reference Net Working Capital Amount, then the "Working Capital Adjustment Amount" shall be a positive number and shall be equal to the difference between the Reference Net Working Capital Amount (taken as a positive number) and the Net Working Capital (taken as a positive number), or
(C) If the Net Working Capital is a negative number but is less (i.e., further from zero) than the Reference Net Working Capital Amount, then the "Working Capital Adjustment Amount" shall be a negative number and shall be equal to the difference between the Net Working Capital (taken as a positive number) and the Reference Net Working Capital Amount (taken as a positive number).
Working Capital Adjustment Amount. Notwithstanding anything to the contrary set forth in the Stock Purchase Agreement, the Bundled Payments shall be in full satisfaction of TDCC’s and the Company’s obligations under Section 2.4 of the Stock Purchase Agreement (the “Working Capital Adjustment Receivables”) and the Company shall have no further liability with respect to any such obligations other than the Bundled Payments.
Working Capital Adjustment Amount. 3.1 Where the Working Capital Ratio is below 1.25, the Working Capital Ratio Adjustment Amount shall be calculated as follows: WCAA = (1.25 x CL) - CA where:
3.2 Where the Working Capital Ratio is 1.25 or above, the Working Capital Ratio Adjustment Amount shall be nil.
Working Capital Adjustment Amount. If the Final Working Capital Adjustment Amount is a positive number, Parent shall pay the Final Working Capital Adjustment Amount (plus simple interest on such amount at an annual rate of interest of 1.25% from the Closing Date through the date of payment) to the Company Stockholder Representative for payment to the Company Stockholders within ten (10) business days of the determination of the Final Statement of Closing Working Capital for payment to the Company Stockholders in accordance with this Article 2. If the Final Working Capital Adjustment Amount is a negative number, Parent shall be paid such Final Working Capital Adjustment Amount (plus simple interest on such amount at an annual rate of interest of 1.25% from the Closing Date through the date of payment) pursuant to the indemnification provisions in Section 8.1(a).